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