2. Article – Emerging Giants
• Some emerging countries: Brazil, China, India,
Russia, Egypt, and South America
• What are some advantages and disadvantages
companies have by using these countries to
make their companies more international?
3. International Management
• International management?
– the process of applying management concepts and
techniques in a multinational environment and
adapting management practices to different
economic, political, and cultural environment
• Reshape business models
• What is a MNC? Give an example of a MNC
company.
4. Globalization and Internationalization
• Internationalization (process of a business
crossing from national to cultural borders) VS.
globalization (vision of creating one world
unit, a single market entity
• Offshoring and outsouring
– Who benefits from these two processes of
globalization?
5. Global and Regional Integration
• World Trade Organization (WTO)
• North American Free Trade Agreement (NAFTA)
• CAFTA – DR
– U.S. central American free trade agreement –
Dominican republic
• Free Trade Agreement of the Americas (FTAA)
• European Union
– 27 member states
• Regional Trade agreements have slowed down
negotiations between countries in the WTO
6. The Shifting Balance of Economic
Power in the Global Economy
• In a report, Goldman Sachs argued that the
global potential of Brazil, Russia, India, and
China is such that they may becoming among
the 4 most dominant economies by the year
2050
• Why do you think that these countries have
the potential to become the most dominant
economies?
7. Economic Systems of the World and
Regional Connections
• Global economies
• Market economy – when private enterprises own
property and monitor the production, distribution
of goods, and services while the state simply
supports competition and efficient practices
• Command economy – the government, has explicit
control over the price and supply of a good or
service
• Mixed economy – a combination of a market and
command economy
8. North America
• Free-market-based economy
• Canada is the US’s largest trading partner
• Mexico has built a very strong maquiladora
(factories) industry
• What industries does North America have
major dominant positions in?
9. South America
• Accumulated heavy foreign debt, and severe
inflation
• Argentina has one of the strongest economies
overall
– abundant natural resources
– literate population
– export-oriented agricultural sector
– diversified industrial base
• Positive dev. in SA is the growth of intercountry
trade, spurred on by the progress toward free-
market policies
10. Europe
• EU
– Ultimate objective of the EU is to eliminate all trade
barriers among member countries (like b/w states in
the US)
– Single currency and a regional central bank
• Central and Eastern Europe
– Russia: dismantling of Russian price controls, and
privatization of ownership
– Poland – economy has done relatively well, first of
communist-bloc countries to adopt more privatized
ownership
11. Asia
• Japan
– Japanese cultural values
– Ministry of International Trade and Industry (MITI)
– Use of keiretsus (a large group of vertically integrated
companies to end users)
• China
– Major risk, tense trade feelings, because of the two systems of
communism and capitalism
• Emerging markets
– South Korea: chaebols
– Hong Kong – headquarters for some of the most successful
multinational operations in Asia
– Singapore: ideal model of urban life, leader and financial
center of Southeast Asia
– Taiwan – progressed from labor intensive economy to one that
is dominated by more technology
12. Other Emerging Countries
• Less Developed Countries (LDC)
– What characterizes an LDC?
• India
– Recent trend of of locating software and other higher-
value-added services
• Middle East and Central Asia
– Many are considered LDC’s, but because of oil they are
considered economically rich
• Africa
– Considerable natural resources, but remains poor and
underdeveloped
– developing nations in Africa lack the
institutions, infrastructure, and economic capacity to take
full advantage of globalization
Notes de l'éditeur
GE, Tata Group (India), Royal Dutch/Shell Group, Cisco Systems
http://www.youtube.com/watch?v=3oTLyPPrZE42:05, 3:30, 5:40Benefits for companies: entry into different countries, increased global sales, cheaper labor and costsBenefits for workers: those in countries being industrialized get jobs, gain wagesCosts for workers: loss of jobs to people who will take lower wagesBenefits for communities: it can increase jobs, therefore reducing povertyCost for communities: can take jobs away from people, increasing unemployment
http://rendezvous.blogs.nytimes.com/2012/02/06/greece-between-default-and-the-explosion-of-revolution/?scp=2&sq=European%20Union,%20globalization&st=cseeconomic doom for Greece and renewed speculation about the life expectancy of the euro. That renewed uncertainty could, in turn, affect not just Europe (spreading “contagion” to Portugal, Spain and Italy), but also the global economy, including China (Europe is its biggest market) and the United States, where a nascent recovery shows signs of strengthening — for now.
http://www.nytimes.com/2012/01/23/business/global/wrenching-the-globe-into-a-new-economic-orbit.html?scp=2&sq=BRIC&st=cseSome See Two New Gilded Ages, Raising Global TensionsToday, as the world economy is being reshaped by the technology revolution and globalization, the resulting economic transformation is creating a new gilded age and a new plutocracy. The West is experiencing a second gilded age, while the emerging markets, as Mr. O’Neill and others have documented, are experiencing their first gilded age. “We are seeing much more rapid growth in developing countries, especially China and India, because the policies and technologies in the West have allowed a lot of medium-skilled jobs to be done” in those countries…A survey of about 10,000 Harvard Business School alumni released last week illustrated this gap. The respondents were very worried about U.S. competitiveness in the world economy — 71 percent expect it to decline over the next three years
http://search.proquest.com.ezproxy.baylor.edu/wallstreetjournal/docview/919895164/134BAA53BC52F1D13F4/1?accountid=7014It is no wonder the price of imports from China, flat for many years, has been rising since late 2010. The changing cost dynamics have boosted hopeful talk that U.S. manufacturers will turn to "in-sourcing," and it is true some companies are moving operations back home. But for many companies, a better step is to beef up production in Mexico-Foreign money is being invested into U.S. manufacturing because some countries that were previously very popular to invest in (China) have had rising costs… It is now as cheap to manufacture and do business in the U.S. (link to article about China, U.S., and Mexico)Based on that information, and the idea that all the best U.S. acquisitions are already invested in, the Wadson Company should invest in companies in Europe that are expanding or will be expanding into the United States.
South America is a great place to invest because there is a lot of growth, and ease of trade between those nations.
-Russia has a very large, untapped population/market, and it also has a promising future rise in GDP as it continues to develop, post-communism. Other Eastern European countries have unemployed, skilled workers that can be tapped.-Europe is likely a good place for foreign investment as the EU continues to expand. (link to article about Greece and Croatia). If the conglomerate is not currently doing business in Europe, it may be difficult to enter the market. Right now, the EU is more uncertain than it has been, so entry right now may be more difficult than it would have been before the global financial crisis
http://www.nytimes.com/2009/12/21/world/asia/21china.html?pagewanted=2China’s Export of Labor Faces Scorn China, famous for its export of cheap goods, is increasingly known for shipping out cheap labor. These global migrants often work in factories or on Chinese-run construction and engineering projects, though the range of jobs is astonishing: from planting flowers in the Netherlands to doing secretarial tasks in Singapore to herding cows in Mongolia — even delivering newspapers in the Middle East. But a backlash against them has grown-Asia is intriguing for MNCs because of the huge market and availability of workers, especially in China, as well as growing GDP. Also, some of the business practices in Asia help cultivate success, like the Japanese keiretsus and the South Korean chaebols (large family-held conglomerates that have political and economic power).
Why are MNCs interested? India is attractive because it has a large population, consisting of highly educated, English speaking people, and also because the government is funding economic development. The Middle East has oil that the majority of the world relies on, so all businesses must have interest there. Africa is untapped, but there are so many resources that it is not smart to leave it that way. Overall, these markets are those of the future, so MNCs need to put their focuses here because this is what will be growing in the future.
