Core Concepts of Management Schermerhorn

1. Core Concepts of ManagementSchermerhorn Prepared by Cheryl Wyrick California State Polytechnic University Pomona John Wiley & Sons, Inc Schermerhorn - Chapter 3

2. COPYRIGHT Copyright 2003 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the 1976 United States Copyright Act without the express written consent of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her owner use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, cause by the use of these programs or from the use of the information contained herein. Schermerhorn - Chapter 3

3. Chapter 3Globalization and International Management • Planning Ahead • What are the processes of globalization? • What is the environment of international business? • How does culture create global diversity? • How do management practices transfer across cultures? Schermerhorn - Chapter 3

4. Processes of Globalization • The New Europe • European Union (EU) • grouping of European countries who agreed to support mutual economic growth • 11 of these countries have agreed to adopt the Euro (common currency) Schermerhorn - Chapter 3

5. Processes of Globalization • The Americas • North American Free Trade Agreement (NAFTA) • Agreement for free flow of goods and services between the U.S., Canada and Mexico • Free Trade of the Americas (FTAA) is a possibility • Other agreements • MERCOSUR • Andrean Pact • CARICOM Schermerhorn - Chapter 3

6. Processes of Globalization • Maquiladoras • foreign manufacturing plants allowed to operate in Mexico • allowed special privileges in exchange for hiring Mexican labor • import materials, components and equipment with duty paid on “value added” Schermerhorn - Chapter 3

7. Processes of Globalization • Maquiladoras • advantages • increased employment and prosperity • disadvantages • social costs in border towns • exploitation of less expensive Mexican labor Schermerhorn - Chapter 3

8. Processes of Globalization • Asia and the Pacific Rim • Asia and Pacific Rim economies are expected to be larger than those of the EU • China is the world’s largest single-country marketplace • Japanese companies account for many Fortune 500 companies Schermerhorn - Chapter 3

9. Processes of Globalization • Africa • beckons international business • increased attention to stable countries Schermerhorn - Chapter 3

10. Environment of International Business • Forms of International Business • Global Sourcing • manufacturing and/or purchasing components worldwide and assembling them into a final product Schermerhorn - Chapter 3

11. Environment of International Business • Forms of International Business • Exporting • selling locally made products in foreign markets • Importing • buying foreign made products and selling them in domestic markets Schermerhorn - Chapter 3

12. Environment of International Business • Forms of International Business • Licensing Agreement • pay a fee to acquire the rights to sell another company’s products • franchising is form of licensing Schermerhorn - Chapter 3

13. Environment of International Business • Forms of International Business • Direct Investment Strategies • joint ventures • strategic alliances • wholly owned subsidiary Schermerhorn - Chapter 3

14. Multinational Corporations • Multinational Corporation (MNC) • business with extensive international operations in more than one country Schermerhorn - Chapter 3

15. Multinational Corporations • Advantages of MNCs • larger tax bases • increased employment opportunities • technology transfers • introduction of new industries • development of local resources Schermerhorn - Chapter 3

16. Multinational Corporations • Disadvantages of MNCs • extract excessive profits • dominate local economy • do not respect local customs and laws • fail to help domestic firms develop • do not transfer most advanced technology Schermerhorn - Chapter 3

17. Pros and Cons of Global Operations • Ethical Issues in Multinational Operations • Foreign Corrupt Practices Act • Sweatshops • Environmental protection Schermerhorn - Chapter 3

18. Culture and Global Diversity • Culture • shared set of beliefs, values and patterns of behavior common to a group of people Schermerhorn - Chapter 3

19. Culture and Global Diversity • Ethnocentrism • tendency to view one’s own culture as superior to others Schermerhorn - Chapter 3

20. Culture and Global Diversity • Silent Language • Culture shock • discomfort a person feels in an unfamiliar culture Schermerhorn - Chapter 3

21. Culture and Global Diversity • Spoken Language • Low-context • explicit spoken and written word • examples: US, Germany • High-context • words convey only part of the message • examples: Middle East, Asia Schermerhorn - Chapter 3

22. Culture and Global Diversity • Use of Space (Proxemics) • interpersonal distance used in communication • Latin Americans tend to be close • Americans value more space Schermerhorn - Chapter 3

23. Culture and Global Diversity • Time Orientation • Monochronic • time is allotted do one thing at a time • Polychronic • time is allotted to do many things at once Schermerhorn - Chapter 3

24. Culture and Global Diversity • Religion • may influence business practices • source of ethical and moral teaching Schermerhorn - Chapter 3

25. Culture and Global Diversity • Role of Contracts • some cultures view as final and binding • others view as a starting point • some expect contracts to be written • others accept “word” as binding Schermerhorn - Chapter 3

26. Culture and Global Diversity • Values and National Cultures (Hofstede) • Power distance • Uncertainty avoidance • Individualism-collectivism • Masculinity-femininity • Short-term - long-term orientation Schermerhorn - Chapter 3

27. Culture and Global Diversity • Understanding Cultural Differences • Relationships with People • universalism vs. particularism • individualism vs. collectivism • neutral vs. affective • specific vs.diffuse • achievement vs. prescription Schermerhorn - Chapter 3

28. Culture and Global Diversity • Understanding Cultural Differences • Attitudes toward time • sequential • synchronic Schermerhorn - Chapter 3

29. Culture and Global Diversity • Understanding Cultural Differences • Attitudes toward environment • inner-directed • outer-directed Schermerhorn - Chapter 3

30. Management Across Cultures • Comparative Management • how management systematically differs from one country and/or culture to the next • global manager • someone comfortable with cultural diversity • quick to find opportunity in unfamiliar settings Schermerhorn - Chapter 3

31. Culture and Global Diversity • Are Management Theories Universal? • U.S. management theories may be ethnocentric • emphasis on participation and individual performance are not applicable to other cultures Schermerhorn - Chapter 3

32. Culture and Global Diversity • Are Management Theories Universal? • Japanese management practices • lifetime employment • job rotation and broad career experience • shared information • collective decision-making • quality emphasis • These practices are not easy to translate Schermerhorn - Chapter 3

33. Culture and Global Diversity • Global Organizational Learning • cultural awareness facilitates more informed transfers of management practices Schermerhorn - Chapter 3