Management Chapter 5 International Management
Management and Globalization
In a global economy resources, markets and competition are found on a
worldwide scope.
Globalization is the growing interdependence amoung element of the
global economy.
Global management
Managing businesses and organizations with interests in more than one
country
Global managers – are culturally aware and are informed on
international affairs
Why companies go global
International business – for profit transactions of goods and
services conducted across national boundaries
Reasons to conduct international business include; profits, labor,
customers, suppliers, capital and risk
How companies go global
When a business is just getting started internationally global sourcing,
import/export and licensing and franchising are the usual ways to begin
Market entry strategies - involve the sale of goods or services to foreign
markets but do not require expensive investments
Types of market entry strategies:
Global sourcing - the process of purchasing materials or services around
the world for local use
Exporting - selling locally made products in foreign markets
Importing - buying foreign-made products and selling them domestically
Licensing agreement - one firm pays fee for rights to make or sell another
company’s products
Franchising - a fee is paid for rights to use another firm’s name and
operating methods
Types of direct investment strategies:
Joint venture - operates in a foreign country through co-ownership by
foreign and local partners
Strategic alliance - a partnership in which foreign and domestic firms
share resources and knowledge for mutual gains
Foreign subsidiary - local operation completely owned by a foreign firm
Global business environments
Legal and political systems
Differences in legal and political systems regarding business ownership,
foreign currency exchange, protection of intellectual property rights
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
Management and Globalization
In a global economy resources, markets and competition are found on a
worldwide scope.
Globalization is the growing interdependence amoung element of the
global economy.
Global management
Managing businesses and organizations with interests in more than one
country
Global managers – are culturally aware and are informed on
international affairs
Why companies go global
International business – for profit transactions of goods and
services conducted across national boundaries
Reasons to conduct international business include; profits, labor,
customers, suppliers, capital and risk
How companies go global
When a business is just getting started internationally global sourcing,
import/export and licensing and franchising are the usual ways to begin
Market entry strategies - involve the sale of goods or services to foreign
markets but do not require expensive investments
Types of market entry strategies:
Global sourcing - the process of purchasing materials or services around
the world for local use
Exporting - selling locally made products in foreign markets
Importing - buying foreign-made products and selling them domestically
Licensing agreement - one firm pays fee for rights to make or sell another
company’s products
Franchising - a fee is paid for rights to use another firm’s name and
operating methods
Types of direct investment strategies:
Joint venture - operates in a foreign country through co-ownership by
foreign and local partners
Strategic alliance - a partnership in which foreign and domestic firms
share resources and knowledge for mutual gains
Foreign subsidiary - local operation completely owned by a foreign firm
Global business environments
Legal and political systems
Differences in legal and political systems regarding business ownership,
foreign currency exchange, protection of intellectual property rights
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
