Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
CHAPTER 17
Globalization and International Business
Going Global Isn’t Just for Travelers
Chapter 17 Overview
Each Chapter contains several inset features designed to assist the student reader in applying the
concepts to relevant examples. Management Live illustrates how experiences and activities relate
to work performance. Hot Topic explores samples of debated topics in business and strategy.
Facts to Consider introduces research or trends that may be used for class discussion in the
classroom or online for distance learning. Insight profiles the importance of opportunity when it
comes to cultural intelligence. Quick Case presents a business related scenario for class analysis
and discussion.
Chapter 17 Takeaways
• Takeaway 17.1 Discuss ways that globalization affects international business.
• Takeaway 17.2 Understand what global corporations are and how they work.
Chapter 17 Lecture Outline
• Takeaway 17.1 How Does Globalization Affect International Business?
• Globalization increases interdependence of the world’s economies.
• Globalization creates international business opportunities.
• Global sourcing is a common international business activity.
• Export/import, licensing, and franchising are market entry forms of international
business.
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
• Takeaway 17.2 What Are Global Corporations, and How Do they Work?
• Global corporations have extensive operations in many countries.
Chapter 17 Supporting Materials
Figures
Figure 17.1 How Does a T-Shirt Travel through the World’s Global Economy?
Figure 17.2 What Can Go Right and Wrong in Relationships Between Global -Corporations
and Their Host Countries?
What’s Inside
• Management Live: Classic American company, or not?
Applications
• TestPrep 17 Multiple-Choice Questions
• Skill Building Portfolio
o Self-Assessment 17: Global Intelligence
o Class Exercise 17: American Football
o Team Project 17: Globalization Pros and Cons
• Case Snapshot: Harley Davidson – Style and Strategy with a Global Reach
Chapter Outline:
Takeaway 17.1: How Does Globalization Affect International Business?
• Globalization increases interdependence of the world’s economies
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
• Figure 17.1 illustrates the path that a t-shirt takes from the point the cotton is grown in
• Globalization creates international business opportunities
✓ International business – conducts for-profit transactions of goods and services across
national boundaries.
✓ Reasons a business may “go international”
➢ Profits
➢ Customers
• Global Sourcing is a common international business activity
• Global sourcing is when a business purchases materials, manufacturing components,
or services from around the world
• Global Supply Chain refers to the network of outsourcing suppliers and contractors
of a firm.
• Export/Import, licensing, and franchising are market entry forms of international
business
• Exporting is selling locally made products in foreign markets
• Importing is buying foreign-made products and selling them in domestic markets
• Joint ventures and wholly owned subsidiaries are direct investment forms of
international business.
• A joint venture is a co-ownership arrangement in which the foreign and local
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
✓ A foreign subsidiary is a local operation completely owned and controlled by a
foreign firm
➢ Often very expensive and therefore entails more risk
✓ Greenfield venture – foreign subsidiary is established after firm has experience in
joint ventures
• Tips to Remember: Checklist for Choosing a Good Joint Venture Partner
• Familiar with your firm’s major business
• Employs a strong local workforce
DISCUSSION TOPIC
Prior to discussing this chapter in class, have each student find a recent newspaper or magazine
article that relates to globalization issues. Articles can easily be found in business publications
such as The Wall Street Journal, Business Week, Fortune, and Forbes, as well as many other
• International business is complicated by different legal and political systems
• Laws may cover occupational health and safety, equal employment opportunity,
sexual harassment and other matters
• Laws of incorporation and ownership, foreign exchange matters, intellectual property
and many others vary
➢ Intellectual property matters an area of controversy in China
• World Trade Organization (WTO) is a global institution that was established to
promote free trade and open markets around the world
➢ Member nations now number 153
• Nontariff barriers are nontax policies that governments enact to discourage
imports, such as quotas and import restrictions
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
• International businesses must navigate regional economic alliances
➢ NAFTA, the North American Free Trade Agreement, creates a trade zone that
frees the flows of goods and services, workers, and investments among the
United States, Canada, and Mexico.
➢ European Union or EU is both a regional economic and political alliance. The
DISCUSSION TOPIC
Divide the class into small discussion groups. Assign each group one of the following four
geographic regions: Europe, the Americas, Asia and the Pacific Rim, or Africa. Have the groups
spend 10-12 minutes identifying the potential challenges and opportunities that these areas face
in the context of the global economy. Have each group report out to the entire class with a brief
summary of its key discussion points.
17.1 Questions for discussion with suggested answers
1) Why would a government want to prohibit a foreign firm from owning more than
49% of a local joint venture?
2) Are joint ventures worth the risk of being taken advantage of by foreign partners,
as with GM’s “Chery” case in China?
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
• The actions of global corporations can be controversial
✓ Globalization Gap involves large global firms growing larger and more quickly than
smaller firms and even countries are able to grow.
• Managers of global corporations face ethical challenges
✓ Corruption – illegal practices to further business
✓ The Foreign Corrupt Practices Act makes it illegal for U.S. companies to engage in
corrupt practices overseas
• Planning and controlling can be difficult in global corporations
✓ Currency risk – fluctuations in foreign exchange rates
➢ Weak dollar – more dollars are necessary to buy one Euro. This is bad for U.S.
• Organizing can be difficult in global corporations
✓ Global area structure – arranges production and sales functions into separate
geographical units and assigns a top manager to oversee them
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
in their parts of the world.
• Leading is challenging in global corporations
17.2 Questions for discussion suggested answers
1) Should becoming a transnational corporation be the goal of all MNCs?
2) Is there anything that global firms and host governments can do to avoid conflicts and
bad feelings with one another?
3) Are laws such as the Foreign Corrupt Practices Act unfair to American companies trying
to compete around the world?
They certainly present challenges. Chapter Three explains that what is considered ethical
can vary across cultures. The Foreign Corrupt Practices Act seems to take a stand that
Career Situation: What Would You Do?
You’ve just read in the newspaper that one of your favorite brands of sports shoes is being
investigated for being made in sweatshop conditions at factories in Asia. It really disturbs you,
but the shoes are great. A student group on campus has a campaign to boycott the brand. Will
you join the boycott, or not, and why? How effective are such consumer threats? Is it still too
easy for global firms to get away with bad behaviors? If so, what can and should be done about
it?
Student responses will vary.
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
Teaching Notes
In this section, ideas, exercises, and assignments are provided to assist you in integrating the
concepts in Exploring Management for your students, especially the special features of the text.
Management Live: Classic American company, or not?
Going to Disneyworld? Stop by Orlando and visit the headquarters of Tupperware, a classic
American company. Or is it? Forty years ago 90% of Tupperware sales were in the U.S. Today
90% are outside of the U.S. It’s executive team is transnational. CEO Rick Goings says: “Our
number two is English, our head of manufacturing and sourcing is Belgian, our head of human
resources is German, our head of tax is Czech, one of our group presidents is a Swede, the other
a Colombian… We may be based in America but not a single piece of our DNA today is that of a
purely American company.”
Ethics Check: Nationalism and Protectionism
This Ethics Check feature explains what happened when Bolivia took over oil and gas fields
regardless of who owned them with the argument that the natural resources belong to Bolivia.
When discussing what can go wrong in an MNC- Host Country relationship, nationalization isn’t
Facts to Consider: Corruption and Bribes Haunt Global Business
The Facts to Consider feature lists the best and worst countries for corruption and bribery. Use
these additional questions for class discussion:
Hot Topic: Avoid China and reshore our manufacturing?
This feature covers the trend of companies who choose to bring production “back home.” Two
manufacturing companies are profiled and both report to more control over local production,
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
despite transportation costs and higher labor costs. The risk of theft of intellectual property is
also reduced when production is done “at home.” Questions to ask: Even with its lower labor
costs, is China still a manufacturing power?
Quick Case: 17 hours to J-burg
Just sit back and relax, the flight is underway and you are sitting in business class on South
African Airways flight 204 from JFK to Johannesburg. It’s your first overseas assignment as an
auditor for Deloitte and you’ve been rushing to prepare. You’re flying in alone but will be met by
four team members from Deloitte’s local office in what they call “J-burg.” You expect to be in
country about a week.
Other than a short “meet-and-greet” video conference with the J-burg team and a
description of the project from your boss, you haven’t received any other preparation. Now that
you’re onboard SA204, the question is: Do you have what it takes to succeed with this
assignment in a new country and culture?
The flight is 17 hours long and you’ve decided to make some notes on “things I should do and
not do.” What’s on your list and why? As a good auditor, you also decide to self assess on your
readiness for cross-cultural teamwork in South Africa. So, you make a balance sheet of “personal
assets and liabilities.” What goes into each column?
Terms to Define
APEC
Child labor
Corruption
Currency risk
EU
Importing
Insourcing
International business
Joint venture
Licensing
