MNGT1001 Lecture Notes - Lecture 9: Individualism, Multinational Corporation, Iso 14000
2 Jul 2018
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International dimensions of management:
LO1: What are the international management challenges of globalisation?
Globalisation is the worldwide interdependence of resource flows, product markets and business
competition. The global economy offers great opportunities for worldwide sourcing, production and
sales capabilities. Multinational businesses are increasingly adopting transnational or ‘global’
identities.
International management involves managing operations in more than one country. Global
managers are culturally aware and well informed on international affairs. Organisations must ensure
their people are ready, willing and able to manage in the global environment. Having the right
people in the right place at the right time is essential to a company’s successful international growth.
The Asia-Pacific Economic Cooperation (APEC) has become the region’s leading forum in trade- with
the forum aiming to strengthen regional economic integration, and regional links and pursue
common trade goals. Asian and pacific rim economies are soon expected to be larger than those of
the European Union.
In Australia, the biggest export markets are China, Japan, Korea, India and the US. The top import
countries in the APEC are China, the US, Japan and Singapore.
The European Union is a political and economic alliance of European Countries, and an institutional
framework for the construction of a united Europe. EU members are linked through favourable trade
and customs laws- expected regional benefits of an expanding EU include higher productivity, lower
inflation and steady growth.
NAFTA is the North American Free Trade Agreement, linking the US, Mexico and Canada in a
regional economic alliance. The US is among Aus and NZ’s largest trading partners and sources of
foreign direct investment. In 2005, Australia entered into a bilateral free trade agreement with the
US, known as Australia-United States Free Trade Agreement (AUSFTA).
The Southern Africa Development Community (SADC) links 14 countries of southern Africa in trade
and economic development efforts. South Africa is experiencing economic recovery and attracting
outside investors. The country still only ranks as Australia’s 20th largest trading partner in the world.
International businesses conduct commercial transactions across national boundaries, and are
foundations for world trade. The reasons for international business include the search for profits,
customers, suppliers, capital and labour.
Problems include rising prices, unemployment, competition and privatisation. Privatisation includes
the selling of state-owned enterprises into private ownership. The World Trade Organisation
involved members agreeing to negotiate and resolve disputes about tariffs and trade restrictions.
Protectionism is a call for tariffs and favourable treatments to protect domestic firms from foreign
competition.
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LO2: What are the forms and opportunities of international business?
When a business is just getting started internationally, global sourcing, exporting/importing and
licencing and franchising are the usual ways to begin. These are market entry strategies that involve
the sale of goods and services to foreign markets but do not require expensive capital investments.
Joint ventures and wholly owned subsidiaries are direct investment strategies- requiring major
capital commitment but create rights of ownership and control over operations in the foreign city.
Market entry strategies include:
Global sourcing- purchases of materials or services from around world for local use.
Exporting- local products are sold abroad.
Importing- process of acquiring products abroad and selling them in domestic markets.
Licensing agreement- occurs when firm pays fee for rights to make or sell another
companies product.
Franchising- involves complete package of support needed to open particular business.
Direct investment strategies:
Joint ventures:
oEstablish operations in foreign country through joint ownership with local partners.
oForeign partner gains new markets and assistance of knowledgeable local partner.
oLocal partner gains new technology and opportunities for employees to learn new
skills.
Wholly owned subsidiary is a local operation completely owned by foreign firm.
LO3: What are multinational corporations and what do they do?
Multinational corporation (MNC):
oA business with extensive operations in more than one foreign country. Examples
include Microsoft, Rio Tinto and McDonalds.
oTypical MNC operates in many countries but has corporate headquarters in one
home or host country.
oAs global economy grows more competitive, many multinationals are acting more
like transnational corporations. They increasingly operate worldwide without being
identified with one national home.
Transnational corporations:
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Document Summary
Globalisation is the worldwide interdependence of resource flows, product markets and business competition. The global economy offers great opportunities for worldwide sourcing, production and sales capabilities. Multinational businesses are increasingly adopting transnational or global" identities. International management involves managing operations in more than one country. Global managers are culturally aware and well informed on international affairs. Organisations must ensure their people are ready, willing and able to manage in the global environment. Having the right people in the right place at the right time is essential to a company"s successful international growth. The asia-pacific economic cooperation (apec) has become the region"s leading forum in trade- with the forum aiming to strengthen regional economic integration, and regional links and pursue common trade goals. Asian and pacific rim economies are soon expected to be larger than those of the european union. In australia, the biggest export markets are china, japan, korea, india and the us.
