Managing Globally

4.1

Learning Objectives
After reading this chapter, you should be able to:
State several characteristics of the global economy Describe six strategies used by organizations in international business Explain the impact of political-legal forces on international business Discuss how three major trade agreements affect global competition

Describe how a countrys culture can affect an organizations

business practices

4.2

Global Economic Trends

Increased competition Shortened product life-cycles Importance of exports and imports Worldwide communication New countries emerge Borderless organizations Worldwide labor pool

Adapted from Table 4.1

4.3

Strategies for International Operations

High Global

C o m p l e x i t y
Low

Multidomestic

Franchising Alliances

Licensing

Exporting
Low

Resource Commitment

High

Adapted from Figure 4.1

4.4

Assessing Political Risk

Low

Domestic Instability Foreign Conflict Political Climate

Stable Low

High

High

Stable

Unstable

Economic Climate

Unstable Corrupt

Corruption

Noncorrupt

Adapted from Figure 4.2

4.5

Goals of the World Trade Organization (WTO)

Administer WTO trade agreements

Provide a forum for trade negotiations

Handle trade disputes between nations Monitor national trade policies Provide technical assistance and training for people in developing countries Cooperate with other international organizations

4.6

Goals of NAFTA
Create a U.S., Canadian,

and Mexican trade zone

Promote liberalized trade, not free trade Retain some protectionist elements Increase efficiency and customer satisfaction

4.7

Goals of the European Union

Create a single market among the 15 member countries

Eliminate existing barriers between countries Implement the Euro as a common currency

4.8

Tendencies of Many U.S. and Japanese Organizations

Dimensions Many (Not All) Major U.S. Organizations
Short term on average, but varies widely; unstable and insecure
Merit pay based on individual contribution; rapid promotion in career Individual responsibilities

Many (Not All) Major Japanese Organizations

Long-term for males (recent decline in lifetime employment), moderately secure and stable
Seniority-based early in career; more merit pay later Collective responsibilities; group loyalty, duty-oriented

Employment

Salary and promotion Attitude toward work

Adapted from Table 4.3

4.9

Tendencies of Many U.S. and Japanese Organizations (cont.)

Dimensions Many (Not All) Major U.S. Organizations
Individual-oriented; relatively top-down emphasis Depersonalized; emphasis on formal contacts Relatively free and open among individuals

Many (Not All) Major Japanese Organizations

Consultation oriented; bottom-up emphasis Personalized; employee treated more as a family member; paternalism Low among individuals within groups; high among groups

Decision making
Relationship with employees Competition

Adapted from Table 4.3