1 Global Dimensions of Management Key Global Events Collapse of the Soviet Union Opening of China Improved Access (Telecommunications) Steady Growth in MNC’s The European Community NAFTA - GATT

2 International Management The conduct of business and other operations in foreign countries. Working overseas in the foreign operation of a domestic firm. Working overseas for a foreign firm. Working as a domestic employee of a foreign firm operating in your country.

3 Why Organizations Go International Profits New Markets Raw Materials Financial Capital Lower Labor Costs

4 The Global Economy Based on the worldwide interdependence of resource supplies, product markets, and business competition. The European Union The Americas Asia and the Pacific Rim Russia NAFTA GATT Asia-Pacific Economic Forum Africa Maquiladoras China WTO

5 International Business The conduct of for-profit transactions of goods and services across national boundaries.

6 International Business Strategies Market Entry –Global Sourcing –Exporting –Importing –Licensing –Franchising Direct Investment –Joint Ventures –Wholly Owned Subs

7 Multinational Corporations A business firm with extensive international operations in more than one foreign country MNO’s are organizations like the Red Cross, whose nonprofit missions and operations span the globe.

8 Types of MNCs Transnational Corporations Strive to operate on a borderless basis and without being identified with one national home. Ethnocentric Strict headquarters control over foreign operations, expects to operate the same way it does at home.

9 Types of MNCs Polycentric Gives it foreign operations more operating freedom, respects market differences among countries, and treats each country as a separate competitive domain. Geocentric Like Traditional it seeks total integration of global operations by operating without "home country" prejudices, making major decisions for global perspective, and employing senior executives from many different countries.

10 Environmental Challenges in the Global Economy Economic Differences –Centralized vs Free Market Economies –Transition to Privatization –Trade Alliances and Policies Legal Political Differences – Democratic vs Totlaitarian Systems – Diverse Legal Codes

11 Environmental Challenges in the Global Economy Educational Differences –Different School Systems –Literacy Levels –Availability of Skilled Labor Socio-Cultural Differences – Different Cultures – Culture Shock – Ethnocentrism

12 Host Country Complaints of MNC’s Extract excessive profits. Dominate the local economy. Interfere with the local government. Fail to help domestic firms develop. Hire the best local personnel. Fail to transfer advanced technologies. Fail to respect local customs, laws, and needs.

13 MNC’s Complaints Profit limitations. Overpriced resources. Exploitative rules. Foreign exchange restrictions. Failure to meet contract obligations.

14 Popular Dimensions Of Culture Language Use of Space Time Orientation Monochronic vs Polychronic Religion Use Of Contracts

15 Hofstede's Dimensions Of Culture Power Distance The degree to which a society accepts the unequal distribution of power in organizations. Uncertainty Avoidance The degree to which a society tolerates risk and situational uncertainties.

16 Hofstede's Dimensions Of Culture Individualism - Collectivism The degree to which a society emphasizes individual self-interest, or the collective values of groups. Masculinity - Femininity The degree to which a society emphasizes assertiveness and material concerns, or relationships with others and concerns for feelings.

17 Hofstede's Dimensions Of Culture Time Orientation The degree to which a society emphasizes short term considerations versus greater concern for the future.

18 High Low Power Distance Philippines Austria US Uncertainty Avoidance Greece Singapore US Individualism USA Venezuela Japan Masculinity Japan Sweden US Time Orientation USAJapan

19 Apply the Management Functions Across Cultures Comparative Management The study of how management practices systematically differ from one country and/or culture to the next. Political-Risk Analysis Involves forecasting the probability of various events that can threaten the securityof a foreign investment.

20 Comparative Management Practices We can look to Hofstede's Model to understand how strong cultural influences can impact the compatibility of management theories when applied across international borders.

21 Comparative Management Practices Notwithstanding the stories proclaiming the success of the Japanese management system.… we should hesitate to accept any practice, no matter how well it appears to work somewhere else, as a universal prescription to action.