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  • —Your group (3 or 4 members)
    is an international management consultancy.
    YOUR TASK is to write a 4000 word (+/- 10%) Business Report for Jawali and
    his Board colleagues at OUTAHR Ventures on the case - for and against - to expand
    their business operation in Pakistan to complement their operations in Australia.
    Your report will employ as much knowledge and technique from our International
    Management course as possible in building that case.
    At minimum, it will present relevant argument on:
    - the global environment;
    - how the operation will understand relevant national cultures;
    - anticipated ethical issues and means to overcome them;
    - communicating and negotiating across the cultures in this scenario;
    - formulate an internationalisation strategy with a proposed organisation structure
    and implementation advice;
    - anticipated employment challenges under this and further globalisation with
    advice for resolution to those challenges.
    Your report will reach a clear conclusion with justified recommendations for
    OUTAHR's best course of action. You should also provide broad anticipated costs
    with financial and strategic returns on that investment.
    The due date and time is provided in the Unit Outline.
    10%/day late penalty applies.Yes, you are at

    12weeks, Mondays 6pm-9pm

    Lecturer: Dr Ian Benton
    Important stuff to do (but only if you wish to do well J):
    1.Know the Unit Outline to include
                                   dates, lecture topics, assignments
    2.Get access to text International Management 
                                                                              Deresky 8th ed
                              but earlier edition = ok …preferably own copy
    This week, we…
    1.Understand the global business environment and how it affects the strategic and operational decisions which managers must make.
    2.Critically assess the developments, advantages, and disadvantages of globalisation.
    3.Discuss the complexities of the international manager’s job.
    4.Develop an appreciation for the ways in which political, economic, legal, and technological factors impact the opportunities that companies face.
    —The Globalisation of Risk
    —Top two risks:
    —Severe income disparity
    —Chronic fiscal imbalances
    —Other issues: natural disasters such as 2011 earthquake in Japan, flood in Thailand, political uncertainty in China, ISIS in the Middle East, financial uncertainty in Greece (& Italy / Spain / us?)
    —Globalisation has compounded the types and level of business risks
    —Typical Challenges
    that international managers face…
    —Political and cultural differences
    —Global competition
    —Finding ways to balance social responsibilities, image & competitive strategies
    —Challenges to Globalism
    —Backlash against capitalism & a rekindling of nationalism
    —Increased protectionism of high-demand resources
    —Need to develop top managers with international understanding and experience
    —Increasing pressure and publicity for companies to consider the social responsibility of their actions
    —Effects of Globalisation on Corporations
    —Global companies are becoming less tied to specific locations
    —Companies that desire to remain competitive will have to develop a cadre of  experienced international managers
    —Small companies are also affected by and in turn affect globalism
    —Regional Trading Blocs
    Much of today’s world trade takes place within these three regional free-trade blocs:
    —Western Europe, Asia, and the Americas

    Much of today’s world trade is grouped around three dominant currencies:
    —euro, yen, and the dollar

    These trade blocs are continually expanding their borders to include neighbouring countries

    —The European Union
    A unified market over 500 million people living in 27 nations (Greece?)
    —Stability of the euro is in question and ability to deal with the debt crisis of some members

    The EU poses two challenges for global managers:
    1.“Fortress” Europe
    2.Dealing with multiple cultures
           within this unified market

    Asian Tigers:

    —The Americas
    —North American Free Trade Agreement (NAFTA)
    —Other Regions in the World
    —The Russian Federation
    —Middle East
    —The African Union — AU
    —South Africa
    —Less developed countries—LDCs
    —Low Gross National Product (GNP)
    —Low Gross Domestic Product (GDP)
    —Large, relatively unskilled workforce
    —High international debt

    —Comparative Management in Focus:
    China’s important role in the Global Economy
    The fastest growing GDP rate (has been over 9 percent/year) for 30 years until recently
    —In March 2012 the Chinese Premier announced only 7.5% growth for 2012
    —China is still a developing country with considerable differences between rural and urban areas
    —State firms play a significant or dominant role
    —Weakening demand for Chinese exports—due to global recession thus China is targeting only 7.5% growth in 2012
    —Chinese labour costs increasing, energy and shipping cost rising; appreciating yuan
    —The political, legal, and social environments create unpredictability for businesses

    —The Global Manager’s Role
    —The Political & Economic Environment
    —Sustainability—economic, political, social, and environmental—has become a significant worldwide issue

    —Ethnicity—a driving force behind political instability around the world

    —Religion—religious disputes lie at the heart of regional instabilities, for example, former Yugoslavia, Northern Island, the Middle East / Independent Islamic State…
    —Political Risk
    Typical Political Risks
    —Expropriation & confiscation
    —Discriminatory treatment
    —Barriers to repatriation of funds
    —Interference in managerial decision making
    —Dishonesty by government officials
    Political Risk Assessment
    —Helps companies manage exposure to risk and minimize financial loss

    —Two forms:
    —Consultation with experts
    —Development of internal staff capabilities – increasingly common
    —Managing Political Risk
    —Avoidance and Adaptation
    —Equity sharing
    —Participating management
    —Localisation of the operation
    —Development assistance
    —Dependency and Hedging

    —Political risk insurance (OPIC and FCIA)
    —Local debt financing
    —Managing Terrorism Risk
    —Develop a benevolent image (IBM and Exxon).
    —Maintain a low profile and minimize publicity.
    —Using teams to monitor terrorist activities
    —Hiring counterterrorism consultants
    —Economic Risk
    —Closely related to political risk
    —Determined by a country’s ability or intention to meet its financial obligations
    —Historically, most industrialised nations have posed little risk of economic instability, however the level of economic risk in the EU is of great concern
    —Categories of Economic Risk
    1.Loss of profitability due to abrupt changes in monetary and fiscal policies
    2.Loss of profitability due to changes in foreign investment policies
    3.Risk of currency exchange rate
    —The Legal Environment
    —Consists of the local laws and legal systems of those countries in which an international company operates, and of international law, which governs relationships between sovereign countries

       Common law
       Civil law
       Islamic law

    —Other Regulatory Issues
    —Protectionist policies, such as tariffs or quotas
    —The attractiveness of the tax system
    —The level of government involvement in the economic and regulatory environment
    —The Impact
    of the Information Technology
    —Making Geographic barriers less relevant
    —Both cause and effect of globalisation
    —Lowering cultural barriers
    —Encouraging convergence of consumers’  tastes and preferences
    —However, China still monitors and limits electronic information

    for discussion together next week
    —How has the economic downturn such the GFC over recent years impacted trends in protectionism and nationalism?
    —Can you name examples of recent macro-political risk events and the effect that they have or might yet have on a foreign subsidiary?
    —What means can managers use to assess political risk?