week 4: recap

Week 4: Recap• Organization’s Environments– Types• External

– General and Task• Internal

• External environment & uncertainty• Corporate culture– Types • Adaptable, achievement, involvement & consistency

Managing in a Global Environment

Week 5

A Borderless World

Organizations and managers are not isolated from international forces:– Trade barriers have fallen– Communication is faster, cheaper– Consumer tastes converge

The difficulties and risks of a borderless world are matched by benefits and opportunities

Ranking of Countries on the Globalization Index

2012 KOF Index of Globalization - 208 Countries • Global Index (convergence)

– Rank 94. Score 54.94 • Economic globalization

– Rank 101. Score 53.02• Social globalization

– Rank 134. Score 35.40 134. • Political globalization

– Rank 49. Score 85.41

• Source 2012 KOF Index of Globalization• Dreher, Axel; Noel Gaston and Pim Martens, 2008, Measuring Globalization - Gauging its Consequence ,

New York: Springer.

Four Stages of Globalization

Getting Started Internationally

• Global Outsourcing • Exporting• May choose licensing or direct investing

Strategies for Entering International Markets

The International Business Environment

• Planning, organizing, leading and controlling in multiple countries can be challenging– It took McDonalds a year to figure that Hindus in India do not

eat beef

– In Africa, the baby food includes pictures to aid illiterate consumers

– What about Ghana?

• Managers must be aware to operate in the highly competitive global environment

Key Factors in International Environment

The Economic Environment

Economic DevelopmentCountries are either developed or developing

Resource and Product MarketsCompanies must evaluate the market demand for

their productsEconomic Interdependence

It has become more obvious that countries are connected by events across the globe

World Economic Forum Global Competitiveness

Bearing the Economic Crisis (Misery Index)

The Legal-Political Environment

Political risk is defined as the risk of lost assets, earning power, or managerial control.

Managers must be concerned with the political instability of global markets.

The Sociocultural Environment

• Social Values

• Communication Differences

• Other Cultural Characteristics

– Language, religion, social organization, education and attitudes

The Cultural Typologies

Hofstede’s dimensions4 dimensions

GLOBE Project 7 dimensions

Hofstede’s Value Dimensions

1. Power Distance

2. Uncertainty Avoidance

3. Individualism and Collectivism

4. Masculinity and Femininity

Countries and Values

GLOBE Project Value Dimensions Uncertainty avoidance Gender differentiation Power distance Social collectivism Individual collectivism Assertiveness Future orientation Performance orientation Humane orientation

Assertiveness

• HIGH ASSERTIVENESS societies– Value competition, success, and progress. – Communicate directly and unambiguously. – Try to have control over the environment. – Expect subordinates to take initiative. – Build trust on basis of calculation.

• LOW ASSERTIVENESS societies – Value cooperation and warm relationships. – Communicate indirectly; try to "save face." – Try to be in harmony with the environment. – Expect subordinates to be loyal. – Build trust on basis of predictability.

Future orientation

• HIGH FUTURE ORIENTATION societies– Propensity to save now for the future. – Emphasize working for long-term success. – Organizations tend to be flexible and adaptive. – View material success and spiritual fulfillment as an integrated

whole.• LOW FUTURE ORIENTATION societies

– Propensity to spend now, rather than save. – Prefer gratification as soon as possible. – Organizations tend to be inflexible and maladaptive. – View material success and spiritual fulfillment as separate, requiring

trade-offs

PERFORMANCE ORIENTATION• HIGH PERFORMANCE

ORIENTATION societies – Value competitiveness and

materialism. – View formal feedback as

necessary for performance improvement.

– Value what one does more than who one is.

– Expect direct, explicit communication.

• LOW PERFORMANCE ORIENTATION societies– Value societal and family

relationships. Value harmony with the environment.

– View formal feedback as judgmental and discomfiting.

– Value who one is more than what one does.

– Expect indirect, subtle communication.

HUMANE ORIENTATION societies• HIGH HUMANE ORIENTATION societies

– The interests of others are important. People are motivated primarily by a need for belonging and affiliation.

– Members of society are responsible for promoting the well-being of others. – Child labor is limited by public sanctions. – People are urged to be sensitive to all forms of racial discrimination.

• LOW HUMANE ORIENTATION societies – One's own self-interest is important. People are motivated primarily by a

need for power and material possessions. – The state provides social and economic support for individuals' well-being. – Child labor is an issue of low importance. – People are not sensitive to all forms of racial discrimination.

Country Ranking on Selected GLOBE Value Dimensions

High-Context and Low-Context Cultures

Other Cultural Characteristics

Language

Religion

Social Organization

Education

Attitudes

Ethnocentrism – a tendency to regard your own culture as

superior

Developing Cultural Intelligence

• Cultural intelligence – ability to use reasoning and observation skills– Culturally flexible– Adapt to new situations

• Cognitive, emotional and physical intelligence• Managers must study the language and learn

International Trade Alliances• General Agreement on Tariffs and Trade (GATT)– 23 nations in 1947, a set of rules for fair trade

• World Trade Organization (WTO)– Maturation of GATT into permanent global institute

• European Union– 1957 Alliance to improve economic and social conditions

among members; evolved to 27-nation European Union• North American Free Trade Agreement (NAFTA)– Merged the United States, Canada and Mexico into

trading bloc

African Trade Alliances

• Economic Community of West African States (ECOWAS)[9]

• Economic Community of Central African States (ECCAS)

• African Free Trade Zone (AFTZ• Common Market for Eastern and Southern Africa

(COMESA)• Southern African Development Community

(SADC)

European Union

China and Southeast Asia Nations

Serving the Bottom of the Pyramid (BOP)

• Corporations can alleviate poverty and social ills by selling to the world’s poorest people

• More than 4 billion people who are the lowest on the economic “pyramid”

• These people have not traditionally been served

• Many companies are adopting BOP strategies

The Globalization Backlash• 53% of American believe free trade has hurt the

United States

• The United States’ primary concern is the loss of jobs

• Business leaders insist that economic benefits flow back to the U.S. economy– Lower prices– Expanded markets– Increased profits and funds for innovation

An Asian View of Cultural Difference

Some questions to consider• Why do you think many people are so frightened by

globalization? Based on what is occurring in the world today, do you expect the globalization backlash to grow stronger or weaker over the next decade?

• How might the social value of low versus high power distance influence how you would lead and motivate employees? What about the value of low versus high performance orientation?

• THANK YOU, Any Questions?

week 4: recap

division of cengage

globalization index

business arrangement

business transaction

trade mark license

license arrangement

economic globalization

political globalization

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