Po b lecture 7 global business models v2 students
Download as PPTX, PDF0 likes963 views
This document provides an overview of a course on principles of global business. It discusses key topics that will be covered such as globalization trends, factors that drive international business, and how cultural and legal differences across countries affect business models. Some specific topics that will be analyzed include Hofstede's cultural dimensions framework, different forms of international business activity, reasons for government interventions in trade, and types of tariff and non-tariff trade barriers. The overall goals are to explain the role of global business and how international trade works while also evaluating challenges that cultural, legal, and political differences can pose for companies operating globally.
Po b lecture 7 global business models v2 students
- 1. Principles of Business Global Business Models – Part 1
- 2. Overview 2 • Overview of the key trends of globalisation; considering different FDI routes to market • What are the factors and costs involved that drive global business • Describe the cultural factors that affect global business (using Hofestede’s Cultural Framework) • Critically evaluate different legal systems and the implications on global business models • Consider the role of trade barriers and uncompetitive business practises across the world • Detail the different forms of international business activity
- 3. Learning Outcomes 3 • Explain the role of global business and effects of culture and legal systems • Critically evaluate why nations and companies trade and describe how international trade is measured • Discuss the nature of conflicts in global business, including free trade and government interventions • Define the major forms of business activities internationally
- 4. Global Competitiveness View video: http://www.youtube.com/watch?v=-2547RlpEIM
- 5. Top Trading Countries Source: World Economic Forum, 2013
- 6. Global Trade: Overview Source: World Economic Forum, 2013
- 7. Global Inflows/Outflows Source: World Economic Forum, 2013
- 8. Regional Trade Source: Daniels et al,, 2013
- 9. Regional Trade Source: World Economic Forum, 2013
- 10. Global Business Model to Market Source: Daniels et al, 2013
- 11. Forms of International Business Activity Importing Purchasing goods or services from another country and bringing them into one’s own country Exporting Selling and shipping goods or services to another country Licensing Agreement to produce and market another company’s product in exchange for a royalty or fee Foreign Direct Investment Investment of money by foreign companies in domestic business enterprises Multinational Corporations Companies with operations in more than one country
- 12. Global Organisation Structures Source: Daniels, 2013
- 13. Geographic & Division Structure Source: unc.edu
- 14. Matrix Structure at Unilever Source: Emeraldinsight.com
- 15. • Problem areas that can hinder managers’ cultural awareness… – Subconscious reactions to circumstances – The assumption that all societal subgroups are similar • Managers that educate themselves about other cultures have a greater chance of succeeding abroad Culture and Global Business • The nation is a useful definition of society because similarity among people is a cause and an effect of national boundaries – laws apply primarily along national lines – language and values are shared within borders – rites and symbols are shared along national lines
- 16. Hofstede’s Cultural Dimensions • Geert Hofstede • Dutch management researcher • Gathered data from 100,000 IBM employees • Wanted to determine values on which cultures vary • Surveyed workers from 50 countries and 3 regions • Concluded that there are five dimensions used to differentiate and rate cultures Geert Hofstede Source: www.geerthofstede.com
- 17. Hofstede’s Cultural Dimensions • How people define themselves and their relationship to others • Individualist • Believe individual is most important • Stress independence over dependence • Collectivist • Views, needs and goals of group most important • Obligation to the group is the norm • Self is defined in relation to others Individualism/Collectivism Uncertainty Avoidance • People within a culture are made nervous by situations which they percieve as unstructured, unclear and unpredictable • High Uncertainty Avoidance • Avoid ambiguity • Strict code of behavior • Belief in absolute truths • Low Uncertainty Avoidance • Accept ambiguity and lack of structure • More inclined to take risks • Rules are rejected or ignored
- 18. Hofstede’s Cultural Dimensions • Extent to which people view inequality as normal • High Power Distance • Power is scarce resource • Natural and inevitable • Centralisation of power • Low Power Distance • Minimal power differences • Power can be achieved through work • Superiority not rigid Power Distance Masculinity-Femininity • Relationship between gender and sex-appropriate behaviour • Masculinity • Distinct roles • Men are assertive, ambitious and competitive • Women are supportive and nurturing • Femininity • Fewer rigid gender roles • Men and women are more equal • Interpersonal relationships
- 19. Hofstede’s Cultural Dimensions • Long-term orientation • Savings • Do anything to achieve a goal • “Eye on the prize” • Short-term orientation • Immediate gratification • “Make money, spend money” • Less willing to sacrifice Long-term/Short-terms
- 20. Managing Cultural Differences • Do managers have to alter their customary practices to succeed in countries with different cultures? • Must consider – Host society acceptance – Degree of cultural differences • cultural distance – Ability to adjust • culture shock and reverse culture shock – Company and management orientation • Three company and management orientations – Polycentrism • business units abroad should act like local companies – Ethnocentrism • home culture is superior to local culture • overlook national differences – Geocentrism • integrate home and host practices
- 21. The Legal Environment • The legal system is the mechanism for creating, interpreting, and enforcing the laws in a specified jurisdiction Source: Daniels et al, 2013
- 22. Trends in Legal Systems • What is the basis of rule in a country? – The rule of man • legal rights derive from the individual who commands the power to impose them • associated with a totalitarian system – The rule of law • systematic and objective laws applied by public officials who are held accountable for their administration • associated with a democratic system
- 23. Trends in Legal Systems The Worldwide Practice of the Rule of Law Source: Daniels et al, 2013
- 24. Flow of Goods and Services Globally Source: Daniels et al, 2013
- 25. Economic Rationales for Government Intervention • Why governments intervene in trade – Economic rationales • Fighting unemployment • Protecting infant industries • Promoting industrialization • Improving comparative position – Non-economic rationales • Maintaining essential industries • Promoting acceptable practices abroad • Maintaining or extending spheres of influence • Preserving national culture
- 26. Tariff and Non-Tariff Barriers • Tariffs are also known as duties – refer to a government levied tax on goods shipped internationally • Tariffs may be levied – on goods entering, leaving, or passing through a country – for protection or revenue – on a per unit basis or a value basis • export tariffs • transit tariffs • import tariffs • Subsidies – direct assistance to companies to make them more competitive • agricultural subsidies • overcoming market imperfections • valuation problems • Aid and loans – tied – untied • Customs valuation • Other direct-price influences – special fees and requirements
- 27. Nontariff Barriers: Quantity Controls • Quotas – limit the quantity of a product that can be imported or exported in a given time frame • Voluntary export restraint (VER) • Embargoes • “Buy local” legislation • Standards and labels • Specific permission requirements – import or export license • Administrative delays • Reciprocal requirements – Countertrade or offsets • Restrictions on services
- 28. Essential work for next week • Please consult the OLE for details of: – Essential readings* – Seminar/workshop preparation work* – Recommended further readings – Any additional learning * Essential readings and preparation work must always be completed in time for the next session 28
- 29. End of presentation © Pearson College 2013