CHAPTER 5: GLOBAL DIMENSIONS OF MANAGEMENT BOH4M1

International Business Challenges 2

What are the forms and opportunities of international business? 3  Reasons for engaging in international business:  _______________

What are the forms and opportunities of international business? 4  Market entry strategies involve the sale of goods or services to _________________ _______________but do not require expensive investments.  Types of market entry strategies:  Global sourcing  Exporting  Importing  Licensing agreement  Franchising

What are the forms and opportunities of international business? 5  Direct investment strategies require ________________ __________________ __________________________ but create rights of ownership and control over foreign operations.  Types of direct investment strategies:  Joint ventures  Foreign subsidiaries

What are the forms and opportunities of international business? 6  Criteria for choosing a joint venture partner:  Familiarity with your firm’s major business.  Strong local workforce.  Future expansion possibilities.  Strong local market for partner’s own products.  Good profit potential.  Sound financial standing.

What are the forms and opportunities of international business? 7  Complications in the global business environment:  Environment is complex, dynamic, and highly competitive.  Global business executives must deal with differences in the environment of business in different countries.  World Trade Organization resolves trade and tariff disputes among countries.  Protectionism can complicate global trading relationships.

Multinational Corporations 8

What are multinational corporations and what do they do? 9  A multinational corporation (MNC) is a business with ______________________ ____________________ _______________________ in ______________ ______________ _____ foreign country.

What are multinational corporations and what do they do? 10  Mutual benefits for host country and MNC:  Shared ______________ opportunities  Shared _______________ opportunities  Shared ___________________ opportunities  Shared ______________________ opportunities

What are multinational corporations and what do they do? 11  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

What are multinational corporations and what do they do? 12  MNC complaints about host countries:  Profit limitations  Overpriced resources  Exploitative rules  Foreign exchange restrictions  Failure to uphold contracts

What are multinational corporations and what do they do? 13  Ethical issues for MNCs:  _______________________ — illegal practices that further one’s business interests.  ________________________— employing workers at low wages for long hours and in poor working conditions.  _________________________— full-time employment of children for work otherwise done by adults.  ____________________________________— meeting current needs without compromising future needs.

Culture and Global Diversity 14

What is culture and how does it relate to global diversity? 15  Culture  The shared set of beliefs, values, and patterns of behavior common to a group of people.  Culture shock  ______________________ and _____________________ a person experiences in an ________________________ culture.  Ethnocentrism  Tendency to consider ________ _________ culture as _______________________ to others.

What is culture and how does it relate to global diversity? 16  Stages in adjusting to a new culture:  Confusion  Small victories  The honeymoon  Irritation and anger  Reality

What is culture and how does it relate to global diversity? 17  Popular dimensions of culture:  ________________________ Low-context cultures and high-context cultures  Interpersonal space  ________________ ________________________ Monochronic cultures and polychronic cultures  ________________________  ________________ ______ ____________________

What is culture and how does it relate to global diversity? 18  Values and national cultures (Hofstede):  Power distance  Uncertainty avoidance  Individualism-collectivism  Masculinity-femininity  Time orientation

What is culture and how does it relate to global diversity? 19  Understanding cultural differences (Trompenaars):  Page 128 in textbook, 8 th ed  Relationships with people: Universalism versus particularism Individualism versus collectivism Neutral versus affective Specific versus diffuse Achievement versus prescription  Attitudes toward time — sequential and synchronic views.  Attitudes toward environment — inner-directed and outer- directed cultures.

Management Across Cultures 20

How do management practices and learning transfer across cultures? 21  ______________________ management  How management systematically differs among countries and/or cultures.  ______________________ managers  Need to successfully apply management functions across international boundaries.

How do management practices and learning transfer across cultures? 22  Planning and controlling  Complexity of international environment makes global planning and controlling challenging.  Planning and controlling risks: Currency risk Political risk

How do management practices and learning transfer across cultures? 23  Organizing and leading  Multinational organization structures Global area structure Global product structure  Staffing international operations Competent locals Expatriates

How do management practices and learning transfer across cultures? 24  Are management theories universal?  North American management theories may be ethnocentric (tendency to believe that one's own race or ethnic group is centrally important, and that all other ethnic groups are measured in relation to one's own) Participation and individual performance are not emphasized as much in other cultures.  Not all Japanese management practices can be applied successfully abroad.

How do management practices and learning transfer across cultures? 25  Global organizational learning:  Companies can and should learn from each other.  Readiness for global organizational learning varies based on managerial attitudes. Ethnocentric attitudes Polycentric attitudes Geocentric attitudes  Be alert, open, inquiring, but always cautious.