UNDERSTANDING THE GLOBAL CONTEXT OF BUSINESS

Globalisasi menciptakan lingkungan vortikal: perusahaan harus

bertanding di landasan yang terus bergoyang, sehingga pemanfaatan peluang usaha kian sulit dan resiko gagal kian besar Rhenald Kasali There is no longer any such thing as a purely national economy. The rest of the world is just too big to ignore, either as a market or as a competitor. If business schools do nothing other than to train their students to think internationally, they would have accomplished an important task (John Young, CEO HP)

THE RISE OF INTERNATIONAL BUSINESS

GLOBAL ECONOMY: resource supplies, product markets, & business competition are worldwide rather than purely local or national scope GLOBALIZATION: Is the process of growing interdependence among elements of the global economy Process by which the world economy is becoming a single interdependent system
KEY WORD: GLOBALIZATION, IMPORT, EXPORT

 The

Contemporary Global Economy

ADOPT FAIR TRADE POLICIES & PRACTICES REDUCE TRADE BARRIERS BY PROMOTING MULTILATERAL NEGOTIATIONS AMONG MEMBER NATIONS ESTABLISH FAIR PROCEDURES FOR RESOLVING DISPUTES AMONG MEMBER NATIONS

WTO

The

Major World Marketplaces

HIGH-INCOME COUNTRIES (> $9,386) MIDDLE-INCOME COUNTRIES ($9,386 765) LOW-INCOME COUNTRIES (< $765)

 THE

AMERICAS

NAFTA: is the North American Free Trade Agreement linking Canada, the US, & Mexico in a regional economic alliance Maquiladoras: foreign manufacturing plants that operate in Mexico with special privileges
DaimlerChrysler, GM, VW, Nissan & Ford 1993 1999: export increased from $7.2 bill to

$20.4 billion, employs 380,000 workers, growth rate 10& by 2001.

The North American Marketplace

 EUROPE:

15 countries (in the near future 25 members) The Euro: is the new common European currency Access to market 375 million consumers

Unilever, Renault, Royal Dutch/ Shell,

Siemens, Nestle

Europe and the Nations of the European Union

 ASIA

& THE PACIFIC RIM

Japan, China, Thailand, Malaysia, Singapore, Indonesia, South Korea, Taiwan, the Philippines & Australia. Emerging world-class competitors from Asian countries: Toyota, Toshiba, Samsung & Hyundai APEC (Asia-Pacific Economic Coop.)

The Nations of ASEAN

 FORM

OF COMPETITIVE ADVANTAGE

Absolute Advantage Comparative Advantage National Competitive Advantage

Factors of production Demand conditions Related & supporting industries
NATIONAL DIAMOND

Strategies, structures & rivalries

 IMPORT-EXPORT

BALANCES

Balance of trade
Deficit or surplus

Balance of payments
Inflows & outflows Exchange rate Exchange rate & competition

INTERNATIONAL BUSINESS MANAGEMENT

GOING INTERNATIONAL AN INTERNATIONAL BUSINESS CONDUCTS COMMERCIAL TRANSACTIONS ACROSS NATIONAL BOUNDARIES

PROFIT CUSTOMERS SUPPLIERS CAPITAL LABOURS

ADAPTING TO CUSTOMER NEEDS???

Going International

INTERNATIONAL BUSINESS CHALLENGES

AN INTERNATIONAL BUSINESS CONDUCTS COMMERCIAL TRANSACTIONS ACROSS NATIONAL BOUNDARIES

PROFIT

CUSTOMERS
SUPPLIERS CAPITAL LABOURS

Maximising the return on competitive advantages

RESOURCE AVAILABILITY IN THE ASIAN REGION

Countries Indonesia China Philippines Thailand Malaysia Korea Taiwan Singapore Hong Kong Source of Advantage Sourcing Costs

Resource Competence Raw Materials Components Labour

Components
Logistics Flexibility Market Info & Linkages New Materials New Processes

Sourcing Cost Market Adaptation Service Technology

Japan

Achieving locational economies

ex: American buys a pontiac le mans from general motors

- $10,000 (this reflects the following international transactions) $3000 to South Korea for routine labor & assembly operations $1750 to Japan for advanced components - engine, transaxles, electronic $750 to Germany for styling and design engineering) $400 to Taiwan, Singapore & Japan for small components $250 to Britain for advertising & marketing services $50 to Ireland & Barbados for data processing The balance some $4000 is distributed primarily within the US.

FORMS OF INTERNATIONAL BUSINESS

STRATEGY
Market entry Global Exporting Licensing & sourcing Importing Franchising Direct investment Joint Ventures Wholly owned subsidiaries

 LEVEL OF INVOLVEMENT EXPORTERS & IMPORTERS INTERNATIONAL FIRMS MULTINATIONAL FIRMS

INTERNATIONAL ORGL STRUCTURES

INDEPENDENT AGENTS LICENSING ARRANGEMENTS BRANCH OFFICES

STRATEGIC ALLIANCES

FOREIGN DIRECT INVESTMENT

Expanding growth in the exchange of information & trade in services. Ex: Montague Corp - designs a unique product (folding mountain bikes) in Cambridge, manufacturers in Taiwan, sells in Europe.

COMPARISON OF INTERNATIONAL-TRADE, COUNTRY-FOCUSED, & GLOBALLY INTEGRATED DESIGNS

INTERNATIONAL TRADE DESIGNS GLOBALLY INTEGRATED DESIGNS COUNTRYFOCUSED DESIGNS

STRAT.FOCUS Standardised product

Global products Products developed for export adjusted for for specific local market local differences STRAT.RESPTY Centralised headquarter Shared among global Decentralized to the div. Headquarters & div. SUBUNIT REL. Hierarchical Interdependent Semiautonomous DISTRIBUTION Located in home country Dispersed through- Located in each div OF CRIT.FUNC. out the div.network EXAMPLE: Toyota (1970s) Toyota (1980s) GM (1980) GM (1970s)

GLOBALLY INTEGRATED DESIGN: creates an interdependent network

Country A Division

Country G Division

Country B Division

Country F Division

Global Headquarters
Country D Division

Country C Division

Country E Division

MULTINATIONAL CORPORATIONS

AN MNC: IS A BUSINESS WITH EXTENSIVE INTERNATIONAL OPERATIONS IN MORE THAN ONE FOREIGN COUNTRY
GE, Exxon, Wal Mart, Mitsubishi, etc

TYPES OF MNC
TRANSNATIONAL CORPORATIONS PROS & CONS OF MNC

MULTINATIONAL CORPORATIONS
MNC-HOST COUNTRY RELATIONSHIPS WHAT SHOULD GO RIGHT: MUTUAL BENEFITS

SHARED OPPORTUNITIES WITH

POTENTIAL FOR GROWTH, INCOME, LEARNING, DEVELOPMENT

MULTINATIONAL CORPORATIONS

MNC-HOST COUNTRY RELATIONSHIPS WHAT CAN GO WRONG HOST-COUNTRY COMPLAINT ABOUT MNCs
EXCESSIVE PROFITS

ECONOMIC DOMINATION
INTERFERENCE WITH GOV. HIRE BEST LOCAL TALENT

LIMITED TECHNOLOGY TRANSFER

DISRESPECT FOR LOCAL CUSTOMS

MULTINATIONAL CORPORATIONS

MNC-HOST COUNTRY RELATIONSHIPS WHAT CAN GO WRONG MNC COMPLAINTS ABOUT HOST COUNTRIES
PROFITS LIMITATIONS

OVERPRICED RESOURCES
EXPLOITATIVE RULES FOREIGN EXCHANGE RESTRICTIONS

FAILURE TO UPHOLD CONTRACTS

MULTINATIONAL CORPORATIONS

ETHICAL ISSUES FOR MNC OPERATIONS

CORRUPTIONS
SWEATSHOPS CHILD LABOR

SUSTAINABLE DEVELOPMENT
ISO 14000

BARRIERS TO INTERNATIONAL TRADE

SOCIAL & CULTURAL DIFFERENCES CULTURE SHOCK POPULAR DIMENSIONS OF CULTURE

LANGUAGE

INTERPERSONAL SPACE
TIME ORIENTATION: Monochronic or Polychronic RELIGION

ROLE OF AGREEMENTS

VALUES & NATIONAL CULTURES

BARRIERS TO INTERNATIONAL TRADE

ECONOMIC DIFFERENCES LEGAL & POLITICAL DIFFERENCES

Quotas ( Or Embargo), Tarrifs & Subsidies Local Content Laws: Cartel

Adjusting to Local Differences: The Coca-Cola Company

Thinking Globally & Managing Locally (Morden)

PRODUCT: COCA COLA PRODUCES & MARKETS THE COKE, FANTA, & SPRITE BRANDS GLOBALLY BUT OTHER PRODUCTS ARE TAILORED TO A SPECIFIC COUNTRY/ TO A SPECIFIC GEOGRAPHY IN BRAZIL - GUARANA TAI, NORTHERN LATIN AMERICA (ELSAVADOR & VENEZUELA) - FANTAKOLITA (A CREAM SODA TYPE OF DRINK). IN GERMANY - A TART ORANGE TASTE IS PREFERRED IN ITALY - SWEET

MARKETING: COKE REENTERED CHINA IN 1979, LITERAL REPRESENTATION OF ITS NAME IN CHINESE CHARACTERS WAS A BITE THE WAX TADPOLE, LAUNCHED & AD CAMPAIGN IN ASIAN MARKET BASED ON A COME A LIVE THEME - TRANSLATED AS THIS PRODUCT MAKES YOUR ANCESTORS RISE FROM THE DEAD DISTRIBUTION: VENDING MACHINES, SMALL PLACTICS COOLERS ETC

Thinking Globally & Managing Locally (Morden) Managing locally:

Knowledge of country & its international context

Knowledge of communication patterns

Knowledge of countrys culture Control & co-ordination Commitment