CHAPTER 4 – GLOBAL MANAGEMENT
Key Questions
Section 4.1: What three important developments of globalization will probably affect you?
Section 4.2: Why learn about international management, and what characterizes the successful international manager?
Section 4.3: Why do companies expand internationally, and how do they do it?
Section 4.4: What are barriers to free trade, and what major organizations and trading blocs promote trade?
Section 4.5: What are the principal areas of cultural differences?
Vocabulary
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globalization
global village
global economy
megamergers
minifirms
multinational corporation
multinational organization
ethnocentric managers
polycentric managers
geocentric managers
parochialism
expatriate
maquiladoras
outsourcing
importing
exporting
countertrading
licensing
franchising
joint venture
wholly-owned subsidiary
Greenfield venture
free trade
tariff
revenue tariff
protective tariff
import quota
dumping
embargo
World Trade Organization (WTO)
World Bank
International Monetary Fund (IMF)
exchange rate
trading bloc
NAFTA
EU
APEC
Mercosur
CAFTA
Most favored nation status
low-context culture
high-context culture
institutional collectivism
in-group collectivism
power distance
uncertainty avoidance
masculinity v. femininity
gender egalitarianism
future orientation
performance orientation
humane orientation
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Independent Sections
Manager’s Toolbox – p. 105
Practical Action – p. 115
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GLOBE Cultural Study
High Power Distance / Low Power DistanceSociety separated into classes on several criteria
Limited upward social mobility
Information is localized
Civil liberties are weak and public corruption high / Society has a large middle class
High upward social mobility
Information is shared
Civil liberties are strong and public corruption low
High Collectivism/Low Individualism / Low Collectivism/High Individualism
Individuals are integrated into strong cohesive groups
The self is viewed as interdependent with groups with
Duties and obligations are important determinants of behavior
There are more extended family structures
Individuals are likely to engage in group activities
Individuals have fewer social interactions but interactions tend to be longer and more intimate / Individuals look after themselves or their immediate families
The self is viewed as autonomous and independent of groups
Attitudes and personal needs are important determinants of behavior
There are more nuclear family structures
Individuals are likely to engage in activities alone
Individuals have more social interactions but interactions tend to be shorter and less intimate
High Assertiveness (Masculinity) / Low Assertiveness (Femininity)
Value assertive, dominant and tough behavior for everyone in society
Have sympathy for the strong
Value competition
Value success and progress / View assertiveness as socially unacceptable and value modesty and tenderness
Have sympathy for the weak
Value cooperation
Value people and warm relationships
High Uncertainty Avoidance / Low Uncertainty Avoidance
Have a tendency toward formalizing their interactions with others
Show stronger resistance to change
Show stronger desire to establish rules allowing predictability of behavior
Show less tolerance for breaking rules / Have a tendency to be more informal in their interactions with others
Show less resistance to change
Show less desire to establish rules to dictate behavior
Show more tolerance for breaking rules
High Future Orientation / Low Future Orientation
Have a propensity to save for the future
Have individuals who are more intrinsically motivated
View materialistic success and spiritual fulfillment as an integrated whole
Value the deferment of gratification, placing a higher priority on long-term success / Have a propensity to spend now
Have individuals who are less intrinsically motivated
See materialistic success and spiritual fulfillment as dualities, requiring tradeoffs
Value instant gratification and place higher priorities on immediate rewards
High Performance Orientation / Low Performance Orientation
Have performance appraisal systems that emphasize achieving results
Value what you do more than who you are
Value being direct, explicit, and to the point in communications
Have a monochronic approach to time
Have a sense of urgency / Have performance appraisal systems that emphasize integrity, loyalty and cooperation
Value who you are more than what you do
Value ambiguity and subtlety in language and communications
Have a polychronic approach to time
Have a low sense of urgency
High Gender Egalitarianism / Low Gender Egalitarianism
Have more women in positions of authority
Accord women a higher status in society
Have similar levels of education of females and males / Have fewer women in positions of authority
Accord women a lower status in society
Have a lower level of education for females relative to males
High Humane Orientation / Low Humane Orientation
Other are important
Values of altruism, benevolence, kindness, love and generosity have high priority
Personal and family relationships induce protection for the individuals
Public policymakers establish sanctions against child labor
People are urged to provide social support to each other / Self-interest is important
Values of pleasure, comfort, self-enjoyment have high priority
Welfare state guarantees social and economic protection of individuals
Public policymakers child labor as a somewhat less important issue
People are expected to solve personal problems on their own
Global Management Project
Objective: To create an informative website that the employees of your company can view to prepare for doing business in your assigned country.
Research Question: What should a manager traveling to (country) know in order to conduct business successfully in that country?
Description: With the rise of the global marketplace has come increased and more frequent travel to foreign countries. To conduct business in other countries, managers must adapt their normal business behaviors to that of the host country. In this project, you will create an informative website for the class about doing business with one of the United States’ top trading partners. You will NOT present your project to the class. We will have a global showcase (and party!) instead. Your project should address:
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¨ capital city and famous landmarks
¨ famous individuals
¨ labor force – by occupation
¨ agricultural products and industries
¨ currency
¨ language(s)
¨ governmental type
¨ political risks (include trade restrictions)
¨ major trading bloc memberships
¨ low-context or high-context
¨ Hofstede’s Four Dimensions
¨ GLOBE’s Nine Dimensions
¨ interpersonal space
¨ time orientation
¨ religion
¨ eye contact, gestures, and touch
¨ gift giving rules
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Chapter 4 in your textbook will provide some insight into the importance of each of these items on your ability to conduct business successfully as a global manager.
Tips
1. Read over Chapter 4 in the text especially sections 2, 4, and 5 to get an idea of the type of information you will need. DO NOT SKIP THIS STEP!!!!!!
2. Gather the information for your website first. You may find these sites helpful:
- The CIA World Factbook - www.cia.gov/cia/publications/factbook
- Kwintessential - www.kwintessential.co.uk/resources/global-etiquette
- Text to speech translator - http://translate.1888usa.com
3. Prepare a storyboard for your website. See the class website for links about storyboards.
4. Create a login at (http://www.wix.com). Consider using a pre-designed layout and begin building your website. Features to include: images, videos, & hyperlinks to valuable web resources.
5. Consider getting some video for your website. You can:
- get a video camera from the library and film examples
- Look for video by using the Library resources (i.e. Symbaloo, Safari Montage)
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Global Management Project Score Sheet
Country:
Group Members:
Score:
Required Elements:
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q capital city and famous landmarks
q famous individuals
q labor force – by occupation
q agricultural products and industries
q currency
q language(s)
q governmental type
q political risks (include trade restrictions)
q major trading bloc memberships
q low-context or high-context
q Hofstede/GLOBE Dimensions
q interpersonal space
q time orientation
q religion
q eye contact, gestures, and touch
q gift giving rules
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Website Development:
q Audience
o demonstrates a clear understanding of the potential reader
o uses appropriate vocabulary
q Research
o provides in-depth information that would be beneficial to conducting business in a foreign country
q Structure
o obvious organization
o easy to navigate
o all links are working
q Design:
o graphics are of high quality and related to the theme/purpose of the site
o colors are pleasing and consistent across pages
o fonts are consistent, easy to read and vary appropriately for headings and text
q Free from spelling and grammar errors
Feedback:
CHAPTER FOUR REVIEW
Part A - Questions for Review
- Summarize the rise of the global village.
- List at least five examples of companies that participate in the global economy.
- What are the differences between a multinational corporation and a multinational organization?
- Why should a manager be geocentric rather than ethnocentric or polycentric?
- What are some reasons why a company might expand internationally?
- List the five ways companies expand internationally?
- List three barriers to international trade.
- List the five major trading blocs.
- What are some possible cultural differences a manager might encounter?
- Provide an example of a low-context culture and a high-context culture.
- Of what benefit is knowing the GLOBE dimensions of both the United States and other countries?
- List five attributes of leadership that are universally liked and five that are universally disliked.
- What are some of the positive and negative effects of a global economy?
Part B – Vocabulary Review
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APEC
CAFTA
countertrading
culture
dumping
e-commerce
embargo
ethnocentric managers
EU
Exchange rate
expatriate manager
exporting
franchising
free trade
geocentric managers
global outsourcing
Global Village
globalization
GLOBE project
greenfield venture
high-context culture
Hofstede model
IMF
quota
importing
joint venture
licensing
low-context culture
maquiladoras
Mercosur
monochromic time
most favored nation
multinational corporation
multinational organization
NAFTA
outsourcing
parochialism
political risk
polycentric managers
polychromic
tariff
trade protectionism
trading bloc
wholly-owned subsidiary
World Bank
WTO
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1. ______is the trend of the world economy toward becoming a more interdependent system.
2. ______is the buying and selling of products and services through computer networks.
3. A ______is a business firm with operations in several countries.
4. The successful international manager should be ______not ______or ______.
5. Manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens are______.
6. ______is using suppliers outside of the company to provide goods and services and ______is using suppliers outside the United States to provide labor, goods or services.
7. When you ______you buy goods outside of the country and resell them domestically and when you ______you are producing goods domestically and selling them outside the country.
8. A ______is a foreign subsidiary that is totally owned and controlled by an organization.
9. The practice of a foreign company's exporting products abroad at a lower price than the price in the home market is known as ______.
10. In ______, a company allows a foreign company to pay it a fee to make or distribute the first company's product or service.
11. The largest trading bloc in Latin America is ______.
12. A nation's ______is the shared set of beliefs, values, knowledge and patterns of behavior common to a group of people.
13. ______time is a preference for doing more than one thing at a time.
14. The ______provides low-interest loans to developing nations for improving transportation, education, health and communications.
15. When a country grants another country a special trading arrangement such as a reduction in import duties they grant the country______status.
16. Cultures that derive shared meanings primarily from spoken and written words are ______.
17. The ______is a cross-cultural investigation of nine cultural dimensions involved in leadership and organizational processes.
Part C – Multiple Choice
1. Which of the following defines globalization?
a. the shrinking of time and space as air travel and the electronic media make it easier for the people of the globe to communicate with one another.
b. the trend of the world economy toward becoming a more interdependent system.
c. the increasing tendency of the economies of the world to interact with one another
d. the trend of businesses opening firms in several countries.
2. Which of the following is true regarding minifirms?
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a. They are corporations on steroids.
b. They take longer to establish.
c. They require more starting capital.
d. They maneuver faster.
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3. A successful international manager should NOT be:
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a. egocentric
b. ethnocentric
c. parochial
d. all of the above
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4. All of the following are reason companies expand internationally except:
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a. new markets
b. access to financial capital
c. export quotas
d. lower labor costs
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5. Which of the following reflects one of the negative sides to globalization?
a. Growth of jobs and incomes in other countries means less growth for jobs in the U.S.
b. There is too much emphasis on flexibility, versatility and change.
c. Globalization leads to the deflation of U.S. currency.
d. None of these
6. Which of the following is NOT one of the five ways companies expand internationally?
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a. partially-owned subsidiaries
b. licensing and franchising
c. global outsourcing
d. importing, exporting, and counter trading
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7. Which of the following is a barrier to international trade?
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a. export quotas
b. free trade
c. embargoes
d. All of the above
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8. Which of the following is NOT a major trading bloc?
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a. NAFTA
b. CAFTA
c. Mercosur
d. UN
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9. Which of the following is a form of nonverbal communication?
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a. eye contact
b. facial expressions
c. body movements and gestures
d. all of the above
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10. If you are doing business in Latin America, your client likely functions on which type of time?
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a. polychromic
b. monochromic
c. ethnochromic
d. geochromic
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11. Which organization is responsible for regulating trade agreements?
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a. World Bank
b. World Trade Organization
c. International Monetary Fund
d. General Agreement on Tariffs and Trade
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12. Exxon + Mobil, Traveler's Group + Citibank, and Daimler-Benz + Chrysler are all examples of:
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a. minifirms
b. acquisitions
c. megamergers
d. joint ventures
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13. Which type of managers take the view that native managers in the foreign offices best understand native personnel and practices and so the home office should leave them alone?
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a. ethnocentric
b. polycentric
c. geocentric
d. egocentric
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14. Which of the following is NOT one of the four cultural dimensions identified by Hofstede/GLOBE?
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a. monochronic/polychronic
b. power distance