Textbook Notes (363,597)
Canada (158,456)
GMS 200 (566)
Chapter 3

Week 5 & 6 - Chapter 3.docx

8 Pages
Unlock Document

Ryerson University
Global Management Studies
GMS 200
Masoomeh Moharrer

What are the management challenges of globalization? 2/18/2013 12:12:00 AM Global Economy Resource supplies, product markets, business competition are worldwide, rather than local Globalization Process of growing interdependence of these components in the global economy GLOBAL MANAGEMENT Management in orgs w/ business interests in more than one country Global Manager culturally aware and informed on international affairs  Transnational in outlook  Competent in working w/ multicultural ppl  Aware of regional developments in changing world REASONS FOR GOING GLOBAL:  Profit potential  Customers – new markets to sell products  Suppliers – access to needed prod/serve  Capital - access to financial resources  Labour – lower labour costs HOW COMPANIES GO GLOBAL Global Businesses conduct for profit transactions national boundaries Market Entry Strategies: Involve sale of goods/serv to foreign markets but don’t require expensive investments  Global sourcing process of purchasing materials/serv around world for local use  Exporting selling locally made products in foreign markets  Importing buying foreign-made prods and selling them domestically  Licensing agreement one firm pays fee for rights to make/sell another company’s prods  Franchising a fee paid for rights to use another firm’s name/operating methods Fig. 3.1 Global Business Foreign Direct Investment Building, buying all/part ownership of a business in another country (insourcing job creating through foreign direct investment) Strategies:  Joint ventures operates in a foreign country through co-ownership by foreign & local partners  A joint venture partner should have: o Familiarity w/ ur firm’s major business o Strong local workforce o Future expansion possibilities o Value its customers o Strong local market for partner’s own products o Good profit potential o Sound financial standing  Global strategic alliances partnership in which foreign & domestic firms share resources & knowledge for mutual gains  Foreign subsidiaries local operation completely owned by a foreign firm (greenfield investment) GLOBAL BUSINESS ENVIRONMENT: Legal/Political Systems: Political risk
 the potential loss in value of a foreign investment due to 
 instability and changes in host country Political-risk analysis tries to forecast political disruptions that can threaten value of foreign investment.  Local legal systems 
 " complex and unfamiliar laws can create problems Trade Agreements/Barriers: World Trade Organization resolves trade and tariff 
 disputes among countries. (153 members nations) Protectionism Call for tariffs (taxes govmnt puts on imports) and most favourable treatment to protect domestic firms from foreign competition.  can complicate global trading relationships. Regional Economic Alliances:  NAFTA (North American Free Trade)  creates trade zone w/ minimal barriers (frees flow) Canada/US/Mexico  EU (European Union)  euro - common currency in Europe (27 countries)  SADC (Southern Africa Development Community) What are the global businesses and what do they do? 2/18/2013 12:12:00 AM TYPES OF GLOBAL BUSINESSES: Global Corporation MNC (multinational corp.) w/ extensive business operations in more than one foreign country Transnational Corporation MNC (multinational corp.) operates worldwide on a borderless basis Wal-Mart Host-country benefits of MNC: Host-country complaints about MNCs:  Larger tax bases  Excessive profits  Increased employment opportunities  Domination of local economy  Technology transfers  Interference w/ local govmn’t  Introduction of new industries  Hiring best local talent  Development of local resources  Limited technology transfer  Disrespect for local customs Fig. 3.2 What should go right/what can go wrong in MNC-host country relationships ETHICAL IS
More Less

Related notes for GMS 200

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.