Chapter 1 Welcome to MGT 480 International Management Tonight: Syllabus & Course Overview Definition...
-
date post
22-Dec-2015 -
Category
Documents
-
view
218 -
download
0
Transcript of Chapter 1 Welcome to MGT 480 International Management Tonight: Syllabus & Course Overview Definition...
Cha
pter 1
Welcome to MGT 480International Management
Tonight:
Syllabus & Course Overview
Definition of International Management
Refresher on Global Business Environment
Globalization & Economic Trends
Political/Regulatory/Technological Environment
Ethics & Corporate Social Responsibility
2
International Management
International management The process of applying management concepts
and techniques in a multinational environment and adapting management practices to different economic, political, and cultural environments
Multinational corporations (MNC) Operations in more than one country International sales, Nationality mix of managers and owners
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
4
Market ValueBillions of U.S. Dollars
SalesBillions of U.S. Dollars
Top Ten Global MNCs
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
1. General Electric
$328.112. Microsoft
284.433. ExxonMobil
283.614. Pfizer
269.665. Wal-Mart Stores
241.196. Citigroup
239.437. BP
193.058. Aig
191.189. Intel
184.6610.Royal Dutch’ Shell
174.83
The Top 10 global MNCs Ranked by Market Value, Sales, Profits, and Share-Price Gain, 2003
1. Wal-Mart Stores
258.682. BP
232.573. ExxonMobil
222.884. Royal Dutch/Shell
201.935. General Motors
183.246. DaimlerChrysler
166.617. Ford Motor
164.208. Toyotal Motor
156.489. Mitsubishi
137.3210.General Electric
134.19
5
Top Ten Global MNCs
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
ProfitsBillions of U.S. Dollars1. ExxonMobil
20.962. Citigroup
17.853. General Electric
15.004. HSBC Holdings
11.655. Royal Dutch/Shell
11.416. Bodafone Group
11.367. Bank of America
10.818. Toyota Motor
10.519. Microsoft
9.9910.BP
9.54
The Top 10 global MNCs Ranked by Market Value, Sales, Profits, and Share-Price Gain, 2003
Share-Price Gain1. Mizuho Financial
636%2. Research in Motion
5503. UFJ Holdings
4204. SK
3835. Rakuten
3816. Sumitomo Mitsui Fin.
3317. Elan
3118. Bharti Tele-Ventures
2769. Yahoo! Japan
24110.Mitsui Trust Hldgs.
229
Data: Morgan Stanley Capital International Standard & Poor’s Compustat
Source: http://images.businessweek.com/mz/0o4/30/0430_62intbg1_a.gif
6
Globalization
Process of integration among countries around the world Social Political Economic Cultural Technological
Benefits of growing global trade and investment Wealth Jobs Technology Lower prices
7
Globalization
Criticisms of globalization Offshoring of business services jobs to lower-wage countries Growing trade deficits Slow wage growth Environmental and social impacts
8
Global and Regional Integration
World Trade Organization (WTO) General Agreement on Tariffs and Trade (GATT)
Regional Agreements North American Free Trade Agreement (NAFTA) U.S.—Central American Free Trade Agreement (CAFTA) Free Trade Agreement of the Americas (FTAA) European Union (EU) Association of Southeast Asian Nations (ASEAN)
9
Trends in InternationalInvestment and Trade
International investments 80 percent from developed countries
Foreign direct investment (FDI) Economic growth potential (esp. China and Asia in general)
Trade growing faster than most domestic economies
Over one-half of world trade is accounted for by United States European Union Japan
10
The World’s Largest Economies 2005 and 2020 (Projected) Measured by The World’s Largest Economies 2005 and 2020 (Projected) Measured by GDP at Market Exchange Rates:GDP at Market Exchange Rates:
11
The World’s Largest Economies 2005 and 2020 (Projected) Measured by The World’s Largest Economies 2005 and 2020 (Projected) Measured by GDP at Purchasing Power Parity (ppp)GDP at Purchasing Power Parity (ppp)
12
Most Populous Countries in 1980, 2000, and Most Populous Countries in 1980, 2000, and 2050 (Projected):2050 (Projected):
13
World Foreign Direct Investment Inflows (in World Foreign Direct Investment Inflows (in millions of dollars):millions of dollars):
14
World Foreign Direct Investment Outflows (in World Foreign Direct Investment Outflows (in millions of dollars): millions of dollars):
15
Trade Flows Among World Regions, 2005 (in billions of dollars or percent)Trade Flows Among World Regions, 2005 (in billions of dollars or percent)
16
Top 10 Trading Partners of Top 10 Trading Partners of the United States, 2003the United States, 2003
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Importing U.S. Exporting U. S. Rank Country Exports Rank Country Imports
1 Canada
169,9242 Mexico
97,4123 Japan
52,0044 United Kingdom
33,8285 Germany
28,8326 China
28,3687 South Korea
24,0738 Netherlands
20,6959 Taiwan
17,44810 France
17,053
(in millions of dollars)
1 Canada
221,5952 China
152,4363 Mexico
138,0604 Japan
118,0375 Germany
68,1136 United Kingdom
42,7957 South Korea
37,2298 Taiwan
31,5999 France
29,21910 Ireland
26,747
Adapted from: Table 1-4: Top 10 Trading partners of the United States, 2003 (in millions of dollars).
18
Market Potential Indicators Ranking for Emerging Markets, Market Potential Indicators Ranking for Emerging Markets, 20072007
19
Economic Performance
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)
Middle East and Central Asia Large oil reserves Highly unstable geopolitical and religious forces Plagued by continuing economic problems
Developing and Emerging Countries
20
Economic Performance
Africa Considerable natural resources African nations remain very poor and undeveloped International trade is not a major source of income Populace divided into 3,000 tribes that speak
1,000 languages and dialects Major political instability Poverty, starvation, illiteracy, corruption,
overcrowding among many social problems negatively affecting economic sector
Developing and Emerging Countries
21
Review and Discuss
1. How has globalization affected different world regions? What are some of the benefits and costs of globalization for different sectors of society?
2. How has NAFTA affected the economies of North America and the EU affected Europe? What importance do these economic pacts have for international managers in North America, Europe and Asia?
3. Why would MNCs be interested in South America, India, the Middle East, Central Asia, and Africa, the less developed and emerging countries of the world?
4. If you were a foreign investor, what asset classes and regions would you seek to invest in today?
23
Political Environment:
Ideologies (ideas reflecting beliefs and values influencing behavior/culture of nations and political systems) underlie the actions of governments.
Evaluate a political system along two dimensions: (1) rights of citizens based on a system of government (range democratic to totalitarian); (2) Focus of political system on individualism vs. collectivism.
No pure form of government (how is the US collectivist?) Democratic tend to emphasize individualism and
totalitarian tends to emphasize collectivism. What challenges are involved in different political
environments?
24
Legal and Regulatory Environment
Confusion and challenge for the MNC due to many different laws and regulations in global business operations
MNCs must carefully evaluate legal framework in each market before doing business
25
Legal and Regulatory Issues
Foreign Corrupt Practices Act (http://www.usdoj.gov/criminal/fraud/docs/dojdocb.html) Illegal to influence foreign officials through
Personal payment Political contributions
When bribes removed, MNCs more willing to do business in that country
Restrictive bureaucratization Government controls often inefficient and uncorrected Local politics often prevail over national concerns Privatization
26
Regulation of Tradeand Investment
Individual countries use legal and regulatory policies to affect the international management environment
If a 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
27
Technological Environment and Global Shifts in Production
Biotechnology Nanotechnology Satellites Automatic translation telephones Artificial intelligence and embedded learning technology Advancements in computer chip technology Supercomputers E-business
Business-to-business (B2B) Business to consumer (B2C) transactions e-tailing Financial services (e-cash)
28
Technological Environment and Global Shifts in Production
Telecommunications Wireless or mobile telephone service
Economic growth hampered by poor communication services Wireless is more affordable than installed phone lines Some governments recognize the need to privatize this service
Technology, outsourcing and offshoring Technology has reduced and eliminated some work in
middle management and white-collar jobs Global competition has forced some MNCs to outsource jobs
to offshore productions (lower labor and other costs) Emerging technology makes work more portable
30
Ethics and Social Responsibility
Ethics: Study of morality and standards of conduct Dilemmas arising from conflicts between ethical standards
between countries most evident in employment practices Inferring right vs. wrong in legal sense
32
Ethics and Social Responsibility
Ethics: Study of morality and standards of conduct Dilemmas arising from conflicts between ethical standards
between countries most evident in employment practices Inferring right vs. wrong in legal sense
33
Ethics and Social Responsibility
Corporate Social Responsibility (CSR):Closely related to ethicsActions of a firm to benefit society beyond
requirements of law and direct interests of firm
CSR involves taking voluntary actionCSR concerns include working conditions in
factories and service centers as well as environmental impacts of corporate activities
34
Ethics and Social Responsibility
Employment and business practices Difficult to establish a universal foundation of employment
practices Difficult dilemmas in deciding working conditions, expected
consecutive work hours, and labor regulations. Offshoring due to differences in labor costs
35
Ethics and Social Responsibility
Human Rights Currently no universally adopted standard A great deal of subjectivity and culturally biased viewpoints
exist Some basic rights: life, freedom from slavery or torture,
freedom of opinion and expression, general ambiance of nondiscriminatory practices
Human rights violations still rampant globally
36
Ethics and Social Responsibility
Corruption Government corruption pervasive element in international
business environment Scandals in Russia, China, Pakistan, Lesotho, South Africa,
Costa Rica, Egypt and elsewhere
38
Ethics and Social Responsibility Around the World
Ethical issues Workers not well paid (often work 12 hours a
day, 7 days a week) Piracy of intellectual property, counterfeiting,
and industrial spying Human rights violations
Use of prisoner and child labor
Ethical Problems and Concerns
China
39
Ethics and Social Responsibility Around the World
Political campaign contributions & lobbyists Fraud in mortgage sector
Attitude of caveat emptor Rising wage inequality
middle class wages stagnant for a decade Lack of health benefits for workers
Loss of promised retirement benefits
Ethical Problems and Concerns
United States
40
Corporate Social Responsibility (CSR) and Sustainability
CSR: Action of a firm to benefit society beyond the requirements of the law and direct interests of the firm
Sustainability: Development that meets humanity’s needs without harming future generations
Why are MNCs getting involved in corporate social responsibility? Are they displaying a sense of social responsibility, or is this merely a matter of good business? Defend your answer.
41
Rise of Civil Society and NGOs
Emergence of organized civil society and NGOs altered Business environment globally Role of MNC within global business environment
NGOs in the U.S. and globally Save the Children Oxfam CARE World Wildlife Fund Conservation International
42
Rise of Civil Society and NGOs
Corporations receiving heavy criticism Nike Levi’s Chiquita
Major criticisms Exploitation of low-wage workers Environmental abuses Intolerable workplace standards
Response to social obligations Agreements and codes of conduct Maintenance of standards in domestic and global operations Cooperation with NGOs regarding certain social issues
43
Trust in Leaders
0 10 20 30 40 50 60
Average Across All 15 Countries Surveyed
NGO leaders
Leaders at the U.N.
Spiritual/religious leaders
Leaders of Western Europe
Managers of the global economy
Managers of the national economy
Executives of MNCs
Leaders of the U.S.A.
52
42
41
36
36
35
33
27
Adapted from Figure 3-1: Trust in Leaders: Percentage Saying “A Lot” and “Some Trust”