© Farhan Mir 2007 IMS Management Thoughts & Practices MBA & BBA Lecture 4 (Managing Global...
-
Upload
cori-sparks -
Category
Documents
-
view
217 -
download
1
Transcript of © Farhan Mir 2007 IMS Management Thoughts & Practices MBA & BBA Lecture 4 (Managing Global...
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Management Management Thoughts & PracticesThoughts & Practices
MBA & BBAMBA & BBALecture 4Lecture 4(Managing Global (Managing Global Environment)Environment)
By: Farhan MirBy: Farhan Mir
© Farhan Mir© Farhan Mir
20200707 IMSIMS
TopicsTopicsIntroductionHistory and Evolution of ManagementOrganizational & Environmental Constraints
Managing Global Environment
Global PerspectiveGlobal Perspective
Need for going GlobalNeed for going Global
Understanding Global Understanding Global EnvironmentEnvironment
Doing Business GloballyDoing Business Globally
Managing in Global EnvironmentManaging in Global Environment
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Trends in International Trends in International BusinessBusinessWhy do companies expand
internationally?Expand sales (Extending Markets)Expand sales (Extending Markets)
Cutting costsCutting costs
Offering new productsOffering new products
Global OpportunitiesGlobal Opportunities(WTO allowing International companies more opportunities in Pakistani market & Vice Versa)
But once they enter into the global But once they enter into the global markets they also face global issues markets they also face global issues (Constraints of the global (Constraints of the global environment)environment)
© Farhan Mir© Farhan Mir
20200707 IMSIMSSource: www.wal-mart.com
Trends in International Trends in International BusinessBusiness
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Trends in International Trends in International BusinessBusiness
Wal-Mart USA1489 Stores1489 Stores1397 Supercenters1397 Supercenters532 Sam’s Clubs532 Sam’s Clubs56 Neighborhood 56 Neighborhood MarketsMarkets
3474 Total Stores3474 Total Stores1,000,000 + associates1,000,000 + associates
Wal-Mart International11 Argentina23 Brazil214 Canada92 Germany613 Mexico (1st int’l store in 1991)
52 Puerto Rico265 Great Britain31 China15 Korea
1317 Total International300,000 + associates
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Trends in International Trends in International BusinessBusiness
China: www.wal-martchina.com
Germany: www.walmartgermany.de
Mexico: www.walmartmexico.com.mx
Korea: www.walmartkorea.com
United Kingdom: www.asda.com
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Trends in International Trends in International BusinessBusiness
Wal-Mart’s next market?
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Perspective towards Perspective towards GlobalizationGlobalization
Parochialism- narrow view of the world where you don’t recognize differences between people
Ethnocentric- best work approaches are that of the home country (where the business initiated)
Polycentric- managers in the host countries know the best work practices for running their business
Geocentric- world-oriented view that focuses on using the best approaches and people from the globe
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Degree of Degree of InternationalizationInternationalization
Domestic businessAll products and services within one All products and services within one countrycountry
Almost extinctAlmost extinct
Mostly small businessesMostly small businesses
International businessOperate primarily in one countryOperate primarily in one country
Some resources or revenues from Some resources or revenues from other countriesother countries
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Degree of Degree of InternationalizationInternationalization
Multinational businessWorldwide marketplace for inputs and Worldwide marketplace for inputs and outputsoutputs
Retain primary “headquarters” in one Retain primary “headquarters” in one countrycountry
Global businessNo overriding commitment to any No overriding commitment to any single countrysingle country
Government and legal restrictions Government and legal restrictions make this category somewhat make this category somewhat “hypothetical” “hypothetical”
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Degree of Degree of InternationalizationInternationalizationThese are the largest export markets for this Finnish
company in 1957. Any idea what company this is?
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Degree of Degree of InternationalizationInternationalizationToday, you might recognize this company as a major providerof telecommunications, information technology, and electronics.
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Degree of Degree of InternationalizationInternationalization
AustriaBelgiumBulgariaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyLatvia
AustraliaChinaHong KongIndiaJapanKoreaPhilippinesSingaporeTaiwan
USABrazilCanada
LithuaniaLuxembourgMaghrebNetherlandsNorwayPolandPortugalRomaniaRussiaSlovakiaSpainSwedenSwitzerlandTurkeyUK
AmericasAsia-PacificEurope, Africa& Middle East
Source: Nokia.com
The company is Nokia, and here are some of the countries it operates in today.
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Degree of Degree of Internationalization Internationalization (Some Examples)(Some Examples)
Nestlé comes close to “global” business
http://www.nestle.com/Html/Id/http://www.nestle.com/Html/Id/index.aspindex.asp
Operations in over 100 countriesOperations in over 100 countries
© Farhan Mir© Farhan Mir
20200707 IMSIMS
© Farhan Mir© Farhan Mir
20200707 IMSIMS
The Structure of the The Structure of the Global MarketGlobal Market
Market Systems (Economic Integration)
European UnionEuropean Union
NAFTANAFTA
AFTAAFTA
ASEANASEAN
OPECOPEC
Hundreds of othersHundreds of others
© Farhan Mir© Farhan Mir
20200707 IMSIMS
European Union (EU)European Union (EU)Established in February 1992 as a treaty uniting 12 countries
Over 374 million peopleOver 374 million people
Since other 7 countries also in negotiation Since other 7 countries also in negotiation process so the overall population increasesprocess so the overall population increases
Before becoming part of EU all these countries Before becoming part of EU all these countries had there own set of policies, tax structures and had there own set of policies, tax structures and protected industriesprotected industries
Now a single market and a common currency Now a single market and a common currency (Euro)(Euro)
No traveling barriers
No investment and employment barriers
Why EU?Why EU?
Idea was to build alliance against the strong US and Japanese Economies
German automobiles now sold in EU
Nokia selling major telecommunication services throughout EU
© Farhan Mir© Farhan Mir
20200707 IMSIMSSource: Robbins, 2002
European Union (EU)
© Farhan Mir© Farhan Mir
20200707 IMSIMS
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Types of Global Types of Global OrganizationsOrganizationsMultinational Corporation (MNCs)
Maintains significant operations in multiple Maintains significant operations in multiple countries but manages them from a base in countries but manages them from a base in the home countrythe home country
Sony
Transnational Corporation (TNC)Maintains significant operations in multiple Maintains significant operations in multiple countries but decentralizes management to countries but decentralizes management to the local countrythe local country
Nestle
Borderless OrganizationApproaches global business from a Approaches global business from a geocentric approach and omits almost all geocentric approach and omits almost all barriersbarriers
IBM (developed itself into 13 divisions)
© Farhan Mir© Farhan Mir
20200707 IMSIMS
The Process of The Process of InternationalizationInternationalizationExporting
Making products at home and selling them Making products at home and selling them overseas overseas
Most of the Sialkot Industry is based on this model SAGA is one of the giant organization & CA is another one
ImportingSelling products home that are made overseasSelling products home that are made overseas
You’ll find products of most of the international manufacturers in Pakistan even those organizations are not themselves present in the countryMost of the Australia is dominated by Chinese products imported for use
Licensing & FranchisingManufacturing organizations allowing others to use Manufacturing organizations allowing others to use their brand name, technology or product their brand name, technology or product specificationspecification
Based on annual fee on salesService organization allowing others to sue their Service organization allowing others to sue their brand name, technology or product specificationbrand name, technology or product specification
© Farhan Mir© Farhan Mir
20200707 IMSIMS
The Process of The Process of InternationalizationInternationalizationStrategic Alliances
Doing business with partner organization Doing business with partner organization overseas by sharing resources and overseas by sharing resources and developing new products and servicesdeveloping new products and services
Joint VentureA partnership in which the partner A partnership in which the partner organization form a separate new organization form a separate new organization by merging togetherorganization by merging together
Foreign SubsidiaryEstablishing and independent unit or Establishing and independent unit or facility in another countryfacility in another country
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Stage IPassive Response
Stage IIInitial Overt Entry
Stage IIIEstablished International
Operations
Exportingto foreigncountries
Importingfrom foreign
countries
Hiring foreignrepresentation orcontracting with
foreign manufacturers Licensing/Franchising
ForeignSubsidiary
JointVentures
StrategicAlliances
The Process of The Process of InternationalizationInternationalization
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Political EnvironmentPolitical EnvironmentGovernment stabilityInternational trade incentivesInternational trade controlsEconomic communities
Economic EnvironmentEconomic EnvironmentResource allocation processesProperty ownershipNatural resourcesInfrastructure
International Management International Management FunctionsFunctions
Cultural EnvironmentCultural EnvironmentValues, Symbols, Beliefs, Language
Cultural EnvironmentCultural EnvironmentValues, Symbols, Beliefs, Language
Challenges for the Challenges for the Global ManagerGlobal Manager
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Challenges for the Global Challenges for the Global ManagerManager
Cultural EnvironmentOften taken for grantedOften taken for granted
Not necessarily a problem, but can be Not necessarily a problem, but can be disastrousdisastrous
LanguageValues, symbols, beliefs
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Challenges for the Global Challenges for the Global ManagerManagerExamples of cultural “bloopers”
GM’s Chevy Nova didn’t sell well in South America GM’s Chevy Nova didn’t sell well in South America because “no va” means “it won’t go” in Spanishbecause “no va” means “it won’t go” in Spanish
In Taiwan, the translation of the Pepsi slogan In Taiwan, the translation of the Pepsi slogan “Come alive with the Pepsi generation” came out as “Come alive with the Pepsi generation” came out as “Pepsi will bring your ancestors back from the “Pepsi will bring your ancestors back from the dead.”dead.”
Gerber changed its baby food packaging in Africa Gerber changed its baby food packaging in Africa after it learned the largely illiterate population was after it learned the largely illiterate population was accustomed to seeing a picture on the label of what accustomed to seeing a picture on the label of what was in the canwas in the can
Coca-Cola had to alter the taste of its soft drink in Coca-Cola had to alter the taste of its soft drink in China when the Chinese described it as “tasting like China when the Chinese described it as “tasting like medicine.” The name “coca-cola” also had to be medicine.” The name “coca-cola” also had to be re-worked because it translated as “bite the wax re-worked because it translated as “bite the wax tadpole”.tadpole”.
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Challenges for the Global Challenges for the Global Manager- Global Manager- Global DistancesDistances
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Hofstede’s Framework for Hofstede’s Framework for Assessing National Assessing National CulturesCultures
Individualism versus Collectivism
Power Distance
Uncertainty Avoidance
Quantity versus Quality of Life
Long-term versus Short-term Orientation
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Examples of Hofstede’s Examples of Hofstede’s Cultural DimensionsCultural Dimensions
© Farhan Mir© Farhan Mir
20200707 IMSIMS
Careers in International Careers in International Management- If you have got Management- If you have got a International Assignmenta International Assignment
Success FactorsCross-cultural Cross-cultural sensitivitysensitivity
Business Business knowledgeknowledge
CourageCourage
Motivates othersMotivates others
Personal integrityPersonal integrity
Diagnostic skills Diagnostic skills
Commitment to Commitment to success success
Takes personal Takes personal and business and business risks risks
Changes with Changes with feedbackfeedback
Enjoys challengeEnjoys challenge
Takes advantage Takes advantage of opportunitiesof opportunities
Open to criticismOpen to criticism
Seeks feedbackSeeks feedback
Maintains Maintains flexibilityflexibility