Management 11e John Schermerhorn

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Management 11e John Schermerhorn

• Chapter 5
• Global Management and
• Cultural Diversity

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Planning Ahead Chapter 5 study questions

1. What are the management challenges of
   globalization?
2. What are global businesses and what do they do?
3. What is culture and how does it impact global
   management?
4. How can we benefit from global management
   learning?

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Study Question 1 What are the management
challenges of globalization?

• Key concepts in the challenges of globalization
• Global economy
• Globalization
• Global management
• Global manager

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Study Question 1 What are the management
challenges of globalization?

• Global economy
• Resource supplies, product markets, and business
  competition are worldwide, rather than local
• Globalization
• The process of growing interdependence of these
  components in the global economy
• Global management
• Management in organizations with business
  interests in more than one country
• Global manager
• Aware of international developments and the
  effect on societies and economies
• Competent in working with people from different
  cultures

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Study Question 1 What are the management
challenges of globalization?

• Global businesses
• Conduct for-profit transactions of goods and
  services across national boundaries
• Reasons why businesses go global

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Study Question 1 What are the management
challenges of globalization?

• Market entry strategies
• involve the sale of goods or services to foreign
  markets but do not require expensive investments
• Types of market entry strategies
• Global sourcing
• Exporting
• Importing
• Licensing agreement
• Franchising

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Figure 5.1 Common forms of global businessfrom
market entry to direct investment strategies
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Study Question 1 What are the management
challenges of globalization?
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Study Question 1 What are the international
business challenges of globalization?

• Direct investment strategies require major
  capital commitments but create rights of
  ownership and control over foreign operations

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Study Question 1 What are the international
business challenges of globalization?

• Types of direct investment strategies

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Study Question 1 What are the international
business challenges of globalization?
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Study Question 1 What are the international
business challenges of globalization?
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Study Question 1 What are the international
business challenges of globalization?

• Legal and political systems
• Differing laws and practices regarding
• Business ownership
• Foreign currency exchange
• Protection of intellectual property rights
• Counterfeit merchandise
• Legal and political systems
• Political risk
• Potential loss in value of a foreign investment
  due to instability and political changes in the
  host country
• Political risk analysis
• Forecast political disruptions that threaten the
  value of a foreign investment

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Study Question 1 What are the international
business challenges of globalization?

• Trade Agreements and Trade Barrriers
• World Trade Organization
• Most favored nation status
• Tariffs
• Nontariff barriers
• Protectionism
• Regional Economic Alliances
• NAFTA North American Free Trade Agreement
• EU European Union
• APEC Asia Pacific Economic Cooperation
• ASEAN Association of Southeast Asian Nations
• SADC Southern Africa Development Community

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Study Question 2 What are global businesses and
what do they do?

• Types of global businesses
• Global corporation
• MNC (multinational corporation) with extensive
  business operations in more than one foreign
  country
• Transnational corporation
• MNC (multinational corporation) operates
  worldwide on a borderless basis
• Mutual benefits for host country and global
  corporation or MNC
• Shared growth opportunities
• Shared income opportunities
• Shared learning opportunities
• Shared development opportunities

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Figure 5.2 What should go right and what can go
wrong in MNC-host country relationships
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Study Question 2 What are global businesses and
what do they do?

• Host country complaints about MNCs
• Excessive profits
• Domination of local economy
• Interference with local government
• Hiring the best local talent
• Limited technology transfer
• Disrespect for local customs
• MNC complaints about host countries
• Profit limitations
• Overpriced resources
• Exploitative rules
• Foreign exchange restrictions
• Failure to uphold contracts

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Study Question 2 What are global businesses and
what do they do?
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Study Question 2 What are global businesses and
what do they do?

• Ethical issues for Global Businesses
• Corruption illegal practices that further ones
  business interests
• Foreign Corrupt Practices Act makes it illegal
  for U.S. firms and their representatives to
  engage in corrupt practices overseas
• Bribes to foreign officials
• Excessive commissions
• Non monetary gifts
• Child labor and Sweatshops
• Child labor full time employment of children
  for work otherwise done by adults
• Sweatshops employ workers at very low wages for
  long hours in poor working conditions

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Study Question 3 What is culture and how does it
impact global management?
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Study Question 3 What is culture and how does it
impact global management?

• Stages in adjusting to a new culture

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Study Question 3 What is culture and how does it
impact global management?
Silent languages of culture
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Study Question 3 What is culture and how does it
impact global management?

• Context
• Low context cultures - emphasize communication
  via spoken or written words
• United States
• Canada
• Germany
• Context
• High context cultures rely on nonverbal and
  situational cues as well as on spoken or written
  words
• Thailand
• Malaysia

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Study Question 3 What is culture and how does it
impact global management?

• Time
• Monochronic cultures people tend to do one
  thing at a time
• United States, Canada, Germany
• Polychronic cultures time is used to accomplish
  many different things at once
• Egypt, Saudi Arabia, Mexico
• Space
• Proxemics study of how people use space to
  communicate
• In the U.S. people value personal space
• Many Latin and Asian cultures expect much less
  personal space

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Study Question 3 What is culture and how does it
impact global management?

• Values and national cultures (Hofstede)

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Figure 5.3 How countries compare on Hofstedes
dimension of national culture
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Study Question 4 How can we benefit from global
management learning?

• Project GLOBE (Global Leadership and
  Organizational Behavior Effectiveness)
• Researches the leadership, organizational
  practices, and diversity among world cultures
• Power distance
• Uncertainty avoidance
• Gender egalitarianism
• Future orientation
• Project GLOBEs nine dimensions continued
• Institutional collectivism
• In-group collectivism
• Assertiveness
• Performance orientation
• Humane orientation

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Study Question 4 How can we benefit from global
management learning?

• Project GLOBEs research on leadership practices
  across cultures
• Facilitators of leadership success
• Acting trustworthy, just, honest
• Showing foresight, planning
• Being positive, dynamic, motivating
• Inspiring confidence
• Being informed and communicative
• Being a coordinator and team builder
• Project GLOBEs research on leadership practices
  across cultures
• Inhibitors of leadership success
• Being a loner
• Acting uncooperative
• Being irritable
• Acting autocratic

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Figure 5.4 Nine cultural dimensions used by
Project GLOBE researchers
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Study Question 4 How can we benefit from global
management learning?

• Comparative management
• How management systematically differs among
  countries and/or cultures
• Global managers
• Need to successfully apply management functions
  across international boundaries
• Global management learning
• Companies can and should learn from each other
• GLOBE dimensions
• Power distance
• Uncertainty avoidance
• Future orientation
• Be alert, open, inquiring, but always cautious

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Management 11e/ Chapter 5 Case

• Harley-Davidson Style and strategy have global
  reach