Globalization and Information Technology

Globalization

• Describes the growing interconnectedness of global economies, cultures, and populations, driven by cross-border trade, technology, and investment flows.
• Characterized by worldwide interconnectedness in various sectors.
• International managers and employees are affected by global economic and political events.
• Globalization impacts business, politics, and technology.

Information Technology's Impact

• Advances in information technology decrease communication costs, leading to more global goods.
• Increased competition and technology's development are linked to globalization.
• Smaller organizations and entrepreneurs now have access to information, resources, products, and markets, thanks to technology.
• SMEs (small and medium-sized enterprises) can compete globally.
• Business sizes, including SME's, differ around the world.

Increased Use and Sophistication of Information Technology

• Advances in information technology contribute to reduced communication costs.
• Globalization of trade accelerates through increased competition.
• Technology's advancements empower individuals and smaller organizations with previously limited capabilities (access to larger markets).

Global Economic and Organizational Interconnectedness

• Trade groups, like the EU (European Union), NAFTA (North American Free Trade Agreement), and APEC (Asia-Pacific Economic Cooperation), exist.
• Tariffs (taxes on imports) are used to restrict imports and increase the price of goods/services from other countries, aiming to protect domestic industries.
• Globalization and trade create a more complex international environment for businesses.
• Outsourcing, downsizing, and privatization are examples of changing business practices in this environment.

International Business Contexts

• Outsourcing means hiring outside organizations for tasks previously handled internally.
• Benefits include reduced costs, larger workforce access, and greater flexibility.
• Drawbacks include potential cross-cultural problems.
• Downsizing involves reducing the size of an organization by eliminating staff positions.

Mergers and Acquisitions

• Mergers and acquisitions (M&A) combine companies, creating larger entities.
• Acquisitions occur when one company takes over another.
• M&A activity impacts remaining employees, affecting morale and productivity.

Privatization

• Transferring ownership of an industry or enterprise from public to private sectors.
• Aims to enhance efficiency through private organization management.

Migration

• Movement of people from one location to another for permanent or temporary settlement
• Increased interconnectedness and weakened political boundaries drive migration trends.
• Migrants often bring diverse skills and cultural backgrounds to host countries.

Political Systems

• Totalitarianism implies centralized and dictatorial control.
• Theocratic totalitarianism has religious leaders as political leaders; secular systems use ideology instead.
• Democracy is characterized by governance where the people have the power.

Cultural Contexts

• Culture encompasses the knowledge, values, norms, attitudes, beliefs, and behaviors shared by a group.
• Culture influences goals, institutions, operations, and attributions (reasoning for behavior).
• Culture is a key aspect relevant to global business practices.

Cognitive Complexity

• The ability to critically analyze, understand intricate situations, and handle multiple tasks simultaneously.
• Essential skill for managers coping with international business' nuances.
• Differentiation involves recognizing and comprehending different aspects of given situations.
• Integration involves building connections among diverse elements and forming patterns.

Emotional Energy

• Motivational force arising from emotions.
• Crucial for rapport, credibility, and effective communication in global settings.
• Emotional energy encompasses emotional awareness, resilience, and the ability to constructively engage with emotions.

Psychological Maturity

• Development of a worldview, characterized by consistent values, self-awareness, and the empathy to understand others.
• Managers with high psychological maturity have a clear set of values and a consistent way to see the world.