Management, 6eSchermerhorn :Management, 6eSchermerhorn Prepared by Cheryl Wyrick California State Polytechnic University Pomona John Wiley & Sons, Inc


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Chapter 5Global Dimensions of Management :Schermerhorn Chapter 5 3 Chapter 5Global Dimensions of Management Planning Ahead What are the challenges of management in a global economy? What are the opportunities of international business? What is the environment for global diversity? How do management and learning transfer across cultures?


The Global Economy :Schermerhorn Chapter 5 4 The Global Economy The New Europe European Union (EU) grouping of 15 Western European countries who have agreed to support mutual economic growth 11 of these countries have agreed to adopt the Euro (common currency)


The Global Economy :Schermerhorn Chapter 5 5 The Global Economy The Americas North American Free Trade Agreement (NAFTA) Agreement for free flow of goods and services between the U.S., Canada and Mexico Free Trade of the Americas (FTAA) is a possibility Other agreements MERCOSUR Andrean Pact CARICOM


The Global Economy :Schermerhorn Chapter 5 6 The Global Economy Maquiladoras foreign manufacturing plants allowed to operate in Mexico allowed special privileges in exchange for hiring Mexican labor import materials, components and equipment with duty paid are “value added”


The Global Economy :Schermerhorn Chapter 5 7 The Global Economy Maquiladoras advantages increased employment and prosperity disadvantages social costs in border towns exploitation of less expensive Mexican labor


The Global Economy :Schermerhorn Chapter 5 8 The Global Economy Asia and the Pacific Rim Asia and Pacific Rim economies are expected to be larger than those of the EU China is the world’s largest single-country marketplace Japanese companies account for many Fortune 500 companies


The Global Economy :Schermerhorn Chapter 5 9 The Global Economy Africa beckons international business increased attention to stable countries


Forms of International Business :Schermerhorn Chapter 5 10 Forms of International Business Market Entry Strategies Global Sourcing manufacturing and/or purchasing components worldwide and assembling them into a final product


Forms of International Business :Schermerhorn Chapter 5 11 Forms of International Business Market Entry Strategies Exporting selling locally made products in foreign markets Importing buying foreign made products and selling them in domestic markets


Forms of International Business :Schermerhorn Chapter 5 12 Forms of International Business Market Entry Strategies Licensing Agreement pay a fee to acquire the rights to sell another company’s products franchising is a form of licensing


Forms of International Business :Schermerhorn Chapter 5 13 Forms of International Business Direct Investment Strategies joint ventures strategic alliances wholly owned subsidiaries


Environment and Global Operations :Schermerhorn Chapter 5 14 Environment and Global Operations Multinational Corporation (MNC) business with extensive international operations in more than one country


Environment and Global Operations :Schermerhorn Chapter 5 15 Environment and Global Operations Types of Multinational Corporations Ethnocentric exert strict control over foreign operations Polycentric give foreign operations more freedom to operate as separate entities Geocentric seek total integration of global operations


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 16 Environmental Challenges in the Global Economy Economic Systems Central-planning government makes basic economic decisions for entire country Free-market operate under capitalism


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 17 Environmental Challenges in the Global Economy General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) international accords in which member nations agree to ongoing negotiations and reduction of tariffs and trade restrictions


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 18 Environmental Challenges in the Global Economy Laws vary between countries common legal problems incorporation practices negotiating contracts protecting patents, trademarks and copyrights foreign exchange restrictions


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 19 Environmental Challenges in the Global Economy Human resource concerns illiteracy absence of appropriate skills shortage of labor supplies


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 20 Environmental Challenges in the Global Economy Pros of MNCs larger tax bases increased employment opportunities technology transfers introduction of new industries development of local resources


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 21 Environmental Challenges in the Global Economy Cons of MNCs extract excessive profits dominate local economy do not respect local customs and laws fail to help domestic firms develop do not transfer most advanced technology


Environmental Challenges in the Global Economy :Schermerhorn Chapter 5 22 Environmental Challenges in the Global Economy Ethical Issues in Multinational Operations Foreign Corrupt Practices Act Sweatshops Environmental protection


Culture and Global Diversity :Schermerhorn Chapter 5 23 Culture and Global Diversity Culture shared set of beliefs, values and patterns of behavior common to a group of people


Culture and Global Diversity :Schermerhorn Chapter 5 24 Culture and Global Diversity Culture shock discomfort a person feels in an unfamiliar culture Ethnocentrism tendency to view one’s own culture as superior to others


Culture and Global Diversity :Schermerhorn Chapter 5 25 Culture and Global Diversity Popular Dimensions of Culture language use of space time orientation religion role of contracts


Culture and Global Diversity :Schermerhorn Chapter 5 26 Culture and Global Diversity Language varies throughout world same language varies in usage from one region to another language training is increasingly important to U.S. managers


Culture and Global Diversity :Schermerhorn Chapter 5 27 Culture and Global Diversity Use of Space interpersonal distance used in communication Latin Americans tend to be close Americans value more space


Culture and Global Diversity :Schermerhorn Chapter 5 28 Culture and Global Diversity Time Orientation Monochronic time is allotted do one thing at a time Polychronic time is allotted to do many things at once


Culture and Global Diversity :Schermerhorn Chapter 5 29 Culture and Global Diversity Religion may influence business practices source of ethical and moral teaching


Culture and Global Diversity :Schermerhorn Chapter 5 30 Culture and Global Diversity Role of Contracts some cultures view as final and binding others view as a starting point some expect contracts to be written others accept “word” as binding


Culture and Global Diversity :Schermerhorn Chapter 5 31 Culture and Global Diversity Values and National Cultures (Hofstede) Power distance Uncertainty avoidance Individualism-collectivism Masculinity-femininity Short-term - long-term orientation


Culture and Global Diversity :Schermerhorn Chapter 5 32 Culture and Global Diversity Understanding Cultural Differences Relationships with People universalism vs. particularism individualism vs. collectivism neutral vs. affective specific vs.diffuse achievement vs. prescription


Culture and Global Diversity :Schermerhorn Chapter 5 33 Culture and Global Diversity Understanding Cultural Differences Attitudes toward time sequential synchronic


Culture and Global Diversity :Schermerhorn Chapter 5 34 Culture and Global Diversity Understanding Cultural Differences Attitudes toward environment inner-directed outer-directed


Management Across Cultures :Schermerhorn Chapter 5 35 Management Across Cultures Comparative Management how management systematically differs from one country and/or culture to the next global manager someone comfortable with cultural diversity quick to find opportunity in unfamiliar settings


Culture and Global Diversity :Schermerhorn Chapter 5 36 Culture and Global Diversity Planning and Controlling Global Operations use of computer-based global networks political risk analysis


Culture and Global Diversity :Schermerhorn Chapter 5 37 Culture and Global Diversity Organizing and Leading Global Operations multinational organization structure geographical product expatriates employees who live and work in foreign countries


Culture and Global Diversity :Schermerhorn Chapter 5 38 Culture and Global Diversity Are Management Theories Universal? U.S. management theories may be ethnocentric emphasis on participation and individual performance is not applicable to other cultures


Culture and Global Diversity :Schermerhorn Chapter 5 39 Culture and Global Diversity Are Management Theories Universal? Japanese management practices lifetime employment job rotation and broad career experience shared information collective decision-making quality emphasis These practices are not easy to translate


Culture and Global Diversity :Schermerhorn Chapter 5 40 Culture and Global Diversity Global Organizational Learning cultural awareness facilitates more informed transfers of management practices