Most U.S. companies see great opportunities in the international marketplace today.⁴ Although the U.S. population is growing slowly but steadily, the population in many other countries is exploding. For example, it has been estimated that in 1990, China, India, and Indonesia together already had more than 2 billion people, or 40 percent of the world’s population.⁵ Obviously, such countries offer a strong profit potential for aggressive businesspeople throughout the world.

This potential does not come without serious risk, however. Managers who attempt to manage in a global context face formidable challenges. Some of these challenges are the cultural differences among workers from different countries, different technology levels from country to country, and laws and political systems that can vary immensely from one nation to the next.

International management is simply the performance of management activities across national borders.⁶ It entails reaching organizational objectives by extending management activities to include an emphasis on organizations in foreign countries.⁷ The trend toward increased international management, or globalization, is now widely recognized. The primary question for most firms is not whether to globalize, but how and how quickly to do so and how to measure global progress over time.⁸

International management can take several different forms, from simply analyzing and fighting competition in foreign markets to establishing a formal partnership with a foreign company. Domino’s Pizza is an example of a company that sees international opportunities and without hesitation acts on them. Domino’s has been so aggressive internationally that at present, its international sales are a significant component of company success. It’s been reported that international business contributes as much as 35 percent of its annual income. The company attributes much of its success internationally to the fact that pizza is universally liked and can be easily adapted. For example, the company can go into India or Japan and simply add different toppings to cater to local tastes, whereas it’s much more difficult for other restaurant chains to adapt their products to local flavors. ⁹

JP Morgan Chase is an example of a bank involved in international management. JP Morgan Chase, the second-largest bank in the United States, is one of the latest financial institutions to launch a global banking business, targeting such rapidly growing economies as Brazil, China, and India. The bank sells loans and commercial banking services to multinational organizations in an effort to expand its business outside the United States and reduce its dependence on the U.S. economy.¹⁰ Many other U.S. banks are pursuing similar international management activities.

The noteworthy trend that already exists in the United States and other countries toward developing business relationships in and with foreign countries is expected to accelerate even more in the future. As Figure 4.1 illustrates, U.S. investment in foreign countries and investment by foreign countries in the United States have grown since 2000 and are expected to continue growing, with slowdowns or setbacks only in recessionary periods. The figure also shows that more recently, investments by foreign countries in the United States and U.S. investments in foreign countries continue to increase at a significant pace. As an interesting side note, Figure 4.2 shows that in 2010, U.S. foreign investments focused most heavily in Canada and Europe. This snapshot is equivalent to that of several years preceding 2010 and is expected to be equivalent to that of several years after. Figure 4.3 shows that European countries were by far the most significant foreign investors in the United States in 2010. This data also is equivalent to that of several years preceding 2010 and is expected to be equivalent to that of several years after. Information of this nature has spurred both management educators and practicing managers to insist that knowledge of international management is necessary for a thorough understanding of the contemporary fundamentals of management.¹⁴