Textbook Notes (280,000)
CA (170,000)
Dal (400)
MGMT (10)
Chapter 3

MGMT 1000 Chapter Notes - Chapter 3: World Trade Organization, Social Capital, Global Sourcing


Department
Management
Course Code
MGMT 1000
Professor
David Stuewe
Chapter
3

This preview shows pages 1-3. to view the full 9 pages of the document.
Global&marketplace&presents&both&opportunities& and&challenges&for&
managers
-
Managers&must&deal&with&cultural,&economic,&and&political&differences
-
What’s'Your'Global'Perspective?
Successful&global&management&requires&enhanced&sensitivity&to&
differences&in&national&custom&and& practices
-
Parochialism: viewing&the&world&solely&through&your&own&perspective,&
leading&to&an&inability&to&recognize&differences&among&people.
Significant&obstacle&for&global&businesses
-
Difficult&to&compete&with&other&managers&and&organizations&around&the&world
-
BAD&approach
-
ETHNOCENTRIC4ATTITUDE:4 the&belief&that&the&best&work&approaches&
and&practices&are&those&of&the&home&country.
(the%country%in%which%headquarters% is%located)
a.
1.
POLYCENTRIC4ATTITUDE:4the&view&that&the& managers&in&the&host&
country&know&the&best&approaches&and&practices&for&running&their&
businesses.
a.
2.
GEOCENTRIC4ATTITUDE:4a&world-oriented& view&that&focuses& on&using&
the&best&approaches&and&people&from&around&the& globe.
3.
Orientation
Ethnocentric
(Home4
Country)
Polycentric4
(Host4Country)
Geocentric4
(World)
Advantages Simpler&
structure
Extensive&
knowledge&of&
foreign&market&and&
workplace
Extensive&
understanding&
of&global&issues
More&tightly&
controlled
More&support& from&
host& government
Balance&
between& local&
and&global&
objectives
Committed&local&
managers&with&high&
morale
Best&people&and&
work&
approaches&
used& regardless&
of&origin
Disadvantages More&
ineffective&
management
Duplication&of&work Difficult&to&
achieve
Inflexibility Reduced&efficiency Managers&must&
have&both& local&
and&global&
knowledge
Social&and&
political&
backlash
Difficult&to&maintain&
global&objectives&
be4cause&of&intense&
focus&on&local&
traditions
Understanding'the'Global'Environment
When&trade&is&allowed&to&flow&freely,&countries&benefit&from&economic&
growth&and&productivity&gains&because&they&specialize&in&producing&the&
goods&that&they&are&best&at&and&importing&good&that&are&more&efficiently&
produced& elsewhere
-
Global&trade&is&shaped&by&two&forces:
Regional4Trading4Alliances
The4European4Union4(EU)
Economic&and&political&partnership&of&27&democratic&
European&countries
i.
a.
North4American4Free4Trade4Agreement4(NAFTA)
an&agreement&among&the&Canadian,&American,&and&Mexican&
governments&in&which&barriers&to&free&trade&were&reduced
i.
b.
Association4of4Southeast4Asian4Nations4(ASEAN)
A&trading&alliance&of&10&southeast& Asian&countriesi.
c.
Other4Trade4Alliancesd.
4.
Trade4Mechanisms4ensuring4global4trade4can4happen
World4Trade4Organization4(WTO)
A&global&organization&of&155&countries&that&deals&with&the&
rules&of&trade&among&nations
i.
Goal&is&to&help&businesses& conduct&trade&(import/export)&
among&countries&without&undesired&side&effects.
ii.
a.
International4Monetary4Fund
An&organization&of&188&countries&that&promotes& international&
monetary&cooperation&and&provides&advice,&loans,&and&
technical&assistance.
i.
b.
World4Bank4Group
a&group&of&5&closely&associated&institutions& that&provides&
financial&and&technical&assistance&to&developing&countries
i.
promote& long-term&economic&development& and&poverty&
reduction&by&providing&members&with&technical&and&financial&
support
ii.
c.
Organization4for4Economic4Co-operation4and4Development4
(OECD)
An&international&economic&organization&that&helps&its&30&
member&countries&achieve&sustainable&economic&growth&and&
employment
i.
Also&raise&the&standard&of&living&in&member&countries&while&
maintain&financial&stability&in&order&to&contribute&to&the&
development& of&the&world&economy.
ii.
d.
5.
Doing'Business'Globally
The&different&types&of&international&organizations
Multinational4Corporations4(MNC’s): a&broad&term&that&refers&to&any&
and&all&types&of&international&companies&that&maintain&operations&in&
multiple&countries
Multidomestic4Corporations: an&MNC&that&decentralizes&management&
and&other&decisions&to&the&local&country
Reflects&the&polycentric&attitude
o
Many&consumer&product&companies&organize&their&global&businesses&
using&this&approach&because&they&must&adapt&their&products&and&services&
to&meet&the&needs&of&local&markets
o
Ø
Global4Companies:4an&MNC&that&centralizes&management&and&other&
decisions&in&the&home& country
Reflects&the&ethnocentric&attitude
o
Ø
Transnational4or4Borderless4Organizations:4an&MNC&in&which&artificial&
geographical&barriers&are&eliminated
Reflects&geocentric&attitude
o
An&attempt&by&organizations&to&increase&efficiency&and&effectiveness&in&a&
competitive&global&marketplace
o
Ø
Born4Global: an&international&company&that&chooses&to&go&global&from&
inception
These&companies&commit&resources&upfront&to&doing&business&in&more&
than&one&country&and&are&likely&to&continue&to&play&an&increasingly&
important&role&in&international&business
o
Ø
How'Organizations'Go'International
Managers&who&want&to&get&into&a&global&market&with&minimal&
investment&may&start&with&global4sourcing,4which&is&purchasing&
materials&or&labour&from&around&the&world&wherever&it&is&cheapest.
Goal:&take&advantage&of&lower&costs&in&order&to&be&more&competitive.
Ø
Importing4and4Exporting4-Involve&minimal&investment&and&minimal&risk
An&organization&can&go&global&by&either&importing&or&exporting&
products
Importing:% acquiring%products%made%abroad% and%selling%them%at%home
-
Exporting:%making%products%at%home%and%selling%them%abroad
-
Licensing4and4Franchising4-Involve&more&investment&and&risk&than&
above&because&the&company’s&brand&is&more&at&stake.
Managers&might&also&go&global&through
Licensing:%primarily%used%by%manufacturing organizations% that%make%or%
sell%another%company’s%products
-
Franchising:%primarily%used%by%service organizations%that%want% to%use%
another%company’s%name%and%operating%methods
-
Strategic4Alliances
When&an&organization&has&been&doing&business& internationally&for&a&
while&and&has&gained&experience&in&international&markets,&managers&
may&decide&to&make&a&more&direct&investment.
Strategic%Alliance:%an%approach%to% going%global%that%involves%a%
partnership% between%a%domestic%and%a%foreign%company%in%which%both%
share%resources%and%knowledge%in%developing%new%products%or%building%
production% facilities.
Partners&share&the&risks&and&rewards&of&this&alliance
o
-
Joint%Venture:%an%approach%to%going%global%in%which%the%partners% agree%
to%form%a%separate,%independent%organization% for%some%business%purpose
-
Foreign4Subsidiaries greatest&risk&and&commitment&of&resources
Managers&may&choose&to&directly&invest&in&a&foreign&country&by&setting&
up&a&
Foreign%Subsidiary:% an%approach% to%going%global%that% involves%a%direct%
investment%in%a%foreign%country%by%setting%up%a%separate%and%
independent%production%facility%or%office.
-
Managing'in'a'Global'Environment
The4Legal-Political4Environment
Canadian&managers&are&accustomed&to&stable&legal&and&political&systems
Changes&are&slow
o
Legal&and&political&procedures&are&well&established
o
Elections&held&at&regular&intervals
o
-
Not&the&case&for&all&countries
-
Managers&in&a&global&organization&must&stay&informed&of&the&specific&
laws&in&countries&where&they&do&business
-
Political&instability&can&cause&problems&and&much&greater&uncertainty&for&
managers&in&foreign&countries
-
The4Economic4Environment
Understanding&a&country’s&type&of&economic&system
Free&Market&Economy: an&economic&system&in&which&resources&are&
primarily&owned&and&controlled&by& the&private&sector
o
Planned&Economy:& an&economic&system&in&which&economic&
decisions&are&planned& by&a&central&government
o
-
Managers&need&to&know&as&it&has&the&potential&to&constrain&decisions&
and&actions
Issues&including&currency&exchange&rates,&inflation&rates,&and&
diverse&tax&policies
o
-
An&MNC’s&profits&can&vary&dramatically,&depending&on&the&strength&of&its&
home&currency&and& the&currency&of&the& countries&in&which&it&operates
-
Inflation&means&increasing&price&for&products&and&services
Monitor&inflation&rates&to&anticipate&possible&changes&in&a&
country’s&monetary&policies&and&make&good&business& decisions
o
-
Tax&policies&can&be&another&major&worry
Restrictive&or&lenient&tax&laws
o
Managers&need&accurate&information&to&minimize&their&business’s&
overall&tax&obligations
o
-
The4Cultural4Environment
Working&closely&with&people&from&a&different&culture&helps&you&to&see&
pitfalls&and&opportunities& in&a&very&different&way
-
National&Culture:%%the%values%and%attitudes%shared%by%individuals%from%a%
specific%country%that%shape%their%behaviour% and%beliefs%about%what%is%
important.
-
Which&is&more&important&to&a&manager&national&or&organizational&
culture?
National&>&organizational
o
-
Hard&to&retrieve&information&about&a&country’s&cultural&characteristics
-
Hofstede’s4Framework4for4Assessing4Cultures6.
a&framework&to&better&help&managers&understand&differences&between&
national&cultures
-
Individualism%vs.%CollectivismI.
Power%distanceII.
Uncertainty% avoidanceIII.
Achievement%vs.%nurturingIV.
Long-term%and%short-term% orientationsV.
The4GLOBE4Framework4for4Assessing4Cultures1.
Global&Leadership&and&Organizational&Behaviour&Effectiveness&(GLOBE)
-
An&ongoing&research&program&that&extended&Hofstede’s&work&by&
investigating&cross-cultural&leadership&behaviours&and&giving&managers&
additional&information&to&help&them&identify&and&manage&cultural&
differences
-
Power&distance
Extent& to&which& a&society& accepts& that& power& in&institutions& and& organizations& is&
distributed& unequally
-
i.
Uncertainty&avoidance
Society’s& reliance& on&social&norms&and&procedures& to&alleviate& the&
unpredictability& of&future&events
-
ii.
Assertiveness
Extent& to&which& a&society& encourages& people& to&be&tough,&confrontational,&
assertive,& and&competitive& rather&than&modest& and&tender.
-
iii.
Humane&orientation
the&degree& to&which& a&society& encourages& and&rewards& people& for&being& fair,&
altruistic,& generous,& caring&and&kind& to&others.
-
iv.
Future& Orientation
The&extent& to&which&a&society& encourages& and&rewards&future-oriented&
behaviours&such&as&planning,& investing&in&the&future,&and&delaying& gratification
-
v.
Institutional&collectivism
The&degree& to&which& individuals&are&encouraged& by&societal& institutions& to&be&
integrated& into&groups&within&organizations& and&society.
-
vi.
Gender&differentiation
the&extent& to& which&a&society& maximizes& gender&role&differences& as& measured& by&
how&much&status& and&decision-making& responsibilities& women& have.
-
vii.
In-group&collectivism
The&extent& to&which&members& of&a& society& take& pride&in&membership& in&small&
groups,&such&as&their&family&and&circle& of&close& friends,&and&the&organizations& in&
which&they’re& employed.
-
viii.
Performance&orientation
The&degree& to&which& a&society& encourages& and&rewards&group&members& for&
performance& improvement& and&excellence
-
ix.
Global'Management' in'Todays'World
The4Challenge4of4Openness
Increased&threat&of&terrorism&by&a&truly&global&terror&network
-
Economic&interdependence&of&trading&countries
Domino&effect
o
-
Challenges4of4Managing4a4Global4Workforce
Cross-cultural&partnerships
Canadians&and&Chinese&are&working&side&by&side
o
Differences&in&work&experience,&pay&levels,&and&
communication
o
-
Managing&cultural&differences
Work-family&practices
o
-
To&help&managers&manage&globalization
Cultural&intelligence: cultural&awareness&and&sensitivity&skills
-
Knowledge&of&culture&as&a&concept&
(how%cultures%vary%and%how%they%affect%behaviour)a.
1.
Mindfulness&
(the%ability%to%pay%attention%to%signals%and%reactions%in%different%
cross-cultural%situations)
a.
2.
Behavioural&skills
(using%one’s%knowledge%and%mindfulness%to%choose%appropriate%
behaviours% in%those% situations)
a.
Global&mind-set:&attributes&that&allow&a&leader&to&be&effective&in&
cross-cultural&environments
Intellectual&capital&knowledge%of%international% business%and%
the%capacity%to%understand% how% business%works% on%a%global%
scale
o
Psychological&capital&openness%to%new%ideas%and%
experiences
o
Social&capital&ability%to%form%connections%and%build%trusting%
relationships% with%people%who% are%different%from%you
o
-
3.
Final%notes
Possessing&these&skills&will&allow&you&to&be&an&important&asset&to&a&
global&organization.
-
Incredible&sensitivity&and&understanding&will&lead&to&being&a&
successful&manager&in&today’s&world
-
Ch.3'-Managing'in'a'Global'Environment
Monday,&November& 13,&2017
2:32&PM

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Global&marketplace&presents&both&opportunities& and&challenges&for&
managers
-
Managers&must&deal&with&cultural,&economic,&and&political&differences
-
What’s'Your'Global'Perspective?
Successful&global&management&requires&enhanced&sensitivity&to&
differences&in&national&custom&and& practices
-
Parochialism: viewing&the&world&solely&through&your&own&perspective,&
leading&to&an&inability&to&recognize&differences&among&people.
Significant&obstacle&for&global&businesses-
Difficult&to&compete&with&other&managers&and&organizations&around&the&world-
BAD&approach-
ETHNOCENTRIC4ATTITUDE:4 the&belief&that&the&best&work&approaches&
and&practices&are&those&of&the&home&country.
(the%country%in%which%headquarters% is%located)a.
1.
POLYCENTRIC4ATTITUDE:4the&view&that&the& managers&in&the&host&
country&know&the&best&approaches&and&practices&for&running&their&
businesses.
(the%foreign%country%in%which%the%organization%is%doing%business)a.
2.
GEOCENTRIC4ATTITUDE:4a&world-oriented& view&that&focuses& on&using&
the&best&approaches&and&people&from&around&the& globe.
3.
Orientation Ethnocentric
(Home4
Country)
Polycentric4
(Host4Country)
Geocentric4
(World)
Advantages
Simpler&
structure
Extensive&
knowledge&of&
foreign&market&and&
workplace
Extensive&
understanding&
of&global&issues
More&tightly&
controlled
More&support& from&
host& government
Balance&
between& local&
and&global&
objectives
Committed&local&
managers&with&high&
morale
Best&people&and&
work&
approaches&
used& regardless&
of&origin
Disadvantages
More&
ineffective&
management
Duplication&of&work
Difficult&to&
achieve
Inflexibility
Reduced&efficiency
Managers&must&
have&both& local&
and&global&
knowledge
Social&and&
political&
backlash
Difficult&to&maintain&
global&objectives&
be4cause&of&intense&
focus&on&local&
traditions
Understanding'the'Global'Environment
When&trade&is&allowed&to&flow&freely,&countries&benefit&from&economic&
growth&and&productivity&gains&because&they&specialize&in&producing&the&
goods&that&they&are&best&at&and&importing&good&that&are&more&efficiently&
produced& elsewhere
-
Global&trade&is&shaped&by&two&forces:
Regional4Trading4Alliances
The4European4Union4(EU)
Economic&and&political&partnership&of&27&democratic&
European&countries
i.
a.
North4American4Free4Trade4Agreement4(NAFTA)
an&agreement&among&the&Canadian,&American,&and&Mexican&
governments&in&which&barriers&to&free&trade&were&reduced
i.
b.
Association4of4Southeast4Asian4Nations4(ASEAN)
A&trading&alliance&of&10&southeast& Asian&countriesi.
c.
Other4Trade4Alliancesd.
4.
Trade4Mechanisms4ensuring4global4trade4can4happen
World4Trade4Organization4(WTO)
A&global&organization&of&155&countries&that&deals&with&the&
rules&of&trade&among&nations
i.
Goal&is&to&help&businesses& conduct&trade&(import/export)&
among&countries&without&undesired&side&effects.
ii.
a.
International4Monetary4Fund
An&organization&of&188&countries&that&promotes& international&
monetary&cooperation&and&provides&advice,&loans,&and&
technical&assistance.
i.
b.
World4Bank4Group
a&group&of&5&closely&associated&institutions& that&provides&
financial&and&technical&assistance&to&developing&countries
i.
promote& long-term&economic&development& and&poverty&
reduction&by&providing&members&with&technical&and&financial&
support
ii.
c.
Organization4for4Economic4Co-operation4and4Development4
(OECD)
An&international&economic&organization&that&helps&its&30&
member&countries&achieve&sustainable&economic&growth&and&
employment
i.
Also&raise&the&standard&of&living&in&member&countries&while&
maintain&financial&stability&in&order&to&contribute&to&the&
development& of&the&world&economy.
ii.
d.
5.
Doing'Business'Globally
The&different&types&of&international&organizations
Multinational4Corporations4(MNC’s): a&broad&term&that&refers&to&any&
and&all&types&of&international&companies&that&maintain&operations&in&
multiple&countries
Multidomestic4Corporations: an&MNC&that&decentralizes&management&
and&other&decisions&to&the&local&country
Reflects&the&polycentric&attitude
o
Many&consumer&product&companies&organize&their&global&businesses&
using&this&approach&because&they&must&adapt&their&products&and&services&
to&meet&the&needs&of&local&markets
o
Ø
Global4Companies:4an&MNC&that&centralizes&management&and&other&
decisions&in&the&home& country
Reflects&the&ethnocentric&attitude
o
Ø
Transnational4or4Borderless4Organizations:4an&MNC&in&which&artificial&
geographical&barriers&are&eliminated
Reflects&geocentric&attitude
o
An&attempt&by&organizations&to&increase&efficiency&and&effectiveness&in&a&
competitive&global&marketplace
o
Ø
Born4Global: an&international&company&that&chooses&to&go&global&from&
inception
These&companies&commit&resources&upfront&to&doing&business&in&more&
than&one&country&and&are&likely&to&continue&to&play&an&increasingly&
important&role&in&international&business
o
Ø
How'Organizations'Go'International
Managers&who&want&to&get&into&a&global&market&with&minimal&
investment&may&start&with&global4sourcing,4which&is&purchasing&
materials&or&labour&from&around&the&world&wherever&it&is&cheapest.
Goal:&take&advantage&of&lower&costs&in&order&to&be&more&competitive.
Ø
Importing4and4Exporting4-Involve&minimal&investment&and&minimal&risk
An&organization&can&go&global&by&either&importing&or&exporting&
products
Importing:% acquiring%products%made%abroad% and%selling%them%at%home
-
Exporting:%making%products%at%home%and%selling%them%abroad
-
Licensing4and4Franchising4-Involve&more&investment&and&risk&than&
above&because&the&company’s&brand&is&more&at&stake.
Managers&might&also&go&global&through
Licensing:%primarily%used%by%manufacturing organizations% that%make%or%
sell%another%company’s%products
-
Franchising:%primarily%used%by%service organizations%that%want% to%use%
another%company’s%name%and%operating%methods
-
Strategic4Alliances
When&an&organization&has&been&doing&business& internationally&for&a&
while&and&has&gained&experience&in&international&markets,&managers&
may&decide&to&make&a&more&direct&investment.
Strategic%Alliance:%an%approach%to% going%global%that%involves%a%
partnership% between%a%domestic%and%a%foreign%company%in%which%both%
share%resources%and%knowledge%in%developing%new%products%or%building%
production% facilities.
Partners&share&the&risks&and&rewards&of&this&alliance
o
-
Joint%Venture:%an%approach%to%going%global%in%which%the%partners% agree%
to%form%a%separate,%independent%organization% for%some%business%purpose
-
Foreign4Subsidiaries greatest&risk&and&commitment&of&resources
Managers&may&choose&to&directly&invest&in&a&foreign&country&by&setting&
up&a&
Foreign%Subsidiary:% an%approach% to%going%global%that% involves%a%direct%
investment%in%a%foreign%country%by%setting%up%a%separate%and%
independent%production%facility%or%office.
-
Managing'in'a'Global'Environment
The4Legal-Political4Environment
Canadian&managers&are&accustomed&to&stable&legal&and&political&systems
Changes&are&slow
o
Legal&and&political&procedures&are&well&established
o
Elections&held&at&regular&intervals
o
-
Not&the&case&for&all&countries
-
Managers&in&a&global&organization&must&stay&informed&of&the&specific&
laws&in&countries&where&they&do&business
-
Political&instability&can&cause&problems&and&much&greater&uncertainty&for&
managers&in&foreign&countries
-
The4Economic4Environment
Understanding&a&country’s&type&of&economic&system
Free&Market&Economy: an&economic&system&in&which&resources&are&
primarily&owned&and&controlled&by& the&private&sector
o
Planned&Economy:& an&economic&system&in&which&economic&
decisions&are&planned& by&a&central&government
o
-
Managers&need&to&know&as&it&has&the&potential&to&constrain&decisions&
and&actions
Issues&including&currency&exchange&rates,&inflation&rates,&and&
diverse&tax&policies
o
-
An&MNC’s&profits&can&vary&dramatically,&depending&on&the&strength&of&its&
home&currency&and& the&currency&of&the& countries&in&which&it&operates
-
Inflation&means&increasing&price&for&products&and&services
Monitor&inflation&rates&to&anticipate&possible&changes&in&a&
country’s&monetary&policies&and&make&good&business& decisions
o
-
Tax&policies&can&be&another&major&worry
Restrictive&or&lenient&tax&laws
o
Managers&need&accurate&information&to&minimize&their&business’s&
overall&tax&obligations
o
-
The4Cultural4Environment
Working&closely&with&people&from&a&different&culture&helps&you&to&see&
pitfalls&and&opportunities& in&a&very&different&way
-
National&Culture:%%the%values%and%attitudes%shared%by%individuals%from%a%
specific%country%that%shape%their%behaviour% and%beliefs%about%what%is%
important.
-
Which&is&more&important&to&a&manager&national&or&organizational&
culture?
National&>&organizational
o
-
Hard&to&retrieve&information&about&a&country’s&cultural&characteristics
-
Hofstede’s4Framework4for4Assessing4Cultures6.
a&framework&to&better&help&managers&understand&differences&between&
national&cultures
-
Individualism%vs.%CollectivismI.
Power%distanceII.
Uncertainty% avoidanceIII.
Achievement%vs.%nurturingIV.
Long-term%and%short-term% orientationsV.
The4GLOBE4Framework4for4Assessing4Cultures1.
Global&Leadership&and&Organizational&Behaviour&Effectiveness&(GLOBE)
-
An&ongoing&research&program&that&extended&Hofstede’s&work&by&
investigating&cross-cultural&leadership&behaviours&and&giving&managers&
additional&information&to&help&them&identify&and&manage&cultural&
differences
-
Power&distance
Extent& to&which& a&society& accepts& that& power& in&institutions& and& organizations& is&
distributed& unequally
-
i.
Uncertainty&avoidance
Society’s& reliance& on&social&norms&and&procedures& to&alleviate& the&
unpredictability& of&future&events
-
ii.
Assertiveness
Extent& to&which& a&society& encourages& people& to&be&tough,&confrontational,&
assertive,& and&competitive& rather&than&modest& and&tender.
-
iii.
Humane&orientation
the&degree& to&which& a&society& encourages& and&rewards& people& for&being& fair,&
altruistic,& generous,& caring&and&kind& to&others.
-
iv.
Future& Orientation
The&extent& to&which&a&society& encourages& and&rewards&future-oriented&
behaviours&such&as&planning,& investing&in&the&future,&and&delaying& gratification
-
v.
Institutional&collectivism
The&degree& to&which& individuals&are&encouraged& by&societal& institutions& to&be&
integrated& into&groups&within&organizations& and&society.
-
vi.
Gender&differentiation
the&extent& to& which&a&society& maximizes& gender&role&differences& as& measured& by&
how&much&status& and&decision-making& responsibilities& women& have.
-
vii.
In-group&collectivism
The&extent& to&which&members& of&a& society& take& pride&in&membership& in&small&
groups,&such&as&their&family&and&circle& of&close& friends,&and&the&organizations& in&
which&they’re& employed.
-
viii.
Performance&orientation
The&degree& to&which& a&society& encourages& and&rewards&group&members& for&
performance& improvement& and&excellence
-
ix.
Global'Management' in'Todays'World
The4Challenge4of4Openness
Increased&threat&of&terrorism&by&a&truly&global&terror&network
-
Economic&interdependence&of&trading&countries
Domino&effect
o
-
Challenges4of4Managing4a4Global4Workforce
Cross-cultural&partnerships
Canadians&and&Chinese&are&working&side&by&side
o
Differences&in&work&experience,&pay&levels,&and&
communication
o
-
Managing&cultural&differences
Work-family&practices
o
-
To&help&managers&manage&globalization
Cultural&intelligence: cultural&awareness&and&sensitivity&skills
-
Knowledge&of&culture&as&a&concept&
(how%cultures%vary%and%how%they%affect%behaviour)a.
1.
Mindfulness&
(the%ability%to%pay%attention%to%signals%and%reactions%in%different%
cross-cultural%situations)
a.
2.
Behavioural&skills
(using%one’s%knowledge%and%mindfulness%to%choose%appropriate%
behaviours% in%those% situations)
a.
Global&mind-set:&attributes&that&allow&a&leader&to&be&effective&in&
cross-cultural&environments
Intellectual&capital&knowledge%of%international% business%and%
the%capacity%to%understand% how% business%works% on%a%global%
scale
o
Psychological&capital&openness%to%new%ideas%and%
experiences
o
Social&capital&ability%to%form%connections%and%build%trusting%
relationships% with%people%who% are%different%from%you
o
-
3.
Final%notes
Possessing&these&skills&will&allow&you&to&be&an&important&asset&to&a&
global&organization.
-
Incredible&sensitivity&and&understanding&will&lead&to&being&a&
successful&manager&in&today’s&world
-
Ch.3'-Managing'in'a'Global'Environment
Monday,&November& 13,&2017 2:32&PM

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Global&marketplace&presents&both&opportunities& and&challenges&for&
managers
-
Managers&must&deal&with&cultural,&economic,&and&political&differences
-
What’s'Your'Global'Perspective?
Successful&global&management&requires&enhanced&sensitivity&to&
differences&in&national&custom&and& practices
-
Parochialism: viewing&the&world&solely&through&your&own&perspective,&
leading&to&an&inability&to&recognize&differences&among&people.
Significant&obstacle&for&global&businesses-
Difficult&to&compete&with&other&managers&and&organizations&around&the&world-
BAD&approach-
ETHNOCENTRIC4ATTITUDE:4 the&belief&that&the&best&work&approaches&
and&practices&are&those&of&the&home&country.
(the%country%in%which%headquarters% is%located)a.
1.
POLYCENTRIC4ATTITUDE:4the&view&that&the& managers&in&the&host&
country&know&the&best&approaches&and&practices&for&running&their&
businesses.
(the%foreign%country%in%which%the%organization%is%doing%business)a.
2.
GEOCENTRIC4ATTITUDE:4a&world-oriented& view&that&focuses& on&using&
the&best&approaches&and&people&from&around&the& globe.
3.
Orientation Ethnocentric
(Home4
Country)
Polycentric4
(Host4Country)
Geocentric4
(World)
Advantages Simpler&
structure
Extensive&
knowledge&of&
foreign&market&and&
workplace
Extensive&
understanding&
of&global&issues
More&tightly&
controlled
More&support& from&
host& government
Balance&
between& local&
and&global&
objectives
Committed&local&
managers&with&high&
morale
Best&people&and&
work&
approaches&
used& regardless&
of&origin
Disadvantages More&
ineffective&
management
Duplication&of&work Difficult&to&
achieve
Inflexibility Reduced&efficiency Managers&must&
have&both& local&
and&global&
knowledge
Social&and&
political&
backlash
Difficult&to&maintain&
global&objectives&
be4cause&of&intense&
focus&on&local&
traditions
Understanding'the'Global'Environment
When&trade&is&allowed&to&flow&freely,&countries&benefit&from&economic&
growth&and&productivity&gains&because&they&specialize&in&producing&the&
goods&that&they&are&best&at&and&importing&good&that&are&more&efficiently&
produced& elsewhere
-
Global&trade&is&shaped&by&two&forces:
Regional4Trading4Alliances
The4European4Union4(EU)
Economic&and&political&partnership&of&27&democratic&
European&countries
i.
a.
North4American4Free4Trade4Agreement4(NAFTA)
an&agreement&among&the&Canadian,&American,&and&Mexican&
governments&in&which&barriers&to&free&trade&were&reduced
i.
b.
Association4of4Southeast4Asian4Nations4(ASEAN)
A&trading&alliance&of&10&southeast& Asian&countries
i.
c.
Other4Trade4Alliances
d.
4.
Trade4Mechanisms4ensuring4global4trade4can4happen
World4Trade4Organization4(WTO)
A&global&organization&of&155&countries&that&deals&with&the&
rules&of&trade&among&nations
i.
Goal&is&to&help&businesses& conduct&trade&(import/export)&
among&countries&without&undesired&side&effects.
ii.
a.
International4Monetary4Fund
An&organization&of&188&countries&that&promotes& international&
monetary&cooperation&and&provides&advice,&loans,&and&
technical&assistance.
i.
b.
World4Bank4Group
a&group&of&5&closely&associated&institutions& that&provides&
financial&and&technical&assistance&to&developing&countries
i.
promote& long-term&economic&development& and&poverty&
reduction&by&providing&members&with&technical&and&financial&
support
ii.
c.
An&international&economic&organization&that&helps&its&30&
member&countries&achieve&sustainable&economic&growth&and&
employment
i.
Also&raise&the&standard&of&living&in&member&countries&while&
maintain&financial&stability&in&order&to&contribute&to&the&
development& of&the&world&economy.
ii.
d.
5.
Doing'Business'Globally
The&different&types&of&international&organizations
Multinational4Corporations4(MNC’s): a&broad&term&that&refers&to&any&
and&all&types&of&international&companies&that&maintain&operations&in&
multiple&countries
Multidomestic4Corporations: an&MNC&that&decentralizes&management&
and&other&decisions&to&the&local&country
Reflects&the&polycentric&attitude
o
Many&consumer&product&companies&organize&their&global&businesses&
using&this&approach&because&they&must&adapt&their&products&and&services&
to&meet&the&needs&of&local&markets
o
Ø
Global4Companies:4an&MNC&that&centralizes&management&and&other&
decisions&in&the&home& country
Reflects&the&ethnocentric&attitude
o
Ø
Transnational4or4Borderless4Organizations:4an&MNC&in&which&artificial&
geographical&barriers&are&eliminated
Reflects&geocentric&attitude
o
An&attempt&by&organizations&to&increase&efficiency&and&effectiveness&in&a&
competitive&global&marketplace
o
Ø
Born4Global: an&international&company&that&chooses&to&go&global&from&
inception
These&companies&commit&resources&upfront&to&doing&business&in&more&
than&one&country&and&are&likely&to&continue&to&play&an&increasingly&
important&role&in&international&business
o
Ø
How'Organizations'Go'International
Managers&who&want&to&get&into&a&global&market&with&minimal&
investment&may&start&with&global4sourcing,4which&is&purchasing&
materials&or&labour&from&around&the&world&wherever&it&is&cheapest.
Goal:&take&advantage&of&lower&costs&in&order&to&be&more&competitive.
Ø
Importing4and4Exporting4-Involve&minimal&investment&and&minimal&risk
An&organization&can&go&global&by&either&importing&or&exporting&
products
Importing:% acquiring%products%made%abroad% and%selling%them%at%home
-
Exporting:%making%products%at%home%and%selling%them%abroad
-
Licensing4and4Franchising4-Involve&more&investment&and&risk&than&
above&because&the&company’s&brand&is&more&at&stake.
Managers&might&also&go&global&through
Licensing:%primarily%used%by%manufacturing organizations% that%make%or%
sell%another%company’s%products
-
Franchising:%primarily%used%by%service organizations%that%want% to%use%
another%company’s%name%and%operating%methods
-
Strategic4Alliances
When&an&organization&has&been&doing&business& internationally&for&a&
while&and&has&gained&experience&in&international&markets,&managers&
may&decide&to&make&a&more&direct&investment.
Strategic%Alliance:%an%approach%to% going%global%that%involves%a%
partnership% between%a%domestic%and%a%foreign%company%in%which%both%
share%resources%and%knowledge%in%developing%new%products%or%building%
production% facilities.
Partners&share&the&risks&and&rewards&of&this&alliance
o
-
Joint%Venture:%an%approach%to%going%global%in%which%the%partners% agree%
to%form%a%separate,%independent%organization% for%some%business%purpose
-
Foreign4Subsidiaries greatest&risk&and&commitment&of&resources
Managers&may&choose&to&directly&invest&in&a&foreign&country&by&setting&
up&a&
Foreign%Subsidiary:% an%approach% to%going%global%that% involves%a%direct%
investment%in%a%foreign%country%by%setting%up%a%separate%and%
independent%production%facility%or%office.
-
Managing'in'a'Global'Environment
The4Legal-Political4Environment
Canadian&managers&are&accustomed&to&stable&legal&and&political&systems
Changes&are&slow
o
Legal&and&political&procedures&are&well&established
o
Elections&held&at&regular&intervals
o
-
Not&the&case&for&all&countries
-
Managers&in&a&global&organization&must&stay&informed&of&the&specific&
laws&in&countries&where&they&do&business
-
Political&instability&can&cause&problems&and&much&greater&uncertainty&for&
managers&in&foreign&countries
-
The4Economic4Environment
Understanding&a&country’s&type&of&economic&system
Free&Market&Economy: an&economic&system&in&which&resources&are&
primarily&owned&and&controlled&by& the&private&sector
o
Planned&Economy:& an&economic&system&in&which&economic&
decisions&are&planned& by&a&central&government
o
-
Managers&need&to&know&as&it&has&the&potential&to&constrain&decisions&
and&actions
Issues&including&currency&exchange&rates,&inflation&rates,&and&
diverse&tax&policies
o
-
An&MNC’s&profits&can&vary&dramatically,&depending&on&the&strength&of&its&
home&currency&and& the&currency&of&the& countries&in&which&it&operates
-
Inflation&means&increasing&price&for&products&and&services
Monitor&inflation&rates&to&anticipate&possible&changes&in&a&
country’s&monetary&policies&and&make&good&business& decisions
o
-
Tax&policies&can&be&another&major&worry
Restrictive&or&lenient&tax&laws
o
Managers&need&accurate&information&to&minimize&their&business’s&
overall&tax&obligations
o
-
The4Cultural4Environment
Working&closely&with&people&from&a&different&culture&helps&you&to&see&
pitfalls&and&opportunities& in&a&very&different&way
-
National&Culture:%%the%values%and%attitudes%shared%by%individuals%from%a%
specific%country%that%shape%their%behaviour% and%beliefs%about%what%is%
important.
-
Which&is&more&important&to&a&manager&national&or&organizational&
culture?
National&>&organizational
o
-
Hard&to&retrieve&information&about&a&country’s&cultural&characteristics
-
Hofstede’s4Framework4for4Assessing4Cultures6.
a&framework&to&better&help&managers&understand&differences&between&
national&cultures
-
Individualism%vs.%CollectivismI.
Power%distanceII.
Uncertainty% avoidanceIII.
Achievement%vs.%nurturingIV.
Long-term%and%short-term% orientationsV.
The4GLOBE4Framework4for4Assessing4Cultures1.
Global&Leadership&and&Organizational&Behaviour&Effectiveness&(GLOBE)
-
An&ongoing&research&program&that&extended&Hofstede’s&work&by&
investigating&cross-cultural&leadership&behaviours&and&giving&managers&
additional&information&to&help&them&identify&and&manage&cultural&
differences
-
Power&distance
Extent& to&which& a&society& accepts& that& power& in&institutions& and& organizations& is&
distributed& unequally
-
i.
Uncertainty&avoidance
Society’s& reliance& on&social&norms&and&procedures& to&alleviate& the&
unpredictability& of&future&events
-
ii.
Assertiveness
Extent& to&which& a&society& encourages& people& to&be&tough,&confrontational,&
assertive,& and&competitive& rather&than&modest& and&tender.
-
iii.
Humane&orientation
the&degree& to&which& a&society& encourages& and&rewards& people& for&being& fair,&
altruistic,& generous,& caring&and&kind& to&others.
-
iv.
Future& Orientation
The&extent& to&which&a&society& encourages& and&rewards&future-oriented&
behaviours&such&as&planning,& investing&in&the&future,&and&delaying& gratification
-
v.
Institutional&collectivism
The&degree& to&which& individuals&are&encouraged& by&societal& institutions& to&be&
integrated& into&groups&within&organizations& and&society.
-
vi.
Gender&differentiation
the&extent& to& which&a&society& maximizes& gender&role&differences& as& measured& by&
how&much&status& and&decision-making& responsibilities& women& have.
-
vii.
In-group&collectivism
The&extent& to&which&members& of&a& society& take& pride&in&membership& in&small&
groups,&such&as&their&family&and&circle& of&close& friends,&and&the&organizations& in&
which&they’re& employed.
-
viii.
Performance&orientation
The&degree& to&which& a&society& encourages& and&rewards&group&members& for&
performance& improvement& and&excellence
-
ix.
Global'Management' in'Todays'World
The4Challenge4of4Openness
Increased&threat&of&terrorism&by&a&truly&global&terror&network
-
Economic&interdependence&of&trading&countries
Domino&effect
o
-
Challenges4of4Managing4a4Global4Workforce
Cross-cultural&partnerships
Canadians&and&Chinese&are&working&side&by&side
o
Differences&in&work&experience,&pay&levels,&and&
communication
o
-
Managing&cultural&differences
Work-family&practices
o
-
To&help&managers&manage&globalization
Cultural&intelligence: cultural&awareness&and&sensitivity&skills
-
Knowledge&of&culture&as&a&concept&
(how%cultures%vary%and%how%they%affect%behaviour)a.
1.
Mindfulness&
(the%ability%to%pay%attention%to%signals%and%reactions%in%different%
cross-cultural%situations)
a.
2.
Behavioural&skills
(using%one’s%knowledge%and%mindfulness%to%choose%appropriate%
behaviours% in%those% situations)
a.
Global&mind-set:&attributes&that&allow&a&leader&to&be&effective&in&
cross-cultural&environments
Intellectual&capital&knowledge%of%international% business%and%
the%capacity%to%understand% how% business%works% on%a%global%
scale
o
Psychological&capital&openness%to%new%ideas%and%
experiences
o
Social&capital&ability%to%form%connections%and%build%trusting%
relationships% with%people%who% are%different%from%you
o
-
3.
Final%notes
Possessing&these&skills&will&allow&you&to&be&an&important&asset&to&a&
global&organization.
-
Incredible&sensitivity&and&understanding&will&lead&to&being&a&
successful&manager&in&today’s&world
-
Ch.3'-Managing'in'a'Global'Environment
Monday,&November& 13,&2017 2:32&PM
You're Reading a Preview

Unlock to view full version