Management Fourteenth Edition Chapter 4 Managing in a Global Environment Copyright Copyright 2018, 2018,2016,
2016,2014 2014Pearson PearsonEducation, Education,Inc. Inc.All AllRights RightsReserved Reserved Learning Objectives 4.1 Contrast ethnocentric, polycentric, and geocentric
attitudes toward global business. Develop your skill at collaborating in cross-cultural settings. 4.2 Discuss the importance of regional trading alliances and global trade mechanisms. 4.3 Describe the structures and techniques organizations use as they go international. 4.4 Explain the relevance of the political/legal, economic, and cultural environments to global business. Know how to be culturally aware. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Whats Your Global Perspective? Parochialism: viewing the world solely through your own perspectives, leading to an inability to recognize differences between people Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Three Possible Global Attitudes Ethnocentric: view that home country has best
work practices Polycentric: view that managers in the host country know the best approaches Geocentric: world-oriented view; wants to use best practices from around the globe Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Regional Trading Alliances Global competition and the global economy are shaped by regional trading agreements, including:
European Union (EU) North American Free Trade Agreement (NAFTA) Association of Southeast Asian Nations (ASEAN) Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved The European Union European Union (EU): a union of 28 democratic European nations created as a unified economic
and trade entity with the Euro as a single common currency Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-1 European Union Map Exhibit 4-1 shows the members of the European Union. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA): an agreement among the Mexican, Canadian, and U.S. governments in which barriers to trade have been eliminated Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Association of Southeast Asian Nations (ASEAN)
Association of Southeast Asian Nations (ASEAN): a trading alliance of 10 Southeast Asian nations Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-2 ASEAN Map Exhibit 4-2 shows the members of ASEAN. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Other Trade Alliances African Union (AU) East African Community (EAC) South Asian Association for Regional Cooperation (SAARC) Trans-Pacific Partnership (TPP) Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-3
TPP Map Exhibit 4-3 shows the current members of TPP and countries indicating a desire to join. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Global Trade Mechanisms World Trade Organization (WTO) International Monetary Fund (IMF) World Bank Group Organization for Economic Cooperation and Development (OECD)
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved World Trade Organization World Trade Organization (WTO): global organization of 161 countries that deals with the rules of trade among nations Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved International Monetary Fund and World
Bank Group International Monetary Fund (IMF): An organization of 188 countries that promotes international monetary cooperation and provides advice, loans, and technical assistance World Bank Group: a group of very closely associated institutions that provides financial and technical assistance to developing countries Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Organization for Economic Cooperation and Development Organization for Economic Cooperation and Development (OECD): an international economic organization that helps its 34 member countries achieve sustainable economic growth and employment Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved How Organizations Go International (1 of 2)
Global sourcing: purchasing materials or labor from around the world wherever it is cheapest Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved How Organizations Go International (2 of 2) Multinational corporation (MNC) Multidomestic corporation (IMF) Global company Transnational or borderless organization
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-4 How Organizations Go Global Exhibit 4-4 shows the different approaches companies can use to go global. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Going Global: Exporting and Importing Exporting: making products domestically and selling them abroad
Importing: acquiring products made abroad and selling them domestically Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Going Global: Licensing and Franchising Licensing: an organization gives another organization the right to make or sell its products using its technology or product specifications Franchising: an organization gives another organization the right to use its name and
operating methods Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Going Global: Strategic Alliances and Joint Ventures Strategic Alliance: partnership between an organization and foreign company partner(s) in which both share resources and knowledge in developing new products or building production facilities
Joint Venture: A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Going Global: Foreign Subsidiary Foreign Subsidiary: directly investing in a foreign country by setting up a separate and independent production facility or office
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Managing in a Global Environment What challenges will a manager face in a new country? Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Political/Legal Environment U.S. managers are accustomed to a stable legal and political system
Managers must stay informed of the specific laws in countries where they do business Some countries have risky political climates Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Economic Environment Free Market Economy: an economic system in which resources are primarily owned and controlled by the private sector Planned Economy: an economic system in which
economic decisions are planned by a central government Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Cultural Environment National Culturethe values and attitudes shared by individuals from a specific country that shape their behavior and beliefs about what is important.
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-5 What Are Americans Like? Characteristic Americans are very informal. They tend to treat people alike even when great differences in age or social standing are evident. Americans are direct. They dont talk around things. To some foreigners, this may appear as abrupt or even rude behavior. American are competitive. Some foreigners may find Americans assertive or overbearing. Americans are achievers. They like to keep score, whether at work or at play. They emphasize
accomplishments. Americans are independent and individualistic. They place a high value on freedom and believe that individuals can shape and control their own destiny. Americans are questioners. They ask a lot of questions, even of someone they have just met. Many may seem pointless (How ya doin?) or personal (What kind of work do you do?) Americans dislike silence. They would rather talk about the weather than deal with silence in a conversation. Americans value punctuality. They keep appointment calendars and live according to schedules and clocks. Americans value cleanliness. They often seem obsessed with bathing, eliminating body odors, and wearing clean clothes.
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-6 Hofstedes Five Dimensions of National Culture Exhibit 4-6 shows Hofstedes Five Dimensions of National Culture. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Global Leadership and Organizational Behavior Effectiveness (GLOBE)
Power distance Uncertainty avoidance Assertiveness Humane orientation Future orientation Institutional collectivism Gender differentiation In-group collectivism Performance orientation Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Global Management in Todays World (1 of 2) The Challenge of Openness Increased threat of terrorism Economic interdependence of trading countries Intense fundamental cultural differences Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Global Management in Todays World (2 of 2) Cultural Intelligence: cultural awareness and sensitivity skills
Global Mind-Set: attributes that allow a leader to be effective in cross-cultural environments Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Exhibit 4-7 A Global Mind-Set Intellectual capital: Knowledge of international business
and the capacity to understand how business works on a global scale Psychological capital: Openness to new ideas and experiences Social capital:
Ability to form connections and build trusting relationships with people who are different from you Exhibit 4-7 shows components of a global mind-set. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.1 Contrast ethnocentric, polycentric, and geocentric attitudes toward global business. Parochialismviewing the world solely through your
own eyes and perspectives. Polycentric attitudemanagers in the host country know the best work approaches and practices for running their business. Geocentric attitudea world-oriented view that focuses on using the best approaches and people from around the globe. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.2 (1 of 2)
Discuss the importance of regional trading alliances and global trade mechanisms. The European Union consists of 28 democratic countries. NAFTA helps Canada, Mexico, and the United States strengthen their global economic power. ASEAN is a trading alliance of 10 Southeast Asian nations. Other trade alliances World Trade Organization (WTO) monitors and promotes trade relationships.
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.2 (2 of 2) The International Monetary Fund (IMF) and the World Bank Group provide monetary support. The Organization for Economic Cooperation and Development assists its member countries with financial support. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Review Learning Objective 4.3 (1 of 3) Describe the structures and techniques organizations use as they go international. A multinational corporationan international company that maintains operations in multiple countries. A multidomestic organizationan MNC that decentralizes management and other decisions to the local country. A global organizationan MNC that centralizes management and other decisions in the home country. A transnational organizationan MNC that has eliminated artificial geographical barriers.
Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.3 (2 of 3) Global sourcing: purchasing materials or labor from around the world wherever it is cheapest. Exporting: making products domestically and selling them abroad. Importing: acquiring products made abroad and selling them domestically. Licensing: gives that organization the right to use the
companys brand name, technology, or product specifications. Franchising: use another companys name and operating methods. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.3 (3 of 3) Global strategic alliance: partnership between an organization and foreign company partners Joint venture: a strategic alliance in which the partners agree to form a separate, independent organization for
some business purpose Foreign subsidiary: direct investment in a foreign country that a company creates by establishing a separate and independent facility or office Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.4 (1 of 2) Explain the relevance of the political/legal, economic, and cultural environments to global business.
The laws and political stability of a country are issues in the global political/legal environment with which managers must be familiar Managers must be aware of a countrys economic issues such as currency exchange rates, inflation rates, and tax policies. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Review Learning Objective 4.4 (2 of 2) Geert Hofstede identified five dimensions for assessing
a countrys culture: individualism-collectivism, power distance, uncertainty avoidance, achievementnurturing, and long-term/short-term orientation. The GLOBE studies identified nine dimensions for assessing country cultures. Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved Copyright Copyright 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
