ch05.ppt

PowerPoint Presentation to Accompany

Management, 10/eJohn R. Schermerhorn, Jr.

Prepared by: Jim LoPrestiUniversity of Colorado, Boulder

Published by: John Wiley & Sons, Inc.

Chapter 5: Global Dimensions of Management

Management 10/e - Chapter 5 2

Planning Ahead — Chapter 5 study questions

What are the management challenges of globalization?

What are global businesses and what do they do?

What is culture and how does it impact global management?

How can we benefit from global management learning?


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

Key concepts in the challenges of globalization: Global economy

Globalization

International management

Global manager



Global economy Resource supplies, product markets, and

business competition are worldwide, rather than local

Globalization The process of growing interdependence

of these components in the global economy



Global management• Management in organizations with business

interests in more than one country

Global manager Informed about international developments Transnational in outlook Competent in working with multicultural people Aware of regional developments in a changing

world



Global businesses• Conduct for-profit transactions of goods and

services across national boundaries

Reasons why businesses go global: Profits Customers Suppliers Capital Labor



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


Figure 5.1 Common forms of global business—from market entry to direct investment strategies.



Global sourcing the process of purchasing materials or services

around the world for local use Exporting

selling locally made products in foreign markets Importing

buying foreign-made products and selling them domestically

Licensing agreement one firm pays fee for rights to make or sell another

company’s products Franchising

a fee is paid for rights to use another firm’s name and operating methods


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

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

Types of direct investment strategies: Joint ventures

operates in a foreign country through co-ownership by foreign and local partners

Strategic alliances a partnership in which foreign and domestic firms

share resources and knowledge for mutual gains.



Types of direct investment strategies: Foreign subsidiaries

o local operation completely owned by a foreign firm

Greenfield investment - builds an entirely new operation in a foreign country

Foreign direct investment. building, buying or buying part ownership of a

business in another country. Insourcing

job creation through foreign direct investment



Criteria for choosing a joint venture partner: Familiarity with your firm’s major business. Strong local workforce. Future expansion possibilities. Values its customers Strong local market for partner’s own

products. Good profit potential. Sound financial standing.



Complications in the global business environment: Political risk

the potential loss in value of a foreign investment due to instability and changes in host country

Local legal systems complex and unfamiliar laws can create problems

World Trade Organization resolves trade and tariff disputes among countries.

Protectionism can complicate global trading relationships.



Regional Economic Alliances NAFTA – North American Free Trade

Agreement CAFTA – Central American Free Trade

Agreement EU – European Union APEC – Asia Pacific Economic Cooperation SADC – Southern Africa Development

Community


Study Question 2: What are global businesses and what do they do?

Types of global businesses:

Global corporation MNC (multinational corporation) with

extensive business operations in more than one foreign country

Transnational corporation MNC (multinational corporation) operates

worldwide on a borderless basis



Mutual benefits for host country and global corporation or MNC:

Shared growth opportunities

Shared income opportunities

Shared learning opportunities

Shared development opportunities



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


Figure 5.2 What should go right and what can go wrong in MNC-host country relationships.



MNC complaints about host countries:

Profit limitations

Overpriced resources

Exploitative rules

Foreign exchange restrictions

Failure to uphold contracts



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.


Study Question 3: What is culture and how does it impact global management?

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.

Cultural intelligence The ability to adapt and adjust to new cultures

Ethnocentrism Tendency to consider one’s own culture as

superior to others.



Stages in adjusting to a new culture: Confusion

Small victories

The honeymoon

Irritation and anger

Reality



Popular dimensions of culture: Language

Low-context cultures and high-context cultures

Interpersonal space proxemics

Time orientation Monochronic cultures and polychronic cultures

Religion Contracts and agreements



Values and national cultures

(Hofstede): Power distance

Uncertainty avoidance

Individualism-collectivism

Masculinity-femininity

Time orientation


Figure 5.3 How countries compare on Hofstede’s dimension of national culture.


Study Question 3: What is culture and how does it relate to global diversity?

Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) Researches the leadership,

organizational practices, and diversity among world cultures.

Power distance Uncertainty avoidance Gender egalitarianism Future orientation



Project GLOBE’s nine dimensions continued

Institutional collectivism In-group collectivism Assertiveness Performance orientation Humane orientation



Project GLOBE’s research on leadership practices across cultures

Facilitators of leadership success Acting trustworthy, just, honest Showing foresight, planning Being positive, dynamic, motivating Inspiring confidence Being informed and communicative Being a coordinator and team builder



Project GLOBE’s research on leadership practices across cultures

Inhibitors of leadership success Being a loner Acting uncooperative Being irritable Acting autocratic


Study Question 4: How can we benefit from global management learning?

Comparative management How management systematically

differs among countries and/or cultures.

Global managers Need to successfully apply

management functions across

international boundaries.


Figure 5.4 Nine cultural dimensions used by Project GLOBE researchers.

A large team of international researchers collaborated in Project GLOBE to examine societal cultures using the nine cultural dimensions shown in the figure. When results from extensive empirical studies were analyzed for 62 countries, they were found to fall into ten culture clusters. Countries within a cluster share many societal cultural practices; countries tend to differ significantly across clusters in their cultural practices.



Are management theories universal?

U.S. 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.



Global management 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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ch05.ppt

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