Schermerhorn Mgmt9 Ch05

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Management, 9/eJohn R. Schermerhorn, Jr.

Chapter 5:

Prepared by: Jim LoPresti

University of Colorado, Boulder

Published by: John Wiley & Sons, Inc.

Chapter 5: Global Dimensions of Management

Planning Ahead —

Chapter 5 Study Questions

�What are the international business challenges of globalization?

�What are multinational corporations and what do they do?

Management 9/e - Chapter 5 2

and what do they do?

�What is culture and how does it relate to global diversity?

�How do management practices transfer across cultures?

Study Question 1: What are the international business

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


worldwide, rather than local

� Globalization

� The process of growing

interdependence of these components

in the global economy



� International management

� Management in organizations with business

interests in more than one country

� Global manager


� Global manager

� Informed about international developments

� Transnational in outlook

� Competent in working with multicultural people

� Aware of regional developments in a changing

world



� International businesses

� Conduct for-profit transactions of goods and

services across national boundaries

� Reasons why businesses go international:


� Reasons why businesses go international:

� Profits

� Customers

� Suppliers

� Capital

� Labor

Study Question 1 What are the international business


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

� Types of market entry strategies:


� Types of market entry strategies:

� Global sourcing

� Exporting

� Importing

� Licensing agreement

� Franchising

Figure 5.1 Common forms of international business—from

market entry to direct investment strategies.




�Direct investment strategies require

major capital commitments but

create rights of ownership and

control over foreign operations.


control over foreign operations.

� Types of direct investment

strategies:

� Joint ventures

� Foreign subsidiaries



� Criteria for choosing a joint venture

partner:

� Familiarity with your firm’s major business.

� Strong local workforce.


� Strong local workforce.

� Future expansion possibilities.

� Strong local market for partner’s own

products.

� Good profit potential.

� Sound financial standing.



� Complications in the global business

environment:

� Environment is complex, dynamic, and highly

competitive.


competitive.

� Global business executives must deal with

differences in the environment of business in

different countries.

� World Trade Organization resolves trade and

tariff disputes among countries.

� Protectionism can complicate global trading

relationships.

Study Question 2: What are multinational

corporations and what do they do?

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




� Mutual benefits for host country and

MNC:

Shared growth opportunities


� Shared growth opportunities

� Shared income opportunities

� Shared learning opportunities

� Shared development opportunities



� Host country complaints about MNCs:

� Excessive profits

� Domination of local economy


� Interference with local government

� Hiring the best local talent

� Limited technology transfer

� Disrespect for local customs

Figure 5.2 What should go right and what can go

wrong in MNC-host country relationships.




� MNC complaints about host countries:

� Profit limitations

� Overpriced resources


� Exploitative rules

� Foreign exchange restrictions

� Failure to uphold contracts



� 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.


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

relate to global diversity?

� 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


� 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


cultures

� Interpersonal space

� Time orientation

� Monochronic cultures and polychronic cultures

� Religion

� Contracts and agreements



� Values and national cultures

(Hofstede):

� Power distance


� Power distance

� Uncertainty avoidance

� Individualism-collectivism

� Masculinity-femininity

� Time orientation

Figure 5.3 How countries compare on Hofstede’s

dimension of national culture.




� Project GLOBE (Global Leadership and Organizational Behavior Effectiveness)

� Researches the leadership,


� Researches the leadership, organizational practices, and diversity among world cultures.

� Power distance

� Uncertainty avoidance

� Gender egalitarianism

� Future orientation



� Project GLOBE’s nine dimensions continued

�Institutional collectivism


�Institutional collectivism

�In-group collectivism

�Assertiveness

�Performance orientation

�Humane orientation

Figure 5.4 Nine cultural dimensions used by Project

GLOBE researchers.


A large team of international researchers collaborated in Project GLOBE to examine societal cultures using the nine cultural dimensions

shown in the figure. When results from extensive empirical studies were analyzed for 62 countries, they were found to fall into ten culture

clusters. Countries within a cluster share many societal cultural practices; countries tend to differ significantly across clusters in their cultural

practices.



� Understanding cultural differences (Trompenaars):� Relationships with people:

� Universalism versus particularism

� Individualism versus collectivism


� Individualism versus collectivism

� Neutral versus affective

� Specific versus diffuse

� Achievement versus prescription

� Attitudes toward time — sequential and synchronic views.

� Attitudes toward environment — inner-directed and outer-directed cultures.

Study Question 4: How do management practices

transfer across cultures?

� Comparative management

� How management systematically

differs among countries and/or


differs among countries and/or

cultures.

� Global managers

� Need to successfully apply

management functions across

international boundaries.



� 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.



� Global organizational learning:

� Companies can and should learn from each

other.

Readiness for global organizational learning


� Readiness for global organizational learning

varies based on managerial attitudes.

� Ethnocentric attitudes

� Polycentric attitudes

� Geocentric attitudes

� Be alert, open, inquiring, but always cautious.

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