ch05.ppt
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PowerPoint Presentation to Accompany
Management, 10/eJohn R. Schermerhorn, Jr.
Prepared by: Jim LoPrestiUniversity of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Chapter 5: Global Dimensions of Management
Management 10/e - Chapter 5 2
Planning Ahead — Chapter 5 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 10/e - Chapter 5 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 10/e - Chapter 5 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 10/e - Chapter 5 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
Management 10/e - Chapter 5 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 Labor
Management 10/e - Chapter 5 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
Management 10/e - Chapter 5 8
Figure 5.1 Common forms of global business—from market entry to direct investment strategies.
Management 10/e - Chapter 5 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 10/e - Chapter 5 10
Study Question 1: What are the international business challenges of globalization?
Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations.
Types of direct investment strategies: Joint ventures
operates in a foreign country through co-ownership by foreign and local partners
Strategic alliances a partnership in which foreign and domestic firms
share resources and knowledge for mutual gains.
Management 10/e - Chapter 5 11
Study Question 1: What are the international business challenges of globalization?
Types of direct investment strategies: Foreign subsidiaries
o local operation completely owned by a foreign firm
Greenfield investment - builds an entirely new operation in a foreign country
Foreign direct investment. building, buying or buying part ownership of a
business in another country. Insourcing
job creation through foreign direct investment
Management 10/e - Chapter 5 12
Study Question 1: What are the international business 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.
Management 10/e - Chapter 5 13
Study Question 1: What are the international business 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.
Management 10/e - Chapter 5 14
Study Question 1: What are the international business challenges of globalization?
Regional Economic Alliances NAFTA – North American Free Trade
Agreement CAFTA – Central American Free Trade
Agreement EU – European Union APEC – Asia Pacific Economic Cooperation SADC – Southern Africa Development
Community
Management 10/e - Chapter 5 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
Management 10/e - Chapter 5 16
Study Question 2: What are global businesses and what do they do?
Mutual benefits for host country and global corporation or MNC:
Shared growth opportunities
Shared income opportunities
Shared learning opportunities
Shared development opportunities
Management 10/e - Chapter 5 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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Figure 5.2 What should go right and what can go wrong in MNC-host country relationships.
Management 10/e - Chapter 5 19
Study Question 2: What are global businesses and what do they do?
MNC complaints about host countries:
Profit limitations
Overpriced resources
Exploitative rules
Foreign exchange restrictions
Failure to uphold contracts
Management 10/e - Chapter 5 20
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 labor — full-time employment of children for work
otherwise done by adults.
Sustainable development — meeting current needs
without compromising future needs.
Management 10/e - Chapter 5 21
Study Question 3: What is culture and how does it impact global management?
Culture The shared set of beliefs, values, and patterns
of behavior common to a group of people. Culture shock
Confusion and discomfort a person experiences in an unfamiliar culture.
Cultural intelligence The ability to adapt and adjust to new cultures
Ethnocentrism Tendency to consider one’s own culture as
superior to others.
Management 10/e - Chapter 5 22
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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Study Question 3: What is culture and how does it impact global management?
Popular dimensions of culture: Language
Low-context cultures and high-context cultures
Interpersonal space proxemics
Time orientation Monochronic cultures and polychronic cultures
Religion Contracts and agreements
Management 10/e - Chapter 5 24
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
Management 10/e - Chapter 5 25
Figure 5.3 How countries compare on Hofstede’s dimension of national culture.
Management 10/e - Chapter 5 26
Study Question 3: What is culture and how does it relate to global diversity?
Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) Researches the leadership,
organizational practices, and diversity among world cultures.
Power distance Uncertainty avoidance Gender egalitarianism Future orientation
Management 10/e - Chapter 5 27
Study Question 3: What is culture and how does it relate to global diversity?
Project GLOBE’s nine dimensions continued
Institutional collectivism In-group collectivism Assertiveness Performance orientation Humane orientation
Management 10/e - Chapter 5 28
Study Question 3: What is culture and how does it relate to global diversity?
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
Management 10/e - Chapter 5 29
Study Question 3: What is culture and how does it relate to global diversity?
Project GLOBE’s research on leadership practices across cultures
Inhibitors of leadership success Being a loner Acting uncooperative Being irritable Acting autocratic
Management 10/e - Chapter 5 30
Study Question 4: How can we benefit from global management learning?
Comparative management How management systematically
differs among countries and/or cultures.
Global managers Need to successfully apply
management functions across
international boundaries.
Management 10/e - Chapter 5 31
Figure 5.4 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 10/e - Chapter 5 32
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 10/e - Chapter 5 33
Study Question 4: How can we benefit from global management learning?
Global management 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.
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