management 11e john schermerhorn chapter 5: global management and cultural diversity

Management 11e John Schermerhorn

Chapter 5:Chapter 5:

Global Management and Global Management and

Cultural Diversity Cultural Diversity

Planning Ahead — Chapter 5 study questions

1. What are the management challenges of globalization?

2. What are global businesses and what do they do?

3. What is culture and how does it impact global management?

4. How can we benefit from global management learning?

Study Question 1: What are the management challenges of globalization?

Key concepts in the challenges of globalization: Global economy Globalization Global

management Global manager

Management 11e/ Chapter 5 3


Global economy 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



Global management Management in organizations with business interests

in more than one country

Global manager Aware of international developments

and the effect on societies and economies

Competent in working with people from different cultures



Global businesses Conduct for-profit transactions of goods and

services across national boundaries

Reasons why businesses go global:



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 Licensing agreement Franchising


Figure 5.1 Common forms of global business—from market entry to direct investment strategies


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

Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations



Types of direct investment strategies:



Legal and political systems Differing laws and practices regarding

Business ownership Foreign currency exchange Protection of intellectual property rights

Counterfeit merchandise



Legal and political systems Political risk

Potential loss in value of a foreign investment due to instability and political changes in the host country

Political risk analysis Forecast political disruptions that threaten the

value of a foreign investment



Trade Agreements and Trade Barrriers World Trade Organization

Most favored nation status Tariffs Nontariff barriers Protectionism



Regional Economic Alliances NAFTA – North American Free Trade

Agreement EU – European Union APEC – Asia Pacific Economic Cooperation ASEAN – Association of Southeast Asian

Nations SADC – Southern Africa Development

Community


Study Question 2: What are global businesses and what do they do?

Types of global businesses: Global corporation

MNC (multinational corporation) with extensive business operations in more than one foreign country

Transnational corporation MNC (multinational corporation) operates

worldwide on a borderless basis



Mutual benefits for host country and global corporation or MNC: Shared growth opportunities Shared income opportunities Shared learning opportunities Shared development opportunities


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



Host country complaints about MNCs: Excessive profits Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customs



MNC complaints about host countries: Profit limitations Overpriced resources Exploitative rules Foreign exchange restrictions Failure to uphold contracts



Ethical issues for Global Businesses: Corruption – illegal practices that further

one’s business interests Foreign Corrupt Practices Act – makes it

illegal for U.S. firms and their representatives to engage in corrupt practices overseas Bribes to foreign officials Excessive commissions Non monetary gifts



Child labor and Sweatshops: Child labor – full time employment of children

for work otherwise done by adults Sweatshops – employ workers at very low

wages for long hours in poor working conditions


Study Question 3: What is culture and how does it impact global management?



Stages in adjusting to a new culture:




Silent languages ofculture


Context Low context cultures - emphasize

communication via spoken or written words United States Canada Germany



Context High context cultures – rely on nonverbal and

situational cues as well as on spoken or written words Thailand Malaysia



Time Monochronic cultures – people

tend to do one thing at a time United States, Canada, Germany

Polychronic cultures – time is used to accomplish many different things at once Egypt, Saudi Arabia, Mexico



Space Proxemics – study of how people use space

to communicate In the U.S. people value “personal space” Many Latin and Asian

cultures expect much less personal space



Values and national cultures (Hofstede):


Figure 5.3 How countries compare on Hofstede’s dimension of national culture


Study Question 4: How can we benefit from global management learning?

Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) Researches the leadership, organizational

practices, and diversity among world cultures Power distance Uncertainty avoidance Gender egalitarianism Future orientation



Project GLOBE’s nine dimensions continued Institutional collectivism In-group collectivism Assertiveness Performance orientation Humane orientation



Project GLOBE’s research on leadership practices across cultures

Facilitators of leadership success Acting trustworthy, just, honest Showing foresight, planning Being positive, dynamic, motivating Inspiring confidence Being informed and communicative Being a coordinator and team builder



Project GLOBE’s research on leadership practices across cultures

Inhibitors of leadership success Being a loner Acting uncooperative Being irritable Acting autocratic


Figure 5.4 Nine cultural dimensions used by Project GLOBE researchers



Comparative management How management systematically differs

among countries and/or cultures

Global managers Need to successfully apply management

functions across international boundaries



Global management learning: Companies can and should learn from each

other GLOBE dimensions

Power distance Uncertainty avoidance Future orientation Etc.

Be alert, open, inquiring, but always cautious


Management 11e/ Chapter 5 Case

Harley-Davidson: Style and strategy have global reach

For activities and assessments, please visit…

www.wiley.com/college/schermerhorn

http://www.wiley.com/college/schermerhorn

management 11e john schermerhorn chapter 5: global management and cultural diversity

Documents

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