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Management, 9/e
John R Schermerhorn Jr. R. Schermerhorn, Chapter 5: Global Dimensions of Management

Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc.

Planning Ahead Chapter 5 Study Questions

What are the international business challenges of globalization? h ll f l b li ti ? What are multinational corporations and what do they do? What is culture and how does it relate to global diversity? How do management practices transfer across cultures?

Management 9/e - Chapter 5

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

Key concepts in the challenges of y p g globalization:

Global economy Globalization International management Global manager

Management 9/e - Chapter 5

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

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

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

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

Reasons why businesses go international:

Profits Customers Suppliers Capital Labor
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Study Question 1 What are the international business challenges of globalization?

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 po t g Licensing agreement Franchising

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Figure 5.1 Common forms of international businessfrom

market entry to direct investment strategies.

Management 9/e - Chapter 5

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

Direct investment strategies require g q major capital commitments but create rights of ownership and control over foreign operations. Types of direct investment strategies:
Joint ventures Foreign subsidiaries
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Study Question 1 What are the international business challenges of globalization?

Criteria for choosing a joint venture partner:

Familiarity with your firms major business. Strong local workforce. Future expansion possibilities. Strong local market for partners own products. Good profit potential. Sound financial standing.
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Study Question 1 What are the international business challenges of globalization?

Complications in the g p global business environment:

Environment is complex, dynamic, and highly competitive. Global business executives must deal with differences in the environment of business in different countries countries. World Trade Organization resolves trade and tariff disputes among countries. Protectionism can complicate global trading relationships.
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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.

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Study Question 2: What are multinational corporations and what do they do?

Mutual benefits for host country and MNC:

Shared growth opportunities Shared income opportunities Shared learning opportunities Sh dl i t iti Shared development opportunities

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Study Question 2: What are multinational corporations and what do they do?

Host country complaints about MNCs: y p

Excessive profits Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customs

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

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Study Question 2: What are multinational corporations and what do they do?

MNC complaints about host countries: p

Profit limitations Overpriced resources Exploitative rules Foreign exchange restrictions Failure to uphold contracts

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Study Question 2: What are multinational corporations and what do they do?

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 labor full-time employment of children for work otherwise done by adults. Sustainable development meeting current needs without compromising future needs.

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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 in an unfamiliar culture.

Cultural intelligence
The ability to adapt and adjust to new cultures

Ethnocentrism
Tendency to consider ones own culture as superior to others.

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

Stages in adjusting to a new g j g culture:

Confusion Small victories The honeymoon Irritation and anger Reality

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

Popular dimensions of culture: p

Language
Low-context cultures and high-context cultures

Interpersonal space Time orientation

Monochronic cultures and polychronic M h i l d l h i cultures

Religion Contracts and agreements

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

Values and national cultures (Hofstede):

Power distance Uncertainty avoidance Individualism collectivism Individualism-collectivism Masculinity-femininity Time orientation
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Figure 5.3 How countries compare on Hofstedes dimension of national culture.

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

Project GLOBE ( j (Global Leadership p and Organizational Behavior Effectiveness)

Researches the leadership, organizational practices, and diversity among world cultures.
Power distance P di t Uncertainty avoidance Gender egalitarianism Future orientation
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Study Question 3: What is culture and how does it relate to global diversity?

Project GLOBEs nine dimensions continued

Institutional collectivism In-group collectivism Assertiveness Performance orientation Humane orientation

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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. Management 9/e - Chapter 5 25

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

Understanding cultural differences (Trompenaars): (T )

Relationships with people: Universalism versus particularism Individualism versus collectivism Neutral versus affective Specific versus diffuse Achievement versus prescription p p Attitudes toward time sequential and synchronic views. Attitudes toward environment inner-directed and outer-directed cultures.
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Study Question 4: How do management practices transfer across cultures?

Comparative management
How management systematically differs among countries and/or cultures.

Global managers g
Need to successfully apply management functions across international boundaries.
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Study Question 4: How do management practices transfer across cultures?

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.

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Study Question 4: How do management practices transfer across cultures?

Global organizational learning: g g

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.

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