Chapter 7.

Global / International Business and

Management

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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

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Multinational Organizations
 International firms or multinational
corporations face many complex variables:
 Social
 Cultural
 Demographic
 Environmental
 Political
 Governmental
 Legal
 Technological
 Competitive opportunities and threats
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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

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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
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 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
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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.

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Globalization

 Globalization:
 The process of doing business worldwide
 Global strategy includes
considering global needs during
 Design
 Production
 Marketing
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Cultural Differences
 Time
 Space
 Family roles
 Religious factors
 Family time
 Values
 Eating
 Rules of etiquette
 Importance of relationships
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 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
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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
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 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
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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
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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

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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

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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

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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%
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