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Chap04
1.
Chapter 4 MANAGING IN A
GLOBAL ENVIRONMENT © Prentice Hall, 2002 4-1
2.
Learning Objectives You should
learn to: – Explain the importance of viewing management from a global perspective – Identify the three different attitudes towards global business – Describe the different regional trading alliances – Explain why so many countries have become part of regional trading alliances – Contrast multinational, transnational, and borderless organizations © Prentice Hall, 2002 4-2
3.
Learning Objectives (cont.) You
should learn to: – Describe the typical stages by which organizations go global – Explain the four dimensions of country culture – Describe U.S. culture according to the four dimensions of country culture – Identify the adjustment challenges faced by a manager on global assignment © Prentice Hall, 2002 4-3
4.
Who Owns What? Global
Environment – national borders have become increasingly irrelevant – has potential for dramatic expansion of organizations – presents numerous challenges for managers © Prentice Hall, 2002 4-4
5.
Revenues From Non-U.S.
Operations For Selected Companies Company Manpower Exxon Mobil Colgate-Palmolive Texas Instruments Avon McDonald’s Coca-Cola Gillette © Prentice Hall, 2002 Non-U.S. Revenues as Percent of Total 77.0% 71.8 71.6 67.8 65.8 61.6 61.2 60.1 4-5
6.
What’s Your Global
Perspective? Parochialism – nation views the world solely through its own eyes and perspectives – people do not recognize that other people have different ways of living and working – significant obstacle for global managers Ethnocentric Attitude – parochialistic belief that the best work approaches and practices are those of the home country – lack trust in foreign employees with key decisions or technology © Prentice Hall, 2002 4-6
7.
What’s Your Global
Perspective? (cont.) Polycentric Attitude – belief that host-country managers know the best work approaches and practices – let foreign employees determine work practices Geocentric Attitude – focuses on using the best approaches and people from around the globe – look for the best approaches and people regardless of the country of origin © Prentice Hall, 2002 4-7
8.
Key Information about
Three Global Attitudes © Prentice Hall, 2002 4-8
9.
Understanding The Global
Environment Regional Trading Alliances – global competition is influenced by regional trading and cooperation agreements – The European Union - created by Maastrict Treaty in 1992 • a unified economic and trade entity • a single market without barriers to travel, employment, investment, and trade • Economic and Monetary Union (EMU) – Euro - common currency • assertion of economic power against U.S. and Japan • created one of the world’s richest markets © Prentice Hall, 2002 4-9
10.
European Union Countries ©
Prentice Hall, 2002 4-10
11.
Understanding The Global
Environment (cont.) Regional Trading Alliances (cont.) – North American Free Trade Agreement (NAFTA) • links economies of U.S., Mexico, and Canada • since 1994, eliminated barriers to free trade such as tariffs, import licensing requirements, customs user fees – other Latin American free-trade blocs • Free Trade Area of the Americas (FTAA) • Southern Cone Common Market (Mercosur) © Prentice Hall, 2002 4-11
12.
Mercousur Members © Prentice
Hall, 2002 4-12
13.
Understanding The Global
Environment (cont.) Regional Trading Alliances (cont.) – Association of Southeast Asian Nations (ASEAN) • alliance of 10 Southeast Asian nations • created in one of the fastest growing economic regions in the world • could rival NAFTA and EU © Prentice Hall, 2002 4-13
14.
ASEAN Members © Prentice
Hall, 2002 4-14
15.
Understanding The Global
Environment (cont.) Different Types of Global Organizations – multinational corporation (MNC) • maintain significant operations in multiple countries but are managed from a base in the home country • exemplifies the ethnocentric attitude – transnational corporation (TNC) • maintains significant operations in more than one country but decentralizes management to the local country • nationals hired to run operations in each country • marketing strategies tailored for each country • exemplifies the polycentric attitude © Prentice Hall, 2002 4-15
16.
Understanding The Global
Environment (cont.) Different Types of Global Organizations (cont.) – borderless organization • eliminates structural divisions that impose artificial geographical barriers • an attempt to increase efficiency and effectiveness in a competitive global marketplace • exemplifies the geocentric attitude © Prentice Hall, 2002 4-16
17.
How Organizations Go
Global Three Stages – each stage requires more investment globally and entails more risk Stage I – nominal steps toward being a global business • exporting - making products and selling them overseas • importing - selling products at home that are made overseas – most organizations start doing business globally this way – involves minimal investment and minimal risk © Prentice Hall, 2002 4-17
18.
How Organizations Go
Global (cont.) Stage II – no physical presence of company employees outside the company’s home country – to handle sales, company may: • send domestic employees on regular overseas business trips • hire foreign agents or brokers – to handle manufacturing may contract with a foreign firm to produce the organization’s products © Prentice Hall, 2002 4-18
19.
How Organizations Go
Global (cont.) Stage III – most serious commitment to pursue global markets – licensing and franchising • both involve an organization giving another organization the right to use its brand name, technology, or product specifications • licensing primarily used in manufacturing • franchising primarily used in service operations © Prentice Hall, 2002 4-19
20.
How Organizations Go
Global (cont.) Stage III (cont.) – strategic alliances • partnerships between an organization and a foreign company • both organizations share resources and knowledge • both organizations share risks and rewards • joint venture - partners agree to form a separate, independent organization for some business purpose © Prentice Hall, 2002 4-20
21.
How Organizations Go
Global (cont.) Stage III (cont.) – foreign subsidiary • involves direct investment in a foreign country – establish a separate and independent production facility or office • entails the greatest commitment of resources • poses the greatest amount of risk © Prentice Hall, 2002 4-21
22.
How Organizations Go
Global Stage I Stage II Stage III Passive Response Initial Overt Entry Established International Operations Foreign Subsidiary Joint Ventures Exporting to foreign countries Importing from foreign countries © Prentice Hall, 2002 Hiring foreign representation or contracting with foreign manufacturers Strategic Alliances Licensing/ Franchising 4-22
23.
Managing In A
Global Environment The Legal-Political Environment – U.S. has stable legal and political systems – managers in foreign countries face greater uncertainty • some countries have history of unstable governments • must stay informed of laws in foreign countries • political interference is a fact of life in some countries The Economic Environment – global manager must be attentive to: • strength of home currency versus foreign currency • differences in inflation rates around the world • tax rules differ from country to country © Prentice Hall, 2002 4-23
24.
Managing In A
Global Environment (cont.) The Cultural Environment – national culture • the values and attitudes shared by individuals from a specific country • shapes behavior and beliefs • has greater effect on employees than organizational culture • getting information about a country’s cultural differences is difficult © Prentice Hall, 2002 4-24
25.
Managing In A
Global Environment (cont.) The Cultural Environment (cont.) – Geert Hofstede - four dimensions of national culture • individualism versus collectivism – individualism - loosely knit social framework » people are supposed to look after their own interests and those of their immediate family » wealthier countries tend to be individualistic – collectivism - tightly knit social framework » people expect others in groups in which they are a part to look after them » owe absolute loyalty to the group » poorer countries tend to be collectivistic © Prentice Hall, 2002 4-25
26.
Managing In A
Global Environment (cont.) The Cultural Environment (cont.) – Geert Hofstede (cont.) • power distance - degree of acceptance of unequal distributions of power in institutions and organizations – large power distance society accepts wide differences in power – low power distance society plays down inequalities • uncertainty avoidance - degree to which people tolerate risk and unconventional behavior – low - tolerate risks and opinion differences – high - political and social mechanisms created to provide security and reduce risk © Prentice Hall, 2002 4-26
27.
Managing In A
Global Environment (cont.) The Cultural Environment (cont.) – Geert Hofstede (cont.) • quantity versus quality of life – quantity of life - culture values assertiveness and the acquisition of money and material goods – quality of life - value relationships » show sensitivity and concern for the welfare of others © Prentice Hall, 2002 4-27
28.
Examples of Hofstede’s
Cultural Dimensions © Prentice Hall, 2002 4-28
29.
Is A Global
Assignment For You? Criteria Used When Making Global Assignment – technical and human factors are considered – criteria used influenced by the company’s experience and commitment to global operations – include technical skills, language fluency, flexibility, and family adaptability © Prentice Hall, 2002 4-29
30.
Is A Global
Assignment For You? Factors That Determine Adjustment to Global Assignment – preassignment adjustment - depends on: • accurate expectations about the global job and the country of assignment • predeparture training and previous experience – in-country adjustment - depends on: • individual factors • organizational factors – organizational culture – organizational socialization © Prentice Hall, 2002 4-30
31.
Factors that Affect
Global Adjustment © Prentice Hall, 2002 4-31
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