Global management & strategy exam 1

Management and international management

Management is the process of coordinating people, resources, and activities to achieve an organization’s goals effectively (doing the right things) and efficiently (doing things right).

International management uses those same ideas across countries, adjusting to different economic, political and cultural settings.

What is the difference between internationalization (expanding across borders) and globalization (the shift toward a single, unified global market)?

Internationalization is the process of a business crossing national and cultural borders, while globalization is the vision of creating a single, unified global market. Globalization requires a growing connection between countries politically, economically, culturally and technologically.

The modern trade debate

Traditional argument - lower prices versus domestic job loss

Today - supply chain resilience and national security

What is the difference between offshoring (moving work overseas) and outsourcing (hiring a third party to do the work)? Can a company do both at the same time?

Offshoring involves moving some company tasks to other countries. Outsourcing is hiring outside firms to do work once done in-house.  They can exist simultaneously because companies can give work to companies outside the U.S.

WTO: How does the World Trade Organization protect multinational companies (MNCs) through "non-discrimination," and why have countries increasingly turned to regional trade deals instead?

The WTO protects multinational corporations (MNCs) through non-discrimination by requiring countries to treat foreign businesses fairly. The multilateral challenge has led to the rise of regional trade deals because WTO decisions require agreements from many countries. To keep trade moving, countries are instead making smaller, regional trade agreements outside of the WTO.

USMCA: How does the USMCA handle digital trade, and what are its strict rules for the auto sector (like regional content requirements and wage rules)?

The USMCA handles “digital trade” by prohibiting tariffs on digital products and banning forced local data storage rules across borders.

The specific labor and regional content requirements for the automotive sector:

• 75% regional auto content

• 40–45% of content be made by workers earning at least $16/hour

The European Union: What are the "Four Freedoms" of the EU, and how does the "Brussels Effect" force global companies to adopt EU standards (like privacy or carbon rules) worldwide?

The four freedoms include the free movement of goods, services, people and capital.

The Brussels effect occurs when EU regulations spread beyond its borders. Global companies adopt EU regulations, such as GDP and CBAM, as their worldwide standard because it is easier than maintaining different standards for different markets.

RCEP vs. CPTPP: How do these two trade blocs differ? (One focuses on "Factory Asia" rules of origin, while the other features Western-style rules on labor and intellectual property without U.S. membership).

The RCEP focuses on integrating “Factory Asia” by making it easier for companies to source parts and materials across member countries through common rules of origin. CPTPP has broader, higher-standard rules and represents “western-style “ trade rules without U.S. membership.

AfCFTA: Why is the African Continental Free Trade Area viewed as a long-term, 20-year bet for internal manufacturing growth?

AfCFTA is viewed as a long-term, 20-year bet because it aims to create a single, large African market, making it easier for countries to trade with each other and for companies to build regional supply chains.

Over time, this larger market can encourage investment, local manufacturing, job creation, and less reliance on imported goods.

The Two-Speed Labor Market: If an advanced economy faces permanent worker shortages, what is the choice between relying on AI versus immigration? How does this compare to the "youth bulge" strategy in Sub-Saharan Africa?

An advanced economy should invest on automation and AI or immigration because there are not enough workers. AI can replace missing workers and immigration can bring in new workers.  

In Sub-Saharan Africa, the “youth bulge” means the large young population can become an economic advantage if countries create enough jobs, education, and entry level talent hubs to employ them productively.

The Fertility Cliff: What is the "replacement level" fertility rate, and what is the difference between population expansion zones (like Sub-Saharan Africa) and contraction zones (like China and developed nations)?

The replacement level fertility rate is 2.1.

Population expansion zones have fertility rates above replacement level, so their populations will continue growing. Contraction zones have shrinking fertility rates and their fertility rates are below replacement level.

Eastern Europe (Poland/Romania): Why do global companies use nearshoring (moving factories out of distant Asian countries and into Eastern Europe) to better supply European markets?

They are nearshoring production to eastern Europe from Asia to reduce shipping times and put factories closer to European customers.

China: How does China's heavy market dominance (producing over 60% of global EV batteries) create operational problems when its domestic workforce is shrinking?

It creates problems because the population will age so there will be a shrinking workforce which means fewer workers are able to work in factories. If labor becomes scarcer, companies may face higher wages, production constraints, and pressure to automate.

South America (Lithium Triangle): What does resource sovereignty mean when governments take national control over critical resources like lithium?

Resource sovereignty means a country wants to control its own natural resources, rather than allowing foreign companies or governments to control how they are extracted and sold. With lithium, governments may increase state ownership, regulate mining, or require more processing to happen domestically.

ASEAN (Vietnam/Indonesia): Why are these nations popular "China Plus One" choices for supply chains, and what basic infrastructure risks (such as power blackouts) do they face?

They are popular “China Plus One” choices because companies can add manufacturing in these countries to reduce dependence on China while still benefiting from lower labor costs and access to asian supply chains. However, they face infrastructure risks including unreliable electricity, power shortages/blackouts, and utility limitations/not enough upgrades.

The Rumelt Definition: Why does Richard Rumelt argue that a simple list of financial goals or corporate wishes is not a real strategy?

He argues this because a real strategy is actionable, problem-solving, focusing resources against a specific challenge. He says that companies often confuse what they want to achieve with how they will achieve it. Executives may put financial targets into PowerPoint decks and call that a strategy, but those targets don’t explain what actions or choices will overcome the company's problems.

Social Contagion ("Success Theater"): Why do corporate executives often create PowerPoint decks full of positive goals while ignoring the hardest problems at the center of their business?

They do this because many companies believe it is bad to talk about “problems”, and want to please boards, so they ignore the reality. To them, it is safer to present positive ambitions than to admit confront problems that require making difficult choices.

The Priority Trap: If a company claims to have 12 different "priorities," why does that violate the true meaning of the word?

Because priority means something is of the most importance out of a list of items, so if everything is a priority then nothing is truly a priority and the company has no strategy.

The Mountain Climbing Analogy: How did Rumelt’s experience on the mountains illustrate the "pain of commitment" and the need to kill off alternative paths?

Rumelt’s mountain-climbing experience showed that commitment requires giving up alternative paths. In his case, he gave up climbing to focus on other priorities in his life like supporting his family and focusing on his career. In business, real strategy means choosing where to focus your resources and abandoning other ideas that may have been good.

What does Rumelt means when he says businesses should try to find the crux?

The crux is the hardest barrier standing in your way that businesses should concentrate their energy and strategy on. Real strategy means killing off good ideas to concentrate your strength against the single, biggest obstacle.

Porter’s Five Forces: Why is it impossible to build a business strategy without analyzing your industry? What are the five forces that shape market competition?

It is impossible to build a business strategy without analyzing the industry because your strategy depends on industry structure and you must solve the pressure points of the specific market structure.

The five forces are suppliers, buyers, entrants, substitutes and rivalry.

VRIO Framework: To gain a lasting competitive advantage, a resource must be Valuable, Rare, and Inimitable. What is the final "O" (Organization), and why do many companies fail at it?

The final O is organization, and it means that resources should be organized to create a sustainable edge that can capture the value of these resources. Many companies fail at it because although companies might have a strong resource, they lack the organizational capability or system to leverage the resources.

Generic Strategies: What is the danger of getting "stuck in the middle"? How does a "transnational" strategy try to balance global cost-cutting with local adaptation?

If you are stuck in the middle, it means a company hasn’t chosen a clear position/strategy so it tries to do a lot at the same time but might not execute any of them well enough.

Transnational strategy tries to balance global cost-cutting with local adaptation by standardizing core operations while allowing local or regional teams to customize products, pricing, and marketing to fit different markets.

Scenario Challenge (MegaCo Strategy Retreat): If a company has 10 competing goals but broken internal systems, why must leaders kill 9 of them to focus resources on the single hardest, most solvable barrier?

Because the single hardest, most solvable barrier is the crux and real, strong strategy means killing off the other options to focus all the strength to overcome the crux.

Framework Utility: How does an "average manager" use PESTLE analysis differently than a top "strategic leader"?

PESTLE maps external forces beyond a company’s direct control. Average managers view PESTLE as a static compliance checklist. Strategic leaders use it to spot structural disruptions before they become crises.

The U.S. Shift: What does Mohamed El-Erian mean when he says U.S. policymaking increasingly resembles a "developing nation" with its patchwork of tariffs and exemptions?

He means that U.S. economic policymaking has become more unpredictable and inconsistent, resembling patterns he associates with developing economies rather than with a mature, stable economy.

• U.S. imposed sudden, high tariffs on many imported goods, similar to countries with weaker tax systems that rely heavily on tariffs to raise revenue.

• It then created a “Swiss cheese approach” to concessions, meaning the government granted exemptions to particular products and industries in a seemingly arbitrary or inconsistent way

Market Correlation: Why are traditional safe havens (like balancing stocks and bonds) no longer reliable in today's volatile economic environment?

Traditional safe havens are less reliable because the usual relationships between different investments have become unstable. Normally, investors diversify by holding assets such as stocks and bonds because they expect them to behave differently: when stocks fall, bonds may remain stable or rise, but because they are no longer reliable, stocks and bonds may both perform poorly at the same time, so diversification does not provide the same protection it once did.

Scenario A (Reagan/Thatcher): What are the pillars of an optimistic economic path built on deregulation and private innovation?

Deregulation, leaner government, private sector innovation (AI/robots), fairer trade terms.

Scenario B (Carter Stagflation): What characterizes a pessimistic path of heavy debt, central bank conflicts, and deep recession?

Persistent inflation, debt overhand, federal reserve conflicts, deep global recession.

Too much debt limits the government's options, inflation limits the central bank's options, and recession makes the debt problem even worse.

The "Middle Path": How can a country "de-risk" its supply chains at the margins to avoid major geopolitical conflict while protecting its own economy?

“De-risking at the margins” means gradually reducing dependence on another country without completely cutting economic ties. A country could diversify its suppliers, produce more critical goods domestically, or shift a small portion of production and investment toward other countries.

The IBM Case: Why did IBM fail during the shift to personal computers even though they saw it coming? What is "active inertia"?

They failed during the shift because although they understood the threat of PCs, execution derailed because leaders couldn’t break away from old, mainframe habits.

Active inertia is when a successful company responds to change by doing more of what made it successful in the past, even when those actions no longer fit the new environment.

The Resilience Triad: Why must companies focus on financial strength (cash), operational stress-testing, and empowering local workers to survive volatility?

Because they need to prepare to survive a crisis that could occur at any time. Its important to have financial strength because it gives a company buffer when revenue falls, costs rise, economy changes, etc. Operational stress-testing is important because it helps develop operational agility. Empowering local workers to survive volatility is also important because it allows for a company to respond quickly and effectively.

Scenario Challenge (AutoTech Tariff Shock): If new tariffs wipe out a company's profit margins, why is "absorbing the costs" a fatal mistake rather than a real solution?

Because the company will operate at a loss without addressing the underlying problems. The tariff remains and absorbing it will not fix the problem. Furthermore, they will just be losing money in general.

The Host vs. Home Debate: If a host country has very poor labor standards, which standards should a multinational company follow?

It is subjective. But I think it should follow standards that are somewhere in between because if it follows very poor labor standards, workers will get exploited but at the same time the company should obey local laws on minor issues (when in rome, do as the romans say).

The Tragedy of the Commons: What is this concept in a global setting, and is it ethical for a company to move factories specifically to exploit weak environmental laws?

It is when companies might try to escape environmental regulations by moving production to a nation with more relaxed regulations. It is not ethical to do this though because the company is intentionally choosing that location because it can operate in ways that are not good for the environment in ways that it couldn’t elsewhere.

Corruption and the FCPA: Does the Foreign Corrupt Practices Act allow for routine "facilitating payments," and how do you draw the line between a bribe and a standard administrative fee?

Yes, it allows for routine facilitating payments. A bribe is a payment intended to influence an official’s decision or to gain something out of the official. A standard administrative fee is an official, published charge paid to a government entity for a legal service.

Friedman Doctrine: Milton Friedman argued that a business's social responsibility is to increase profits—what is the one major caveat he included?

As long as the company stays within the rules of the law.

Cultural Relativism ("When in Rome..."): Why is this rule dangerous when operating under oppressive or corrupt political regimes?

It can make unethical behavior seem acceptable just because it is common or tolerated in that oppressive or corrupt political regime.

Righteous Moralist vs. Naïve Immoralist: Why can applying strict home-country morals abroad look like "ethical imperialism," and why is copying local bad behavior (like bribery) an ethical failure?

It may look like "ethical imperialism” because they are assuming their standards are superior by acting like the home-country standards of ethics should be followed in foreign countries. However, copying local bad behavior is an ethical failure because just because local unethical behavior might seem ok and acceptable it doesn’t mean its right.

Kantian Ethics & Rawls’ Veil of Ignorance: What does it mean to treat people as ends rather than means, and how does designing a society without knowing your status help create fairer rules?

It means people have dignity and deserve to be respected so you shouldn’t exploit them to use as a tool to achieve your goals. Designing a society without knowing your status helps create fairer rules because if you don’t know your own status you would be less inclined to create rules that favor the wealthy or privileged because you could very much be in a disadvantaged position.

Stakeholder Analysis & Moral Imagination: What is "moral imagination," and why is it vital for ethical problem-solving?

Moral imagination is the ability to see an ethical problem from the perspective of different stakeholders and imagine solutions beyond your own immediate interests. It is vital for ethical problem solving because it allows decision-makers to see a problem from multiple perspectives, recognize its broader consequences, and develop solutions that are fairer and less harmful.

Moral Courage: What does it mean for a manager to have the courage to walk away from a highly profitable but unethical deal?

It means the manager is willing to do what they think is ethically right even when doing so could cost the company a really good opportunity or deal.

Noblesse Oblige & Sustainability: How does the idea that "privilege entails responsibility" anchor corporate social responsibility (CSR) and long-term sustainable strategy for future generations?

“Privilege entails responsibility” means that companies with great power and resources have a responsibility to use them in ways that benefit society and protect the ability of future generations to meet their own needs. Businesses need to recognize their noblesse oblige and give back to the society that made their success possible.