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MANAGING IN A GLOBAL ENVIRONMENT
Prepared By : ZAREEN SHAIKH, SZABIST LarkanaSession-4
Class-BBA-2
The International Business The International Business EnvironmentEnvironment
Greater difficulties and risks when Greater difficulties and risks when performing management functions - due performing management functions - due to differences in culture, language, to differences in culture, language, economies, laws, political stability, etc.economies, laws, political stability, etc.
Stages of GlobalizationStages of Globalization1.1. Domestic StageDomestic Stage = All production and marketing facilities at = All production and marketing facilities at
home.home.
2. 2. International StageInternational Stage = International Division is typically part of = International Division is typically part of the structure, but is not dominant.the structure, but is not dominant.
3. 3. Multinational StageMultinational Stage = Marketing and production in many = Marketing and production in many countries and 1/3 of sales from outside home country.countries and 1/3 of sales from outside home country.
4. 4. Global StageGlobal Stage =Making sales and acquiring(to get something) =Making sales and acquiring(to get something) resources in whatever country offers the best deal.resources in whatever country offers the best deal.
Ownership, control, and top management tend to be Ownership, control, and top management tend to be dispersed.dispersed.
INTERNATIONAL BUSINESS MANAGEMENT
ENVIRONMENTAL ENVIRONMENTAL FORCESFORCES
1. Economic environment2. Legal/ Political environmental4. Socio-cultural environment5. Technological environment
Economic environment
Economic Development (Developed & Less Developed Countries)
Infrastructure Resource & Product Markets Exchange rates
Legal/ Political environment
Political Risk and Instability Laws and Regulations
GATTWTOEUNAFTATRADE ALLIANCES
Socio-cultural environment
Hofstede’s Dimensions of Culture Hofstede’s Dimensions of Culture (National Social Values)(National Social Values)
Power DistancePower Distance Uncertainty AvoidanceUncertainty Avoidance Individualism/CollectivismIndividualism/Collectivism Masculinity/FemininityMasculinity/Femininity Time OrientationTime Orientation
Power DistancePower DistanceHigh power distance High power distance means people accept means people accept
inequality in power among institutions, inequality in power among institutions, organizations, and peopleorganizations, and people
Uncertainty AvoidanceUncertainty AvoidanceHigh uncertainty High uncertainty avoidance means that avoidance means that members of a society feel uncomfortable members of a society feel uncomfortable
with uncertainty and ambiguitywith uncertainty and ambiguity
IndividualismIndividualism IndividualismIndividualism reflects a value for a reflects a value for a loosely knit social framework in which loosely knit social framework in which
individuals are expected to take care of individuals are expected to take care of themselvesthemselves
CollectivismCollectivism CollectivismCollectivism is a preference for a tightly is a preference for a tightly
knit social framework in which knit social framework in which individuals look after one anotherindividuals look after one another
Masculinity/Femininity Masculinity/Femininity (Toughness/Tenderness)(Toughness/Tenderness)(Achievement/Nurturing)(Achievement/Nurturing)
MasculineMasculine cultures stress the cultures stress the importance of achievement, heroism, importance of achievement, heroism, assertiveness, and material successassertiveness, and material success
FeminineFeminine cultures value relationships, cultures value relationships, modesty, caring for the weak, and modesty, caring for the weak, and quality of lifequality of life
Time OrientationTime Orientation
Short-Term Orientation Short-Term Orientation means a greater means a greater concern with the past and present and a concern with the past and present and a high value on meeting social obligations.high value on meeting social obligations.
Long-Term OrientationLong-Term Orientation means a greater means a greater concern for the future and high value on concern for the future and high value on the saving and determination.the saving and determination.
Technological EnvironmentTechnological EnvironmentChanging at “lightning speed” Internet and telecommunications
Increasing bandwidth/high-speed accessReduced costs of entry/ leapfrogging
E-businessCustomization (“the long end of the tail”)E-retailing and financial services
Movement of money across borders “E-cash” – a currency without a country
Outsourcing and offshoringInformation as a commodityThe 24-hour office – increased productivity/lower cost
How Organizations Go GlobalThree Stages of Globalization
Stage I Exporting products for sale overseas and importing products from
overseas to sell in the home country.
Stage II Committing to directly sell home-country products in overseas
markets or contracting for products to be manufactured overseas and sold in the home country.
Stage III Licensing manufacturing and franchising services to foreign firms
to use the brand name, technology, or product specifications developed by the firm.
How Organizations Go Global
Other Forms of GlobalizationStrategic Alliances
Partnerships between an organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities.
Joint VentureA specific type of strategic alliance in which the
partners agree to form a separate, independent organization for some business purpose.
Class Debate: The Pros and Cons of Globalization
THE PROS AND CONS THE PROS AND CONS OF GLOBALIZATIONOF GLOBALIZATION
1. Where do you stand?2. Key themes to consider
a. Impact on Laborb. Impact on Equalityc. Impact on Governmentd. Impact on the Environmente. Impact on Culture and Community
Impact on LaborImpact on Labor
Positive effects Increased job opportunities
Upgraded education system
Increased training
Negative effects Job displacement
Loss of industries or economic
groups
Lowered labor standards
Downward wage pressure
Decreased union power
Diminished social contract
Impact on EqualityImpact on EqualityPositive effects
Increased income / reduced poverty
Increased wages for education or
technically skilled
Improved economic conditions
Rich become richer
Greater access to goods
Lower cost of goods
Increased food supply (in some
countries)
Negative effects Greater disparity between haves
and have-nots within and across
countries
Some downward pressure on
wages for the poorly educated or
unskilled
Worsened economic conditions in
marginalized countries
Poor become poorer
Impact on GovernmentImpact on GovernmentPositive effects
Increased economic
development
Expanded infrastructure
Transfer of modern
management techniques
Greater interdependence
among business
partners
Negative effects MNC power increased
MNCs externalize cost to countries
Competition results in too many
concessions
MNCs influence local policies
Companies incorporate in low tax
countries
Pressure to reduce social benefits
Impact on the EnvironmentImpact on the EnvironmentPositive effects
More efficient use of
resources
Increased demand for and
transfer of more efficient
technologies
Increased incomes lead to
greater concern for
environmental protection
Negative effects Increased consumption
Advertising creates artificial
needs
Greater use of fossil fuels
(increased travel)
Increased surplus and scarcity
More factories require more
infrastructure
Impact on Culture/CommunityImpact on Culture/Community
Positive effects Increased cultural exposure
and understanding
Closer cross-border ties
Negative effects More mobility disrupts social life,
particularly in remote or rural
communities
Disintegration of local
communities
Cultural homogenization and
monoculture / reduced cultural
diversity
Globalization: Pros and ConsGlobalization: Pros and ConsGlobalization as “moral conflict” Impacts of Globalization
Increases economic interdependenceCreates winners and losers
Implications of the debateFor academics
Need for more objective research Need to question assumptions and be open to alternatives
For companies Be aware of multiple stakeholder interests Follow the guidelines of the UN Global Compact
ConclusionConclusion Implications for Managers
Lifelong learningthe “most valuable asset is the ability to learn how to learn” (Thomas
Friedman, The World is Flat)
Responsivenessbe alert for changes and quick to respond
Adaptabilityknowing how to work with othersbeing comfortable with uncertainty and ambiguity
Both a local and global perspectivesee the big picture (global economy/whole organization)understand the details of operating at the local level
ANY QUESTION