chapter 3 b0h4m. 3.1 management and globalization global economy ◦ resource supplies, product...
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CHAPTER 3B0H4M
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3.1 Management and GlobalizationGlobal 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
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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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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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Types of market entry strategies:
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
Franchisinga fee is paid for rights to use another firm’s name and
operating methods
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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 subsidiarieso local operation completely owned by a foreign
firmGreenfield investment - builds an entirely new
operation in a foreign country
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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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Regional Economic Alliances◦NAFTA – North American Free
Trade Agreement◦EU – European Union◦SADC – Southern Africa
Development Community
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3.2 Global BusinessesTypes 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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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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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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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.
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3.3 Culture and Global DIversityCulture
◦ 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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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.
◦ 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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Values and national cultures:
◦Power distance
◦Uncertainty avoidance
◦Individualism-collectivism
◦Masculinity-femininity
◦Time orientation
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3.4 Global Management LearningComparative management
◦How management perspectives and
practices systematically differs among
countries and cultures.
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.
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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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◦Project GLOBE’s nine dimensions continued Institutional collectivism In-group collectivism Assertiveness Performance orientation Humane orientation
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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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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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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.