What’s your global perspective? Understanding the global environment. Doing business globally. Managing in a global environment.

1. MANAGING IN GLOBAL
ENVIRONMENT

2. Table Of Contents
i. What’s your global perspective?
ii. Understanding the global environment.
iii. Doing business globally.
iv. Managing in a global environment.
2

3. What’s Your Global Perspective ?

4. What’s Your Global Perspective ?
✘ Most U.S.A. children study only English in school. It is not
unusual for Germans, Italians, and Indonesians to speak three
or four languages.
✘ Americans tend to think of English as the only international
business language and see little need to study other languages.
✘ How does the US’s monolingualism affect our view of culture?
4

5. Parochialism is viewing the world solely through your own
perspectives, leading to an inability to recognize differences
between people.
Parochialism is an obstacle for many U.S.A.
managers and stems from monolingualism.
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6. Parochialism
✘ Is viewing the world exclusively through ones own eyes and
perspectives.
✘ Is not recognizing that others have different ways of living and
working.
✘ Is a significant problem for managers working in a global
business world.
✘ Is falling into the trap of ignoring others‘ values and customs
and strictly applying an attitude of “ours is better than theirs” to
foreign cultures.
6

7. Managers might have one of three perspectives or attitudes
toward international business:
Ethnicentric Attitude
 The parochalistic belife that the best work approaches and
practices are those of the home country.
Polycentric Attitude
 The view that the managers in the host country know the
best work approaches and practices for running their
business.
Geocentric Attitude
 A world-orientedview that focuses on using the best
approaches and people from around the globe.
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8. To be a successful global manager,
an individual needs to be sensitive
to differences in national customs
and practices.
8

9. LEADERS
WHO MAKE A DIFFERENCE
Indra Nooyi, CEO of PepsiCo, was
recently named for the four straight years the Most
Powerful Woman in Business by Fortune magazine
and was named one of the 100 most powerful women
in the world by Forbes magazine.
On a trip to China, she spent 10 days immersing herself
in China. She said, “I wanted to look at how people
live, how they eat, what the growth possibilities
are.”
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10. Understanding The Global Environment

11. Why Nations And Companies Participate In International
Trade ?
Nations trade because they don’t produce all the products that their
inhabitants need.
✘ They import those that they need but don’t produce and export those
that are needed elsewhere.
✘ To understand why certain countries import or export certain products,
you need to realize that not all countries are good at producing or are
able to produce the same products.
✘ The cost of labor, the availability of natural resources, and the level of
know-how vary greatly around the world.
11

12. Why Nations And Companies Participate In International
Trade ?
✘ To explain how countries decide what products to import and export,
economists use the concepts of absolute and comparative advantage.
i. A nation has an absolute advantage if it’s the only source of a particular product or can make
more of a product with the same amount of or fewer resources than other countries.
ii. A comparative advantage exists when a country can produce a product at a lower opportunity
cost than other nations. The cost of labor, the availability of natural resources, and the level of
know-how vary greatly around the world.
✘ Nations trade to exploit their advantages: they benefit from
specialization, focusing on what they do best and trading the output to
other countries for what they do best.
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13. How Trade Between Nations Is Measured ?
✘ To evaluate the impact of its international trade, a nation looks at two
key indicators: balance of trade and balance of payments.
✘ We determine a country’s balance of trade by subtracting the value of
its imports from the value of its exports.
i. If a country sells more products than it buys, it has a favorable balance, called a trade surplus.
ii. If it buys more than it sells, it has an unfavorable balance, or a trade deficit.
13

14. How Trade Between Nations Is Measured ?
✘ The balance of payments is the difference, over a period of time,
between the total flow coming into a country and the total flow going
out.
i. As in its balance of trade, the biggest factor in a country’s balance of payments is the
money that comes in and goes out as a result of exports and imports.
ii. But balance of payments includes other cash inflows and outflows, such as cash
received from or paid for foreign investment, loans, tourism, military expenditures, and
foreign aid.
14

15. Ways In Which Governments And International Bodies
Promote And Regulate Global Trade.
✘ Because they protect domestic industries by reducing foreign competition, the use
of controls to restrict free trade is often called protectionism.
✘ Though there’s considerable debate over protectionism, all countries engage in it
to some extent.
✘ Tariffs are taxes on imports. Because they raise the price of the foreign-made
goods, they make them less competitive.
✘ Quotas are restrictions on imports that impose a limit on the quantity of a good
that can be imported over a period of time. They’re used to protect specific
industries, usually new industries or those facing strong competitive pressure
from foreign firms.
15

16. Ways In Which Governments And International Bodies
Promote And Regulate Global Trade.
✘ An embargo is a quota that, for economic or political reasons, bans the import or
export of certain goods to or from a specific country.
✘ A common rationale for tariffs and quotas is the need to combat dumping—the
practice of selling exported goods below the price that producers would normally
charge in their home markets, often below the costs of producing the goods.
✘ Some experts believe that governments should support free trade and refrain
from imposing regulations that restrict the free flow of products between nations.
✘ Others argue that governments should impose some level of trade regulations on
imported goods and services.
16

17. Initiatives Designed To Reduce International Trade Barriers
And Promote Free Trade.
✘ Free trade is encouraged by a number of agreements and organizations set up to monitor trade policies.
✘ The General Agreement on Tariffs and Trade (GATT) encourages free trade by regulating and
reducing tariffs and by providing a forum for resolving disputes.
✘ This highly successful initiative achieved substantial reductions in tariffs and quotas, and in 1995, its
members founded the World Trade Organization (WTO), which encourages global commerce and
lower trade barriers, enforces international rules of trade, and provides a forum for resolving disputes.
✘ Providing monetary assistance to some of the poorest nations in the world is the shared goal of two
organizations: the International Monetary Fund (IMF) and the World Bank. Several initiatives have
successfully promoted free trade on a regional level. In certain parts of the world, groups of countries
have joined together to allow goods and services to flow without restrictions across their mutual
borders. Such groups are called trading blocs.
✘ The North American Free Trade Association (NAFTA) is an agreement among the governments of
the United States, Canada, and Mexico to open their borders to unrestricted trade.
✘ The effect of this agreement is that three very different economies are combined into one economic
zone with almost no trade barriers.
✘ The European Union (EU) is a group of twenty-seven countries that have eliminated trade barriers
among themselves.
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18. Regional Trading Alliances
✘ Regional trading alliances are reshaping global competition. Competition is
no longer limited to country versus country, but region versus region.
✘ The European Union (EU) is a union of 27 European nations created as a
unified economic and trade entity. Three more countries will be gaining
membership soon.
I. The primary motivation for the creation of the EU in February 1992 was to allow member
nations to reassert their position against the industrial strength of the United States and
Japan. Currently its membership covers a base of nearly a billion people and owns 31% of the
world’s economic output.
II. Sixteen of the 27 member states of the EU have agreed to adopt the common currency of the
EU, the euro. Denmark, the United Kingdom and Sweden have opted out of using the euro.
III.The Lisbon Treaty, signed in December 2007, provides the EU with a common legal framework
to meet current challenges facing European economies, such as climate change, security and
energy needs.
IV.The concept of solidarity has been a challenge as individual member states struggle with
maintaining a common currency and at the same time valuing protectionist measures that
foster nationalism. Another recent struggle has been the massive debt crisis of Greece which
has been bailed out by the International Monetary Fund.
18

19. MAP
19

20. Regional Trading Alliances
✘ The North American Free Trade Agreement (NAFTA) is an
agreement among the Mexican, Canadian, and U.S. governments in
which barriers to trade have been eliminated.
I. NAFTA went into effect on January 1, 1994 and today is the world’s largest trading block in terms
of GDP. Canada is currently the US’s top trading partner with Mexico being number three (China is
number two). As of 2010, it remains the largest trading bloc in terms of combined GDP of its
members.
II. Eliminating barriers to free trade (tariffs, import licensing requirements, customs user fees) has
resulted in a strengthening of the economic power of all three countries.
III. Colombia, Mexico, and Venezuela signed an economic pact eliminating import duties and tariffs in
1994.
IV. The Central American Free Trade Agreement (CAFTA) is agreement between the US and five
Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
Currently, only Costa Rica and El Salvador have signed onto this agreement.
V. Thirty-four countries in the Western Hemisphere continue to negotiate a Free Trade Area of the
Americas (FTAA) agreement. FTAA was to have been in effect no later than 2005, but has not yet
become operational; its future is still undetermined.
20

21. MAP - NAFTA
21

22. Regional Trading Alliances
✘ The Association of Southeast Asian Nations (ASEAN) is a trading
alliance of Southeast 10 Asian nations.
I. In the future, the Southeast Asian region promises to be one of the fastest-growing and
increasingly influential economic regions of the world.
II. The future economic impact of the Southeast Asian region could rival that of both NAFTA
and the EU.
✘ Other Trade Alliances:
I. The 53-nation African Union (AU) came into existence in July 2002. AU members plan to
achieve greater economic development and unity among Africa’s nations.
II. The South Asian Association for Regional Cooperation (SAARC) is composed of eight
Asian member states that began eliminating tariffs in 2006.
22

23. MAP – ASEAN and AU
23

24. MAP - SAARC
24

25. Global Trade Mechanisms
✘ The World Trade Organization (WTO): Formed in 1995 and evolving
from GATT, the WTO is the only global organization dealing with the
rules of trade among nations.
I. Membership consists of 153 countries and 30 observer governments as of 2008.
II. The WTO appears to play an important role even though critics are vocal and
highly visible.
✘ International Monetary Fund and World Bank Group
I. The International Monetary Fund (IMF) is an organization of 185 countries that
promotes international monetary cooperation and provides member countries
with policy advice, temporary loans, and technical assistance to establish and
maintain financial stability and to strengthen economies.
II. The World Bank Group is a group of five closely associated institutions, all owned
by its member countries, that provides vital financial and technical assistance to
developing countries around the world.
25

26. Organization for Economic Cooperation and Development (OCED)
✘ The Organization for European Economic Cooperation, formed 194, is a
Paris-based international economic organization.
✘ Its mission is to help its 30 member countries achieve sustainable
economic growth and employment and raise the standard of living in
member countries while maintaining financial stability in order to
contribute to the development of the world economy.
26

27. Doing Business Globally

28. Different Types of International Organizations
✘ Business has been conducted internationally for many years (e.g., DuPont
conducted business in China in 1863, H. J. Heinz manufacturing their brands since
1905, and Ford established its first overseas sales branch in France in 1908).
Multinational corporations did not become popular until the mid-1960s.
✘ Global organizations can be classified in the following categories:
I. The term multinational corporation (MNC) is a broad term that refers to
any and all types of international companies that maintain operations in
multiple countries.
II. A transnational corporation (TNC), sometimes called a borderless
organization, is a type of international company in which artificial
geographical barriers are eliminated.
✘ We should keep in mind that neither the national origin of a company nor the
national origin of its employees is any longer a good measure of where that
company conducts business.
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29. How Organizations Go International
✘ For a company wishing to expand beyond national borders, there are a variety of ways to get involved in
international business:
✘ Companies that go international may begin by using global sourcing (also called global outsourcing). In this stage
of going international, companies purchase materials or labor from around the world, wherever the materials or
labor are least expensive. Beyond the stage of global sourcing, each successive stage to become more
international involves more investment and risk.
✘ In the next stage, companies may go international by exporting (making products domestically and selling them
abroad) or importing (acquiring products made abroad and selling the products domestically). Both exporting and
importing require minimal investment and risk.
✘ In the early stages of going international, managers may also use licensing (giving another organization the right
to make or sell its products using its technology or product specifications) or franchising (giving another
organization the right to use its name and operating methods).
✘ After an organization has done international business for a period of time, managers may decide to make more of
a direct investment in international markets by forming a strategic alliance, which is a partnership between an
organization and a foreign company partner(s). In a strategic alliance, partners share resources and knowledge in
developing new products or building production facilities.
✘ A joint venture (a specific type of strategic alliance) may be undertaken to allow partners to form a separate,
independent organization for some business purpose.
✘ Managers may decide to make a direct investment in a foreign country by establishing a foreign subsidiary, in
which a company sets up a separate and independent production facility or office. Establishing a foreign subsidiary
involves the greatest commitment of resources and the greatest risk of all of the stages in going international.
29

30. An Alliance Can Serve A Number Of Purposes:
✘ Enhancing marketing efforts
✘ Building sales and market share
✘ Improving products
✘ Reducing production and distribution costs
✘ Sharing technology
30

31. Managing In A Global Environment
31

32. Challenges in managing in a global environment
A. The Legal-Political Environment
B. The Economic Environment
C. The Cultural Environment
32

33. 33
One of the more difficult aspects of
doing business globally is dealing
with vast differences in legal and
regulatory environments.
Companies doing international
business often face many
inconsistent laws and regulations.
1. Hiring lawyers from the host
country who can provide advice
on legal issues.
2. working with local
businesspeople who have
experience in complying with
regulations and overcoming
bureaucratic obstacles.
Approach to dealing with local
laws and regulations

34. 34
Foreign Corrupt Practices Act
 One U.S. law that creates unique challenges for American firms
operating overseas is the Foreign Corrupt Practices Act, which
prohibits the distribution of bribes and other favors in the conduct of
business.
 Unfortunately, though they’re illegal in this country, such tactics as
kickbacks and bribes are business-as-usual in many nations.
According to some experts, American businesspeople are at a
competitive disadvantage if they’re prohibited from giving bribes or
undercover payments to foreign officials or businesspeople who
expect them; it’s like asking for good service in a restaurant when the
waiter knows you won’t be giving a tip.
 In theory, because the Foreign Corrupt Practices Act warns
foreigners that Americans can’t give bribes, they’ll eventually stop
expecting them.

35. 35
Rank Country CPI score
1 Denmark 9.3
1 New Zealand 9.3
1 Singapore 9.3
4 Finland 9.2
4 Sweden 9.2
6 Canada 8.9
15 Germany 7.9
17 Japan 7.8
20 United Kingdom 7.6
22 United States 7.1
98 Mexico 3.1
175 Iraq 1.6
Rank Country CPI score
1 Denmark 8.8
1 New Zealand 8.8
3 Finland 8.5
3 Singapore 8.5
3 Sweden 8.5
3 Switzerland 8.5
9 Germany 8.0
11 Canada 7.7
11 United Kingdom 7.7
19 Japan 7.4
25 United States 67
45 Poland 5.6
2010 2020
*A score of 10 means
that a country is
squeaky clean. Anything
under 3 means that
corruption is rampant.

36. 36
 If you plan to do business in a foreign country, you need to
know:
a) Its level of economic development,
b) Be aware of factors influencing the value of its currency,
c) The impact that changes in that value will have on your
profits.

37. ✘ A country’s level of economic development can be evaluated by
estimating the annual income earned per citizen.
✘ The World Bank, which lends money for improvements in
underdeveloped nations, divides countries into four income categories:
37
Economic Development
•High income—$12,276 or higher (United States,
Germany, Japan)
•Upper-middle income—$3,976 to $12,275 (China,
South Africa, Mexico)
•Lower-middle income—$1,006 to $3,975
(Vietnam, Philippines, India)
•Low income—$1,005 or less (Kenya, Bangladesh,
Haiti)
***Note that that even though a country has a
low annual income per citizen, it can still be an
attractive place for doing business. India, for
example, is a lower-middle-income country,
yet it has a population of a billion, and a
segment of that population is well educated—
an appealing feature for many business
initiatives.

38. • A reliable banking system,
• A strong stock market,
• Government policies to encourage investment and competition
while discouraging corruption.
• A strong infrastructure:
 Systems of communications (telephone, internet,
television, newspapers), transportation (roads, railways,
airports), energy (gas and electricity, power plants), and
social facilities (schools, hospitals)
38
✘ The long-term goal of many countries is to move up the
economic development ladder. Some factors conducive to
economic growth include:
Economic Development

39.  If a foreign currency goes up relative to the U.S.
dollar, Americans must pay more for goods and
services purchased from sellers in the country
issuing the currency (foreign products are more
expensive). This is bad for exporters who have
to pay more for the foreign-made goods they
buy to bring back to the United States to sell.
 If a foreign currency goes down relative to the
U.S. dollar, Americans pay less for products
from the country issuing the currency (foreign
products are cheaper).
39
✘ If every nation used the same currency, international trade and travel would be a
lot easier.
✘ There are about 175 currencies in the world.
✘ exchange rate: tells you how much one currency is worth relative to another
currency.
Currency Valuations and Exchange Rates
 If the U.S. dollar goes up relative to a
foreign currency, foreign buyers must
pay more for American goods and
services (they become more expensive).
 If the U.S. dollar goes down relative to
a foreign currency, foreign buyers pay
less for American products (they
become cheaper). This is good for
importers as their “cheaper” goods are
more attractive to customers in the
foreign country.

40. 40
 Differences in communication styles reflect differences in
culture:
a) The system of shared beliefs, values, customs,
b) Behaviors that govern the interactions of members of a
society.
 Cultural differences create challenges to successful
international business dealings.

41. 41
✘ English is the international language of business;
 Most educated Europeans have studied English,
 On the South Asian subcontinent, English is the official language.
 In most corners of the world, English-only speakers—such as most Americans—have no problem
finding competent translators and interpreters.
✘ In many countries, only members of the educated classes speak English. The larger
population—which is usually the market you want to tap—speaks the local tongue.
Advertising messages and sales appeals must take this fact into account. More than one
English translation of an advertising slogan has resulted in a humorous (and perhaps
serious) blunder.
Challenges: Language
Why is language an issue for English speakers doing business in the global marketplace?
Translated into German, the slogan “Come Alive
with Pepsi” became
“Come out of the Grave with Pepsi.”
A proposed new soap called “Dainty” in English came
out as “aloof” in Flemish (Belgium), “dimwitted” in Farsi
(Iran), and “crazy person” in Korea; the product was
shelved.
-------------------------------------------------

42. ✘ Furthermore, relying on translators and interpreters puts you as an international
businessperson at a disadvantage. Maybe you will misread the subtler intentions
of the person with whom you are trying to conduct business.
 The best way to combat this problem is to study foreign languages.
 Most people appreciate some effort to communicate in their local language,
 They even appreciate mistakes you make resulting from a desire to demonstrate
your genuine interest in the language of your counterparts in foreign countries.
 Few things work faster to encourage a friendly atmosphere than a native
speaker’s willingness to greet a foreign guest in the guest’s native language.
42
Challenges: Language

43. ✘ The expectation that meetings will start on time and adhere to precise agendas is
common in parts of Europe (especially the Germanic countries), as well as in the
United States, but elsewhere—say, in Latin America and the Middle East—people
are often late to meetings.
43
Challenges: Time and Sociability
-------------------------------------------------
Challenges: High- and Low-Context Cultures
In high-context cultures, the numerous
interlocking (and often unstated) personal and
family connections that hold people together
have an effect on almost all interactions.
Because people’s personal lives overlap with
their business lives (and vice versa), it’s
important to get to know your potential business
partners as human beings and individuals.
In low-context cultures, such as those of the
United States, Germany, Switzerland, and the
Scandinavian countries, personal and work
relationships are more compartmentalized:
you don’t necessarily need to know much about
the personal context of a person’s life to deal with
him or her in the business arena.

44. ✘ Different cultures have different communication styles:
 Degrees of animation in expression
 Delivering direct, clear messages, or using a language that is subtler or more indirect.
✘ Two important points.
1. Avoid lumping loosely related cultures together. We sometimes talk, for example, about “Asian culture,” but such broad categories as “Asian”
are usually oversimplifications. Japanese culture is different from Korean, which is different from Chinese.
2. Never assume that two people from the same culture will always act in a similar manner. Not all Latin Americans are casual about meeting
times, not all Italians use animated body language, and not all Germans are formal.
Learn about a country’s culture and use your knowledge to help improve the quality of your business dealings.
Learn to value the subtle differences among cultures, but don’t allow cultural stereotypes to dictate how you interact with people
from any culture.
Treat each person as an individual and spend time getting to know what he or she is about.
44
Challenges: Intercultural communication
------------------------------------------

45.  The global marketplace has enabled organizations to grow well beyond their physical boundaries,
providing them with access to consumers located in almost every corner of the world.
 There are three management strategies to be considered by companies wanting to excel as a global
enterprise:
1. Implementing an effective organizational structure,
2. Successfully managing talent,
3. Developing a differentiation strategy
 Let us take a look at three key strategies employed by Coca-cola to support rapid growth and
expansion across the globe:
 Global marketing strategies, product differentiation, and technology.

46. 46
 Coca-Cola’s marketing strategies played a significant role in successfully globalizing the
company.
 Their popular advertising slogans and catchy jingles played into the hearts and minds of
people around the world:
• “Drink Coca-Cola.”
• “Things go better with Coke.”
• “Good ‘til the last drop.”
 Coca-Cola was the first commercial sponsor of the Olympic Games in Amsterdam in 1928
and has regularly sponsored the event for over 80 years.
 They also sponsor many other sporting events such as the International Federation of
Association Football (FIFA), National Hockey League (NHL), National Basketball Association
(NBA), National Football Association (NFL), Major League Baseball (MLB), NASCAR, and the
Cricket World Cup.
• “It’s the real thing.”
• “Always Coca-Cola.”
• “Enjoy.”
• “Life tastes good.”

47. 47
 Another key factor that has supported Coca-Cola’s globalized vision has been the company’s ability to
customize its product line to meet the needs of individual consumer markets:
• “Coca-Cola has appealed to younger consumers by offering Powerade, energy drinks, and a variety of
flavored Coke products, such as Cherry Coke and Vanilla Coke.
• also meeting the needs of the health conscious, older consumer with Diet Coke, Vitamin Water, and
Odwalla products.
• Has invested significant time and money into researching and understanding different marketing
trends and consumer segments based on lifestyle, age, and income in order to accurately develop and
market its products.
• Functional packaging has been used to make the products available in different sizes and forms,
including glass and plastic bottles, aluminum cans, and fountain drink dispensers.
• To promote the company’s commitment to environmental sustainability, all packaging materials are
designed to be recyclable and labeled accordingly for easy consumer identification.

48. 48
 Technological advances contributed to Coca-Cola’s ability to globalize rapidly
throughout the 20th century
• Product transportation became more efficient and cost effective with the
development of bigger and faster semi-trucks, cargo ships, jet aircraft, and trains.
Coca-Cola was able to manufacture and ship products quicker and farther to market
segments that were unreachable before these transportation improvements.
• More accurately tracking inventory levels and fill order shipments, resulting in lower
overall operating costs.
• Increase in the speed and volume in which products were produced.
 These technological advances enabled Coca Cola to compete on a global scale,
selling the well-known brand of products across the world at highly competitive
prices.

49. References
✘ BUS208: Principles of management. (n.d.). Saylor Academy. Retrieved May 30,
2021, from https://learn.saylor.org/course/view.php?id=88§ionid=6283
✘ Sreang Munynimeth. (n.d.). Chapter 3 managing in a global environment.
Academia.edu - Share research. Retrieved May 30, 2021, from
https://www.academia.edu/33429552/Chapter_3_Managing_in_a_Global_Envir
onment
✘ Arnulf Grübler (2000). Peer Reviewed: Managing the Global Environment.
Environmental Science & Technology, 34(7), 184A-187A.
49

50. 50
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