After reading this chapter, you should be able to answer the following questions: Discuss ways that globalization affects international business, understand what global corporations are and how they work.
Exploring Management Chapter 17 Globalization and International Business Chapter 17 • • How does globalization affect international business? What are global corporations and how they work? 17.1 Globalization • • • • • Globalization involves the growing interdependence of the world’s economies Globalization creates a variety of international business opportunities International business is done by global sourcing, import/export, licensing and franchising Internal business is done by joint ventures and wholly owned subsidiaries International business is complicated by GLOBALIZATION World Economies • Global economy – • Resources, markets and competition are worldwide in scope Globalization – Process of growing interdependence of global economies GLOBALIZATION World Economies • Insourcing – • Domestic jobs are created by foreign employers Outsourcing – Jobs are shifted to foreign locations to take advantage of lower wages, infrastructure, educated workforce or government support GLOBALIZATION International Opportunities • International Business – • Conducts transaction across international boundaries Reasons to “go international” GLOBALIZATION International Opportunities GLOBALIZATION International Opportunities GLOBALIZATION Legal and Political Issues • International business is complicated by different legal and political systems – Health and safety – Equal employment – Sexual harassment – Incorporation and ownership – Foreign currency exchange – Intellectual property GLOBALIZATION Legal and Political Issues • Tariffs – • Taxes placed on imports Protectionism – Tariffs, subsidies and other tactics that give advantages to domestic producers GLOBALIZATION Legal and Political Issues • World Trade Organization – Global institution to promote free trade and open markets around the world – Membership of around 153 countries – Most Favored Nation status – www.wto.org 17.2 Global Corporations • • • Global corporations or MNCs substantial business in many countries The actions of global corporations can be controversial at home and abroad Managers of global corporations face a variety of ethical challenges 17.2 CONTINUED Global Corporations • • • Planning and controlling are complicated in global corporations Organizing can be difficult in global corporations Leading is challenging in global corporations GLOBAL CORPORATIONS Global Corporations • Global corporations and also known as Multinational corporations (MNC) – • Extensive foreign operations in more than one country Transnational corporations – Operate without one national home GLOBAL CORPORATIONS Issues GLOBAL CORPORATIONS Ethical Challenges • Corruption – • Illegal practices Foreign Corrupt Practices Act – U.S legal standards apply to companies when operating in foreign countries – Prevents • Bribes, gifts to foreign officials in return for business favors GLOBAL CORPORATIONS Ethical Challenges • Sweatshops – • Employees work long hours in poor or unsafe conditions Child labor – Full-time employment of children GLOBAL CORPORATIONS Planning and Controlling Challenges Currency Risk • GLOBAL CORPORATIONS Planning and Controlling Challenges Political risk • – • Political risk analysis – • Risk of loss because of political instability in foreign country Forecasts how political events may impact foreign investments Currency risk – Possible loss because of fluctuating exchange rates GLOBAL CORPORATIONS Organizing Challenges GLOBAL CORPORATIONS Leading Challenges • Global managers – Competent in working in different cultures ... government support GLOBALIZATION International Opportunities • International Business – • Conducts transaction across international boundaries Reasons to “go international? ?? GLOBALIZATION International. .. Opportunities GLOBALIZATION International Opportunities GLOBALIZATION Legal and Political Issues • International business is complicated by different legal and political systems – Health and safety.. .Chapter 17 • • How does globalization affect international business? What are global corporations and how they work? 17.1 Globalization • • • • • Globalization involves