Business Management 3: Globalization Issues

Business Management 3. Integrative Managerial Issues

• Learning Objectives:
  • Explain globalization and its impact on organizations.
  • Discuss how societal expectations influence managers and organizations.
  • Discuss factors leading to ethical and unethical behavior in organizations.
  • Describe workforce changes and their impact on organizational management.

Myth vs. Truth

• Myth: Employees are less ethical today than in the past.
• Truth: Ethical misconduct is at an all-time low.
• Summary: Media portrayal may misrepresent the reality. Employee ethics are a significant managerial concern, compounded by globalization's impact on the workforce.

Globalization and its Impact on Organizations

• Globalization's Effect on Management: Management is no longer constrained by borders, with events (disasters, economic downturns) globally affecting businesses.
• Example: BMW (a German firm) manufactures cars in South Carolina, USA.
• Globalization's Impact: Globalization has created a global market with products and services produced and marketed worldwide.
• Globalization & Adaptation: Managers need to adapt to effectively operate in this boundaryless world.

What Does "Global" Mean?

• Exchange of Goods and Services: Organizations are considered global if they trade goods and services with international consumers.
• Global Talent: Organizations often utilize international managerial and technical expertise.
• Financial Globalization: Utilizing international financial resources.

How Organizations Go Global

• Global Sourcing: Purchasing materials or labor from around the world.
• Exporting: Domestically producing goods for global sale.
• Importing: Acquiring foreign products/goods and selling them domestically.
• Licensing/Franchising: One organization allows another to use its brand, technology, or specifications.
• Foreign Subsidiary: Direct investment in a foreign country with a separate entity.
• Global strategic alliance/joint venture: Cooperative partnership with foreign companies.

Types of Global Organizations

• Multinational Companies (MNCs): International corporations operating in multiple countries.
  • Multidomestic Corporation: Decentralizes management/decisions to local countries.
  • Transnational Corporation: Eliminates geographical barriers in management.
  • Global Corporation: Centralizes management/decisions in its home country.

Managing in a Global Organization

• Parochialism: Limited perspective, viewing the world through a narrow, domestic lens as managers are affected by the unique values, norms, and expectations of each country.
• Cultural Differences: Status, work values (competition, assertiveness, etc.) are culturally defined. Important to understand social context of a culture.
• Legal Implications: Different countries have varying employment laws and rules.

Hofstede Dimensions

• Power Distance: Degree to which inequality is accepted.
• Individualism vs. Collectivism: Importance of individual goals vs. group membership.
• Uncertainty Avoidance: Preference for structured vs. unstructured situations.
• Long-Term vs. Short-Term Orientation: Focus on future rewards vs. quick results.
• Quantity of Life vs. Quality of Life: Value placed on material possessions vs. relationships.

Globe Dimensions

• Nine dimensions identify cultural differences including: Assertiveness, Future Orientation, Gender Differentiation, Uncertainty Avoidance, Power Distance, Individualism/Collectivism, In-group Collectivism, Performance Orientation, and Humane orientation.

Social Responsibility (CSR)

• Social Obligations: Actions taken from a firm's economic and legal responsibility.
• Social Responsiveness: Firm actions in response to societal needs.

Should Organizations be Socially Involved?

• Arguments For: Ethical obligation, public image, long-run profits, etc.
• Arguments Against: Costs, dilution of purpose, etc.

Sustainability

• Importance: Companies are seeking sustainable products and services, reducing emissions, and integrating environmental/social values into strategies.

Factors Determining Ethical/Unethical Behavior

• Morality: Personal sense of right and wrong.
• Values: Individual beliefs and priorities.
• Experience: Past encounters shaping decisions.
• Organizational Culture: Shared values within an organization.
• Ethical Issues Faced: Contextual situations influencing choices.

Encouraging Ethical Behavior

• Code of Ethics: Formal statement of values, ethical guidelines, and decision rules.
• Management Commitment: Top management leadership to ethical behavior.
• Ethics Training: Teach ethical problem-solving, enhance awareness, and provide simulations.
• Ethical Leaders: Lead by example, honesty, transparency, etc.

Ethics Training

• Value Systems Established in Youth: Criticism of the effectiveness of ethics training when value systems are already formed.
• Proponents: Emphasize the development of moral reasoning and ethical problem-solving.

The Changing Workforce

• Workforce Diversity: Increasing diversity in organizations, encompassing differences in age, gender, race, etc.
• Workforce Impacts: Recognition of differences, adapting to diverse workforce needs, and flexible work arrangements.
• Adapting to a Changing Workforce: Managers adapt to different generational expectations through flexible work arrangements, work-life balance programs.