The main actors in this book are the multinational corporation and the nation-state (the environment). These two entities are mutually interdependent. The MNC's survival depends on the survival of the nation-state, and vice versa.
The student of international business must comprehend the dynamics of the mutual interdependence between the MNCs and the nation-states of the world. A process of globalization is going on, as MNCs bid for the privilege of assisting nation-states in accomplishing their goals and thereby profiting. Similarly, nation-states are bidding for the privilege of assisting MNCs in accomplishing their goals and thereby profiting. As globalization continues, no nation-state can afford to erect unreasonable barriers to any MNC's desire to participate in the wealth-creating process and no MNC can afford to refuse a nation-state's reasonable request for assistance.
Understanding the exceedingly complex interactions among the thousands of MNCs and the hundreds of nation-states requires an equally complex scheme. The goal of THE SUBJECT, is to provide the reader with a clear understanding of what the field is and who the main actors are (see Figure 2.7). The science of economics and its special field of international economics, with its emphasis on international trade and international finance, are the subjects of THE THEORETICAL BASE: THE FUNDAMENTALS. THE MANAGEMENT OF GLOBAL OPERATIONS is the heart of the book. The chapters in this part examine the initial decision to enter the global market and the main functions of management such as finance, production, personnel, communication and control, and marketing. The final chapter provides a glimpse into the future of the MNC.
International management is to international economics what engineering is to physics: the former creates mechanisms by applying knowledge created by the latter. The mechanism this book is concerned with is the MNC—a goal-directed enterprise run by people who look around the globe in search of profitable opportunities for satisfaction of human needs and creation of wealth. Although in the real world MNCs do not behave in the sequential form depicted in this book, analyzing managerial decisions and strategies in the sequence adopted here facilitates understanding.
Table 2.3 provides a bird's-eye view of the material in this book. Accompanying a short summary of each chapter is the main question it addresses, along with a brief answer. The questions in Table 2.3 fairly adequately represent the tasks that a multinational manager must master. The material covered in this book is not easy. An attempt has been made here to make it simple without making it simplistic. After studying the ideas in the following chapters, as well as the associated examples of life in the global village, the student will know a great deal about international business.
|
Question |
Answer |
Relevant Material in the Book |
|---|---|---|
|
(1) What is global business all about? |
The interaction between an MNC and its environments (i.e., the diverse sociopolitical and economic systems that affect the company's operations) |
THE MULTINATIONAL CORPORATION, describes the company's role in modern society and the controversies surrounding its existence and operations around the globe. THE ENVIRONMENT, presents material on the world within which the company operates. |
|
(2) What background knowledge must students have to understand the company-environment (MNC-NS) interaction? |
Students must possess an adequate knowledge of international economics, international trade, and international finance. |
INTERNATIONAL ECONOMICS, exposes students to the basics of economics, the "mother science" of the discipline. INTERNATIONAL TRADE, focuses on the pragmatic aspects of exports and imports and their meaning for the practicing manager. INTERNATIONAL FINANCE, provides a working knowledge of the international monetary system. |
|
(3) How should the company become involved in international business? |
By following the "evolutionary approach to international market entry" |
PARTICIPATION STRATEGY, explores the various entry modes and some of the analytic tools commonly used to evaluate the cost and benefits of each mode of entry. |
|
(4) Once the company enters foreign markets, how should it organize its global activities? |
The company should develop an adaptive (flexible) organizational structure. |
ORGANIZATION STRATEGY, considers the many diverse organizational structures that enable the firm to accomplish its goals. |
|
(5) How does the MNC find, protect, and dispense the financial resources needed to maintain the organizational structure designed to carry out the participation strategy? |
Management must design a global financial strategy that minimizes the cost of financing global operations. |
FINANCIAL MANAGEMENT STRATEGY, examines the main tasks of international financial management—finding, using, and protecting financial resources. |
|
(6) How should the company serve the global market? |
The company must develop a global sourcing and production strategy that minimizes production and transportation costs. |
PRODUCTION / SOURCING STRATEGY, explores the basic considerations of overseas production for the local, international, or home market. |
|
(7) How do multinational companies market their products overseas? |
Although selling products is pretty much a universal function, there are some differences in selling internationally that a multinational manager must deal with. |
ORGANIZATION STRATEGY, Marketing Strategy, focuses on the nature of international marketing and the development of a global marketing mix. |
|
(8) How do so many people from different cultural backgrounds manage to work together? |
By learning the corporate culture and by practicing the formal corporate procedures and informal corporate rituals. |
FINANCIAL MANAGEMENT STRATEGY, Human Resource Development Strategy, examines the process of finding, selecting, hiring, and developing personnel who will staff the various positions in the organizational structure. |
|
(9) How does a company that is spread all over the world hold together? |
An MNC is held together by a network of information flows among the different subsystems and between the subsystems and the "mother" company. |
PRODUCTION / SOURCING STRATEGY, Communication and Control, describes the types of financial controls an MNC uses to make sure that every single subsystem's performance contributes to the performance of the entire company. |
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(10) What is the future of international business and the MNC? |
The field of international business management will permeate every aspect of business education and practice. |
MARKETING STRATEGY, Epilogue: Consortia/Strategic Alliances, summarizes the current trends toward new forms of global business and speculates about the future. |
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