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MANAGEMENT

RICHARD L. DAFT

Managing in a Global Environment

CHAPTER 4

Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved.

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chapter4

• Describe the emerging borderless world and some issues of particular concern for today’s managers.

• Describe market entry strategies that business use to develop foreign markets.

• Define international management and explain how it differs from the management of domestic business operations.

• Indicate how dissimilarities in the economic, sociocultural, and legal-political environments throughout the world can affect business operations.

• Describe how regional trading alliances are reshaping the international business environment.

• Describe the characteristics of a multinational corporation.

• Explain cultural intelligence and why it is necessary for managers working in foreign countries.

Learning Outcomes


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chapter4 Are You Ready To Work Internationally?

• Cross-cultural skills are extremely important

• Every manager needs to think globally

• The future of business and society is being shaped by global relationships

• A global mind-set is becoming a prerequisite for managers


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chapter4 A Borderless World

• Isolation from international forces is no longer possible

– Trade barriers are falling

– Communication is faster and cheaper

– Consumer tastes are converging

• Virtual connections enable close, rapid coordination among people working in different parts of the world


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chapter4 Four Stages of Globalization


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chapter4 Strategies for Entering International Markets

• Exporting – transfers products for sale in foreign countries

• Global Outsourcing – transferring the labor of specific tasks to low cost countries

• Licensing – allowing an operation in another country to produce and sale company products

• Franchising – providing a foreign organization with package of materials and services

• Direct Investing - a production facility in another country


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chapter4 Getting Started Internationally


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chapter4 China Inc.

• Opportunities in China are booming

• Companies are engaging in all strategies– The most common practice is outsourcing

• Multinationals are manufacturing a large variety of products in China

• China is attractive for low-cost manufacturing

• India is attractive in software design, services and engineering

• An author has named the phenomenon Chindia


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chapter4Key Factors in The

International Environment


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chapter4 The Economic Environment

• Economic development differs around the world

– Countries can be categorized as developed or less-developed

• Companies must be able to access the resources needed to produce their products

• Volatility in exchange rates can impact a businesses bottom-line

• Economic development differs around the world

– Countries can be categorized as developed or less-developed

• Companies must be able to access the resources needed to produce their products

• Volatility in exchange rates can impact a businesses bottom-line


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chapter4 World Economic Forum Global Competitiveness


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chapter4 The Legal-Political Environment

Government supervision

Political instability

Laws and regulations


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chapter4 The Sociocultural Environment

Shared knowledge Beliefs Values Modes of behavior

Values and behaviors from the US do not translate around the world


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chapter4 Country Ranking and National Value Systems


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chapter4 Hofstede’s Value Dimensions

National value systems that influence organizational and employee working

relationships

Individualismand

Collectivism

UncertaintyAvoidance

Masculinity/Femininity

Power Distance


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chapter4 GLOBE Project Value Dimensions

• Assertiveness• Future Orientation• Uncertainty Avoidance• Gender Differentiation• Power Distance• Societal Collectivism• Individual Collectivism• Performance Orientation• Humane Orientation

Global Leadership and Organizational Behavior Global Leadership and Organizational Behavior Effectiveness (GLOBE)Effectiveness (GLOBE)

Extension of Hofstede’s

assessment


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chapter4 Country Rankings and GLOBE Rankings


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chapter4 Communication Differences

• Some cultures pay more attention to the social context of communication

– Social Setting

– Nonverbal Behavior

– Social Status

• High-context cultures are sensitive to social exchanges

• Low-context cultures use communication to exchange facts and information


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chapter4 High-Context and Low-Context Cultures


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chapter4 Other Cultural Characteristics

Language

Religion

Social Organization

Education

Attitudes


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chapter4 International Trade Alliances

• General Agreement on Tariffs and Trade (GATT)– Signed in 1947 by 23 nations– Nondiscrimination, clear procedures, negotiations and disputes

regarding trade• World Trade Organization (WTO)

– Permanent global organization from GATT– As of July 2007: 151 Countries

• European Union– Begun in 1957 to improve economic and social conditions in

European Economic Community– Evolved into the 27-nation European Union– Goal is to develop single market system

• North America Free Trade Agreement (NAFTA)– United States, Canada, and Mexico– Trading bloc to spur growth and investment


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chapter4 The Nations of the European Union


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chapter4 The Globalization Backlash

• As the world becomes more global, a backlash is growing

• 68% of American say other countries benefit more from trade

• One of the key concerns is job loss

• Many argue that globalization benefits the economy


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chapter4 Multinational Corporations

• More than 25% of its total sales revenue come from outside the home country

• In 2007, 42% of the global sales of US multinationals come from their foreign affiliates

• An MNC is managed as an integrated business system

• MNCs are controlled by a single management authority

• MNC managers have a global perspective


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chapter4 Managing In A Global Environment

• Developing Cultural Intelligence– Cultural flexibility and ability to adapt– Cognitive, emotional and physical

• Managing Cross-Culturally– Expatriates can be successful by focusing on:

• Human Resources• Leading• Decision Making• Motivating

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Documents

world countries

aroundthe world

trade gatt

china china

emerging borderless

countries european union

foreign organization

global mindset