Global Management Exam Review
Unit 1: Introducing Management
1. Global management is the study of how companies become global and how they interact with
other companies across the world. It is doing business abroad. Globalization is the worldwide
interdependence of resource flows, product markets, and business competition. Global
management is managing operations in more than one country.
2. In the global economy, resources, markets, and competition are worldwide in scope.
5. A learning organization continuously changes and improves, using the lessons of experience.
Learning organizations is a branch off of knowledge management which is the process of using
intellectual capital for competitive advantage. Organizations can learn from many different
sources, some of which include past experiences, other companies, contractors, suppliers etc.
6. The critical survival skills for the new workplace are:
Lecture 2: Information and Decision Making
1. The classical model talks about an optimizing decision while the behavioural model talks
about a satisfying decision. The classical model describes decision making with complete
information (optimizing decision), which allows the manager to choose the best possible
decision. The behavioural decision model describes decision-making with limited information
and bounded rationality. It assumes that people will only act in terms of what they perceive.
2. The five step decision making process is:
1. Identify and Define the Problem
2. Generate and Evaluate Alternative Courses of Action
3. Define on a Preferred Course of Action
4. Implement the Decision
5. Evaluate Results
3. Problem-Solving: involves identifying and taking action to resolve problems
Decision: is a choice among possible alternative courses of action
Programmed Decision: applies a solution from past experience to a routine problem
Nonprogrammed Decision: applies a specific solution crafted for a unique problem
Structured Problems: are straightforward and clear with respect to information needs
Unstructured Problems: have ambiguities and information deficiencies
Intuitive Thinking: approaches the problem in a flexible and spontaneous fashion
Systemic Thinking: approaches the problem in a rational and analytical fashion
4. Certain Environments: offers complete information on possible action alternatives and their
consequences. Ideal when factual information is available. For the decision maker, all they have
to do is study the alternatives and choose the best one. Risk Environments: lacks complete information but offers "probabilities" of the likely outcomes
for possible action alternatives. Require the use of probabilities to estimate the likelihood of
certain things to happen. See GM example.
Uncertain Environment: lacks so much information that it is difficult to assign probabilities to the
likely outcomes of alternatives. Forces managers to be creative in solving problems. Ex, banks
5. Mental Heuristics: strategies which simplify decision-making
Availability: bases a decision on recent events or information
Respresentiveness: bases a decision on similarity to other decisions
Anchoring and Adjustment Heuristic: bases a decision on incremental adjustments from a prior
Framing Error: trying to solve a problem in the context in which it is perceived
Confirmation Error: occurs when focusing only on information that confirms a decision already
Escalating Commitment: the continuation of a course of action even though it is not working
6. Problem Seekers: people who seek problem and conflict in order to get their way
Avoiders: People who try to avoid problems
Solvers: People who try to help solve problems
Lecture 3: Global Dimensions of Management
1. The reason for firms going international is so that they can help increase sales profits
primarily. By doing this, they also increase their market, employees, name, reputation etc.
To access to new markets for customers
• To establish connections with foreign suppliers of raw materials
o (Might get the same raw materials at a lower cost, as opposed to getting
them overseas expensively)
• To tap into cheaper funding sources
• To take advantage of relatively abundant low-wage unskilled labor
2. Direct exporting – selling directly to foreign customers.
o Advantages: establish & maintain relationship with foreign customers;
control pricing decisions
o Disadvantages: may demand managerial time and significant financial
• Indirect exporting – selling to foreign customers through an agent or distributor
o Advantages: requires limited financial commitment and knowledge of
foreign market. o Disadvantages: no contact with foreign customers; smaller profit margin;
lose opportunity to learn about foreign markets.
3. Importing involves the selling in domestic markets of products acquired abroad
5. Brownfield (cross boarder acquisition of an existing business in a different country) and
Greenfield (establish a new plan, company etc. from scratch)
6. A joint venture operates in a foreign country through co-ownership by foreign and local
partners. Review side box in page 78
7. Licensing agreement: an international marketer (i.e. licensor) may permit another company
to use intellectual capital (IP) such as trademarks in exchange for compensation in royalty fees.
Royalty fees (i.e. 10% of sales