Description
PPT
The Global Environment
Globalization and the International Management Environment
OVERVIEW
1.
International Management and Globalization What is Globalization? Environmental Forces The Pros and Cons of Globalization Implications for Managers
2. 3. 4. 4.
International Management and Globalization
y
What is international management?
´the process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political, and cultural environmentsµ (HLD, p. 6)
y
Why is globalization important?
International management is rapidly gaining in importance in tandem with the quickening pace of globalization
WHAT IS GLOBALIZATION?
1. 2. 3. 4. 5.
Definitions Roots of Globalization Drivers of Globalization Globalization from a Regional Perspective Convergence or Divergence
Globalization: Definitions
y
Hodgetts, Luthans and Doh,
Globalization is ´the process of social, political, economic, cultural, and technological integration among countries around the worldµ (p. 7)
y
Robertson (Globalization: Social Theory and Global Culture, 1992),
Globalization in its most allembracing form ´refers to both the compression of the world and the intensification of consciousness of the world as a wholeµ (p. 8)
The Roots of Globalization
y
When did globalization begin?
Ancient trade routes ² barter trade Standard weights and measures Mercantilism ² the highways of the sea Post WWII ² institutions of global governance Past 1980s ² ICT, globalization defined
y
Hodgetts, Luthans, and Doh,
´Contemporary globalization is a new branch of a very old tree whose roots were planted in antiquityµ (p. 8)
The Drivers of Globalization
y
What drives globalization?
Individual and social needs and aspirations Technological innovation Reduced technological and economic barriers to trade
y Sustaining
forces
Greater policy liberalization Greater efficiency of business Greater market access Increased flows of goods, services, and people
Search for competitive advantage
Development of new technologies
Reduced barriers to trade
Globalization from a Regional Perspective
y
Developed Economies
x U.S. the European Union and Japan account for one-half of world trade
y
Emerging and Transition Economies
x Economies in Latin America and Asia are increasingly important global players
x BRIC, economic powers with large internal markets x Eastward expansion of the EU
y
Less Developed Countries (LDCs)
x Some fast growing and increasingly open to the global system x Others, notably in Africa, struggle to compete globally
North America
y
Important global market
x Combined purchasing power of the U.S., Canada and Mexico is $12 million
y
United States
x U.S. outbound FDI $1.8 billion (2003) x U.S. inbound FDI $1.4 billion (2003)
y
Canada
x Largest U.S. trading partner x Legal and business environment similar to the U.S.
y
Mexico
x Strong maquiladora industry x Competitive with Asia for the U.S. market x Emergence of Mexican MNCs
South America
y
Economic challenges
x x x x High inflation Heavy foreign debt Entrenched interests (crony capitalism) Political instability
y
Economic opportunities
x Important emerging markets
x Brazil, Argentina,Venezuela, Columbia, Chile, Peru
x Prevalence of free market policies x Expanding regional and international trade
x Mercosur and Asia-Pacific Economic Cooperation (APEC)
Europe
y Market
factors
x Operational integration of the EU x Privatization of traditionally nationalized industries x Expanded ties to Central and Eastern Europe
y Social
factors challenges
x Maintaining social cohesion x Adjusting to local tastes ± ³Plan globally, act locally´
y Economic
x For foreign MNCs, gaining a foothold in the EU
x Strategies include: acquisitions, alliances, and cooperative R&D
x Absorbing the former communist-bloc countries
x 550 million middle-class consumers across 25 countries x Largest economic market in the world
Central and Eastern Europe
y Collapse
of the Soviet Union (1991)
x Glasnost (openness) and perestroika (economic and political restructuring) x The fall of the Berlin Wall and German reunification
y Russia
x Dismantling of price controls and privatization x Crime, political uncertainty, and inflation x Membership in International Monetary Fund (IMF)
y Successful y Economies
transition economies caught in transition
x Czech Republic, Hungary, Poland, the Baltic states x Albania, Bulgaria, Romania, former Soviet republics
East Asia
y
Japan
x In the 1970s and 1980s
x Strong government role x Vertically integrated industries (keiretsus)
x In the 1990s
x x x x Economic recession Collapse of the real estate bubble Banks reluctant to write-off uncollectible loans Still the world¶s second largest economy
y
China
x Economic opportunities
x High rates of growth (8-10% per year) x Large internal market (> 1.3 billion consumers)
x Economic challenges
x Inflation and political instability x Regulatory reform and compliance x Complex and unpredictable economic environment
East Asia ² The Four Tigers
y
South Korea
x Dominated by family-held conglomerates (chaebols) x Impacted by the Asian financial crisis (1997)
y
Hong Kong
x Part of the PRC (one country, two systems) x Risk of radical change in business environment
y
Singapore
x Corporatist model x From entrepot to global city
y
Taiwan
x From cheap producer to technology leader x Managing relations with the PRC ± the 3 Chinas
South and Southeast Asia
y
Southeast Asia
x x x x
x The Baby Tigers (TH, MY, IN, VN)
Large population base Inexpensive labor Considerable natural resources Attractive to outside investors
x Other Southeast Asian nations
x Philippines, Cambodia, Laos, Myanmar
y
South Asia
x India
x x x x Large population (300 million middle class consumers) Increasingly open markets, technology leader Attractive to US and British investors ENGLISH SPEAKING TECH SAVVY CLASSES
x Other South Asian nations
x Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan
Developing and Emerging Economies (1)
y
Economic characteristics
x Low per capita GDP, low (or negative) GDP growth x High unemployment - semiskilled or unskilled workforce x Considerable government intervention in the economy x Political instability, weak infrastructure, corruption
y
LDCs in Asia and Latin America
x Include important regional economic powers (e.g. China, India, Indonesia, Brazil, Argentina) x Generally well integrated into the global economy
Developing and Emerging Economies (2)
y
LDCs in the Middle East and Central Asia
x Large oil reserves x Highly unstable geopolitical and religious forces x Plagued by continuing economic problems
y
LDCs in Africa
Considerable natural resources Diverse populations Weak and unstable governments Economies negatively impacted by social and environmental factors (poverty, starvation, illiteracy, corruption, environmental degradation) x Poorly integrated into the global economy x x x x
Convergence or Divergence
Political Systems Economic Systems
Technology
Information Systems
Belief Systems
Culture
ENVIRONMENTAL FORCES
1. 2. 3. 4. 5.
Economic environment Political environmental Legal/regulatory environment Socio-cultural environment Technological environment
Economic Environment
y
Global and regional integration
International agreements (GATT, WTO) Regional agreements (EU, ASEAN, NAFTA, CAFTA, FTAA, Mercosur)
y
World trade and investment
80% of FDI contributed by developed economies U.S. exports/imports increased by 550% from 1983 to 2003 (to $1.3 and $1.8 trillion) Trade within the EU increased sharply, to > $2 trillion annually
Political Environment
y
Rapid and uncertain change
China¶s transition to a market economy European expansion and integration Russia¶s unstable political institutions The emergence of political Islam in the Middle East
y
Significant differences across countries
Less stable governments increase political risk Uncertain responses to democratization
y
Change in government policies
Adjusting to adjust to new perspectives and changing requirements Assessing political risks (Chapter 10)
Legal/Regulatory Environment
y
Complex and confusing
MNCs must
x Conform to national laws and standards x Abide by the laws of their own countries x Be aware of international treaties and obligations
Differences in regulatory regimes
x Increase transaction costs x Restrict and distort trade x Can result in retaliatory practices or sanctions
y
Four main legal traditions
x x x x Common law Civil law Islamic law (theocratic law) Socialist law
SocioSocio-Cultural Environment
y
Ethics and social responsibility (Chapter 3)
Business practices Labor standards and workers rights Corporate governance Intellectual property rights
y
Values and culture (Part II)
Responses to authority Individual vs. group recognition and responsibility Balance of work and family obligations Managing and resolving conflict
Technological Environment
Changing at ´lightning speedµ y Internet and telecommunications
y
Increasing bandwidth/high-speed access Reduced costs of entry/leapfrogging
y
E-business
Customization (´the long end of the tailµ) E-retailing and financial services
x Movement of money across borders x ´E-cashµ ² a currency without a country
y
Outsourcing and offshoring
Information as a commodity The 24-hour office ² increased productivity/lower cost
THE PROS AND CONS OF GLOBALIZATION
1. 2.
Where do you stand? Key themes to consider
a. b. c. d. e. Impact on Labor Impact on Equality Impact on Government Impact on the Environment Impact on Culture and Community
Impact on Labor
y
Positive effects
x Increased job opportunities x Upgraded education system x Increased training
y
Negative effects
x Job displacement x Loss of industries or economic groups x Lowered labor standards x Downward wage pressure x Decreased union power x Diminished social contract
Impact on Equality
y
Positive effects
x Increased income / reduced poverty x Increased wages for education or technically skilled x Improved economic conditions x Rich become richer x Greater access to goods x Lower cost of goods x Increased food supply (in some countries)
y
Negative effects
x Greater disparity between haves and havenots within and across countries x Some downward pressure on wages for the poorly educated or unskilled x Worsened economic conditions in marginalized countries x Poor become poorer
Impact on Government
y
Positive effects
x Increased economic development x Expanded infrastructure x Transfer of modern management techniques x Greater interdependence among business partners
y
Negative effects
x MNC power increased x MNCs externalize cost to countries x Competition results in too many concessions x MNCs influence local policies x Companies incorporate in low tax countries x Pressure to reduce social benefits
Impact on the Environment
y
Positive effects
x More efficient use of resources x Increased demand for and transfer of more efficient technologies x Increased incomes lead to greater concern for environmental protection
y
Negative effects
x Increased consumption x Advertising creates artificial needs x Greater use of fossil fuels (increased travel) x Increased surplus and scarcity x Increased degradation from unregulated businesses x More factories require more infrastructure
Impact on Culture/Community
y
Positive effects
x Increased cultural exposure and understanding x Closer cross-border ties
y
Negative effects
x More mobility disrupts social life, particularly in remote or rural communities x Disintegration of local communities x Cultural homogenization and monoculture / reduced cultural diversity
Globalization: Pros and Cons
Globalization as ´moral conflictµ y Impacts of Globalization
y
Increases economic interdependence Creates winners and losers
y
Implications of the debate
For academics
x Need for more objective research x Need to question assumptions and be open to alternatives
For companies
x Be aware of multiple stakeholder interests x Follow the guidelines of the UN Global Compact x Consider the ´triple bottom lineµ
Conclusion
y
Implications for Managers
Lifelong learning
x the ´most valuable asset is the ability to learn how to learnµ (Thomas Friedman, The World is Flat)
Responsiveness
x be alert for changes and quick to respond
Adaptability
x knowing how to work with others x being comfortable with uncertainty and ambiguity
Both a local and global perspective
x see the big picture (global economy/whole organization) x understand the details of operating at the local level
y
«
doc_631033203.ppt
PPT
The Global Environment
Globalization and the International Management Environment
OVERVIEW
1.
International Management and Globalization What is Globalization? Environmental Forces The Pros and Cons of Globalization Implications for Managers
2. 3. 4. 4.
International Management and Globalization
y
What is international management?
´the process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political, and cultural environmentsµ (HLD, p. 6)
y
Why is globalization important?
International management is rapidly gaining in importance in tandem with the quickening pace of globalization
WHAT IS GLOBALIZATION?
1. 2. 3. 4. 5.
Definitions Roots of Globalization Drivers of Globalization Globalization from a Regional Perspective Convergence or Divergence
Globalization: Definitions
y
Hodgetts, Luthans and Doh,
Globalization is ´the process of social, political, economic, cultural, and technological integration among countries around the worldµ (p. 7)
y
Robertson (Globalization: Social Theory and Global Culture, 1992),
Globalization in its most allembracing form ´refers to both the compression of the world and the intensification of consciousness of the world as a wholeµ (p. 8)
The Roots of Globalization
y
When did globalization begin?
Ancient trade routes ² barter trade Standard weights and measures Mercantilism ² the highways of the sea Post WWII ² institutions of global governance Past 1980s ² ICT, globalization defined
y
Hodgetts, Luthans, and Doh,
´Contemporary globalization is a new branch of a very old tree whose roots were planted in antiquityµ (p. 8)
The Drivers of Globalization
y
What drives globalization?
Individual and social needs and aspirations Technological innovation Reduced technological and economic barriers to trade
y Sustaining
forces
Greater policy liberalization Greater efficiency of business Greater market access Increased flows of goods, services, and people
Search for competitive advantage
Development of new technologies
Reduced barriers to trade
Globalization from a Regional Perspective
y
Developed Economies
x U.S. the European Union and Japan account for one-half of world trade
y
Emerging and Transition Economies
x Economies in Latin America and Asia are increasingly important global players
x BRIC, economic powers with large internal markets x Eastward expansion of the EU
y
Less Developed Countries (LDCs)
x Some fast growing and increasingly open to the global system x Others, notably in Africa, struggle to compete globally
North America
y
Important global market
x Combined purchasing power of the U.S., Canada and Mexico is $12 million
y
United States
x U.S. outbound FDI $1.8 billion (2003) x U.S. inbound FDI $1.4 billion (2003)
y
Canada
x Largest U.S. trading partner x Legal and business environment similar to the U.S.
y
Mexico
x Strong maquiladora industry x Competitive with Asia for the U.S. market x Emergence of Mexican MNCs
South America
y
Economic challenges
x x x x High inflation Heavy foreign debt Entrenched interests (crony capitalism) Political instability
y
Economic opportunities
x Important emerging markets
x Brazil, Argentina,Venezuela, Columbia, Chile, Peru
x Prevalence of free market policies x Expanding regional and international trade
x Mercosur and Asia-Pacific Economic Cooperation (APEC)
Europe
y Market
factors
x Operational integration of the EU x Privatization of traditionally nationalized industries x Expanded ties to Central and Eastern Europe
y Social
factors challenges
x Maintaining social cohesion x Adjusting to local tastes ± ³Plan globally, act locally´
y Economic
x For foreign MNCs, gaining a foothold in the EU
x Strategies include: acquisitions, alliances, and cooperative R&D
x Absorbing the former communist-bloc countries
x 550 million middle-class consumers across 25 countries x Largest economic market in the world
Central and Eastern Europe
y Collapse
of the Soviet Union (1991)
x Glasnost (openness) and perestroika (economic and political restructuring) x The fall of the Berlin Wall and German reunification
y Russia
x Dismantling of price controls and privatization x Crime, political uncertainty, and inflation x Membership in International Monetary Fund (IMF)
y Successful y Economies
transition economies caught in transition
x Czech Republic, Hungary, Poland, the Baltic states x Albania, Bulgaria, Romania, former Soviet republics
East Asia
y
Japan
x In the 1970s and 1980s
x Strong government role x Vertically integrated industries (keiretsus)
x In the 1990s
x x x x Economic recession Collapse of the real estate bubble Banks reluctant to write-off uncollectible loans Still the world¶s second largest economy
y
China
x Economic opportunities
x High rates of growth (8-10% per year) x Large internal market (> 1.3 billion consumers)
x Economic challenges
x Inflation and political instability x Regulatory reform and compliance x Complex and unpredictable economic environment
East Asia ² The Four Tigers
y
South Korea
x Dominated by family-held conglomerates (chaebols) x Impacted by the Asian financial crisis (1997)
y
Hong Kong
x Part of the PRC (one country, two systems) x Risk of radical change in business environment
y
Singapore
x Corporatist model x From entrepot to global city
y
Taiwan
x From cheap producer to technology leader x Managing relations with the PRC ± the 3 Chinas
South and Southeast Asia
y
Southeast Asia
x x x x
x The Baby Tigers (TH, MY, IN, VN)
Large population base Inexpensive labor Considerable natural resources Attractive to outside investors
x Other Southeast Asian nations
x Philippines, Cambodia, Laos, Myanmar
y
South Asia
x India
x x x x Large population (300 million middle class consumers) Increasingly open markets, technology leader Attractive to US and British investors ENGLISH SPEAKING TECH SAVVY CLASSES
x Other South Asian nations
x Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan
Developing and Emerging Economies (1)
y
Economic characteristics
x Low per capita GDP, low (or negative) GDP growth x High unemployment - semiskilled or unskilled workforce x Considerable government intervention in the economy x Political instability, weak infrastructure, corruption
y
LDCs in Asia and Latin America
x Include important regional economic powers (e.g. China, India, Indonesia, Brazil, Argentina) x Generally well integrated into the global economy
Developing and Emerging Economies (2)
y
LDCs in the Middle East and Central Asia
x Large oil reserves x Highly unstable geopolitical and religious forces x Plagued by continuing economic problems
y
LDCs in Africa
Considerable natural resources Diverse populations Weak and unstable governments Economies negatively impacted by social and environmental factors (poverty, starvation, illiteracy, corruption, environmental degradation) x Poorly integrated into the global economy x x x x
Convergence or Divergence
Political Systems Economic Systems
Technology
Information Systems
Belief Systems
Culture
ENVIRONMENTAL FORCES
1. 2. 3. 4. 5.
Economic environment Political environmental Legal/regulatory environment Socio-cultural environment Technological environment
Economic Environment
y
Global and regional integration
International agreements (GATT, WTO) Regional agreements (EU, ASEAN, NAFTA, CAFTA, FTAA, Mercosur)
y
World trade and investment
80% of FDI contributed by developed economies U.S. exports/imports increased by 550% from 1983 to 2003 (to $1.3 and $1.8 trillion) Trade within the EU increased sharply, to > $2 trillion annually
Political Environment
y
Rapid and uncertain change
China¶s transition to a market economy European expansion and integration Russia¶s unstable political institutions The emergence of political Islam in the Middle East
y
Significant differences across countries
Less stable governments increase political risk Uncertain responses to democratization
y
Change in government policies
Adjusting to adjust to new perspectives and changing requirements Assessing political risks (Chapter 10)
Legal/Regulatory Environment
y
Complex and confusing
MNCs must
x Conform to national laws and standards x Abide by the laws of their own countries x Be aware of international treaties and obligations
Differences in regulatory regimes
x Increase transaction costs x Restrict and distort trade x Can result in retaliatory practices or sanctions
y
Four main legal traditions
x x x x Common law Civil law Islamic law (theocratic law) Socialist law
SocioSocio-Cultural Environment
y
Ethics and social responsibility (Chapter 3)
Business practices Labor standards and workers rights Corporate governance Intellectual property rights
y
Values and culture (Part II)
Responses to authority Individual vs. group recognition and responsibility Balance of work and family obligations Managing and resolving conflict
Technological Environment
Changing at ´lightning speedµ y Internet and telecommunications
y
Increasing bandwidth/high-speed access Reduced costs of entry/leapfrogging
y
E-business
Customization (´the long end of the tailµ) E-retailing and financial services
x Movement of money across borders x ´E-cashµ ² a currency without a country
y
Outsourcing and offshoring
Information as a commodity The 24-hour office ² increased productivity/lower cost
THE PROS AND CONS OF GLOBALIZATION
1. 2.
Where do you stand? Key themes to consider
a. b. c. d. e. Impact on Labor Impact on Equality Impact on Government Impact on the Environment Impact on Culture and Community
Impact on Labor
y
Positive effects
x Increased job opportunities x Upgraded education system x Increased training
y
Negative effects
x Job displacement x Loss of industries or economic groups x Lowered labor standards x Downward wage pressure x Decreased union power x Diminished social contract
Impact on Equality
y
Positive effects
x Increased income / reduced poverty x Increased wages for education or technically skilled x Improved economic conditions x Rich become richer x Greater access to goods x Lower cost of goods x Increased food supply (in some countries)
y
Negative effects
x Greater disparity between haves and havenots within and across countries x Some downward pressure on wages for the poorly educated or unskilled x Worsened economic conditions in marginalized countries x Poor become poorer
Impact on Government
y
Positive effects
x Increased economic development x Expanded infrastructure x Transfer of modern management techniques x Greater interdependence among business partners
y
Negative effects
x MNC power increased x MNCs externalize cost to countries x Competition results in too many concessions x MNCs influence local policies x Companies incorporate in low tax countries x Pressure to reduce social benefits
Impact on the Environment
y
Positive effects
x More efficient use of resources x Increased demand for and transfer of more efficient technologies x Increased incomes lead to greater concern for environmental protection
y
Negative effects
x Increased consumption x Advertising creates artificial needs x Greater use of fossil fuels (increased travel) x Increased surplus and scarcity x Increased degradation from unregulated businesses x More factories require more infrastructure
Impact on Culture/Community
y
Positive effects
x Increased cultural exposure and understanding x Closer cross-border ties
y
Negative effects
x More mobility disrupts social life, particularly in remote or rural communities x Disintegration of local communities x Cultural homogenization and monoculture / reduced cultural diversity
Globalization: Pros and Cons
Globalization as ´moral conflictµ y Impacts of Globalization
y
Increases economic interdependence Creates winners and losers
y
Implications of the debate
For academics
x Need for more objective research x Need to question assumptions and be open to alternatives
For companies
x Be aware of multiple stakeholder interests x Follow the guidelines of the UN Global Compact x Consider the ´triple bottom lineµ
Conclusion
y
Implications for Managers
Lifelong learning
x the ´most valuable asset is the ability to learn how to learnµ (Thomas Friedman, The World is Flat)
Responsiveness
x be alert for changes and quick to respond
Adaptability
x knowing how to work with others x being comfortable with uncertainty and ambiguity
Both a local and global perspective
x see the big picture (global economy/whole organization) x understand the details of operating at the local level
y
«
doc_631033203.ppt