global management in today’s world
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MANAGING IN GLOBAL
ENVIRONMENT
Submitted by:-Neeraj mehtaNeetu mehra
Neha aroraNeha asija
Neha bhallaNeha gupta
Contents • Parochialism • Adopting a global perspectives• Regional trading alliances• The world trade organization• Different types of global organization• How organization go global• Managing in global environment• Hofstadter's framework for assessing cultures• Globe’s frame work for assessing culture• Global management in today’s world
The Global MarketplaceOpportunities and Challenges
Coping with the sudden appearance of new competitors
Acknowledging cultural, political, and economic differences
Dealing with increased uncertainty, fear, and anxiety
Adapting to changes in the global environmentAvoiding parochialism
What’s Your Global Perspective?
• Parochialism– Is viewing the world solely through its own
eyes and perspectives.– Is not recognizing that others have different
ways of living and working.– Is a significant obstacle for managers working
in a global business world.– Is falling into the trap of ignoring others’
values and customs and rigidly applying an attitude of “ours is better than theirs” to foreign cultures.
Exhibit 4–1 Key Information About Three Global Attitudes
Adopting a Global Perspective• Ethnocentric Attitude
– The parochialistic belief that the best work approaches and practices are those of the home country.
• Polycentric Attitude– The view that the managers in the host country
know the best work approaches and practices for running their business.
• Geocentric Attitude– A world-oriented view that focuses on using the
best approaches and people from around the globe.
REGIONAL TRADING ALLIANCES
Countries within specified region conduct free trade with one another.
Regional trading agreements reshaped global competition .
It mainly involves : 1) European Union 2) North American
Free Trade Agreement (NAFTA)
3) The Association of Southeast Asian Nations (ASEAN)
THE EUROPEAN UNION1992
• FORMATION OF EUROPEAN UNION
COMPRISES OF 12 MEMBERS
1995
• THREE COUNTRIES – AUSTRIA , FINLAND AND SWEDEN JOINED THE GROUP
2004 •TEN NEW MEMBERS ARE ADDED
2007• 27 MEMBER COUNTRIES IN EUROPEAN
UNION
AIM – To reassert their economic position against their strength of the United States and JapanADVANTAGES – It continues to assert its economic power in one of the world’s richest markets.● No barrier to travel●Employment●Investment●Trade
NORTH AMERICAN FREE TRADE AGREEMENT
CANADA
USA
MEXICO
NAFTA came into existence in 1992 between Mexico , Canada and U.S. Soon Canada, Mexico and Japan become leading trading partners of United States. Other Latin American Nations become part of free trade blocs. 34 countries in the Caribbean region, South America and Central America are negotiating a Free Trade Area of the Americas (FTAA).
ASSOCIATION OF SOUTHEAST ASIAN NATIONS(ASEAN)
ASEAN is a trading alliance of ten Southeast Asian nations. One of the fastest growing economic regions of the world.
OTHER TRADE ALLIANCES 53 nation African Union came into existence in july 2002. It plan to create an economic development plan To achieve greater unity among Africa’s nations.
THE WORLD TRADE ORGANIZATION
The WTO was formed in 1995. It evolved from the General Agreement on Tariffs and Trade (GATT) Global organisation dealing with the rules of trade among nations.Comprises of 146 countries.Goal is to help businesses (importers and exporters) conduct their business .
a)Multinational corporations{MNC’s}
b)Transnational corporations{TNC’s}
c)Borderless organisations
Different types of Global Organisations
Multinationl corporations• a)Maintain
operations- multiple countries -managed home country.
• b)Ethnocentric attitude
• c)Sony,Deutsche BankAG, Merrill Lynch.
Transnatioal corporations• a)Maintain
operations - more than one country but decentralizes management to a local country.
• b)Polycentric attitude
• c)Nestle, Frito -Lay
Borderless organisatios• a)Maintain
operations - eliminating structural divisions that impose artificial geographical barriers.
• b)Geocentric attitude
• c)IBM, Bristol-Myers Squibb
How organisations go global?
Imports
Exports
Stage one
HIRING FOREIGN REPRESENTATIONS
OR CONTRACTING WITH FOREIGN
MANUFACTURES
STAGE TWO
STAGE 3
FOREIGN
SUBSIDIARY
JOINT VENTUR
E
STRATEGIC
ALLIANCE
LICENSING/
FRANCHISING
Managing in A Global Environment
• The Legal –
Political
environment
• The Economic
environment
• The Cultural
environment
The Legal – Political Environment
• Stability of legal
and political
systems
• Differences in the
laws of various
nations
The Economic Environment
Economic Systems
Market Economy
Command Economy
Monetary and Financial Factors
Currency
exchange rates
Inflation rates
Diverse tax
policies
The Cultural Environment
National culture
• Is the values and attitudes shared by
individuals from a specific country that shape
their behavior and their beliefs about what is
important.
• May have more influence on an organization
than the organization culture.
Hofstede’s Framework for Assessing Cultures
Individualism v/s Collectivism• Degree to which
people prefer to act as individuals.
• Characterized by social framework where preference is in being in groups or organizations.
Power Distance• Extent to which a
society accepts the unequal distribution of power within organizations.
• High power distance society accepts wide differences.
• Low power distance society, the differences are less.
Uncertainty Avoidance• Degree to which
people tolerate risks& prefer structured rather than unstructured situations.
• Low uncertainty avoidance more prone to risks.
• High uncertainty avoidance, less prone to risks
Quantity v/s Quality of life
• Degree to which values like assertiveness, material goods & money acquisition & competition prevails.
• Cultural Attribute which emphasizes relationships & concern.
Long term/Short term Orientation
• Orientation towards life & work• Long term Orientation-people
look into future & value persistence.
• Short term orientation values past & present, emphasizes tradition & fulfilling social obligations.
Cont…
•Extent of encouragement to be tough, confrontational, assertive & competitive.•Opposite to modest & tender.
Assertiveness
•Extent of rewards granted for future orientation behaviors i.e. planning, investing & delaying gratification.
Future Orientation
•Extent to which society maximizes gender role differences as measured by how much status & decision making responsibilities women have.
Gender Differentiatio
n
GLOBE Framework for Assessing Cultures
•Society’s reliance on social norms & procedures to alleviate the unpredictability of future events.
Uncertainty Avoidance
•Degree to which members of society expect power to be unequally shared.
Power Distance
•Degree to which individuals are encouraged by societal institutions to be integrated into groups within organizations & society.
Individualism/Collectivism
Cont…
•Extent to which members of society involves in small groups like family, friends or organization in which they are employed.
In-Group Collectivism
•Degree to which society rewards & encourages the group members for performance improvement & excellence.
Performance Orientation
•Degree to which society encourages & rewards individuals for being fair, generous, caring & kind to others.
Humane Orientation
Cont…
GLOBAL MANAGEMENT IN TODAY’S WORLD
IMPORTANCE
1 • TECHNOLOGY MAKES THE WORLD SMALLER .
2• AMALGAMATION OF
BUSINESS, CULTURE, HISTORY AND SOCIAL PRACTICES WITHIN OTHER CULTURES .
3• GROWTH OF
MULTINATIONAL CORPORATIONS, OUTSOURCING AND CONTINUING ECONOMIC CHALLENGES .
OPENNESS CAUSES SERIOUS CHALLENEGES
CHALLENGES FROM THE OPENNESS
ASSOCIATED WITH GLOBALIZATION
CHALLENGES FROM
SIGNIFICANT CULTURAL
DIFFERENCESINCREASED THREAT OF TERRORISM
ECONOMIC INTERDEPENDENCE
OF TRADING COUNTRIES
SUCCESSFUL MANAGEMENT IN TODAY’S WORLD
MANAGERS
QuestionsWhat do you mean by global perspectives? How do companies
do business globally?
Write short notes on:-
1. Hofstede’s framework for assessing cultures
2. World trade organization
A broad term that refers to any and all types of international
companies that maintain operations in multiple countries
a) Multidomestic corporation
b) Multinational corporation
c) World trade organization
Exporting means making products domestically and
selling them abroad
a) Correct
b) Incorrect
An organization gives another organization the right to
use it’s name and operating methods is called:-
a) Franchising
b) Licensing
c) Joint venture
Purchasing labor or materials from around the world
wherever it is cheapest is called global sourcing
a) Correct
b) incorrect
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