Understanding Management

First Canadian Edition

Slides prepared by Janice Edwards College of the Rockies

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Chapter 3

Managing in a Global Environment

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Learning Objectives
1. 2.

3.

4.

5. 6.

Describe the emerging borderless world. Define international management and explain how it differs from the management of domestic business operations. Indicate how dissimilarities in the economic, sociocultural, and legal-political environments throughout the world can affect business operations. Describe market entry strategies that businesses use to develop foreign markets. Describe the characteristics of a multinational corporation. Explain the challenges of managing in a global environment.
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Four Stages of Globalization

Domestic stage International stage

Multinational stage
Global stage

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Ex. 3.2

Key Factors in the International Environment

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The Economic Environment

Includes such factors as:

Economic development Infrastructure Resource and product markets Exchange rates

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3-6

Legal-Political Environment
Political Risk and Political Instability Risk of loss of assets, earning power, or managerial control. Includes government takeovers, civil disorders.
Laws and Regulations Laws and regulations differ from country to country.

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Sociocultural Environment
Includes shared: Knowledge Beliefs Values Common modes of behaviour Common ways of thinking

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Dimensions of Social Value Systems

Power distance. Uncertainty avoidance. Individualism & collectivism. Masculinity/femininity. Long term versus short term orientation.

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GLOBE Project Value Dimensions

Assertiveness Future orientation Uncertainty avoidance Gender differentiation Power distance

Societal collectivism Individual collectivism Performance orientation Humane orientation

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Additional Cultural Influences for International Organizations Consideration

Language Religion Attitudes Social organization Education

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GATT and the WTO

General Agreement on Tariffs and Trade (GATT)

Set of rules signed by 23 nations in 1947. Ensured nondiscrimination, clear procedures, negotiation of disputes, and participation of lesser developed countries (LDCs) in international trade.

Copyright 2009 Nelson Education Ltd.

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GATT and the WTO (Contd)

Primary tools of GATT successor, World Trade Organization (WTO): Tariff concessions, countries agree to limit level of tariffs on imports from other members. Most favoured nation clause.
WTO overall goal: Guide world nations toward free trade and open markets.

Copyright 2009 Nelson Education Ltd.

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European Union (EU)

Formed in 1957 to improve economic and social conditions. Has 25-nation alliance. EUs monetary revolution, introduction of the Euro () in 2002. Euro is the single European currency that replaced 12 national currencies; unified a huge marketplace.

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North American Free Trade Agreement (NAFTA)

Went into effect in 1994. Merged the United States, Canada, and Mexico into a megamarket with more than 421 million consumers.

Breaks down tariffs and trade restrictions on most agricultural and manufactured products.

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Globalization Backlash

Protests against globalization at WTO meeting in Seattle, 1999. WTO, World Bank and IMF (International Monetary Fund) referred to as The Iron Triangle of globalization. Primary concern is loss of jobs to countries with lower wages.

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Getting Started Internationally

Outsourcing Seeks cheaper sources of labour supply regardless of country.
Exporting Produces goods in home nation and transfers its products for sale in foreign countries.

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Ex. 3.6

Strategies for Entering International Markets

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Personal Challenges for Global Managers*

Need for: Personal learning and growth Cultural flexibility Sensitivity to cultural differences and other ways of thinking
* May experience culture shock: feelings of confusion, disorientation and anxiety.

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Managing Cross Culturally

Managers must be sensitive to cultural subtleties in: Leadership Decision making Motivation Control

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