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Principles of Management

by: Marisol Swift

Principles of Management MAN 3025

Marisol Swift
GPA 3.59

Marvin Karlins

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Marvin Karlins
Class Notes
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This 4 page Class Notes was uploaded by Marisol Swift on Wednesday September 23, 2015. The Class Notes belongs to MAN 3025 at University of South Florida taught by Marvin Karlins in Fall. Since its upload, it has received 20 views. For similar materials see /class/212716/man-3025-university-of-south-florida in Business, management at University of South Florida.


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Date Created: 09/23/15
Chapter 6 The Global Environment World Trade Organization WTO formed in 1995 151 member countries involved in 95 of worlds trade It provides a forum for nations to negotiate trade agreements and procedures for administering the agreements and solving disputes Some issues are 1 objections to environmental regulations 2 subsidies to farmers in developed countries Global economy is dominated by three regions 1 North America 2 Western Europe 3 Asia European Unification 0 European is integrating economically to form the biggest market in the world under the Maastricht Treaty which established the European Union EU euro was adopted as the common currency among 13 member countries 0 Goal of Uni cation is to strengthen Europe s position as an economic superpower 0 EU presents challenge to US and other countries eg Eu has supported excluding genetically engineered food from US rms Fined Microsoft for unreasonable prices China and the Pacific Rim 0 Japan is third largest export market after Canada and Mexico 0 China is on the way to becoming the worlds largest producer and consumer Largest in basic raw materials like steel and cement and largest cellphone market 0 China s appeal to managers lies in it s large population and economic growth which makes it the worlds second largest economy Microsoft and Chinese computer company Lenovo have entered partnership China has huge advantage in manufacturing due to low labor costs so it a huge exporting nation With these low wages managers have relocated operations to China Threats to Chinas growing dominance include political instability Other rapidly growing countries trading with US include South Korea Taiwan and Singapore because they have developed a competitive advantage in areas such as engineering and technological know how 0 21 member trade group is AsiaPacific Economic Cooperation APEC Association of Southeast Asian Regions ASEAN bring together 10 nations including Indonesia Malaysia and the Philippines aimed to promote cultural development and political security THE ANIERICAS O The North America Free Trade Agreement is a economic pact that combined the economies of the United States Canada and Mexico NAFTA countries have invested in facilities across borders Example is CEMEX a Mexico based cement company and is largest cement supplier in the US Brazil is expected to replace the US in 2015 as worlds largest exported of agricultural producer The Rest of the World India has become a important provider for support of online software Much of middle east south Africa and some countries in south America have yet to participate in globalization Consequences of a Global Economy 1 Volume of trade has increased fast then the volume of output 2 Foreign direct investment FDI is playing a everincreasing role in the global economy as companies of all sizes invest overseas 3 Imports are penetrating deeper into the worlds largest economies 4 The growth of world trade FDI and imports implies that companies around the globe are nding their home markets under attack from foreign competitors 5 This all means that now opportunities are greater The Role of Outsourcing Outsourcing Contracting with an outside provider to produce one or more of a organizations goods or services Offshoring moving work to other countries Evidence suggest that the cause of job decline is not from offshoring but of innovation Jobs are also in sourced brought to the US by foreign companies One less positive effect of offshoring is wage stagnation in industries where offshoring is common as workers in those areas compete with their lower wage counterparts Managers who offshore also have unexpected additional costs training travel control language barriers Companies use offshoring as a way to find talent that is in short supply at home Factors in deciding to offshore are What are the competitive advantage of the products they offer Is the business in the early stage Can production savings be achieved locally Can the entire supply chain be improved Global Strategy Reasons managers want a common global strategy 1 existence of universal needs 2 pressures to reduce costs 3 presence of competitors with a global strategy Pressures fo countries quotas r Local Responsiveness Strong pressures emerge when customer tastes and preferences differ among Also emerge when there a differences in traditional practices Differences in distribution channels or sales practices Economic and political demands for example countries may impose tariffs and Choosing a Global Strategy 4 approaches managers can use depending on their company s position on the integr ation responsiveness grid 1 The international model An organizational model that is composed of a company s overseas subsidiaries and characterized by greater control by the parent company over the research function and the local product and marketing strategies than is the case in the multinational lever Example is P zer does not compete on cost and don t need to be tailored to local tastes Advantage is that this model facilitates the transfer of skills and know how from the parent company to subsidiaries around the globe Disadvantage is that it does not provide maximum latitude for responding to local conditions and does not provide the opportunity to achieve a low cost position via scale economics 2 The Multinational Model 3 TheG A organizational model that consists of the subsidiaries in each country in which a company does business with ultimate control exercised by the parent company Where global efficiency is not required but adapting to local conditions has it s advantages Example is Heineken Disadvantage is higher manufacturing costs lobal Market Model consisting of a companies overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations Typically adopted by organizations that base their global strategy on cost considerations Adopted by companies that see the world at one market and assume that not tangible differences exist among countries with regard to to consumer tastes or preferences Disadvantage is that may be less responsive to customer s tastes and demands 4 The Transnational Model Characterized by centralizing certain functions in locations that best achieve cost economies basing other functions in the national subsidiaries to facilitate greater local responsiveness and fostering communication among subsidiaries to permit transfer of technological expertise and skills


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