ch4-managing in a global environment

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Managing in a Global Environment

Chapter4


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Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.

3

Global Environment and

International Managers

Difficulties Operating in Borderless World

Challenges Economic

Legal-political

Socio-cultural Multinational Corporations

Foreign Markets - Entrance

Chapter 4

Topics

Managers Challenge: Wal-Mart Managers


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4

A Borderless World

Business is becoming a unified, global field

Companies that think globally have acompetitive edge

Domestic markets are saturated for many

companies

Consumers can no longer tell from which

country they are buying


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4 Stages of Globalization

1. Domestic 2. International 3. Multinational 4. Global

Strategic Orientation

Stage of Development

Cultural Sensitivity

Manager Assumptions

Domestically

Oriented

Export- Oriented

multi-domestic

Multinational Global

GlobalInitial foreign

involvement

Competitive

positioning

Explosion of

international

operations

Of little

importance

One best

way

Very important

Many good

ways

Somewhat

important

The least-cost

way

Critically

important

Many good

ways

SOURCE: Based on Nancy J. Adler, International Dimensions of Organizational Behavior, 4 th ed. (Cincinnati, Ohio: South-Western, 2002), 8-

9.


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The International

Business Environment

International management is management

of business operations conducted in morethan one country

Fundamental tasks do not change

Basic management functions are the same - domestic or international

Greater difficulties and risks when performing on

an international scale


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Economic Environment Factors

Economic development

Infrastructure Resource and product markets

Exchange rates

Inflation

Interest rates

Economic growth


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Infrastructure

A countrys physical facilities that support

economic activities

Airports, highways, and railroads

Energy-producing facilities

Communication facilities


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Exchange Rates

Rate at which one countryscurrency is exchanged for

another countrys Has become a major concern for

companies doing businessinternationally

Changes in the exchange ratecan have major implications forprofitability of internationaloperations


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The Legal-Political Environment

Political Riskdue to events or actions by host

governments Loss of assets

Loss of earning power

Loss of managerial control

Government takeovers

Acts of violence


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Political Instability

Events such as riots, revolutions, or

government upheavals that affect the

operations of an international company


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Laws and Regulations

Government laws and regulations differ from

country to country Make doing business a true challenge for

international firms

Internet has increased impact of foreign lawson U.S. companies expands potential for

doing business on global basis


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Sociocultural Environment

Culture shared knowledge, beliefs, values,common modes of behavior, and ways of thinking

among members of a society Intangible

Pervasive

Difficult for outsider to learn

Managers need to understand difference in socialvalues to comprehend local cultures and deal withthem effectively


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Hofstedes Value Dimensions

Research = national value systems influence

organizational and employee working relationships

Power distance (high = accept inequality)

Uncertainty avoidance (uncomfortable with uncertainty)

Individualism and collectivism (Individualism take careof themselves)

Masculinity/femininity (preference forachievement/assertiveness; femininity for relationship)

Long-term/short-term orientation = 5th dimension

Ethical Dilemma: The Problem in Asia


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Four Dimensions of National Value


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GLOBE Value Dimensions

Assertiveness

Future orientation

Uncertainty avoidance

Gender differentiation

Power distance

Societal collectivism

Individual collectivism

Performance orientation

Humane orientation

Global Leadership and Organizational Behavior Effectiveness project

More comprehensive view of cultural

similarities and differences


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International Trade Agreements

Most visible changes in legal-political

factors grow out of international trade

agreements: GATT

WTO

EU

NAFTA


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International Trade Alliances

General Agreement on Tariffs and Trade (GATT)

Signed by 23 nations in 1947 as a set of rules Ensured nondiscrimination, clear procedures,

negotiation of disputes, and participation of lesserdeveloped countries in international trade

Today, 147 member countries abide by the rules

Primary tools WTO uses on tariff concessions,countries agree to limit level of tariffs on importsfrom other WTO members

Most favored nation clause


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European Union

Formed in 1957 to improve economic and socialconditions

Has grown to 25-nation alliance

Initiative Europe 92 called for creation of open marketsfor Europes 340 million consumers

Biggest expansion in 2004 10 new members from

southern and eastern Europe

Observers feared EU would become a trade barrier

EUs monetary revolution, introduction of the Euro


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Nations of The EU

*

* *

*

*

*

*

*

**

*Joined in2004


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Multinational Corporations (MNC)

Receives >25% total sales revenues from

operations outside parent companys home

country

Managed as integrated worldwide business system

Controlled by single management authority

Top managers exercise global perspective


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Managing in a Global Environment

Managers must be sensitive to cultural subtleties

Personal challenges culture shock Managing Cross-culturally

Leading

Decision making

Motivating

Controlling

Managers must be culturally flexible and easily

adapt to new situations

Experiential Exercise: Rate your Global

Management Potential

ch4-managing in a global environment

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