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Chapter 8: Global Management
MGMT9
Chapter 8: Global Management
Pedagogy Map
This chapter begins with the learning outcome summaries and terms covered in the chapter, followed by a
set of lesson plans for instructors to use to deliver the content in Chapter 8.
What Would You Do? Case Groupon has grown rapidly, but there are few barriers to
Assignment entry to its market, and it faces stiff competition as it expands
to global markets.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Chapter 8: Global Management
Practice Being a Manager Students consider the cultural variety in their hometown.
Develop Your Career Potential The cultural issues presented in the chapter are reframed in
the context of the United States alone.
Video Assignment: Management Holden is a US-based company but has manufacturing
Workplace facilities in China. For any company that sources materials
and labor overseas, shipping is a vital concern.
Supplemental Resources
4LTR Press supplements and online assets include PowerPoint Lectures, Test Banks, Executive Profiles,
What Would You Do Cases, Management Workplace Videos, Key Exhibits, and Self-Assessment
Activities. Within the exposition (narrative), students will experience interactive problems that include
matching and fill-in-the-blank problems. Also, they will encounter the second half of the WWYD Case
and the Self-Assessment content.
Learning Outcomes
8.1 Discuss the impact of global business and the trade rules and agreements that govern it.
Today, there are roughly 103,000 multinational corporations, more than fourteen times as many as in
1970, and 9,692, or 9.4 percent, are based in the United States. Direct foreign investment occurs when a
company builds a new business or buys an existing business in a foreign country. Of course, companies
from many other countries also own businesses in the United States. Overall, foreign companies invest
more than $2.5 trillion a year to do business in the United States and US companies invest more than $4.6
trillion a year to do business in other countries. Historically, governments have actively used trade
barriers to make it much more expensive or difficult (or sometimes impossible) for consumers to buy or
consume imported goods.
The second major development that has reduced trade barriers has been the creation of regional trading
zones, or zones in which tariff and nontariff barriers are reduced or eliminated for countries within the
trading zone. The largest and most important trading zones are in Europe (the Maastricht Treaty), North
America (the North American Free Trade Agreement, or NAFTA), Central America (Dominican
Republic-Central America Free Trade Agreement, or CAFTA-DR), South America (Union of South
American Nations, or USAN), and Asia (the Association of Southeast Asian Nations, or ASEAN, and
Asia-Pacific Economic Cooperation, or APEC). Although some US industries, such as textiles, have been
heavily protected from foreign competition by trade barriers, for the most part, American consumers (and
businesses) have had plentiful choices among American-made and foreign-made products.
8.2 Explain why companies choose to standardize or adapt their business procedures.
Global business requires a balance between global consistency and local adaptation. Global consistency
means that a multinational company with offices, manufacturing plants, and distribution facilities in
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Chapter 8: Global Management
different countries uses the same rules, guidelines, policies, and procedures to run all of those offices,
plants, and facilities. Managers at company headquarters value global consistency because it simplifies
decisions. By contrast, a company following a policy of local adaptation modifies its standard operating
procedures to adapt to differences in foreign customers, governments, and regulatory agencies. Local
adaptation is typically preferred by local managers who are charged with making the international
business successful in their countries. If companies lean too much toward global consistency, they run the
risk of using management procedures poorly suited to particular countries’ markets, cultures, and
employees. If, however, companies focus too much on local adaptation, they run the risk of losing the
cost effectiveness and productivity that result from using standardized rules and procedures throughout
the world.
8.3 Explain the different ways that companies can organize to do business globally.
Besides determining whether to adapt organizational policies and procedures, a company must also
determine how to organize itself for successful entry into foreign markets. Historically, companies have
generally followed the phase model of globalization, in which a company makes the transition from a
domestic company to a global company in the following sequential phases: exporting, cooperative
contracts, strategic alliances, and wholly owned affiliates. Some companies do not follow the phase
model of globalization. Some skip phases on their way to becoming more global and less domestic.
Others don’t follow the phase model at all. These are known as global new ventures.
The most important factor in an attractive business climate is access to a growing market. Two factors
help companies determine the growth potential of foreign markets: purchasing power and foreign
competitors. Rather than focusing on costs alone, companies should consider both qualitative and
quantitative factors. When conducting global business, companies should attempt to identify two types of
political risk: political uncertainty and policy uncertainty.
Several strategies can be used to minimize or adapt to the political risk inherent in global business. An
avoidance strategy is used when the political risks associated with a foreign country or region are viewed
as too great. Control is an active strategy to prevent or reduce political risks. Another method for dealing
with political risk is cooperation, which involves using joint ventures and collaborative contracts, such as
franchising and licensing.
National culture is the set of shared values and beliefs that affects the perceptions, decisions, and behavior
of the people from a particular country. The first step in dealing with culture is to recognize meaningful
differences such as power distance, individualism, masculinity and femininity, uncertainty avoidance, and
short-term/long-term orientation. After becoming aware of cultural differences, the second step is
deciding how to adapt your company to those differences. One problem is that different cultures will
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Chapter 8: Global Management
Expatriates who receive pre-departure language and cross-cultural training make faster adjustments to
foreign cultures and perform better on their international assignments. Three methods can be used to
prepare workers for international assignments: documentary training, cultural simulations, and field
experiences. Evidence clearly shows that how well an expatriate’s spouse and family adjust to the foreign
culture is the most important factor in determining the success or failure of an international assignment. A
number of companies, however, have found that adaptability screening and intercultural training for
families can lead to more successful overseas adjustment.
Terms
Asia-Pacific Economic Cooperation (APEC) Maastricht Treaty of Europe
Association of Southeast Asian Nations Multinational corporation
(ASEAN) National culture
Central America Free Trade Agreement Nontariff barriers
(CAFTA-DR) North American Free Trade Agreement
Cooperative contract (NAFTA)
Customs classification Policy uncertainty
Direct foreign investment Political uncertainty
Dominican Republic-Central America Free Protectionism
Trade Agreement (CAFTA-DR) Purchasing power
Expatriate Quota
Exporting Regional trading zones
Franchise Strategic alliance
General Agreement on Tariffs and Trade Subsidies
(GATT) Tariff
Global business Trade barriers
Global consistency Union of South American Nations
Global new ventures (UNASUR)
Government import standard Voluntary export restraints
Joint venture Wholly owned affiliates
Licensing World Trade Organization (WTO)
Local adaptation
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Chapter 8: Global Management
Content Lecture slides: Make note of where instructors stop so that they can pick up at the next
Delivery class meeting. Slides have teaching notes on them to help instructors deliver the lecture
8.4 Finding the Best 12: Finding the Best If instructors have an
Business Climate Business Climate electronic classroom,
8.4a Growing Markets 13: Finding the Best consider doing a free
8.4b Choosing an Business Climate geography game offered
Office/Manufacturing by Sheppard’s software at
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6
Chapter 8: Global Management
Location Sheppardssoftware.com
8.4c Minimizing Have students shout out
Political Risk answers that you enter into
the map. Games have time
limits of a couple of
minutes. Instructors will
get a collective score for
their class.
8.5 Becoming Aware of 14: Becoming Aware of
Cultural Differences Cultural Differences
Special Spark a debate among the students by asking them to respond to the following statement:
Items “If given a choice, Americans will buy American-made goods rather than foreign-made
goods.”
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Chapter 8: Global Management
Content The first section of the chapter has a lot of content that instructors can use to spark
Delivery debate among students. For this reason, instructors may want to hold off lecturing on
“Global Business, Trade Rules, and Trade Agreements” until after instructors can do the
group activity “World Trade and You.”
Divide the class into small groups of 3 to 5 students. Before beginning the activity,
ask students if anyone can describe the function of the World Trade Organization
(WTO). Ask if anyone can explain why the WTO is so controversial (cite the
inevitable protests and violence that accompany any meeting of the WTO). Assign
each group to either assemble arguments for free trade or against free trade. Come
together as a class and do a point–counterpoint debate. Begin by having one of the
students assigned to an “against” group give an argument that his or her group came
up with against free trade. Then have a “for” student give an argument. Continue until
no new arguments are proffered. Determine if one side had stronger, more convincing
arguments or if it was even. Ask if any students changed their point of view
subsequent to hearing all of the arguments.
If instructors didn’t lecture on Section 8.1 prior to the activity they can do so now.
Instructors can segue into the next section by asking students, “So if we postulate that
global business is good for consumers and companies alike, what’s the best way to go
global? Perhaps before we can answer that, we should consider the choices a company
has when going global.”
Lecture on How to Go Global? (Sections 8.2 and 8.3) and Finding the Best Business
Climate (Section 8.4).
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Chapter 8: Global Management
Introduce the sections on culture by asking if any of the students have ever lived,
worked, or studied abroad and where. If they have, ask them what they considered the
biggest difference between the host culture and the student’s culture of origin.
If time allows, consider showing the BizFlix clip from Lost in Translation. Teaching
notes follow.
Conclusion Assignments:
and 1. To follow up on the discussion of where and how to go global, assign students to
Preview complete the Management Decision on dealing with cultural backlash issues in
India.
2. If instructors have finished covering Chapter 8, assign students to review Chapter 8
and read the next chapter on the syllabus.
Groupon
Chicago, Illinois
From 400 subscribers and 30 daily deals in 30 cities in December 2008 to 35 million subscribers and 900
daily deals in 550 markets today, Groupon got to $1 billion in sales faster than any other company.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Chapter 8: Global Management
Starbucks CEO Howard Schultz, who was an eBay board member and is now a Groupon investor and
board member, said, “Starbucks and eBay were standing still compared to what is happening with
Groupon. I candidly haven’t witnessed anything quite like this. They have cracked the code on a very
significant opportunity.” Eric Lefkofsky, who chairs Groupon’s board said, “The numbers got crazy a
long time ago, and they keep getting crazier.” So, what is propelling Groupon’s astronomical growth?
How does it work?
Groupon sends a daily email to its 35 million subscribers offering a discount to a restaurant, museum,
store, or service provider in their city. This “coupon” becomes a “groupon” because the company offering
the discount specifies how many people (i.e., a group) must buy before the deal “tips.” For example, a
local restaurant may require 100 people to buy. If only 90 do, then no one gets the discount. Daily deals
go viral as those who buy send the discount to others who might be interested. When the deal tips (and 95
percent do), the company and Groupon split the revenue.
Why would companies sign up, especially since half of the money goes to Groupon? Nearly all of
Groupon’s clients are local companies, which have few cost effective ways of advertising. Radio,
newspapers, and online advertising all require upfront payment (whether they work or not). By contrast,
local companies pay Groupon only after the daily deal attracts enough customers to be successful.
Another problem with traditional ads is that they are broadcast to a wide group of people, many of whom
have little interest in what’s being advertised. The viral nature of Groupon’s coupons, however, along
with tailoring deals based on subscribers’ ages, interests, and discretionary dollars, lets companies target
Groupon’s daily deals to customers who are more likely to buy. Groupon’s CEO, Andrew Mason, said,
“We think the Internet has the potential to change the way people discover and buy from local businesses.
Because there are few barriers to entry and the basic web platform is easy to copy, Groupon’s record
growth and 80 percent U.S. market share has attracted start-up competitors like Living Social, Tippr,
Bloomspot, Scoutmob, and BuyWithMe, along with offerings from Google, Facebook, and Walmart.
Globally, Groupon’s business has been copied in 50 countries. China alone has 1,000 Groupon-type
businesses, including one that has copied Groupon’s website down to the www.groupon.com URL.
Likewise, Taobao, which is part of Alibaba Group Holdings, one of China’s largest Internet companies,
has a group buying service call “Ju Hua Suan,” which translates to “Group Bargain.”
So although Groupon has grown to $1 billion in sales faster than any other company, competitors threaten
to take much of that business, especially in international markets, which Groupon is just starting to enter.
As Groupon goes global, should it adapt its business to different cultures? For example, it relies on a large
Chicago-based sales force to build and retain business with merchants, and 70 comedy writers to write ad
copy. Similarly, who should make key decisions—managers at headquarters or managers in each
country? In short, should Groupon run its business the same way all around the world? How should
Groupon expand internationally? Should it license its web services to businesses in each area, form a
strategic alliance with key foreign business partners (it rejected Google’s $6 billion offer in the United
States), or should it completely own and control each Groupon business throughout the world? Finally,
deciding where to go global is always important, but with so many foreign markets already heavy with
competitors, the question for Groupon isn’t where to expand, but how to expand successfully in so many
different places at the same time.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Chapter 8: Global Management
Sources:
L. Chao, “Taobao to Launch Local Deals on Group-Buying Website,” Wall Street Journal, 23 February 2011,
http://online.wsj.com/article/SB10001424052748703775704576161340839989996.html [accessed 19 January 2015]; B. Stone &
D. MacMillan, “Groupon's $6 Billion Snub,” Bloomberg Businessweek, 13 December 2010, 6-7; B. Stone & D. MacMillan, “Are
Four Words Worth $25 Billion?” Bloomberg Businessweek, 21 March 2011, 70-75.
In the opening case, you learned that Groupon, the “daily deal” coupon company had grown from 400
subscribers and 30 daily deals in 30 cities in December 2008 to 35 million subscribers and 900 daily deals
in 550 markets today, thus getting to $1 billion in sales faster than any other company. Local companies
flock to Groupon because it helps them attract new customers in a cost effective way. Because of low
barriers to entry and an easy-to-copy web platform and business model, however, domestic and
international competitors could take much of Groupon’s business, especially in international markets,
which Groupon was just starting to enter. Let’s find out what happened at Groupon and see what steps
CEO Andrew Mason took to replicate Groupon’s amazing success in the U.S. around the world.
As Groupon goes global, should it adapt its business to different cultures? Or, is it likely to find that the
daily deals that are successful in the U.S. will be popular throughout the world? Also, since humor is a
key part of its advertising approach, should Groupon continue to rely on its 70 Chicago-based comedy
writers to write copy for ads in China, Chile, and Germany?
National culture is the set of shared values and beliefs that affects the perceptions, decisions, and behavior
of the people from a particular country. The first step in dealing with culture is to recognize meaningful
cultural differences, such as power distance, individualism, masculinity, uncertainty avoidance, and short-
term/long-term orientation.
After becoming aware of cultural differences, the second step is deciding how to adapt your company to
those differences. The biggest mistake that companies make at this point is not changing their products or
services or their management practices and procedures when they do business abroad. This is a common
mistake among global franchisors, 65 percent of which make absolutely no change in their business for
overseas franchisees when they first go global.
So, given that it just offers daily deals, can Groupon have a standard set of products or should they be
different in each market and culture? Not surprisingly, Groupon has found that people in different
countries and cultures don’t respond to the same offers. For example in India, the most popular daily
deals aren’t restaurants and beverages (which are popular in many global cities), but traveling, mobile
phones, and wellness products. Ananya Bubna, managing director of Groupon India, said, “A beverage
deal that we thought would have huge takers didn't sell.” Furthermore, “We have realized that something
like balloon rides, which got massive response in the U.K., may not get the same reaction here. Product
deals, mobile phones, and wellness products work best in India. India has a large number of travel lovers;
this is what we are looking at pursuing, aggressively.”
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Chapter 8: Global Management
Finally, in a nod to the importance of culture, especially with humor, which can differ tremendously
across cultures, Groupon now realizes that its 70 Chicago-based ad writers, some of whom have comedy
backgrounds linked to Chicago’s famous Second City comedy troupe, may not be able to write persuasive
ad copy for other parts of the world. A case in point (though Groupon employed an advertising agency
here) was Groupon’s Super Bowl commercial, which featured actor Timothy Hutton proclaiming, “The
people of Tibet are in trouble … but they still whip up an amazing fish curry. And since 200 of us bought
at Groupon.com, we're each getting $30 of Tibetan food for just $15.” The commercial was criticized
roundly, not just as ineffective, but insensitive.
Similarly, who should make key decisions, managers at headquarters or managers in each country?
Likewise, should Groupon continue to use its large Chicago-based sales force to build and retain
business with merchants, and In short, should Groupon run its business the same way all around the
world?
One of the key issues in global business is determining whether the way you run your business in one
country is the right way to run that business in another. In other words, how can you strike the right
balance between global consistency and local adaptation? Global consistency means that when a company
like Groupon has offices and facilities in different countries, it will use the same rules, guidelines,
policies, and procedures to run them all. Managers at company headquarters value global consistency
because it simplifies decisions. In contrast, a company with a local adaptation policy modifies its standard
operating procedures to adapt to differences in foreign customers, governments, and regulatory agencies.
Local adaptation is typically more important to local managers who are charged with making the
international business successful in their countries.
If companies focus too much on local adaptation, they run the risk of losing the cost efficiencies and
productivity that result from using standardized rules and procedures throughout the world. However, if
companies lean too much toward global consistency, they run the risk of their business being poorly
suited to particular countries’ markets, cultures, and employees (i.e., a lack of local adaptation).
Groupon has discovered that, in part, it must adapt its business as it does business around the world.
While the web side of its business works most places, that is, using email and text, web sites, and
smartphone apps to notify subscribers of daily deals, it doesn’t work everywhere. For example, in Indian,
Groupon is adapting the way that it gets paid. Throughout much of the world, online credit cards facilitate
quick, easy, and trustworthy payment. But, in India, many customers are still reluctant to make online
purchases. Ananya Bubna, managing director of Groupon India says, “We are doing cash-on delivery in
India, which we don't do anywhere else. We have realized that reaching out to Indian customers online is
a big challenge. We have started personal concierge help, especially for Indian customers. A few
customers have given us feedback that while they liked our site, they could not make a purchase. Through
this service, one of our experts would handhold a buyer, helping them in registration and purchase on the
site. We also have our people calling customers informing them about various deals in their area of
interest.”
In other ways, however, Groupon is balancing consistency with local adaptation. While it has local
managers (see more below) to run its businesses in 42 different countries, it brings all of them to Chicago
to learn how to run their offices the way that it’s done in the U.S. Then, it makes sure that those managers
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Chapter 8: Global Management
stay current with its client companies by using Salesforce.com’s relationship management software to
track calls and make sure that its sales force follows up to address potential issues after every daily deal is
completed.
Another part of balancing consistency with local adaptation, at least for now, is maintaining a large call
center in Chicago. Unlike Facebook and Google, which hire software engineers to automate their web
sites, Groupon relies on a call center-based sales force in Chicago to sell and maintain relationships with
client companies. Every time it opens in a new city, its sales force is charged with identifying and then
approaching businesses who could be interested in using Groupon to provide discounts to customers. The
question is whether it makes sense for Groupon to have similar call centers in the other regions or
countries in which it now does business.
Joe Harrow, who manages Groupon’s Chicago call center, says that Groupon will have call centers in
Chicago and in key international locations. But, unlike many multinational companies who have moved
their call centers to lower cost locations like India, he says, “Maybe having a 1,000-person call center in
downtown Chicago is not smart. We haven't done the math yet. When we do, we'll ask how we can make
this economical without costing us our culture.”
How should Groupon expand internationally? Should it license its web services to businesses in each
area, form a strategic alliance with key foreign business partners (it rejected Google’s $6 billion offer in
the U.S.), or should it completely own and control each Groupon business throughout the world?
Determining how to organize your company for successful entry into foreign markets is a key decision in
going global. When companies produce products in their home countries and sell those products to
customers in foreign countries, they are exporting. When an organization wants to expand its business
globally without making a large financial commitment, it signs a cooperative contract with a foreign
business owner who pays the company a fee for the right to conduct that business in his or her country.
There are two kinds of cooperative contracts: licensing and franchising. Another method of international
organizing is for two companies to form a strategic alliance to combine key resources, costs, risks,
technology, and people. The most common strategic alliance is a joint venture, which occurs when two
existing companies collaborate to form a third company. Finally, one-third of multinational companies
enter foreign markets through wholly owned affiliates. Unlike licensing arrangements, franchises, or joint
ventures, wholly owned affiliates are 100 percent owned by the parent company.
As explained in the chapter, each of these methods of "going global" has specific advantages and
disadvantages. Moreover, a common method of going global is to use the phase model of international
expansion in which a company starts by exporting, and then as it grows, switches to cooperative contracts
(i.e., licensing and franchising right), followed by strategic alliances, and then wholly owned affiliates. As
the chapter makes clear, not all companies follow the steps of the phase model in this order.
The challenge for Groupon is that just three years after its startup, it may be the fastest growing startup
company of all time, but it also faces the most quickly established set of global competitors ever
established. So unlike other companies which might take a more measured, slow growth approach to
global expansion, the speed with which competitors and consumers have adopted Groupon’s business
model suggests that Groupon could find itself locked out of key international markets if it doesn’t move
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Chapter 8: Global Management
quickly to establish itself as a multinational company. Groupon chief financial officer, Rob Solomon,
emphasized the need for speed, saying, “We think there will be lots of consolidation in a very short
amount of time, and we want to be the 8,000-pound gorilla in that space.”
Backed with several hundred million dollars in funding, Groupon used an approach in which it combined
strategic alliances and wholly-owned affiliates. In short, just as Google offered a $6 billion buy out to
Groupon, Groupon has offered to buy the market leaders that it has identified in 50 different countries.
Groupon board member Kevin Efrusy says, “To see people copy you is difficult to adjust to. But Groupon
immediately looked at it as an opportunity. You could pick the best that's out there and save a lot of
time.” “The strategy,” he says, is to find the best local teams. Then give them the tools they need to be
successful. One such acquisition was Berlin-based CityDeal. CityDeal, which was started by the Samwer
brothers, who, a decade before had founded eBay Europe, was just 6 months old when purchased by
Groupon. But, in that short time, it had 1 million subscribers, operated in 80 European cities, and had 600
employees. CityDeal co-founder Daniel Glasner commented on being bought by Groupon, saying, “We
have exactly the same understanding of how we need to serve our end customers and partners. Thousands
of businesses out there are looking to attract new customers and are thrilled to leverage the Internet to do
that.” Groupon’s CEO Andrew Mason said, “We wanted to find entrepreneurs [like CityDeal] to work
with that were excellent operators and also understood the local culture.”
Groupon repeated this acquisition strategy, buying similar companies in Chile, Russia, Japan, China, and
other locations. One year, after deciding to go global, Groupon is in 42 different countries.
Self-Assessment
World-mindedness
Step 1: Use the 6-point rating scale to complete the 32-question inventory shown below.
Rating Scale
1. Strongly disagree
2. Disagree
3. Mildly disagree
4. Mildly agree
5. Agree
6. Strongly agree
1. Our country should have the right to prohibit certain racial and religious groups from entering it to live.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
Chapter 8: Global Management
1 2 3 4 5 6
2. Immigrants should not be permitted to come into our country if they compete with our own workers.
1 2 3 4 5 6
3. It would set a dangerous precedent if every person in the world had equal rights that were guaranteed
by an international charter.
1 2 3 4 5 6
4. All prices for exported food and manufactured goods should be set by an international trade committee.
1 2 3 4 5 6
6. Race prejudice may be a good thing for us because it keeps many undesirable foreigners from coming
into this country.
1 2 3 4 5 6
7. It would be a mistake for us to encourage certain racial groups to become well educated because they
might use their knowledge against us.
1 2 3 4 5 6
8. We should be willing to fight for our country without questioning whether it is right or wrong.
1 2 3 4 5 6
10. Immigration should be controlled by a global organization rather than by each country on its own.
1 2 3 4 5 6
11. We ought to have a world government to guarantee the welfare of all nations irrespective of the rights
of any one.
1 2 3 4 5 6
12. Our country should not cooperate in any global trade agreements that attempt to better world
economic conditions at our expense.
1 2 3 4 5 6
13. It would be better to be a citizen of the world than of any particular country.
1 2 3 4 5 6
14. Our responsibility to people of other races ought to be as great as our responsibility to people of our
own race.
1 2 3 4 5 6
15. A global committee on education should have full control over what is taught in all countries about
history and politics.
1 2 3 4 5 6
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15
Chapter 8: Global Management
16. Our country should refuse to cooperate in a total disarmament program even if some other nations
agree to it.
1 2 3 4 5 6
17. It would be dangerous for our country to make international agreements with nations whose religious
beliefs are antagonistic to ours.
1 2 3 4 5 6
18. Any healthy individual, regardless of race or religion, should be allowed to live wherever he or she
wants to in the world.
1 2 3 4 5 6
19. Our country should not participate in any global organization that requires that we give up any of our
national rights or freedom of action.
1 2 3 4 5 6
20. If necessary, we ought to be willing to lower our standard of living to cooperate with other countries
in getting an equal standard for every person in the world.
1 2 3 4 5 6
21. We should strive for loyalty to our country before we can afford to consider world brotherhood.
1 2 3 4 5 6
22. Some races ought to be considered naturally less intelligent than ours.
1 2 3 4 5 6
23. Our schools should teach the history of the whole world rather than of our own country.
1 2 3 4 5 6
24. A global police force ought to be the only group in the world allowed to have armaments.
1 2 3 4 5 6
25. It would be dangerous for us to guarantee by international agreement that every person in the world
should have complete religious freedom.
1 2 3 4 5 6
26. Our country should permit the immigration of foreign peoples, even if it lowers our standard of living.
1 2 3 4 5 6
27. All national governments ought to be abolished and replaced by one central world government.
1 2 3 4 5 6
28. It would not be wise for us to agree that working conditions in all countries should be subject to
international control.
1 2 3 4 5 6
29. Patriotism should be a primary aim of education so that our children will believe our country is the
best in the world.
1 2 3 4 5 6
30. It would be a good idea if all the races were to intermarry until there was only one race in the world.
1 2 3 4 5 6
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Chapter 8: Global Management
31. We should teach our children to uphold the welfare of all people everywhere, even though it may be
against the best interests of our own country.
1 2 3 4 5 6
32. War should never be justifiable, even if it is the only way to protect our national rights and honor.
1 2 3 4 5 6
Step 2: Determine your score by entering your response to each survey item below, as follows. In blanks
that say regular score, simply enter your response for that item. If your response was a 4, place a 4 in the
regular score blank. In blanks that say reverse score, subtract your response from 7 and enter the result.
So if your response was a 4, place a 3 (7 - 4 = 3) in the reverse score blank.
1. reverse score ————
2. reverse score ________
3. reverse score ————
4. regular score ————
5. regular score ————
6. reverse score ————
7. reverse score ————
8. reverse score ————
9. reverse score ————
10. regular score ————
11. regular score ————
12. reverse score ————
13. regular score ————
14. regular score ————
15. regular score ————
16. reverse score ————
17. reverse score ————
18. regular score ————
19. reverse score ————
20. regular score ————
21. reverse score ————
22. reverse score ————
23. regular score ————
24. regular score ————
25. reverse score ————
26. regular score ————
27. regular score ————
28. reverse score ————
29. reverse score ————
30. regular score ————
31. regular score ————
32. regular score ————
Scoring
Total your scores from items 1–16 _____
Total your scores from items 17–32 _____
Add together to compute TOTAL ______
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17
Chapter 8: Global Management
People who are flexible, adaptable, open to other cultures, and have good relationship skills are more
successful on international assignments. In a sense, we could say that these people have greater
"worldmindedness." Individuals who are strong in worldmindedness look at problems as problems of
humanity rather than American problems, or Japanese problems, or Spanish problems. In contrast, people
who are weak in worldmindedness are "nationminded." They define themselves and others by their
nationalities: German, Chinese, Egyptian, and Venezuelan. Nationmindedness is "us" and "them,"
whereas worldmindedness is simply "us."
Worldmindedness affects global business decision making. Personnel managers who are low in
worldmindedness try to avoid hiring foreign students. Professional buyers, who purchase supplies, raw
materials, and finished goods for their companies, were less likely to purchase foreign products when they
were weak on worldmindedness. Also, CEOs of exporting companies are more worldminded than CEOs
of nonexporting companies.
Worldmindedness is related to gender (females have higher scores), to family income (students from
high income families have lower scores), foreign language ability (fluency in additional languages means
higher scores), and college major (business majors have lower scores than other majors, and finance and
accounting majors have lower scores than marketing and management majors). Worldmindedness may
not be related to international travel (except for longer-term residency in a country) or age.
This survey is based on research presented in R. W. Boatler, “Study Abroad: Impact on Student
Worldmindedness,” Journal of Teaching in International Business 2, no. 2 (1990): 13–17; R.W. Boatler,
“Worldminded Attitude Change in a Study Abroad Program: Contact and Content Issues,” Journal of
Teaching in International Business 3, no. 4 (1992): 59–68; H. Lancaster, “Learning to Manage in a
Global Workplace (You’re on Your Own),” The Wall Street Journal, 2 June 1998, B1; D. L. Sampson &
H. P. Smith, “A Scale to Measure Worldminded Attitudes,” Journal of Social Psychology 45 (1957): 99–
106; R. W. Boatler, “Worldmindedness of International Division Managers,” Southwest Journal of
Business and Economics, 9 (1992): 23.
What follows is a series of grids depicting average worldmindedness (WM) scores for various
groupings of students:
Except for undecided majors, Business majors have the lowest worldmindedness
scores.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18
Chapter 8: Global Management
Average WM Score
Business Majors
No foreign language 88.76
One, fair 92.15
One, good/excellent 94.18
Two or more, any level 101.00
All Other Majors
No foreign languages 105.45
One, fair 100.41
One, good/excellent 98.70
Two or more, any level 116.63
Business majors who speak no foreign languages have the lowest worldmindedness scores,
whereas other majors who speak two or more languages have the highest worldmindedness
scores. Whatever major, speaking another language increases worldmindedness.
Male finance and accounting majors have the lowest worldmindedness scores. Female finance and
general majors have the highest worldmindedness scores. Except marketing majors, females have higher
worldmindedness scores than males.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Chapter 8: Global Management
Your worldmindedness score is not a fixed number. Several activities can help you improve your score,
but to do so, you’ll need to develop a plan, such as the one that follows.
Management Decision
Purpose
Setting It Up
Instructors can introduce this case to students by creating a table that shows the various cultural
differences between the U.S. and a foreign country, ideally one that has been the site of much foreign
investment such as China, India, Brazil, or Russia. Instructors can then ask students how a company
should deal with these differences in order to find success.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
20
Chapter 8: Global Management
As you look at the latest quarterly earnings report of your clothing and accessories company, you think to
yourself “You are a genius!” It was your idea to move manufacturing to India last year, and it was your
idea to partner with a local retail chain to get your products to Indian consumers. So even though your
U.S. sales fell 5 percent, much in part due to the recession, your company’s profits actually rose 35
percent, thanks to all the money you made in India. Almost every day, you walk through the city and you
see young, affluent Indians wearing your jeans, clutching your purses, donning your sunglasses, and you
are unbelievably glad that you decided to come into this dynamic, fast-growing market that really likes
Western fashion styles.
There are many people, however, who aren’t so fond of your styles, and of Western culture in general.
Various religious and political conservative groups have recently been protesting the growing influence of
Western culture in India, sometimes in quite violent ways. During a recent Valentine’s Day, a group of
men publicly beat young couples who were holding hands or having a romantic dinner. In another city, a
group of people attacked women who were at bars and dance clubs. And just the other day, you saw a
crowd of people throwing your jeans, purses, and sunglasses into a big bonfire as a statement against
Western fashion. Even businesses are getting into the anti-American sentiment; a local beverage company
announced that they would take on the popularity of Coke and Pepsi by selling a beverage based on cow
urine, which is considered a holy, medicinal drink by Hindus.
When you came up with the idea of expanding into India, you certainly didn’t think that you would find
yourself in the middle of a cultural clash. “I’m just here to sell jeans,” you think, “not to tell people how
to live.” But clearly, many people view companies like yours as a threat to their culture and heritage.
Source:
Mehul Srivastava, “Business Caught in Middle of India’s Culture War,” Bloomberg Businessweek, February 18, 2009, accessed
September 10, 2010, from http://www.businessweek.com/globalbiz/content/feb2009/gb20090218_783926.htm.
Questions:
1. How would you, as the manager of this company, deal with the risk associated with doing business
in countries that feel threatened by American culture?
Students are likely to respond in one of two ways—either the company must learn how to do deal
with the risk, or the company should cut its losses and terminate its business. In general, students
choosing the former answer should show awareness that it is critical for a company to learn as much
as it can about the foreign culture, so that it can adapt its business practices as necessary. This may
mean that the company hires more Indian staff, who can help train the rest of the staff on how to be
more culturally sensitive. It may also mean giving Western staff extensive cultural and language
training prior to working in India. Students, of course, may come up with other ideas about how to
raise cultural awareness within the company.
Students who choose to cut losses and leave the country should cite the tremendous cost, in terms of
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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