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Chapter 3

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Global Management Studies
GMS 200
Shavin Malhotra

Chapter three: Global Dimensions of Management Lecture Notes: 1. Culture is a set of assumptions and values that are shared by a group of people. Culture is a firm’s personality, which helps distinguish itself from others. Values are the stable core of culture. They are strong, unconscious emotions with a minus and a plus pole, like: evil-good, dirty-clean, etc. 2. Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behaviour of its members. 3. Impact of culture: 82% of executives said corporate culture has an impact on financial performance. 82% of executives said it has tangible impact on their organization’s ability to recruit, manage and retain the best people. 20% of executives said corporate culture is their company’s primary driver of success. 4. What constitutes of culture: innovation and risk taking, attention to detail, and outcome orientation (results more important than processes). 5. Where does culture come from? Founders who act as role models and hire and keep similar employees. 6. Strong cultures: Pros and Cons a. Drives employee behaviour due to clear vision leading to high performance b. It can also lead to rigid beliefs 7. Global mindset: many people assert that cultures around the world are converging: a. People are same everywhere b. They wear jeans and European designer fashions c. They eat at McDonald’s, talk on Nokia phones and listen to iPod 8. Hofstede’s Cultural Dimensions: a. Individualism vs. collectivism: degree to which people in a country prefer to act as individual rather than as members of groups b. High vs. low power distance: the degree of inequality among people which the population of the country considers as normal c. Masculine vs. feminine: degree to which tough values like assertiveness, performance, success and competition (masculine) prevail over tender values like quality of life d. Uncertain avoidance: degree to which people in a country prefer structures over unstructured situations – what is different is dangerous e. Long-term vs. short-term orientation: degree to which values oriented towards the future, like saving and persistence prevail over values oriented towards immature or short-term gratification 9. Types of market entry strategies to enter in the international market: a. Non-equity modes: where you don`t make any equity based investments in another country – example: exporting, licensing/franchising agreement b. Equity modes or Direct Investment strategies: example: joint ventures, mergers and acquisitions, wholly owned subsidiaries 10. Non-Equity Modes: Exporting a. It is a good way for new firms to overcome fear of entering an international market – therefore, a very beneficial strategy b. Minimizes international market and political risks c. Helps obtain knowledge 11. Licensing/Franchising: a. Licensing refers to offering a firm’s know-how or other intangible asset to a foreign company for a fee, royalty, and/or other type of payment b. Advantages for the new exporter: the need for local market research is reduced – the license may
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