Managements responsibilities n

challenges in global environment

Need for lifelong learning

Responsiveness
Adaptability
Having global perspective and developing local
knowledge
Understand diversity management
Understand ethical differences around the world

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The Globalization of Markets

The globalization of markets means that the expansion and access
of businesses to all over the world to reach the needs of the
customers internationally.
The European Union (EU)
A unified economic and trade entity
Economic and monetary union (Euro)
North American Free Trade Agreement (NAFTA)
Eliminated barriers to free trade
United States, Canada, and Mexico
Association of Southeast Asian Nations (ASEAN)
Trading alliance of 10 Southeast Asian nations
African Union
South Asian association for regional cooperation (SAARC)

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Globalization of production
The globalization of production means that the world has
become the global village and now the producers can
get the benefit from the different countries cheap labors
and high technological knowledge.
Example:
Honda who is making the spare parts in china,
assembling the products in Pakistan and designing the
engine in the Japan so the production is distributed into
three common places

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Different Types of Global Organizations

Multinational corporations
1. Multi-domestic Corporation
Which decentralizes management and other decisions
to local country.

2. Global company
Which centralizes its management and other decisions
in the home country.
3. Transnational Corporation (TNC) or Borderless
Organization
A firm that has eliminated structural divisions that impose
artificial geographic barriers.
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How Organizations Go Global (process of globalization)

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Process of globalization:
Globalization approaches
1. global outsourcing:
Purchasing material and labour from around the world
wherever it is cheapest.
2. exporting and importing
Making products domestically and selling them abroad
Getting products made abroad and selling them domestically
3. Licensing and franchising
Licensing manufacturing and franchising services to foreign
firms to use the brand name, technology, or product
specifications developed by the firm.
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Contd
4.Strategic Alliances
Partnerships between an organization and a foreign
company in which both share resources and knowledge
in developing new products or building new production
facilities.
e.g., Joint Venture
5. Foreign Subsidiary
Directly investing in a foreign country by setting up a
separate and independent production facility or office.

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Constraints on Globalization
1. The Legal Environment
Stability or instability of legal and political systems
2. Economic Systems
Market economy
An economy in which resources are primarily owned and
controlled by the private sector.
Command economy
An economy in which all economic decisions are planned by a
central government.
3. Monetary and Financial Factors
Currency exchange rates
Inflation rates
tax policies
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(contd)
4. Cultural differences
National Culture may have more influence on an organization
than the organization culture.
Working with multicultural work teams.
Benefits of Globalization:
Increased Wealth (cheap labor n more profits)
Availability of Foreign Goods
Competitive prices of products

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