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84 Part 1 • Introduction
that affects talent globalization is immigration laws and regulations. Managers must be alert
global sourcing
Purchasing materials or labor from around the to changes in those laws. Finally, an organization can be considered global if it ❸ uses finan-
world, wherever it is cheapest cial sources and resources outside its home country, which is known as financial globaliza-
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tion. As might be expected, the global economic slowdown severely affected the availability
exporting
Making products domestically and selling them of financial resources globally. And even as countries’ economies began the slow process of
abroad recovery, the impact continued to be felt globally.
importing
Acquiring products made abroad and selling them How Do Organizations Go Global?
domestically
As organizations go global, they often use different approaches. (See Exhibit 3–1.) At first, man-
licensing agers may want to get into a global market with minimal investment. At this stage, they may start
An agreement in which an organization gives with global sourcing (also called global outsourcing), which is purchasing materials or labor
another the right, for a fee, to make or sell its prod-
ucts, using its technology or product specifications from around the world wherever it is cheapest. The goal: take advantage of lower costs in order
to be more competitive. For instance, Massachusetts General Hospital uses radiologists in India
franchising to interpret CT scans. Although global sourcing may be the first step to going international for
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An agreement in which an organization gives
another organization the right, for a fee, to use its many companies, they often continue using this approach because of the competitive advantages
name and operating methods it offers. However, during the last economic crisis, many organizations reconsidered their deci-
MNC (multinational sions to source globally. For instance, Dell, Apple, and American Express were just a few U.S.
corporation) companies that scaled back some of their offshore customer service operations. Others brought
Any type of international company that maintains manufacturing back home. For instance, Apple decided to build some Mac computers in the
operations in multiple countries.
United States for the first time in about a decade. The company had faced political pressure to hire
multidomestic corporation U.S. workers and to “reduce its reliance on foreign subcontractors whose treatment of workers”
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An MNC that decentralizes management and other has been strongly criticized. As companies think about the best places to do business, they face
decisions to the local country where it’s doing choices of offshore (in another global location), onshore (at home), or nearshore (in countries
business
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close to home). Then, as a company takes that next step in going global, each successive stage
transnational (borderless) beyond global sourcing requires more investment and thus entails more risk for the organization.
organization The next step in going global may involve exporting the organization’s products to other
An MNC where artificial geographic boundaries
are eliminated countries—that is, making products domestically and selling them abroad. In addition, an
organization might do importing, which involves acquiring products made abroad and sell-
global corporation ing them domestically. Both usually entail minimal investment and risk, which is why many
An MNC that centralizes management and other
decisions in the home country small businesses often use these approaches to doing business globally.
Finally, managers might use licensing or franchising, which are similar approaches
involving one organization giving another organization the right to use its brand name,
technology, or product specifications in return for a lump-sum payment or a fee that is usu-
ally based on sales. The only difference is that licensing is primarily used by manufacturing
organizations that make or sell another company’s products, and franchising is primar-
ily used by service organizations that want to use another company’s name and operating

Exhibit 3–1 How Organizations Go Global

Significant Foreign Subsidiary

Strategic Alliance – Joint Venture

Franchising

Licensing

Exporting and Importing

Minimal Global Sourcing

Global
Investment
Source: Robbins, Stephen P., Coulter, Mary, Management, 13th Ed., © 2016, p. 106. Reprinted
and electronically reproduced by permission of Pearson Education, Inc., New York, NY.