1. Schermerhorn - Chapter 31 Core Concepts of Management Schermerhorn Prepared by Cheryl Wyrick California State Polytechnic University Pomona John Wiley & Sons, Inc

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3. Schermerhorn - Chapter 33 Chapter 3 Globalization and International Management 4 Planning Ahead –What are the processes of globalization? –What is the environment of international business? –How does culture create global diversity? –How do management practices transfer across cultures?

4. Schermerhorn - Chapter 34 Processes of Globalization 4 The New Europe –European Union (EU) grouping of European countries who agreed to support mutual economic growth 11 of these countries have agreed to adopt the Euro (common currency)

5. Schermerhorn - Chapter 35 Processes of Globalization 4 The Americas –North American Free Trade Agreement (NAFTA) Agreement for free flow of goods and services between the U.S., Canada and Mexico –Free Trade of the Americas (FTAA) is a possibility –Other agreements MERCOSUR Andrean Pact CARICOM

6. Schermerhorn - Chapter 36 Processes of Globalization 4 Maquiladoras –foreign manufacturing plants allowed to operate in Mexico allowed special privileges in exchange for hiring Mexican labor –import materials, components and equipment with duty paid on “value added”

7. Schermerhorn - Chapter 37 Processes of Globalization 4 Maquiladoras –advantages increased employment and prosperity –disadvantages social costs in border towns exploitation of less expensive Mexican labor

8. Schermerhorn - Chapter 38 Processes of Globalization 4 Asia and the Pacific Rim –Asia and Pacific Rim economies are expected to be larger than those of the EU –China is the world’s largest single-country marketplace –Japanese companies account for many Fortune 500 companies

9. Schermerhorn - Chapter 39 Processes of Globalization 4 Africa –beckons international business –increased attention to stable countries

10. Schermerhorn - Chapter 310 Environment of International Business 4 Forms of International Business –Global Sourcing manufacturing and/or purchasing components worldwide and assembling them into a final product

11. Schermerhorn - Chapter 311 Environment of International Business 4 Forms of International Business –Exporting selling locally made products in foreign markets –Importing buying foreign made products and selling them in domestic markets

12. Schermerhorn - Chapter 312 Environment of International Business 4 Forms of International Business –Licensing Agreement pay a fee to acquire the rights to sell another company’s products franchising is form of licensing

13. Schermerhorn - Chapter 313 Environment of International Business 4 Forms of International Business –Direct Investment Strategies joint ventures strategic alliances wholly owned subsidiary

14. Schermerhorn - Chapter 314 Multinational Corporations 4 Multinational Corporation (MNC) –business with extensive international operations in more than one country

15. Schermerhorn - Chapter 315 Multinational Corporations 4 Advantages of MNCs –larger tax bases –increased employment opportunities –technology transfers –introduction of new industries –development of local resources

16. Schermerhorn - Chapter 316 Multinational Corporations 4 Disadvantages of MNCs –extract excessive profits –dominate local economy –do not respect local customs and laws –fail to help domestic firms develop –do not transfer most advanced technology

17. Schermerhorn - Chapter 317 Pros and Cons of Global Operations 4 Ethical Issues in Multinational Operations –Foreign Corrupt Practices Act –Sweatshops –Environmental protection

18. Schermerhorn - Chapter 318 Culture and Global Diversity 4 Culture –shared set of beliefs, values and patterns of behavior common to a group of people

19. Schermerhorn - Chapter 319 Culture and Global Diversity 4 Ethnocentrism –tendency to view one’s own culture as superior to others

20. Schermerhorn - Chapter 320 Culture and Global Diversity 4 Silent Language –Culture shock discomfort a person feels in an unfamiliar culture

21. Schermerhorn - Chapter 321 Culture and Global Diversity 4 Spoken Language –Low-context explicit spoken and written word examples: US, Germany –High-context words convey only part of the message examples: Middle East, Asia

22. Schermerhorn - Chapter 322 Culture and Global Diversity 4 Use of Space (Proxemics) –interpersonal distance used in communication Latin Americans tend to be close Americans value more space

23. Schermerhorn - Chapter 323 Culture and Global Diversity 4 Time Orientation –Monochronic time is allotted do one thing at a time –Polychronic time is allotted to do many things at once

24. Schermerhorn - Chapter 324 Culture and Global Diversity 4 Religion –may influence business practices –source of ethical and moral teaching

25. Schermerhorn - Chapter 325 Culture and Global Diversity 4 Role of Contracts –some cultures view as final and binding –others view as a starting point –some expect contracts to be written –others accept “word” as binding

26. Schermerhorn - Chapter 326 Culture and Global Diversity 4 Values and National Cultures (Hofstede) –Power distance –Uncertainty avoidance –Individualism-collectivism –Masculinity-femininity –Short-term - long-term orientation

27. Schermerhorn - Chapter 327 Culture and Global Diversity 4 Understanding Cultural Differences –Relationships with People universalism vs. particularism individualism vs. collectivism neutral vs. affective specific vs.diffuse achievement vs. prescription

28. Schermerhorn - Chapter 328 Culture and Global Diversity 4 Understanding Cultural Differences –Attitudes toward time sequential synchronic

29. Schermerhorn - Chapter 329 Culture and Global Diversity 4 Understanding Cultural Differences –Attitudes toward environment inner-directed outer-directed

30. Schermerhorn - Chapter 330 Management Across Cultures 4 Comparative Management –how management systematically differs from one country and/or culture to the next global manager –someone comfortable with cultural diversity –quick to find opportunity in unfamiliar settings

31. Schermerhorn - Chapter 331 Culture and Global Diversity 4 Are Management Theories Universal? –U.S. management theories may be ethnocentric emphasis on participation and individual performance are not applicable to other cultures

32. Schermerhorn - Chapter 332 Culture and Global Diversity 4 Are Management Theories Universal? –Japanese management practices lifetime employment job rotation and broad career experience shared information collective decision-making quality emphasis –These practices are not easy to translate

33. Schermerhorn - Chapter 333 Culture and Global Diversity 4 Global Organizational Learning –cultural awareness facilitates more informed transfers of management practices