Download - Ebbpa3 b ch 5
Chapter 5
International Management
Planning Ahead — Chapter 5 Study Questions
1. What are the management challenges of globalization?
2. What are global businesses and what do they do?3. What is culture and how does it impact global
management?4. How can we benefit from global management
learning?
Chapter 5 Learning Dashboard
1. Management and Globalization1. Global management2. Why companies go global3. How companies go global4. Global business environments
2. Global Businesses1. Types of global businesses2. Pros and cons of global businesses3. Ethics challenges for global businesses4. Global business environments
Chapter 5 Learning Dashboard
3. Culture and Global Diversity1. Cultural intelligence2. Silent languages of culture3. Tight and loose cultures4. Values and national cultures
4. Global Management Learning1. Are management theories universal?2. Global learning goals
Management and Globalization
• Key concepts in the challenges of globalization:
– Global economy: global economy can be seen as the economy of global society and national economies
– Globalization: process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture
– Global management: management of a global company with different views, products and cultures.
– World 3.0: global prosperity and how to achieve it
– Global manager: has the capability to manage amid the complexity of business that is conducted across divergent cultures and time zones
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Management and Globalization
• International businesses– Conducting for-profit transactions of goods and
services across national boundaries
• Reasons why businesses go global:(PSLRCC)
• Market entry strategies – involve the sale of goods or services to foreign
markets but do not require expensive investments
Management and Globalization
• Types of market entry strategies: (GLIFE)– Global sourcing– Exporting– Importing– Licensing agreement– Franchising
• Types of direct investment strategies: (JSF)– Joint venture– Strategic alliance – Foreign subsidiary
Common forms of global business—from market entry to direct investment strategies
Management and Globalization
Management and Globalization?
Insourcing refers to local job creation that results from foreign direct investment
Management and Globalization
Types of insourcing:
Insourcing refers to local job creation that results from foreign direct investment
Management and Globalization
Management and Globalization
Management and Globalization
Legal and political systems– Differing laws and practices regarding• Business ownership• Foreign currency exchange• Protection of intellectual property rights
– Counterfeit merchandise
– Political risk• Potential loss in value of a foreign investment due to
instability and political changes in the host country
– Political risk analysis• Forecast political disruptions that threaten the value of a
foreign investment
Management and Globalization
• Trade Agreements and Trade Barriers–World Trade Organization • Most favored nation status• Tariffs• Nontariff barriers• Protectionism
Management and Globalization
Regional Economic Alliances– NAFTA – North American Free Trade Agreement– EU – European Union– APEC – Asia Pacific Economic Cooperation– ASEAN – Association of Southeast Asian Nations– SADC – Southern Africa Development Community
Global Businesses
• Types of global businesses:– Global Corporation• MNE (multinational enterprise) or MNC (multinational
corporation) with extensive business operations in more than one foreign country
– Transnational corporation• A global corporation that operates worldwide on a
borderless basis
Global Businesses
• Mutual benefits for host country and global corporation or MNC:
– Shared growth opportunities– Shared income opportunities– Shared learning opportunities– Shared development opportunities
Global Businesses
• Host country complaints about MNCs:(LIEDHD)
– Excessive profits– Domination of local economy– Interference with local government– Hiring the best local talent– Limited technology transfer– Disrespect for local customs
Global Businesses
• MNC complaints about host countries:
Profit limitations– Overpriced resources– Exploitative rules– Foreign exchange restrictions– Failure to uphold contracts
Global Businesses
Global Businesses
• Ethical issues for Global Businesses:– Corruption – illegal practices that further one’s
business interests– Foreign Corrupt Practices Act – makes it illegal for
U.S. firms and their representatives to engage in corrupt practices overseas• Bribes to foreign officials• Excessive commissions• Non monetary gifts
Global Businesses
• Child labor and Sweatshops:– Child labor – full time employment of children for
work otherwise done by adults– Sweatshops – employ workers at very low wages for
long hours in poor working conditions
Culture and Global Diversity
Culture and Global Diversity
Stages in adjusting to a new culture:
Culture and Global Diversity
Silent languages ofculture
Culture and Global Diversity
Context– Low context cultures - emphasize communication
via spoken or written words• United States• Canada• Germany
Culture and Global Diversity
Context– High context cultures – rely on nonverbal and
situational cues as well as on spoken or written words• Thailand• Malaysia
Space– Proxemics – study of how people use space to
communicate• In the U.S. people value “personal space”• Many Latin and Asian cultures expect much less personal
space
Culture and Global Diversity
Time– Monochronic cultures – people tend to do one
thing at a time• United States, Canada, Germany
– Polychronic cultures – time is used to accomplish many different things at once• Egypt, Saudi Arabia, Mexico
Culture and Global Diversity
Tight and Loose Cultures– Cultural tightness-looseness• Strength of norms that govern social behavior• Tolerance for any deviance from norms• Tight = Japan, Korea• Loose = Brazil, Hungary