6️⃣
International Management
Finished
1. Managing in the International Marketplace
2.Going International
2.1 Offshoring & Regional trade blocs
2.2.Foreign Entry Modes
3.Working with people & cultures internationally
3.1 The Skills of the Global Manager
1. Managing in the International Marketplace
Globalization (1945-2008)
= Interdependence & integration among people (clients, employees,…), organizations (firms,govs,…) &
economies around the world
⇒ Production and sales can be disconnected geographically & firms may face foreign competition in their home market
Indicators & features of globalization
A country’s trade-to-GDP-ratio
Foreign Direct Investment (FDI)
→ ownership and control of assets abroad through new operation or acquisition or merger with existing operations
Shifts in economic power and trade relationships
→ Rise of BRICS ( Brazil, Russia, India, China, South Africa)
Governance
e.g. WTO
World Trade Organization (WTO)
⇒ An organization established in 1995 in Marrakesh containing 164 member states, they establish trading rules of G&S and
Intellectual property using a system of dispute settlement
⇒ This Org. evolved from the GATT ( General Agreement on Tariffs & Trade) who established rules on trading goods to prevent tariff
wars
The 3 basic principles of WTO
1. Elimination of tariffs & non-tariff trad ebarriers
International Management 1
, 2. trade without discrimination
3. Reciprocity as a basis for negotiation
→ Member states must extend same advantage to each other)
Slowbalization ( since 2008-2010 crisis)
⇒ a.k.a. Globalization in retreat
Trends
Anti-global trade movements local production & consumption
political nationalism downfall of WTO
→ time for a rethink
Causes of Slowbalization
Rise in trade barriers which led to disruption of supply chains which led to retaliation which led to more trade barriers
The need for self-sufficiency
→ COVID, inshoring of supply chains to reduce dependence
→ geopolitics, need for reduced economic interdependence & dependence
2.Going International
2.1 Offshoring & Regional trade blocs
Offshoring
= Operations initially done domestically are now carried out abroad
Motives to do offshoring
Cost reduction of labour, raw mats & other inputs Closer to Customer
→ new markets which means greater outlet
improved supply chain management
Circumventing trade barriers
risk management
→ import tariffs & quotas
Downsides for company
Costs of training & traveling Language or cultural barriers
→ resistance from clients who want to buy ‘local’
Quality issues
labour costs in lower wage countries could increase
Vulnerability of supply chain
Loss of control, coordination problems
Broad-based unfavourable effects
Decrease in employment in home country because of political pressure in home country
Industry’s employees compete against lower wages
→ wage stagnation in home country
‘International isn’t necessarily ‘sustainable’
Company needs to stay active in home market in case of
Skilled labour in home country Political pressure in home country
local demand Cost saving from offshoring help sustain profitability of
home country activity
Network fixed in home country
⇒ Inshoring is the opposite of offshoring and is the action of bringing back activity to home country
Regional Trade Blocs
⇒ Key aims of these blocs are eliminating tariffs on imported goods and also aiming growth, cooperation, trade, investment
International Management 2
International Management
Finished
1. Managing in the International Marketplace
2.Going International
2.1 Offshoring & Regional trade blocs
2.2.Foreign Entry Modes
3.Working with people & cultures internationally
3.1 The Skills of the Global Manager
1. Managing in the International Marketplace
Globalization (1945-2008)
= Interdependence & integration among people (clients, employees,…), organizations (firms,govs,…) &
economies around the world
⇒ Production and sales can be disconnected geographically & firms may face foreign competition in their home market
Indicators & features of globalization
A country’s trade-to-GDP-ratio
Foreign Direct Investment (FDI)
→ ownership and control of assets abroad through new operation or acquisition or merger with existing operations
Shifts in economic power and trade relationships
→ Rise of BRICS ( Brazil, Russia, India, China, South Africa)
Governance
e.g. WTO
World Trade Organization (WTO)
⇒ An organization established in 1995 in Marrakesh containing 164 member states, they establish trading rules of G&S and
Intellectual property using a system of dispute settlement
⇒ This Org. evolved from the GATT ( General Agreement on Tariffs & Trade) who established rules on trading goods to prevent tariff
wars
The 3 basic principles of WTO
1. Elimination of tariffs & non-tariff trad ebarriers
International Management 1
, 2. trade without discrimination
3. Reciprocity as a basis for negotiation
→ Member states must extend same advantage to each other)
Slowbalization ( since 2008-2010 crisis)
⇒ a.k.a. Globalization in retreat
Trends
Anti-global trade movements local production & consumption
political nationalism downfall of WTO
→ time for a rethink
Causes of Slowbalization
Rise in trade barriers which led to disruption of supply chains which led to retaliation which led to more trade barriers
The need for self-sufficiency
→ COVID, inshoring of supply chains to reduce dependence
→ geopolitics, need for reduced economic interdependence & dependence
2.Going International
2.1 Offshoring & Regional trade blocs
Offshoring
= Operations initially done domestically are now carried out abroad
Motives to do offshoring
Cost reduction of labour, raw mats & other inputs Closer to Customer
→ new markets which means greater outlet
improved supply chain management
Circumventing trade barriers
risk management
→ import tariffs & quotas
Downsides for company
Costs of training & traveling Language or cultural barriers
→ resistance from clients who want to buy ‘local’
Quality issues
labour costs in lower wage countries could increase
Vulnerability of supply chain
Loss of control, coordination problems
Broad-based unfavourable effects
Decrease in employment in home country because of political pressure in home country
Industry’s employees compete against lower wages
→ wage stagnation in home country
‘International isn’t necessarily ‘sustainable’
Company needs to stay active in home market in case of
Skilled labour in home country Political pressure in home country
local demand Cost saving from offshoring help sustain profitability of
home country activity
Network fixed in home country
⇒ Inshoring is the opposite of offshoring and is the action of bringing back activity to home country
Regional Trade Blocs
⇒ Key aims of these blocs are eliminating tariffs on imported goods and also aiming growth, cooperation, trade, investment
International Management 2
