PowerPoint Presentation to Accompany Management, 9/e John R. Schermerhorn, Jr. Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc. Chapter 5: Global Dimensions of Management

Management 9/e - Chapter 52 Planning Ahead — Chapter 5 Study Questions  What are the international business challenges of globalization?  What are multinational corporations and what do they do?  What is culture and how does it relate to global diversity?  How do management practices transfer across cultures ?

Management 9/e - Chapter 53 Study Question 1: What are the international business challenges of globalization?  Key concepts in the challenges of globalization: Global economy Globalization International management Global manager

Management 9/e - Chapter 54 Study Question 1: What are the international business challenges of globalization? Global economy Resource supplies, product markets, and business competition are worldwide, rather than local Globalization The process of growing interdependence of these components in the global economy

Management 9/e - Chapter 55 Study Question 1: What are the international business challenges of globalization? International management Management in organizations with business interests in more than one country Global manager Informed about international developments Transnational in outlook Competent in working with multicultural people Aware of regional developments in a changing world

Management 9/e - Chapter 56 Study Question 1: What are the international business challenges of globalization? International businesses Conduct for-profit transactions of goods and services across national boundaries Reasons why businesses go international: Profits Customers Suppliers Capital Labor

Management 9/e - Chapter 57 Study Question 1 What are the international business challenges of globalization?  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

Management 9/e - Chapter 58 Figure 5.1 Common forms of international business—from market entry to direct investment strategies.

Management 9/e - Chapter 59 Study Question 1 What are the international business challenges of globalization?  Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations.  Types of direct investment strategies: Joint ventures Foreign subsidiaries

Management 9/e - Chapter 510 Study Question 1 What are the international business challenges of globalization?  Criteria for choosing a joint venture partner: Familiarity with your firm’s major business. Strong local workforce. Future expansion possibilities. Strong local market for partner’s own products. Good profit potential. Sound financial standing.

Management 9/e - Chapter 511 Study Question 1 What are the international business challenges of globalization?  Complications in the global business environment : Environment is complex, dynamic, and highly competitive. Global business executives must deal with differences in the environment of business in different countries. World Trade Organization resolves trade and tariff disputes among countries. Protectionism can complicate global trading relationships.

Management 9/e - Chapter 512 Study Question 2: What are multinational corporations and what do they do?  A multinational corporation (MNC) is a business with extensive international operations in more than one foreign country.

Management 9/e - Chapter 513 Study Question 2: What are multinational corporations and what do they do?  Mutual benefits for host country and MNC: Shared growth opportunities Shared income opportunities Shared learning opportunities Shared development opportunities

Management 9/e - Chapter 514 Study Question 2: What are multinational corporations and what do they do?  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

Management 9/e - Chapter 515 Figure 5.2 What should go right and what can go wrong in MNC-host country relationships.

Management 9/e - Chapter 516 Study Question 2: What are multinational corporations and what do they do?  MNC complaints about host countries: Profit limitations Overpriced resources Exploitative rules Foreign exchange restrictions Failure to uphold contracts

Management 9/e - Chapter 517 Study Question 2: What are multinational corporations and what do they do?  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.

Management 9/e - Chapter 518 Study Question 3: What is culture and how does it relate to 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.  Cultural intelligence The ability to adapt and adjust to new cultures  Ethnocentrism Tendency to consider one’s own culture as superior to others.

Management 9/e - Chapter 519 Study Question 3: What is culture and how does it relate to global diversity?  Stages in adjusting to a new culture: Confusion Small victories The honeymoon Irritation and anger Reality

Management 9/e - Chapter 520 Study Question 3: What is culture and how does it relate to global diversity?  Popular dimensions of culture: Language  Low-context cultures and high-context cultures Interpersonal space Time orientation  Monochronic cultures and polychronic cultures Religion Contracts and agreements

Management 9/e - Chapter 521 Study Question 3: What is culture and how does it relate to global diversity?  Values and national cultures (Hofstede): Power distance Uncertainty avoidance Individualism-collectivism Masculinity-femininity Time orientation

Management 9/e - Chapter 522 Figure 5.3 How countries compare on Hofstede’s dimension of national culture.

Management 9/e - Chapter 523 Study Question 3: What is culture and how does it relate to global diversity?  Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) Researches the leadership, organizational practices, and diversity among world cultures.  Power distance  Uncertainty avoidance  Gender egalitarianism  Future orientation

Management 9/e - Chapter 524 Study Question 3: What is culture and how does it relate to global diversity? Project GLOBE’s nine dimensions continued  Institutional collectivism  In-group collectivism  Assertiveness  Performance orientation  Humane orientation

Management 9/e - Chapter 525 Figure 5.4 Nine cultural dimensions used by Project GLOBE researchers. A large team of international researchers collaborated in Project GLOBE to examine societal cultures using the nine cultural dimensions shown in the figure. When results from extensive empirical studies were analyzed for 62 countries, they were found to fall into ten culture clusters. Countries within a cluster share many societal cultural practices; countries tend to differ significantly across clusters in their cultural practices.

Management 9/e - Chapter 526 Study Question 3: What is culture and how does it relate to global diversity?  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.

Management 9/e - Chapter 527 Study Question 4: How do management practices transfer across cultures ?  Comparative management How management systematically differs among countries and/or cultures.  Global managers Need to successfully apply management functions across international boundaries.

Management 9/e - Chapter 528 Study Question 4: How do management practices transfer across cultures?  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.

Management 9/e - Chapter 529 Study Question 4: How do management practices transfer across cultures?  Global organizational learning: Companies can and should learn from each other. Readiness for global organizational learning varies based on managerial attitudes.  Ethnocentric attitudes  Polycentric attitudes  Geocentric attitudes Be alert, open, inquiring, but always cautious.

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