MANAGEMENT FUNCTIONS

Seven Key Trends of the Globalizing

Economy
1) Borders Are Disintegrating
The World Trade Organization
Formal structure for continued negotiations and for
settling trade disputes among nations.
Historical Developments:
GATT 1947: Nations met to reduce tariffs resulting in the
General Agreement on Tariffs and Trade.
WTO 1986/1993: Negotiations began in Uruguay to
continue reducing tariffs and established the World Trade
Organization.
1997: Trade ministers from countries representing 92%
of world trade agreed to eliminate tariffs on software,
computer chips, telecommunication equipment, and
computers.
WTO has some critics and not all countries are
participating equally.
Sell Anywhere, Locate Anywhere
Regional Trade Agreements
European Union (EU)
North American Free Trade Agreement (NAFTA)
Asia-Pacific-Economic Cooperation (APEC)
Nearly half of the over $5 trillion in world
trade is among the European union, the U.S.,
and Japanthe TRIAD
2) Foreign Direct Investment
Foreign Direct Investment (FDI) occurs when a
multinational company from one country has an
ownership position located in another country.
FDI increased by more that 36% between 1996
and 2000.
Developed countries get the bulk of FDI (69%) while
developing countries get around 30%.
Least developed countries get minimal FDI.
Implications for managers:
significant opportunities around the world.
Multinational managers should look at risk rating
of countries.
3) Internet and Information
Technology
Electronic Communication
E-mail, World Wide Web, teleconferencing, etc.
Allows multinationals to communicate with
company locations throughout the world.
Multinationals can monitor worldwide operations.
Borderless financial market.

4) Global Products and Global
Customers
The needs of customers for many products
and services are growing more similar,
e.g., McDonalds, Boeing, Toyota.
Global customers search the world for their
supplies without regard for national
boundaries.

5) Privatization
Sale of government-owned businesses to private
investors.
usually through stock or direct sale to other
companies.
Two types of privatization contribute to the global
economy:
The Developed Countries - Use privatization to make
formerly government-controlled enterprises more
competitive in the global economy.
The Developing Countries - Use privatization to jump-
start their economies or to speed the transition from
a communist to a capitalist system.
6) New Competitors are Emerging
Free market reforms are creating a potential group
of new competitors.
Korean, Russian, Taiwanese, and Mexican
companies are all emerging.
Chinese companies are also on the move.
Global trade has two important effects in
developing new competitors:
1. Multinationals facilitate the transfer of
technology when developing countries are used
as low-wage platforms for high-tech assembly
2. Aggressive multinationals from emerging
markets are also expanding beyond their own
borders.
7) Global Standards
Companies can make one or only a few versions of
product for the world market.
This is cheaper than making different versions for
different countries since there is pressure to
develop common standards to save money.
Consistency in quality also an important requirement
of doing business in many countries.
International organization for standardization (ISO) in
Geneva, Switzerland
Developed a set of technical standards (ISO
9001:2000 series).
Planning
Defining goals and
establishing
action plans
Controlling
Monitoring activities
to ensure that they
are achieving
results
Leading
Guiding and
motivating all
involved parties
Organizing
Determining what
needs to be done, in
what order, and by
whom
Management Activities
(Management Functions)
Effective
Management
FOM 1.10
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112
Manageme
nt Process
Activities
Exhibit 1.4
Management process:
planning, organizing,
leading, and controlling
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113
Management Processes
Planning
Includes defining goals, establishing strategy, and
developing plans to coordinate activities
Organizing
Includes determining what tasks
to be done, who is to do them,
how the tasks are to be
grouped, who reports to
whom, and where
decisions are to be made
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114
Management Processes (contd)
Leading
Includes motivating employees, directing the
activities of others, selecting the most effective
communication channel, and resolving conflicts
Controlling
The process of monitoring performance,
comparing it with goals, and
correcting any significant
deviations
FOM 1.15
Distribution of Managers Time
0 20 40 60
Planning
Organizing
Leading
Controlling
First-level
Middle level
Top level
FOM 1.16
Mintzbergs
Managerial Roles

Interpersonal
Decisional


Informational

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117
Mintzbergs Managerial Roles
Interpersonal
Figurehead
Leader
Liaison
Informational
Monitor
Disseminator
Spokesperson
Decisional
Entrepreneur
Disturbance handler
Resource allocator
Negotiator
Exhibit 1.5
Source: The Nature of Managerial Work (paperback) by H. Mintzberg. Table 2, pp. 9293. Reprinted by
permission of Pearson Education Inc., Upper Saddle River, New Jersey.
FOM 1.18
The Roles That Managers Play
High
Moderate
Low
Importance
Spokesperson
Resource Allocator
Entrepreneur
Figurehead
Leader
Liaison, Monitor
Disturbance Handler
Negotiator
Disseminator Entrepreneur
Small Firms Large Firms
FOM 1.19
General Management Skills
POLITICAL TECHNICAL
INTERPERSONAL CONCEPTUAL
FOM 1.20
Conceptual Skills
Mental ability to analyze and diagnose
complex situations
Allow Managers to see how things fit
FOM 1.21
Interpersonal Skills
Ability to work with, understand, mentor and
motivate others
Both individually and as a group
Many managers fail in this
FOM 1.22
Technical Skills
Ability to apply specialized knowledge or
expertise
Engineer, accountant, etc
FOM 1.23
Political Skills
Ability to enhance one position, build a power
base, and establish the right connection
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124
Efficiency and Effectiveness
Exhibit 1.3