chapter 4 management (10 th edition) by robbins and coulter

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–1

Managing in a Managing in a Global Global EnvironmentEnvironment

ChapterChapter

44

Management Stephen P. Robbins Mary Coulter

tenth edition


Learning OutcomesLearning OutcomesFollow this Learning Outline as you read and study Follow this Learning Outline as you read and study this chapter.this chapter.

4.1 What’s Your Global perspective?• Define parochialism.Define parochialism.

• Contrast ethnocentric, polycentric, and geocentric Contrast ethnocentric, polycentric, and geocentric attitudes towards global business.attitudes towards global business.

4.2 Understanding The global Environment• Describe the current status of the EU, NAFTA, Describe the current status of the EU, NAFTA,

ASEAN and other Regional Trade Allowances.ASEAN and other Regional Trade Allowances.

• Discuss the role of the WTO.Discuss the role of the WTO.


Learning OutcomesLearning Outcomes

4.3 Doing Business Globally• Contrast multinational, multidomestic, global, Contrast multinational, multidomestic, global,

transnational, and born global organizations.transnational, and born global organizations.• Describe the different ways organizations can go Describe the different ways organizations can go

international.international.

4.4 Managing In A Global Environment.• Explain how the global legal-political and economic Explain how the global legal-political and economic

environments affect managers.environments affect managers.• Discuss Hofstede’s five dimensions for assessing Discuss Hofstede’s five dimensions for assessing

cultures.cultures.• Describe the challenges of doing business globally in Describe the challenges of doing business globally in

today’s world.today’s world.


Learning OutcomesLearning Outcomes

4.4 Managing In A Global Environment.• Explain how the global legal-political and economic Explain how the global legal-political and economic

environments affect managers.environments affect managers.

• Discuss Hofstede’s five dimensions for assessing Discuss Hofstede’s five dimensions for assessing cultures.cultures.

• Describe the challenges of doing business globally in Describe the challenges of doing business globally in today’s world.today’s world.


The Global MarketplaceThe Global Marketplace

• Opportunities and ChallengesOpportunities and Challenges Coping with the unexpected appearance of new Coping with the unexpected appearance of new

competitorscompetitors Acknowledging cultural, political, and economic Acknowledging cultural, political, and economic

differencesdifferences Dealing with increased uncertainty, fear, and worryDealing with increased uncertainty, fear, and worry Adapting to changes in the global environmentAdapting to changes in the global environment Avoiding parochialismAvoiding parochialism


What’s Your Global What’s Your Global Perspective?Perspective?

• ParochialismParochialism Is viewing the world exclusively through one’s own Is viewing the world exclusively through one’s own

eyes and perspectives.eyes and perspectives. Is not recognizing that others have different ways of Is not recognizing that others have different ways of

living and working.living and working. Is a significant problem for managers working in a Is a significant problem for managers working in a

global business world.global business world. Is falling into the trap of ignoring others’ values and Is falling into the trap of ignoring others’ values and

customs and strictly applying an attitude of “ours is customs and strictly applying an attitude of “ours is better than theirs” to foreign cultures.better than theirs” to foreign cultures.


Adopting a Global PerspectiveAdopting a Global Perspective• Ethnocentric AttitudeEthnocentric Attitude

The parochalistic belief that the best work approaches The parochalistic belief that the best work approaches and practices are those of the and practices are those of the homehome country. country.

• Polycentric AttitudePolycentric Attitude The view that the managers in the The view that the managers in the hosthost country know country know

the best work approaches and practices for running the best work approaches and practices for running their business.their business.

• Geocentric AttitudeGeocentric Attitude A A world-orientedworld-oriented view that focuses on using the best view that focuses on using the best

approaches and people from around the globe.approaches and people from around the globe.


Regional Trading AgreementsRegional Trading Agreements• The European Union (EU)The European Union (EU)

A unified economic and trade entity A unified economic and trade entity Belgium, Denmark, France, Greece, Ireland, Italy, Belgium, Denmark, France, Greece, Ireland, Italy,

Luxembourg, the Netherlands, Portugal, Spain, the United Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and SwedenKingdom, Germany, Austria, Finland, and Sweden

• North American Free Trade Agreement (NAFTA)North American Free Trade Agreement (NAFTA) Eliminated barriers to free trade (tariffs, import Eliminated barriers to free trade (tariffs, import

licensing requirements, and customs user fees)licensing requirements, and customs user fees) United States, Canada, and MexicoUnited States, Canada, and Mexico


Exhibit 4–1Exhibit 4–1 European Union European Union


Regional Trading AgreementsRegional Trading Agreements

• U.S.-Central America Free Trade Agreement (CAFTA)U.S.-Central America Free Trade Agreement (CAFTA)• Free Trade Area of the AmericasFree Trade Area of the Americas• Southern Cone Common Market (Mercosur)Southern Cone Common Market (Mercosur)• Association of Southeast Asian Nations (ASEAN)Association of Southeast Asian Nations (ASEAN)

Trading alliance of 10 Southeast Asian nationsTrading alliance of 10 Southeast Asian nations• African UnionAfrican Union• South Asian Association for Regional Cooperation South Asian Association for Regional Cooperation

(SARRC)(SARRC)


Exhibit 4–2Exhibit 4–2 ASEAN MembersASEAN Members

Source: Based on J. McClenahen and T. Clark, “ASEAN at Work,” IW. May 19, 1997, p. 42.


The World Trade Organization The World Trade Organization (WTO)(WTO)

• Evolved from the General Agreement on Tariffs Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995.and Trade (GATT) in 1995.

• Functions as the only global organization Functions as the only global organization dealing with the rules of trade among nations.dealing with the rules of trade among nations.

• Has 149 member nations and 32 observer Has 149 member nations and 32 observer governments.governments.

• Monitors and promotes world trade.Monitors and promotes world trade.


Different Types of International Different Types of International OrganizationsOrganizations

• Multinational Corporation (MNC)Multinational Corporation (MNC) Maintains operations in multiple countries.Maintains operations in multiple countries.

• Multidomestic CorporationMultidomestic Corporation Is an MNC that decentralizes management and other Is an MNC that decentralizes management and other

decisions to the local country.decisions to the local country.

• Global CompanyGlobal Company Is an MNC that centralizes its management and other Is an MNC that centralizes its management and other

decisions in the home country.decisions in the home country.


Different Types of International Different Types of International Organizations (cont’d)Organizations (cont’d)

• Transnational Corporation (Borderless Transnational Corporation (Borderless Organization)Organization) Is an MNC that has eliminated structural divisions that Is an MNC that has eliminated structural divisions that

impose artificial geographic barriers and is organized impose artificial geographic barriers and is organized along business lines that reflect a geocentric attitude.along business lines that reflect a geocentric attitude.


Managing in A Global Managing in A Global EnvironmentEnvironment

• The Legal EnvironmentThe Legal Environment Stability or instability of legal and political systemsStability or instability of legal and political systems

Legal procedures are established and followedLegal procedures are established and followed

Fair and honest elections held on a regular basisFair and honest elections held on a regular basis

Differences in the laws of various nationsDifferences in the laws of various nations Effects on business activitiesEffects on business activities

Effects on delivery of products and servicesEffects on delivery of products and services


The Economic EnvironmentThe Economic Environment• Economic SystemsEconomic Systems

Free market economyFree market economy An economy in which resources are primarily owned and An economy in which resources are primarily owned and

controlled by the private sector.controlled by the private sector.

Planned economyPlanned economy An economy in which all economic decisions are planned by An economy in which all economic decisions are planned by

a central government.a central government.

• Monetary and Financial FactorsMonetary and Financial Factors Currency exchange ratesCurrency exchange rates Inflation ratesInflation rates Diverse tax policiesDiverse tax policies


The Cultural EnvironmentThe Cultural Environment• National CultureNational Culture

Is the values and attitudes shared by individuals from Is the values and attitudes shared by individuals from a specific country that shape their behavior and their a specific country that shape their behavior and their beliefs about what is important.beliefs about what is important.

May have more influence on an organization than the May have more influence on an organization than the organization culture.organization culture.


Exhibit 4–4Exhibit 4–4 What Are Americans Like What Are Americans Like

Americans are very informal.

Americans are direct.

Americans are competitive.

Americans are achievers.

Americans are independent and individualistic.

Americans are questioners.

Americans dislike silence.

Americans value punctuality.

Americans value cleanliness.Sources: Based on M. Ernest (ed.), Predeparture Orientation Handbook: For Foreign Students and Scholars Planning to Study in the United States (Washington, DC: U.S. Information Agency, Bureau of Cultural Affairs, 1984), pp. 103–05; A. Bennett, “American Culture Is Often a Puzzle for Foreign Managers in the U.S.,” Wall Street Journal, February 12, 1986, p. 29; “Don’t Think Our Way’s the Only Way,” The Pryor Report, February 1988, p. 9; and B.J. Wattenberg, “The Attitudes behind American Exceptionalism,” U.S. News & World Report, August 7, 1989, p. 25.


Global Management in Today’s Global Management in Today’s WorldWorld

• ChallengesChallenges Openness associated with globalizationOpenness associated with globalization Significant cultural differences (e.g., Americanization)Significant cultural differences (e.g., Americanization) Adjusting leadership styles and management Adjusting leadership styles and management

approachesapproaches

• RisksRisks Loss of investments in unstable countriesLoss of investments in unstable countries Increased terrorismIncreased terrorism Economic interdependence Economic interdependence


Terms to KnowTerms to Know• parochialismparochialism• ethnocentric attitudeethnocentric attitude• polycentric attitudepolycentric attitude• geocentric attitudegeocentric attitude• European Union (EU)European Union (EU)• EuroEuro• North American Free Trade North American Free Trade

Agreement (NAFTA)Agreement (NAFTA)• Association of Southeast Asian Association of Southeast Asian

Nations (ASEAN)Nations (ASEAN)• World Trade Organization World Trade Organization

(WTO)(WTO)• multinational corporations multinational corporations

(MNCs)(MNCs)• multidomestic corporationmultidomestic corporation• global companyglobal company• transnational or borderless transnational or borderless

organizationorganization

• born globals born globals • global sourcingglobal sourcing• exportingexporting• importingimporting• licensinglicensing• franchisingfranchising• strategic alliancesstrategic alliances• joint venturejoint venture• foreign subsidiaryforeign subsidiary• market economymarket economy• command economycommand economy• national culturenational culture• GLOBEGLOBE• wikiswikis• blogsblogs