International Management

FH Wuerzburg
Part 1
International Management
Michael Krueger
Nov 8, 2014
Nov 2012 Part 2 - Michael Krueger 2
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Nov 2012 Part 2 - Michael Krueger 3

Syllabus
1. Introduction
Nov 8 2. Management Cycle
8:15 14:00
3. International Market Research

4. Homework rehearsal
Nov 22 5. Social Responsibilities and Ethics
14:15 17:30
6. The role of culture in International Management

7. Homework rehearsal
8. Communication across culture in International
Dec 13 Management
8:15 14:00
8. Developing International Strategies
9. International Strategy Impementation
10. Homework rehearsal
Jan 10 11. Organization and Control
8:15 11:30 12. Global HR Management
13. EXAM Preparation (Q&A, old exam)

??? Final exam

Nov 2012 Part 2 - Michael Krueger 4

Grad Calculation

20 % Participation

30 % Homework

50 % Exam

Nov 2012 Part 2 - Michael Krueger 5

Homework Due Nov 22

Please answer all three questions :

a. Google was censured to allow disremembering

(= deleting links to outdated pages).
Please list the arguments of Google in court against
disremembering as well as the reasons for it.

b. Due to its size and power, Google is seen in Europe as a threat.

Please list the arguments for that. Please list the requested
actions to reduce the power of Google.

c. Please give your opinion and the reasons for your position.

Papers will be collected and graded. Panel discussion in class.

Nov 2014 International Management Michael Krueger 6

Homework Due Dec 13

Please answer all three questions :

a. Google was censured to allow disremembering

(= deleting links to outdated pages).
Please list the arguments of Google in court against
disremembering as well as the reasons for it.

b. Due to its size and power, Google is seen in Europe as a threat.

Please list the arguments for that. Please list the requested
actions to reduce the power of Google.

c. Please give your opinion and the reasons for your position.

Papers will be collected and graded. Panel discussion in class.

Nov 2014 International Management Michael Krueger 7

Homework Due Jan 10

Please answer all three questions :

a. Google was censured to allow disremembering

(= deleting links to outdated pages).
Please list the arguments of Google in court against
disremembering as well as the reasons for it.

b. Due to its size and power, Google is seen in Europe as a threat.

Please list the arguments for that. Please list the requested
actions to reduce the power of Google.

c. Please give your opinion and the reasons for your position.

Papers will be collected and graded. Panel discussion in class.

Nov 2014 International Management Michael Krueger 8

Exam Structure

about 10 questions from all topics

50 out of 100 points necessary to pass
90 minutes duration
All you need is a pen + ruler
No other aids needed or allowed
Paper will be provided

Nov 2012 Part 2 - Michael Krueger 9

International Management

FH Wuerzburg
Part 1
International Management
Michael Krueger
October 12, 2013
 What will be
different in
doing business,
when you cross
boarders

Nov 2012 Part 2 - Michael Krueger 11

Differences to National Management

Payment / debt
People / Cultures Corruption
collection
Law / Contracts Risk levels Geography / Topology

Climate Trade Organizations Time zones

Behavior (professional) Business Strategies Economic power

Behavior (private) Competition History

Education Regulations Language

Personal Preferences Duty / tariffs / quota Leadership

Religion Unions Responsibility

Communication Infrastructures Intercultural behavior

Technology Market size / growth

Nov 2012 Part 2 - Michael Krueger 12

 To what kind of
companies it is
important to go
international

Nov 2012 Part 2 - Michael Krueger 13

 Example 1
German Beer Industry

Nov 2012 Part 2 - Michael Krueger 14

 Example 2
Hotel Industry

Nov 2012 Part 2 - Michael Krueger 15

 What about
Automotive supplier
industry in Germany

Nov 2012 Part 2 - Michael Krueger 16

 What is
Globalization

Nov 2012 Part 2 - Michael Krueger 17

Globalization

increasing unification of the world's economy

thru reduced barriers

Goal: increase wealth globally

thru international deviation of labor (Specialization / efficiency)

unification thru communication, transport & trade

Nov 2012 Part 2 - Michael Krueger 18

 To what kind of
companies it is
important to go
international

Nov 2012 Part 2 - Michael Krueger 19

 Globalization
can effect all
kinds of
companies

Negative.
Positive.

Nov 2012 Part 2 - Michael Krueger 20

Strategic Management Process

Define / clarify
mission and objectives
Set up control and
Evaluation systems to Assess environment for
Ensure success and feedback threats, opportunities

Assess internal strengths

Implement strategy
and weaknesses
thru complementary structure
systems, and processes
Consider alternative
Choose strategies using
strategy competitive analysis

Nov 2012 Part 2 - Michael Krueger 21

 What other trends
force companies to
go international

Nov 2012 Part 2 - Michael Krueger 22

International Mega-Trends

(1) Economical developments

(2) Market developments (goods, services)
(3) Technical developments
(4) Developments of population

Nov 2012 Part 2 - Michael Krueger 23

(1) Economical Developments

Increasing number of trading blocs

Reduction of trade barriers
Economical growth enlarging imbalance of developed
industrial countries and less developed countries
Liberalization of monetary transactions
Structural changes towards service sector within the
developed industrial countries

Nov 2012 Part 2 - Michael Krueger 24

Trading Blocs

Three trading blocs grouped around dominating currencies:

Association of Southeast Asian Nations (ASEAN)
European Union (EU)
North American Free Trade Agreement (NAFTA)
Account for > 60 % of global GDP

China for 5.5 %

ASEAN for 2.5 %
India for 1.8 %

Nov 2012 Part 2 - Michael Krueger 25

 What about
China

Nov 2012 Part 2 - Michael Krueger 26

The new Free Trading Zone in Asia

Free Trading Zone China + Asean 6

Population

GDP

Trade Volume

Nov 2012 Part 2 - Michael Krueger 27

 What about
India

Nov 2012 Part 2 - Michael Krueger 28

(1) Economical Developments

Increasing number of trading blocs

Reduction of trade barriers
Economical growth enlarging imbalance of developed
industrial countries and less developed countries
Liberalization of monetary transactions
Structural changes towards service sector within the
developed industrial countries

Nov 2012 Part 2 - Michael Krueger 29

Exports

Exports

Global economic
performance

Source: WTO, 2003

Nov 2012 Part 2 - Michael Krueger 30

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Incoterms

Nov 2012 Part 2 - Michael Krueger 34

(1) Economical Developments

Increasing number of trading blocs

Reduction of trade barriers
Economical growth enlarging imbalance of developed
industrial countries and less developed countries
Liberalization of monetary transactions
Structural changes towards service sector within the
developed industrial countries

Nov 2012 Part 2 - Michael Krueger 35

(2) Developments of Markets

Increasing number of (goods) markets are saturated

Increasing number of unsaturated markets in less developed
countries, not targeted yet due to a lack of purchasing power
Technical progress shortens PLC
Increased competition in home markets due to additional
competitors from abroad
Liquidation of regional markets due to e-commerce

Nov 2012 Part 2 - Michael Krueger 36

(3) Technical Developments
New technologies are invented and marketed faster
Increased labor productivity
Shortened PLC
IT technology enables global storage, transfer, and access of
data in real time
Global market transparency

Nov 2012 Part 2 - Michael Krueger 37

(4) Developments of Population
Global population fast growing
Unbalanced allocation
Growing cities / migration
International migration gains economical relevance
"Aging" population in developed countries with non-
appreciable consequences

Nov 2012 Part 2 - Michael Krueger 38

 What factors
do skillful Global
Managers
consider

Nov 2012 Part 2 - Michael Krueger 39

Assessing The Environment

Global management is the process of developing strategies,

designing and operating systems, and working with people
around the world to ensure sustained competitive advantage

(1) Political environment (corruption, terrorism, )

(2) Economic environment
(3) Social environment
(4) Technological

(5) Global e-Business / e-Commerce

(6) Environmental factors
(7) Legal factors
(8) Demographic aspects

Nov 2012 Part 2 - Michael Krueger 40

(1) Political Environment

Factors for political risk assessment (= early warning system)

Political (in-) stability in host country
Ethnic grouping / differences => conflicts
Religious grouping / differences => terrorism
Political risk (nationalization or expropriation)
Macro political risk
Micro political risk
Loss of intellectual property
Interference with managerial decision making

Nov 2012 Part 2 - Michael Krueger 41

(1) Political Environment

Managing the Political Risk

avoidance / withdrawal
taking risk due to opportunity
adaption
dependency
hedging

Nov 2012 Part 2 - Michael Krueger 42

(2) Economical Environment

actual risk level = ability or intention to meet its financial

obligations
two categories of risk
gov. changes abruptly its monetary or fiscal politics
gov. modifies foreign investment politics

How to assess economic risk

quantitative
qualitative
combination
check list

Nov 2012 Part 2 - Michael Krueger 43

(3) Social Environment

Cultural aspects
Role of family / friends
Education
Religion
Social system
Unions

Nov 2012 Part 2 - Michael Krueger 44

(4) Technological Environment

Ability of innovative MNC to profit from ist own technology by

protecting it from competition
Patent regulations and fees (patent trade mark, )
IP (intellectual property) enforcement
Espionage / fakes
Decision on technological transfers
(plagiarism, willingness to adopt)

technical trends

Nov 2012 Part 2 - Michael Krueger 45

(5) Global e-Business / e-Commerce

e-Business = integrations of systems

e-Commerce = marketing and sales via Internet

Speeding up trading and data exchange

New level of competition
(cost savings, global, price transparency)
Convenience across boarder business / communication
Efficiency (web meeting, trading paces, )
Corporate Intranet services make expertise available to all
employees (immediately)

Nov 2012 Part 2 - Michael Krueger 46

(5) Global e-Business / e-Commerce
C B A worldwide
C electronically Reverse
B cost effective Auctions
A 24/7
transparent
e-Commerce supports
contracting (price offer, negotiation, credit assessment,
payments)
communication (advertising, promotion, CRM)
distribution (download, tracking, availability, delivery time)
service (complains, information)

e-Commerce is appropriate for products that

well-known / no assistance or advice needed
have no difference in quality
offer price advantage
Nov 2012 Part 2 - Michael Krueger 47
(6) Environmental Factors

Topographical / geographical aspects

Climate
Pollution / contamination
Environmental protection (rules and regulations / law)

Nov 2012 Part 2 - Michael Krueger 48

(6) Biospheric Megatrends
Row materials, metals, fossil fuels are limited
New exploration grounds (seabed)
New exploration methods (deposits)
New energy sources (renewable)
Water shortages requires closed circuits (100 % purity)

Nov 2012 Part 2 - Michael Krueger 49

(7) Legal Environment

Managers actions have to apply to local law

which is derived from
Common law
Civil law / contract law

in some countries
Islamic law (or other religious rules)

Other regulatory issues

tariffs, quotas, trade restrictions
tax law (depreciation allowances, )
holidays

Nov 2012 Part 2 - Michael Krueger 50

(8) Demographic Aspects

Population (#, growing, shrinking)

Average income
Age (structure)
Education (structure)
Religions
Conflicts

Nov 2012 Part 2 - Michael Krueger 51