Management11e John Schermerhorn
Global Management and
Cultural Diversity
Planning Ahead
—Chapter 5 study questions
1.What are the management challenges of globalization?
2.What are global businesses and what do they do?
3.What is culture and how does it impact global management?
4.How can we benefit from global management learning?
Study Question 1:
What are the management challenges of globalization?
-Key concepts in the challenges of globalization:
§Global
economy
§Globalization
§Global
management
§Global
manager
-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
-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
-Global businesses
§Conduct
for-profit transactions of goods and services across national boundaries
-Reasons why businesses go global:
Profits- Customers- Suppliers- Capital- Labor- Risk
-Market entry strategies
§involve
the sale of goods or services to foreign markets but do not require expensive
investments
-Types of market entry strategies:
§Global
sourcing
§Exporting
§Importing
§Licensing
agreement
§Franchising
•the process of purchasing materials or services around the
world for local useGlobal sourcing•selling locally made products in foreign
marketsExporting•buying foreign-made products and selling them
domesticallyImporting•one firm pays fee for rights to make or sell another
company’s productsLicensing agreement•a fee is paid for rights to use another
firm’s name and operating methodsFranchising
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
Joint venturesoperates in a foreign country through
co-ownership by foreign and local partnersStrategic alliancesa partnership in
which foreign and domestic firms share resources and knowledge for mutual
gains Foreign subsidiaries local
operation completely owned by a foreign firm
Global business environments Legal and political systems Trade
agreements and trade barriers Regional economic alliances
-Legal and political systems:
§Differing
laws and practices regarding:
§Business
ownership
§Foreign
currency exchange
§Protection
of intellectual property rights
-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
-Trade Agreements and Trade Barrriers
§World
Trade Organization
§Most
favored nation status
§Tariffs
§Nontariff
barriers
§Protectionism
-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
-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
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
-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
-MNC complaints about host countries:
§Profit
limitations
§Overpriced
resources
§Exploitative
rules
§Foreign
exchange restrictions
§Failure
to uphold contracts
•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 Ethical issues for Global Businesses:
-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
-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
Study Question 3:
What is culture and how does it impact global management?
• culture : The
shared set of beliefs, values, and patterns of behavior common to a group of
people Culture
• Cultureshock : Confusion and discomfort a person
experiences in an unfamiliar •Culturalintelligence : The ability to adapt and
adjust to new cultures
• Ethnocentrism : Tendency to consider one’s own culture as
superior to others
-Stages in adjusting to a new culture:
-Silent languages of
§Context:
§Low context cultures -emphasize
communication via spoken or written words
§United
States
§Canada
§Germany
§High context cultures –rely on
nonverbal and situational cues as well as on spoken or written words
§Thailand
§Malaysia
-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
-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
-Values and national cultures (Hofstede):
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
§Project
GLOBE’s nine dimensions continued
§Institutional
collectivism
§In-group
collectivism
§Assertiveness
§Performance
orientation
§Humane
orientation
§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
§Project
GLOBE’s research on leadership practices across cultures
§Inhibitors
of leadership success
§Being
a loner
§Acting
uncooperative
§Being
irritable
§Acting
autocratic
-Comparative management
§How
management systematically differs among countries and/or cultures
-Global managers
§Need
to successfully apply management functions across international boundaries
-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
-Harley-Davidson: Style and strategy have global reach
For activities and assessments, please visit…
§www.wiley.com/college/schermerhorn