1. Managing Globally

2. Learning Outcomes
Describe the emerging borderless world and some issues of particular concern for today’s managers.
Describe market entry strategies that business use to develop foreign markets.
Define international management and explain how it differs from the management of domestic business operations.
Indicate how dissimilarities in the economic, sociocultural, and legal-political environments throughout the world can affect business operations.
Describe how regional trading alliances are reshaping the international business environment.
Describe the characteristics of a multinational corporation.
Explain cultural intelligence and why it is necessary for managers working in foreign countries.

3. A Borderless World
Isolation from international forces is no longer possible.
Trade barriers are falling
Communication is faster and cheaper
Consumer tastes are converging
Virtual connections enable close, rapid coordination among people working in different parts of the world.

4. International Trade Alliances
General Agreement on Tariffs and Trade (GATT)
Signed in 1947 by 23 nations
Nondiscrimination, clear procedures, negotiations and disputes regarding trade
World Trade Organization (WTO)
Permanent global organization from GATT
As of July 2007: 151 Countries
European Union
Begun in 1957 to improve economic and social conditions in European Economic Community
Evolved into the 27-nation European Union
Goal is to develop single market system
North America Free Trade Agreement (NAFTA)
United States, Canada, and Mexico
Trading bloc to spur growth and investment

5. The Nations of the European Union

6. Ranking of Six Countries on the Global Index6
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

7. BRIC. Opportunities in China are booming
Companies are engaging in all strategies
The most common practice is outsourcing
Multinationals are manufacturing a large variety of products in China
China is attractive for low-cost manufacturing
India is attractive in software design, services and engineering

8. Multinational Corporations
The size and volume of international business is LARGE
Companies have revenue = GDP of small country
Move assets from country to country
25% or more of its profit comes from outside parent country
MNC is managed as an integrated whole
Controlled by one management authority
MNC managers must have a global perspective

9. Serving the Bottom of the Pyramid (BOP)
An approach for multinationals to do good
Corporations can alleviate problems and make large profits by selling to the world’s poor
There are more than 4 billion people at the lowest level of the economic pyramid
Many companies are adopting BOP strategies

10. Four Stages of Globalization

11. Strategies for Entering International Markets
Exporting – transfers products for sale in foreign countries
Global Outsourcing – transferring the labor of specific tasks to low cost countries
Licensing – allowing an operation in another country to produce and sale company products
Franchising – providing a foreign organization with package of materials and services
Direct Investing - a production facility in another country

12. Getting Started Internationally

13. Key Factors in The International Environment

14. The Economic Environment
Economic development differs around the world
Countries can be categorized as developed or less-developed
Companies must be able to access the resources needed to produce their products
Volatility in exchange rates can impact a businesses bottom-line

15. The Legal-Political Environment
Government supervision
Political instability
Laws and regulations

16. The Sociocultural Environment
The values and behaviors that govern business at home country do not always translate to other countries.
Social Values
Communication Differences
Other Cultural Characteristics
Language
Religion
Social organization
Education
Attitudes

17. Country Culture

18. People want praise from their boss.
People want to balance work and personal life.
People want to be seen as a better performer than others.
People respect their boss and will do what the boss asks them to do.
People are concerned about the success of their company.

19. Hofstede’s Cultural Value Dimensions
Individualism - Collectivism
Power Distance
Uncertainty Avoidance
Masculinity - Femininity
Long-Term Orientation

20. Power Distance
Deals with the fact that all individuals in societies are not equal and expresses the attitude of the culture towards these inequalities.
The extent to which less powerful members of institutions and organizations accept that power is distributed unequally.
Large: Russia, Romania, Slovakia, Mexico, Philippines, Malaysia
Small: U.S., Israel, New Zealand, Netherlands, Norway,

21. Power Distance and Formality
First names?
Importance of titles?
Importance of following protocol?
Appearance indicate status?
Approachable vs. unapproachable leaders?
Hierarchical vs. egalitarian structures?

22. Individualism vs. Collectivism
Whether people´s self-image is defined in terms of “I” or “We”.
Individualist societies look after themselves and their direct family only.
In collectivist societies people belong to ‘in-groups’ that take care of them in exchange for loyalty.
High individualism: U.S., Netherlands, Australia, France
High collectivism: China, Brazil, Venezuela, Chile

23. Collectivism + Power Distance=Paternelism
Paternalistic leader works by acting as a father figure by taking care of their subordinates as a parent would.
Takes a personal interest in workers' off-the-job lives and attempt to promote workers' personal welfare.
In return, leader receives complete trust and loyalty of his people.

24. Masculinity vs. Femininity
A High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure.
A Low Masculinity ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society.
High: Japan, Germany, Hungary, Italy, U.S.
Low: Netherlands, Norway, Sweden

25. Masculinity vs. Femininity Cont’d.
Masculine societies will be driven by competition, achievement and success, with success being defined by the winner / best in field.
Dominant values in a feminine society are caring for others and quality of life.
The fundamental issue is what motivates people: wanting to be the best (masculine) or liking what you do (feminine).

26. Uncertainty Avoidance
Concerned with the way a society deals with the fact that the future can never be known: should we try to control the future or just let it happen?
The extent to which people feel threatened by ambiguous/unknown situations and create beliefs and institutions to limit anxiety.

27. Discuss in Groups Cultural Divergence
Despite economic forces, individuals will retain diverse, culturally-determined values.
Cultural Convergence
As the developing nations become integrated in the global economy, values will shift towards industrialized Western nations.
Cultural Crossvergence
Unique value set different from the value set supported either by national culture or economic forces.

28. Communication Differences
Some cultures pay more attention to the social context of communication
Social Setting
Nonverbal Behavior
Social Status
High-context cultures are sensitive to social exchanges
Low-context cultures use communication to exchange facts and information

29. High-Context and Low-Context Cultures