BBB4M
CHAPTER 5 – INTERNATIONAL
AGREEMENTS, ORGANIZATIONS, AND
POLICIES.
5.1 Positioning in the Global
Economy
Positioning starts with a product, a piece of
merchandise, a service, a company, an institution, or
even a person.
To position itself in world markets, a business must
establish what makes its products or services unique
and superior to others. (image and reputation)
Visibility among trade partners
Strategies toward Global
Positioning
By exporting or importing
Franchising a business operation
Starting up a wholly owned subsidiary
Purchasing parts/materials in foreign markets
Establishing a joint venture
Strategic alliance
International and Global
Companies
Global economy is based on the interdependence of
competitors, markets, and resources.
A global company is one in which top management
makes decisions to maximize worldwide revenues,
income, and profits
BENEFITS AND CHALLENGES IN GLOBAL
COMPANIES – PAGE 148-149
5.2 Corporate Globalization
Globalization refers to the growth and spread of
interactive international economies and businesses
around the world.
A Multinational company (MNC) is a business
enterprise that conducts business in several countries.
The global influence of these economies is illustrated
by their dominance in the following areas: oil and
gasoline, hydroelectric and nuclear plants, minerals,
construction of transportation crafts, lumber and
agriculture.
Multinational companies
Ethnocentric MNC e.g. Coca-Cola's headquarters in
Atlanta, Georgia control most of the company’s foreign
affairs.
Polycentric MNC e.g. 3M corporation – 35,00 of its
employees are positioned in countries around the
world
Geocentric MNC (uncommon) e.g. Colgate-Palmolive
Challenges to Multinational
Organizations
Developing global customers beyond the Triad.
Multinational companies sometimes dominate
economies and try to influence governments.
Creating new international divisions of labour
Global Organizational
Structure
Separate International Divisions
Functional Divisions
Product Divisions
Geographic Divisions
Matrix Organization
5.3 International Trade
Agreements
There is an increase need for trade agreements
Trading Blocs
Reciprocity
Bilateral trade/multilateral trade
NAFTA, FTAA, EU, APEC
Agreement on Internal Trade (AIT)
Free Trade or Duty-Free Zones
5.4 Organizations Influencing
Global Trade
G20 – An international forum of finance ministers and central bank
governors.
World Trade Organization(WTO)
World Economic Forum (WEF)
Organization for Economic Cooperation and Dev.
World Bank Group
International Chamber of Commerce (ICC)
International Monetary Fund (IMF)
National Organizations