S MALL B USINESS, E NTREPRENEURSHIP, AND F RANCHISES C HAPTER -05 Dr. Gehan Shanmuganathan, (DBA) 1.
C HAPTER -02 I NTERNATIONAL M ANAGEMENT AND C ULTURAL D IVERSITY Dr. Gehan Shanmuganathan, (DBA) 1.
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Transcript of C HAPTER -02 I NTERNATIONAL M ANAGEMENT AND C ULTURAL D IVERSITY Dr. Gehan Shanmuganathan, (DBA) 1.
2
CHAPTER OBJECTIVES
Describe the importance of multinational
corporations and outsourcing in international
business
Importance of sensitivity to cultural differences
Identify major challenges facing global managerial
worker
Various methods of entry into world markets
Success factors in the global market place and
positives and negatives of globalization
Scope of diversity, competitive advantage, and
potential problems of culturally diverse workforce
4
INTERNATIONAL MANAGEMENT
Global integration influences the manager’s job
Approximately 10% to 20% of all jobs in the United
States are dependent upon trade with other countries
National identity of the product is vague in today’s
context due to outsourcing certain parts in the value
chain
Critical aspects to manage in international business are,
Cultural diversity
Time factor in business operations (local and international)
Outsourcing
7
MULTINATIONAL CORPORATIONS (MNC)
A firm with operating units in two or more countries in addition to its own
Headquarters in one country and subsidiaries in other countries
Some times hire people from its own country of origin (expatriates) for key positions in facilities in other countries
Other times, MNC will hire citizens of the country in which the division is located (host-country nationals)
Some MNCs are PepsiCo, IBM, Microsoft
8
TRANSNATIONAL CORPORATIONS
A special type of MNC that operates worldwide
without having a single national headquarters
Units of the company located in different parts of
the world
Eg- Tokyo based Trend Micro is a specialist in
combating computer viruses
Key challenges in international business are,
Government agreements about trade
Outsourcing
9
TRADE AGREEMENT
The North American Free Trade Agreement (NAFTA)
Relationships among United States, Canada, and Mexico
Central American Free Trade Agreement (CAFTA)
United States, Dominican Republic, and Central America
The European Union (EU)
27-nation alliance in Europe
The World Trade Organization (WTO)
The only international agency overseeing the rules of
international trade and settle disputes among countries
11
GLOBAL OUTSOURCING AS PART OF INTERNATIONAL BUSINESS
The practice of hiring an individual or another company outside the organization to perform work
Global outsourcing
Outsourcing Offshoring
13
GLOBAL OUTSOURCING
Lower-Priced goods
Create new jobs
Around the clock
service
Permanent loss of
jobs
Slow job creation
Low wages to local
employees
threatening
offshoring
Cases for ….. Cases against……
14
PROBLEMS WITH OUTSOURCING
Language barrier
Customer handling issues
Currency value
When relatively weak- begins on-shoring and
re-shoring
16
CULTURAL SENSITIVITY
Awareness and use of local and
national customs and their
importance in effective interpersonal
relationships
17
MULTICULTURAL WORKER
An individual who is
aware of and values
other cultures Ethnocentrism discuss……
CULTURAL MISTAKES TO AVOID
Country
Great Britain
Spain
Scandinavia
All Asian countries
Japan
India
Cultural Mistake
Asking personal questions. The British protect their privacy.
Expecting punctuality. Your appointments will usually arrive 20-30 minutes late.Being overly rank conscious in these countries. Little attention is paid to a person’s place in the hierarchy.Pressuring an Asian employee to brag about his or her accomplishments. They prefer to let the record speak for itself.Shaking hands or hugging in public. Japanese consider the practices to be offensive.Telling Indians you prefer not to eat with your hands. If they are not using cutlery when eating, they expect you to do likewise.
Mexico
Brazil
Latin America
Flying into a Mexican city in the morning, expecting to close a deal by lunch. They build business relationships slowly.Attempting to impress them by speaking a few words of Spanish. Portuguese is the official language.Wearing elegant jewelry during a business meeting. They feel people should appear conservative during business meetings.
2.2
CHALLENGES FACING THEGLOBAL MANAGERIAL WORKER
Economic crises in
other countries
Balance of trade
problems
Collecting money
Liability of being a foreigner
Differences in
negotiating style
Human rights
violations
Culture shock
2.3
Global leadership skills
21
DEVELOPING GLOBAL LEADERSHIP SKILLS
The ability to effectively lead people of other cultures
This is a combination of cultural sensitivity and general leadership skills
A welcoming attitude towards other cultures is the most important in becoming an effective global leader
Their main roles are, Inspiring Envisioning Culturally sensitive
24
CURRENCY FLUCTUATIONS
If the currency gains in value, difficult for
exports but easy for imports
If the currency weakens in value, difficult for
imports, but easy for exports
These affect marketing and production in MNCs
25
BALANCE OF TRADE PROBLEMS
The difference between exports and imports in both goods and services
Deficit and surplus effects
26
HUMAN RIGHTS VIOLATIONS, CORRUPTIONS, AND VIOLENCE
Should the manager use,
Child labor
Free labor from political prisoners
Undocumented employees
Unfair treatments for indigenous people
27
CULTURE SHOCK
A group of physical and psychological
symptoms that may develop when a person
is abruptly placed in a foreign culture
Understanding of,
Values, beliefs, attitudes, ideas, religious beliefs,
myths, colors, education, symbols, and so on
Time zones
28
DIFFERENCES IN NEGOTIATING STYLE
Negotiation is a process where each party
involved in bargaining, tries to gain an
advantage for themselves by the end of the
process. Negotiation is intended to aim at
compromise.
American managers will have to be;
Patient
Use team approach
Avoid being too informal
29
PIRACY OF INTELLECTUAL PROPERTY RIGHTS AND OTHER MERCHANDISE
Intellectual property rights – software
Copy rights – publications
Exporting Licensing
Local warehousing & selling
Local assembly & packaging
Strategic Alliance(joint venture)
Direct foreign
investment
Global startup
Global merger
Methods of Entry into
World Markets
12
3
4
56
7
8
2.4
32
INTERNATIONAL BUSINESS ENTRY STRATEGIES
Licensing- A contractual agreement in which one firm
permits another to produce and market its products and use
its brand name in return for royalty or other compensation
Exporting- organization manufactures in the home country
to export to other countries
Joint venture- a partnership between two entities for a
business operation in a country (guest country)
Totally owned facility- with total ownership of the business
Strategic Alliance- partnership formed to create
competitive advantage on a worldwide business
33
INTERNATIONAL BUSINESS ENTRY STRATEGIES
Trading company- These companies provide a link between the international buyer and the seller
Counter Trade- International barter transactions
Multinational Firms- A firm that operates on a worldwide scale without ties to any specific nation or region
Global startup- a small firm that comes into existence by serving an international market
HOW TO SUCCEED IN THE GLOBAL MARKETPLACE
Think globally, act locally Diversify into similar product markets• Be familiar with local business concepts, laws,
and customs Recruit talented nationals Research and assess potential markets Hire or develop multicultural workers Adopt Environmentally Friendly Policies Understand your
CompetitorsPotential partnersMembers of the management team
2.5
THE COMPETITIVE ADVANTAGES OF DIVERSITY
Leads to better rapport with
culturally diverse
customers
Improves productivity and profits
Improves customer service
Reduces possible cultural bloopers
2.6
Facilitates recruiting and
retaining talented
individuals
39
COMPETITIVE ADVANTAGE OF DIVERSITY
The advantage an organization has as an advantage
of managing diversity over rivals
Product – Apple
Price- Wal-Mart
Advertising – insurance companies
Distribution or delivery – fast food
People or service- Banks
Process - travel and leisure
40
BENEFITS OF CULTURAL DIVERSITY
Marketing advantage in terms of sales and
profits
Reduces costs (lost customer and efficiency)
Recruiting talented employees
Provide useful ideas for advertising and
publicity
Reduces cultural bloopers (blunders)
Create corporate creativity
42
PROBLEMS ASSOCIATE WITH DIVERSITY
Heterogeneous groups could create potential
conflicts among groups
ORGANIZATIONAL PRACTICES FOR IMPROVINGTHE MANAGEMENT OF DIVERSITY
2.7
Establish corporate policies favoring
diversity
Encourage employees to form network groups
Conduct “valuing diversity” training
programs English Language as a
Force
For Unity