Place Slide Title Text Here JOHN R. SCHERMERHORN, JR.

MANAGEMENT
12th Edition
Chapter 5

International Management
2013 John Wiley & Sons, Inc. All rights reserved.

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Planning Ahead Chapter Place Slide Title Text Here 5 Study Questions
1. What are the management challenges of globalization? 2. What are global businesses and what do they do? 3. What is culture and how does it impact global management? 4. How can we benefit from global management learning?

2013 John Wiley & Sons, Inc. All rights reserved.

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5 Learning Place Slide Chapter Title Text Here Dashboard

1. Management and Globalization
1. 2. 3. 4. 1. 2. 3. 4. Global management Why companies go global How companies go global Global business environments Types of global businesses Pros and cons of global businesses Ethics challenges for global businesses Global business environments

2. Global Businesses

2013 John Wiley & Sons, Inc. All rights reserved.

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5 Learning Place Slide Chapter Title Text Here Dashboard

3. Culture and Global Diversity
1. 2. 3. 4. 1. 2. Cultural intelligence Silent languages of culture Tight and loose cultures Values and national cultures Are management theories universal? Global learning goals

4. Global Management Learning

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Key concepts in the challenges of globalization:

Global economy Globalization Global management World 3.0 Global manager

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Global economy
Resources, markets, and competition are worldwide in scope

Globalization
The process of growing interdependence among elements in the global economy

World 3.0
Nations cooperate while respecting different national characters and interests
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Takeaway 1: Management Place Slide Title Text Here and Globalization

Global management
Managing in organizations with business interests in more than one country

Global manager
Is culturally aware and informed on international affairs

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Takeaway 1: Management Place Slide Title Text Here and Globalization

International businesses
Conducting for-profit transactions of goods and services across national boundaries

Reasons why businesses go global:

Profits

Customers

Suppliers

Capital

Labor

Risk

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Market entry strategies

involve the sale of goods or services to foreign markets but do not require expensive investments

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Types of market entry strategies:

Global sourcing Exporting Importing Licensing agreement Franchising

Types of direct investment strategies:

Joint venture Strategic alliance Foreign subsidiary

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Place Slide Title Text Here Figure 5.1 Common forms of global businessfrom market entry to direct investment strategies

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Global sourcing

the process of purchasing materials or services around the world for local use selling locally made products in foreign markets buying foreign-made products and selling them domestically one firm pays fee for rights to make or sell another companys products a fee is paid for rights to use another firms name and operating methods

Exporting
Importing Licensing agreement Franchising

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Takeaway 1: Management and Globalization? Place Slide Title Text Here

Insourcing refers to local job creation that results from foreign direct investment

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Takeaway 1: Management and Globalization Place Slide Title Text Here

Types of insourcing:
Joint ventures
operates in a foreign country through coownership by foreign and local partners

Strategic alliances
a partnership in which foreign and domestic firms share resources and knowledge for mutual gains

Foreign subsidiaries
local operation completely owned by a foreign firm

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Takeaway 1: Management Place Slide Title Text Here and Globalization?

Criteria for choosing a joint venture partner:

Familiarity with your firms major business Strong local workforce Future expansion possibilities Values its customers Strong local market for partners own products Good profit potential Sound financial standing

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Global business environments

Legal and political systems Trade agreements and trade barriers Regional economic alliances

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Legal and political systems

Differing laws and practices regarding
Business ownership Foreign currency exchange Protection of intellectual property rights
Counterfeit merchandise

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Legal and political systems

Political risk
Potential loss in value of a foreign investment due to instability and political changes in the host country

Political risk analysis

Forecast political disruptions that threaten the value of a foreign investment

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Trade Agreements and Trade Barriers

World Trade Organization
Most favored nation status Tariffs Nontariff barriers Protectionism

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Takeaway 1: Management Place Slide Title Text Here and Globalization

Regional Economic Alliances

NAFTA North American Free Trade Agreement EU European Union APEC Asia Pacific Economic Cooperation ASEAN Association of Southeast Asian Nations SADC Southern Africa Development Community

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Takeaway 2: Global Place Slide Title Text Here Businesses

Types of global businesses:
Global corporation
MNE (multinational enterprise) or MNC (multinational corporation) with extensive business operations in more than one foreign country

Transnational corporation
A global corporation that operates worldwide on a borderless basis

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Takeaway 2: Here Global Businesses Place Slide Title Text

Mutual benefits for host country and global corporation or MNC:
Shared growth opportunities Shared income opportunities Shared learning opportunities Shared development opportunities

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Place Slide Title Text Here Figure 5.2 What should go right and what can go wrong in MNC-host country relationships

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Takeaway 2: Here Global Businesses Place Slide Title Text Host country complaints about MNCs:
Excessive profits Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customs

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Takeaway 2: Global Place Slide Title Text Here Businesses

MNC complaints about host countries:
Profit limitations Overpriced resources Exploitative rules Foreign exchange restrictions Failure to uphold contracts

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Takeaway 2: Global Place Slide Title Text Here Businesses

Ethical challenges for Global Businesses:

Corruption Sweatshops Child labor

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Takeaway 2: Here Global Businesses Place Slide Title Text

Ethical issues for Global Businesses:
Corruption illegal practices that further ones business interests Foreign Corrupt Practices Act makes it illegal for U.S. firms and their representatives to engage in corrupt practices overseas
Bribes to foreign officials Excessive commissions Non monetary gifts

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Takeaway 2: Global Place Slide Title Text Here Businesses

Child labor and Sweatshops:
Child labor full time employment of children for work otherwise done by adults Sweatshops employ workers at very low wages for long hours in poor working conditions

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Culture
The shared set of beliefs, values, and patterns of behavior common to a group of people Culture shock Confusion and discomfort a person experiences in an unfamiliar culture Cultural intelligence The ability to adapt and adjust to new cultures Ethnocentrism Tendency to consider ones own culture as superior to others

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Confusion

Stages in adjusting to a new culture:

Small victories

The honeymoon

Irritation and anger

Reality

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here

Silent languages of culture

Context
Low context High context

Space
Proxemics

Time
Monochronic Polychronic

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Context
Low context cultures - emphasize communication via spoken or written words
United States Canada Germany

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Context
High context cultures rely on nonverbal and situational cues as well as on spoken or written words
Thailand Malaysia

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Time
Monochronic cultures people tend to do one thing at a time
United States, Canada, Germany

Polychronic cultures time is used to accomplish many different things at once

Egypt, Saudi Arabia, Mexico

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Space
Proxemics study of how people use space to communicate
In the U.S. people value personal space Many Latin and Asian cultures expect much less personal space

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here
Tight and Loose Cultures
Cultural tightness-looseness
Strength of norms that govern social behavior Tolerance for any deviance from norms Tight = Japan, Korea Loose = Brazil, Hungary

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway 3: Culture and Global Diversity Place Slide Title Text Here

Values and national cultures (Hofstede):

Power distance

Uncertainty avoidance

Individualismcollectivism

Masculinityfemininity

Time orientation

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Place Slide Title Text Here Figure 5.3 How countries compare on Hofstedes dimension of national culture

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Takeaway 4: Global Management Learning Place Slide Title Text Here

Comparative management
How management systematically differs among countries and/or cultures

Global managers
Need to successfully apply management functions across international boundaries

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Takeaway 4: Global Management Learning Place Slide Title Text Here

Global learning goals:
Not universal Engage critical thinking Look everywhere for new management ideas Always consider culture!

2013 John Wiley & Sons, Inc. All rights reserved.

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