CHAPTER 1 MULTINATIONAL MANAGEMENT IN A CHANGING WORLD

2. CHAPTER 1 MULTINATIONAL MANAGEMENT IN A CHANGING WORLD

3. MULTINATIONAL MANAGEMENT • The formulation of strategies and the design of management systems to take advantage of international opportunities and respond to international threats

4. THE MULTINATIONAL COMPANY • Any company that engages in business functions beyond its domestic borders • Includes both large and small companies

5. Exhibit 1.1 (in Text) Lists The Top Multinational Corporations Ranked By Sales Revenue.

6. WHY IS MULTINATIONAL MANAGEMENT IMPORTANT? • Businesses increasingly look to other countries • to seek global opportunities • to keep an eye on global competition

7. GLOBALIZATION • The worldwide trend of businesses expanding beyond their domestic boundaries

8. SEVEN KEY FORCES ARE GLOBALIZING THE WORLD ECONOMY • 1. Disintegrating borders • 2. Growing cross-border trade and investment • 3. The rise of global products and global customers • 4. Privatizations

9. 5. New competitors in the world market • 6. The rise of global standards of quality and production • 7. The Internet and information technology

11. THE GLOBAL 1. Falling Borders ECONOMY

12. BORDERS ARE FALLING • Free trade areas and the world trade organization • By 2000, the number of regional trade agreements reached 139, more than double the number existing in 1992

13. TRADE AGREEMENTS • Reduce tariffs and restrictions • The three largest groups --EU, NAFTA, and APEC • World Trade Organization

14. THE 2. Growing Trade GLOBAL and Investment ECONOMY

15. SELL ANYWHERE, LOCATE ANYWHERE • World trade growth: average of 6.5% per year 1990 to 2000 • Nearly half of the over $5 trillion in world trade is among the European union, the U.S., and Japan -- the TRIAD

16. Exhibits 1.4 and 1.5 (in text) show the leading countries in terms of import and export size and growth.

17. FOREIGN DIRECT INVESTMENT (FDI) • A company from one country has an ownership position in an organization from another country - See Ex 1.6 for top 30 • FDI in the developed countries approximately $899 billion

18. EXHIBIT 1.6 TOP FOREIGN ASSET COMPANIES • 1. General Electric: USA • 2. General Motors: USA • 3. Royal Dutch Shell: UK/Netherlands • 4. Ford: USA • 5. Exxon: USA • 6. Toyota: Japan

19. EXHIBIT 1.9 RISK RATINGS FOR SELECTED COUNTRIES(100 = Lowest Risk)

20. THE 3. Global Products/ GLOBAL Customers ECONOMY

21. THE RISE OF GLOBAL PRODUCTS AND GLOBAL CUSTOMERS • The needs of customers growing more similar • Global customers search the world for their supplies without regard for national boundaries

22. THE GLOBAL 4. Privatizations ECONOMY

23. PRIVATIZATION • Privatization is the sale of government owned businesses to private investors

24. Privatization, continued • The developing countries and transition economies use privatization to become capitalistic economies

25. BENEFITS FOR MULTINATIONAL COMPANIES • Opportunities for bargain basement investments • An easy way to gain access • often with local government incentives such as several years of tax free operations

26. THE GLOBAL 5. New Competitors ECONOMY

27. EXHIBIT 1.10: TOP EMERGING MARKET COMPANIES • 1. China Telecom:Hong Kong • 2. Taiwan Semiconductor:Taiwan • 3.Samsung Electronics:Korea • 4.Telefonos de Mexico (Telmex):Mexico

28. THE 6. Rise of Global GLOBAL Standards ECONOMY

29. GLOBAL OR REGIONAL PRODUCT STANDARDS • Companies can make one or only a few versions of a product for the world market • Cheaper than versions for different countries

30. CONSISTENCY AND PREDICTABILITY IN QUALITY • The international organization for standardization (ISO) in Geneva, Switzerland - ISO 9000:2000

31. THE 7. IT and the GLOBAL Internet ECONOMY

32. THE INTERNET AND INFORMATION TECHNOLOGY • Allows easy worldwide communication and economic transactions • Small companies have more computer power • Poorer nations can have technology

33. THE NEXT GENERATION OF MULTINATIONAL MANAGERS • A global mindset • The ability to work with diverse people • A long range perspective • The ability to manager change and transition

34. The next generation of multinational managers, continued • The ability to create systems for a learning and changing organizations • The talent to motivate all employees to achieve excellence • Accomplished negotiation skills

35. The next generation of multinational managers, continued • A willingness to seek and succeed in overseas assignments • An understanding of national cultures

36. MULTINATIONAL MANAGEMENT: A STRATEGIC APPROACH • The strategic approach to multinational management considers how managers formulate and implement strategies to compete successfully in the global economy

37. STRATEGY • The maneuvers or activities that managers use to sustain and increase organizational performance

38. MULTINATIONAL STRATEGY FORMULATION • The process of choosing or crafting a strategy • challenge of dealing with opportunities and competitors located anywhere in the world

39. MULTINATIONAL STRATEGY IMPLEMENTATION • Includes all the activities necessary to achieve strategic objectives • requires complex management systems to carry out the strategies that reach beyond domestic boundaries

40. A FUNDAMENTAL ASSUMPTION OF THE BOOK • “When you understand your competitors and yourself, you will always win," Sun Tzu, The art of war

41. CONCLUSIONS • Multinational management and the multinational company • Forces that drive globalization • Key characteristics of successful multinational managers • The strategic approach to multinational management