1. Chapter 3: Global Dimensions of Management
PowerPoint Presentation to Accompany Management, 2/e John R. Schermerhorn, Jr. and Barry Wright
Chapter 3: Global Dimensions of Management
Prepared by: Jim LoPresti
University of Colorado, Boulder
Revised by: Dr. Shavin Malhotra
Ryerson University, Toronto, Ontario
Published by: John Wiley & Sons Canada, Ltd

2. Planning Ahead — Chapter 3 study questions
What are the management challenges of globalization?
What are global businesses and what do they do?
What is culture and how does it impact global management?
How can we benefit from global management learning?
Management 2e - Chapter 3

3. Study Question 1: What are the management challenges of globalization?
Key concepts in the challenges of globalization:
Global economy
Globalization
International management
Global manager
Management 2e - Chapter 3

4. Study Question 1: What are the management 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 2e - Chapter 3

5. Study Question 1: What are the management challenges of globalization?
Global 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
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6. Study Question 1: What are the management challenges of globalization?
Global businesses
Conduct for-profit transactions of goods and services across national boundaries
Reasons why businesses go global:
Profits
Customers
Suppliers
Capital
Labour
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7. Study Question 1: What are the management 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
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8. Figure 3.1 Common forms of global business—from market entry to direct investment strategies.
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9. Study Question 1: What are the management challenges of globalization?
Global sourcing
the process of purchasing materials or services around the world for local use
Exporting
selling locally made products in foreign markets
Importing
buying foreign-made products and selling them domestically
Licensing agreement
one firm pays fee for rights to make or sell another company’s products
Franchising
a fee is paid for rights to use another firm’s name and operating methods
Management 2e - Chapter 3

10. Study Question 1: What are the management challenges of globalization?
Foreign Direct Investment is building, buying all, or buying part ownership of a business in another country.
Insourcing
job creation through foreign direct investment
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11. Study Question 1: What are the management challenges of globalization?
Types of direct investment strategies:
Joint ventures
operates in a foreign country through co-ownership by foreign and local partners
Global strategic alliances
a partnership in which foreign and domestic firms share resources and knowledge for mutual gains.
Foreign subsidiaries
local operation completely owned by a foreign firm
Greenfield investment - builds an entirely new operation in a foreign country
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12. Study Question 1: What are the management challenges of globalization?
Criteria for choosing a joint venture partner:
Familiarity with your firm’s major business.
Strong local workforce.
Future expansion possibilities.
Values its customers
Strong local market for partner’s own products.
Good profit potential.
Sound financial standing.
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13. Study Question 1: What are the management challenges of globalization?
Complications in the global business environment:
Political risk
the potential loss in value of a foreign investment due to instability and changes in host country
Local legal systems
complex and unfamiliar laws can create problems
World Trade Organization resolves trade and tariff disputes among countries.
Protectionism can complicate global trading relationships.
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14. Study Question 1: What are the management challenges of globalization?
Regional Economic Alliances
NAFTA – North American Free Trade Agreement
EU – European Union
SADC – Southern Africa Development Community
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15. Study Question 2: What are global businesses and what do they do?
Types of global businesses:
Global corporation
MNC (multinational corporation) with extensive business operations in more than one foreign country
Transnational corporation
MNC (multinational corporation) operates worldwide on a borderless basis
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16. Study Question 2: What are global businesses and what do they do?
Host-country benefits of MNC:
Larger tax bases
Increased employment opportunities
Technology transfers
Introduction of new industries
Development of local resources
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17. Study Question 2: What are global businesses 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
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18. Figure 3.2 What should go right and what can go wrong in MNC-host country relationships.
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19. Study Question 2: What are global businesses 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 labour — full-time employment of children for work otherwise done by adults.
Sustainable development — meeting current needs without compromising future needs.
Management 2e - Chapter 3

20. Cultural intelligence
Study Question 3: What is culture and how does it impact global management?
Culture
The shared set of beliefs, values, and patterns of behaviour common to a group of people.
Culture shock
Confusion and discomfort a person experiences in an unfamiliar culture.
Ethnocentrism
Tendency to consider one’s own culture as superior to others.
Cultural intelligence
The ability to adapt and adjust to new cultures
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21. Stages in adjusting to a new culture:
Study Question 3: What is culture and how does it impact global management?
Stages in adjusting to a new culture:
Confusion
Small victories
The honeymoon
Irritation and anger
Reality
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22. Silent Languages of culture:
Study Question 3: What is culture and how does it impact global management?
Silent Languages of culture:
Context
Low-context cultures – emphasize communication via spoken or written words.
High-context cultures – rely on nonverbal and situational cues as well as on spoken or written words in communication.
Management 2e - Chapter 3

23. Silent Languages of culture:
Study Question 3: What is culture and how does it impact global management?
Silent Languages of culture:
Time
Monochronic cultures – people tend to do one thing at a time.
Polychronic cultures – time is used to accomplish many different things at once.
Space
Proxemics – is how people use space to communicate.
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24. Values and national cultures (Hofstede):
Study Question 3: What is culture and how does it impact global management?
Values and national cultures (Hofstede):
Power distance
Uncertainty avoidance
Individualism-collectivism
Masculinity-femininity
Time orientation
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25. Figure 3.3 How countries compare on Hofstede’s dimension of national culture.
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26. Study Question 4: How can we benefit from global management learning?
Comparative management
How management perspectives and practices systematically differs among countries and cultures.
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27. Study Question 4: How can we benefit from global management learning?
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 2e - Chapter 3

28. Study Question 4: How can we benefit from global management learning?
Project GLOBE (Global Leadership and Organizational Behaviour Effectiveness)
Researches the leadership, organizational practices, and diversity among world cultures.
Power distance
Uncertainty avoidance
Gender egalitarianism
Future orientation
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29. Study Question 4: How can we benefit from global management learning?
Project GLOBE’s nine dimensions continued
Institutional collectivism
In-group collectivism
Assertiveness
Performance orientation
Humane orientation
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30. Study Question 4: How can we benefit from global management learning?
Project GLOBE’s research on leadership practices across cultures
Facilitators of leadership success
Acting trustworthy, just, honest
Showing foresight, planning
Being positive, dynamic, motivating
Inspiring confidence
Being informed and communicative
Being a coordinator and team builder
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31. Study Question 4: How can we benefit from global management learning?
Project GLOBE’s research on leadership practices across cultures
Inhibitors of leadership success
Being a loner
Acting uncooperative
Being irritable
Acting autocratic
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32. Figure 3.4 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 2e - Chapter 3

33. Study Question 4: How can we benefit from global management learning?
Global management attitudes and 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.
Management 2e - Chapter 3

34. COPYRIGHT
Copyright © 2011 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. 34