Transcript Management 8e. - Robbins and Coulter

Chapter 3
Global Management
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What’s your global perspective?
 Parochialism
 Is viewing the world exclusively through one’s own eyes and
perspectives.
 Is not recognizing that others have different ways of living and
working.
 Is a significant problem for managers working in a global
business world.
 Is falling into the trap of ignoring others’ values and customs
and strictly applying an attitude of “ours is better than theirs” to
foreign cultures.
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What’s Your Global Perspective?
 Ethnocentric Attitude
 Belief that home country has the best work approaches and
practices
 Polycentric Attitude
 View that managers in host country know the best approaches and
practices
 Geocentric Attitude
 A world-oriented view that focuses on using the best approaches
and people from around the globe
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Exhibit 3.1 Global Attitudes
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Regional Trading Alliances
 The European Union (EU)
 A unified economic and trade entity to eliminate national barriers to
travel, employment, investment, and trade
 28 member countries
 Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria,
Finland, and Sweden
 Economic and monetary union (Euro)
 North American Free Trade Agreement (NAFTA)
 Eliminated barriers to free trade (tariffs, import licensing
requirements, and customs user fees)
 United States, Canada, and Mexico
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The World Trade Organization (WTO)
 Evolved from the General Agreement on Tariffs and Trade



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(GATT) in 1995
Functions as the only global organization dealing with the
rules of trade among nations
Helps countries conduct trade through a system of rules
Has 162 member nations as of 2015
Monitors and promotes world trade
Bangladesh Export Processing Zones
Authority (BEPZA)
 The official organ of the government to promote, attract and facilitate
foreign investment in the Export Processing Zones (EPZs).
 The primary objective of an EPZ is to provide special areas where
potential investors would find a congenial investment climate, free from
cumbersome procedures.
 The Government provides numerous incentives for investors for
opening factories in EPZs. For example, new factories enjoy tax holidays
for 5 years.
 Labour unions and other activities that are often viewed detrimental to
productivity, are banned inside the EPZs.
 Bangladesh has Eight EPZs.
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Bangladesh Garments Manufacturers and
Exporters Association (BGMEA)
 An association of readymade garments manufacturers and
exporters of Bangladesh.
 It promotes and protects the greater interest of the garment
sector of Bangladesh and its members.
 BGMEA is dedicated to establishing and promoting contacts
with foreign buyers, business and trade associations,
chambers and research organizations to develop the export
base of apparels.
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Different Types of Global Organizations
 Multinational Corporation (MNC)
 A firm that maintains operations in multiple countries
 Multidomestic corporation, which decentralizes management
 Global company, which centralizes its management and other decisions in
the home country.
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Exhibit 3.4 How Organizations Go
Global
Exporting to
or importing
from foreign
countries
Low
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Hiring foreign
representation
or contracting
with foreign
managers
Licensing/
Franchising
Strategic
Alliances
Degree of Risk and Investment
Foreign
Subsidiary
High
How Organizations Go Global
 Exporting
 Making products at home and selling them overseas
 Importing
 Selling products at home that are made overseas
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How Organizations Go Global (cont’d)
 Licensing and Franchising
 Giving another organization the right to use brand name,
technology, or product specifications
 Licensing (manufacturing organizations)
 Franchising (service organizations)
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How Organizations Go Global (cont’d)
 Strategic Alliance
 Partnership between an organization and a foreign company in
which both share resources and knowledge in developing new
products or building new production facilities
 Joint Venture
 A specific type of strategic alliance in which the partners agree
to form a separate, independent organization for some business
purpose
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How Organizations Go Global
(cont’d)
 Foreign subsidiary
 Managers choose to directly invest in a foreign country by
setting up a foreign subsidiary as a separate and independent
facility or office.
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Managing in a Global Environment
 The Legal-Political Environment
 Stability or instability of legal and political systems
 Legal procedures are established and followed
 Fair and honest elections held on a regular basis
 Differences in the laws of various nations
 Effects on business activities
 Effects on delivery of products and services
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Managing in a Global Environment
(cont’d)
 The Economic Environment
 Economic Systems
 Market economy

An economy in which resources are primarily owned and controlled by the
private sector
 Command economy

An economy in which all economic decisions are planned by a central
government
 Monetary and Financial Factors
 Currency exchange rates
 Inflation rates
 Diverse tax policies
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The Challenge of Global Management
 Increased threat of terrorism
 Economic interdependence of trading
 Acknowledging cultural, political, and economic differences
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Managing in a Global Environment
(cont’d)
 The Cultural Environment
 National Culture
 Values and attitudes shared by individuals from a specific country that
shape their behaviour and their beliefs about what is important
 May have more influence on an organization than the organization culture
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Hofstede’s Framework Power
Distance
 The extent to which a society accepts that power in institutions
and organizations is distributed unequally.
 Low distance
• Relatively equal power between those with status/wealth and
those without status/wealth
 High distance
• Extremely unequal power distribution between those with
status/wealth and those without status/wealth
Hofstede’s Framework
Individualism
 Individualism
 The degree to which people prefer to act as individuals
rather than as member of groups
 Collectivism
 A tight social framework in which people expect others
in groups of which they are a part to look after them and
protect them
Hofstede’s Framework: Masculinity
 Masculinity
 The extent to which the society values work roles of
achievement, power, and control, and where
assertiveness and materialism are also valued
 Femininity
 The extent to which there is little differentiation between
roles for men and women
Hofstede’s Framework: Uncertainty
Avoidance
The extent to which a society feels threatened by uncertain
and ambiguous situations and tries to avoid them
 High Uncertainty Avoidance:
Society/individual does not like ambiguous situations and
tries to avoid them.
 Low Uncertainty Avoidance:
Society/individual does not mind ambiguous situations and
embraces them.
Hofstede’s Framework: Time
Orientation
 Long-term Orientation
 A national culture attribute that emphasizes the future,
thrift, and persistence
 Short-term Orientation
 A national culture attribute that emphasizes the present
and the here and now
Hofstede’s Framework: Indulgence
 Indulgence
 The degree to which it is alright for people to enjoy life, have
fun and fulfill natural human desires
 Restraint
 The degree to which there are social norms governing the
gratification of basic human desires and people’s behavior