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Management, 6e Schermerhorn
Prepared by Cheryl Wyrick California State Polytechnic University Pomona John Wiley & Sons, Inc
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COPYRIGHT Copyright 1999 © 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 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.
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Chapter 5 Global Dimensions of Management
Planning Ahead What are the challenges of management in a global economy? What are the opportunities of international business? What is the environment for global diversity? How do management and learning transfer across cultures? Schermerhorn Chapter 5
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The Global Economy The New Europe European Union (EU)
grouping of 15 Western European countries who have agreed to support mutual economic growth 11 of these countries have agreed to adopt the Euro (common currency) Schermerhorn Chapter 5
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The Global Economy 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 Schermerhorn Chapter 5
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The Global Economy 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 are “value added” Schermerhorn Chapter 5
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The Global Economy Maquiladoras advantages disadvantages
increased employment and prosperity disadvantages social costs in border towns exploitation of less expensive Mexican labor Schermerhorn Chapter 5
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The Global Economy 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 Schermerhorn Chapter 5
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The Global Economy Africa beckons international business
increased attention to stable countries Schermerhorn Chapter 5
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Forms of International Business
Market Entry Strategies Global Sourcing manufacturing and/or purchasing components worldwide and assembling them into a final product Schermerhorn Chapter 5
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Forms of International Business
Market Entry Strategies Exporting selling locally made products in foreign markets Importing buying foreign made products and selling them in domestic markets Schermerhorn Chapter 5
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Forms of International Business
Market Entry Strategies Licensing Agreement pay a fee to acquire the rights to sell another company’s products franchising is a form of licensing Schermerhorn Chapter 5
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Forms of International Business
Direct Investment Strategies joint ventures strategic alliances wholly owned subsidiaries Schermerhorn Chapter 5
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Environment and Global Operations
Multinational Corporation (MNC) business with extensive international operations in more than one country Schermerhorn Chapter 5
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Environment and Global Operations
Types of Multinational Corporations Ethnocentric exert strict control over foreign operations Polycentric give foreign operations more freedom to operate as separate entities Geocentric seek total integration of global operations Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
Economic Systems Central-planning government makes basic economic decisions for entire country Free-market operate under capitalism Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) international accords in which member nations agree to ongoing negotiations and reduction of tariffs and trade restrictions Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
Laws vary between countries common legal problems incorporation practices negotiating contracts protecting patents, trademarks and copyrights foreign exchange restrictions Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
Human resource concerns illiteracy absence of appropriate skills shortage of labor supplies Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
Pros of MNCs larger tax bases increased employment opportunities technology transfers introduction of new industries development of local resources Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
Cons 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 Schermerhorn Chapter 5
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Environmental Challenges in the Global Economy
Ethical Issues in Multinational Operations Foreign Corrupt Practices Act Sweatshops Environmental protection Schermerhorn Chapter 5
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Culture and Global Diversity
shared set of beliefs, values and patterns of behavior common to a group of people Schermerhorn Chapter 5
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Culture and Global Diversity
Culture shock discomfort a person feels in an unfamiliar culture Ethnocentrism tendency to view one’s own culture as superior to others Schermerhorn Chapter 5
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Culture and Global Diversity
Popular Dimensions of Culture language use of space time orientation religion role of contracts Schermerhorn Chapter 5
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Culture and Global Diversity
Language varies throughout world same language varies in usage from one region to another language training is increasingly important to U.S. managers Schermerhorn Chapter 5
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Culture and Global Diversity
Use of Space interpersonal distance used in communication Latin Americans tend to be close Americans value more space Schermerhorn Chapter 5
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Culture and Global Diversity
Time Orientation Monochronic time is allotted do one thing at a time Polychronic time is allotted to do many things at once Schermerhorn Chapter 5
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Culture and Global Diversity
Religion may influence business practices source of ethical and moral teaching Schermerhorn Chapter 5
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Culture and Global Diversity
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 Schermerhorn Chapter 5
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Culture and Global Diversity
Values and National Cultures (Hofstede) Power distance Uncertainty avoidance Individualism-collectivism Masculinity-femininity Short-term - long-term orientation Schermerhorn Chapter 5
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Culture and Global Diversity
Understanding Cultural Differences Relationships with People universalism vs. particularism individualism vs. collectivism neutral vs. affective specific vs.diffuse achievement vs. prescription Schermerhorn Chapter 5
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Culture and Global Diversity
Understanding Cultural Differences Attitudes toward time sequential synchronic Schermerhorn Chapter 5
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Culture and Global Diversity
Understanding Cultural Differences Attitudes toward environment inner-directed outer-directed Schermerhorn Chapter 5
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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 Schermerhorn Chapter 5
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Culture and Global Diversity
Planning and Controlling Global Operations use of computer-based global networks political risk analysis Schermerhorn Chapter 5
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Culture and Global Diversity
Organizing and Leading Global Operations multinational organization structure geographical product expatriates employees who live and work in foreign countries Schermerhorn Chapter 5
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Culture and Global Diversity
Are Management Theories Universal? U.S. management theories may be ethnocentric emphasis on participation and individual performance is not applicable to other cultures Schermerhorn Chapter 5
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Culture and Global Diversity
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 Schermerhorn Chapter 5
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Culture and Global Diversity
Global Organizational Learning cultural awareness facilitates more informed transfers of management practices Schermerhorn Chapter 5
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