Lecture 13: International Management
International Business: defines as the business activities of any firm that involve the movement of resources across national boundaries
International Management: management of business operations conduced in more than one country
Multinational Corporations: owns businesses in two or more countries and receives more than 25% of total sales revenue from operations outside the home country
International Business Environment
Legal-political Environment: includes the government legislation, regulations policies and changes to the political environment that will impact a company's decision-making
Nationalisation: refers to the forced sales of MNCs' assets to local buyers
Expropriation: occurs when the local government seizes foreign-owned assets, without or inadequate compensation
Acts of violence directed against a MNC's properties or employees
Economic Environment: to reduce economic risk, international firms must pay particular attention to key economic variables.
Socio-cultural Environment: represents the demographical characteristics, customs, values and norms of the population in which the organisation operates
cultural and national differences strongly influence attitudes and expectations
develop cultural sensitivity
pay attention to language and cross-cultural training and dealing with family issues
Technological Environment: includes the scientific and technological advancement in the industry and the society at large
Technology Transfer: encouraging foreign direct invesment
Technological factors like maturity of technology, technological advancements and the role of the internet
Why companies choose to go international
To gain access to more reliable or cheaper resources
To increase market share
To avoid foreign tariffs and import quotes
Market Entry Strategy
Exporting: production facilities within its home country and sale to foreign markets
Licensing: company receives royalty payments and allowing another company to produce it product, sell its services or use its brand name
Franchising: provides franchisees with a standard package of products
Joint Venture: jointly owned by two or more firms in the host country to develop new products, build a manufacturing facility or set up a sales and distribution network
Wholly-owned Subsidiaries: is an operation on foreign soil that is totally owned and controlled by a company and established through acquisitions or start-ups
High and Low Context
High context: to build personal social relationships
Low Context: use communication primarily to exchange facts and information