3robbins_mgmt15_ppt_04.pptx

Management
Fifteenth Edition, Global Edition
Chapter 4
Managing in a Global
Environment
Copyright © 2021 Pearson Education Ltd.

Learning Objectives
1. Define globalization, nationalism, and parochialism; and
contrast ethnocentric, polycentric, and geocentric
attitudes.
2. Describe the history of globalization.
3. Summarize the case for and against globalization.
4. Explain the different types of international organizations.
5. Describe the structures and techniques organizations
use as they go international.
6. Explain the relevance of the political/legal, economic,
and cultural environments to global business.

Hold the Pork, Please!
Germany-based Haribo
(www.haribo.com)
Cultural Challenge and Blunders:
Pork-based product: off-limits
to Muslims and Jews
Not meeting the needs of a
globally dispersed subculture
Potentially worth $2 billion
annually
Printing on packages:
Backward, but Hebrew is read
from right to left

Three Possible Global Attitudes
• Ethnocentric: the belief that the best work approaches
and practices are those of the home country.
• Polycentric: the view that the managers in the host
country know the best work approaches and practices for
running their business.
• Geocentric: a world-oriented view that focuses on using
the best approaches and people from around the globe.

Ethnocentric Orientation
• Guided by domestic market extension concept:
• Domestic strategies, techniques, and personnel are
perceived as superior
• International customers are considered as secondary
• International markets are regarded primarily as outlets for
surplus domestic production
• International marketing plans are developed in-house by the
international division

Polycentric Orientation
• Guided by the multi-domestic market concept:
• Focuses on the importance and uniqueness of each
international market
• Likely to establish businesses in each target country
• Fully decentralized, minimal coordination with
headquarters
• Marketing strategies are specific to each country
• Result: No economies of scale, duplicated functions,
higher final product costs

Geocentric Orientation
• Guided by the world marketing concept:
• The world is perceived as a total market with identifiable,
homogenous segments
• Targeted marketing strategies aimed at market segments,
rather than geographic locations
• Achieve position as low-cost manufacturer and marketer of
product line
• Provides standardized product or service throughout the
world

Types of International Organizations
• Multinational Corporation (MNC) – a
broad term that refers to any and all types
of international companies that maintain
operations in multiple countries.
• Multi-domestic Corporation – an MNC
that decentralizes management and other
decisions to the local country which
reflects polycentric attitude .

Types of International Organizations (cont.)
• Global Company – an MNC that centralizes
management and other decisions in the home
country which reflects ethnocentric attitude.
• Transnational or Borderless Organization –
an MNC in which artificial geographical
barriers are eliminated and reflects a
geocentric attitude.
• For example, IBM dropped its organizational structure based on
country and reorganized into industry groups. Ford Motor
Company is pursuing what it calls the One Ford concept as it
integrates its operations around the world.

Globalization & International Trade Highlights
• After WWI nations became more protectionist
• After WWII the trend toward globalization started
• Numerous agreements, institutions, and events pushed for
globalization

• Understanding the Global Environment
– Trading Alliances

Understanding the Global Environment –
Trading Alliances
• European Union (EU) – a union of 28
democratic European nations created as a
unified economic and trade entity with the
Euro as a single common currency.

Exhibit 4.1 European Union Map
Exhibit 4.1 shows the members of the European Union.

Trading Alliances (cont.)
• North American Free Trade
Agreement (NAFTA) – an agreement
among the Mexican, Canadian, and
U.S. governments in which certain
barriers to trade have been
eliminated.

Trading Alliances (cont.)
• Association of Southeast Asian Nations
(ASEAN) – a trading alliance of 10
Southeast Asian nations. Brunei Darussalam,
Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar,
Philippines, Singapore, Thailand, and Vietnam.
• ASEAN +3 (China, S. Korea and Japan)
• ASEAN 16 (India, Australia, and N. Zealand)

Global Trading System
• The General Agreement on Tariffs and Trade (GATT): a
treaty designed to promote free trade by reducing both tariff
and nontariff barriers to international trade
• Between 1947 and 1988: Highly Successful
– Reduce average tariffs from 40 percent to 5 percent
– Multiply the volume of international trade by a factor of 20
• By the middle to late 1980s: Challenges
– Nontariff barriers
– Services not covered by the original GATT

Global Trade Mechanisms
• World Trade Organization (WTO) –
a global organization of 153 countries that deals with
the rules of trade among nations. Help the free flow of
trade, Settle trade disputes among its members
• International Monetary Fund (IMF) –
an organization of 185 countries that promotes
international monetary cooperation and provides
advice, loans, and technical assistance.

Exhibit 4.3 How Organizations Go Global
Exhibit 4.3 shows the different approaches companies can use to go global.

Going Global: Exporting and Importing
• Exporting: making products domestically and selling them
abroad
• Importing: acquiring products made abroad and selling
them domestically

Going Global: Licensing and Franchising
• Licensing: an organization gives another organization the
right to make or sell its products using its technology or
product specifications
• Franchising: an organization gives another organization
the right to use its name and operating methods

Going Global: Strategic Alliances and Joint Ventures
• Strategic Alliance: partnership between an organization
and foreign company partner(s) in which both share
resources and knowledge in developing new products or
building production facilities
• Joint Venture: A specific type of strategic alliance in which
the partners agree to form a separate, independent
organization for some business purpose

Going Global: Foreign Subsidiary
• Foreign Subsidiary: directly investing in a foreign country
by setting up a separate and independent production
facility or office

Managing in a Global Environment
• What challenges will a manager face in a new country?

Political/Legal Environment
– U.S. managers are accustomed to a stable legal and
political system
– Managers must stay informed of the specific laws in
countries where they do business
– Some countries have risky political climates

Economic Environment
• Free Market Economy: an economic system in which
resources are primarily owned and controlled by the
private sector
• Planned Economy: an economic system in which
economic decisions are planned by a central government

Cultural Environment
• National Culture—the values and attitudes shared by
individuals from a specific country that shape their
behavior and beliefs about what is important.
• Hofstede’s framework for assessing cultures—one of
the most widely referenced approaches to helping
managers better understand differences between national
cultures.

Exhibit 4.5 Hofstede’s Six Dimensions of National Culture
Exhibit 4.5 shows Hofstede’s Six Dimensions of National Culture.

Individualism vs. Collectivism
• The individualism vs. collectivism dimension considers the
degree to which societies are integrated into groups and their
perceived obligation and dependence on groups.
• Individualism indicates that there is greater importance on
attaining personal goals. A person’s self-image in this category
is defined as “I.”
• Collectivism indicates that there is greater importance on the
goals and well-being of the group. A person’s self-image in this
category is defined as “We”.

Power Distance
• The power distance index considers the extent to which
inequality and power are tolerated. In this dimension, inequality
and power are viewed from the viewpoint of the followers – the
lower level.
• High power distance index indicates that a culture accepts
inequality and power differences, encourages bureaucracy and
shows high respect for rank and authority.
• Low power distance index indicates that a culture encourages
organizational structures that are flat, decentralized decision-
making responsibility, participative style of management, and
places emphasis on power distribution.

Uncertainty Avoidance
• The uncertainty avoidance index considers the extent to which
uncertainty and ambiguity are tolerated. This dimension
considers how unknown situations and unexpected events are
dealt with.
• High uncertainty avoidance index indicates a low tolerance for
uncertainty, ambiguity, and risk-taking. The unknown is
minimized through strict rules, regulations, etc.
• Low uncertainty avoidance index indicates a high tolerance for
uncertainty, ambiguity, and risk-taking. The unknown is more
openly accepted, and there are lax rules, regulations, etc.

Masculinity vs. Femininity
• The masculinity vs. femininity dimension is also referred to as
“tough vs. tender,” and considers the preference of society for
achievement, attitude towards sexuality equality, behavior, etc.
• Masculinity comes with the following characteristics: distinct
gender roles, assertive, and concentrated on material
achievements and wealth-building.
• Femininity comes with the following characteristics: fluid gender
roles, modest, nurturing, and concerned with the quality of life.

Long-Term Orientation vs. Short-Term
Orientation
• Long-term orientation shows focus on the future and involves delaying
short-term success or gratification in order to achieve long-term
success. Long-term orientation emphasizes persistence,
perseverance, and long-term growth.
• Short-term orientation shows focus on the near future, involves
delivering short-term success or gratification and places a stronger
emphasis on the present than the future. Short-term orientation
emphasizes quick results and respect for tradition.

Indulgence versus restraint
• Indulgence versus restraint This dimension captures the extent
to which a society allows free expression. An indulgent society
(one scoring high on this dimension) allows people to rather
freely satisfy human needs related to enjoying life and having
fun.
• By contrast, a restrained society uses varying degrees of social
norms to suppress the free satisfaction of such needs.

Other Major Events Shaping Globalization
• Shanghai Cooperation Organization (2003) – an eight-
nation group pledges to promote free trade among other
goals.
• We are the 99% Protest Movement (2011) – a group
protesting income and wealth inequality in the US.
• Made in China 2025 (2015) – a Chinese government-led
initiative to make China dominant in high-tech
manufacturing by 2025

Other Globalization Events
• British vote to Exit EU (2016) – also known as Brexit. The
vote was in response to nationalist feelings in the UK
• Donald Trump elected US president (2016) – elected on
an America First campaign due to distrust of career
politicians
• Trans-Pacific Partnership (2016) – TPP was a trade
agreement among Pacific rim countries that fell apart for
lack of support
• USMCA (2018) – President Trump’s renegotiated version
of NAFTA

The Case for Globalization
• The Win-Win Argument: The “every country wins”
argument is based on the law of comparative advantage.
• Essentially says a ‘rising tide floats all boats.’
• Globalization benefits all trading partners.

The Case Against Globalization
• The Downside of Globalization: Critics of globalization
maintain that jobs were leaving developed high labor cost
nations and flowing to cheap labor nations.
• Cheap goods worldwide created wage stagnation for the
middle class.
• Globalization and capitalism together have increased
wealth inequality.
• Some groups are harmed by globalization.

Globalization Today and Managerial Implications
• Globalization will continue despite its critics because:
– The infrastructure is already in place for global trade.
– The evidence shows globalization is NOT the cause of
unemployment—technology is the culprit.
– Managers need to develop requisite skills to be a
global manager.

REVIEW QUESTIONS

Exercises –Choose the best Answer
1)Natalya operates a retail store in Romania. She buys consumer
electronics from vendors in China and Japan to sell in her store. Natalya
is engaging in , 1)
A) importing B) licensing C) global sourcing D) franchising
2)Samanex Corporation maintains production facilities in 13 different
countries on three continents. Each facility is managed by a native of the
country where it is located. This practice is indicative of a(n)
attitude.2)
A) polycentric B) multicentric C) ethnocentric D) geocentric

3) A(n) attitude is the view that employees in the host country
know the best practices for running their operations. 3)
A) polycentric B) ethnocentric C) geocentric D) regiocentric
4)Harley Davidson makes motorcycles but in its retail stores it also sells
clothing, motorcycle accessories, jewelry, and many related products
made by other companies. Harley Davidson is engaging in .
4)
A) licensing B) exporting C) global sourcing D) franchising

5) Which of the following is a multinational corporation that tailors
marketing strategies to the host country's unique characteristics?5)
A) global company
C) borderless organization
B) transnational organization
D) multidomestic corporation
6)While talking with her advisor at the university, Jane deduces that she
has a(n) attitude, as she has never traveled abroad and relates
well only to people from her home country. 6)
A) polycentric B) regiocentric C) geocentric D) ethnocentric

7)Melamark LLC has customers on four continents. It would like to
increase its global presence as a supplier to its global customers. The
most expensive option would be to . 7)
A) export from a single production plant
B) license producers in several countries
C) directly invest in a production facility in another country
D) form a strategic alliance with an existing company in another country
8)For American company Leather Exporters, first quarter sales in Italy
were higher compared to the preceding year but profits were down. What
could account for this difference? 8)
A) a change in the national leadership in Italy
B) a reduction in trade barriers with Italy
C) a difference in the currency exchange rate
D) a cultural change in Italian society

9) Transnational organizations are also known as . 9)
A) polycentric organizations
C) multidomestic organizations
B) borderless organizations
D) ethnocentric organizations
10) The International Monetary Fund is an organization that .
10)
A) helps countries conduct trade through a system of rules
B) provides financial assistance to developing countries
C) rules on disputes over tariffs and subsidies
D) promotes international monetary cooperation

11)A global company reflects the . 11)
A) ethnocentric attitude
C) pancentric attitude
B) geocentric attitude
D) polycentric attitude

12) Multidomestic corporations . 12)
A) reflect ethnocentric attitudes
B) attempt to replicate their domestic successes by managing foreign
operations from the home country
C) decentralize management and other decisions to the local country
D)maintain operations in multiple countries, but do not allow managers in
each country to make their own decisions
13) Melamark's advisor on global affairs is concerned that carries
too much risk. 13)
A) setting up a foreign subsidiary
C) a joint venture
B) franchising
D) a strategic alliance

14) In Malbadia, a central committee formed by the political powers decides
what products and how many of each will be produced. This situation is
typical of . 14)
A) a free market economy
C) a planned economy
B) a free enterprise economy
D) a freely planned economy
15) In today's global environment, managers must have a(n)
attitude to be successful. 15)
A) parochial B) geocentric C) ethnocentric D) bigoted

16) In 1984 Toyota and General Motors formed a company called NUMMI to
build cars carrying both the General Motors and Toyota brands. NUMMI is
an example of a(n) . 16)
A) equity strategic alliance
C) joint venture
B) global venture
D) nonequity strategic alliance
17) Which of the following types of global organizations reflects the
geocentric attitude? 17)
A) regional organization
C) transnational organization
B) global company
D) multidomestic corporation

18) Unlike the United States, the change from one regime to another in
foreign countries can be less than peaceful. Differences in the
can lead to uncertainty and risk for global managers. 18)
A) cultural environment
C) demographic environment
B) political/legal environment
D) economic environment
19) If Shana's company decides to open another company in France but
centralizes its management in the United States, it would be considered a
19
A) borderless organization
C) multidomestic corporation
B) transnational corporation
D) global company

20) The World Trade Organization evolved from which of the following?
21)
A) Marshall Plan
C) Mercosur
B) GeneralAgreement on T
ariffs and Trade
D) Truman Doctrine
22) Nathan uses ethnic craftsmen to make high quality oak furniture. If he
decides to offer his furniture for sale in other countries, he will be engaging
in . 20)
A) licensing B) importing C) franchising D) exporting

21) "Let's forget about tomorrow for tomorrow never comes." "Live for
today." These expressions would be typical of a culture that is .
21)
A) low in future orientation B) low in humane orientation
C) high in assertivenessD) high in performance orientation
22)A domestic firm and a foreign firm sharing the cost of developing new
products or building production facilities in a foreign country constitute a
. 22)
A) foreign subsidiary
C) strategic alliance
B) franchising agreement
D) joint venture

3robbins_mgmt15_ppt_04.pptx

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