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Globalization Organizations: Behavior, Structure, Processes Chapter 3

3-3 Learning Objectives Define what is meant by globalization Understand why the study of cross-cultural management is important Discuss the global skills managers must learn, practice, and refine to deal with a changing world Compare how the characteristics of culture can influence the behavior and attitudes of employees Identify Hofstede’s cultural dimensions

3-4 Globalization The interdependency of transportation, distribution, communication, and economic networks across international borders

3-5 Globalization Global corporations have replaced multinational corporations as the most effective international competitors Offering standardized products for a homogenous world market reduces costs Developing global strategies and managing diverse workers Requires managers to have new thinking and managerial skills

3-6 Global Evolution Phase I Domestic Phase II International Phase III Multinational Phase IV Global Primary orientation Product, service MarketPriceStrategy Competitive strategy DomesticMulti- domestic MultinationalGlobal Importance of world business MarginalImportant Extremely Important Dominant Product, service New, unique More standardized Completely standardized (commodity) Mass- customized

3-7 Global Evolution Phase I Domestic Phase II International Phase III Multinational Phase IV Global Technology ProprietarySharedWidely shared Instantly & extensively shared R&D, sales HighDecreasingVery lowVery high Profit margin HighDecreasing Very low High, yet immediately decreasing Competitors None FewManySignificant Market Small, domestic Large, multi- domestic Large, multi- national Largest, global

3-8 Global Evolution Phase I Domestic Phase II International Phase III Multinational Phase IV Global Production location DomesticDomestic & primary markets Multinational, least cost Global, least cost Exports NoneGrowing, high potential Large, saturated Imports and exports Structure Functional divisions, Centralized Functional, w/ international division Decentralized Multinational line of business Centralized Global alliances Coordinated Decentralized

3-9 Global Evolution Phase I Domestic Phase II International Phase III Multinational Phase IV Global Cultural sensitivity Marginally important Very importantSomewhat important Critically important With whom No oneClientsEmployeesEmployees & clients Level No oneWorkers & clients Managers Executives Strategic Assumption One way / one best way Many good ways One least-cost way Many good ways simultaneously

3-10 Cross-Cultural Management Study of the behavior of individuals in organizations around the world Describes organizational behavior within and across countries and cultures Attempts to understand and improve the interaction and behavior of stakeholders Across different countries and cultures

3-11 Cross-Cultural Management Global Strategic Skills Team-Building Skills Organization Skills Communication Skills Transfer of Knowledge Skills

3-12 Cross-Cultural Management Team building skills Increased complexity of global operations Requires greater use of work teams and culturally diverse groups Must develop systems, processes, and procedures across subsidiaries Must acknowledge cultural differences and difficulties of developing multicultural teams

3-13 Cross-Cultural Management Organization skills Use Theory X or Theory Y approach, as situation and culture dictate Minimum requirements for managers Creativity in designing organizations and jobs High tolerance for ambiguity and cultural differences Ability to coordinate finance, marketing, operations management, and human resources

3-14 Cross-Cultural Management Communication skills Be able to communicate with diverse groups of people and virtual teams Continually hone communication skills Transfer of knowledge skill Increased competitiveness has put special emphasis on need to transfer knowledge Foreign firms gained market advantage due to superior knowledge transfer skills

3-15 Cross-Cultural Management Benchmarking Standard of excellence or achievement against which a firm’s products or practices are measured or judged

3-16 National Culture Set of values, attitudes, beliefs, and norms shared by majority of the inhabitants of a country Embedded in laws and regulations May vary between dominant and subcultures A country’s history provides insights into it’s culture

3-17 Cultural Dimensions Individualism vs. Collectivism Time Orientation Activity Orientation Degree of Formality Religion Language Relationship to Nature

3-18 Hofstede’s Research Cultural dimensions Uncertainty avoidance Masculinity-femininity Individualism-collectivism Power Distance

3-19 Hofstede-Inspired Research Confucian Dynamism The extent to which people believe in persistence, status, thrift, and shame Plus the unimportance of personal stability, face saving, respect for tradition, and reciprocation of favors and gifts

3-20 Hofstede-Inspired Research The GLOBE project Data collected from more than 17,000 managers from 62 different cultures To identify and understand managers’ perceptions of cultural practices and values in different countries Cultures classified based on scores related to nine cultural dimensions

3-21 GLOBE Project Findings

3-22 Cross-Cultural Transitions Multinational Corporation A firm with operations in different nations Each viewed as a relatively separate enterprise Global Corporation Structured so that national boundaries become blurred The best people are hired, irrespective of national origin

3-23 International Assignments Sources of employees for international assignments Host country nationals Parent country nationals Third country nationals

3-24 International Assignments Expatriate manager A manager from the firm’s home nation, who is on an overseas assignment

3-25 Characteristics of Expatriates Strong technical skills Good language skills Strong desire to work overseas Knowledge of host culture Well-adjusted family situation Complete support of spouse Behavioral flexibility Adaptable to new ideas Good relational ability Deals well with stress Low technical competency Weak language skills Unsure about going overseas Knows little of host culture Family problems Low spouse support Behavioral rigidity Not adaptable to new ideas Poor relational ability Weak stress management skills High Probability for Success Low Probability for Success

3-26 Culture Shock A three-phase cycle that most people experience when sent to another culture

3-27 Training Expatriates How much and what kind of training managers receive is determined by Expected level of contact with the host culture Degree of dissimilarity between the home and host cultures

3-28 Training Expatriates Language skills Nation orientation Culture orientation Personal orientation Family orientation Career planning Language skills Local mentoring Stress training Business issues Financial management Reentry shock Career management Overseas Assignment Predeparture Repatriation

3-29 Self-Awareness Questions to consider How will living abroad affect me and my family? What will my spouse do in terms of work and home life? Are my children prepared to live abroad? What assistance and support will be available? What will happen to my home and personal property while we’re gone?

3-30 Self-Awareness What will we do with our pets? How will we handle health care overseas? Can we expect anti-Americanism? What about terrorism? What security measures should we take? What kind of recreational opportunities are available? Will language barriers present problems?

3-31 Self-Awareness What is the proper form of dress for various occasions? How will we handle transportation there? What kinds of foods can we expect to eat?

3-32 A Global Theme for Organizations Globalization is a reality U.S.-based organizational prescriptions are limited in value Organizations in many countries play a role in a nation’s social-political, economic, and technological process Dramatic shifts in the world require more than culture-bound approaches to managing behavior, structure, and processes