Chapter 3- Global Dimensions of Management
( IMPORTANT: the questions from this chapter will be double than other chapters)
Reasons why businesses go global:
KFC in china
In 1987, The first Chinese KFC was opened in Tiananmen Square, with 15,070 square fee and 500
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:
the process of purchasing materials or services around the world for local use
Exporting and Importing
one firm pays fee for rights to make or sell another company's products (e.g. Coca-Cola
a fee is paid for rights to use another firm's name and operating methods (e.g. KFC)
Types of direct investment strategies:
operates in a foreign country through co-ownership by foreign and local partners
Global strategic alliances (HP and Microsoft)
local operation completely owned by a foreign firm
Look at figure 3.2 common forms of international business-from market entry to direct investment
Complications in the global business environment
Local legal systems
World Trade Organization
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)
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.