Chapter 4 Notes
Chapter 4 Notes MGMT 371 002
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MGMT 371 002
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This 2 page Class Notes was uploaded by Richard Martin on Thursday September 8, 2016. The Class Notes belongs to MGMT 371 002 at University of South Carolina taught by Patrick J. Demouy in Fall 2016. Since its upload, it has received 4 views. For similar materials see Principles of Management in Business Administration at University of South Carolina.
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Date Created: 09/08/16
Chapter 4 Wednesday, August 31, 2016 3:11 PM • Difficulties and risks of a borderless world are matched by benefits and opportunities • Cargo containers: world of commerce would not exist today without them • 1940s-50s: 20% of cost of product was from shipping • Four stages of globalization: 1. Domestic 2. International 3. Multinational 4. Global • Slide 5 - International ○ Exporting: transferring products for sale to foreign countries ○ Outsourcing: called off shoring, work activities are done in countries with cheap labor ○ Licensing: enabling a company to produce and market a product in another country Franchising: licensing that provides a complete package of materials and services ○ Direct investing: high level of involvement, company manages and controls assets • Political risk: risk of lost assets, earning power, or managerial control • Hofstede's Value Dimensions ○ Power distance: degree to which people accept inequality in power among organizations/people ○ Uncertainty avoidance: characterized by people's intolerance for uncertainty resulting support for beliefs that promise certainty and conformity ○ Individualism and collectivism: social framework which individuals take care of themselves or look after one another and organizations protect their member's interest ○ Masculinity and felinity: cultural preference for achievement, heroism, assertiveness, cooperation, relationships and quality of life • Globalization: extent to which trade and investments, information, social and cultural ideas and political cooperation flow between countries • Bottom of the pyramid concept (BOP): proposes that corporations can alleviate poverty and other social ills by selling to the world's poorest people • Exporting: maintains production facilities within the home nation and transfers its products for sale in foreign countries • Global outsourcing (offshoring): engaging in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies • Licensing: enabling a company to produce and market a product in another country • Franchising: licensing that provides a complete package of materials and services • Joint venture: company shares costs and risks with another firm to develop new products, build new facilities, or set up distribution networks • Acquisition: provide cost savings over exporting by shortening distribution channels and reducing storage and transportation conditions • Greenfield venture: company builds a subsidiary from scratch in a foreign country • China: ○ Growing consumer market ○ Manufacturing area for US companies • India: ○ Service giant ○ Software design and precision engineering • Brazil: gaining attention of American managers • International management: management of business operations conducted in more than one country • Economic development: economic conditions in the country where the international organization operates • Infrastructure: physical facilities (highways, airports, telephone lines) that support economic activities • Political risk: risk of lost assets, earning power or managerial control Notes Page 1 • Political risk: risk of lost assets, earning power or managerial control • Political instability: events such as riots, revolutions or government upheavals that can affect the operations of an international company • Cultural intelligence: ability to use reasoning and observation to interpret culturally unfamiliar situations and know how to respond Notes Page 2
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