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This chapter is from the book

Working in a Global Economy

Globalization isn't just an issue for larger companies in corporate America. Every business (including the "Mom and Pop" operations) must compete in the international arena. The level of involvement and the intensity in the global arena may vary. For smaller organizations, it may mean the need to stave off global competitors. Even if you work for a small, domestic firm, you must be prepared to compete with a foreign firm operating just across the street.

Being a part of this global economy means thinking with a broader perspective. This global mind-set recognizes the interdependence of the world's countries.

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Working in a global economy means increasing your awareness of differences among cultures. Harmony is critical in the Japanese culture. Vague discussions often are the result, in order to save face. Americans have difficulty dealing with this vagueness. For example, a Japanese counterpart often will refrain from directly voicing disagreement with you while your American counterpart may have few reservations about open disagreement.

Globalization usually begins with exporting. Companies maintain operations in their home country while sending goods across borders. Then a move is made to more extensive global operations.

MNC is the acronym used for multinational corporations. These are companies that conduct business outside of their home borders. They operate in several countries and have a truly global mindset—especially when designing strategy. A general rule of thumb is that at least 20 percent of their sales are generated from operations outside the home country.

Today there are over 35,000 multinational corporations around the globe. This number continues to grow. As the number of foreign affiliates of these multinational corporations grows, the need for managers to take foreign assignments will similarly grow.

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The impact of international trade is critical, accounting for about 20 percent of the jobs in America.

Companies are also using licensing agreements to build a global presence. A licensing agreement occurs when the company collects money for allowing another company to manufacture its goods (or in the case of a service firm, to market its service) or use its name. More international strategic alliances are also being created. Companies partner with other firms to the benefit of each. Firms can especially improve the learning curve in a new country by partnering with a local firm.

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