management lec 4

8/14/2019 Management Lec 4

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ninth edition

STEPHEN P. ROBBINS

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama

MARY COULTER

Managing in a GlobalManaging in a Global

EnvironmentEnvironment



The Global MarketplaceThe Global Marketplace

• Opportunities and ChallengesOpportunities and Challenges

Coping with the sudden appearance of new competitorsCoping with the sudden appearance of new competitors

Acknowledging cultural, political, and economic differencesAcknowledging cultural, political, and economic differences

Dealing with increased uncertainty, fear, and anxietyDealing with increased uncertainty, fear, and anxiety

Adapting to changes in the global environmentAdapting to changes in the global environment

AvoidingAvoiding parochialismparochialism . . .. . . Is viewing the world solely through its own eyes and perspectives.Is viewing the world solely through its own eyes and perspectives.

Is not recognizing that others have different ways of living andIs not recognizing that others have different ways of living and

working.working.

Is a significant obstacle for managers working in a global businessIs a significant obstacle for managers working in a global business

world.world. Is falling into the trap of ignoring others’ values and customs andIs falling into the trap of ignoring others’ values and customs and

rigidly applying an attitude of “ours is better than theirs” to foreignrigidly applying an attitude of “ours is better than theirs” to foreign

cultures.cultures.



Adopting a Global PerspectiveAdopting a Global Perspective

• Ethnocentric AttitudeEthnocentric Attitude

The parochialistic belief that the best workThe parochialistic belief that the best work

approaches and practices are those of theapproaches and practices are those of the homehome

country.country.

•Polycentric AttitudePolycentric AttitudeThe view that the managers in theThe view that the managers in the host host country knowcountry know

the best work approaches and practices for runningthe best work approaches and practices for running

their business.their business.

• Geocentric AttitudeGeocentric AttitudeAA world-oriented world-oriented view that focuses on using the bestview that focuses on using the best

approaches and people from around the globe.approaches and people from around the globe.



Key Information About Three Global AttitudesKey Information About Three Global Attitudes



Regional Trading AgreementsRegional Trading Agreements

• The European Union (EU)The European Union (EU)

A unified economic and trade entityA unified economic and trade entity

Belgium, Denmark, France, Greece, Ireland, Italy,Belgium, Denmark, France, Greece, Ireland, Italy,

Luxembourg, the Netherlands, Portugal, Spain, the UnitedLuxembourg, the Netherlands, Portugal, Spain, the United

Kingdom, Germany, Austria, Finland, and SwedenKingdom, Germany, Austria, Finland, and Sweden

Economic and monetary union (Euro)Economic and monetary union (Euro)

• North American Free Trade Agreement (NAFTA)North American Free Trade Agreement (NAFTA)

Eliminated barriers to free trade (tariffs, importEliminated barriers to free trade (tariffs, import

licensing requirements, and customs user fees)licensing requirements, and customs user fees)

United States, Canada, and MexicoUnited States, Canada, and Mexico



European Union CountriesEuropean Union Countries



Regional Trading Agreements (cont’d)Regional Trading Agreements (cont’d)

• U.S.-Central America Free Trade AgreementU.S.-Central America Free Trade Agreement

(CAFTA)(CAFTA)

• Free Trade Area of the AmericasFree Trade Area of the Americas

• Southern Cone Common Market (Mercosur)Southern Cone Common Market (Mercosur)

• Association of Southeast Asian NationsAssociation of Southeast Asian Nations(ASEAN)(ASEAN)

Trading alliance of 10 Southeast Asian nationsTrading alliance of 10 Southeast Asian nations

• African UnionAfrican Union• South Asian Association for RegionalSouth Asian Association for Regional

Cooperation (SARRC)Cooperation (SARRC)



ASEAN MembersASEAN Members

Source: Based on J. McClenahen and T. Clark,

“ASEAN at Work,” IW . May 19, 1997, p. 42.



The World Trade Organization (WTO)The World Trade Organization (WTO)

• Evolved from the General Agreement on TariffsEvolved from the General Agreement on Tariffs

and Trade (GATT) in 1995.and Trade (GATT) in 1995.

• Functions as the only global organization dealingFunctions as the only global organization dealing

with the rules of trade among nations.with the rules of trade among nations.

• Has 149 member nations and 32 observer Has 149 member nations and 32 observer

governments.governments.

• Monitors and promotes world trade.Monitors and promotes world trade.



How Organizations Go GlobalHow Organizations Go Global



Approaches to GlobalizationApproaches to Globalization

• Global Sourcing (outsourcing)Global Sourcing (outsourcing)

Purchasing materials or labor from around the world wherever itPurchasing materials or labor from around the world wherever itis cheapest.is cheapest.

Examples: Nike & Dell (notebook computers)Examples: Nike & Dell (notebook computers)

• Exporting/ImportingExporting/Importingwww.commerce.govwww.commerce.govwww.ita.doc.govwww.ita.doc.gov (International Trade Administration)(International Trade Administration)Getting into exporting/importing . . .Getting into exporting/importing . . .

Government assistanceGovernment assistance

Trade showsTrade showsContact foreign buyers directlyContact foreign buyers directly Foreign distributorsForeign distributors

http://www.commerce.gov/


http://www.ita.doc.gov/







• LicensingLicensing Definition:Definition: Global strategy in which a firm (the licensor) allows aGlobal strategy in which a firm (the licensor) allows a

foreign company (the licensee) to produce its product inforeign company (the licensee) to produce its product inexchange for a fee (royalty).exchange for a fee (royalty).

• FranchisingFranchising

Definition:Definition: Providing organizations the right to your Providing organizations the right to your brand name, technology, or product specifications.brand name, technology, or product specifications.

Franchisors and franchiseesFranchisors and franchisees

Franchising vs. licensing: (1)Franchising vs. licensing: (1) Licensing Licensing is primarilyis primarily

used in manufacturing, andused in manufacturing, and franchising franchising is used isis used isservice industries. (2) Franchising is typically a moreservice industries. (2) Franchising is typically a moreinvolved relationship.involved relationship.




• Strategic AlliancesStrategic Alliances

Partnerships between and organization and a foreignPartnerships between and organization and a foreign

company in which both share resources andcompany in which both share resources and

knowledge in developing new products or buildingknowledge in developing new products or building

new production facilities.new production facilities. Ex: GM & Toyota partner on manufacturing Toyota TercelsEx: GM & Toyota partner on manufacturing Toyota Tercels

and Chevy Novasand Chevy Novas

• Joint VentureJoint Venture

A specific type of strategic alliance in which theA specific type of strategic alliance in which the

partners agree to form apartners agree to form a separate, independentseparate, independentorganizationor ganization for some business purpose.for some business purpose.




• Foreign SubsidiaryForeign Subsidiary

Directly investing in a foreign country by setting up aDirectly investing in a foreign country by setting up a

separate and independent production facility or office.separate and independent production facility or office.

Subsidiaries can be purchased or started fromSubsidiaries can be purchased or started from

scratch.scratch.

ExamplesExamples: Nestle (a Swiss-based company) owns: Nestle (a Swiss-based company) owns

Ralston Purina, Dreyer’s Ice Cream, and Perrier.Ralston Purina, Dreyer’s Ice Cream, and Perrier.



The Cultural EnvironmentThe Cultural Environment

• National CultureNational Culture

Is the values and attitudes shared by individuals fromIs the values and attitudes shared by individuals from

a specific country that shape their behavior and their a specific country that shape their behavior and their

beliefs about what is important.beliefs about what is important.

May have more influence on an organization than theMay have more influence on an organization than theorganization culture.organization culture.



What Are Americans LikeWhat Are Americans Like

Americans are very informal.Americans are direct .

Americans are competitive.

Americans are achievers.

Americans are independent and individualistic.

Americans are questioners.

Americans dislike silence.

Americans value punctuality.Americans value cleanliness.

Sources: Based on M. Ernest (ed.), Predeparture Orientation Handbook: For Foreign Students and Scholars Planning to Study in the

United States (Washington, DC: U.S. Information Agency, Bureau of Cultural Affairs, 1984), pp. 103–05; A. Bennett, “American Culture Is

Often a Puzzle for Foreign Managers in the U.S.,” Wall Street Journal , February 12, 1986, p. 29; “Don’t Think Our Way’s the Only Way,”

The Pryor Report , February 1988, p. 9; and B.J. Wattenberg, “The Attitudes behind American Exceptionalism,” U.S. News & World

Report , August 7, 1989, p. 25.



Hofstede’s Framework for Assessing CulturesHofstede’s Framework for Assessing Cultures

Individualismversus

Collectivism

Power

Distance

Uncertainty

Avoidance

Achievementversus

Nurturing

Long-Term

versus

Short-TermOrientation

Culture



Examples of Hofstede’s Cultural DimensionsExamples of Hofstede’s Cultural Dimensions

Source: Based on G. Hofstede, “Motivation, Leadership, and Organization: Do American

Theories Apply Abroad?” Organizational Dynamics, Summer 1980, pp. 42–63.



Global Management in Today’s WorldGlobal Management in Today’s World

• ChallengesChallenges

Openness associated with globalizationOpenness associated with globalization

Significant cultural differences (e.g., Americanization)Significant cultural differences (e.g., Americanization)

Adjusting leadership styles and managementAdjusting leadership styles and management

approachesapproaches

• RisksRisks

Loss of investments in unstable countriesLoss of investments in unstable countries

Increased terrorismIncreased terrorism

Economic interdependenceEconomic interdependence



Why U.S. Employees Fail in ForeignWhy U.S. Employees Fail in Foreign

AssignmentsAssignments

1. Inability of the1. Inability of the manager’s spousemanager’s spouse to adjust to a differentto adjust to a different

cultural environment.cultural environment.

2. The2. The manager’s inability manager’s inability to adapt to a different physicalto adapt to a different physical

or cultural environment.or cultural environment.

3. Other family-related problems.3. Other family-related problems.

4. The manager’s personality or emotional immaturity.4. The manager’s personality or emotional immaturity.

5. The manager’s inability to cope with the responsibilities5. The manager’s inability to cope with the responsibilities

posed by overseas work.posed by overseas work.

6. The manager’s lack of technical competence.6. The manager’s lack of technical competence.

7. The manager’s lack of motivation to work overseas.7. The manager’s lack of motivation to work overseas.

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