1. Understanding Management First Canadian Edition Slides prepared by Janice Edwards College of the Rockies Copyright © 2009 Nelson Education Ltd.

2. Chapter 3 Copyright © 2009 Nelson Education Ltd.. Managing in a Global Environment

3. Copyright © 2009 Nelson Education Ltd. 3-3 Learning Objectives 1. Describe the emerging borderless world. 2. Define international management and explain how it differs from the management of domestic business operations. 3. Indicate how dissimilarities in the economic, sociocultural, and legal-political environments throughout the world can affect business operations. 4. Describe market entry strategies that businesses use to develop foreign markets. 5. Describe the characteristics of a multinational corporation. 6. Explain the challenges of managing in a global environment.

4. Copyright © 2009 Nelson Education Ltd. 3-4 Four Stages of Globalization Domestic stage International stage Multinational stage Global stage

5. Copyright © 2009 Nelson Education Ltd. 3-5 Ex. 3.2 Key Factors in the International Environment

6. Copyright © 2009 Nelson Education Ltd. 3-6 The Economic Environment Includes such factors as: Economic development Infrastructure Resource and product markets Exchange rates

7. Copyright © 2009 Nelson Education Ltd. 3-7 Legal-Political Environment Political Risk and Political Instability Risk of loss of assets, earning power, or managerial control. Includes government takeovers, civil disorders. Laws and Regulations Laws and regulations differ from country to country.

8. Copyright © 2009 Nelson Education Ltd. 3-8 Sociocultural Environment Includes shared: Knowledge Beliefs Values Common modes of behaviour Common ways of thinking

9. Copyright © 2009 Nelson Education Ltd. 3-9 Dimensions of Social Value Systems Power distance. Uncertainty avoidance. Individualism & collectivism. Masculinity/femininity. Long term versus short term orientation.

10. Copyright © 2009 Nelson Education Ltd. 3-10 GLOBE Project Value Dimensions Assertiveness Future orientation Uncertainty avoidance Gender differentiation Power distance Societal collectivism Individual collectivism Performance orientation Humane orientation

11. Copyright © 2009 Nelson Education Ltd. 3-11 Additional Cultural Influences for International Organizations’ Consideration Language Religion Attitudes Social organization Education

12. Copyright © 2009 Nelson Education Ltd. 3-12 GATT and the WTO General Agreement on Tariffs and Trade (GATT)  Set of rules signed by 23 nations in 1947.  Ensured nondiscrimination, clear procedures, negotiation of disputes, and participation of lesser developed countries (LDCs) in international trade.

13. GATT and the WTO (Cont’d) Primary tools of GATT successor, World Trade Organization (WTO): Tariff concessions, countries agree to limit level of tariffs on imports from other members. Most favoured nation clause. WTO overall goal: Guide world nations toward free trade and open markets. Copyright © 2009 Nelson Education Ltd. 3-13

14. Copyright © 2009 Nelson Education Ltd. 3-14 European Union (EU) Formed in 1957 to improve economic and social conditions. Has 25-nation alliance. EU’s monetary revolution, introduction of the Euro (€) in 2002. Euro is the single European currency that replaced 12 national currencies; unified a huge marketplace.

15. Copyright © 2009 Nelson Education Ltd. 3-15 North American Free Trade Agreement (NAFTA) Went into effect in 1994. Merged the United States, Canada, and Mexico into a megamarket with more than 421 million consumers. Breaks down tariffs and trade restrictions on most agricultural and manufactured products.

16. Globalization Backlash Protests against globalization at WTO meeting in Seattle, 1999. WTO, World Bank and IMF (International Monetary Fund) referred to as The Iron Triangle of globalization. Primary concern is loss of jobs to countries with lower wages. Copyright © 2009 Nelson Education Ltd. 3-16

17. Copyright © 2009 Nelson Education Ltd. 3-17 Exporting Produces goods in home nation and transfers its products for sale in foreign countries. Getting Started Internationally Outsourcing Seeks cheaper sources of labour supply regardless of country.

18. Copyright © 2009 Nelson Education Ltd. 3-18 Ex. 3.6 Strategies for Entering International Markets

19. Personal Challenges for Global Managers* Copyright © 2009 Nelson Education Ltd. 3-19 Need for: Personal learning and growth Cultural flexibility Sensitivity to cultural differences and other ways of thinking *May experience culture shock: feelings of confusion, disorientation and anxiety.

20. Copyright © 2009 Nelson Education Ltd. 3-20 Managing Cross Culturally Managers must be sensitive to cultural subtleties in: Leadership Decision making Motivation Control