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3 managing in a global diverse environment
- 1. CHAPTER 3: MANAGING INA GLOBAL DIVERSE ENVIRONMENT CH 3 © 2015 SAGE Publications
- 2. Global Business inthe Global Village • Global business: buying and selling of goods amongst different countries • Global village: companies conducting business worldwide without boundaries
- 3. Different Types ofGlobal Business • Domestic Business: Conducts business in only one country • International Business: Based primarily in one country but transacts business in other countries • Multinational Corporations (MNC): Has ownership of operations in two or more countries
- 4. Foreign and TransnationalCompanies • Foreign subsidiaries or affiliates: company owned and controlled by another company making up a combined company called the holding or parent company • Transnational Company type: eliminates artificial geographical barriers and does not have a single national headquarter
- 5. Foreign Trade • ForeignTrade is conducting business with other countries • Foreign trade generally, but not always, benefits a company • Dumping is when a company sells a product in another country at a loss with the intention of driving out the competition
- 6. Trade Barriers • Embargo:Total ban on the importing of a product from one or more countries • Quotas: Sets a limit on the number or volume of a product that can be imported or exported during a set period of time • Subsidies: Include government grants, loans and a tax breaks given to domestic companies • Tariff (Tax Method): Direct tax on imports to make foreign products more expensive
- 7. World Trade Organization(WTO) • Allows organizations and governments to work together to develop free trade among countries
- 8. Trade Agreements • Thereare six major trade agreements around the globe: • North American Free Trade Agreement (NAFTA) • Dominican Republic-Central American Free Trade Agreement (CAFTA- DR) • Union of South American Nations (UNASUR) • European Union (EU) • Association of Southeast Asian Nations (ASEAN) • Asia-Pacific Economic Cooperation (APEC)
- 9. Exchange Rates • ExchangeRates: the value of one country’s currency when accepted by/convereted to another country • Balance of Trade: The difference between the value of the products and services a country exports and imports.
- 10. The Balance ofTrade • Trade deficit: a country importing more than it exports • Trade surplus: a country exporting more than it imports
- 12. Becoming a BusinessGlobal • Global Sourcing: Hiring others outside the firm to perform work worldwide • Importing and Exporting: Commerce that moves goods or services into or out of a country • Licensing and Franchising: Licensor allows the licensee to make its products, serves or intellectual property for a fee
- 13. Becoming a BusinessGlobal • Contracting: A foreign company making a product or providing a service for domestic one • Contract manufacturing vs. Management Contracting • Strategic Alliances and Joint Ventures Strategic • Alliance is an agreement to share resources that does not necessarily involve creating a new company. • Joint venture is created when two or more firms share ownership of a new company • Direct Investment: The building or buying operating facilities in a foreign country
- 15. Business Practices ofGlobal Companies • Global Management Team- Top level managers who are foreign nationals • Global Strategy- One strategy for the entire company not one per subsidiary
- 16. Business Practices ofGlobal Companies • Global Operations and Products- Standardized operations and products worldwide to attain economies of scale • Global Technology and R&D- Technology research and development centralized in one country, rather than duplicated at each subsidiary
- 17. Business Practices ofGlobal Companies • Global Financing- Search world markets to get the best rates and terms when borrowing money for the long term; short term financing is largely arranged in individual countries using local financial institutions • Global Marketing- Global products and marketing are adapted for local markets and are often developed by local agencies
- 18. Workplace Diversity • Diversity:the variety of people with different group identities within the same workplace • Diversity has a major impact on employees’ work related values and attitudes and can affect the way an organization is managed
- 19. Workplace Diversity • Age •Gender • Race and Ethnicity • Disability • Other
- 20. Hofstede National CultureDiversity • Power Distance • Individualism vs. Collectivism • Assertiveness vs. Nurturing • Uncertainty Avoidance vs. Acceptance • Long term vs. Short term Orientation
- 21. Power Distance • HighPower Distance Cultures • Employees expect and accept that management will make all decisions with little input from them • China, Philippines, & most Arab countries • Low Power Distance Cultures • Employees expect to be consulted on decisions of management and want to participate • Israel, United States, & most European countries
- 22. Individualism vs. Collectivism •Individualism • Individualist cultures believe the individual should be self-sufficient with loyalty to themselves first and the group and company second • United States & Netherlands • Collectivism • Places society, the group & the company first • Indonesia & China
- 23. Assertiveness vs. Nurturing •Assertiveness • Assertive cultures are more aggressive and competitive with focus on achievement and material possessions • Indonesia & China • Nurturing • Nurturing cultures emphasize the importance of relationships, modesty, caring and quality of life • Netherlands & France
- 24. Uncertainty Avoidance vs.Acceptance • Uncertainty Avoidance • Uncertainty avoidance cultures like structure, security, and are less likely to take risk • Japan & Germany • Uncertainty Acceptance • Uncertainty acceptance cultures are more comfortable dealing with the unknown, changes and take more risk • Hong Kong
- 25. Long Term vs.Short Term Orientation • Long Term Orientation • Long term cultures look to the future and value thrift • China & Hong Kong • Short Term Orientation • Short term cultures focus on the past and present, and value immediate gratification • United States & Germany
- 26. GLOBE’s Expanded Dimensions •Global Leadership and Organizational Behavior Effectiveness (GLOBE) Initiative- Expanded Hofstede's 5 dimensions into 9 • Assertiveness • Future Orientation • Gender differences • Uncertainty Avoidance • Power Distance • Social Collectivism • In-Group Collectivism • Performance Orientation • Humane Orientation
- 27. Dimensions Low ModerateHigh Assertiveness: People are tough, confrontational, and competitive Switzerland New Zealand Ireland Philippines Spain United States Future Orientation: People plan, delaying to invest in the future Russia Argentina Slovenia India United States Netherlands Canada Gender differences: People have great gender role differences Sweden Denmark United States Brazil Italy Egypt China Uncertainty Avoidance: People are uncomfortable with the unknown/ambiguity Bolivia Hungary Mexico United States Austria Germany Power distance: People accept power inequality differences Netherlands United States France Thailand
- 28. Dimensions Low ModerateHigh Societal Collectivism: Teamwork is encouraged( vs. individualism) Greece Germany Hong Kong United States Japan Singapore In-Group Collectivism: People take pride in membership (family, team, organization) Denmark New Zealand Israel Japan United States China Morocco Performance Orientation: People strive for improvement and excellence Russia Venezuela England Sweden Taiwan United States Humane Orientation: People are fair, caring and kind to others Singapore Spain United States Hong Kong Indonesia Iceland