MULTINATIONAL MANAGEMENT

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MULTINATIONAL MANAGEMENT

• The formulation of strategies and the design of
  management systems to take advantage of
  international opportunities and respond to
  international threats

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THE MULTINATIONAL COMPANY

• Any company that engages in business functions
  beyond its domestic borders
• Includes both large and small companies

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WHY IS MULTINATIONAL MANAGEMENT IMPORTANT?

• Businesses increasingly look to other countries
• To seek global opportunities
• To keep an eye on global competition

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GLOBALIZATION

• The worldwide trend of businesses expanding
  beyond their domestic boundaries

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SEVEN KEY FORCES ARE GLOBALIZING THE WORLD ECONOMY

• 1. Falling borders
• 2. Growing cross-border trade and investment
• 3. The rise of global products and global
  customers
• 4. Privatizations

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• 5. New competitors in the world market
• 6. The rise of global standards of quality and
  production
• 7. Growing sophistication of information
  technology

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BORDERS ARE FALLING

• Free trade areas and the world trade organization
• In 1996, the number of regional trade agreements
  reached 108, almost doubling the number since 1992

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TRADE AGREEMENTS

• Reduce tariffs and restrictions
• The three largest groups --EU, NAFTA, and APEC
• GATT
• World Trade Organization

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SELL ANYWHERE, LOCATE ANYWHERE

• World trade growth an average rate of 7 per
  year 1990 to 1996
• Nearly half of the over 5 trillion in world
  trade is among the European union, the U.S., And
  Japan -- the triad

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FOREIGN DIRECT INVESTMENT (FDI)

• A company from one country has an ownership
  position in an organization from another country
  - See Ex 1-6 for top 30
• FDI in the developed countries approximately 216
  billion

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THE RISE OF GLOBAL PRODUCTS AND GLOBAL CUSTOMERS

• The needs of customers growing more similar
• Global customers search the world for their
  supplies without regard for national boundaries

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• Privatization is the sale of government owned
  businesses to private investors

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PRIVATIZATION

• The developing countries and transition economies
  use privatization to become capitalistic
  economies

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BENEFITS FOR MULTINATIONAL COMPANIES

• Opportunities for bargain basement investments
• An easy way to gain access
• Often with local government incentives such as
  several years of tax free operations

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A GLOBAL OR REGIONAL PRODUCT STANDARD

• Companies can make one or only a few versions of
  a product for the world market
• Cheaper than versions for different countries

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CONSISTENCY IN QUALITY

• The international organization for
  standardization (ISO) in Geneva, Switzerland

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INFORMATION TECHNOLOGY IS MAKES IT ALL EASIER

• Allows easy worldwide communication
• Small companies have more computer power
• Poorer nations can have technology

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STRATEGY

• The maneuvers or activities that managers use to
  sustain and increase organizational performance

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MULTINATIONAL STRATEGY FORMULATION

• The process of choosing or crafting a strategy
• Challenge of dealing with opportunities and
  competitors located anywhere in the world

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MULTINATIONAL STRATEGY IMPLEMENTATION

• Includes all the activities necessary to achieve
  strategic objectives
• Requires complex management systems to carry out
  the strategies that reach beyond domestic
  boundaries

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THE NEXT GENERATION OF MULTINATIONAL MANAGERS

• A global mindset
• The ability to work with diverse people
• A long range perspective
• The ability to manager change and transition

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• The ability to create systems for a learning and
  changing organizations
• The talent to motivate all employees to achieve
  excellence
• Accomplished negotiation skills

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• A willingness to seek and succeed in overseas
  assignments
• An understanding of national cultures