This chapter discusses managing in a global environment. It describes how the world is becoming increasingly borderless and globalized. Managers need cross-cultural skills and a global mindset. The chapter outlines different strategies for entering international markets and factors of the international environment that managers must consider, such as economic, sociocultural, and legal-political differences between countries. It also discusses trade alliances, multinational corporations, and developing cultural intelligence to manage successfully across cultures.

1. MANAGEMENT
RICHARD L. DAFT

2. Managing in a Global
Environment
CHAPTER 4

3. chapter4 Learning Outcomes
• Describe the emerging borderless world and some issues of particular
concern for today’s managers.
• Describe market entry strategies that business use to develop foreign
markets.
• Define international management and explain how it differs from the
management of domestic business operations.
• Indicate how dissimilarities in the economic, sociocultural, and legal-
political environments throughout the world can affect business
operations.
• Describe how regional trading alliances are reshaping the international
business environment.
• Describe the characteristics of a multinational corporation.
• Explain cultural intelligence and why it is necessary for managers working
in foreign countries.
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4. Are You Ready To Work
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Internationally?
• Cross-cultural skills are extremely important
• Every manager needs to think globally
• The future of business and society is being
shaped by global relationships
• A global mind-set is becoming a prerequisite
for managers
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5. chapter4 A Borderless World
• Isolation from international forces is no
longer possible
– Trade barriers are falling
– Communication is faster and cheaper
– Consumer tastes are converging
• Virtual connections enable close, rapid
coordination among people working in
different parts of the world
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6. chapter4 Four Stages of Globalization
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7. Strategies for Entering
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International Markets
• Exporting – transfers products for sale in
foreign countries
• Global Outsourcing – transferring the labor of
specific tasks to low cost countries
• Licensing – allowing an operation in another
country to produce and sale company products
• Franchising – providing a foreign organization
with package of materials and services
• Direct Investing - a production facility in
another country
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8. Getting Started
chapter4
Internationally
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9. chapter4 China Inc.
• Opportunities in China are booming
• Companies are engaging in all strategies
– The most common practice is outsourcing
• Multinationals are manufacturing a large variety
of products in China
• China is attractive for low-cost manufacturing
• India is attractive in software design, services
and engineering
• An author has named the phenomenon Chindia
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10. Key Factors in The
chapter4
International Environment
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11. chapter4 The Economic Environment
•• Economic development differs around
Economic development differs around
the world
the world
– Countries can be categorized as developed or
– Countries can be categorized as developed or
less-developed
less-developed
•• Companies must be able to access the
Companies must be able to access the
resources needed to produce their
resources needed to produce their
products
products
•• Volatility in exchange rates can impact a
Volatility in exchange rates can impact a
businesses bottom-line
businesses bottom-line
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12. World Economic Forum
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Global Competitiveness
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13. The Legal-Political
chapter4
Environment
 Government supervision
 Political instability
 Laws and regulations
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14. The Sociocultural
chapter4
Environment
 Shared knowledge
 Beliefs
 Values
 Modes of behavior
Values and behaviors from the US do not translate
around the world
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15. Country Ranking and
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National Value Systems
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16. Hofstede’s Value
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Dimensions
National value systems that influence
organizational and employee working
relationships
Power Uncertainty
Distance Avoidance
Individualism
Masculinity/
and
Femininity
Collectivism
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17. GLOBE Project Value
chapter4
Dimensions
Global Leadership and Organizational Behavior
Effectiveness (GLOBE)
• Assertiveness
• Future Orientation
• Uncertainty Avoidance
• Gender Differentiation Extension of
• Power Distance Hofstede’s
assessment
• Societal Collectivism
• Individual Collectivism
• Performance Orientation
• Humane Orientation
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18. Country Rankings and
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GLOBE Rankings
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19. chapter4 Communication Differences
• Some cultures pay more attention to the social
context of communication
– Social Setting
– Nonverbal Behavior
– Social Status
• High-context cultures are sensitive to social
exchanges
• Low-context cultures use communication to
exchange facts and information
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20. High-Context and Low-
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Context Cultures
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21. Other Cultural
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Characteristics
 Language
 Religion
 Social Organization
 Education
 Attitudes
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22. International Trade
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Alliances
• General Agreement on Tariffs and Trade (GATT)
– Signed in 1947 by 23 nations
– Nondiscrimination, clear procedures, negotiations and disputes
regarding trade
• World Trade Organization (WTO)
– Permanent global organization from GATT
– As of July 2007: 151 Countries
• European Union
– Begun in 1957 to improve economic and social conditions in
European Economic Community
– Evolved into the 27-nation European Union
– Goal is to develop single market system
• North America Free Trade Agreement (NAFTA)
– United States, Canada, and Mexico
– Trading bloc to spur growth and investment
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23. The Nations of the
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European Union
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24. chapter4 The Globalization Backlash
• As the world becomes more global, a
backlash is growing
• 68% of American say other countries
benefit more from trade
• One of the key concerns is job loss
• Many argue that globalization benefits the
economy
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25. chapter4 Multinational Corporations
• More than 25% of its total sales revenue
come from outside the home country
• In 2007, 42% of the global sales of US
multinationals come from their foreign
affiliates
• An MNC is managed as an integrated
business system
• MNCs are controlled by a single
management authority
• MNC managers have a global
perspective
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26. Managing In A Global
chapter4
Environment
• Developing Cultural Intelligence
– Cultural flexibility and ability to adapt
– Cognitive, emotional and physical
• Managing Cross-Culturally
– Expatriates can be successful by focusing on:
• Human Resources
• Leading
• Decision Making
• Motivating
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