Management BBA MBA Lec Globalization

Skill Development at it’s Best
Principles of Management
Lecture 131415
(Managing in the Global Environment)
By: Farhan Mir
Copyright 2020@MIRS
Topics
• Introduction
• History and Evolution of Management
• Organizational & Environmental Constraints
• Managing Global Environment
– Global Perspective
– Need for going Global
– Understanding Global Environment
– Doing Business Globally
– Managing in Global Environment
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Trends in International Business

• Why do companies expand internationally?
– Expand sales (Extending Markets)
– Cutting costs
– Offering new products
– Global Opportunities
• (WTO allowing International companies more
opportunities in Pakistani market & Vice Versa)
– But once they enter into the global markets
they also face global issues (Constraints of the
global environment)
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Source: www.wal-mart.com Copyright 2020@MIRS


• Wal-Mart USA • Wal-Mart International
– 1489 Stores • 11 Argentina
– 1397 Supercenters • 23 Brazil
– 532 Sam’s Clubs • 214 Canada
– 56 Neighborhood Markets • 92 Germany
• 613 Mexico (1st int’l store in 1991)
• 52 Puerto Rico
• 265 Great Britain
• 31 China
• 15 Korea
– 3474 Total Stores • 1317 Total International

– 1,000,000 + associates • 300,000 + associates
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• China: www.wal-martchina.com
• Germany: www.walmartgermany.de
• Mexico: www.walmartmexico.com.mx
• Korea: www.walmartkorea.com
• United Kingdom: www.asda.com
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Wal-Mart’s next market?
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Perspective towards Globalization

• Parochialism- narrow view of the world where
you don’t recognize differences between people
• Ethnocentric- best work approaches are that
of the home country (where the business initiated)
• Polycentric- managers in the host countries
know the best work practices for running their
business
• Geocentric- world-oriented view that focuses
on using the best approaches and people from the
globe
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Degree of Internationalization
• Domestic business
– All products and services within one country
– Almost extinct
– Mostly small businesses
• International business
– Operate primarily in one country
– Some resources or revenues from other
countries
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• Multinational business
– Worldwide marketplace for inputs and outputs
– Retain primary “headquarters” in one country
• Global business
– No overriding commitment to any single
country
– Government and legal restrictions make this
category somewhat “hypothetical”
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These are the largest export markets for this Finnish
company in 1957. Any idea what company this is?
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Today, you might recognize this company as a major provider
of telecommunications, information technology, and electronics.
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The company is Nokia,
and here are some of the countries it operates in today.
Europe, Africa Asia-Pacific Americas
& Middle East
Austria Lithuania Australia USA
Belgium Luxembourg China Brazil
Bulgaria Maghreb Hong Kong Canada
Czech Republic Netherlands India
Denmark Norway Japan
Estonia Poland Korea
Finland Portugal Philippines
France Romania Singapore
Germany Russia Taiwan
Greece Slovakia
Hungary Spain
Ireland Sweden
Italy Switzerland
Latvia Turkey
Source: Nokia.com UK
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(Some Examples)
• Nestlé comes close to “global” business

– http://www.nestle.com/Html/Id/index.asp
– Operations in over 100 countries
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The Structure of the Global Market
• Market Systems (Economic Integration)

– European Union
– NAFTA
– AFTA
– ASEAN
– OPEC
– Hundreds of others
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European Union (EU)

• Established in February 1992 as a treaty uniting 12 countries
– Over 374 million people
– Since other 7 countries also in negotiation process so the overall
population increases
– Before becoming part of EU all these countries had there own set of
policies, tax structures and protected industries
– Now a single market and a common currency (Euro)
• No traveling barriers
• No investment and employment barriers
– Why EU?
• Idea was to build alliance against the strong US and Japanese
Economies
• German automobiles now sold in EU
• Nokia selling major telecommunication services throughout EU
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European Union (EU)
Source: Robbins, 2002 Copyright 2020@MIRS

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Types of Global Organizations

• Multinational Corporation (MNCs)
– Maintains significant operations in multiple countries
but manages them from a base in the home country
• Sony
• Transnational Corporation (TNC)
– Maintains significant operations in multiple countries
but decentralizes management to the local country
• Nestle
• Borderless Organization
– Approaches global business from a geocentric
approach and omits almost all barriers
• IBM (developed itself into 13 divisions)
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The Process of Internationalization

• Exporting
– Making products at home and selling them overseas
• Most of the Sialkot Industry is based on this model
• SAGA is one of the giant organization & CA is another one
• Importing
– Selling products home that are made overseas
• You’ll find products of most of the international manufacturers in
Pakistan even those organizations are not themselves present in
the country
• Most of the Australia is dominated by Chinese products imported
for use
• Licensing & Franchising
– Manufacturing organizations allowing others to use their brand name,
technology or product specification
• Based on annual fee on sales
– Service organization allowing others to sue their brand name,
technology or product specification
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• Strategic Alliances
– Doing business with partner organization overseas by
sharing resources and developing new products and
services
• Joint Venture
– A partnership in which the partner organization form a
separate new organization by merging together
• Foreign Subsidiary
– Establishing and independent unit or facility in another
country
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Stage I Stage II Stage III
Passive Response Initial Overt Entry Established International
Operations
Foreign
Subsidiary
Joint
Exporting Ventures
to foreign
countries
Strategic
Hiring foreign Alliances
representation or
Importing
contracting with
from foreign Licensing/
foreign manufacturers
countries Franchising
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Challenges for the Global Manager

Political Environment Economic Environment
Government stability Resource allocation processes
International trade incentives Property ownership
International trade controls Natural resources
Economic communities Infrastructure
Cultural Environment
Values, Symbols, Beliefs, Language
International Management Functions

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• Cultural Environment
– Often taken for granted
– Not necessarily a problem, but can be disastrous
• Language
• Values, symbols, beliefs
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• Examples of cultural “bloopers”
– GM’s Chevy Nova didn’t sell well in South America because “no
va” means “it won’t go” in Spanish
– In Taiwan, the translation of the Pepsi slogan “Come alive with
the Pepsi generation” came out as “Pepsi will bring your
ancestors back from the dead.”
– Gerber changed its baby food packaging in Africa after it learned
the largely illiterate population was accustomed to seeing a
picture on the label of what was in the can
– Coca-Cola had to alter the taste of its soft drink in China when
the Chinese described it as “tasting like medicine.” The name
“coca-cola” also had to be re-worked because it translated as
“bite the wax tadpole”.
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Challenges for the Global Manager-

Global Distances
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Hofstede’s Framework for Assessing

National Cultures
• Individualism versus Collectivism

• Power Distance
• Uncertainty Avoidance
• Quantity versus Quality of Life
• Long-term versus Short-term Orientation
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Examples of Hofstede’s Cultural

Dimensions
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Careers in International Management- If

you have got a International Assignment
• Success Factors – Takes personal and

– Cross-cultural business risks
sensitivity – Changes with
– Business knowledge feedback
– Courage – Enjoys challenge
– Motivates others – Takes advantage of
– Personal integrity opportunities
– Diagnostic skills – Open to criticism
– Commitment to – Seeks feedback
success – Maintains flexibility
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Skill Development at it’s Best

By: Farhan Mir

Trends in International Business

Trends in International Business

Source: www.wal-mart.com Copyright 2020@MIRS

Trends in International Business

– 3474 Total Stores • 1317 Total International

Trends in International Business

Trends in International Business

Perspective towards Globalization

• Nestlé comes close to “global” business

The Structure of the Global Market

• Market Systems (Economic Integration)

European Union (EU)

European Union (EU)

Source: Robbins, 2002 Copyright 2020@MIRS

Types of Global Organizations

The Process of Internationalization

The Process of Internationalization

The Process of Internationalization

Challenges for the Global Manager

International Management Functions

Challenges for the Global Manager

Challenges for the Global Manager

Challenges for the Global Manager-

Hofstede’s Framework for Assessing

• Individualism versus Collectivism

Examples of Hofstede’s Cultural

Careers in International Management- If

• Success Factors – Takes personal and

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