What does Global Management mean?
Involves managing operations in more than one country.
Define Globalized economy
Resources, markets, and competition are worldwide in scope.
In a competitive global business landscape, the increasing demand for talented, knowledge
workers is primarily due to the increasing use of low-cost production. (FALSE). It is due to
advancement in technology.
The age gap in today’s workplaces is one of the diversity issues that may create major challenges
for managers. (TRUE)
The recruitment and retention of talented workers is one of the major challenges faced by
manager in a global competitive economy (TRUE).
According to the Katz’s framework on essential managerial skills, low-level managers need to
develop more conceptual skills than top-level managers (FALSE).
What are the key conditions that describes the general (business) environment?
Economic Conditions: influence customer spending, resource supplies, and investment
Legal-Political Conditions: laws and regulations, government policies, and philosophies of
Technological Conditions: Rapid changing technology and implications that it has on work
Socio-cultural Conditions: Norms, customs, social values and beliefs on matters such as
ethics, human rights, lifestyles. Companies need to anticipate changing trends.
Natural Environment Conditions: “Green” perspectives, concerned with global warming
and being eco friends.
Describe a Learning Organization
Renewed belief in human capital
Emphasis on teamwork,
demise of “command and control”,
Pre-eminence of technology,
embrace of networking,
new workforce expectations,
concern for work-life balance,
Focus on speed.
What are the critical survival skills for a new workplace?
Planning: process of setting objectives, and ways of accomplishing them
Organizing: arranging tasks, people, and resources to accomplish work
Leading: Inspiring people to work hard
Controlling: Measuring performance and taking actions. Chapter 2
What are the three branches of the classical approach to management?
Who is known as the father of Scientific Management?
Fredrick W. Taylor, Father of scientific management.
Who is known as the father of bureaucratic management?
Max Weber, father of bureaucratic management.
What are the main findings of the Hawthorne studies (1924-32)?
Initial study examined how economic incentives and physical conditions affected
No consistent relationship found
“Psychological factors” influenced results
Relay assembly test-room studies
Manipulated physical work conditions to assess impact on output
Designed to minimize the “psychological factors” of previous experiment
Factors that accounted for increased productivity
Employee attitudes, interpersonal relations and group processes
Some things satisfied some workers but not others
People restricted output to adhere to group norms
Lessons from the Hawthorne Studies:
Social and human concerns are keys to productivity
Hawthorne effect — people who are singled out for special attention perform as
Review Fredrick Taylor’s approach to scientific management
Develop rules of motion, standardized work implements, and proper working conditions
for every job
Carefully select workers with the right abilities for the job
Carefully train workers and provide proper incentives
Support workers by carefully planning their work and removing obstacles
Science of reducing a job or task to its basic physical motions
Eliminating wasted motions improves performance
Practical lessons from scientific management
Make results-based compensation a performance incentive
Carefully design jobs with efficient work methods
Carefully select workers with the abilities to do these jobs
Train workers to perform jobs to the best of their abilities
Train supervisors to support workers so they can perform jobs to the best of their
abilities Review Max Weber’s approach to bureaucratic management?
An ideal, intentionally rational, and very efficient form of organization
Based on principles of logic, order, and legitimate authority
Characteristics of bureaucratic organizations:
Clear division of labour
Clear hierarchy of authority
Formal rules and procedures
Careers based on merit
Possible Disadvantages of bureaucracy:
Excessive paperwork or “red tape”
Slowness in handling problems
Rigidity in the face of shifting need
Resistance to change
Review Maslow’s Hierarchy
A need is a physiological or psychological deficiency a person feels compelled to satisfy
A satisfied need is not a motivator of behaviour
A need becomes a motivator once the preceding lower-level need is satisfied
Both principles cease to operate at self-actualization level
Review Chris Argyris’ theory of adult personality
Classical management principles and practices inhibit worker maturation and are
inconsistent with the mature adult personality
Management practices should accommodate the mature personality by:
Increasing task responsibility
Increasing task variety
Using participative decision making
Review (human systems) Contingency Thinking (model)
Tries to match managerial responses with problems and opportunities unique to
Especially individual or environmental differences
No “one best way” to manage
Appropriate way to manage depends on the situation Chapter 3
Common reasons for firms becoming international?
Profits: Global operations offer greater profit potential
Customers: Global operations offer new markets to sell products
Suppliers: Global operations offer access to needed products and services
Capital: Global operations offer access to financial resources
Labour: Global operations offer access to lower labour costs.
Advantages/Disadvantages of Direct and Indirect Exporting
Advantages of Direct Exporting
you are in control of pricing
full control of your brand
direct understanding of buyers' or end users' needs and an ability to customise accordingly
maintain the customer relationship
able to identify possible new opportunities
Customers may prefer dealing directly with the producer.
Disadvantages of Direct Exporting
will take a lot of time, energy, staff resources and money
competitors with a local presence will be perceived as lower risk to buy from
after-sales commissioning and service may require local language capability
prompt troubleshooting may not be able to be done remotely and will require additional visits
growth will be slower.
Advantages of Indirect Exporting
Selling to or through an intermediary is a relatively cheap and straightforward way to enter a
A good intermediary will have in-market experience, reputation and contacts.
Disadvantages of Indirect Exporting
intermediary still requires sales support
intermediary takes a margin
have no direct contact with the end customer
will have less control over the actual final transaction
Don’t get to learn about the overseas market, which could slow down longer term expansion
What does importing involve?
Importing involves buying foreign-made products and selling them domestically.
What ethical issues are usually raised in relations the international operations of multinational
illegal practices that further one’s business interests
Bribery and others forms of corruption can pose significant challenges as global managers
around the world.
employing workers at low wages for long hours and in poor working conditions
full-time employment of children for work otherwise done by adults
Global warming, industrial pollution, hazardous waste disposal, depletion of natural resources,
and related concerns are worldwide issues.
meeting current needs without compromising future needs
Difference between brownfield and greenfield investment
Greenfield Investment: A form of foreign direct investment where a parent company starts a
new venture in a foreign country by constructing new operational facilities from the ground up.
Brownfield Investment: When a company or government entity purchases or leases existing
production facilities to launch a new production activity.
What factors should be taken into account when considering a joint venture?
Joint Ventures: operates in a foreign country through co-ownership by foreign and local
partners. Some factors/questions to take into account when considering a joint venture are:
Is the partner familiar with your firm’s major business
Employs a strong local workforce
Value its customers
Has potential for future expansion
Has strong local market for its products
Has good profit potential
Has sound financial standing.
Licensing: one firm pays fee for rights to make or sell another company’s products in a specified
region. The license typically grants access to a unique manufacturing technology, special patent,
or trademark. In effect, the firm provides the local firm with the technology and knowledge to
offer its products or services for local sales. Such licensing involves potential risk.
Franchising: a fee is paid for rights to use another firm’s name and operating method in its
home country. The international version operates similarly to domestic franchising agreements.
Foreign Direct Investment (FDI): involves setting up, buying all, or buying part of a business in
another country. For many countries, the ability to attract foreign business investors has been a
key to succeeding in the global economy. Insourcing is often used to describe job creation that
results from foreign direct investment. Its effect can be very positive for the local economy. Nature of the relationship (i.e. complaints) between host countries and multinational
Host-Country complaints about MNCs
Domination of local economy
Interference with local government
Hiring the best local talent
Limited technology transfer
Disrespect for local customs
MNCs complaints about host countries
Foreign exchange restrictions
Failure to uphold contracts.
Major regional blocks/free-trade agreements
World Trade Organization (WTO): Currently 153 members, agree to negotiate and resolve
disputes about tariffs and trade restrictions. Established to promote free trade and open
markets around the world. “Liberal trade policies – which involve allow the unrestricted flow
of goods and services – sharpen competition, motivate innovation, and breed success. They
multiply the rewards that result from producing the best products, with the best design, at
the best price. “
North American Free Trade Agreement (NAFTA): Creates a trade zone with minimal barriers,
which frees the flow of goods and services, workers, and investments among the three
countries – Canada, USA, and Mexico. NAFTA include greater cross-border trade, benefits to
farm exports, greater productivity of manufacturers, and reform of the Mexican business
European Union (EU): Now links 27 countries that agree to support mutual economic growth by
removing barriers that previously limited cross-border trade and business development.
Define a Global Manager
Someone who is culturally aware and informed on international affairs.
Difference between low-context and high-context culture
Emphasize communication via spoken or written words
As the saying goes in U.S, Canada, and Germany, “we say or write what we mean, and we
mean what we say” High-context culture
Rely on non-verbal and situational cues as well as on spoken or written words in
Including body language, physical setting, and even past relationship among the people
Hofestede’s five cultural dimensions:
Power Distance: Degree to which a society accepts unequal distribution of power. In
high-power cultures, we expect to find great respect for age, status, and titles. People
in these cultures tend to be tolerant of power; they are prone to follow orders and
accept differences in rank.
Individualism – Collectivism: Degree to which a society emphasizes individuals and
Uncertainty Avoidance: Degree to which a society is uncomfortable with risk, change
and situational uncertainty, versus having tolerance for them. Low-uncertainty
avoidance cultures display openness to change and innovation. In high-uncertainty
avoidance cultures, by contrast, one would expect to find a preference for structure,
order and predictability.
Masculinity – Femininity: Degree to which a society values assertiveness and
materialism. It is a tendency for members of a culture to show stereotypical masculine
and feminine traits and reflect different attitudes toward gender roles.
Time-Orientation: Degree to which a society emphasizes short-term or long-term
Who is an entrepreneur? What is entrepreneurship?
Entrepreneur: risk-taking individual who takes action to pursue opportunities others fail
to recognize, or even view as problems or threats. Business entrepreneurs start new
ventures that bring to life new products or service ideas.
Entrepreneurship: Strategic thinking and risk-taking behaviour that results in the
creation of new opportunities for individuals and/or organizations.
Myths about entrepreneurs:
Entrepreneurs are born, not made
Entrepreneurs are gamblers
Money is the key to entrepreneurial success
You have to be young to be an entrepreneur
You must have a degree in business to be an entrepreneur
Different forms of Business Ownerships:
Sole Proprietorship: simply an individual or a married couple pursuing a business for a
profit. This does not involve incorporation. A sole proprietorship is easy to start, run,
and terminate and it is the most common form of small business ownership In Canada.
Partnership: formed when two or more people agree to contribute resources to start
and operate a business together. It is usually backed by a legal and written partnership
agreement. Business partners agree on the contribution of resources and skills to the
new venture, and on the sharing of profits and losses. General Partnership: simplest and most common form, they also share
Limited Partnership: consists of a general partner and one or more “limited”
partners who do not participate in day-to-day business management.
Limited Liability Partnership: common among professionals such as accountants
and lawyers, limits the liability of one partner of the negligence of another.
Corporation: commonly identified by the “Inc.” designation in a name, is a legal entity
that is chartered by the government and exists separately from its owners. The
corporation can be for-profit or non-profit. The corporate form offers 2 major
advantages: (1) it grants the organization certain legal rights, and (2) the corporation
becomes responsible for its own liabilities.
Limited Liability Corporation (LLC): combines the advantages of the other forms. For
liability purposes, it functions like a corporation, protecting the assets of owners made
against the company.
Financing options available to new ventures:
Debt Financing: involves going into debt by borrowing money from another person,
bank, or financial institution. This loan must be paid back over time, with interest. It also
requires collateral that pledges business assets or personal assets, such as home, to
secure the loan in case of default.
Equity Financing: involves giving ownership shares in the business t outsiders in return
for their cash investments. This money does not need to be paid back. It is an
investment, and the investor assumes the risk for potential gains and losses. It return for
taking the risk, the equity investor gains some proportionate ownership control.
Venture Capitalists: companies and individuals make large investments in new ventures
in return for an equity stake in the business. Most venture capitalists tend to focus
relatively large investments of $1 million or more, and they usually take a management
Initial Public Offering (IPO): when shares of stock in the business are first sold to the
public and then begin trading on a major stock exchange.
Stages in the life cycle of an entrepreneurial firm
Establishing the firm
Finding the money
Working on finances
Refining the strategy
Managing for success Chapter 6
What does planning as a management function entail?
The Planning Process
Planning: The process of setting objectives and determining how to best
Objectives: Identify the specific results or desired outcomes that one intends to
Plan: A statement of action steps to be taken in order to accomplish the
Steps in the Planning Process
Define your objectives: Identify desired outcomes or results in very specific
ways. Know where you want to go.
Determine where you stand vis-à-vis objectives: Evaluate current
accomplishments relative to the desired results. Know where you stand in
reaching your objectives'
Develop premises regarding future conditions: Anticipate future events.
Generate alternative “scenarios” for what may happen;
Analyze and choose among action alternatives: List and evaluate possible
actions. Chose the alternative most likely to accomplish your objectives’
Implement the plan and evaluate results: Take action and carefully measure
your progress toward objectives.
Benefits of Planning:
Improves focus and flexibility
Improves action orientation
Improves coordination and Control
Improves time management
What is planning?
Process of setting objectives and determining how to accomplish them.
Creates a solid platform for the other management functions: organizing, planning,
leading, and controlling.
Two factors Walmart primarily gains directions from are:
Basic Beliefs (respect for the individual, service to our customers, striving for excellence)
Customer Service Rule (sundown, ten foot, and everyday low prices rule).
What is Scenario planning? What are its benefits?
Scenario planning identifies alternative scenarios and makes plans to deal with each. A
long-term version of contingency planning
Benefits of Scenario planning:
Managers are forced to break out of their standard world view, exposing blind
spots that might otherwise be overlooked in the generally accepted forecast.
Decision-makers are better able to recognize in its early stages, should it actually
be the one that unfolds.
Managers are better able to understand the source of disagreements that often
occur when they are envisioning different scenarios without realizing it. What is Contingency planning:
Identifies alternative courses of action to take when things go wrong or if circumstances
What are organizational procedures and policies? What is the main difference between them?
Organizational Procedures: precisely describe actions that are to be taken in specific
situations. They are stated in employee handbooks and often called “SOPs” – standard
Organizational Policies: communicate broad guidelines for making decisions and taking
action in specific circumstances. Organizations operate with lots of policies, and they set
expectations for many aspects of employee behavior.
What is Strategy? What is strategic management?
Strategy: comprehensive plan guiding resource allocation to achieve long-term
Strategic management: Process of formulating and implementing strategies.
What are two basic ways in which firms compete against their rivals?
Competitive Advantage: the ability to do something so well that one outperforms
Sustainable Competitive Advantage: ability to outperform rivals in a way that are
difficult or costly to imitate.
Porter’s five forces of framework:
Industry Competition: the intensity of rivalry among firms in the industry and the ways
they behave competitively toward one another.
New entrants: the threat of new competitors entering the market, based on the
presence or absence of barriers to entry.
Substitute products or service: the threat of substitute products or services, based on
the ability of consumers to find what they want from other sellers.
Bargaining power of suppliers: the ability to resource suppliers to influence the price
that one has to pay for their products or services.
Bargaining power of customers: the ability of customers to influence the price that they
will pay for the firm’s products or services.
Porter’s model of generic strategies:
Cost Leadership Strategy (Broad): seeks to have low costs so that they can sell products
and services at low prices. While the low cost drive sales, the low cost structure allows
them to still make profits even when selling at low prices that competitors can’t match.
Success with the cost leadership at low prices strategy requires a continuing search for
innovations that increase operating efficiencies throughout purchasing, production,
distribution, and other organizational systems. Walmart is an example of Cost
Differentiation Strategy: seek competitive advantage through uniqueness. Then try to
develop goods and services that are clearly different from the competition or that,
through successful advertising, are perceived as clearly different. The objective is to
build a strong base of customers that are loyal to the organization’s products and lose in
those of competitors. Polo Ralph is an example of Differentiation Strategy. Focused low-cost strategy: seeks the lowest costs of operations within a special market
Focused Differentiation: offers a unique product to a special market segment.
Various components of SWOT Analysis:
SWOT Analysis: examines organizational strengths and weaknesses and environmental
opportunities and threats.
Strengths: Positive Internal assessment of the Organization.
Good market share?
Weaknesses: Negative Internal assessment of the Organization.
Inadequate research and development?
Past planning failures?
Opportunities: Positive External assessment of the Organization.
Possible new markets?
Weak market rivals?
Growth of existing market?
Threats: Negative External assessment of the Organization.
Shortage of resources?
Changing market tastes?
Total Quality Management (TQM): managing with an organization-wide commitment to
continuous improvement, product quality, and customer needs. This is a process that makes
quality principles part of the organization’s strategic objectives, applying them to all aspects of
operations and striving to meet customers