management, 7e schermerhorn prepared by michael k. mccuddy valparaiso university john wiley &...

Management, 7eSchermerhorn

Prepared by

Michael K. McCuddy

Valparaiso University

John Wiley & Sons, Inc

COPYRIGHT

Copyright 2002 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

Schermerhorn Chapter 5 3

Chapter 5Global Dimensions of Management

Planning ahead—study questions– What are the management challenges of globalization?

– What are the forms and opportunities of international business?

– What are multinational corporations and what do they do?

– How does culture create global diversity?

– How do management practices and learning transfer across cultures?


What are the management challenges of globalization?

Modern managers operate in a complex

global arena:

– Resource supplies, product markets, and

business competition are global in nature.

– There is a growing interdependence of supplies,

markets, and competition.

– Global managers must think and act globally.



Europe

– European Union (EU)

• Grouping of 15

Western European

countries that agreed to

support mutual

economic growth

• Expected to expand to

at least 25 members



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)—Alaska to Chile

—is a possibility



Asian and the Pacific Rim– Rivals EU in size and is

growing

– Economic power of Japan and China

– Asia-Pacific Economic Cooperation (APEC) is a growing regional economic alliance

– Human rights and intellectual property issues



Africa– Beckons international

business– Increased attention to

stable countries– South African

Development Community (SADC) links 12 countries in trade and economic development


What are the forms and opportunities of international business?

Reasons for engaging in international business:– 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



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

Types of direct investment strategies:– Joint ventures

– Wholly owned subsidiaries


What are multinational corporations and what do they do?

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



Types of multinational corporations:

– Ethnocentric MNC

• Exerts strict control over foreign operations

– Polycentric MNC

• Gives foreign operations more freedom to operate as separate

entities

– Geocentric MNC

• Seeks total integration of global operations



Mutual benefits for host country and 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



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.

– ISO 14000—responsible environmental policies.


How does culture create 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

all others.



Popular dimensions of culture:– Language

• Low-context cultures and high-context cultures

– Use of space– Time orientation

• Monochronic cultures and polychronic cultures

– Religion– Role of contracts



Values and national cultures (Hofstede):

– Power distance

– Uncertainty avoidance

– Individualism-collectivism

– Masculinity-femininity

– Time orientation



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.


How do management practices and learning transfer across cultures?

Comparative management

– How management systematically differs among

countries and/or cultures.

Global managers

– Need to apply management functions across

international boundaries.


How do management practices and learning transfer across cultures? Planning and controlling:

– Complexity of international operating environment– Political risk

Organizing and leading:– Multinational organization structures

• Multinational geographic structure• Multinational product structure

– Staffing international operations• Competent locals• Expatriates



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.

• Lifetime employment, job rotation and broad career experience, shared information, collective decision-making, and quality emphasis.

• Keiretsu—long-term alliances for attaining common interests.



Global organizational learning:

– Companies can and should learn from each

other.

– Caution should be exercised in transferring

management practices.

– Cultural awareness facilitates more informed

transfers of management practices.

management, 7e schermerhorn prepared by michael k. mccuddy valparaiso university john wiley &...

Documents

schermerhorn chapter

economic development

possibility slide

e schermerhorn

management practices

business competition

copyright copyright

global managers