Download - 3 managing in a global diverse environment
CHAPTER 3:MANAGING IN A GLOBAL DIVERSE
ENVIRONMENT
CH 3© 2015 SAGE Publications
Global Business in the Global Village• Global business: buying and selling of goods amongst
different countries• Global village: companies conducting business
worldwide without boundaries
Different Types of Global Business• Domestic Business: Conducts business in only one
country• International Business: Based primarily in one country
but transacts business in other countries• Multinational Corporations (MNC): Has ownership of
operations in two or more countries
Foreign and Transnational Companies • Foreign subsidiaries or affiliates: company owned and
controlled by another company making up a combined company called the holding or parent company
• Transnational Company type: eliminates artificial geographical barriers and does not have a single national headquarter
Foreign Trade• Foreign Trade is conducting business with other countries• Foreign trade generally, but not always, benefits a
company• Dumping is when a company sells a product in another country
at a loss with the intention of driving out the competition
Trade Barriers• Embargo: Total ban on the importing of a product from
one or more countries• Quotas: Sets a limit on the number or volume of a
product that can be imported or exported during a set period of time
• Subsidies: Include government grants, loans and a tax breaks given to domestic companies
• Tariff (Tax Method): Direct tax on imports to make foreign products more expensive
World Trade Organization (WTO)• Allows organizations and governments to work together
to develop free trade among countries
Trade Agreements• There are six major trade agreements around the globe:
• North American Free Trade Agreement (NAFTA)• Dominican Republic-Central American Free Trade Agreement
(CAFTA-DR) • Union of South American Nations (UNASUR)• European Union (EU)• Association of Southeast Asian Nations (ASEAN)• Asia-Pacific Economic Cooperation (APEC)
Exchange Rates• Exchange Rates: the value of one country’s currency
when accepted by/convereted to another country• Balance of Trade: The difference between the value of the
products and services a country exports and imports.
The Balance of Trade• Trade deficit: a country importing more than it exports • Trade surplus: a country exporting more than it imports
Becoming a Business Global• Global Sourcing: Hiring others outside the firm to
perform work worldwide• Importing and Exporting: Commerce that moves goods
or services into or out of a country• Licensing and Franchising: Licensor allows the licensee
to make its products, serves or intellectual property for a fee
Becoming a Business Global• Contracting: A foreign company making a product or
providing a service for domestic one• Contract manufacturing vs. Management Contracting• Strategic Alliances and Joint Ventures Strategic • Alliance is an agreement to share resources that does not
necessarily involve creating a new company.• Joint venture is created when two or more firms share
ownership of a new company • Direct Investment: The building or buying operating
facilities in a foreign country
Business Practices of Global Companies• Global Management Team- Top level managers who are
foreign nationals • Global Strategy- One strategy for the entire company not
one per subsidiary
Business Practices of Global Companies• Global Operations and Products- Standardized operations
and products worldwide to attain economies of scale• Global Technology and R&D- Technology research and
development centralized in one country, rather than duplicated at each subsidiary
Business Practices of Global Companies• Global Financing- Search world markets to get the best
rates and terms when borrowing money for the long term; short term financing is largely arranged in individual countries using local financial institutions
• Global Marketing- Global products and marketing are adapted for local markets and are often developed by local agencies
Workplace Diversity• Diversity: the variety of people with different group
identities within the same workplace • Diversity has a major impact on employees’ work
related values and attitudes and can affect the way an organization is managed
Workplace Diversity• Age• Gender• Race and Ethnicity• Disability• Other
Hofstede National Culture Diversity• Power Distance • Individualism vs. Collectivism• Assertiveness vs. Nurturing• Uncertainty Avoidance vs. Acceptance• Long term vs. Short term Orientation
Power Distance• High Power Distance Cultures
• Employees expect and accept that management will make all decisions with little input from them
• China, Philippines, & most Arab countries• Low Power Distance Cultures
• Employees expect to be consulted on decisions of management and want to participate
• Israel, United States, & most European countries
Individualism vs. Collectivism• Individualism
• Individualist cultures believe the individual should be self-sufficient with loyalty to themselves first and the group and company second
• United States & Netherlands• Collectivism
• Places society, the group & the company first• Indonesia & China
Assertiveness vs. Nurturing• Assertiveness
• Assertive cultures are more aggressive and competitive with focus on achievement and material possessions
• Indonesia & China• Nurturing
• Nurturing cultures emphasize the importance of relationships, modesty, caring and quality of life
• Netherlands & France
Uncertainty Avoidance vs. Acceptance• Uncertainty Avoidance
• Uncertainty avoidance cultures like structure, security, and are less likely to take risk
• Japan & Germany• Uncertainty Acceptance
• Uncertainty acceptance cultures are more comfortable dealing with the unknown, changes and take more risk
• Hong Kong
Long Term vs. Short Term Orientation• Long Term Orientation
• Long term cultures look to the future and value thrift• China & Hong Kong
• Short Term Orientation• Short term cultures focus on the past and present, and value
immediate gratification • United States & Germany
GLOBE’s Expanded Dimensions• Global Leadership and Organizational Behavior
Effectiveness (GLOBE) Initiative- Expanded Hofstede's 5 dimensions into 9• Assertiveness• Future Orientation• Gender differences• Uncertainty Avoidance• Power Distance• Social Collectivism• In-Group Collectivism• Performance Orientation • Humane Orientation
Dimensions Low Moderate High
Assertiveness:People are tough, confrontational, and competitive
SwitzerlandNew Zealand
IrelandPhilippines
Spain United States
Future Orientation:People plan, delaying to invest in the future
RussiaArgentina
SloveniaIndiaUnited States
NetherlandsCanada
Gender differences:People have great gender role differences
Sweden DenmarkUnited States
BrazilItaly
Egypt China
Uncertainty Avoidance:People are uncomfortable with the unknown/ambiguity
BoliviaHungary
MexicoUnited States
Austria Germany
Power distance:People accept power inequality differences
NetherlandsUnited States
France Thailand
Dimensions Low Moderate High
Societal Collectivism:Teamwork is encouraged( vs. individualism)
Greece Germany
Hong KongUnited States
Japan Singapore
In-Group Collectivism:People take pride in membership (family, team, organization)
DenmarkNew Zealand
IsraelJapanUnited States
China Morocco
Performance Orientation:People strive for improvement and excellence
RussiaVenezuela
EnglandSweden
TaiwanUnited States
Humane Orientation:People are fair, caring and kind to others
SingaporeSpain
United StatesHong Kong
IndonesiaIceland