schermerhorn - chapter 31 core concepts of management schermerhorn prepared by cheryl wyrick...

Schermerhorn - Chapter 3 1

Core Concepts of ManagementSchermerhorn

Prepared by

Cheryl Wyrick

California State Polytechnic University Pomona

John Wiley & Sons, Inc

COPYRIGHT

Copyright 2003 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the 1976 United States Copyright Act without the express written consent of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her owner use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, cause by the use of these programs or from the use of the information contained herein.

Chapter 3Globalization and International Management

Planning Ahead– What are the processes of globalization?

– What is the environment of international business?

– How does culture create global diversity?

– How do management practices transfer across cultures?

Processes of Globalization

The New Europe– European Union (EU)

• grouping of European countries who agreed to support mutual economic growth

• 11 of these countries have agreed to adopt the Euro (common currency)

The Americas– North American Free Trade

Agreement (NAFTA)• Agreement for free flow of

goods and services between the U.S., Canada and Mexico

– Free Trade of the Americas (FTAA) is a possibility

– Other agreements• MERCOSUR• Andrean Pact• CARICOM

Maquiladoras– foreign manufacturing plants allowed to operate

in Mexico• allowed special privileges in exchange for hiring

Mexican labor– import materials, components and equipment with duty

paid on “value added”

Maquiladoras– advantages

• increased employment and prosperity

– disadvantages• social costs in border towns

• exploitation of less expensive Mexican labor

Asia and the Pacific Rim– Asia and Pacific Rim economies are expected

to be larger than those of the EU– China is the world’s largest single-country

marketplace– Japanese companies account for many Fortune

500 companies

Africa– beckons international

business

– increased attention to stable countries

Environment of International Business

Forms of International Business– Global Sourcing

• manufacturing and/or purchasing components worldwide and assembling them into a final product

Forms of International Business – Exporting

• selling locally made products in foreign markets

– Importing• buying foreign made products and selling

them in domestic markets

Forms of International Business – Licensing Agreement

• pay a fee to acquire the rights to sell another company’s products

• franchising is form of licensing

Environment of International Business Forms of International Business

– Direct Investment Strategies• joint ventures

• strategic alliances

• wholly owned subsidiary

Multinational Corporations

Multinational Corporation (MNC)– business with extensive international operations

in more than one country

Advantages of MNCs– larger tax bases– increased employment opportunities– technology transfers– introduction of new industries– development of local resources

Disadvantages of MNCs– extract excessive profits– dominate local economy– do not respect local customs and laws– fail to help domestic firms develop– do not transfer most advanced technology

Pros and Cons of Global Operations

Ethical Issues in Multinational Operations– Foreign Corrupt Practices Act– Sweatshops– Environmental protection

Culture and Global Diversity

Culture– shared set of beliefs, values and patterns of

behavior common to a group of people

Ethnocentrism– tendency to view one’s own culture

as superior to others

Silent Language– Culture shock

• discomfort a person feels in an unfamiliar culture

Spoken Language– Low-context

• explicit spoken and written word

• examples: US, Germany

– High-context• words convey only part of the message

• examples: Middle East, Asia

Use of Space (Proxemics)– interpersonal distance used in communication

• Latin Americans tend to be close

• Americans value more space

Time Orientation– Monochronic

• time is allotted do one thing at a time

– Polychronic• time is allotted to do many things at once

Religion– may influence business practices– source of ethical and moral teaching

Role of Contracts– some cultures view as final and binding– others view as a starting point– some expect contracts to be written– others accept “word” as binding

Values and National Cultures (Hofstede)– Power distance– Uncertainty avoidance– Individualism-collectivism– Masculinity-femininity– Short-term - long-term orientation

Understanding Cultural Differences– Relationships with People

• universalism vs. particularism

• individualism vs. collectivism

• neutral vs. affective

• specific vs.diffuse

• achievement vs. prescription

Understanding Cultural Differences– Attitudes toward time

• sequential

• synchronic

Understanding Cultural Differences– Attitudes toward environment

• inner-directed

• outer-directed

Management Across Cultures

Comparative Management– how management systematically differs from

one country and/or culture to the next• global manager

– someone comfortable with cultural diversity

– quick to find opportunity in unfamiliar settings

Are Management Theories Universal?– U.S. management

theories may be ethnocentric

• emphasis on participation and individual performance are not applicable to other cultures

Are Management Theories Universal?– Japanese management practices

• lifetime employment

• job rotation and broad career experience

• shared information

• collective decision-making

• quality emphasis

– These practices are not easy to translate

Global Organizational Learning– cultural awareness facilitates more informed

transfers of management practices

schermerhorn - chapter 31 core concepts of management schermerhorn prepared by cheryl wyrick...

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