Define Define multinational multinational management management Understand Understand the the characteristics
characteristics ofof aa multinational multinational company company Understand Understand the the nature nature ofof the the global global economy economy and and the the key key forces forces that that drive drive globalization globalization Know Know the the basic basic classification classification ofof the the world’s world’s economies economies
Multinational Management •• Formulation Formulation ofof strategies strategies and and management management systems systems toto take take advantage advantage ofof international international opportunities opportunities and and respond respond toto international international threats threats
The Nature of the Multinational Company •• Any Any company company that that engages engages inin business business functions functions beyond beyond its its domestic domestic borders borders •• Includes Includes both both large large and and small small companies companies
Countries of the World: The Arrived, the Coming, and the Struggling •• Developed Developed countries: countries: mature mature economies economies with with substantial substantial per per capita capita Gross Gross Domestic Domestic Product, Product, international international trade, trade, and and investments. investments. •• Developing Developing countries: countries: economies economies that that have have grown grown extensively extensively over over past past two two decades, decades, e.g., e.g., Hong Hong Kong, Kong, Singapore, Singapore, South South Korea. Korea.
The Globalizing Economy: Seven Key Trends •• •• •• ••
Disintegrating Disintegrating borders borders Growing Growing cross-border cross-border trade trade and and investment investment The The rise rise ofof global global products products and and global global customers customers Privatizations Privatizations
New New competitors competitors inin the the world world market market The The rise rise ofof global global standards standards ofof quality quality and and production production The The Internet Internet and and information information technology technology
Borders Are Disintegrating: The World Trade Organization •• Formal Formal structure structure for for continued continued negotiations negotiations and and for for settling settling trade trade disputes disputes among among nations. nations. •• 1947: 1947: Nations Nations met met toto reduce reduce tariffs tariffs from from 45% 45% toto less less than than 5%—resulted 5%—resulted inin the the General GeneralAgreement Agreement on on Tariffs Tariffs and andTrade Trade (GATT). (GATT). •• 1986: 1986: Negotiations Negotiations began began inin Uruguay Uruguay toto continue continue reducing reducing tariffs. tariffs.
World Trade Organization •• 1997: 1997:Trade Trade ministers ministers from from countries countries representing representing 92% 92% ofof world world trade trade agreed agreed toto eliminate eliminate tariffs tariffs on on software, software, computer computer chips, chips, telecommunication telecommunication equipment, equipment, and and computers. computers. •• WTO WTO has, has, nevertheless, nevertheless, some some critics. critics. •• Not Not all all countries countries are are participating participating equally equally inin WTO. WTO.
Regional Trade Agreements •• Regional RegionalTrade TradeAgreements—agreements Agreements—agreements among among nations nations toto reduce reduce tariffs tariffs and and develop develop similar similar technical technical and and economic economic standards. standards. •• European European Union: Union: includes includes aa large large number number ofof European European countries. countries. •• Allows Allows free free movement movement ofof goods goods and and services services and and aa common common currency. currency.
Regional Trade Agreements •• The The North NorthAmerican American Free FreeTrade TradeAgreement Agreement (NAFTA): (NAFTA): links links United United States, States, Canada, Canada, and and Mexico Mexico inin an an economic economic bloc. bloc. •• Allows Allows freer freer exchange exchange ofof goods goods and and services services •• The TheAsia-Pacific-Economic Asia-Pacific-Economic Cooperation Cooperation (APEC): (APEC): looser looser confederation confederation ofof 19 19Asian Asian nations nations with with less less specific specific agreements agreements on on trade trade facilitation. facilitation.
Sell Anywhere, Locate Anywhere •• World World trade trade growth: growth: average average ofof 6.5% 6.5% per per year year between between 1990 1990 and and 2000. 2000. •• Nearly Nearly half half ofof the the over over $5 $5 trillion trillion inin world world trade trade isis among among the the European European union, union, the the U.S., U.S., and and Japan—the Japan—the TRIAD. TRIAD.