Chapter 4 bba samester 1

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–1

Managing in a Managing in a Global Global EnvironmentEnvironment

ChapterChapter

44

Management Stephen P. Robbins Mary Coulter

tenth edition


What’s Your Global What’s Your Global Perspective?Perspective?

• ParochialismParochialism Is viewing the world solely through one’s own eyes Is viewing the world solely through one’s own eyes

and perspectives.and perspectives. Is not recognizing that others have different ways of Is not recognizing that others have different ways of

living and working.living and working. Is a significant obstacle for managers working in a Is a significant obstacle for managers working in a

global business world.global business world. Is falling into the trap of ignoring others’ values and Is falling into the trap of ignoring others’ values and

customs and rigidly applying an attitude of “ours is customs and rigidly applying an attitude of “ours is better than theirs” to foreign cultures.better than theirs” to foreign cultures.


Adopting a Global PerspectiveAdopting a Global Perspective• Ethnocentric AttitudeEthnocentric Attitude

The parochialistic belief that the best work The parochialistic belief that the best work approaches and practices are those of the approaches and practices are those of the homehome country.country.

• Polycentric AttitudePolycentric Attitude The view that the managers in the The view that the managers in the hosthost country know country know

the best work approaches and practices for running the best work approaches and practices for running their business.their business.

• Geocentric AttitudeGeocentric Attitude A A world-orientedworld-oriented view that focuses on using the best view that focuses on using the best

approaches and people from around the globe.approaches and people from around the globe.


Regional Trading AgreementsRegional Trading Agreements• The European Union (EU)The European Union (EU)

A unified economic and trade entity A unified economic and trade entity Belgium, Denmark, France, Greece, Ireland, Italy, Belgium, Denmark, France, Greece, Ireland, Italy,

Luxembourg, the Netherlands, Portugal, Spain, the United Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and SwedenKingdom, Germany, Austria, Finland, and Sweden

• North American Free Trade Agreement (NAFTA)North American Free Trade Agreement (NAFTA) Eliminated barriers to free trade (tariffs, import Eliminated barriers to free trade (tariffs, import

licensing requirements, and customs user fees)licensing requirements, and customs user fees) United States, Canada, and MexicoUnited States, Canada, and Mexico


The World Trade Organization The World Trade Organization (WTO)(WTO)

• Evolved from the General Agreement on Tariffs Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995.and Trade (GATT) in 1995.

• Functions as the only global organization Functions as the only global organization dealing with the rules of trade among nations.dealing with the rules of trade among nations.

• Has 153 member nations.Has 153 member nations.

• Monitors and promotes world trade.Monitors and promotes world trade.


Different Types of International Different Types of International OrganizationsOrganizations

• Multinational Corporation (MNC)Multinational Corporation (MNC) Maintains operations in multiple countries.Maintains operations in multiple countries.

• Multi domestic CorporationMulti domestic Corporation Is an MNC that decentralizes management and other Is an MNC that decentralizes management and other

decisions to the local country. decisions to the local country.

• Global CorporationGlobal Corporation Is an MNC that centralizes its management and other Is an MNC that centralizes its management and other

decisions in the home country.decisions in the home country.


Different Types of International Different Types of International Organizations (cont’d)Organizations (cont’d)

• Transnational Corporation (Borderless Transnational Corporation (Borderless Organization)Organization) Is an MNC that has eliminated structural divisions that Is an MNC that has eliminated structural divisions that

impose artificial geographic barriers and is organized impose artificial geographic barriers and is organized along business lines that reflect a geocentric attitude.along business lines that reflect a geocentric attitude.


Exhibit 4–3Exhibit 4–3 How Organizations Go GlobalHow Organizations Go Global


Other Forms of GlobalizationOther Forms of Globalization• Strategic AlliancesStrategic Alliances

Partnerships between and organization and a foreign Partnerships between and organization and a foreign company in which both share resources and company in which both share resources and knowledge in developing new products or building knowledge in developing new products or building new production facilities.new production facilities.

• Joint VentureJoint Venture A specific type of strategic alliance in which the A specific type of strategic alliance in which the

partners agree to form a separate, independent partners agree to form a separate, independent organization for some business purpose.organization for some business purpose.

• Foreign SubsidiaryForeign Subsidiary Directly investing in a foreign country by setting up a Directly investing in a foreign country by setting up a

separate and independent production facility or office. separate and independent production facility or office.


Managing in A Global Managing in A Global EnvironmentEnvironment

• The Legal EnvironmentThe Legal Environment Stability or instability of legal and political systemsStability or instability of legal and political systems

Legal procedures are established and followedLegal procedures are established and followed Fair and honest elections held on a regular basisFair and honest elections held on a regular basis

Differences in the laws of various nationsDifferences in the laws of various nations Effects on business activitiesEffects on business activities Effects on delivery of products and servicesEffects on delivery of products and services


The Economic EnvironmentThe Economic Environment• Economic SystemsEconomic Systems

Free market economyFree market economy An economy in which resources are primarily owned and An economy in which resources are primarily owned and

controlled by the private sector.controlled by the private sector. Planned economyPlanned economy

An economy in which all economic decisions are planned by An economy in which all economic decisions are planned by a central government.a central government.

• Monetary and Financial FactorsMonetary and Financial Factors Currency exchange ratesCurrency exchange rates Inflation ratesInflation rates Diverse tax policiesDiverse tax policies


The Cultural EnvironmentThe Cultural Environment• National CultureNational Culture

Is the values and attitudes shared by individuals from Is the values and attitudes shared by individuals from a specific country that shape their behavior and their a specific country that shape their behavior and their beliefs about what is important.beliefs about what is important.

May have more influence on an organization than the May have more influence on an organization than the organization culture.organization culture.


Hofstede’s Framework for Hofstede’s Framework for Assessing CulturesAssessing Cultures

Individualismversus

Collectivism

PowerDistance

UncertaintyAvoidance

Achievement versus

Nurturing

Long-Termversus

Short-Term Orientation Culture


Exhibit 4–5 Hofstede’s Five Dimensions of National Culture(1) Individualistic — people look after their own and family interests Collectivistic — people expect group to look after and protect them Individualistic Collectivistic United States, Canada Japan Mexico, Thailand Australia

(2) High power distance—Accepts wide differences in power, great deal of respect for those in authority

Low power distance—Plays down inequalities: employees are not afraid to approach nor are in awe of the boss.

High power distance Low power distance Mexico, Singapore, Italy, Japan United States, Sweden


Exhibit 4–5 Hofstede’s Five Dimensions of National Culture(3) High uncertainty avoidance—Threatened with ambiguity and

experience high levels of anxiety. Low uncertainty avoidance— Comfortable with risks; tolerant of

different behavior and opinions.

High uncertainty avoidance Low uncertainty avoidance Italy, Mexico, France United Kingdom Canada, United States,

Singapore

(4) Achievement—Values such as assertiveness, acquiring money and goods, and competition prevail

Nurturing—Values such as relationships and concern for others prevail

Achievement Nurturing United States, Japan, Canada, Greece France,

Sweden Mexico


Exhibit 4–5 Hofstede’s Five Dimensions of National Culture

(5) Long-term orientation—People look to the future and value thrift and persistence.

Short-term orientation — People value tradition and the past. Short-term thinking Long-term thinking

Germany, Australia, China, Taiwan, Japan United States, Canada


Global Management in Today’s Global Management in Today’s WorldWorld

• ChallengesChallenges Openness associated with globalizationOpenness associated with globalization Significant cultural differences (e.g., Americanization)Significant cultural differences (e.g., Americanization) Adjusting leadership styles and management Adjusting leadership styles and management

approachesapproaches• RisksRisks

Loss of investments in unstable countriesLoss of investments in unstable countries Increased terrorismIncreased terrorism Economic interdependence Economic interdependence

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Chapter 4 bba samester 1