schermerhorn - chapter 31 core concepts of management schermerhorn prepared by cheryl wyrick...
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Schermerhorn - Chapter 3 1
Core Concepts of ManagementSchermerhorn
Prepared by
Cheryl Wyrick
California State Polytechnic University Pomona
John Wiley & Sons, Inc
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Schermerhorn - Chapter 3 2
COPYRIGHT
Copyright 2003 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the 1976 United States Copyright Act without the express written consent of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her owner use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, cause by the use of these programs or from the use of the information contained herein.
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Schermerhorn - Chapter 3 3
Chapter 3Globalization and International Management
Planning Ahead– What are the processes of globalization?
– What is the environment of international business?
– How does culture create global diversity?
– How do management practices transfer across cultures?
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Schermerhorn - Chapter 3 4
Processes of Globalization
The New Europe– European Union (EU)
• grouping of European countries who agreed to support mutual economic growth
• 11 of these countries have agreed to adopt the Euro (common currency)
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Schermerhorn - Chapter 3 5
Processes of Globalization
The Americas– North American Free Trade
Agreement (NAFTA)• Agreement for free flow of
goods and services between the U.S., Canada and Mexico
– Free Trade of the Americas (FTAA) is a possibility
– Other agreements• MERCOSUR• Andrean Pact• CARICOM
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Processes of Globalization
Maquiladoras– foreign manufacturing plants allowed to operate
in Mexico• allowed special privileges in exchange for hiring
Mexican labor– import materials, components and equipment with duty
paid on “value added”
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Processes of Globalization
Maquiladoras– advantages
• increased employment and prosperity
– disadvantages• social costs in border towns
• exploitation of less expensive Mexican labor
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Processes of Globalization
Asia and the Pacific Rim– Asia and Pacific Rim economies are expected
to be larger than those of the EU– China is the world’s largest single-country
marketplace– Japanese companies account for many Fortune
500 companies
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Schermerhorn - Chapter 3 9
Processes of Globalization
Africa– beckons international
business
– increased attention to stable countries
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Environment of International Business
Forms of International Business– Global Sourcing
• manufacturing and/or purchasing components worldwide and assembling them into a final product
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Environment of International Business
Forms of International Business – Exporting
• selling locally made products in foreign markets
– Importing• buying foreign made products and selling
them in domestic markets
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Schermerhorn - Chapter 3 12
Environment of International Business
Forms of International Business – Licensing Agreement
• pay a fee to acquire the rights to sell another company’s products
• franchising is form of licensing
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Schermerhorn - Chapter 3 13
Environment of International Business Forms of International Business
– Direct Investment Strategies• joint ventures
• strategic alliances
• wholly owned subsidiary
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Schermerhorn - Chapter 3 14
Multinational Corporations
Multinational Corporation (MNC)– business with extensive international operations
in more than one country
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Multinational Corporations
Advantages of MNCs– larger tax bases– increased employment opportunities– technology transfers– introduction of new industries– development of local resources
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Multinational Corporations
Disadvantages of MNCs– extract excessive profits– dominate local economy– do not respect local customs and laws– fail to help domestic firms develop– do not transfer most advanced technology
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Pros and Cons of Global Operations
Ethical Issues in Multinational Operations– Foreign Corrupt Practices Act– Sweatshops– Environmental protection
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Schermerhorn - Chapter 3 18
Culture and Global Diversity
Culture– shared set of beliefs, values and patterns of
behavior common to a group of people
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Culture and Global Diversity
Ethnocentrism– tendency to view one’s own culture
as superior to others
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Culture and Global Diversity
Silent Language– Culture shock
• discomfort a person feels in an unfamiliar culture
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Culture and Global Diversity
Spoken Language– Low-context
• explicit spoken and written word
• examples: US, Germany
– High-context• words convey only part of the message
• examples: Middle East, Asia
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Culture and Global Diversity
Use of Space (Proxemics)– interpersonal distance used in communication
• Latin Americans tend to be close
• Americans value more space
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Culture and Global Diversity
Time Orientation– Monochronic
• time is allotted do one thing at a time
– Polychronic• time is allotted to do many things at once
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Culture and Global Diversity
Religion– may influence business practices– source of ethical and moral teaching
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Culture and Global Diversity
Role of Contracts– some cultures view as final and binding– others view as a starting point– some expect contracts to be written– others accept “word” as binding
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Culture and Global Diversity
Values and National Cultures (Hofstede)– Power distance– Uncertainty avoidance– Individualism-collectivism– Masculinity-femininity– Short-term - long-term orientation
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Culture and Global Diversity
Understanding Cultural Differences– Relationships with People
• universalism vs. particularism
• individualism vs. collectivism
• neutral vs. affective
• specific vs.diffuse
• achievement vs. prescription
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Culture and Global Diversity
Understanding Cultural Differences– Attitudes toward time
• sequential
• synchronic
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Culture and Global Diversity
Understanding Cultural Differences– Attitudes toward environment
• inner-directed
• outer-directed
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Management Across Cultures
Comparative Management– how management systematically differs from
one country and/or culture to the next• global manager
– someone comfortable with cultural diversity
– quick to find opportunity in unfamiliar settings
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Culture and Global Diversity
Are Management Theories Universal?– U.S. management
theories may be ethnocentric
• emphasis on participation and individual performance are not applicable to other cultures
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Culture and Global Diversity
Are Management Theories Universal?– Japanese management practices
• lifetime employment
• job rotation and broad career experience
• shared information
• collective decision-making
• quality emphasis
– These practices are not easy to translate
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Culture and Global Diversity
Global Organizational Learning– cultural awareness facilitates more informed
transfers of management practices