MANAGEMENT AND GLOBALIZATION

Prepared By: Group 4

In the Global Economy resources, markets and competition are worldwide in scope.

It is also a time heavily inflience by the forces of globalization.

Rosabeth Moss Kanter

International Management- involves managing operations in more than one country.

Global Manager- is culturally aware and informed on international affairs

WHY COMPANIES GO INTERNATIONAL? International Business-

conducts commercial transactions across national.

The reasons why businesses go international include: Profits

*Customer *Suppliers *Labor

*Capital

Forms of International Business

Global Sourcing

Exporting/Importing

Licensing and Franchising

Marketing entry strategies

Direct Investment Strategies

Joint Ventures

Foreign Subsidiaries

INTERNATIONAL BUSINESS ENVIRONMENT

The international business environment is complex and dynamic and highly competitive. International managers must master the demands of operating with worldwide suppliers, distributors, customers and competitors.

Regional Economic Alliances

There is more to limited brands than it’s 4,000 plus it’s retail stores. Standing behind the displays and the fashion merchandise is a large operation that depends on vast worldwide networks of suppliers and subcontractors for it’s products. But it’s global reach must be well managed and it’s ethical standards must be maintained.

The EUROPEAN UNION is a political and economic alliance of European countries.

Laws and legal structures

Differences in legal environments among nations create substantial international business challenges. Organizations are expected to abide by the laws of the host. Country in which they are operating.

Example..

Executives of foreign-owned companies must worry about antitrust issues that prevent competitors from regularly talking to one another.

They also must deal with a variety of special laws regarding occupational health and safety, equal employment opportunity, sexual harassment, and other matters-all constraints potentially different from those they find at home.

The more home and host country laws differ, the more difficult and complex it is or international businesses to adapt to local ways. In china ,for example Google, yahoo and other firms have faced laws that restrict internet usage for the country’s citizens. they have also faced controversies elsewhere in the world when they comply with the Chinese laws.

Common legal problems in international business involve incorporation practices and business ownership: negotiating and implementing contract with foreign parties; protecting patents, trademarks, and copyrights; and handling foreign exchange restriction.

Intellectual property rights

Problems with software piracy and copyrights violations of cds and designer fashions are well known. But general motors, long an investor in china. Has had its own problems there. The firm’s China joint venture executives noticed that a new model from a fast growing local competitor- cherry automobile, partially owned by GM’s Chinese partner-looked very similar to one of it’s cars. GM claimed in local courts that its design was copied. The competitor denied the charges and plans to export its cars to the united states.

When disputes between nations relate to international trade, they can end up before: WORLD TRADE ORGANIZATION

(WTO)- this is a global institution established to promote free trade and open markets around the world. Some 140+ members of the WTO agree to give one another most favored nation status –the most favorable treatment for imports and exports.

Although members agree to ongoing negotiations and the reduction of tariffs and trade restrictions, trading relationships are often difficult. When the problem arise the WTO offers a mechanism for monitoring international trade and resolving disputes among countries.

Protectionism

Is a call for tariffs and favorable treatments to protect domestic firms from foreign competition.

Protectionism In the form of political calls for

tariffs and favorable treatments to help protect domestic businesses from foreign competition is a common complication of international trade. Government leaders such as the president of the united states. Face international trade while still protecting domestic industries.

MULTINATIONAL CORPORATIONS

Multinational corporation is a business with extensive international operations in more than one foreign country

A typical MNC operates in many countries but has corporate headquarters in one home or host country.. example: Microsoft, Apple computer and Mc Donald’s food chain.

Transnational corporation

They try to operate worldwide without being identified with one national home.

Is an MNC that operates worldwide on a borderless basis.

Pros and cons of multinational corporations;

The UN has reported that MNC hold one-third of the world’s productive assets and control 70% of world trade. At recent count, 52 of the largest economies in the world are MNC.

furthermore, more than 90% of MNC are based in the northern hemisphere. While this may bring a sense of both accomplishment and future opportunity to business leaders. It can also be very threatening to small and less-developed countries and to their domestic industries.

MNC host-country

relationships: what should go

rightMUTUAL BENEFITS:SHARED

OPPORTUNITIES WITH

POTENTIAL FOR:

GROWTH INCOME

LEARNINGDEVELOPME

NT

MNC host-country relationships: what can go

wrongHOST COUNTRY

COMPLAINTS ABOUT MNC’S

• EXCESSIVE PROFITS

• ECONOMIS DOMINATION

• INTERFERENCE WITH

GOVERNMENT• HIRE BEST LOCAL

TALENT • LIMITED TECHNOLOGY

TRANSFERDISRESPECT FOR LOCAL CUSTOMS

MNC COMPLAINTS ABOUT HOST COUNTRIES• PROFIT

LIMITATIONS • OVERPRICED

RESOURCES• EXPLOITATIVE

EXCHANGE RESTRICTIONS • FAILURE TO

UPHOLD CONTRACTS

Host country issues

The potential host-country benefit of MNC’s include larger tax bases. Increase employment opportunities, technology transfers, the introduction of new industries and the development of local resources.

Potential host –country costs

Include complaints that mnc’s extract

excessive profits, dominate the local

economy,interfere with the local government, do not respect local customs and laws, failed to help domestic firms develop, hired the most talented of local personnel, and do not transfer their most advance technologies.

Home-country issues

MNC may also encounter difficulties in the home country where their headquarters are located. Even as many MNC’s try to operate more globally. Home country governments and citizens still lend to identify them with local and national interest.

Home-country criticisms of MNC

Include complaints about transferring jobs out of the country, shifting capital investments abroad, and engaging in corrupt practices in foreign setting.

Ethical Issues for

Multinational Corporations

WHAT IS ETHICS?

Code of moral principles that set standards of conduct of what is good and right.

What are multinational corporations?

Corruption Involves illegal practices for further one’s business interests.

SweatshopsEmploy workers at a very low wages for long hours and in poor working conditions.

Child Labor Is the full time employment of

children for work otherwise done by adults.

Sustainable Development

Meets the needs of the present without hurting future generations.

“Sustainable development is development that

delivers basic environmental, social and economic services to all

residents of a community without threatening the viability of the natural,

built, and social systems upon which the delivery of these services depends.”

ICLEI (1994)

Culture and Global Diversity

Is a shared set of beliefs, values and patterns of behavior common t6o a group of people.

Culture

Is the confusion and discomfort a person experiences when in an unfamiliar culture.

Ethnocentrism Is the tendency to consider one’s

culture as superior to others.

Cultural Intelligence

Is the ability to accept and adapt to new cultures.

Silent Languages Of Culture

Low-context Cultures

Emphasize communication via spoken or written words.

High-context cultures

Rely on non-verbal and situational cues as well as on spoken or written words in communication.

Monochronic Cultures

In here, people tend to do one thing at a time.

Polychronic Cultures

In here, time is used to accomplish many things at once.

Proxemics Is how people use space to

communicate.

Management Across Cultures

The management process planning, organizing, leading,

and controlling is as relevant to international operations as to

domestic ones. yet as the preceding

discussions of environment and culture should suggest,

just how this functions are applied may vary somewhat from what one country and culture to the

next.

Comparative Management

Comparative management analyzes the extent to which management

principles are applicable from one country to another. Since the leader in

the development of management principles is the United

States, comparative management seeks to determine the applicability of

American know-how to foreign locales.

Are Management Theories Universal?

Geert Hofstede, whose framework for understanding national cultures was introduced earlier, believes the answer is no. He worries that many theories are ethnocentric and fail to take into account cultural differences. Hofstede also points out that the motivation theories of American scholars tend to value individual performance. This is consistent with the high individualism found in Anglo-American countries such as the United States, Canada, and the United Kingdom. Elsewhere, where values are more collectivist, the theories may be less applicable. Even a common value, such as the desire for increased humanization of work, may lead in different management directions.

Global Organizational Learning

Global organizational learning is a timely and relevant theme. This point is evident in the following words of kenichi ohmae, noted japanese management consultant and author of The Borderless World.

Companies can learn from one another, particularly from other excellent companies, both at home and abroad. The industrialized world is becoming increasingly homogenous in trems of customer needs and social infrastucture, and only truly excellent companies can compete effectively in the global marketplace.

What are the international business challenges of Globalization?

Global managers are informed about international developments, transnational, in outlook, competent in working with people from different cultures, and always aware of regional developments in changing world.

The global economy is making the diverse countries of the world increasingly interdependent regarding resource supplies, product markets, and business competition.

Market entry strategies of international business include global sourcing, exporting/importing, and licensing.

Direct investment strategies of international business include joint ventures and wholly owned subsidiaries in foreign countries.

Global operations are influenced by important environmental differences among the economic, legal political, and educational systems of countries.

What are multinational corporations and what do they do?

- A multinational corporation (MNC) is a business with extensive operations in more than one foreign country.

-True MNCs are global firms with worldwide missions and strategies that earn a substantial part of their revenues abroad.

-MNCs offer potential benefits to host countries in broader tax bases, new technologies, and employment opportunities.

-MNCs can disadvantage host countries if they interfere in local government, extract excessive profits, and dominate the local economy.

-The Foreign Corrupt Practices Act Prohibits American MNCs from engaging in corrupt practices abroad.

VALUES AND NATIONAL CULTURES

Five Cultural Dimension

Power Distance Uncertainty Avoidance Individualism collectivism Masculinity-Femininity Time orientation

Expatriate Effectiveness Model

Big Five Personality TraitsConscientiousnessEmotional stabilityAgreeableness IntellectanceExtraversion

Cultural insight from project globe

9 Dimensions• Power distance Institutional

collectivism• Uncertainty avoidance In a group

collectivism• Gender egalitarianism Assertiveness• Future orientation Humane orientation