Global Dimensions of Management

Management 10/e - Chapter 5 2

Planning Ahead — Chapter 5 study questions

What are the management challenges of globalization?

What are global businesses and what do they do?

What is culture and how does it impact global management?

How can we benefit from global management learning?


Study Question 1: What are the management challenges of globalization?

Key concepts in the challenges of globalization: Global economy

Globalization

International management

Global manager



Global economy Resource supplies, product markets, and business competition are worldwide, rather than local

Globalization The process of growing interdependence of these components in the global economy



Global management• Management in organizations with business interests in more than one country

Global manager Informed about international developments Transnational in outlook Competent in working with multicultural people

Aware of regional developments in a changing world



Global businesses• Conduct for-profit transactions of goods and services across national boundaries

Reasons why businesses go global: Profits Customers Suppliers Capital Labor



Market entry strategies involve the sale of goods or services to foreign markets but do not require expensive investments.

Types of market entry strategies:Global sourcing Exporting Importing Licensing agreement Franchising


Figure 5.1 Common forms of global business—from market entry to direct investment strategies.



Global sourcing the process of purchasing materials or services around the world for local use

Exporting selling locally made products in foreign markets

Importing buying foreign-made products and selling them domestically

Licensing agreement one firm pays fee for rights to make or sell another company’s products

Franchising a fee is paid for rights to use another firm’s name and operating methods


Study Question 1: What are the international business challenges of globalization?

Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations.

Types of direct investment strategies: Joint ventures

operates in a foreign country through co-ownership by foreign and local partners

Strategic alliances a partnership in which foreign and domestic firms share resources and knowledge for mutual gains.



Types of direct investment strategies: Foreign subsidiaries

o local operation completely owned by a foreign firm

Greenfield investment - builds an entirely new operation in a foreign country

Foreign direct investment. building, buying or buying part ownership of a business in another country.

Insourcing job creation through foreign direct investment



Criteria for choosing a joint venture partner: Familiarity with your firm’s major business.

Strong local workforce. Future expansion possibilities. Values its customers Strong local market for partner’s own products.

Good profit potential. Sound financial standing.



Complications in the global business environment: Political risk

the potential loss in value of a foreign investment due to instability and changes in host country

Local legal systems complex and unfamiliar laws can create problems

World Trade Organization resolves trade and tariff disputes among countries.

Protectionism can complicate global trading relationships.



Regional Economic Alliances NAFTA – North American Free Trade Agreement

CAFTA – Central American Free Trade Agreement

EU – European Union APEC – Asia Pacific Economic Cooperation

SADC – Southern Africa Development Community


Study Question 2: What are global businesses and what do they do?

Types of global businesses:

Global corporation MNC (multinational corporation) with extensive business operations in more than one foreign country

Transnational corporation MNC (multinational corporation) operates worldwide on a borderless basis


De acuerdo a su estructura, las empresas multinacionales pueden ser clasificadas en:

Corporaciones integradas horizontalmenteTienen bases de producci en diferentes pa�es pero producen el mismo o muy similar producto. (ejemplos McDonald's, United Fruit Company y BHP Billiton)

Corporaciones integradas verticalmentePrincipalmente producen en ciertos pa�es bienes intermedios, que sirven de abastecimiento para la producci final en otros pa�es (ejemplo: Timex, General Motors y Adidas)

Corporaciones diversificadasProducen diferentes bienes o servicios en diferentes centros de producci a nivel internacional. Por ejemplo, Alstom; Altria Group; Novartis (productora de medicinas y otros productos qu�icos, alimentos, pesticidas, semillas, etc) y Samsung (no solo productos electricos pero tambi駭 industria pesada, entretenimientos, servicios comerciales y financieros, venta al plico, etc)


Figure 5.2 What should go right and what can go wrong in MNC-host country relationships.


Study Question 2: What are global businesses and what do they do?

Ethical issues for MNCs: Corruption — illegal practices that further

one’s business interests.

Sweatshops — employing workers at low wages for

long hours and in poor working conditions.

Child labor — full-time employment of children

for work otherwise done by adults.

Sustainable development — meeting current needs

without compromising future needs.


Study Question 3: What is culture and how does it impact global management?

Culture The shared set of beliefs, values, and patterns of behavior common to a group of people.

Culture shock Confusion and discomfort a person experiences in an unfamiliar culture.

Cultural intelligence The ability to adapt and adjust to new cultures

Ethnocentrism Tendency to consider one’s own culture as superior to others.



Stages in adjusting to a new culture: Confusion

Small victories

The honeymoon

Irritation and anger

Reality



Popular dimensions of culture: Language

Low-context cultures and high-context cultures

Interpersonal space proxemics

Time orientation Monochronic cultures and polychronic cultures

Religion Contracts and agreements


Study Question 3: What is culture and how does it relate to global diversity?

Project GLOBE’s research on leadership practices across cultures

Inhibitors of leadership success

Being a loner Acting uncooperative Being irritableActing autocratic


Study Question 4: How can we benefit from global management learning?

Comparative management How management systematically differs

among countries and/or cultures.

Global managers Need to successfully apply management

functions across international

boundaries.


Study Question 4: How can we benefit from global management learning?

Are management theories universal?

U.S. management theories may be

ethnocentric.

Participation and individual performance

are not emphasized as much in other

cultures.

Not all Japanese management practices

can be applied successfully abroad.


Figure 5.4 Nine cultural dimensions used by Project GLOBE researchers.1.-Da dos ejemplos de empresas que usen las siguientes estrategias y describe por que.

Global sourcingExportingImportingLicensing agreementFranchising

2.-De acuerdo a su clasificacion da 3 ejemplos diferentes a los vistos de empresas multinacionales.

3.-Identifica las nueve dimensiones identificadas por el proyecto clobe para el estudio delas diferencias culturales y ejemplifica a que se refieren.

Entrega en una hoja impresa al comienzo de la clase el miercoles 14 de octubre. Si no cuenta con nombre impreso no se aceptara el trabajo.

Global Dimensions of Management

Documents

Transcript of Global Dimensions of Management