Multinationals and the Global Environment of Business © 2007 The McGraw-Hill Companies, Inc., All...
-
Upload
gloria-powell -
Category
Documents
-
view
216 -
download
0
Transcript of Multinationals and the Global Environment of Business © 2007 The McGraw-Hill Companies, Inc., All...
Multinationals and the Global Environment of
Business
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
McGraw-Hill/IrwinIntroduction to Business
Chapter Four
4 - 3
Chapter 4Multinationals and the
Global Environment of Business
1. Describe the role of multinational companies in global production and trade today and the way they affect the countries in which they operate.
2. Discuss how multinationals are affected by the political systems of the countries they operate in and especially by the desire of countries around the world to pursue free trade and reduce or abolish tariff barriers .
3. Describe the nature of the specific forces in the global environment and appreciate why they present so many challenges for multinational companies today.
4. Describe the nature of the general forces in the global environment that affect all companies as they compete in industries or countries around the world.
5. Identify the main challenges facing multinationals in managing global business commerce and business occupations, and choosing a method of global organizing .
4 - 4
Chapter 4Multinationals and the
Global Environment of Business
Multinational companies• Are operating in a global environment and conditions
such as opportunities and threats that affect the multinational company’s profitability
4 - 5
Chapter 4Multinationals and the
Global Environment of Business
• Review SWOT analysis in Chapter 3
• The giant multinationals can dominate business activity in most industries
4 - 6
Chapter 4Multinationals and the
Global Environment of Business
Significance of Multinationals• In business commerce, multinationals control the giant
production and distribution of products that handle the majority of world trade
4 - 7
Chapter 4Multinationals and the
Global Environment of Business
Significance of Multinationals Production is worldwide and tends to countries where
labor costs are low and therefore higher productivity
4 - 8
Chapter 4Multinationals and the
Global Environment of Business
Significance of Multinationals Multinationals have grown so large they can affect the
well being of the countries they do business in as the role of the government may be to control the relationship of this company and the people
4 - 9
Chapter 4Multinationals and the
Global Environment of Business
Significance of Multinationals Company and individual behavior are affected by a
country’s choice of property rights and is a main determinant of its political system
4 - 10
Chapter 4Multinationals and the
Global Environment of Business
Capitalism Capitalism as a business system ( private ownership
of the means of production and distribution -- is most commonly found in representative democracies and may be illustrated as a continuum or a range
4 - 11
Chapter 4Multinationals and the
Global Environment of Business
Capitalism At your left is “strong” capitalism where individuals
are ultimately responsible for their own future success – “strong” property rights
4 - 12
Chapter 4Multinationals and the
Global Environment of Business
Capitalism At you move right capitalism becomes “weaker” as
the government and/or welfare capitalism establishes a social support framework to aid citizens who don’t support themselves
4 - 13
Chapter 4Multinationals and the
Global Environment of Business
Capitalism Capitalism varies as to the amount of a government
social support by country
Canada is a “stronger” capitalist country compared to Sweden
4 - 14
Chapter 4Multinationals and the
Global Environment of Business
Totalitarian government One person, usually a dictator, or party exercises
absolute control over all business and social activity
4 - 15
Chapter 4Multinationals and the
Global Environment of Business
Communism Not only totalitarian but all property is owned by the
state (no property rights.) or government and distribution is totally controlled by the state
4 - 16
Chapter 4Multinationals and the
Global Environment of Business
Communism Controls the creation of wealth as there isn’t any
motivation to produce more product
4 - 17
Chapter 4Multinationals and the
Global Environment of Business
Free trade agreements Established by countries to reduce or eliminate price
barriers to and are designed to increase the flow of products among countries
4 - 18
Chapter 4Multinationals and the
Global Environment of Business
Tariffs Taxes on imported products that raises the price and
may make them uncompetitive with the local product
4 - 19
Chapter 4Multinationals and the
Global Environment of Business
Free Trade Zones The establishment of free trade areas creates an
opportunity for global manufacturing companies as it minimizes the cost and barriers to trade
4 - 20
Chapter 4Multinationals and the
Global Environment of Business
Free Trade Zones Free trade areas increase competition and some
multinationals consider this a threat rather than an opportunity
4 - 21
Chapter 4Multinationals and the
Global Environment of Business
Global Environment You may want to think of the global environment as a
worldwide marketplace and as the set of forces surrounding you that determine the ability to obtain productive resources of land, labor, capital, and enterprise
4 - 22
Chapter 4Multinationals and the
Global Environment of Business
Global Environment Every product goes through three stages: Input Conversion Output In the process of making and selling of goods and
services
4 - 23
Chapter 4Multinationals and the
Global Environment of Business
Forces in the Global Environment The specific forces directly affect the company’s
business model while general forces affect all multinationals
Specific forces are directly related to profitability and are suppliers, distributors, competitors, and customers
4 - 24
Chapter 4Multinationals and the
Global Environment of Business
Forces in the Global Environment Customers and competitors are also specific forces and
both affect the company’s market share or that portion of a product sold in a market by one company
4 - 25
Chapter 4Multinationals and the
Global Environment of Business
Forces in the Global Environment General forces in the global environment affect
multinationals access to resources and determine worldwide demand and include, economic, socio-cultural, demographic, and legal forces
4 - 26
Chapter 4Multinationals and the
Global Environment of Business
Forces in the Global Environment These forces are general because they affect all
multinationals and their suppliers, distributors and customers
4 - 27
Chapter 4Multinationals and the
Global Environment of Business
Global outsourcing of suppliers is not only a very controversial issue as it
is the process by which companies purchase supplies, labor or raw materials throughout the world
4 - 28
Chapter 4Multinationals and the
Global Environment of Business
Global outsourcing An intermediary such as a agent, broker, or
wholesaler is a company that distributes or supplies a product to another company
4 - 29
Chapter 4Multinationals and the
Global Environment of Business
Challenges of global commerce Building a global competitive advantage, Integration
of the Internet into the business models
4 - 30
Chapter 4Multinationals and the
Global Environment of Business
Challenges of global commerce Managing ethically Incorporating the differing cultures into global
planning and organizing
4 - 31
Chapter 4Multinationals and the
Global Environment of Business
Globalization Has led to the development of a diverse supply of IT
workers in both Europe and Asia as these workers are linked through the Internet as a part of the global workforce