MANA 4321 1nd EditionExam # 1 Study Guide Lectures: 1 - 7Lecture 1 (August 26)Introduction to Globalization- International competition is inevitable and future managers will be affected by international competition. - Firms that have experience in the foreign market will be tomorrow’s winners.- Managers should be able to understand international industries and be able to formulate strategies to achieve competitive advantage. - To beat your rivals you must know your rivals. For example their weaknesses, strategies, players, objectives and goalsThe World is flat- The barriers are gone- trade, outsourcing, competition has come from the lack of those barriers. - “The cold, hard truth is that management, shareholders, and investors are largely indifferent to where their profit comes from or even where the employment is created. But they do want sustainable companies.” – Thomas Friedmano CEO- has a fiduciary duty for the shareholders of the company. The implications of a “Flat World”Flattening is progress and it poses a threat to historical U.S. and European prosperity and power. The proper response is not to fight it, but embrace it and adapt, not only to survive, but thrive in the new environment. - New economies need better education, pervasive high-speed connections, and more globally aware government policies. The playing field is a lot more layered. High trade barriers were one of the causes of the Great Depression. Globalization - The shift towards a more integrated and interdependent world economy - Two components:o The globalization of markets (all interconnected) The merging of distinct national markets into one  huge global marketplaceo The globalization of production (takes advantage of things made in different countries) The sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of productionEx: Vizio  Cheaper. Employees only 300 people because of outsourcing all over the world Reasons for outsourcing: flexibility, communication, transportation, political conditions or trade barriers. Lecture 2 (August 28) Is globalization prosperity or improvement?PROPONENTS- Free trade results in greater efficiency/innovation the whole economy is better off- Reduction of poverty in less developed economies- Low price for goods and services- Free trade results in economic progress and tougher environmental regulations and stricter labor standards- Bodies such as United Nations and the WTO exist to serve the collective interests of member states - not subvert themGood- Cheaper products, have a wider range of choices, innovation increase, increase competition, new products come in a much faster paceCRITICS- Destroys manufacturing jobs in wealthy advanced countries- Creates income inequality and social problems- Wage rates of unskilled workers in advanced countries declines- Manufacturing done in less developed countries that lack adequate regulations to protect labor and environment- Unelected bureaucrats impose policies on nation-states, undermining sovereigntyBad- lower salaries, things outsourced for high level jobs. Results in poverty, structural shifGINI COEFFICIENT- measure of income inequalityLecture 3 (September 2)Changing Demographics of the Global Economy- Changing world output and world trade picture-Changing FDI picture (Japan in India)- made in emerging economies- Changing nature of the multinational enterpriseo Non-US multinationalso Rise of mini-multinationals - Changing world orderPPP- Purchasing Power ParityLecture 4 (September 4)International Diversification (important questions to ask when entering a market)- STAGINGo When should we go international? How quickly should we expand into international markets? - ARENAS:o Which geographic areas will we enter?- VEHICLESo Which market entry strategies will we use?- DIFFERENTIATORSo How does “being international” make our products more attractive to our customers?- ECONOMIC LOGICo How will international diversification create value?International Diversification Traditional Motivations- Use underemployed resources (fixed resources, lower cost sell off the assets) - Seek new markets- Secure key supplies- Exploit firm specific assets - Access low cost factors- Benefit from government investment subsidies- Lower risksWhen growth is low the competition is high.- Downward spiral of price.- Labor (resources)- Cost of capital (enticing you)Lecture 5 (September 16)International Diversification Emerging Motivations- Increasing minimum efficient scale and economies of scale- Escalating R&D costs and shorter product life cycles- Protect domestic markets- Seek “knowledge” (go to learn)- Follow competitors; Competitive positioning4 Factors Influencing Type of FDIs- RESOURCE SEEKINGo Availability, price and quality of natural resourceso Infrastructure to enable resources to be exploitedo Investment incentives (e.g., tax holidays)- STRATEGIC ASSET SEEKINGo Availability of knowledge-related assets o Institutional factors influencing ease or difficulty by which assets can be acquired (knowledge related)- MARKET SEEKINGo Large, growing marketso Transportation costs; tariff barrierso Need to be closer to users o Macroeconomic policies pursued by host governments- EFFICIENCY SEEKINGo Mainly production cost related factorso Removal of obstacles by governmento Availability of specialized clusters (e.g., science and industrial parks)Fast Cycle Model- product change more frequentlyManaging in the global marketplace- Countries are different – liabilities of “newness” and “foreignness”- Range of problems confronted by a manager is widero Which foreign markets to enter and which to avoido Appropriate mode of entryo Where to site production activities- Governance and coordination- Work within the limits imposed by government interventionWhich market to enter and avoid? Governance- control the way firms function. (Each governance is different)MANAGERIAL TASKS IN A GLOBAL ENVIRONMENT- Ensure that their company leads the industry in identifying and pursuing market opportunities worldwide- Work relentlessly to convert global presence into global competitive advantage- Cultivate a global mindset- Strive to always reinvent the rules of the global game (reinvent and create the market)Lecture 6 (September 18)ANALYZING