International Manajemenl Bab 1

Globalization andInternational LinkagesChapter 1International ManagementLecturer: Dr. Ir. Perdana Wahyu Santosa, MMFred Luthans | Jonathan P. Doh

Course OutlineThe GlobalEnvironmentof BusinessCulturein GlobalBusinessGlobalStrategicManagementOrganizationalBehavior andGlobal HumanResourcesManagementInternational ManagementLecturer: Dr. Ir. Perdana Wahyu Santosa, MM

The Global Environment of BusinessChapter 1: Globalization and international linkagesChapter 2: The political, legal, and technological environment of businessChapter 3: Ethics and social responsibility

Chapter 1 OutlineInternational business and managementGlobalizationOutsourcing and offshoringAdvantages and disadvantagesThe World Trade OrganizationRegional trade blocsThe shifting balance of economic power

Chapter 1 Outline (2)Regional economic issuesJapanChinaOther economies in East AsiaIndiaRussiaSouth America

International ManagementThe process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political, and cultural environments

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights reserved.

1-*International Business ActivityExporting and ImportingExporting: selling products made in ones own country for use or resale in other countriesImporting: buying products made in other countries for use or resale in ones own country

1-*International Business Activity (2)International InvestmentsForeign direct investment: the investor has control, or shares control, in the management of the asset Home country: the country in which the parent company's headquarters is locatedHost country: any other country in which the company does businessPortfolio investment: the purchase of financial assets, such as stocks and bonds, issued by companies outside your own country

Firms Involved in International BusinessMultinational corporations (MNC's)Operations in more than one countryInternational salesNationality mix of managers and ownersSmall and medium-sized enterprises (SME's)

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Globalization of BusinessGlobalization of business functionsMarketingManufacturing and service operationsFinancePurchasing and supplier networksBusiness process outsourcing: call centers, technical service, financial researchGlobal business environment with global competition

Outsourcing and OffshoringOutsourcing is contracting to buy goods or services that your company produced in the past. When the work is done outside your own country, offshore outsourcing occurs.Offshoring means performing business activities outside the country where the resulting goods or services are sold.

International Business: Strategy, Management, and the New RealitiesStages in Economic DevelopmentAdvanced economies are post-industrial countries characterized by high per-capita income, highly competitive industries, well-developed commercial infrastructure, and a large service sector.Developing economies are low-income countries characterized by limited industrialization and stagnant economies, with little economic growth.Emerging markets are former developing economies that have achieved substantial industrialization, modernization, and rapid economic growth

Country Expected & Global Demographics

Trade DefinitionsA tariff is a tax on an imported good.A subsidy is a government payment to producers of certain products.Farm products are often subsidized.

World Trade Organization (WTO)153 member countriesRussia is not a member.Oversees regulations forinternational trade in goods and servicesinternational investmentprotection of intellectual propertysettling trade and investment disputes between countries

World Trade Organization (2)Developing countries can charge higher tariffs and impose more restrictions on investment than developed countriesDeveloping countries want the WTO to change its rules so that they will be more competitive in the global economy.The biggest issue is subsidies that developed countries pay to their own farmers to encourage crop production.

North American Free Trade Agreement (NAFTA)Free trade agreement among Canada, United States, and MexicoFree trade agreement means that there are no tariffs on goods traded among member countriesThis provision applies only to goods that were produced in one of the 3 countriesMost restrictions on foreign investment among the 3 countries have been abolished.Firms in member countries can compete for government contracts.

NAFTA (2)Financial services firms can do business in all 3 countries.There is a dispute resolution procedure.Each country agreed to enforce its own laws related toEnvironmental protectionChild laborMinimum wagesWorkplace safety

10-*Free Trade Agreements in Central and South America and the Caribbean

Other Free Trade Areasin the AmericasMercosur includes Brazil, the largest economy in South AmericaThe Andean CommunityThe Caribbean Community (CARICOM)Central American Common Market Tariffs are imposed on U. S. goods exported to Mercosur, the Andean Community, and CARICOM

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Other Free Trade Areasin the Americas (2)ALADI is a free trade area amongMercosurThe Andean CommunityMexico, Chile, and CubaCAFTA-DR is a free trade agreement among the United States, the Central American Common Market, and the Dominican RepublicA proposed Free Trade Area of the Americas has made little progress

European Union (EU) Before 2004 Enlargement

The European Union TodayCandidate Countries

Turkey Croatia Macedonia

The European Union (EU)Almost 500 million people27 member countries2006 Gross Domestic Product (GDP) was about 13.5 trillion dollars Slightly higher than U. S. GDP16 EU members use the euro currencyThe European Central Bank manages the euro currency (similar to the Federal Reserve Bank in the United States)

The European Union A Single MarketFree trade in goods and services among member countriesCommon tariffs on goods imported from outside the EUCommon (minimum) product standards - CE mark is required to sell many goodsBusiness is subject to many regulationsThe EU Commission settles trade disputes among EU members.

Rights of EU CitizensEU citizens have a right to live and work in any EU countryThese rights take effect 7 years after a country joins the EU2011 for countries that joined in 20042014 for Bulgaria and RomaniaIndividual countries can choose to grant residency and work rights sooner.

The Shifting Balanceof World Economic PowerFor about 20 years, 55 60% of global imports and exports have come from four areas: the United States, the EU, Japan, and ChinaThe BRIC countries Brazil, Russia, India, and China are expected to be among the fastest growing economies for the next 20 40 yearsTo continue rapid growth, Russia must make its economy less dependent on oil and gas. China, India, Brazil, and several Arab countries are increasing their foreign direct investment.

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