Managing in a Global Environment Ch 4

Managing in a Global Environment Challenges 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 Avoiding parochialismAvoiding parochialism

Adopting a Global Perspective Ethnocentric Attitude Ethnocentric Attitude The parochialistic belief that the best work approaches and practices are those of the home country.The parochialistic belief that the best work approaches and practices are those of the home country. Polycentric Attitude Polycentric Attitude The view that the managers in the host country know the best work approaches and practices for running their business.The view that the managers in the host country know the best work approaches and practices for running their business. Geocentric Attitude Geocentric Attitude A world-oriented view that focuses on using the best approaches and people from around the globe.A world-oriented view that focuses on using the best approaches and people from around the globe.

Regional 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, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, 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, import licensing requirements, and customs user fees)Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees) United States, Canada, and Mexico United States, Canada, and Mexico

Regional Trading Agreements (cont’d) Free Trade Area of the Americas Free Trade Area of the Americas Southern Cone Common Market (Mercosur) Southern Cone Common Market (Mercosur) Association of Southeast Asian Nations (ASEAN) Association of Southeast Asian Nations (ASEAN) Trading alliance of 10 Southeast Asian nationsTrading alliance of 10 Southeast Asian nations African Union African Union

The World Trade Organization (WTO) Evolved from the General Agreement on Tariffs and Trade (GATT) in Evolved from the General Agreement on Tariffs and Trade (GATT) in Functions as the only global organization dealing with the rules of trade among nations. Functions as the only global organization dealing with the rules of trade among nations. Has 145 member nations. Has 145 member nations. Monitors and promotes world trade. Monitors and promotes world trade.

Different Types of Global Organizations Multinational Corporation (MNC) Multinational Corporation (MNC) A firm which maintains operations in multiple countries but manages the operations from a base in the home country.A firm which maintains operations in multiple countries but manages the operations from a base in the home country. Transnational Corporation (TNC) Transnational Corporation (TNC) A firm that maintains operations in several countries but decentralizes management to the local country.A firm that maintains operations in several countries but decentralizes management to the local country. Borderless Organization Borderless Organization A firm that has eliminated structural divisions that impose artificial geographic barriers and is organized along business lines.A firm that has eliminated structural divisions that impose artificial geographic barriers and is organized along business lines.

How Organizations Go Global Three Stages of Globalization Three Stages of Globalization Stage IStage I Exporting products for sale overseas and importing products from overseas to sell in the home country. Exporting products for sale overseas and importing products from overseas to sell in the home country. Stage IIStage II Committing to directly sell home-country products in overseas markets or contracting for products to be manufactured overseas and sold in the home country. Committing to directly sell home-country products in overseas markets or contracting for products to be manufactured overseas and sold in the home country. Stage IIIStage III Licensing manufacturing and franchising services to foreign firms to use the brand name, technology, or product specifications developed by the firm. Licensing manufacturing and franchising services to foreign firms to use the brand name, technology, or product specifications developed by the firm.

Other Forms of Globalization Strategic Alliances Strategic Alliances Partnerships between and organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities.Partnerships between and organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities. Joint Venture Joint Venture A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose.A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose.

Managing in A Global Environment The Legal Environment The Legal Environment Stability or instability of legal and political systemsStability or instability of legal and political systems Legal procedures are established and followed Legal procedures are established and followed Fair and honest elections held on a regular basis Fair and honest elections held on a regular basis Differences in the laws of various nationsDifferences in the laws of various nations Effects on business activities Effects on business activities Effects on delivery of products and services Effects on delivery of products and services

The Economic Environment Economic Systems Economic Systems Market economyMarket economy An economy in which resources are primarily owned and controlled by the private sector. An economy in which resources are primarily owned and controlled by the private sector. Command economyCommand economy An economy in which all economic decisions are planned by a central government. An economy in which all economic decisions are planned by a central government. Monetary and Financial Factors Monetary and Financial Factors Currency exchange ratesCurrency exchange rates Inflation ratesInflation rates Diverse tax policiesDiverse tax policies

The Cultural Environment National Culture National Culture Is the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important.Is the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important. May have more influence on an organization than the organization culture.May have more influence on an organization than the organization culture.

Hofstede’s Framework for Assessing Cultures Individualism versus Collectivism Individualism versus Collectivism Power Distance Power Distance Uncertainty Avoidance Uncertainty Avoidance Quantity versus Quality of Life Quantity versus Quality of Life Long-term versus Short-term Orientation Long-term versus Short-term Orientation Individualism: the degree to which people in a country prefer to act as individuals.Individualism: the degree to which people in a country prefer to act as individuals. Collectivism: a social framework in whichCollectivism: a social framework in which

The GLOBE (Global Leadership and Organizational Behavior Effectiveness) Framework for Assessing Cultures Assertiveness Assertiveness Future orientation Future orientation Gender differentiation Gender differentiation Uncertainty avoidance Uncertainty avoidance Power distance Power distance Individualism/collectivism Individualism/collectivism In-group collectivism In-group collectivism Performance orientation Performance orientation Humane orientation Humane orientation