MGT 201 11th Edition Lecture 5 Outline of Last Lecture I. Define elements of an organization’s culture II. Discuss how an organization’s culture affects its response to its external environmentOutline of Current Lecture III. Discuss the global environment and how different countries are managing in the global environment IV. Discuss general trade agreements V. Go over market entry strategies Current Lecture The Global Environment  The global economy is dominated by countries in three regions: North America, WesternEurope, & Asia China & The Pacific Rim Japan dominated world attention the latter half of the last century  China is now on its way to becoming the world’s largest producer and consumer of manyof the world’s goods Growing consumer market  Doing business in China is not easy nor is it a smooth process  India, the Service Giant  India- rising power in software design, services & precision engineering  Major source of technological brainpower  Large English-speaking population= target for outsourcing  Brazil’s Growing Presence  Brazil’s economy was projected to grow as much as 6% in 2010 Currently 10th largest economy in the world and is projected to be 4th largest by 2020 International Trade Alliances  General Agreement on Tariff & Trade (GATT) 23 nations in 1947, a set of rules for fair trade  World Trade Organization (WTO) Maturation of GATT into permanent global institute  European Union  1957- alliance to improve economic and social conditions among members These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. North American Free Trade Agreement (NAFTA) 1994, merges the U.S, Canada, and Mexico into a single market  Created one of the world’s largest trading blocs  Nearly 400 million U.S, Canadian, & Mexican consumers and a total output of $6.5 trillion  Market Entry Strategies 1.) Exporting 2.) Outsourcing 3.) Licensing & Franchising 4.) Direct ventures  Greenfield venture- when a company builds a subsidiary from scratch in a foreign country  Outsourcing vs. Offshoring  Outsourcing- contracting with an outside provider to produce one or more of an organization’s goods or services  Global Outsourcing/Offshoring- moving jobs to other countries, typically where wages are low  The Economic Environment  Economic Development- countries are categorized as either developed or developing based on per capita income  Government policies, market size, financial markets, infrastructure  Resource and Product Markets  Companies must evaluate market demand  The Legal-Political Environment  Political risk- risk of lost assets, earning power, or managerial control  Managers must be concerned with the political instability of global markets  The Sociocultural Environment  The values and behaviors that govern U.S. businesses do not always translate  Social values, communication differences, other cultural characteristics  Multinational Corporations  Global, stateless, or transnational corporations  25% or more of its profit comes from outside parent company  Managed as a worldwide business