FIN 350 Lecture Notes - Lecture 4: Global Sourcing, Parochialism, Franchising

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7 Feb 2017
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Fundamentals of management
Chapter 3 In-class notes
Integrative Managerial Issues
Globalization and its impact
o Global village
A boundary less world where goods and services are produced and
marketed world wide
o Parochialism
A narrow focus in which managers see things only through their own eyes
and form their own perspectives
They do not recognize that countries have different morals customs and
economic systems an laws which can affect how a business is managed
o Geocentric
How do organizations go global
o Global sourcing
Purchasing materials or belabor from the cheapest source in order to
maintain a competitive edge
Exporting and Importing
Exporting
o An organizations products involves making products
domestically and selling them abroad
Importing
o Involves acquiring product made abroad and selling them
domestically
Licensing and Franchising
Licensing
o Often used by manufacturing organizations that make or
sell another company’s product
Franchising
o Primarily used by service organizations that want to use
another company’s name and operating methods
Types of Global Organizations
o Multi domestic corporation
Management and other decisions are decentralized to the local country in
which it is operating
Relies on local employees to manage the business tailors strategies to each
country’s unique characteristic and is used by many consumer products
companies
o Transnational (borderless) organization
An MNC where artificial graphical boundaries are eliminated
Country or origins or where business is conducted becomes irrelevant
Increases efficiency and effectiveness in a competitive global marketplace
o Global corporations
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