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Assessing The Environment - Political, Economic, Legal, Technological
Assessing The Environment - Political, Economic, Legal, Technological
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NAFTA CAFTA
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The TRIAD
Three regional free-trade blocs
Western Europe, Asia, and North America
In 2004, these trade blocs were expanding their boarders to include neighboring countries
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Foreign investors have invested $5 billion into the Indian stock market
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Information Technology
Information Technology is transforming the international managers agenda more than any other item Information is no longer centrally or secretly controlled by governments Information technology is boosting productivity and electronic commerce around the world
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Economic Risk
A countrys level of economic development generally determines its economic stability Economic risk falls into 2 categories
Government changes its fiscal policies Government modifies its foreign-investment policies
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Global E-Business
E-business the integration of systems, processes, organizations, value chains and entire markets using Internet-based and related technologies and concepts. E-commerce - refers directly to the marketing and sales process via the Internet
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Global E-Business
Convenience in conducting business worldwide; facilitating communication across borders contributes to the shift toward globalization and a global market. An electronic meeting and trading place, which adds efficiency in conducting business sales. A corporate Intranet service, merging internal and external information for enterprises worldwide. Power to consumers as they gain access to limitless options and price differentials. A link and efficiency in distribution.
2006 Prentice Hall 1-22
Looking Ahead
Chapter 2 Social Responsibility and Ethics
The Social Responsibility of MNCs Ethics in Global Management Managing Interdependence
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Global Management
The process of developing strategies, designing and operating systems, and working with people around the world to ensure sustained competitive advantage
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2006 Prentice Hall 1-24
European Union
Comprised of 25 nations 400 million people Elimination of tariffs has not eliminated national pride Global Managers face two major tasks
Strategic how to deal with the EU as an non-European company Cultural How to deal with multiple sets of national cultures, traditions and customs
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2006 Prentice Hall 1-25
Asia
Japan and the Four Tigers - Singapore, Hong Kong, Taiwan, and South Korea,
Each has an abundance of natural resources and labor
China
A new east Asian economy is emerging, focused on greatly increased trade within the region and based on China rather than Japan.
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2006 Prentice Hall 1-26
North America
The goal of NAFTA was to bring the US, Canada, and Mexico together to create more jobs, better working conditions and a cleaner environment 421 Million Consumers Has been very beneficial to Mexico
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2006 Prentice Hall 1-27
Adaptation
Equity sharing includes the initiation of joint ventures with nationals (individuals or those in firms, labor unions, or government) to reduce political risks. Participative management requires that the firm actively involve nationals, including those in labor organizations or government, in the management of the subsidiary. Localization of the operation includes the modification of the subsidiarys name, management style, and so forth, to suit local tastes. Localization seeks to transform the subsidiary from a foreign firm to a national firm. Development assistance includes the firms active involvement in infrastructure development (foreignexchange generation, local sourcing of materials or parts, management training, technology transfer, securing external debt, and so forth)
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2006 Prentice Hall 1-28
Dependency
Input control means that the firm maintains control over key inputs, such as raw materials, components, technology, and know-how. Market control requires that the firm keep control of the means of distribution Position control involves keeping certain key subsidiary management positions in the hands of expatriate or home-office managers. Staged contribution strategies mean that the firm plans to increase, in each successive year, the subsidiarys contributions to the host nation
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2006 Prentice Hall 1-29
Hedging
Political risk insurance is offered by most industrialized countries. Insurance minimizes losses arising from specific riskssuch as the inability to repatriate profits, expropriation, nationalization, or confiscation and from damage as a result of war, terrorism, and so forth.
The Foreign Credit Insurance Association (FCIA) also covers political risks caused by war, revolution, currency inconvertibility, and the cancellation of import or export licenses.
Local debt financing (money borrowed in the host country), where available, helps a firm hedge against being forced out of operation without adequate compensation. In such instances, the firm withholds debt repayment in lieu of sufficient compensation for its business losses.
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2006 Prentice Hall 1-30