Operating In An International Business Environment[1]

Operating in an International Business EnvironmentDr. Jeff ShayMBA Essentials CourseUniversity of MontanaKnowing the basics…Have I got a car foryou. It’s the NOVA.Wow, are you goingto like this car.Did he justsay the no va?Why would Iwant such a car?Nixon leaves a lasting impression on Brazil•Very simplistic examples of what can happen…the problems go much deeper.•There are thousands of other examples…Tonight’s Road Map•Brief Bio•Overview of the current situation•Reasons for going global•Entry strategies•Corporate strategies•International Business Research•Ethics in International Business•Impact of September 11thon International BusinessJeff Shay –Brief Bio•Academic–Training•Ph.D. –Cornell University, International Business•MBA & B.S. –Babson College, Strategic Management, Finance, Entrepreneurial Studies–Teaching•University of Montana, London School of Economics, Cornell University, Centre International de Glion, Australian International Hotel School•Professional–Clients:•Montana –Hi-Noon Petroleum, Big Sky Brewery, Montana World Trade Center, Montana Business Capital Corporation•Non-Montana –Four Seasons, Marriott, Magic Mountains, Sail Caribbean, Egan Entertainment Network, American Express, Hyundai, Swedish Trade Council, etc.–Regions:•Caribbean, Western Europe, Australia, Latin AmericaAn overview of the current situationMBA EssentialsDr. Jeff ShayUniversity of MontanaWhy International Business should be important to you…Regardless of the size, type, or location of your business, today’s business environment is truly global in nature:–Nearly all organizations are somehow affected by companies from other countries–This creates a need for managers who understand the global competitive environment–These ―global‖ managers must understand all business disciplines and how their company might be affected by foreign competition What does this mean for managing in today’s economy?•Regardless of their size,–All businesses are challenged at home by overseas businesses–All businesses must consider sourcing materials overseas–All businesses must consider offshore production–All businesses must consider entering attractive markets overseasHence the need for managers who understand international business even if they are working in their home countryWhat’s different (cont.)?–Businesses must learn to play a global competitive game–Multiple market access and various global scale economics allow companies new competitive strategic options–Businesses must address currency fluctuation risks–Economic performance is measured in multiple currencies which result in accounting and economic exposure–Businesses face increased organizational complexity and diversity–Businesses need to manage these complex and diverse demands across barriers of distance, time, language, and cultureJun -00US$30.6 BThe magnitude of the growth in the US trade deficit isdepicted in the graph below…Entry StrategiesMBA EssentialsDr. Jeff ShayUniversity of MontanaThe Big PictureCorporate Strategic ObjectivesBusiness analysis-Industry analysis (structures, economics)-Competitor analysis (share, position, intent)-Company competitive analysis (competitiveadvantages and vulnerabilities)Country analysis-Market analysis (demand, channels, price)-Investment climate, risk (political, social,economic)-Host government conditions/concessions(tariffs, restrictions, incentives)Internationalization Motivation and ObjectivesCompany Resources and Capabilities-Resource and skill audit (financial, technology, materials, management, and org.)-Risk ProfileInternationalization StrategyEntry StrategyCorporate Strategic ObjectivesBusiness analysisCountry analysisInternationalization Motivation and ObjectivesCompany Resources and CapabilitiesInternationalization StrategyEntry StrategyThe Big PictureProduct/marketobjectives andprioritiesInfrastructure:Value chain configurationMode of entry(ownership)Penetrationandoperating planOrganizationand controlComprehensive MNC Strategy ModelIndustryGlobalizationDrivers:MarketCostGovernmentCompetitiveStrategy:MultidomesticGlobalInternationalTransnationalOrganizationalStructure:CentralizedDecentralizedManagementProcesses:CoordinationConfigurationPerformance:Market shareProfitsFormalization:HighLowResponsiveness/Integration FrameworkGlobalCoordinationIntegrationHighHighLowLowGlobalInternationalTransnationalMulti-nationalLocal responsivenessIntegration/Responsiveness FrameworkGlobalCoordination,IntegrationHighHighLowLowGlobalInternationalTransnationalMulti-nationalLocal responsivenessTechnologyWorldwidelearning“Tip of the iceberg”Objective CultureSubjective CultureAssumptionsValuesBeliefsAttitudesPerceptionsThinkingInstitutionsArtifactsArts, crafts, literatureCurrency