Chapter 11

Global / International Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

Copyright 2011 Pearson

Education, Inc.

Ch 11 -1

Copyright 2011 Pearson

Education, Inc.

Ch 11 -2

Global Issues
Global considerations impact
virtually all strategic decisions
A world market has emerged
It is difficult for a firm to survive
relying solely on domestic markets

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Education, Inc.

Ch 11 -3

Multinational Organizations

International firms or multinational

corporations face many complex variables:

Social
Cultural
Demographic
Environmental
Political
Governmental
Legal
Technological
Competitive opportunities and threats
Copyright 2011 Pearson
Education, Inc.

Ch 11 -4

Potential Advantages of International

Operations
Gain new customers
Absorb excess capacity, reduce unit
costs, and spread economic risks
Allow firms to establish low-cost
production facilities
Competition may be less intense

Copyright 2011 Pearson

Education, Inc.

Ch 11 -5

Potential Advantages of International

Operations (continued)

Reduced tariffs, lower taxes, and

favorable political treatment
Joint ventures can enable firms to learn
new technology, culture, and business
practices
Economies of scale
Power and prestige in domestic markets
may be significantly enhanced
Copyright 2011 Pearson
Education, Inc.

Ch 11 -6

Potential Disadvantages of
International Operations

Foreign operations could be seized

Different and often little-understood social,
cultural, demographic, environmental, political,
governmental, legal, technological, economic,
and competitive forces
Weakness of competitors overestimated
Different language, culture, and value systems
Understanding of regional organizations needed
Dealing with two or money systems
Copyright 2011 Pearson
Education, Inc.

Ch 11 -7

Reasons for Global Expansion

Advancements in
telecommunications
Growth in demand for goods and
services outside the U.S. is
considerably higher than inside
95% of the world's population lives
outside the U.S.

Copyright 2011 Pearson

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Ch 11 -8

Globalization

Globalization:

The process of doing business worldwide

Global strategy includes

considering global needs during

Design
Production
Marketing
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Ch 11 -9

Cultural Differences

Time
Space
Family roles
Religious factors
Family time
Values
Eating
Rules of etiquette
Importance of relationships
Copyright 2011 Pearson
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Ch 11 -10

European Business Cultures

Participatory management
Most workers are unionized
More frequent vacations and holidays
Guaranteed permanent employment
common
Workers often resent pay for performance,
commissions, and objective measurement
and reward systems
Copyright 2011 Pearson
Education, Inc.

Ch 11 -11

Asian Business Cultures

First names are not generally used in

business
Extended periods of silence are
important
A sale is the beginning, not the end of a
relationship
Resting, listening, meditating, and
thinking are considered productive
Copyright 2011 Pearson
Education, Inc.

Ch 11 -12

Mexican Business Culture

Low tolerance for adversarial relations or friction

at work
Employers are paternalistic
Workers do not expect self-expression or
initiative at work
Businesses stress collectivism, continuity,
cooperation, belongingness, formality, and doing
exactly what you are told
Rarely entertain business associates at homes
Copyright 2011 Pearson
Education, Inc.

Ch 11 -13

Mexican Business Culture

(continued)

Preserving ones honor, saving face, and

looking important are valued
Opinions expressed by employees are often
regarded as back talk
Supervisors are viewed as weak if they
explain the rationale for their orders to
workers
Mexicans often do not follow rules
Life is slower in Mexico, tardiness is common
Copyright 2011 Pearson
Education, Inc.

Ch 11 -14

Japanese Business Culture

Importance of group loyalty and consensus

called Wa
Constant discussion and compromise
Silence is a plus in formal meetings
When confronted with disturbing questions,
managers often remain silent
Managers are reserved, quiet, distant,
introspective, and other oriented
Copyright 2011 Pearson
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Ch 11 -15

Communication Differences Across

Cultures

Italians, Germans, and French do not soften

up executives with praise before a criticism
Israelis are accustomed to fast paced
meetings
British executives complain that Americans
chatter too much
Europeans feel that they are being treated
like children when asked to wear nametags
Copyright 2011 Pearson
Education, Inc.

Ch 11 -16

Communication Differences Across

Cultures (continued)
Executives in India are used to
interrupting each other
In Malaysia and Japan periods of silence
are appropriate, no silence is needed in
Israel
How was your weekend? is considered
intrusive by many business people

Copyright 2011 Pearson

Education, Inc.

Ch 11 -17

Worldwide Tax Rates

US and Japan 38%

Asia-Pacific Region 30%
Germany 30%
Great Britain 28%
France 27%
Europe 26%
Ireland near 0%
Former Soviet-Bloc nations near 0%
Copyright 2011 Pearson
Education, Inc.

Ch 11 -18