Lecture 3&4

Chapter 5 (page 97) Lecture 3&4 1) The international management challenges of globalization Key concepts in the challenges of globalization: - Globalization - Global economy - International management - Global manager Global economy: in which resources, supplies, product markets, and business competition have a worldwide—rather than a local or national—scope. Globalization: Defined as the growing interdependence among the components of the global economy. Global management: Which refers to management in businesses and organizations with interests in more than one country. Global managers: who have a strong global perspective, are culturally aware, and are informed about current international issues and events. 2) Forms and opportunities of international business Reasons for engaging in international business: - Profits (Gain profits through expanded operations) - Customers (Enter new markets to gain new customer) - Suppliers (Get access to materials, products, and services) - Labour (Get access to lower-cost, talented workers) - Capital (Tap into a larger pool of financial resources) - Risk (Spread assets among multiple countries) Market entry strategies involve the sale of goods or services to foreign markets but do not require expensive investments.
Chapter 5 (page 97) Types of market entry strategies: (How companies go global?) - Global sourcing - Is the process of purchasing materials, manufacturing components, or locating business services around the world. Global sourcing requires an international division of labour in which activities are performed in countries where they can be accomplished effectively at low cost. - Exporting - Is selling locally made products in foreign markets. - Importing - Is busing foreign-made products and selling them in domestic markets. - Licensing agreement - Foreign firms pay a fee for rights to make or sell a company's products in a specified region. The licence typically grants access to a unique manufacturing technology, special patent, or trademark. - Franchising - Is a form of licensing in which a foreign firm buys the rights to use another's name and operating methods in its home country. Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations. Types of direct investment strategies: - Joint ventures - This is a co-ownership arrangement in which foreign and local partners agree to pool resources, share risks and jointly operate the new business. - Foreign subsidiaries - Is a local operation completely owned and controlled by a foreign firm.
Chapter 5 (page 97) Characteristics to look at when choosing a joint venture partner: - Familiarity with your firm's major business. - Strong local workforce. - Values its customers. - Has potential for future expansion possibilities. - Strong local market for partner's own products. - Has good profit potential. - Has sound financial standing. Complications in the global business environment: - Environment is complex, dynamic, and highly competitive. - Global business executives must deal with differences in the environment of business in different countries. - The World Trade Organization (WTO) resolves trade and tariff disputes among countries. - Protectionism can complicate global trading relationships. 3) definition of multinational corporations A multinational corporation (MNC) is a business with extensive international operations in more than one foreign country. Global corporations: are also called multinational enterprises , are business firms with extensive international operations in many foreign countries. MNC - a multinational corporation or company. Mutual benefits for host country and MNC: - Shared growth opportunities - Shared income opportunities - Shared learning opportunities - Shared development opportunities Complaints about MNC by the host countries: - Excessive profits - Domination of local economy - Interference with local government - Hiring the best local talent
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