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International Management Concerns

International Management Concerns. Lecture 22. Global Differences. Average paid vacation days per year Paid vacation days per year required by law. Average paid vacation days per year. Germany: 30 Italy: 30 France: 25 Netherlands: 25. Average paid vacation days per year.

robert-contreras
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International Management Concerns

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  1. International Management Concerns Lecture 22

  2. Global Differences • Average paid vacation days per year • Paid vacation days per year required by law

  3. Average paid vacation days per year • Germany: 30 • Italy: 30 • France: 25 • Netherlands: 25

  4. Average paid vacation days per year • Britain: 25 • Belgium: 24 • Japan: 17.5 • U.S.: 10.2

  5. Paid vacation days per year required by law • France: 25 • Germany: 24 • Italy: 20 • Netherlands: 20

  6. Paid vacation days per year required by law • Britain: 20 • Belgium: 20 • Japan: 10 • U.S.:

  7. Labor Costs • Average production worker compensation per hour

  8. Labor Costs (2002) • U.S. $17.10 • Japan 21.42 • Germany 27.31 • Mexico 1.38

  9. Fastest Growing Auto Market? • Total vehicle sales increase 75% from 2002 to 2003.

  10. Chinese consumption in ‘03 • 50% of world’s concrete output • 33% of world’s steel output • 25% of world’s copper output • 20% of world’s aluminum output (Fortune, 6-8-04)

  11. Health Insurance Costs Per Capita • UK $1400 • Canada $2300 • Germany $2400 • US $4200 • (2003, in US dollars)

  12. CEO Pay • Manufacturing Sector • CEO pay as a factor of average worker pay • (Business Week, May 6, 2002)

  13. CEO Pay • England 24x average worker’s pay • Germany 15x average worker’s pay • Sweden 13x average worker’s pay • US ?

  14. Global Pricing – Volkswagen Golf • Finland: $ 8,290 • France: 10,510 • Italy: 10,690 • Germany: 11,040 • Britain: 13,040 (Year 2000)

  15. Economic Market Organizations

  16. NAFTA • United States • Mexico • Canada

  17. European Union • 28 countries and counting (members & applicants)

  18. World Trade Organization • 146 Member Countries

  19. Mercosur(Southern Common Market) • Argentina • Brazil • Paraguay • Uruguay

  20. Mercosur(Southern Common Market) • Chile • Bolivia • Peru • (Venezuela)

  21. Andean Common Market • Bolivia • Columbia • Ecuador • Peru • Venezuela

  22. FTAA (Free Trade Area of the Americas)Alliance of the Americas • From Alaska to Argentina

  23. SAFTASouth Asian Free Trade Area • India • Pakistan • Sri Lanka • Bangladesh • Nepal • Bhutan • Maldives

  24. 2003 Top U.S. Trade Partners 1. 2. 3. China 4. Japan 5. Germany

  25. 2003 Top U.S. Trade Partners • United Kingdom • South Korea • Taiwan • France • Italy

  26. Global Business Terms • Exporting • Licensing/Franchising • Joint Venture • Wholly Owned Subsidiary

  27. Exporting • Selling products or services produced in one country to customers in another country

  28. Exporting • Entry without ownership (EWO) • Beware of tariffs (Hail Free Trade Zones!) • Intracorporate Transfers • Ford plant in Mexico exports fuel tanks to Ford assembly plants in U.S.

  29. Exporting • Overseas Distributors • Understand the market • Understand the culture • Understand the product/service

  30. Licensing/Franchising • Using the logo/system of another company

  31. Licensing • Selling the right to brand names, patents, manufacturing technology, or intellectual property • EWO • Avoids high tariffs

  32. Licensing • Licensor gives up considerable control • May be educating a potential rival • Mitsubishi and Hyundai • Microsoft in the PRC

  33. Franchising • Selling the contractual rights to methods, trademarks, products, procedures, and marketing strategies • EWO • Allows quick expansion by franchiser

  34. Joint Venture • A company from one country pools its resources with those of a foreign company

  35. Joint Ventures • Shared ownership between companies • Set up as a separate legal entity

  36. Joint Ventures • Large MNC with a product design and technological expertise partners with local firm that offers marketing expertise in that culture

  37. Joint Ventures • Sharing of costs/risks • Chrysler and BMW built a $500 million engine plant.

  38. Joint Ventures • Economies of scale required selling 400,000 of those engines. Neither Chrysler nor BMW thought they could sell that many engines alone. Win-Win.

  39. Wholly Owned Subsidiary • An independent company owned by the parent corporation

  40. Wholly Owned Subsidiaries • Ownership • More Control • More closely coordinate worldwide ops • Greater expense and risk

  41. Wholly Owned Subsidiaries • Greenfield approach • Time consuming and expensive • Acquisition approach • Complicated negotiations and financial transactions

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