1. PowerPoint Presentation to Accompany Management Third Canadian Edition John R. Schermerhorn, Jr. Barry Wright Prepared by: Jim LoPresti University of Colorado, Boulder Revised by: Dr. Shavin Malhotra Ryerson University, Toronto, Ontario

2. 2 Management 3e - Chapter 3 2 Chapter 3: Global Dimensions of Management

3. 3 Management 3e - Chapter 3 3.1 Explain what the management challenges are in going global. 3.2 Define what a global business is and what things it undertakes. 3.3 Explain what culture is and how it impacts global management. 3.4 Explain the benefits of developing global management skills. Chapter 3 Learning Objectives 3

4. 4 Management 3e - Chapter 3  Key concepts in the challenges of globalization: Global economy Globalization International management Global manager Management and Globalization 4

5. 5 Management 3e - Chapter 3  Global economy Resource supplies, product markets, and business competition are worldwide, rather than local  Globalization The process of growing inter dependence of these components in the global economy 5 Management and Globalization

6. 6 Management 3e - Chapter 3  Global management Management in organizations with business interests in more than one country  Global manager Informed about international developments Transnational in outlook Competent in working with multicultural people Aware of regional developments in a changing world 6 Management and Globalization

7. 7 Management 3e - Chapter 3  Global businesses Conduct for-profit transactions of goods and services across national boundaries  Reasons why businesses go global : Profits Customers Suppliers Capital Labour 7 Management and Globalization

8. 8 Management 3e - Chapter 3  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 8 Management and Globalization

9. 9 Management 3e - Chapter 5 Figure 3.3 Common forms of global business—from market entry to direct investment strategies. 9 Management and Globalization

10. 10 Management 3e - Chapter 3  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 10 Management and Globalization

11. 11 Management 3e - Chapter 3  Foreign Direct Investment: building, buying all, or buying part ownership of a business in another country. Insourcing: job creation through foreign direct investment 11 Management and Globalization

12. 12 Management 3e - Chapter 3 Types of direct investment strategies: Joint ventures: operates in a foreign country through co-ownership by foreign and local partners Global strategic alliances: a partnership in which foreign and domestic firms share resources and knowledge for mutual gains. Foreign subsidiaries: local operation completely owned by a foreign firm Greenfield investment - builds an entirely new operation in a foreign country 12 Management and Globalization

13. 13 Management 3e - Chapter 3  Criteria for choosing a joint venture partner: Familiarity with your firm’s major business. Strong local workforce. Future expansion possibilities. Values its customers Strong local market for partner’s own products. Good profit potential. Sound financial standing. 13 Management and Globalization

14. 14 Management 3e - Chapter 3  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. Protectionism can complicate global trading relationships. 14 Management and Globalization

15. 15 Management 3e - Chapter 3  Regional Economic Alliances NAFTA – North American Free Trade Agreement EU – European Union SADC – Southern Africa Development Community 15 Management and Globalization

16. 16 Management 3e - Chapter 3  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 Global Businesses 16

17. 17 Management 3e - Chapter 3 Fig. 3.7 Big Mac Index (2013 data) 17 Global Businesses

18. 18 Management 3e - Chapter 3  Host-country benefits of multinational corporations: Larger tax bases Increased employment opportunities Technology transfers Introduction of new industries Development of local resources 18 Global Businesses

19. 19 Management 3e - Chapter 3  Host country complaints about multinational corporations : Excessive profits Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customs 19 Global Businesses

20. 20 Management 3e - Chapter 5 Figure 3.8 What should go right and what can go wrong in MNC-host country relationships. 20 Global Businesses

21. 21 Management 3e - Chapter 3  Ethical issues for multinational corporations : Corruption — illegal practices that further one’s business interests. Sweatshops — employing workers at low wages for long hours and in poor working conditions. Child labour — full-time employment of children for work otherwise done by adults. Sustainable development — meeting current needs without compromising future needs. 21 Global Businesses

22. 22 Management 3e - Chapter 3  Culture The shared set of beliefs, values, and patterns of behaviour common to a group of people.  Culture shock Confusion and discomfort a person experiences in an unfamiliar culture.  Ethnocentrism Tendency to consider one’s own culture as superior to others.  Cultural intelligence The ability to adapt and adjust to new cultures Culture and Global Diversity 22

23. 23 Management 3e - Chapter 3  Stages in adjusting to a new culture: Confusion Small victories The honeymoon Irritation and anger Reality 23 Culture and Global Diversity

24. 24 Management 3e - Chapter 3  Silent Languages of culture: Context Low-context cultures – emphasize communication via spoken or written words. High-context cultures – rely on nonverbal and situational cues as well as on spoken or written words in communication. 24 Culture and Global Diversity

25. 25 Management 3e - Chapter 3  Silent Languages of culture: Time Monochronic cultures – people tend to do one thing at a time. Polychronic cultures – time is used to accomplish many different things at once. Space Proxemics – is how people use space to communicate. 25 Culture and Global Diversity

26. 26 Management 3e - Chapter 3  Values and national cultures (Hofstede): Power distance Uncertainty avoidance Individualism-collectivism Masculinity-femininity Time orientation 26 Culture and Global Diversity

27. 27 Management 3e - Chapter 5 Figure 3.9 How countries compare on Hofstede’s dimension of national culture. 27 Culture and Global Diversity

28. 28 Management 3e - Chapter 3  Comparative management How management perspectives and practices systematically differs among countries and cultures.  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. Global Management Learning 28

29. 29 Management 3e - Chapter 3  Project GLOBE (Global Leadership and Organizational Behaviour Effectiveness): Researches the leadership, organizational practices, and diversity among world cultures. Power distance Uncertainty avoidance Gender egalitarianism Future orientation Institutional collectivism In-group collectivism Assertiveness Performance orientation Humane orientation 30 Global Management Learning

30. 30 Management 3e - Chapter 3 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 31 Global Management Learning

31. 31 Management 3e - Chapter 3 Project GLOBE’s research on leadership practices across cultures  Inhibitors of leadership success Being a loner Acting uncooperative Being irritable Acting autocratic 32 Global Management Learning

32. 32 Management 3e - Chapter 5 Figure 3.11 Nine cultural dimensions used by Project GLOBE researchers. 33 A large team of international researchers collaborated in Project GLOBE to examine societal cultures using the nine cultural dimensions shown in the figure. When results from extensive empirical studies were analyzed for 62 countries, they were found to fall into ten culture clusters. Countries within a cluster share many societal cultural practices; countries tend to differ significantly across clusters in their cultural practices. Global Management Learning

33. 33 Management 3e - Chapter 3  Global management attitudes and 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. 34 Global Management Learning

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