How Organizations Go Global

Chapter 2 Business Management Ms. Stewart

Different Types of International Organizations

Multinational Corporation A firm that operates in multiple countries but manages from the home country Multidomestic Corporation A firm that operates in several countries but decentralizes management to the local country Global Company An international company that centralizes management in the home country

Different Types of International Organizations (contd)

Transnational or Borderless Organization An international company that eliminates artificial geographical barriers Born Global A company that chooses to go global from inception

Chapter 2, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition Copyright 2011 Pearson Canada Inc.

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Chapter 2, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition Copyright 2011 Pearson Canada Inc.

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How Organizations Go Global (contd)

Global Sourcing Purchasing materials or labour from around the world, wherever it is cheapest Exporting Making products at home and selling them abroad Importing Selling products at home that are made abroad
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Chapter 2, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition Copyright 2011 Pearson Canada Inc.

How Organizations Go Global (contd)

Licensing and Franchising

Giving another organization the right to use its name, technology, or product specifications Licensing is used by manufacturing organizations that make or sell another companys products Franchising is used by service organizations to use another firms name and operating methods
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Chapter 2, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition Copyright 2011 Pearson Canada Inc.

How Organizations Go Global (contd)

Strategic Alliance Partnership between a domestic and foreign company to share resources in developing new products or building production facilities Joint Venture is a type of strategic alliance in which partners form an independent organization for a business purpose Is a faster and less expensive way to compete globally
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Chapter 2, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition Copyright 2011 Pearson Canada Inc.

How Organizations Go Global (contd)

Foreign Subsidiary

A direct investment by an organization in a foreign country by creating a separate and independent production facility or office This involves the greatest amount of resources and highest risk
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Chapter 2, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition Copyright 2011 Pearson Canada Inc.