CHP 3 NOTES- GLOBAL MANAGEMENT - MANAGING IN A GLOBAL...

This preview shows page 1 - 3 out of 11 pages.

MANAGING IN A GLOBAL ENVIRONMENT Globalization refers to the extent to which trade and investments, information, social and cultural ideas, and political cooperation flow between countries. One result is that countries, businesses, and people become increasingly interdependent. Globalization has been on the rise since the 1970s, and most industrialized nations show a high degree of globalization today. Globalization provides a competitive edge at all stages of developing, manufacturing, and marketing products, and domestic markets are saturated for many firms. The reality of today’s borderless companies means consumers can no longer tell from which country they’re buying (e.g., U.S. publisher Random House is owned by Germany’s Bertelsmann AG, and Miller beer is owned by a South African company). The process of globalization typically passes through four distinct stages: Domestic . Market potential is limited to the home country with all production and marketing facilities located at home. International . Exports increase and the company adopts a multidomestic approach with marketing in several countries individually. Multinational . Company has marketing and production facilities located in many countries, with more than one-third of its sales outside the home country. Global (or stateless). International development transcends any single home country. GETTING STARTED INTERNATIONALLY Organizations can become involved internationally in a couple of different ways. One way is to seek cheaper sources of material or labor offshore, which is called offshoring or global outsourcing. Another way is to implement market entry strategies such as exporting, licensing, and direct investment. These market entry strategies represent alternative ways to sell products and services in foreign markets. A. Exporting -- is a strategy in which the corporation maintains its production facilities within the home nation and transfers its products for sale in foreign countries. Exporting enables a company to market its products in other countries at modest resource cost and with limited risk. B. Global outsourcing , or offshoring , means engaging in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies. C. Licensing is a strategy in which the corporation (the licensor) in one country makes certain resources available to companies in another country (the licensees). These resources can include technology, managerial skills, and/or patent and trademark rights that enable the licensee(s) to produce and market a product similar to what the licensor has been producing. 1. Franchising is a special form of licensing that occurs when the franchisee buys a complete package of materials and services, including equipment, products, product
ingredients, trademark and trade name rights, managerial advice, and a standardized operating system.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture