Chapter 11
Global / International Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David
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Publishing as Prentice Hall
Ch 11 -1
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Ch 11 -2
Global/International Issues
“Sad but true, U.S. businesspeople
have the lowest foreign language
proficiency of any major trading nation.
U.S. business schools do not
emphasize foreign languages, and
students traditionally avoid them.”
- Ronald Dulek
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Ch 11 -3
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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Ch 11 -4
Multinational Organizations
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International firms or multinational
corporations face many complex variables:
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Social
Cultural
Demographic
Environmental
Political
Governmental
Legal
Technological
Competitive opportunities and threats
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Ch 11 -5
Potential Advantages of International
Operations
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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
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Ch 11 -6
Potential Advantages of International
Operations continued
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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
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Ch 11 -7
Potential Disadvantages of
International Operations
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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
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Ch 11 -8
The Global Challenge
 How
to gain and maintain
exports to other nations
 How
to defend domestic
markets against imported goods
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Ch 11 -9
Changes in the Global Economy
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Corporations are obtaining customers
globally
Markets are shifting rapidly and
converging in tastes, trends, and prices
Innovative transport systems are
accelerating transfer of technology
Nature and location of production
systems are shifting
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Ch 11 -10
Protectionism
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Countries imposing tariffs, taxes,
and regulations on firms outside the
country to favor their own
companies and people
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Ch 11 -11
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.
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Ch 11 -12
Globalization
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Globalization:
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The process of doing business worldwide
Global strategy includes
considering global needs during
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Design
Production
Marketing
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Ch 11 -13
A Weak Economy
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Recession
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Two consecutive quarters of a decline in
real gross domestic product
Many countries have recently
experienced a recession
Unemployment rates are high across
the U.S. and around the world
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Ch 11 -14
Cultural Differences
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Time
Space
Family roles
Religious factors
Family time
Values
Eating
Rules of etiquette
Importance of relationships
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Ch 11 -15
European Business Cultures
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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
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Ch 11 -16
Asian Business Cultures
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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
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Ch 11 -17
Mexican Business Culture
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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
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Ch 11 -18
Mexican Business Culture continued
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Preserving one’s 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
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Ch 11 -19
Japanese Business Culture
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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
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Ch 11 -20
Communication Differences Across
Cultures
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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
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Ch 11 -21
Communication Differences Across
Cultures continued
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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
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Ch 11 -22
Worldwide Tax Rates
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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%
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Ch 11 -23
India
Debt is 80% of GDP
 Gap between rich and poor
widening
 Middle class is growing
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Ch 11 -24
Joint Ventures in India
Joint ventures are mandatory for
foreign companies doing business
in India
 Foreign firms restricted to 74%
ownership of India-based firms
 Most joint ventures in India fail
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Ch 11 -25
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Ch 11 -26
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Chapter 11 Global / International Issues