MGT 340 - Week 1 Notes
MGT 340 - Week 1 Notes MGT 340 100
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This 7 page Class Notes was uploaded by Rose_Esqui on Sunday October 4, 2015. The Class Notes belongs to MGT 340 100 at Pace University - New York taught by Hwang in Fall 2015. Since its upload, it has received 15 views. For similar materials see International Management in Business, management at Pace University - New York.
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Date Created: 10/04/15
Chapter 1 Globalization and International Linkages I International Management A Involves 1 Applies management concepts and techniques in a multinational environment 2 Adapts management practices to different economic political and cultural environments B Multinational Corporation MNC 1 Operates in more than one country 2 Produces international sales 3 Includes a miX of nationalities within managers and owners C The World39s Top Nonfinancial MNC39s liable 1 1 Wrnrl d is Top Hium lii n a racial M HIGH FlairI Iredl by Foreign Aaseis EBET in rrrii llli ll l of dollars Eu ny H m F sreig m Total chrlrxeig r1 Terrell Hank Na m e Econ ram y 324 5513125 559 15 53 has 3955 a i E ene ral lE la ctr ire IL nited Statea 133309 953 3 86519 1HJ3 B E we 1 atone E mu ii In ILJ nited King do rn E r 2549 61331 1 er Royal Dutchr Netlierlanntle EllieII E mu p LI united ing do rn 196323 BEErim 239313 1 BE 31 E riti sl i Petr lmmm En mpa mi Fla IL nited King tie rn 1353133 23590 223316 2834355 539 EamonMobil LI united States IMEEE EILEJJEE 35511 EMILE E E Tamra Elli1quot Eorpozration 1 a pa n 153dl EEQEEE ME 31 E ERRED ii TutEl Fra nee 1113353161 llEi39l iafll l T312335 2336539 3 Eleni rieit D e F rame Fra nee 123591 ETdJElEI l d l SETQE Ell Ford Meter Company 1 united Statea 121353 WEE E Eil 915311 HidES ilEl E H rst E a rmany 1334 202111 51 gal int 1 El S nltrrrea LJN CIA World rrrrrasrrrrerrr Report EGGS Annex il39a bl e ALE II Globalization amp Internationalization A the process of social political economic cultural and technological integration among countries around the world 1 Hastened by a Offshoring the process by which companies undertake some activities at offshore locations instead of their countries of origin b Outsourcing the subcontracting or contracting out of activities to external organizations that had previously been performed by the firm B Pros amp Cons 1 Benefits of Globalization a Wealth b Jobs c Technology 1 Lower prices 2 Criticisms of Globalization a Offshoring of business service jobs to lowerwage countries b Growing trade deficits c Slow wage growth d Environmental and social impacts C Global amp Regional Integration 1 Global Agreements a World Trade Organization WTO the global organization of countries that oversees rules amp regulations for international trade and investment i Trade amp Investments include International Management Page 1 b a Agriculture b Intellectual Property c Services d Competition e Subsidies General Agreement on Tariffs and Trade GATT a freetrade agreement between the United States Canada amp Mexico that has removed most barriers to trade amp investment 2 Regional Agreements a C North American Free Trade Agreement NAFTA a freetrade agreement between the United States Canada amp Mexico that has removed most barriers to trade amp investment i Designed to promote commerce in the region ii Eliminated tariffs as well as importexport quotas iii Government procurement markets opened to companies in other 2 countries iv Increase in opportunity to make investments in each other39s country v Increase in ease of travel between countries vi Removal of restrictions on agriculture products auto parts amp energy goods US Central American Free Trade Agreement CAFTA is an expansion of NAFTA to six Central American nations Guatemala El Salvador Honduras Costa Rica Nicaragua amp the Dominican Republic i Same e ects from NAFTA ii Became CAFTA DR to include the Dominican Republic approved on July 2005 European Union EU a political amp economic community consisting of 27 member states i Trade barriers removed ii Unified currency Euro iii Customers can compare prices between countries between countries iv Businesses can conduct business in one uniform policy amp currency Association of Southeast Asian Nations ASEAN is an alliance promoting economic and political cooperation by fostering dialogue among its ten members Brunei Cambodia Indonesia Laos Malaysia Myanmar the Philippines Singapore Thailand and Vietnam i Active collaboration and mutual assistance on matters of common interest in the economic social cultural technical scientific and administrative fields ii Collaboration for greater utilization of agriculture amp industries iii Expansion of trade iv Improving transportation and communications facilities v Raising of the living standards of their peoples vi Maintain close and beneficial cooperation with existing international and regional organizations Free Trade Agreement of the Americas FTAA a proposed freetrade agreement among the 34 democratically governed countries of the Western Hemisphere III International Economic Power in the Global Economy A Shifting landscape due to 1 Economic integration 2 Economic potential of emerging markets a BRIC countries Brazil Russia India and China could be among the four most dominant economies by 2050 B The World39s Largest Economies 2005 2020 projected International Management Page 2 Thins 14 The 39W nrli s LiarEat Eanaimiina and man Prngj at d Mnawmd by EDP at Market El h g i t in millions if duiilarsj 213135 2132121 EDP Hank GilFl Flam United Stains 1245 23331 1 Japan 11511 55352 39 Germam 2331 Eil39iima 2225 United Kingdom 2213 France 2132 III HalfFr 1 1213 Eanadai 1122 22115 11 Spain 1113 1116 12 South Korea am 1 25121 9 tragil 1 11 1131311 13 in ia 1 59 12 31233 1 Maxim 13952 13 1451 14 Russia 14 11 E I i was a 131231 2 431313 5 n m Source Fer Foresight 3331 Economic fridu try and E39wr1arare Trmd Cowright it 21135 The Economist intelli gema Unit Reprinted with permission niTlim Economist inialliganne LinquotIii via uipwighr laaranea Gamer IV Trends in Trade amp International Investments A International Trade 1 In 2009 merchandise and commercial services exports declined B Foreign Direct Investment FDI investment in property plant or equipment in another country 1 Growing at healthy rate 2 Outpacing domestic growth in most countries 3 Declined in 2009 due to the global recession C World Merchandise Trade by Region 2009 Talism ill ell ma a I39H39Ii lrz zha l a Tra Ify Magmai air E l t d BEnatal gum llri blillnnn and pamnn tgnn Enrich u 7 7 7 7 7 7 7 lawmantime 7 7 7 7 7 7 7 7 V j g A Irll39rl inquot F r a v n I39quotI all lilil quot Hellman F1 I39m9n t 39 ir l Ghana WEIIlium Fin rcmmtn n Eihvnnl n 39 u E s E s 1amp5 E E i E 39 i 21E El n g E EVEI133 E 39 i wiziirlcl 1121613quot nil M 391 Pi 33 1 EJH n il l b 115 211 Nur lI n I111 ring I IEI E39 E 111 11 1 1 39l 7quot 1 El Fa 9395 Uniiliimtl SEMIJEH I EUET 4quot II 15 IE I aIFIiiiIIiIi 2quot ES 3quot 93931 EmmaIi 3 1 E H 35 2 11quot 533 11 3quot 9 1 M mi im Pfili a 3F 511 139 5391 Ed 11 1E5 112 5M1 E 39 llil39l Fill Eurrltrml lingBF an iiiL11 E 111 21 34 dam TILE EE EU 33951 EIFEuz rl li 153 1quot 11 23 2393 153 15 32 44 27quot Uilhn f ELIEL111 F IEI nFEr39IEIKFII AIIT391fII ill j l IR 1111 39 3121 H111 iquotIi SH 5quot E uirg m a lif 39 FI 391 1 2393 51141quot 1 1 H 1 EH Ellyn5311543 H Lininrh r ILEHEE 111 391391 ILTifi i H 12 G ni y 1121 1 1quotEI El 23 931 5 IE 13quot 1 1 Fran153 19515 31 HI 3 2391 551 2 1 1 39I 22 MQEI Jif l ir l i a a E 39I EI 1E 2392 414E 5 15 39IE 23 Uail mrll Kii39hEEIEli a39l 33931 2 E E4 4155 2 il EE39 2d IIIII 1115 2 EEG LEE 1 2 IE E BEE Earn 11H 11 Wism 39ili l39 iipuuviluguuuuriu 3 Eirntna IE39EIFEI 1113 1quot 239 4g 213 1 1 Jit J I 2 luiumiiald n nsmilai ll39lillli l 27111 iIii ii iii Zilll I39Hf I I Elli quotrll39ti l i 513 l39 rillIE 31 239 a 1quot 339ll ZIE i g 15 2quot 339 IF 1 Hung till nlquotrl rrUI yrs 1 55 F39rr39 i 115 11 am d39iagl ris I39IZEr EnsH1151 39139th in in IN 39339 E I Tan 3521 32111 11 51quot STE 15139 1 Inm39lllnll llm Jam 1 in run nus 1Hr 1n arta Hi 1 MiEF resill FriHE 9111 ed Iii I113 1 I13 1 33 il Equot 112 1 EFTF E39f1 139 MW hi 1 IEnr m ll39l39i dl il i nm Im 115 1 le39ln billI iJl anvii i1 2 L I39dil G 1 il Fl Li 3941quot 11115 IE 1 L 21 2 1 t hirsn 153112 1 Hi3 139 quot PIE 1 I JsiSJ39LE 1 1 2 1 11 Jlliiumi39l 39 l 1 H r 7 f Ella 13151 7quot 1 5391 51 Ind Did 1 1 E 21quot 1quot 23915 fifIIIF ll 3 13 21 15115 In uin hiihL il39lru1 arurminm 49 new EI I 1 in aquot nagem It 39 l 39I 1 9121 MIu lira39inrtnnualiu I111 E I39Zlmilili39lJ U39 vul39yu i 3939Hi1EET1il E 1915111 1quot 1 quot 139JI EZE I39lI39lquot lug fl 1I F I 26 MJF si aiz 5 539 1 Tquot al39 EH SIP3931 in lairHa 5139 E 9i 1 an Lat39L39Ehlm H 11quot 1 1 1J1 ill39l IEIF in 1 11 1 1 ELI gr H slym3 wrung n I3 mJIn 13m a n r 1 u 11 1nd 5I 1 m I r r r Lanna E V I iixEE inJul in Li T3111 391 iii rim inquot Eil 393 Vi ei i 39r fir2 9139s ii 451 PFH W Ni F39 are Huh rrurIr Earl Miser 1111 EH 2011 1 II14 ME 13941quot L 5143 erwnwi 3939K39ll l alli39liegllIn lquot1quotWFF minquot 153 anquot Fal E Fa VEIP1I iiquotn International Management Page 3 V Global Economic Systems A Market Economy when private enterprise reserves the right to own property amp monitor the production amp distribution of goods amp services while the state simply supports competition amp efficient practices 1 Least restriction on resources since they39re determined by demand 2 Customers have the right to disclose wants amp needs a Businesses are obligated to respond appropriately 3 Supply amp Demand a Balance sustains prices b Imbalance price uctuation B Command Economy the government has explicit control over the price amp supply of a good or service 1 Businesses are owned by the state a Ensures investment amp business practices are done at the best interest of the nation b This excludes what the people want or need 2 Ignores demographic information 3 The government provides security for firms to keep them from going bankrupt 4 Private ownership is prohibited 5 Improving customer service with innovative ideas isn39t a priority C Mixed Economy a combination of a market amp command economy 1 Allows private ownership 2 Flexibility of the law of demand 3 Government extends assistances to companies IF requested 4 Standard of Living all is taken care of by the government Minimum wage standards Social security Environmental protection Advancement of civil rights Elderly security f Health Insurance VI Economic Performance by Major World Region A Established Economies 1 North America a One of the four largest trading blocs in the world b Combined purchasing power of US Canada and Mexico approaches 12 trillion c Freemarketbased economy is attractive to private firms d Countries involved i United States a Foreign MNC s nd US a lucrative expansion market b Foreign firms welcomed as investors in US market c US firms hold market dominance in many European markets gaining market share in Asia ii Canada a US s largest trading partner b Most of the largest foreignowned Canadian companies are totally or heavily US owned c Legal and business environment in Canada is similar to that in US iii Mexico a Strongest Latin American economy b Very strong maquiladora industry c Trade with both Europe and Asia has increased d Now competitive with Asia for the US market 2 European Union a Ultimate objective i Eliminate all trade barriers among member countries ii Emergence of the EU as an operational economic union a A unified Europe could become the largest economic market in terms of purchasing power in the world iii Foreign MNCs trying to gain foothold in EU 9905 International Management Page 4 a Acquisitions alliances cooperative RampD efforts iv Economic linkages between the EU and newly emerging Central amp Eastern European countries a Challenge is to absorb former communist bloc countries V Financial crises in Greece amp Ireland putting pressure on the euro 3 Japan a Huge economic success in 1970s and 1980s b Ministry of International Trade and Industry MITI a governmental agency that identifies amp ranks national commercial pursuits amp guides the distribution of national resources to meet these goals c Keiretsus i Vertically integrated industries ii Holdings provide assistance needed in providing goods amp services to end users d Decade long recession in 1990s i More competition from emerging economies ii Poor management decisions e Remains a formidable competitor in the Pacific Rim North America amp Europe B Emerging Economies 1 Central and Eastern Europe a Russia i Dismantling of price controls amp privatization ii Membership in International Monetary Fund IMF helps raise GDP amp decrease in ation offsetting the hyperin ation created from the initial attempt at transitioning to a marketbased economy a Controls in ation iii Crime and political uncertainty b Czech Republic Hungary amp Poland i Privatization ii In ation iii Political uncertainty 2 China a Real economic growth of 12 in 2007 9 in 2008 amp 115 in 2009 i Savings glut in corporate sector ii Vast developmental needs iii Unemployment concerns b Attractive to investors despite political risk i Product pirating is a major problem ii Currency value iii Government policies favor domestic firms 3 Other Emerging Markets of Asia a South Korea i very large familyheld conglomerates ii Solid economy moderate growth amp in ation low unemployment b Hong Kong i Part of People s Republic of China ii Uncertainty about the role the Chinese government c Singapore i Success story ii Leader amp financial center for region d Taiwan i Progressed from laborintensive economy to one dominated by technologically sophisticated industries a Banking b Electricity Generation c Petroleum Refining d Computers e Thailand Malaysia amp Indonesia International Management Page 5 i Large population base ii Inexpensive labor iii Considerable natural resources iv Attractive to outside investors 4 India a Large population b Recent trend of locating software amp high valueadded services to this country boosting middle amp upperclass market for goods amp services c Attractive to US amp British investors i Well educated ii English speaking iii Technologically sophisticated workers C Developing Economies on the Verge 1 South America a Hampered by foreign debt amp severe in ation b But intercountry trade is increasing c Countries looking to do business with US 2 Countries involved a Brazil i Economy is now ourishing amp attracting investment from MNCs ii Privatization amp stable government b Chile i Uncertain future but helped by trade agreements 0 Argentina i Abundant natural resources ii Economic problems persist 3 Middle East and Central Asia a Large oil reserves b Highly unstable geopolitical and religious forces c Plagued by continuing economic problems 4 Africa Considerable natural resources African nations remain very poor amp undeveloped International trade is not a major sources of income Populace divided into 3000 tribes that speak 1000 languages amp dialects Major political instability Poverty starvation illiteracy corruption overcrowding among many social problems negatively affecting economic sector D World39s Most Competitive Nations as of 2010 thFDP PFfP Table 11 1 warnat Gompa tlua HE tI E 2ND un rtlr y Hank Singapore 1 Horny 1th Ll Sit Switzerland Australia Ea Ila113 Taiwan Norway Malaysia 11 3 I 39 5 SwedeI1 E 339 3 Eli Sourcequot World Competitive Scoreboard Emil International Management Page 6 International Management Page 7
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