Chapter 11

Global / International Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

Ch 11 -1
Ch 11 -2
Global/International Issues

“Sad but true, U.S. businesspeople

have the lowest foreign language
proficiency of any major trading nation.
U.S. business schools do not
emphasize foreign languages, and
students traditionally avoid them.”
- Ronald Dulek

Ch 11 -3
Global Issues

 Global considerations impact

virtually all strategic decisions
 A world market has emerged

 It is difficult for a firm to survive

relying solely on domestic markets

Ch 11 -4
Multinational Organizations
 International firms or multinational
corporations face many complex variables:
 Social
 Cultural
 Demographic
 Environmental
 Political
 Governmental
 Legal
 Technological
 Competitive opportunities and threats
Ch 11 -5
Potential Advantages of International
Operations
 Gain new customers
 Absorb excess capacity, reduce unit
costs, and spread economic risks
 Allow firms to establish low-cost
production facilities
 Competition may be less intense

Ch 11 -6
Potential Advantages of International
Operations continued
 Reduced tariffs, lower taxes, and
favorable political treatment
 Joint ventures can enable firms to learn
new technology, culture, and business
practices
 Economies of scale
 Power and prestige in domestic markets
may be significantly enhanced
Ch 11 -7
 Potential Disadvantages of
International Operations
 Foreign operations could be seized
 Different and often little-understood social,
cultural, demographic, environmental, political,
governmental, legal, technological, economic,
and competitive forces
 Weakness of competitors overestimated
 Different language, culture, and value systems
 Understanding of regional organizations needed
 Dealing with two or money systems
Ch 11 -8
The Global Challenge

 Howto gain and maintain

exports to other nations

 Howto defend domestic

markets against imported goods

Ch 11 -9
Changes in the Global Economy

 Corporations are obtaining customers

globally
 Markets are shifting rapidly and
converging in tastes, trends, and prices
 Innovative transport systems are
accelerating transfer of technology
 Nature and location of production
systems are shifting
Ch 11 -10
Protectionism

 Countries imposing tariffs, taxes,

and regulations on firms outside the
country to favor their own
companies and people

Ch 11 -11
Reasons for Global Expansion

 Advancements in
telecommunications
 Growth in demand for goods and

services outside the U.S. is

considerably higher than inside
 95% of the world's population lives

outside the U.S.

Ch 11 -12
Globalization

 Globalization:
 The process of doing business worldwide
 Global strategy includes
considering global needs during
 Design
 Production
 Marketing
Ch 11 -13
A Weak Economy

 Recession
 Two consecutive quarters of a decline in
real gross domestic product
 Many countries have recently
experienced a recession
 Unemployment rates are high across
the U.S. and around the world

Ch 11 -14
Cultural Differences
 Time
 Space
 Family roles
 Religious factors
 Family time
 Values
 Eating
 Rules of etiquette
 Importance of relationships
Ch 11 -15
 European Business Cultures

 Participatory management
 Most workers are unionized
 More frequent vacations and holidays
 Guaranteed permanent employment
common
 Workers often resent pay for performance,
commissions, and objective measurement
and reward systems
Ch 11 -16
Asian Business Cultures

 First names are not generally used in

business
 Extended periods of silence are
important
 A sale is the beginning, not the end of a
relationship
 Resting, listening, meditating, and
thinking are considered productive
Ch 11 -17
 Mexican Business Culture

 Low tolerance for adversarial relations or friction

at work
 Employers are paternalistic
 Workers do not expect self-expression or
initiative at work
 Businesses stress collectivism, continuity,
cooperation, belongingness, formality, and doing
exactly what you are told
 Rarely entertain business associates at homes
Ch 11 -18
Mexican Business Culture continued

 Preserving one’s honor, saving face, and

looking important are valued
 Opinions expressed by employees are often
regarded as back talk
 Supervisors are viewed as weak if they
explain the rationale for their orders to
workers
 Mexicans often do not follow rules
 Life is slower in Mexico, tardiness is common
Ch 11 -19
Japanese Business Culture

 Importance of group loyalty and consensus

called “Wa”
 Constant discussion and compromise
 Silence is a plus in formal meetings
 When confronted with disturbing questions,
managers often remain silent
 Managers are reserved, quiet, distant,
introspective, and other oriented

Ch 11 -20
Communication Differences Across
Cultures
 Italians, Germans, and French do not soften
up executives with praise before a criticism
 Israelis are accustomed to fast paced
meetings
 British executives complain that Americans
chatter too much
 Europeans feel that they are being treated
like children when asked to wear nametags

Ch 11 -21
Communication Differences Across
Cultures continued
 Executives in India are used to
interrupting each other
 In Malaysia and Japan periods of silence
are appropriate, no silence is needed in
Israel
 “How was your weekend?” is considered
intrusive by many business people

Ch 11 -22
Worldwide Tax Rates

 US and Japan 38%

 Asia-Pacific Region 30%
 Germany 30%
 Great Britain 28%
 France 27%
 Europe 26%
 Ireland near 0%
 Former Soviet-Bloc nations near 0%
Ch 11 -23
India

 Debt is 80% of GDP

 Gap between rich and poor

widening
 Middle class is growing

Ch 11 -24
Joint Ventures in India

 Joint ventures are mandatory for

foreign companies doing business
in India
 Foreign firms restricted to 74%

ownership of India-based firms

 Most joint ventures in India fail

Ch 11 -25