MANAGEMENT 1.1
CHAPTER 5
TAKEAWAY 1: Management & Globalization
Global economy – resources, markets and competition are worldwide in scope.
Globalization – the growing interdependence among elements of the global
economy.
World 3.0 – a world where nations balance cooperation in the global economy with
national identities and interests.
Global Management – involves managing business and organizations with
interests in more than one country.
Global managers culturally aware and informed on international affairs.
International businesses conducting for-profit transactions of goods and services
across national boundaries
Reasons why businesses go global:
Profits Customers Suppliers Capital Labor Risk
How Companies Go Global
the process of purchasing materials or services around
Global sourcing the world for local use
Exporting selling locally made products in foreign markets
buying foreign-made products and selling them
Importing domestically
one firm pays fee for rights to make or sell another
Licensing agreement company’s products
a fee is paid for rights to use another firm’s name and
Franchising operating methods
, MANAGEMENT 1.1
CHAPTER 5
Common forms of global business—from market entry to direct investment strategies
Insourcing – job creation through foreign direct investment.
Types of insourcing:
1. Joint venture – operates in a foreign country through co-ownership by foreign
and local partners.
2. Strategic alliances – partnership in which foreign and domestic firms share
resources and knowledge for mutual gains.
3. Foreign subsidiary – a local operation completely owned by a foreign firm.
a. Greenfield subsidiary – a foreign subsidiary built from the ground up
by the foreign owner.
Global Business Environments
Legal and political systems
– Differing laws and practices regarding
• Business ownership
Legal and political systems
• Foreign currency exchange Global business environments
Trade agreements and trade barriers
• Protection of intellectual property rights Regional economic alliances
– Counterfeit merchandise
– Political risk
• Potential loss in value of a foreign investment due to instability and
political changes in the host country.
– Political risk analysis
• Forecast political disruptions that threaten the value of a foreign
investment.
CHAPTER 5
TAKEAWAY 1: Management & Globalization
Global economy – resources, markets and competition are worldwide in scope.
Globalization – the growing interdependence among elements of the global
economy.
World 3.0 – a world where nations balance cooperation in the global economy with
national identities and interests.
Global Management – involves managing business and organizations with
interests in more than one country.
Global managers culturally aware and informed on international affairs.
International businesses conducting for-profit transactions of goods and services
across national boundaries
Reasons why businesses go global:
Profits Customers Suppliers Capital Labor Risk
How Companies Go Global
the process of purchasing materials or services around
Global sourcing the world for local use
Exporting selling locally made products in foreign markets
buying foreign-made products and selling them
Importing domestically
one firm pays fee for rights to make or sell another
Licensing agreement company’s products
a fee is paid for rights to use another firm’s name and
Franchising operating methods
, MANAGEMENT 1.1
CHAPTER 5
Common forms of global business—from market entry to direct investment strategies
Insourcing – job creation through foreign direct investment.
Types of insourcing:
1. Joint venture – operates in a foreign country through co-ownership by foreign
and local partners.
2. Strategic alliances – partnership in which foreign and domestic firms share
resources and knowledge for mutual gains.
3. Foreign subsidiary – a local operation completely owned by a foreign firm.
a. Greenfield subsidiary – a foreign subsidiary built from the ground up
by the foreign owner.
Global Business Environments
Legal and political systems
– Differing laws and practices regarding
• Business ownership
Legal and political systems
• Foreign currency exchange Global business environments
Trade agreements and trade barriers
• Protection of intellectual property rights Regional economic alliances
– Counterfeit merchandise
– Political risk
• Potential loss in value of a foreign investment due to instability and
political changes in the host country.
– Political risk analysis
• Forecast political disruptions that threaten the value of a foreign
investment.
