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CHAPTER FOUR

The International Environment

INTRODUCTION

Internationalism is increasingly the rule rather than the exception when it comes to doing business. In fact, in today’s marketplace there are more than 50,000 multinational corporations, some of which are larger economic entities than entire countries themselves. This chapter addresses the opportunities and challenges presented when organizations expand internationally.

HOW TO PRESENT THE ROADMAP

Ask students to envision a company they have started that is rapidly expanding. Would they consider expanding the business internationally? If so, how would they go about it? What are the benefits of internationalizing the business? What are the likely challenges? Building on the students’ responses, introduce the various levels of involvement in terms of internationalizing, including (1) importing/exporting, (2) licensing/franchising, (3) strategic alliances and joint ventures, and (4) foreign subsidiaries. Next, explain to students that this chapter expands on Chapter 3 by adding another layer (internationalism) to the four dimensions of the organizational environment. Specifically, the four dimensions (sociocultural, natural, political-legal, and economic-technological) will be re-examined through a global lens, recognizing, for example, cross-cultural differences in norms and beliefs and differing labor and environmental laws between countries.

DETAILED LECTURE OUTLINE

I. Mainstream management and the international environment A. The international environment provides opportunities for cheap inputs, labor costs, and a larger market for outputs B. Multinational corporations (MNCs) 1. Definition = an organization that receives more than 25 percent of its total sales revenue from outside its home country 2. MNCs are increasingly common (7,000 in 1970s to 50,000 today) and powerful (half of the world’s 100 largest economic entities are MNCs instead of countries)

Discussion Questions

Regardless of...