CHAPTER 5- GLOBAL DIMENSIONS OF MANAGEMENTBY: LINDA, JANELLE, UMEKA

INTERNATIONAL MANAGEMENT AND GLOBALIZATION

• Global Economy : resources, markets, competition are worldwide in scope

• economy offers great opportunities for worldwide sourcing, production, sales capabilities

• Globalization: process of growing interdependence among elements of global economy

• International Management: managing operations in more than one country

• management challenges and opportunities of working across national & culture borders must be mastered

management practised in organizations that conduct business in more than one country

• Global Manager: culturally aware and informed about international affairs

• https://www.youtube.com/watch?v=JJ0nFD19eT8

EUROPE

• European union: political and economic alliance of European countries

• Union expanding to 22 countries that agree to support mutual economic growth by removing barriers

• Euro: common European currency

• Expected regional benefits of an expending EU include higher productivity, lower inflation and steady growth

THE AMERICAS

• NAFTA: North American Free trade agreement linking Canada, The Unites States , and Mexico in an economic alliance

• NAFTA frees the flow of goods, services, workers, and investments within a region

• Getting approval of NAFTA from all three governments was not easy

• Calls were made to protect domestic industries from foreign competition

• Maquiladoras: Manufacturing plants that operate in Mexico with special privileges

• Import materials , components, and equipment duty free

• Maquiladoras increase employment and prosperity and help develop skilled local workers

• Regions are cutting off tariffs, updating their economic policies and welcoming foreign investors

• Agreement has been reached by trade ministers to create Free Trade Area of the Americas ( FTAA)

• https://www.youtube.com/watch?v=OCG7ScRP1ws

ASIA AND THE PACIFIC RIM

• Country of 1.3 billion people is the world’s largest consumer market place

• Top exporter of computers, electrical parts and components, telecommunications equipment and sporting goods

• Goals are to expanding its growing presence in global markets for medical transcription and accounting services

• “Opportunity” is watchword , wherever you travel/ do business in Asia

• India is an example, country is in midst of economic expansion, with high literacy rates and relatively inexpensive skilled labour

• It is emerging as world class base for technology development and software engineering

AFRICA

• Foreign businesses tend to avoid risk of troubled spots , giving increase attention to stable countries with growing economies

• Example Ghana , established growing presence in market for business process outsourcing

• Many parts of Africa suffer from problems of poverty and continuing AIDS epidemic

• Southern African development community (SADC) links 14 countries in Africa to trade and develop economics efforts

• SADC objective include harmonizing and rationalizing strategies for sustainable development among member countries

• http://www.ted.com/talks/simon_anholt_which_country_does_the_most_good_for_the_world#t-151961

INTERNATIONAL BUSINESS CHALLENGES

• International Business: Conducts commercial transactions across national boundaries

WHY DO COMPANIES GO INTERNATIONAL ?

• Profits-Global operations offer greater profit potential

• Customers-Global operations offer new markets to sell products

• Suppliers-Global operations offer access to needed raw materials

• Capital-Global operations offer access to financial resources

• Labour-Global operations offer access to lower labour costs

FORMS OF INTERNATIONAL BUSINESS

• Market strategies involve the sale of goods or services to foreign markets, but do not require capital in vestments

• Joint ventures & wholly owned subsidiaries are direct investment strategies

• Require major capital commitments but creates rights of ownership and control over foreign countries

Direct Investment Strategies:

• To establish direct investment presence in foreign country, firms enter into joint ventures

• International joint ventures are strategic alliances that help partners gain thing through co-operation

COMPLICATIONS IN THE GLOBAL BUSINESS ENVIRONMENT

• Global executives must master task demands operating with worldwide suppliers, distributors, customers and competitors

• Organizations are expected to abide by the laws of the host country in which they are operating

• Legal problems in international business involve incorporation practices and business ownership negotiating and implementing contracts with foreign parties

• World trade Organization: member nations agree to negotiate disputes about tariffs and trade restrictions

MULTINATIONAL CORPORATIONS

• Multinational Corporation: business with extensive international operations in more than one foreign country

TYPES OF MULTINATIONAL CORPORATIONS

• Transitional corporations: MNC that operates worldwide on a borderless basis

• Executives view the entire world as their domain for acquiring resources locating production facilities, marketing goods, and services and promoting its brand image

• Try to operate across borders without homes-based prejudices, make major decisions from a global perspective

• Distribute work among worldwide points of excellence and employ senior executives from many different countries

PROS AND CONS

• When consumer demand, resource supplies , product flow, and labour markets increasingly span national boundaries, actions of MNC’s are increasingly influential in the global economy

• Host-Country Issues:

• Potential host-country benefits include larger tax bases, increased employment opportunities, technology transfers, introduction of new industries & development of local resources

• Home-Country Issues:

• When MNC outsources cut back or close domestic operation to shift work to lower-cost international destinations, loss of local jobs is controversial

ETHICAL ISSUES FOR MULTINATIONAL CORPORATIONS • Corruption: involves illegal practices to further ones business interests

• The Canadian Corruption of Foreign Public Officials Act makes it illegal for firms and managers to engage in corrupt practices overseas

• Sweatshops: employ workers at very low wages , for long hours and in poor working conditions

• Outsourcing of contracts are now common as manufacturers follow the worlds low cost labour supplies

• Child Labour: full-time employment of children for work otherwise done by adults

• Sustainable development: meets the needs of the present without hurting future generations

• MNC’s are increasingly expected to uphold high standards in dealing with sustainable development and protection of the natural environment

CULTURE AND GLOBAL DIVERSITY

• Culture: shared set of beliefs, values and patterns of behaviour common to a group of people

POPULAR DIMENSIONS OF CULTURE• Language:

provides access to the cultural understanding needed to conduct business and develop personal relationships

• Use of Space:

The use of interpersonal space is one of the important ‘silent languages’ of culture

• Time Orientation:

another silent languages which controls the way people approach and deal with time tends to vary widely

• Religion:

major influence that impacts the way people dress, eat, and interpersonal behaviour

• Contracts and Agreements:

cultures vary in their use of contracts and agreements

VALUES AND NATIONAL CULTURES

• Framework helps to better understand how cultural differences can influence management and organizational practices

• Dutch Scholar, Geert Hofstede published his book Culture’s Consequences: International Differences in Work –Related Values which demonstrates broad differences in national cultures

• Hofstede’s five dimensions for selected countries to be ranked:

UNDERSTANDING CULTURAL DIVERSITY

• Relationships with people:

Universalism vs. particularism, individualism vs. collectivism. Neutral vs. affective, specific vs. diffuse, achievement vs. prescription

• Attitudes toward time:

Time may be considered as a continuous series of events or a greater sense of urgency

• Attitudes Toward the Environment:

Inner- directed cultures view themselves separated from nature while outer- directed cultures view themselves as a part of nature

MANAGEMENT ACROSS CULTURES

• Management process is as relevant to international operations as to domestic ones

• This process must be applied appropriately from one country and culture to the next

PLANNING AND CONTROLLING

• Planning must link the home office and foreign affiliates, while thinking about other countries

• Computer based global networks allow home and field office to share database, transfer document, have group meetings virtually

• Planning factors into the risks of doing business across political and economic borders

• The potential loss of an investment or managerial control over a foreign asset due to instability and political changes in the host country will become a political risk.

ORGANIZING AND LEADING

• Common organizing approach is to appoint a vice-president or other senior managers to oversee all foreign operations

• The global area structure arranges production and sales functions into separate geographical units

• The global product structure gives worldwide responsibilities to product group managers, who are assisted by area specialists on the corporate staff

ARE MANAGEMENT THEORIES UNIVERSAL?

• Geert Hofsted answers No, He claims that many theories are ethnocentric and fail to take into account cultural differences

• He argues that the North American emphasis on participating in leadership reflects the culture’s moderate score of power distance, national cultures with lower scores are characterized by more democratic leadership initiatives

• The motivation of American scholars value individual performances

• Elsewhere, where values are more collectivist, the theories are less applicable

GLOBAL ORGANIZATIONAL LEARNING

• Global organizational learning is when managers around the world realize they have much to share and learn from one another

• It must be learned with full appreciation of the constraints and opportunities of different cultures and country environments

• However, not everyone/organization is ready to learn about other cultures

• Some organizations still have ethnocentric attitudes, while others have polycentric attitudes, and in global businesses geocentric attitudes create a rich global environment

• The approach to learning should be an alert, open, inquiring, and cautious one