Transcript Managing in Turbulent Times

MANAGEMENT
RICHARD L. DAFT
Managing in a Global
Environment
CHAPTER 4
chapter4
Learning Outcomes
• Describe the emerging borderless world and some issues of particular
concern for today’s managers.
• Describe market entry strategies that business use to develop foreign
markets.
• Define international management and explain how it differs from the
management of domestic business operations.
• Indicate how dissimilarities in the economic, sociocultural, and legalpolitical environments throughout the world can affect business
operations.
• Describe how regional trading alliances are reshaping the international
business environment.
• Describe the characteristics of a multinational corporation.
• Explain cultural intelligence and why it is necessary for managers working
in foreign countries.
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chapter4
Are You Ready To Work
Internationally?
• Cross-cultural skills are extremely important
• Every manager needs to think globally
• The future of business and society is being
shaped by global relationships
• A global mind-set is becoming a prerequisite
for managers
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chapter4
A Borderless World
• Isolation from international forces is no
longer possible
– Trade barriers are falling
– Communication is faster and cheaper
– Consumer tastes are converging
• Virtual connections enable close, rapid
coordination among people working in
different parts of the world
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chapter4
Four Stages of Globalization
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chapter4
Strategies for Entering
International Markets
• Exporting – transfers products for sale in
foreign countries
• Global Outsourcing – transferring the labor of
specific tasks to low cost countries
• Licensing – allowing an operation in another
country to produce and sale company products
• Franchising – providing a foreign organization
with package of materials and services
• Direct Investing - a production facility in
another country
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chapter4
Getting Started
Internationally
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China Inc.
• Opportunities in China are booming
• Companies are engaging in all strategies
– The most common practice is outsourcing
• Multinationals are manufacturing a large variety
of products in China
• China is attractive for low-cost manufacturing
• India is attractive in software design, services
and engineering
• An author has named the phenomenon Chindia
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Key Factors in The
International Environment
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The Economic Environment
• Economic development differs around
the world
– Countries can be categorized as developed or
less-developed
• Companies must be able to access the
resources needed to produce their
products
• Volatility in exchange rates can impact a
businesses bottom-line
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chapter4
World Economic Forum
Global Competitiveness
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chapter4
The Legal-Political
Environment
 Government supervision
 Political instability
 Laws and regulations
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The Sociocultural
Environment
Shared knowledge
Beliefs
Values
Modes of behavior
Values and behaviors from the US do not translate
around the world
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Country Ranking and
National Value Systems
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Hofstede’s Value
Dimensions
chapter4
National value systems that influence
organizational and employee working
relationships
Power
Distance
Uncertainty
Avoidance
Individualism
Masculinity/
and
Femininity
Collectivism
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GLOBE Project Value
Dimensions
Global Leadership and Organizational Behavior
Effectiveness (GLOBE)
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Assertiveness
Future Orientation
Uncertainty Avoidance
Gender Differentiation
Power Distance
Societal Collectivism
Individual Collectivism
Performance Orientation
Humane Orientation
Extension of
Hofstede’s
assessment
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Country Rankings and
GLOBE Rankings
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Communication Differences
• Some cultures pay more attention to the social
context of communication
– Social Setting
– Nonverbal Behavior
– Social Status
• High-context cultures are sensitive to social
exchanges
• Low-context cultures use communication to
exchange facts and information
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High-Context and LowContext Cultures
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Other Cultural
Characteristics
chapter4
 Language
 Religion
 Social Organization
 Education
 Attitudes
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International Trade
Alliances
• General Agreement on Tariffs and Trade (GATT)
– Signed in 1947 by 23 nations
– Nondiscrimination, clear procedures, negotiations and disputes
regarding trade
• World Trade Organization (WTO)
– Permanent global organization from GATT
– As of July 2007: 151 Countries
• European Union
– Begun in 1957 to improve economic and social conditions in
European Economic Community
– Evolved into the 27-nation European Union
– Goal is to develop single market system
• North America Free Trade Agreement (NAFTA)
– United States, Canada, and Mexico
– Trading bloc to spur growth and investment
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The Nations of the
European Union
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The Globalization Backlash
• As the world becomes more global, a
backlash is growing
• 68% of American say other countries
benefit more from trade
• One of the key concerns is job loss
• Many argue that globalization benefits the
economy
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Multinational Corporations
• More than 25% of its total sales revenue
come from outside the home country
• In 2007, 42% of the global sales of US
multinationals come from their foreign
affiliates
• An MNC is managed as an integrated
business system
• MNCs are controlled by a single
management authority
• MNC managers have a global
perspective
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chapter4
Managing In A Global
Environment
• Developing Cultural Intelligence
– Cultural flexibility and ability to adapt
– Cognitive, emotional and physical
• Managing Cross-Culturally
– Expatriates can be successful by focusing on:
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•
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Human Resources
Leading
Decision Making
Motivating
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