Global Dimensions of Management

Key Global Events

Collapse of the Soviet Union Opening of China Improved Access (Telecommunications) Steady Growth in MNCs The European Community NAFTA - GATT

International Management
The conduct of business and other operations in foreign countries.
Working overseas in the foreign operation of a domestic firm.

Working overseas for a foreign firm.

Working as a domestic employee of a foreign firm operating in your country.

Why Organizations Go International

Profits
New Markets Raw Materials Financial Capital Lower Labor Costs
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The Global Economy

Based on the worldwide interdependence of resource supplies, product markets, and business competition. WTO GATT
The Americas The European Union

Russia
China

Africa Maquiladoras Asia and the Pacific Rim NAFTA

Asia-Pacific Economic Forum

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International Business
The conduct of for-profit transactions of goods and services across national boundaries.

International Business Strategies

Market Entry
Global Sourcing Exporting Importing Licensing Franchising

Direct Investment
Joint Ventures Wholly Owned Subs

Multinational Corporations
A business firm with extensive international operations in more than one foreign country
MNOs are organizations like the Red Cross, whose nonprofit missions and operations span the globe.
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Types of MNCs
Transnational Corporations
Strive to operate on a borderless basis and without being identified with one national home.

Ethnocentric
Strict headquarters control over foreign operations, expects to operate the same way it does at home.
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Types of MNCs
Polycentric
Gives it foreign operations more operating freedom, respects market differences among countries, and treats each country as a separate competitive domain.

Geocentric
Like Traditional it seeks total integration of global operations by operating without "home country" prejudices, making major decisions for global perspective, and employing senior executives from many different countries. 9

Environmental Challenges in the Global Economy

Economic Differences
Centralized vs Free Market Economies Transition to Privatization Trade Alliances and Policies

Legal Political Differences

Democratic vs Totlaitarian Systems Diverse Legal Codes
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Environmental Challenges in the Global Economy

Educational Differences
Different School Systems Literacy Levels Availability of Skilled Labor

Socio-Cultural Differences
Different Cultures Culture Shock Ethnocentrism
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Host Country Complaints of MNCs

Extract excessive profits. Dominate the local economy. Interfere with the local government. Fail to help domestic firms develop. Hire the best local personnel. Fail to transfer advanced technologies. Fail to respect local customs, laws, and needs.

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MNCs Complaints
Profit limitations.
Overpriced resources.

Exploitative rules.
Foreign exchange restrictions.

Failure to meet contract obligations .

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Popular Dimensions Of Culture

Language Use of Space Time Orientation
Monochronic vs Polychronic

Religion Use Of Contracts

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Hofstede's Dimensions Of Culture

Power Distance
The degree to which a society accepts the unequal distribution of power in organizations.

Uncertainty Avoidance
The degree to which a society tolerates risk and situational uncertainties.
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Hofstede's Dimensions Of Culture

Individualism - Collectivism
The degree to which a society emphasizes individual self-interest, or the collective values of groups.

Masculinity - Femininity
The degree to which a society emphasizes assertiveness and material concerns, or relationships with others and concerns for feelings.

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Hofstede's Dimensions Of Culture

Time Orientation
The degree to which a society emphasizes short term considerations versus greater concern for the future.

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High
Philippines

Power Distance
US

Low
Austria

Uncertainty Avoidance
Greece Individualism USA
Japan
US

Singapore

Venezuela

Masculinity

Japan

US

Sweden Time Orientation

USA

Japan
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Apply the Management Functions Across Cultures

Comparative Management
The study of how management practices systematically differ from one country and/or culture to the next.

Political-Risk Analysis
Involves forecasting the probability of various events that can threaten the security of a foreign investment. 19

Comparative Management Practices

We can look to Hofstede's Model to understand how strong cultural influences can impact the compatibility of management theories when applied across international borders.
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Comparative Management Practices

Notwithstanding the stories proclaiming the success of the Japanese management system. we should hesitate to accept any practice, no matter how well it appears to work somewhere else, as a universal prescription to action.

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