Strama Chap2

The Global Challenge

-America's economy is becoming much less American. -A world economy and monetary system are emerging. -Markets are shifting rapidly and in many cases converging in tastes, trends, and prices.

Cultural Differences between U.S. and Foreign Managers

-Americans place an exceptionally high priority on time, viewing time as an asset. Many foreigners place more worth on relationships. -Personal touching and distance norms differ around the world. Americans generally stand about three feet from each other when carrying on business conversations, but Arabs and Africans stand about one foot apart. -Family roles and relationships vary in different countries. -Business and daily life in some societies are governed by religious factors. -Time spent with the family and the quality of relationships are more important in some cultures than the personal achievement and accomplishments espoused by the traditional U.S. manager -Many cultures around the world value modesty, team spirit, collectivity, and patience much more than competitiveness and individualism, which are so important in the United States. -Punctuality is a valued personal trait when conducting business in the United States, but it is not revered in many of the world's societies. -Eating habits differ dramatically across cultures -Rules of etiquette vary and managers must learn the rules of others. -Americans often do business with individuals they do not know, unlike businesspersons in many other cultures.

Mexico's business culture

-Authoritarian society in terms of schools, churches, businesses and families. -Seek workers who are agreeable, respectful, and obedient rather than innovative, creative and independent. -Provide workers with more than a paycheck, but in return they expect allegiance or loyalty.

America's business culture

-High priority in time, view time as an asset. -Stand about three feet from each other -Value competitiveness and individualism -Punctuality is valued -Do business with persons they do not know -Often use blunt criticism and make quick decisions

Japan's business culture

-Place the great importance on group loyalty and consensus called Wa -Japanese remain silent when they are confronted.

China's business culture

-Rarely do business with people they do not know. -Position is important in business relationships. -Arriving late is an insult -Meeting require patience -greetings are formal and the oldest person is always greeted first

Global/International Issues

-The underpinnings of strategic management hinge on managers gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors, shareholders, and customers worldwide. -The price and quality of a firm's products and services must be competitive on a worldwide basis, not just on a local basis.

India's business culture

-They don't like to say no -They don't want to disappoint people, they would rather say something is not available. -Titles such as professor, doctor, or engineer are important Prefer to do business with whom they established a relationship. -Punctuality is important -Do not trust the legal system -Use the right hand to give and receive business cards

American Versus Foreign Business Culture

-To be successful in world markets, U.S. managers must obtain a better knowledge of historical, cultural, and religious forces that motivate and drive people in other countries. -For multinational firms, knowledge of business culture variation across countries can be essential for gaining and sustaining competitive advantage.

Advantages of Global Business

1.Firms can gain new customers for their products. 2.Foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets. 3.Foreign operations can allow firms to establish low-cost production facilities in locations close to raw materials or cheap labor. 4.Competitors in foreign markets may not exist, or competition may be less intense than in domestic markets. 5.Foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment. 6.Joint ventures can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries. 7.Economies of scale can be achieved from operation in global rather than solely domestic markets. Afirm's power and prestige in domestic markets may be significantly enhanced ifthe firmcompetes globally

Disadvantages of Global Business

1.Foreign operations could be seized by nationalistic factions. 2.Firms confront different and often little-understood social, cultural, demographic, environmental, political, governmental, legal, technological, economic, and competitive forces. 3.Weaknesses of competitors in foreign lands are often overestimated, and strengths are often underestimated. 4.Language, culture, and value systems differ among countries, which can create barriers to communication. 5.Gaining an understanding of regional organizations is difficult. Dealingwith two or more monetary systems can complicate internationalbusiness operations

The Nature of Doing Business Globally

Exports of goods and services from the United States account for only 13.5 percent of U.S. gross domestic product

Multinational Corporations

Organizations that conduct business operations across national borders

Global Strategy

includes designing, producing, and marketing products with global needs in mind, instead of considering individual countries alone

Globalization

process of doing business worldwide, so strategic decisions are made based on global profitability of the firm rather than just domestic considerations