McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

International International ManagementManagement

Chapter SixChapter Six

The Global EnvironmentThe Global Environment

The global economy is dominated by countries in three regions: North America, Western Europe, and Asia.

Other developing countries and regions represent important areas for economic growth

6-2

The Global EconomyThe Global Economy

6-3Figure 6.1

European UnificationEuropean Unification

Europe is integrating economically to form the biggest market in the world

Certain structural issues within Europe need to be corrected for the EU to function effectively.

6-4

U.S. Trading PartnersU.S. Trading PartnersBased on Total Imports and ExportsBased on Total Imports and Exports

Figure 6.26-5

Consequences of a Global EconomyConsequences of a Global Economy

1. Expansion of international trade2. Foreign direct investment (FDI) is playing an

ever-increasing role in the global economy3. Imports are penetrating deeper into the

world’s largest economies4. Companies are finding their home markets

under attack from foreign competitors

6-6

Factors to Consider for OffshoringFactors to Consider for Offshoring

What is the competitive advantage of the products they offer?

Is the business in its early stages? Can production savings be achieved locally? Can the entire supply chain be improved?

6-7

Organizational ModelsOrganizational Models

6-8Figure 6.5

Comparison of Entry ModesComparison of Entry Modes

6-9Table 6.2

Managing across BordersManaging across Borders

Expatriates Parent-company

nationals who are sent to work at a foreign subsidiary

6-10

Identifying International ExecutivesIdentifying International Executives

6-11Table 6.4

How to Prevent Failed Global AssignmentsHow to Prevent Failed Global Assignments

6-12

Table 6.5

Understanding Cultural IssuesUnderstanding Cultural Issues

Ethnocentrism The tendency to judge

others by the standards of one’s group or culture, which are seen as superior

Culture shock The disorientation and

stress associated with being in a foreign environment.

6-13

Understanding Cultural IssuesUnderstanding Cultural Issues

Power distance the extent to which a

society accepts the fact that power in organizations is distributed unequally

Individualism/collectivism the extent to which people

act on their own or as a part of a group.

6-14

Understanding Cultural IssuesUnderstanding Cultural Issues

Uncertainty avoidance the extent to which

people in a society feel threatened by uncertain and ambiguous situations.

Masculinity/femininity the extent to which a

society values quantity of life over quality of life

6-15