Global Dimensions Of Management

Global Dimensions of Management

Planning Ahead — Chapter 5 study questions

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What are the management challenges of globalization? What are global businesses and what do they do? What is culture and how does it impact global management? How can we benefit from global management learning?

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

Key concepts in the challenges of globalization:  Global

economy

 Globalization  International  Global

management

manager

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

 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 Management 10/e - Chapter 5

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

 Global management • Management in organizations with business interests in more than one country

 Global manager 

Informed about international developments

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Transnational in outlook

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Competent in working with multicultural people

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Aware of regional developments in a changing world Management 10/e - Chapter 5

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

 Global businesses • Conduct for-profit transactions of goods and services across national boundaries

 Reasons why businesses go global: 

Profits

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Customers

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Suppliers

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Capital



Labor

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

 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 Management 10/e - Chapter 5

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

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

 the process of purchasing materials or services around the

world for local use

 Exporting

 selling locally made products in foreign markets

 Importing

 buying foreign-made products and selling them

domestically

 Licensing agreement

 one firm pays fee for rights to make or sell another

company’s products

 Franchising

 a fee is paid for rights to use another firm’s name and operating methods

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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.

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Types of direct investment strategies: 

Joint ventures 



operates in a foreign country through co-ownership by foreign and local partners

Strategic alliances  a partnership in which foreign and domestic firms share resources and knowledge for mutual gains.

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Study Question 1: What are the international

business challenges of globalization? Types of direct investment strategies: Foreign subsidiaries o local operation completely owned by a foreign firm  Greenfield investment - builds an entirely new operation in a foreign country

Foreign direct investment. 

building, buying or buying part ownership of a business in another country.

Insourcing 

job creation through foreign direct investment

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Study Question 1: What are the international

business challenges of globalization? 

Criteria for choosing a joint venture partner: 

Familiarity with your firm’s major business.

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Strong local workforce.

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Future expansion possibilities.

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Values its customers

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Strong local market for partner’s own products.

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Good profit potential.

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Sound financial standing.

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Study Question 1: What are the international

business challenges of globalization? 

Complications in the global business environment: 

Political risk  the potential loss in value of a foreign investment due to instability and changes in host country



Local legal systems 

complex and unfamiliar laws can create problems



World Trade Organization resolves trade and tariff disputes among countries.

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Protectionism can complicate global trading relationships.

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Study Question 1: What are the international

business challenges of globalization? 

Regional Economic Alliances  NAFTA

– North American Free Trade Agreement

 CAFTA

– Central American Free Trade Agreement

 EU

– European Union

 APEC

– Asia Pacific Economic Cooperation

 SADC

– Southern Africa Development Community Management 10/e - Chapter 5

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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

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De acuerdo a su estructura, las empresas multinacionales pueden ser clasificadas en: 

Corporaciones integradas horizontalmenteTienen bases de producci en diferentes pa�es pero producen el mismo o muy similar producto. (ejemplos McDonald's, United Fruit Company y BHP Billiton)



Corporaciones integradas verticalmentePrincipalmente producen en ciertos pa�es bienes intermedios, que sirven de abastecimiento para la producci final en otros pa�es (ejemplo: Timex, General Motors y Adidas) Corporaciones diversificadasProducen diferentes bienes o servicios en diferentes centros de producci a nivel internacional. Por ejemplo, Alstom; Altria Group; Novartis (productora de medicinas y otros productos qu�icos, alimentos, pesticidas, semillas, etc) y Samsung (no solo productos electricos pero tambi 駭 industria pesada, entretenimientos, servicios comerciales y financieros, venta al plico, etc)



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

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Study Question 2: What are global businesses

and what do they do?  Ethical issues for MNCs: 

Corruption — illegal practices that further one’s business interests.

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Sweatshops — employing workers at low wages for long hours and in poor working conditions.

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Child labor — full-time employment of children for work otherwise done by adults.

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Sustainable development — meeting current needs without compromising future needs.

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Study Question 3: What is culture and how

does it impact global management?  Culture  The shared set of beliefs, values, and patterns of

behavior common to a group of people.

 Culture shock 

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Cultural intelligence 

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Confusion and discomfort a person experiences in an unfamiliar culture. The ability to adapt and adjust to new cultures

Ethnocentrism 

Tendency to consider one’s own culture as superior to others.

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Study Question 3: What is culture and how

does it impact global management? 

Stages in adjusting to a new culture:  Confusion  Small  The

victories

honeymoon

 Irritation

and anger

 Reality

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Study Question 3: What is culture and how

does it impact global management? 

Popular dimensions of culture: 

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

 

Language  Low-context cultures and high-context cultures Interpersonal space  proxemics Time orientation  Monochronic cultures and polychronic cultures Religion Contracts and agreements

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Study Question 3: What is culture and how does it relate to global diversity? Project GLOBE’s research on leadership practices across cultures  Inhibitors  Being  Acting  Being  Acting

of leadership success

a loner uncooperative irritable autocratic

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Study Question 4: How can we benefit from

global management learning?  Comparative management 

How management systematically differs among countries and/or cultures.



Global managers 

Need to successfully apply management functions across international boundaries.

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Study Question 4: How can we benefit from

global management learning? 

Are management theories universal?  U.S.

management theories may be

ethnocentric. 

Participation and individual performance are not emphasized as much in other cultures.

 Not

all Japanese management practices

can be applied successfully abroad. Management 10/e - Chapter 5

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Figure 5.4 Nine cultural dimensions used by Project GLOBE researchers. 1.-Da dos ejemplos de empresas que usen las siguientes estrategias y describe por que. Global sourcing Exporting Importing Licensing

agreement Franchising 2.-De acuerdo a su clasificacion da 3 ejemplos diferentes a los vistos de empresas multinacionales. 3.-Identifica las nueve dimensiones identificadas por el proyecto clobe para el estudio delas diferencias culturales y ejemplifica a que se refieren. Entrega en una hoja impresa al comienzo de la clase el miercoles 14 de octubre. Si no cuenta con nombre impreso no se aceptara el trabajo. Management 10/e - Chapter 5

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