BA 210: Global Management

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BA 210 Global Management
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Part Two Organizations and Environment
Environment
Organization
Org. Culture
Ethics
Strategy
Diversity
Organizational Structure
Global Mgmt
Organizational Design
Human Resources Mgmt
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Global Mgmt Objective and Roadmap

• Understand key issues in Global management
• Explosive growth in global trade and implications
• Managing globally and going global
• National cultures and management
• Becoming a global manager

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Declining Barriers to Trade

• Free-Trade Doctrine Everyone is better off if
  each country specializes in what it can produce
  most efficiently
• Tariffs have been reduced globally through GATT
  and regionally through trading alliances
• Trends towards democracy and free-market
  economies tend to open markets
• Barriers of distance and culture have been
  greatly reduced through improvement in
  transportation and communications technologies
• National borders are becoming increasingly
  irrelevant as barriers to trade

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Revenues From Non-U.S. Operations For Selected
Companies (exhibit 4.1)
Non-U.S. Revenues 77.0 71.8 71.6 67
.8 65.8 61.6 61.2 60.1
Company Manpower Exxon Mobil Colgate-Palmolive Te
xas Instruments Avon McDonalds Coca-Cola Gillette
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Regional Trading Alliances

• Read about these
• The European Union - created 1992
• A single, rich market without barriers to travel,
  employment, investment, and trade
• North American Free Trade Agreement (NAFTA)
• Eliminated barriers to free trade such as
  tariffs, import licensing requirements, customs
  user fees between U.S., Mexico, Canada
• Mercosur (South America)
• Association of Southeast Asian Nations (ASEAN)

All of these build size of markets and reduce
costs of international trade (in-group)
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Effects of Free Trade on Managers

• Declining trade barriers huge opportunities
• Expand markets for goods and services
• (Out)source globally, both products and talent
• Declining trade barriers huge challenges
• Intense competition Anyone, anywhere
• Managing and operating in foreign countries
• Global legal-political environments differ (e.g.,
  stability)
• Global economic environments differ (e.g.,
  inflation)
• Dislocations in employment
• Managers need to learn to compete globally

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Who owns it?

• Bic Pens
• RCA Television
• Braun electric shavers

France Germany Japan United States
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Global Perspectives and Managing

• Parochialism
• nation views the world solely through its own
  eyes and perspectives, does not recognize
  differences
• Ethnocentric Attitude
• home country knows best dont trust foreigners
  with key decisions / technology
• Polycentric Attitude
• host-country managers know best, each manage
  their own
• Geocentric Attitude

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Global Perspectives and Organizational Models
Organization Multinational Transnational
Borderless

• Economy of scale
• and efficiency

Exhibit 4.2
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How Organizations Go Global
Exhibit 4.7
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Global Management Video

• What strategies did they use to go global?
• What did they seem to have problems with?

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The International Environment

• Legal-political
• Economic
• National Cultural

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National Cultural Environments

• National Culture The values and attitudes shared
  by individuals from a specific country
• Ideas about what a society believes to be good,
  desirable and beautiful.
• Provides conceptual support for democracy, truth,
  appropriate roles for men and women.
• Usually not static but very slow to change.
• Influences employees more than organizational
  culture
• Finding out a countrys cultural differences is
  difficult

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National Cultural Minefields

• Thumbs up across the world
• Venture investing in Russian technology

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Hofstedes Model of National Cultural Values

• Dimensions along which national cultures vary
• Power distance comfort with influence and
  control being unequally distributed
• Uncertainty avoidance
• Individualism expectation that people take care
  of themselves / masters of own destiny.
• Compared to Collectivism, expectation that others
  in the group will look after them and should be
  looked after.
• Quantity of Life assertiveness, acquisition of
  money, indifference to others
• Compared with Quality of Life, valuing
  relationships and showing sensitivity and concern
  for the welfare of others.

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Relative Ranking of Four Countries On Cultural
Values
low
50 40 30 20 10
R a n k i n g o u t o f 5 0 c o u n t r i e s
Canada
Canada
USA
USA
Taiwan
Taiwan
Japan
Japan
Power Distance
Uncertainty Avoidance
Individualism
Quantity /Quality
Confucian Dynamics
high
Cultural Value Dimension
Rank Numbers 1 Highest 50 Lowest
Source Adapted from G. Hofstede and M. H. Bond.
The Confucius connection From cultural roots to
economic growth. Organization Dynamics, Spring
1988, pp. 12-13
See Also Exhibit 4.9
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American Culture A baseline
See also exhibit 4.8

• Informal
• Direct
• Competitive
• Independent and individualistic
• Questioners
• Dislike silence
• Values punctuality
• Values cleanliness

• Similar to
• Great Britain Commonwealth
• Netherlands
• Very dissimilar to
• Venezuela, Columbia, Chile, Portugal
• Pakistan, Singapore

Know thyself so one can see as others do
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What do you think?

• You have recently been assigned to manage Widget
  inc.s manufacturing operations in Greece. On
  Hofstedes dimensions, Greece is collectivistic,
  has high power-distance, high uncertainty
  avoidance, and moderate masculinity/quantity of
  life.
• Would you consider using a pay-for-performance
  system in Greece? Why?
• If you did implement such a system and everything
  else being equal, would you make it primarily
  based on group performance or individual
  performance? Why?

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What do you think?

• Reading The Economist at breakfast, you find that
  frustrated would-be entrepreneurs in France are
  moving to the U.K. in droves. Based on this
  alone, on which of Hofstedes dimensions would
  you think France and the U.K. differ, how, and
  why?
• Individualism/collectivism
• Power distance
• Uncertainty avoidance
• Quantity of life

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How Cultural Values Affect Organizations

• Power distance Manager-subordinate
  relationships
• Uncertainty avoidance receptive to new ideas,
  changing rules, competition
• Individualism individual merit, incentive pay
  systems (vs. group pay, seniority systems)
• Quantity v. Quality of Life

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Managing in cultures different than your own

• Management practices that are effective in one
  culture often will not work as well in another
  culture.
• Culture Shock
• The feelings of surprise and disorientation that
  people experience when they do not understand the
  values, folkways, and mores that guide behavior
  in a culture.
• Expatriate Managers Managers who go abroad to
  work for a global organization.

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Predicting success as a global manager

• Technical capability
• Ability to connect with national and
  organizational organisational culture
• Ability to seek feedback and change

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Major Points Global management

• Fast trade growth crucial management challenge
• National borders now less important regional
  trading alliances becoming more important
• Going global Different stages, importance of
  learning
• Each global perspective has advantages and
  disadvantages
• Hofstede helps unmask national cultural
  minefields
• Americans have a clear national culture
  informal, direct, etc.
• Expatriates risk culture shock and failure unless
  they can connect and change

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Next Time Ethics and Social Responsibility

• Ch 5 - Social Responsibility and Managerial
  Ethics
• T123 Skip 5-6, 8-9, 16
• Mastering Management Ethics module
• Complete the introduction, concepts, exercises
  and resolution sections of the Ethics module