PowerPoint Presentation to Accompany Chapter 5 of Management Fundamentals Canadian Edition Schermerhorn Wright Prepared by:Michael K. McCuddy Adapted.

PowerPoint Presentation to Accompany Chapter 5 of

Management FundamentalsCanadian Edition

Schermerhorn Wright

Prepared by: Michael K. McCuddy

Adapted by: Lynda Anstett & Lorie Guest

Published by: John Wiley & Sons Canada, Ltd.

Management Fundamentals - Chapter 5 2

Planning Ahead — Chapter 5 Study Questions

What are the international management challenges of

globalization?

What are the forms and opportunities of international

business?

What are multinational corporations and what do they do?

What is culture and how does it relate to global diversity?

How do management practices and learning transfer across

cultures?

Management Fundamentals - Chapter 5 3

Study Question 1: What are the international management challenges of globalization?

Key concepts in the challenges of

globalization:

– Global economy

– Globalization

– International management

– Global manager

Management Fundamentals - Chapter 5 4

Study Question 1: What are the international management challenges of globalization?

Europe

– European Union (EU)

• Political and economic

alliance European

countries that agreed to

support mutual economic

growth

• Expanding to at 22

member countries with

375 million consumers

Management Fundamentals - Chapter 5 5

Study Question 1: What are the international management challenges of globalization?

The Americas– North American Free Trade

Agreement (NAFTA)

• Agreement for free flow of

goods and services

between the Canada,

Mexico, and United States

– Free Trade of the Americas

(FTAA) — Alaska to Chile

— is a possibility

Management Fundamentals - Chapter 5 6

Study Question 1: What are the international management challenges of globalization?

Asia and the Pacific Rim– Economic power of

China and Japan

– Growth in other Pacific Rim countries

– Asian countries represent a third of the global marketplace

Management Fundamentals - Chapter 5 7

Study Question 1: What are the international management challenges of globalization?

Africa– Increased attention to stable countries

– Beckons international business

– South African Development Community (SADC) links 14 countries in trade and economic development

Management Fundamentals - Chapter 5 8

Figure 5.1 Africa, continent of opportunity.

Management Fundamentals - Chapter 5 9

Study Question 2: What are the forms and opportunities of international business?

Reasons for engaging in international business:– Profits

– Customers

– Suppliers

– Capital

– Labor

Management Fundamentals - Chapter 5 10

Study Question 2: What are the forms and opportunities of international business?

Market entry strategies involve the sale of goods or services to foreign markets but do not require expensive investments.

Types of market entry strategies:– Global sourcing

– Exporting

– Importing

– Licensing agreement

– Franchising

Management Fundamentals - Chapter 5 11

Figure 5.2 Common forms of international business—from market entry to direct investment strategies.

Management Fundamentals - Chapter 5 12

Study Question 2: What are the forms and opportunities of international business?

Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations.

Types of direct investment strategies:– Joint ventures

– Foreign subsidiaries

Management Fundamentals - Chapter 5 13

Study Question 2: What are the forms and opportunities of international business?

Criteria for choosing a joint venture partner:– Familiarity with your firm’s major business.

– Strong local workforce.

– Future expansion possibilities.

– Strong local market for partner’s own products.

– Good profit potential.

– Sound financial standing.

Management Fundamentals - Chapter 5 14

Study Question 2: What are the forms and opportunities of international business?

Complications in the global business environment:– Environment is complex, dynamic, and highly

competitive.

– Global business executives must deal with differences in the environment of business in different countries.

– World Trade Organization resolves trade and tariff disputes among countries.

– Protectionism can complicate global trading relationships.

Management Fundamentals - Chapter 5 15

Study Question 3: What are multinational corporations and what do they do?

A multinational corporation (MNC) is a business with extensive international operations in more than one foreign country.

Management Fundamentals - Chapter 5 16

Study Question 3: What are multinational corporations and what do they do?

Mutual benefits for host country and MNC:

– Shared growth opportunities

– Shared income opportunities

– Shared learning opportunities

– Shared development opportunities

Management Fundamentals - Chapter 5 17

Study Question 3: What are multinational corporations and what do they do?

Host country complaints about MNCs:

– Excessive profits

– Domination of local economy

– Interference with local government

– Hiring the best local talent

– Limited technology transfer

– Disrespect for local customs

Management Fundamentals - Chapter 5 18

Figure 5.3 What should go right and what can go wrong in MNC-host country relationships.

Management Fundamentals - Chapter 5 19

Study Question 3: What are multinational corporations and what do they do?

MNC complaints about host countries:

– Profit limitations

– Overpriced resources

– Exploitative rules

– Foreign exchange restrictions

– Failure to uphold contracts

Management Fundamentals - Chapter 5 20

Study Question 3: What are multinational corporations and what do they do?

Ethical issues for MNCs:– Corruption — illegal practices that further one’s

business interests.

– Sweatshops — employing workers at low wages for long hours and in poor working conditions.

– Child labor — full-time employment of children for work otherwise done by adults.

– Sustainable development — meeting current needs without compromising future needs.

Management Fundamentals - Chapter 5 21

Study Question 4: What is culture and how does it relate to global diversity?

Culture – The shared set of beliefs, values, and patterns of

behavior common to a group of people.

Culture shock – Confusion and discomfort a person experiences in an

unfamiliar culture.

Ethnocentrism– Tendency to consider one’s own culture as superior to

others.

Management Fundamentals - Chapter 5 22

Study Question 4: What is culture and how does it relate to global diversity?

Stages in adjusting to a new culture:

– Confusion

– Small victories

– The honeymoon

– Irritation and anger

– Reality

Management Fundamentals - Chapter 5 23

Study Question 4: What is culture and how does it relate to global diversity?

Popular dimensions of culture:– Language

• Low-context cultures and high-context cultures

– Interpersonal space– Time orientation

• Monochronic cultures and polychronic cultures

– Religion– Contracts and agreements

Management Fundamentals - Chapter 5 24

Study Question 4: What is culture and how does it relate to global diversity?

Values and national cultures (Hofstede):

– Power distance

– Uncertainty avoidance

– Individualism-collectivism

– Masculinity-femininity

– Time orientation

Management Fundamentals - Chapter 5 25

Figure 5.4 How countries compare on Hofstede’s dimension of national culture.

Management Fundamentals - Chapter 5 26

Study Question 4: What is culture and how does it relate to global diversity?

Understanding cultural differences (Trompenaars):– Relationships with people:

• Universalism versus particularism• Individualism versus collectivism• Neutral versus affective• Specific versus diffuse• Achievement versus prescription

– Attitudes toward time — sequential and synchronic views.

– Attitudes toward environment — inner-directed and outer-directed cultures.

Management Fundamentals - Chapter 5 27

Study Question 5: How do management practices and learning transfer across cultures?

Comparative management

– How management systematically differs among

countries and/or cultures.

Global managers

– Need to successfully apply management

functions across international boundaries.

Management Fundamentals - Chapter 5 28

Study Question 5: How do management practices and learning transfer across cultures?

Planning and controlling

– Complexity of international environment makes

global planning and controlling challenging.

– Planning and controlling risks:

• Currency risk

• Political risk

Management Fundamentals - Chapter 5 29

Study Question 5: How do management practices and learning transfer across cultures?

Organizing and leading

– Multinational organization structures

• Global area structure

• Global product structure

– Staffing international operations

• Competent locals

• Expatriates

Management Fundamentals - Chapter 5 30

Figure 5.5 Alternative multinational structures for global operations.

Management Fundamentals - Chapter 5 31

Study Question 5: How do management practices and learning transfer across cultures?

Are management theories universal?

– North American management theories may be

ethnocentric.

• Participation and individual performance are not

emphasized as much in other cultures.

– Not all Japanese management practices can be

applied successfully abroad.

Management Fundamentals - Chapter 5 32

Study Question 5: How do management practices and learning transfer across cultures?

Global organizational learning:

– Companies can and should learn from each other.

– Readiness for global organizational learning varies

based on managerial attitudes.

• Ethnocentric attitudes

• Polycentric attitudes

• Geocentric attitudes

– Be alert, open, inquiring, but always cautious.

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