Chapter Multinational Multinational Management Management in in aa Changing Changing World World © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• •• •• •• •• Define Define multinational multinational management management Understand Understand the the characteristics characteristics ofof aa multinational multinational company company Understand Understand the the nature nature ofof the the global global economy economy and and the the key key forces forces that that drive drive globalization globalization Know Know the the basic basic classification classification ofof the the world’s world’s economies economies Identify Identify the the characteristics characteristics ofof the the next next generation generation ofof multinational multinational managers managers © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Multinational Management •• Formulation Formulation ofof strategies strategies and and management management systems systems toto take take advantage advantage ofof international international opportunities opportunities and and respond respond toto international international threats threats © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Nature of The Multinational Company •• Any Any company company that that engages engages inin business business functions functions beyond beyond its its domestic domestic borders borders •• Includes Includes both both large large and and small small companies companies © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 1.1 – The Largest Companies in the World © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 1.2 – Locations of Global 500 Companies © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Globalizing Economy •• Globalization: Globalization: the the worldwide worldwide trend trend ofof the the economies economies ofof the the world world becoming becoming borderless borderless and and interlinked interlinked © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Negatives of Globalization •• Not Not all all economies economies ofof the the world world are are benefiting benefiting equally equally or or participating participating equally equally inin the the process process •• Terrorism, Terrorism, wars, wars, and and aa worldwide worldwide economic economic stagnation stagnation have have limited limited or or reversed reversed some some aspects aspects ofof globalization globalization •• Producing Producing negative negative effects effects such such as as scarcity scarcity ofof natural natural resources, resources, environmental environmental pollution, pollution, negative negative social social impacts, impacts, and and increased increased interdependence interdependence ofof the the world’s world’s economies economies •• Widening Widening the the gap gap between between rich rich and and poor poor countries countries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Benefits of Globalization •• Resulting Resulting inin lower lower prices prices inin many many countries countries as as multinationals multinationals are are becoming becoming more more efficient efficient •• Benefiting Benefiting many many emerging emerging markets markets such such as as India India and and China China as as these these countries countries enjoy enjoy greater greater availability availability ofof jobs jobs and and better better access access toto technology technology •• Major Major reason reason why why many many new new companies companies from from Mexico, Mexico, Brazil, Brazil, China, China, India, India, and and South South Korea Korea are are the the new new dominant dominant global global competitors competitors © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Globalizing Economy: Key Trends •• •• •• •• •• •• •• Disintegrating Disintegrating borders borders Growing Growing cross-border cross-border trade trade and and investment investment The The rise rise ofof global global products products and and global global customers customers The The internet internet and and information information technology technology Privatizations Privatizations New New competitors competitors inin the the world world market market The The rise rise ofof global global standards standards ofof quality quality and and production production © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Internet and Information Technology •• Electronic Electronic Communication Communication E-mail, E-mail, World World Wide Wide Web, Web, etc etc •• Allows Allows multinationals multinationals toto communicate communicate with with company company locations locations throughout throughout the the world world •• Allows Allows multinationals multinationals toto monitor monitor worldwide worldwide operations operations •• Expands Expands global global reach reach ofof organizations organizations •• Information Information technology technology isis spurring spurring aa borderless borderless financial financial market market © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Internet and Information Technology •• Information Information technologies technologies make make available available many many new new tools tools that that facilitate facilitate business business operations operations •• E.g., E.g., Voice-Over-Internet Voice-Over-Internet Protocol Protocol (VOIP) (VOIP) such such as as Skype, Skype, MSN MSN Messenger Messenger and andAOL, AOL, WIKIs, WIKIs, Google Google © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Rise of Global Products and Global Customers •• The The needs needs ofof customers customers for for many many products products and and services services are are growing growing more more similar similar •• E.g., E.g., McDonald’s, McDonald’s, Boeing, Boeing,Toyota Toyota •• Global Global customers customers search search the the world world for for their their supplies supplies without without regard regard for for national national boundaries boundaries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part New Competitors •• Free Free market market reforms reforms are are creating creating aa potential potential group group ofof new new competitors competitors •• These These companies companies have have survived survived brutal brutal competition competition inin local local markets markets •• Able Able toto deal deal with with domestic domestic rivalry rivalry and and competition competition from from western western MNC MNC •• Develop Develop strategies strategies toto compete compete with with very very low low prices prices © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part New Competitors are Emerging •• Global Global trade trade has has two two important important effects effects inin developing developing new new competitors: competitors: •• When When developing developing countries countries are are used used as as low-wage low-wage platforms platforms for for high-tech high-tech assembly, assembly, multinationals multinationals facilitate facilitate the the transfer transfer ofof technology technology.Assemblers Assemblers may may become become builders builders and and creators creators ofof technology technology •• Aggressive Aggressive multinationals multinationals from from emerging emerging markets markets are are also also expanding expanding beyond beyond their their own own borders borders © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Rise of Global Standards •• Companies Companies can can make make one one or or only only aa few few versions versions ofof aa product product for for the the world world market market •• This This isis cheaper cheaper than than making making different different versions versions for for different different countries countries •• Drive Drive toto develop develop common common standards standards toto save save money money © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Global Standards •• Consistency Consistency inin quality quality also also an an important important requirement requirement ofof doing doing business business inin many many countries countries •• International International organization organization for for standardization standardization (ISO) (ISO) inin Geneva, Geneva, Switzerland Switzerland •• Developed Developed aa set set ofof technical technical standards standards (ISO (ISO 9001:2000 9001:2000 series) series) © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Corporate Social Responsibility and Business Ethics •• Increased Increased pressure pressure on on MNCs MNCs toto be be responsible responsible •• Increased Increased scrutiny scrutiny ofof MNCs’ MNCs’actions actions and and impact impact © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Corporate Social Responsibility and Business Ethics •• Some Some MNCs MNCs are are becoming becoming more more proactive proactive inin responding responding toto social social and and ethical ethical issues issues that that arise arise from from their their overseas overseas operations operations •• Some Some issues issues are: are: •• Climate Climate change change •• Environmental Environmental degradation degradation and and pollution pollution •• Sweatshop Sweatshop conditions conditions for for labor labor Bribery Bribery â 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 1.8: Ranking the World’s Most Ethical Companies © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Next Generation of Multinational Managers: Characteristics •• Global Global mindset mindset •• Emotional Emotional intelligence intelligence Long-range Long-range perspective perspective â 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Next Generation of Multinational Managers: Characteristics •• Talent Talent toto motivate motivate all all employees employees toto achieve achieve excellence excellence •• Accomplished Accomplished negotiation negotiation skills skills •• Willingness Willingness toto seek seek overseas overseas assignments assignments •• Understanding Understanding ofof national national cultures cultures © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Multinational Management: A Strategic Approach •• Considers Considers how how managers managers formulate formulate and and implement implement strategies strategies toto compete compete successfully successfully inin the the global global economy economy •• Strategies Strategies are are the the maneuvers maneuvers or or activities activities used used toto increase increase and and sustain sustain organizational organizational performance performance •• Multinational Multinational strategies strategies must must include include maneuvers maneuvers that that deal deal with with operating operating inin more more than than one one country country and and culture culture •• Helps Helps position position yourself yourself inin evolving evolving global global economy economy © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Trends Shaping Future Business Environment •• •• •• •• •• Blurring Blurring ofof industry industry boundaries boundaries Flexibility Flexibility matters matters more more than than size size Focusing Focusing on on niche niche Hyper-competition Hyper-competition Emphasis Emphasis on on innovation innovation and and the the learning learning organization organization © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Conclusion •• Chapter Chapter provides provides key key background background information information toto support support study study ofof multinational multinational management management •• Must Must be be prepared prepared toto compete compete with with firms firms from from any any country country •• Must Must be be prepared prepared toto collaborate collaborate and and align align with with firms firms from from any any country country •• Develop Develop organizational organizational strategies strategies and and skills skills toto compete compete inin different different nations nations inin aa global global economy economy © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part ... accessible website, in whole or in part Multinational Management •• Formulation Formulation ofof strategies strategies and and management management systems systems toto take take advantage advantage...Learning Objectives •• •• •• •• •• Define Define multinational multinational management management Understand Understand the the characteristics characteristics ofof aa multinational... Trends •• •• •• •• •• •• •• Disintegrating Disintegrating borders borders Growing Growing cross- border cross- border trade trade and and investment investment The The rise rise ofof global global