general management - managing in a global environment

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Prof. Rushen ChahalProf. Rushen Chahal

General Management



Prof. Rushen Chahal

L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapter.

What Your Global Perspective?

Contrast ethnocentric, polycentric, and geocentric

attitudes towards global business.

Explain why it¶s important for managers to be sensitive to

global differences

Understanding the Global Environment

Describe the current status of the European Union.

Discuss the North American Free Trade Agreement and

other regional trade alliances in Latin America. Tell about the Association of Southeast Asian Nations.

Explain the interdependence that globalization involves.

Discuss the role of the WTO.



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L E A R N I N G O U T L I N E (cont¶d) Follow this Learning Outline as you read and study this chapter.

Doing Business Globally

Contrast MNCs, TNCs, and borderless organizations.

Describe the three stages organizations go through as

they go global.

Define exporting, importing, licensing, and franchising.

Describe global strategic alliances, joint ventures, and

foreign subsidiaries.

Managing in a Global Environment

Explain how the global legal-political environment affectsmanagers.

Discuss Hofstede¶s five dimensions for assessing

cultures.



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L E A R N I N G O U T L I N E (cont¶d) Follow this Learning Outline as you read and study this chapter.

Managing in a Global Environment (cont¶d)

Explain the nine GLOBE dimensions for assessing

cultures.

Discuss the challenges of doing business globally in

today¶s world.



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Managing in a Global Environment

Challenges

Coping with the sudden appearance of new

competitors

Acknowledging cultural, political, and economic

diff erences

Dealing with increased uncertainty, f ear, and anxiety

Adapting to changes in the global envir onment

Avoiding par ochialism



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Adopting a Global Perspective

Ethnocentr ic Attitude

The par ochialistic belief that the best work

appr oaches and practices are those of the home

country.

Polycentr ic Attitude

The view that the managers in the host country know

the best work appr oaches and practices for running

their business.

Geocentr ic Attitude

A w orld-oriented view that focuses on using the best

appr oaches and people f r om ar ound the globe.



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Regional Trading Agreements

The Eur opean Union (EU)

A unified economic and trade entity

Belgium, Denmark, France, Greece, Ireland, Italy,

Luxembourg, the Netherlands, Portugal, Spain, the

United Kingdom, Germany, Austr ia, Finland, andSweden

Economic and monetary union (Eur o)

North Amer ican Free Trade Agreement (NAFT A)

Eliminated barr iers to f ree trade (tar iff s, import

licensing requirements, and customs user f ees)

United States, Canada, and Mexico



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Exhibit 4.3Exhibit 4.3

European Union Countries



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Regional Trading Agreements (cont¶d)

Free Trade Area of the Amer icas

Southern Cone Common Market (Mercosur)

Association of Southeast Asian Nations

(ASE AN) Trading alliance of 10 Southeast Asian nations

Af r ican Union



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ASEAN Members

Source: Based on J. McClenahen and T. Clark,

³ASE AN at Work,´ IW . May 19, 1997, p. 42.



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The World Trade Organization (WTO)

Evolved f r om the General Agreement on Tar iff s

and Trade (GATT) in 1995.

Functions as the only global organization

dealing with the rules of trade among nations.

Has 145 member nations.

Monitors and pr omotes world trade.



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Different Types of Global Organizations

Multinational Cor poration (MNC)

A firm which maintains operations in multiple

countr ies but manages the operations f r om a base in

the home country.

Transnational Cor poration (TNC)

A firm that maintains operations in several countr ies

but decentralizes management to the local country.

Borderless Organization A firm that has eliminated structural divisions that

impose artificial geographic barr iers and is organized

along business lines.



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How Organizations Go Global

Three Stages of Globalization

Stage I

Exporting pr oducts for sale overseas and importing

pr oducts f r om overseas to sell in the home country.

Stage II

Committing to directly sell home-country pr oducts in

overseas markets or contracting for pr oducts to be

manuf actured overseas and sold in the home country.

Stage III Licensing manuf actur ing and f ranchising services to

foreign firms to use the brand name, technology, or

pr oduct specifications developed by the firm.



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How Organizations Go Global



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Other Forms of Globalization

Strategic Alliances

Partnerships between and organization and a foreign

company in which both share resources and

knowledge in developing new pr oducts or building

new pr oduction f acilities.

Joint Venture

A specific type of strategic alliance in which the

partners agree to form a separate, independent

organization for some business pur pose.



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Managing in A Global Environment

The Legal Envir onment

Stability or instability of legal and political systems

Legal pr ocedures are established and followed

Fair and honest elections held on a regular basis

Diff erences in the laws of var ious nations

Eff ects on business activities

Eff ects on delivery of pr oducts and services



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The Economic Environment

Economic Systems

Market economy

An economy in which resources are pr imar ily owned

and contr olled by the pr ivate sector.

Command economy

An economy in which all economic decisions are

planned by a central government.

Monetary and Financial Factors

Currency exchange rates

Inf lation rates

Diverse tax policies



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The Cultural Environment

National Culture

Is the values and attitudes shared by individuals f r om

a specific country that shape their behavior and their

belief s about what is important.

May have more inf luence on an organization than the

organization culture.



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What Are Americans Like?

Americans are very informal.

Americans are direct .

Americans are competitive.

Americans are achievers.

Americans are independent and individualistic.

Americans are questioners.

Americans dislike silence.

Americans value punctuality.Americans value cleanliness.

Sources: Based on M. Ernest (ed.), Predeparture Orientation Handbook: For Foreign Students and Scholars Planning to Study in the

United States (Washington, DC: U.S. Information Agency, Bureau of Cultural Aff airs, 1984), pp. 103±05; A. Bennett, ³Amer ican Culture Is

Of ten a Puzzle for Foreign Managers in the U.S.,´ W all Street Journal , February 12, 1986, p. 29; ³Don¶t Think Our Way¶s the Only Way,´

The Pryor Report , February 1988, p. 9; and B.J. Wattenberg, ³The Attitudes behind Amer ican Exceptionalism,´ U.S. News & W orld

Report , August 7, 1989, p. 25.



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Hofstede¶s Framework for Assessing

Cultures Individualism versus Collectivism

Power Distance

Uncertainty Avoidance Quantity versus Quality of Lif e

Long-term versus Short-term Or ientation



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Examples of Hofstede¶s Cultural Dimensions

Source: Based on G. Hof stede, ³Motivation, Leadership, and Organization: Do Amer ican

Theor ies Apply Abr oad?´ Organizational Dynamics, Summer 1980, pp. 42±63.



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The GLOBE (Global Leadership and

Organizational Behavior Effectiveness)Framework for Assessing Cultures

Assertiveness

Future or ientation

Gender diff erentiation

Uncertainty avoidance

Power distance

Individualism/collectivism

In-gr oup collectivism

Per formance or ientation

Humane or ientation

general management - managing in a global environment

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