1. Management 11e John Schermerhorn
Chapter 5:
Global Management and
Cultural Diversity

2. Planning Ahead — Chapter 5 study questions
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?

3. Study Question 1: What are the management challenges of globalization?
Key concepts in the challenges of globalization:
Global economy
Globalization
Global management
Global manager
Management 11e/ Chapter 5

4. 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 11e/ Chapter 5

5. 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
Aware of international developments and the effect on societies and economies
Competent in working with people from different cultures
Management 11e/ Chapter 5

6. 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
Customers
Suppliers
Capital
Labor
Risk
Management 11e/ Chapter 5

7. 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
Management 11e/ Chapter 5

8. Study Question 1: What are the management challenges of globalization?
Types of market entry strategies:
Global sourcing
Exporting
Importing
Licensing agreement
Franchising
Management 11e/ Chapter 5

9. Figure 5.1 Common forms of global business—from market entry to direct investment strategies
Management 11e/ Chapter 5

10. 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
Management 11e/ Chapter 5

11. 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
Management 11e/ Chapter 5

12. local operation completely owned by a foreign firm
Study Question 1: What are the international business challenges of globalization?
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
Foreign subsidiaries
local operation completely owned by a foreign firm
Management 11e/ Chapter 5

13. 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
Strong local workforce
Future expansion possibilities
Values its customers
Strong local market for partner’s own products
Good profit potential
Sound financial standing
Management 11e/ Chapter 5

14. Study Question 1: What are the international business challenges of globalization?
Global business environments
Legal and political systems
Trade agreements and trade barriers
Regional economic alliances
Management 11e/ Chapter 5

15. Legal and political systems
Study Question 1: What are the international business challenges of globalization?
Legal and political systems
Differing laws and practices regarding
Business ownership
Foreign currency exchange
Protection of intellectual property rights
Counterfeit merchandise
Management 11e/ Chapter 5

16. Legal and political systems
Study Question 1: What are the international business challenges of globalization?
Legal and political systems
Political risk
Potential loss in value of a foreign investment due to instability and political changes in the host country
Political risk analysis
Forecast political disruptions that threaten the value of a foreign investment
Management 11e/ Chapter 5

17. Trade Agreements and Trade Barrriers
Study Question 1: What are the international business challenges of globalization?
Trade Agreements and Trade Barrriers
World Trade Organization
Most favored nation status
Tariffs
Nontariff barriers
Protectionism
Management 11e/ Chapter 5

18. Regional Economic Alliances
Study Question 1: What are the international business challenges of globalization?
Regional Economic Alliances
NAFTA – North American Free Trade Agreement
EU – European Union
APEC – Asia Pacific Economic Cooperation
ASEAN – Association of Southeast Asian Nations
SADC – Southern Africa Development Community
Management 11e/ Chapter 5

19. 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
Management 11e/ Chapter 5

20. Study Question 2: What are global businesses and what do they do?
Mutual benefits for host country and global corporation or MNC:
Shared growth opportunities
Shared income opportunities
Shared learning opportunities
Shared development opportunities
Management 11e/ Chapter 5

21. Figure 5.2 What should go right and what can go wrong in MNC-host country relationships
Management 11e/ Chapter 5

22. Study Question 2: What are global businesses and what do they do?
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
Management 11e/ Chapter 5

23. Study Question 2: What are global businesses and what do they do?
MNC complaints about host countries:
Profit limitations
Overpriced resources
Exploitative rules
Foreign exchange restrictions
Failure to uphold contracts
Management 11e/ Chapter 5

24. Study Question 2: What are global businesses and what do they do?
Ethical issues for Global Businesses:
Corruption – illegal practices that further one’s business interests
Sweatshops — employing workers at low wages for long hours and in poor working conditions
Child labor — full-time employment of children for work otherwise done by adults
Sustainable development — meeting current needs without compromising future needs
Management 11e/ Chapter 5

25. Study Question 2: What are global businesses and what do they do?
Ethical issues for Global Businesses:
Corruption – illegal practices that further one’s business interests
Foreign Corrupt Practices Act – makes it illegal for U.S. firms and their representatives to engage in corrupt practices overseas
Bribes to foreign officials
Excessive commissions
Non monetary gifts
Management 11e/ Chapter 5

26. Study Question 2: What are global businesses and what do they do?
Child labor and Sweatshops:
Child labor – full time employment of children for work otherwise done by adults
Sweatshops – employ workers at very low wages for long hours in poor working conditions
Management 11e/ Chapter 5

27. Study Question 3: What is culture and how does it impact global management?
The shared set of beliefs, values, and patterns of behavior common to a group of people
Culture shock
Confusion and discomfort a person experiences in an unfamiliar culture
Cultural intelligence
The ability to adapt and adjust to new cultures
Ethnocentrism
Tendency to consider one’s own culture as superior to others
Management 11e/ Chapter 5

28. Stages in adjusting to a new culture:
Study Question 3: What is culture and how does it impact global management?
Confusion
Small victories
The honeymoon
Irritation and anger
Reality
Stages in adjusting to a new culture:
Management 11e/ Chapter 5

29. Study Question 3: What is culture and how does it impact global management?
Context
Low context
High context
Time
Monochronic
Polychronic
Space
Proxemics
Silent languages of
culture
Management 11e/ Chapter 5

30. Study Question 3: What is culture and how does it impact global management?
Context
Low context cultures - emphasize communication via spoken or written words
United States
Canada
Germany
Management 11e/ Chapter 5

31. Study Question 3: What is culture and how does it impact global management?
Context
High context cultures – rely on nonverbal and situational cues as well as on spoken or written words
Thailand
Malaysia
Management 11e/ Chapter 5

32. Study Question 3: What is culture and how does it impact global management?
Time
Monochronic cultures – people tend to do one thing at a time
United States, Canada, Germany
Polychronic cultures – time is used to accomplish many different things at once
Egypt, Saudi Arabia, Mexico
Management 11e/ Chapter 5

33. Space Proxemics – study of how people use space to communicate
Study Question 3: What is culture and how does it impact global management?
Space
Proxemics – study of how people use space to communicate
In the U.S. people value “personal space”
Many Latin and Asian cultures expect much less personal space
Management 11e/ Chapter 5

34. Values and national cultures (Hofstede):
Study Question 3: What is culture and how does it impact global management?
Values and national cultures (Hofstede):
Power distance
Uncertainty avoidance
Individualism-collectivism
Masculinity-femininity
Time orientation
Management 11e/ Chapter 5

35. Figure 5.3 How countries compare on Hofstede’s dimension of national culture
Management 11e/ Chapter 5

36. Study Question 4: How can we benefit from global management learning?
Project GLOBE (Global Leadership and Organizational Behavior Effectiveness)
Researches the leadership, organizational practices, and diversity among world cultures
Power distance
Uncertainty avoidance
Gender egalitarianism
Future orientation
Management 11e/ Chapter 5

37. Study Question 4: How can we benefit from global management learning?
Project GLOBE’s nine dimensions continued
Institutional collectivism
In-group collectivism
Assertiveness
Performance orientation
Humane orientation
Management 11e/ Chapter 5

38. Study Question 4: How can we benefit from global management learning?
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
Management 11e/ Chapter 5

39. Study Question 4: How can we benefit from global management learning?
Project GLOBE’s research on leadership practices across cultures
Inhibitors of leadership success
Being a loner
Acting uncooperative
Being irritable
Acting autocratic
Management 11e/ Chapter 5

40. Figure 5.4 Nine cultural dimensions used by Project GLOBE researchers
Management 11e/ Chapter 5

41. 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
Management 11e/ Chapter 5

42. Study Question 4: How can we benefit from global management learning?
Companies can and should learn from each other
GLOBE dimensions
Power distance
Uncertainty avoidance
Future orientation
Etc.
Be alert, open, inquiring, but always cautious
Management 11e/ Chapter 5

43. Management 11e/ Chapter 5 Case
Harley-Davidson: Style and strategy have global reach

44. For activities and assessments, please visit…