CHAPTER 1

MULTINATIONAL MANAGEMENT IN A CHANGING WORLD

MULTINATIONAL MANAGEMENT
• The formulation of strategies

and the design of management systems to take advantage of international opportunities and respond to international threats

THE MULTINATIONAL COMPANY
• Any company that engages in

business functions beyond its domestic borders

• Includes both large and small companies

1 (in Text) Lists The Top Multinational Corporations Ranked By Sales Revenue.Exhibit 1. .

WHY IS MULTINATIONAL MANAGEMENT IMPORTANT? • Businesses increasingly look to other countries • to seek global opportunities • to keep an eye on global competition .

GLOBALIZATION • The worldwide trend of businesses expanding beyond their domestic boundaries .

Growing cross-border trade and investment • 3. Disintegrating borders • 2.SEVEN KEY FORCES ARE GLOBALIZING THE WORLD ECONOMY • 1. The rise of global products and global customers • 4. Privatizations .

The Internet and information technology . New competitors in the world market • 6. The rise of global standards of quality and production • 7.• 5.

New Competiors Rise of Global Standards Disintegrating Borders The Internet & Information Technology THE GLOBAL ECONOMY Privatization Global Products/ Customers Growing Trade and Investment .

THE GLOBAL ECONOMY 1. Falling Borders .

more than double the number existing in 1992 . the number of regional trade agreements reached 139.BORDERS ARE FALLING • Free trade areas and the world trade organization • By 2000.

NAFTA.TRADE AGREEMENTS • Reduce tariffs and restrictions • The three largest groups --EU. and APEC • World Trade Organization .

Growing Trade and Investment .THE GLOBAL ECONOMY 2.

S. and Japan -.. the U. LOCATE ANYWHERE • World trade growth: average of 6.5% per year 1990 to 2000 • Nearly half of the over $5 trillion in world trade is among the European union.the TRIAD .SELL ANYWHERE.

.Exhibits 1.5 (in text) show the leading countries in terms of import and export size and growth.4 and 1.

FOREIGN DIRECT INVESTMENT (FDI) • A company from one country has an ownership position in an organization from another country .6 for top 30 • FDI in the developed countries approximately $899 billion .See Ex 1.

Exxon: USA • 6. General Electric: USA • 2. Toyota: Japan . Ford: USA • 5.6 TOP FOREIGN ASSET COMPANIES • 1.EXHIBIT 1. Royal Dutch Shell: UK/Netherlands • 4. General Motors: USA • 3.

EXHIBIT 1.9 RISK RATINGS FOR SELECTED COUNTRIES Switzerland Greece Israel Czech Republic Mauritius India Venezuela Congo Afghanistan 0 20 40 60 80 100 120 (100 = Lowest Risk) .

THE GLOBAL ECONOMY 3. Global Products/ Customers .

THE RISE OF GLOBAL PRODUCTS AND GLOBAL CUSTOMERS • The needs of customers growing more similar • Global customers search the world for their supplies without regard for national boundaries .

Privatizations .THE GLOBAL ECONOMY 4.

PRIVATIZATION • Privatization is the sale of government owned businesses to private investors .

continued • The developing countries and transition economies use privatization to become capitalistic economies .Privatization.

BENEFITS FOR MULTINATIONAL COMPANIES • Opportunities for bargain basement investments • An easy way to gain access • often with local government incentives such as several years of tax free operations .

THE GLOBAL ECONOMY 5. New Competitors .

Samsung Electronics: Korea • 4.EXHIBIT 1. Taiwan Semiconductor: Taiwan • 3.10: TOP EMERGING MARKET COMPANIES • 1. China Telecom: Hong Kong • 2. Telefonos de Mexico (Telmex): Mexico .

Rise of Global Standards .THE GLOBAL ECONOMY 6.

GLOBAL OR REGIONAL PRODUCT STANDARDS • Companies can make one or only a few versions of a product for the world market • Cheaper than versions for different countries .

CONSISTENCY AND PREDICTABILITY IN QUALITY • The international organization for standardization (ISO) in Geneva.ISO 9000:2000 . Switzerland .

IT and the Internet .THE GLOBAL ECONOMY 7.

THE INTERNET AND INFORMATION TECHNOLOGY • Allows easy worldwide communication and economic transactions • Small companies have more computer power • Poorer nations can have technology .

THE NEXT GENERATION OF MULTINATIONAL MANAGERS • A global mindset • The ability to work with diverse people • A long range perspective • The ability to manager change and transition .

continued • The ability to create systems for a learning and changing organizations • The talent to motivate all employees to achieve excellence • Accomplished negotiation skills .The next generation of multinational managers.

continued • A willingness to seek and succeed in overseas assignments • An understanding of national cultures .The next generation of multinational managers.

MULTINATIONAL MANAGEMENT: A STRATEGIC APPROACH • The strategic approach to multinational management considers how managers formulate and implement strategies to compete successfully in the global economy .

STRATEGY • The maneuvers or activities that managers use to sustain and increase organizational performance .

MULTINATIONAL STRATEGY FORMULATION • The process of choosing or crafting a strategy • challenge of dealing with opportunities and competitors located anywhere in the world .

MULTINATIONAL STRATEGY IMPLEMENTATION • Includes all the activities necessary to achieve strategic objectives • requires complex management systems to carry out the strategies that reach beyond domestic boundaries .

A FUNDAMENTAL ASSUMPTION OF THE BOOK • “When you understand your competitors and yourself." Sun Tzu. The art of war . you will always win.

CONCLUSIONS • Multinational management and the multinational company • Forces that drive globalization • Key characteristics of successful multinational managers • The strategic approach to multinational management .

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