There are many things that are taught in Chapter 6; in this paragraph is the summary of the global environment and consequences of a global economy which can lead to global strategy. How the world economy is becoming more integrated than ever before. The global economy is becoming more integrated than ever before. For example, the World Trade Organization (WTO), formed in 1995, now has 153 member countries involved in more than 95 percent of the world’s trade.
The newest members are Cambodia, Nepal, Russia, Saudi Arabia, Tonga, Ukraine, and Viet Nam (The International Monetary Fund, set up by the United Nations in 1945, serves a similar purpose and includes 185 countries).
The WTO provides a forum for nations to negotiate trade agreements and procedures for administering the agreements and resolving disputes. Integration of the global economy means for individual companies and their managers. The increasing integration of the global economy has had many consequences.
First, even as the output of the world’s economies surged during the middle of the past decade, international trade expanded even faster. When trouble in the financial industry sparked an economic downturn, European and North American imports declined, and other world trade growth slowed. But those trends are expected to be temporary, eventually reversing as economic conditions improve. Also in Chapter 6, the strategies organizations use to compete in the global marketplace. One of the critical tasks an international manager faces is to identify the best strategy for competing in a global marketplace.
To approach this issue, managers can plot a company’s position on an integration–responsiveness grid. Compare the various entry modes organizations use to enter overseas markets. When considering global expansion, international managers must decide on the best means of entering an overseas market. The five basic ways to expand overseas are exporting, licensing, franchising, entering into a joint venture with a host-country company, and setting up a wholly owned subsidiary in the host country.
How companies can approach the task of staffing overseas operations. When establishing operations overseas, headquarters executives have a choice among sending expatriates (individuals from the parent country), using host-country nationals (natives of the host country), and deploying third-country nationals (natives of a country other than the home country or the host country).
While most corporations use some combination of all three types of employees, there are advantages and disadvantages of each. The skills and knowledge managers need to manage globally.
It is estimated that nearly 15 percent of all employee transfers are to an international location. However, the failure rate among expatriates (defined as those who come home early) ranges from an estimated 20 percent to 70 percent, depending on the country of assignment. The cost of each of these failed assignments ranges from tens of thousands to hundreds of thousands of dollars. We also learn in Chapter 6 how to identify ways in which cultural differences across countries influence management. In many ways, cultural issues represent the most elusive aspect of international business.
In an era when modern transportation and communication technologies have created a “global village,” it is easy to forget how deep and enduring the differences among nations can be. This week we learned about the influence of how organizational structure is on behavior. Also we learned how to analyze and influence an organizational culture on behavior. Then there is how power and politics influence people’s behavior. We talked about mechanistic structure and organic structure. When talking about mechanistic structure, the employees know how to present themselves, why there is no room for them to mess up.
When people are at work they have to act one way compared to the way they act at home. If the business does not put into place a strong organizational culture, then there could be a lot of unethical behavior in the place of business. This would show the people that work at the place of business and the customers that there is a low organizational structure. All work places of some kind of influence of power and politics. Without the right kind of power and politics in the place of business this could cause discord for people that work in the business.
If this kind of behavior is not watched it could cause other people in the business to feel left out or not appreciated in the right way. In week four we took a look at power and leadership, here we contrasted the two. Power is the influence someone has over another person and leadership uses power to attain goals. It is important that one does not have to be a leader to have power. Many people have the power to coerce others without having the leadership role. We could relate to formal power and compare it to the workplace. We also use rewards for employees who exceed goals.