PowerPoint Presentation

to Accompany
Management, 2/e
John R. Schermerhorn, Jr.
and Barry Wright

Chapter 3:
Global Dimensions of Management
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?
Planning Ahead Chapter 3 study questions

Management 2e - Chapter 3 2
Key concepts in the challenges of
globalization:
Global economy
Globalization
International management
Global manager

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

Management 2e - Chapter 3 3
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

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

Management 2e - Chapter 3 4
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

Study Question 1: What are the management challenges
of globalization?
Management 2e - Chapter 3 5
Global businesses
Conduct for-profit transactions of goods and services across
national boundaries
Reasons why businesses go global:
Profits
Customers
Suppliers
Capital
Labour


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

Management 2e - Chapter 3 6
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

Study Question 1: What are the management challenges
of globalization?
Management 2e - Chapter 3 7
Figure 3.1 Common forms of global businessfrom
market entry to direct investment strategies.
Management 2e - Chapter 3 8
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
companys products
Franchising
a fee is paid for rights to use another firms name and
operating methods



Study Question 1: What are the management challenges
of globalization?
Management 2e - Chapter 3 9
Foreign Direct Investment is building, buying all,
or buying part ownership of a business in another
country.
Insourcing
job creation through foreign direct investment


Study Question 1: What are the management
challenges of globalization?
Management 2e - Chapter 3 10
Types of direct investment strategies:
Joint ventures
operates in a foreign country through co-ownership
by foreign and local partners
Global strategic alliances
a partnership in which foreign and domestic firms
share resources and knowledge for mutual gains.
Foreign subsidiaries
o local operation completely owned by a foreign firm
Greenfield investment - builds an entirely new operation
in a foreign country



Study Question 1: What are the management
challenges of globalization?
Management 2e - Chapter 3 11
Criteria for choosing a joint venture partner:
Familiarity with your firms major business.
Strong local workforce.
Future expansion possibilities.
Values its customers
Strong local market for partners own products.
Good profit potential.
Sound financial standing.

Study Question 1: What are the management
challenges of globalization?
Management 2e - Chapter 3 12
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.

Study Question 1: What are the management
challenges of globalization?
Management 2e - Chapter 3 13
Regional Economic Alliances
NAFTA North American Free Trade
Agreement
EU European Union
SADC Southern Africa Development
Community

Study Question 1: What are the management
challenges of globalization?
Management 2e - Chapter 3 14
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


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

Management 2e - Chapter 3 15
Host-country benefits of MNC:
Larger tax bases
Increased employment opportunities
Technology transfers
Introduction of new industries
Development of local resources



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

Management 2e - Chapter 3 16
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


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


Management 2e - Chapter 3 17
Figure 3.2 What should go right and what can go
wrong in MNC-host country relationships.
Management 2e - Chapter 3 18
Ethical issues for MNCs:
Corruption illegal practices that further ones business
interests.
Sweatshops employing workers at low wages for long
hours and in poor working conditions.
Child labour full-time employment of children for work
otherwise done by adults.
Sustainable development meeting current needs
without compromising future needs.

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


Management 2e - Chapter 3 19
Culture
The shared set of beliefs, values, and patterns of behaviour
common to a group of people.
Culture shock
Confusion and discomfort a person experiences in an
unfamiliar culture.
Ethnocentrism
Tendency to consider ones own culture as superior to others.
Cultural intelligence
The ability to adapt and adjust to new cultures



Study Question 3: What is culture and how does it impact
global management?
Management 2e - Chapter 3 20
Stages in adjusting to a new culture:
Confusion
Small victories
The honeymoon
Irritation and anger
Reality
Study Question 3: What is culture and how does it
impact global management?
Management 2e - Chapter 3 21
Silent Languages of culture:
Context
Low-context cultures emphasize communication
via spoken or written words.
High-context cultures rely on nonverbal and
situational cues as well as on spoken or written
words in communication.

Study Question 3: What is culture and how does it
impact global management?
Management 2e - Chapter 3 22
Silent Languages of culture:
Time
Monochronic cultures people tend to do one
thing at a time.
Polychronic cultures time is used to accomplish
many different things at once.
Space
Proxemics is how people use space to
communicate.

Study Question 3: What is culture and how does it
impact global management?
Management 2e - Chapter 3 23
Values and national cultures (Hofstede):
Power distance
Uncertainty avoidance
Individualism-collectivism
Masculinity-femininity
Time orientation
Study Question 3: What is culture and how does it
impact global management?
Management 2e - Chapter 3 24
Figure 3.3 How countries compare on Hofstedes
dimension of national culture.
Management 2e - Chapter 3 25
Comparative management
How management perspectives and
practices systematically differs among
countries and cultures.

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

Management 2e - Chapter 3 26
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.


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

Management 2e - Chapter 3 27
Project GLOBE (Global Leadership and
Organizational Behaviour Effectiveness)
Researches the leadership, organizational
practices, and diversity among world cultures.
Power distance
Uncertainty avoidance
Gender egalitarianism
Future orientation
Study Question 4: How can we benefit from global
management learning?

Management 2e - Chapter 3 28
Project GLOBEs nine dimensions continued
Institutional collectivism
In-group collectivism
Assertiveness
Performance orientation
Humane orientation


Study Question 4: How can we benefit from global
management learning?
Management 2e - Chapter 3 29
Project GLOBEs research on leadership
practices across cultures
Facilitators of leadership success
Acting trustworthy, just, honest
Showing foresight, planning
Being positive, dynamic, motivating
Inspiring confidence
Being informed and communicative
Being a coordinator and team builder



Study Question 4: How can we benefit from global
management learning?
Management 2e - Chapter 3 30
Project GLOBEs research on leadership
practices across cultures
Inhibitors of leadership success
Being a loner
Acting uncooperative
Being irritable
Acting autocratic




Study Question 4: How can we benefit from global
management learning?
Management 2e - Chapter 3 31
Figure 3.4 Nine cultural dimensions used by Project
GLOBE researchers.
Management 2e - Chapter 3 32
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.
Global management attitudes and learning:
Companies can and should learn from each other.
Readiness for global organizational learning varies
based on managerial attitudes.
Ethnocentric attitudes
Polycentric attitudes
Geocentric attitudes
Be alert, open, inquiring, but always cautious.

Study Question 4: How can we benefit from global
management learning?
Management 2e - Chapter 3 33
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