Download Managing in Turbulent Times

Managing Globally
chapter4
Learning Outcomes
• Describe the emerging borderless world and some issues of particular
concern for today’s managers.
• Describe market entry strategies that business use to develop foreign
markets.
• Define international management and explain how it differs from the
management of domestic business operations.
• Indicate how dissimilarities in the economic, sociocultural, and legalpolitical environments throughout the world can affect business
operations.
• Describe how regional trading alliances are reshaping the international
business environment.
• Describe the characteristics of a multinational corporation.
• Explain cultural intelligence and why it is necessary for managers working
in foreign countries.
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A Borderless World
• Isolation from international forces is no
longer possible.
– Trade barriers are falling
– Communication is faster and cheaper
– Consumer tastes are converging
• Virtual connections enable close, rapid
coordination among people working in
different parts of the world.
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International Trade
Alliances
• General Agreement on Tariffs and Trade (GATT)
– Signed in 1947 by 23 nations
– Nondiscrimination, clear procedures, negotiations and disputes
regarding trade
• World Trade Organization (WTO)
– Permanent global organization from GATT
– As of July 2007: 151 Countries
• European Union
– Begun in 1957 to improve economic and social conditions in
European Economic Community
– Evolved into the 27-nation European Union
– Goal is to develop single market system
• North America Free Trade Agreement (NAFTA)
– United States, Canada, and Mexico
– Trading bloc to spur growth and investment
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The Nations of the
European Union
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Ranking of Six Countries
on the Global Index
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Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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BRIC.
• Opportunities in China are booming
• Companies are engaging in all strategies
– The most common practice is outsourcing
• Multinationals are manufacturing a large variety
of products in China
• China is attractive for low-cost manufacturing
• India is attractive in software design, services
and engineering
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Multinational Corporations
• The size and volume of international business is
LARGE
– Companies have revenue = GDP of small country
– Move assets from country to country
– 25% or more of its profit comes from outside parent
country
• MNC is managed as an integrated whole
• Controlled by one management authority
• MNC managers must have a global
perspective
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Serving the Bottom
of the Pyramid (BOP)
• An approach for multinationals to do
good
• Corporations can alleviate problems and
make large profits by selling to the
world’s poor
• There are more than 4 billion people at
the lowest level of the economic pyramid
• Many companies are adopting BOP
strategies
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Four Stages of Globalization
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Strategies for Entering
International Markets
• Exporting – transfers products for sale in
foreign countries
• Global Outsourcing – transferring the labor of
specific tasks to low cost countries
• Licensing – allowing an operation in another
country to produce and sale company products
• Franchising – providing a foreign organization
with package of materials and services
• Direct Investing - a production facility in
another country
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Getting Started
Internationally
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Key Factors in The
International Environment
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The Economic Environment
• Economic development differs around
the world
– Countries can be categorized as developed or
less-developed
• Companies must be able to access the
resources needed to produce their
products
• Volatility in exchange rates can impact a
businesses bottom-line
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The Legal-Political
Environment
 Government supervision
 Political instability
 Laws and regulations
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The Sociocultural
Environment
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•The values and behaviors that govern
business at home country do not always
translate to other countries.
•
•
•
Social Values
Communication Differences
Other Cultural Characteristics
»
»
»
»
»
Language
Religion
Social organization
Education
Attitudes
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Country Culture
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6. People want praise from their
boss.
7. People want to balance work
and personal life.
8. People want to be seen as a
better performer than others.
9. People respect their boss and
will do what the boss asks
them to do.
10. People are concerned about
the success of their company.
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•
•
•
•
•
Hofstede’s Cultural Value
Dimensions
Individualism - Collectivism
Power Distance
Uncertainty Avoidance
Masculinity - Femininity
Long-Term Orientation
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Power Distance
• Deals with the fact that all individuals in societies
are not equal and expresses the attitude of the
culture towards these inequalities.
• The extent to which less powerful members of
institutions and organizations accept that power
is distributed unequally.
• Large: Russia, Romania, Slovakia, Mexico,
Philippines, Malaysia
• Small: U.S., Israel, New Zealand, Netherlands,
Norway,
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Power Distance and
Formality
• First names?
• Importance of titles?
• Importance of following protocol?
• Appearance indicate status?
• Approachable vs. unapproachable leaders?
• Hierarchical vs. egalitarian structures?
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Individualism vs.
Collectivism
• Whether people´s self-image is defined in terms
of “I” or “We”.
• Individualist societies look after themselves and
their direct family only.
• In collectivist societies people belong to ‘ingroups’ that take care of them in exchange for
loyalty.
• High individualism: U.S., Netherlands, Australia,
France
• High collectivism: China, Brazil, Venezuela, Chile
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Collectivism + Power
Distance=Paternelism
• Paternalistic leader works by acting as a father
figure by taking care of their subordinates as a
parent would.
• Takes a personal interest in workers' off-the-job
lives and attempt to promote workers' personal
welfare.
• In return, leader receives complete trust and
loyalty of his people.
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Masculinity vs.
Femininity
• A High Masculinity ranking indicates the country
experiences a high degree of gender differentiation. In
these cultures, males dominate a significant portion of
the society and power structure.
• A Low Masculinity ranking indicates the country has a
low level of differentiation and discrimination between
genders. In these cultures, females are treated equally to
males in all aspects of the society.
• High: Japan, Germany, Hungary, Italy, U.S.
• Low: Netherlands, Norway, Sweden
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Masculinity vs.
Femininity Cont’d.
• Masculine societies will be driven by
competition, achievement and success, with
success being defined by the winner / best in
field.
• Dominant values in a feminine society are caring
for others and quality of life.
• The fundamental issue is what motivates people:
wanting to be the best (masculine) or liking what
you do (feminine).
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Uncertainty Avoidance
• Concerned with the way a society deals
with the fact that the future can never be
known: should we try to control the future
or just let it happen?
• The extent to which people feel threatened
by ambiguous/unknown situations and
create beliefs and institutions to limit
anxiety.
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Discuss in Groups
• Cultural Divergence
– Despite economic forces, individuals will retain
diverse, culturally-determined values.
• Cultural Convergence
– As the developing nations become integrated in the
global economy, values will shift towards
industrialized Western nations.
• Cultural Crossvergence
– Unique value set different from the value set
supported either by national culture or economic
forces.
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Communication Differences
• Some cultures pay more attention to the social
context of communication
– Social Setting
– Nonverbal Behavior
– Social Status
• High-context cultures are sensitive to social
exchanges
• Low-context cultures use communication to
exchange facts and information
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High-Context and LowContext Cultures
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