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Chapter 3

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Global Management Studies
GMS 200
Sui Sui

Chapter 3- Global Dimensions of Management ( IMPORTANT: the questions from this chapter will be double than other chapters)  Global businesses  Reasons why businesses go global:  Profits  Customers  Suppliers  Capital  Labour  KFC in china  In 1987, The first Chinese KFC was opened in Tiananmen Square, with 15,070 square fee and 500 seats.  Self-developed logistics and distribution system.  Implemented a supplier rating system to find suppliers that perform best.  Local food R&D team and a test kitchen  Focusing on ownership rather than franchising.  KFC'S management impressively adapted its business model to better suit china recently and it's in no danger of losing momentum.  Types of market entry strategies:  Global sourcing  the process of purchasing materials or services around the world for local use  Exporting and Importing  Licensing agreement  one firm pays fee for rights to make or sell another company's products (e.g. Coca-Cola bottlers)  Franchising  a fee is paid for rights to use another firm's name and operating methods (e.g. KFC)  Types of direct investment strategies:  Joint ventures  operates in a foreign country through co-ownership by foreign and local partners  Global strategic alliances (HP and Microsoft)  Foreign subsidiaries  local operation completely owned by a foreign firm  Look at figure 3.2 common forms of international business-from market entry to direct investment strategies.  Complications in the global business environment  Political risk  Local legal systems  World Trade Organization  Protectionism  The political call for tariffs and favourable treatment to help shelter domestic businesses from foreign competition  Regional Economic Alliances  North American Free Trade Agreement (NAFTA)  The U.S., Mexico and Canada  Favourable trade and customs laws  European Union (EU) fEuropean countries  Euro  Removing trade barriers  Southern Africa Development Community (SADC)  A multinational corporation (MNC) is a business with extensive international operations in more than one foreign country.  Lululemon: 201 stores in Canada, the U.S., New Zealand and Australia.  Transnational corporation: MNC operates worldwide on a borderless basis.  General El
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