Professional Documents
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Discussion Topics
Chapter 1
Chapter 2
Next weeks assignments
Read Chapter 3, Ethics and social responsibility ,
Discussion Review Questions, #1 -5
International Management
Chapter One
Globalization and
International Linkage
International Management
Chapter Objectives
REVIEW current trends in
international investment and trade
EXAMINE the present economic
status in the major regions of the
global community
ANALYZE some of the major
developments and issues in various
regions of the world
International Management
Introduction
International Management
The process of applying
management concepts and
techniques in a multinational
environment
International Management
Multinational Corporation
(MNC)
Operates in more than one country
Sells its products in international
markets
Managers and owners are of different
nationalities
Must learn to work effectively with people from
different countries and different cultures.
International Management
Introduction
Small and medium-sized businesses are
being affected by the trend toward
internationalization
International Management
Sales
Billions of U.S. Dollars
1. Wal-Mart Stores
258.68
2. BP
232.57
3. ExxonMobil
222.88
4. Royal Dutch/Shell
201.93
5. General Motors
183.24
6. DaimlerChrysler
International Management
7
2006 The McGraw-Hill Companies, Inc. All rights reserved.
Share-Price Gain
1. Mizuho Financial
2. Research in Motion
3. UFJ Holdings
4. SK
5. Rakuten
6. Sumitomo Mitsui Fin.
7. Elan
8. Bharti Tele-Ventures
9. Yahoo! Japan
10. Mitsui Trust Hldgs.
636%
550
420
383
381
331
311
276
241
229
International Management
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2006 The McGraw-Hill Companies, Inc. All rights reserved.
Globalization
Process of integration among countries
around the world
Social
Political
Economic
Cultural
Technological
Wealth
Jobs
Technology
Lower prices
International Management
Globalization
Criticisms of globalization
Offshoring of business services jobs to
lower-wage countries
Growing trade deficits
Slow wage growth
Environmental and social impacts
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10
Increasing
Internationalization
Regional Developments
North American Free Trade Agreement
(NAFTA)
Free trade agreement between the U.S., Canada,
and Mexico which essentially removed all barriers
to trade
May expand to include Latin American countries
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11
Increasing
Internationalization
Pacific Rim
Japan and China are the dominant
economies
Association of Southeast Asian
Nations (ASEAN)
BRIC Economies
Brazil, Russia, India & China
12
Increasing Internationalization
(cont.)
International Investment and Trade
Foreign direct investment is the amount
invested in another country
International trade has increased substantially
over the last two decades
MNCs buy domestic companies rather than
trying to export products to that country
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13
Importing
Rank Country
1
Canada
2
Mexico
3
Japan
4
U.K.
5
Germany
6
South Korea
7
Netherlands
8
Taiwan
9
France
10
Singapore
Exports*
166,600
86,908.9
57,465.
38,407.1
26,800.2
22,958.4
19,436.6
19,131.4
18,877.4
16,247.3
U.S.
Rank
1
2
3
4
5
6
7
8
9
10
Exporting
U.S.
Country
Imports*
Canada
198,711.1
Japan 130,863.9
Mexico
109,720.5
China 81,788.2
Germany
55,228.4
U.K.
39,237.2
Taiwan 35,204.4
South Korea
31,178.6
France
26,708.6
Italy
22,356.5
* in millions of dollars
International Management
14
McGraw-Hill/Irwin
1,340,011
96,437
982,062
2003
1,268,001
105,255
1,000,532
218,175
139,620
141,400
19,198
230,374
148,774
143,341
20,636
7,483
997
6,680
663
International Management
15
2006 The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
2003
50,167
48,921
8,088
4,014
28,260
2,298
7,456
5,914
4,048
28,949
2,187
7,931
3,699
986
3,834
1,155
International Management
16
2006 The McGraw-Hill Companies, Inc. All rights reserved.
2002
2003
183,392
192,539
150,499
23,136
2,569
650
1,879
159,258
24,652
2,708
162
1,981
Adapted from: Table 1-2: Foreign Direct Investment in the United States, 2002-2004 (in millions of
dollars)
McGraw-Hill/Irwin
International Management
17
2006 The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
2003
1,601,414
170,169
848,599
1,788,911
192,409
963,087
239,219
67,404
42,999
131,973
272,640
80,163
47,914
141,449
55,724
27,615
61,526
29,915
International Management
18
2006 The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
2002
2003
152,597
162,574
80,048
49,806
16,290
14,671
84,609
54,507
18,960
16,942
5,632
3,823
6,208
4,217
International Management
19
2006 The McGraw-Hill Companies, Inc. All rights reserved.
2003
267,125 292,490
65,939
34,409
7,608
52,449
41,571
10,499
73,435
40,985
10,961
57,589
44,323
11,877
Adapted from: Table 1-3: Foreign Direct Investment by the United States Abroad, 2002-2004 (in
millions of dollars)
McGraw-Hill/Irwin
International Management
20
2006 The McGraw-Hill Companies, Inc. All rights reserved.
Importing
Country
Canada
169,924
Mexico
97,412
Japan
52,004
United Kingdom
U.S.
Exports
Exporting
Rank Country
1
Canada
221,595
China
152,436
Mexico
138,060
Japan
U. S.
Imports
Adapted from: Table 1-4: Top 10 Trading partners of the United States, 2003 (in millions of dollars).
33,828
International
McGraw-Hill/Irwin
5
Germany
118,037
Management
21
2006 The McGraw-Hill Companies, Inc. All rights reserved.
22
United States
U.S. MNCs have holdings throughout
the world
Foreign MNCs find U.S. to be a
lucrative market
Weaken US Dollar compared to foreign
currencies
Increasing National Debt
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23
Canada
U.S.s largest trading partner
Legal and business environments
similar to those of the U.S.
Target of increased international
investment
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24
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25
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26
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27
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28
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29
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30
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31
Taiwan
Progression from labor-intensive economy
to one dominated by technologically
sophisticated industries (banking,
electricity generation, petroleum refining
and computers)
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32
33
34
35
Rank
1
2
3
4
5
6
7
8
9
10
Adapted from Table 1-6: The Worlds Most Competitive nations, 2003 Ranking
Source: World Competitive Scoreboard, 2004.
McGraw-Hill/Irwin
International Management
36
2006 The McGraw-Hill Companies, Inc. All rights reserved.
Economic Performance
Southeast Asia
The Baby Tigers
Thailand, Malaysia, Indonesia
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37
Characteristics of
Less Developed Countries
High
unemployment
Low
GDP
High
international
debt
Less
Developed
Countries
Slow (or
negative) GDP
growth per
capita
Inexpensive
unskilled or
semi-skilled
labor
International Management
Large
population
38
Economic Performance
Developing and Emerging Countries
India
Low per capita GDP
Recent trend of locating software and
high value-added services to this country
Attractive to U.S. and British investors
(well educated, English speaking,
technologically sophisticated workers)
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39
Economic Performance
Developing and Emerging Countries
Middle East and Central Asia
Large oil reserves
Highly unstable geopolitical and religious
forces
Plagued by continuing economic
problems
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40
Economic Performance
Developing and Emerging Countries
Africa
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41
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42
43
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44
Chapter Two
The Political, Legal, and
Technological Environment
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45
Chapter
Objectives
EXAMINE some of the major changes that
are currently taking place in the political
environments of China, Europe, Russia, and
Central and Eastern Europe
PRESENT an overview of the legal and
regulatory environments in which MNCs
operate worldwide
REVIEW key technological developments and
their impact on MNCs now and in the future
International Management
46
Political Environment
Components include:
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47
Political Environment
China
Government regulations
Lack of qualified employees
Active involvement of government in business affairs
International Management
48
Political Environment
Change in government policies
MNCs must adjust their strategies and
practices to accommodate the new
perspectives and actual requirements
International Management
49
Political Environment
China
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50
Political Environment
(cont.)
Europe
51
Political Environment
(cont)
Russia
52
International Management
53
2006 The McGraw-Hill Companies, Inc. All rights reserved.
Adapted from: Table 2-1: Key Elements of Russias WTO Accession Deal with the EU
McGraw-Hill/Irwin
International Management
54
2006 The McGraw-Hill Companies, Inc. All rights reserved.
Political Environment
High unemployment
Economic slowdown
Estonia
Latvia
Lithuania
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55
Political Environment
Regulations
Legal environment
Tax regimes
Accounting methods
Business structures
Import/export regulations
Manpower and labor regulations
Restrictions on foreign capital investment
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56
Political Environment
War on terrorism
Afghanistan and Iraq wars
IsraelArab conflicts
Rising tensions
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57
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58
Socialist
Law
- derived from
Marxism
- continues to
influence
regulations in
countries from
the former
Soviet Union
Common
Law
- derived from
English law
- foundation for
legal systems
in Western
democracies
International Management
Civil or
Code Law
- derived from
Roman law
- found in nonIslamic and
nonsocialist
countries
59
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60
61
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62
Restrictive, inefficient
Problematic
Red tape increased the cost of doing business
Bureaucracies make it difficult to open
markets
Privatization
Selling state-owned properties to private
enterprises
Example: Deregulation of German
telecommunications
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63
Restrictive bureaucratization
Government controls often inefficient and uncorrected
Local politics often prevail over national concerns
Privatization
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64
Regulation of Trade
and Investment
Individual countries use legal and regulatory
policies to affect the international
management environment
Country is perceived to engage in unfair
trade practices (WTO and similar
agreements)
Government support (subsidies)
Require MNCs to accept local partners
Response may be
Retaliatory tariffs
Restrictive trade regulations
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65
Silicon
Chips
Supercomputers
Internet
Biotechnology
Automatic
Translation
Telephones
International
Business
Nanotechnology
Satellites
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66
Technological Environment
Technology is rapidly changing
E-Business
Telecommunications
Technologic leapfrogging - Moving from no
telephones to wireless communications
Economic growth hampered by poor communication
services
Wireless is more affordable than installed phone lines
Some governments recognize the need to privatize this
service
Privatization of telecommunications
MNCs unwilling to invest in telecommunications without
the prospect of good financial return
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68
Technological Environment
(cont.)
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69
Expected Winners
in Selected Occupations
Computer software engineers,
applications
100
Computer support
specialists
97
90
82
62
Medical assistants
-80
-60
-40
-20
20
40
60
80
100
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70
Adapted from: Figure 2-1: Winners and Losers in Selected Occupations: Percentage Change Forecasts for
Expected Losers
in Selected Occupations
Railroad brake, signal,
and switch operators
Telephone
operators
-61
-35
-28
-80
-60
-26
Meter readers,
utilities
-25
-20
Order clerks
-20
-40
-20
20
40
60
80
100
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Adapted from: Figure 2-1: Winners and Losers in Selected Occupations: Percentage Change Forecasts for
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