Chapter One

Globalization and
International Linkages

1
 International Management

International management involves

Applying management concepts and techniques in
a multinational environment and
Adapting management practices to different
economic, political, and cultural environments.

Multinational corporation (MNC)

Operations in more than one country
International sales
Nationality mix of managers and owners

2
Globalization and Internationalization

Globalization
Process of social, political, economic, cultural, and
technological integration among countries around
the world.
Hastened by
Offshoring
Outsourcing

3
 Globalization: Pros and Cons

Benefits of Globalization
Wealth
Jobs
Technology
Lower prices

Criticisms of Globalization
off-shoring of business and service jobs to lower-
wage countries
growing trade deficits
slow wage growth
environmental and social impacts

4
 Global and Regional Integration

Global Agreements
World Trade Organization (WTO)
General Agreement on Tariffs and Trade (GATT)

Regional Agreements
North American Free Trade Agreement (NAFTA)
U.S.-Central American Free Trade Agreement
(CAFTA)
European Union (EU)
Association of Southeast Asian Nations (ASEAN)
Free Trade Agreement of the Americas (FTAA)

5
 International Economic Power
in the Global Economy
Shifting landscape due to
Economic integration

Economic potential of emerging markets

BRIC countries (Brazil, Russia, India, and China)
could be among the four most dominant
economies by 2050

6
The Worlds Largest Economies 2005 and 2020
(Projected)
Measured by GDP at Market Exchange Rates

7
 Global Economic Systems

Market Economy
Command Economy
Mixed Economy

9
 Economic Performance
by Major World Region
Established Economies

Emerging Economies

Developing Economies on the Verge

10
 Economic Performance
Established Economies
North America
One of the four largest trading blocs in the world
Free-market-based economy is attractive to private
firms

United States
Foreign MNCs find U.S. a lucrative expansion market
Foreign firms welcomed as investors in U.S. market
U.S. firms hold market dominance in many European
markets; gaining market share in Asia

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 Economic Performance
Established Economies
Canada
U.S.s largest trading partner
Most of the largest foreign-owned Canadian
companies are totally or heavily U.S.-owned
Legal and business environment in Canada is similar
to that in U.S.

Mexico
Strongest Latin American economy
Very strong maquiladora industry
Trade with both Europe and Asia has increased
Now competitive with Asia for the U.S. market

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 Economic Performance
Established Economies
European Union
Ultimate objective
Foreign MNCs trying to gain foothold in EU
Acquisitions, alliances, cooperative R&D efforts

Economic linkages between the EU and newly emerging

Central and Eastern European countries
Challenge is to absorb former communist bloc countries

13
 Economic Performance
Established Economies
Japan
Huge economic success in 1970s and 1980s
Keiretsu
Decade long recession in 1990s
Remains a formidable competitor in the Pacific Rim,
North America, and Europe

14
 Economic Performance
Emerging Economies
Central and Eastern Europe
Russia
Czech Republic, Hungary, Poland

15
 Economic Performance
Emerging Economies
China
Real economic growth of 12 percent in 2007, 9
percent in 2008, and 11.5 percent in 2009
Attractive to investors despite political risk

16
 Economic Performance
Emerging Economies
South Korea
Chaebols

Hong Kong
Part of Peoples Republic of China
Uncertainty about the role the Chinese government

17
 Economic Performance
Emerging Economies
Singapore
Success story
Leader and financial center for ASEAN region

Taiwan
Progressed from labor-intensive economy to one
dominated by technologically sophisticated
industries

18
 Economic Performance
Emerging Economies
Thailand, Malaysia, Indonesia
Large population base
Inexpensive labor
Considerable natural resources
Attractive to outside investors

19
 Economic Performance
Emerging Economies
India
Large population
Recent trend of locating software and high value-
added services to this country boosting middle- and
upper-class market for goods and services

20
 Economic Performance
Developing Economies on the Verge
South America
Hampered by foreign debt and severe inflation
But, intercountry trade is increasing

Brazil
Economy is now flourishing and attracting
investment from MNCs

21
 Economic Performance
Developing Economies on the Verge
Middle East and Central Asia
Large oil reserves
Highly unstable geopolitical and religious forces
Plagued by continuing economic problems

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