What Is Global BusinessThis is the buying and selling of goods and services by people from different countries?MultinationalA corporation that owns businesses in two or more countries.Impact of Global BusinessDirect Foreign InvestmentA method of investment in which a company builds a new business or buys an existing business in a foreign country.Has doubled in the past decade making world markets much more competitive than they used to be.Trade Rules & AgreementsTrade BarriersA government-imposed regulation that increases the cost and restricts the number of imported goods.TariffNontariff barriersQuotasVoluntary export restraintsSubsidiesGATTA worldwide trade agreement that will reduce and eliminate tariffs, limit government subsidies, and protect intellectual property.How to Go GlobalConsistency vs. AdaptationUsing the same rules, guidelines, policies, and procedures in each foreign location vs. adapting standard procedures to differences in foreign markets.Forms for Global BusinessPhase Model of GlobalizationExportingCooperative Contract•licensing•franchiseStrategic Alliances-Joint VenturesWholly OwnedAffiliatesGlobal NewVenturesForms of GlobalizationExportingSelling a domestically produced product to customers in foreign countries.FranchiseBy this form of organizing itself globally, in the last decade McDonald’s has doubled its number of overseas stores.Forms of GlobalizationJoint-ventureA strategic alliance in which two existing companies collaborate to form a third company.Where to Go Global?Growing MarketsPurchasing Powercomparison of a standard set of goods and services in different countriesmore means greater growth potentialDegree of Global Competitionthe number & quality of companies already in the market more means less growth potentialWhere to Go Global?Choosing an Office /Manufacturing LocationQualitative factorswork force qualitycompany strategyWhere to Go Global?Policy UncertaintyThe risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business.Attractive Global Business ClimateThis positions the company for easy access to growing markets, is an effective but cost-efficient place to build an office or manufacturing site, and minimizes the political risk to the company?National Culture Defined as a set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country.Difficulties in Adapting Management Practices May be adapting the way they run their business based on outdated and incorrect assumptions about a country’s culture.Hofstede’s 5 Consistent Differences Across National CulturesPower-DistanceIndividualismShort-term/Long-term OrientationMasculinity/FemininityUncertainty AvoidanceExpatriate This refers to someone who lives outside of his or her native country.Expatriate Training Serves the purpose to reduce the uncertainty that expatriates feel, the misunderstandings that take place between expatriates and natives, and the inappropriate behaviors that expatriates unknowingly commit.Pre-departure language trainingCross-cultural trainingUsing a phoneFinding a public toiletExchanging greetingsOrdering in restaurantsField Simulation Training An opportunity to practice adapting to cultural differences by placing trainees in an ethnic neighborhood for 3-4 hours to talk to residents about cultural differences.Adaptability Screening This is used to assess how well managers and their families are likely to adjust to foreign cultures.