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GlobalConsiderations

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Learning Objectives

After this Session, you should be able to:

1. State several characteristics of the global economy

2. Describe five ways of organizing to engage in international

business

3. Explain six strategies used in international business

4. Explain the impact of political-legal forces in international

business

5. Discuss how three major trade agreements affect competitive

forces

6. Describe how cultural forces affect international management

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Organizing for International Operations

High

High

Low

LowResource Commitment

Comp

lexit

y

Multinational

Corporation

International

Corporation

Export Department

Export Manager

Commission Agent

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Portion of Thomsons Corporate Structure

Source: Adapted from The ThomsonCorporation 1996 Annual Report. Toronto,Ontario, Canada, 1997

Thomson

Corporate Headquarters(Toronto, Ontario)

Travel GroupInformation /

Publishing Group

Newspapers

Group

Financial

Services

Regional

Newspapers

International

Publishing

Information

Services

Limited

Business

Information

Brooks / Cole

Nelson Canada

South-Western

Thomas Nelson Australia

10 additional divisions

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Portion of Coca-Colas Multinational Structure

(For each soft drink unit) (For each soft drink unit)

Coca-Cola

Corporate Headquarters(Atlanta, Georgia)

North American

Business Sector

International

Business Sector

(Soft Drinks)

Coca-Cola

Canada

Group

Coca-Cola

USA

Group

Coca-Cola

Foods

Group

Pacific

Group

European

Union

Group

NortheastEurope &AfricaGroup

Marketing MarketingOperations Operations BottlersBottlers

Latin

America

Group

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Strategies for International Operations

High

High

Low

LowResource Commitment

Comp

lexit

yExporting

Licensing

Franchising Alliances

Multidomenstic

Global

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Factors Leading to a Successful Global Strategy

n Being a strong competitor in North America,

Europe, and Asia

n Developing goods for the world

n Basing decisions on global considerations

n Sensitizing employees to other cultures

n Promoting foreign managers to top positions

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Assessing Political Risk

Domestic InstabilityLow High

Foreign Conflict

Low High

Political ClimateLow High

Economic ClimateLow High

Adapted from Figure 4.5

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Goals of NAFTA

n Create a U.S., Canadian,

and Mexican trade zone

n Promote liberalized trade, not free trade

n Retain some protectionist elements

n Increase efficiency and customer satisfaction

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Goals of the European Union

n Create a single market

among the 15 member countries

n Eliminate existing barriers between countries

n Introduce common currency, the Euro, by 1999

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Tendencies of Many U.S. and Japanese Organizations

n Employment

n Salary and

promotion

n Attitude

toward work

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) MajorU.S. Organizations Many (Not All) MajorJapanese OrganizationsDimensions

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

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

n Decision

Making

n Relationship

with employees

n Competition

Individual-oriented;

relatively top-down

Depersonalized;

emphasis on

formal contacts

Relatively free andopen among individuals

Consultation oriented;

bottom-up emphasis

Personalized; employee

treated more as a family

member; paternalism

Low among individualswithin groups; high

among groups

Many (Not All) MajorU.S. Organizations

Many (Not All) MajorJapanese OrganizationsDimensions

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