Globalization: Cultural Diversity and Global Management

• International travel allows the exploration of cultural diversity and even everyday activities can offer global experiences.
• The interconnected global community presents information, opportunities, controversies, and complexities.
• Social media and news organizations provide real-time global updates on events like the COVID-19 pandemic and the Black Lives Matter movement.
• Online games connect people worldwide in real time.
• Canadian colleges and universities offer international study-abroad programs.
• Many companies operate globally such as IBM, Anheuser-Busch, Ben & Jerry’s, Tata Group, Geely, Honda, Nissan, Toyota and Bombardier.
• Canada's prosperity relies on trade and international markets.
• Globalization has major implications for managers, organizations, and daily life.
• Global corporations can offer benefits but also spark controversies.
• Cultural differences can both enrich experiences and create misunderstandings.
• The essentials of global management and cultural diversity are important for global learning.

Management and Globalization

• Globalization is the increasing interdependence of the global economy's components.
• Some believe globalization is creating a "borderless world" while others believe national identities remain strong.
• National leaders balance economic gains from global integration with local needs.
• Economist Pietra Rivoli tracked the complex global life of a T-shirt, from cotton grown in Texas to being sold in African markets, illustrating the global economy.
• Harvard scholar Rosabeth Moss Kanter described globalization as "one of the most powerful and pervasive influences on nations, businesses, workplaces, communities, and lives.".

Global Management

• Global management involves managing businesses and organizations with interests in multiple countries.
• Procter & Gamble uses a global strategy with customers in over 180 countries.
• Global managers should have a strong global perspective, be culturally aware, and informed about international issues.

Why Companies Go Global

• Companies go global for profits from operations.
• Companies go global to gain new customers by entering new markets.
• Companies go global for access to materials, products, and services from suppliers.
• Companies go global for access to lower-cost, talented workers.
• Companies go global to tap into a larger pool of financial resources.
• Companies go global to spread assets among multiple countries.
• Economic development is a benefit to global firms by doing business in foreign countries with the intention to help the local economy.

How Companies Go Global

• Stages of pursuing international business include global sourcing, exporting/importing, licensing, and franchising.
• Strategic alliances, joint ventures, and wholly owned subsidiaries are direct investment strategies.
• Global sourcing is purchasing materials, manufacturing components, or locating business services around the world.
• Boeing uses global sourcing for its 787 Dreamliners, with parts from Italy, France, and Japan.
• In services, global sourcing includes customer support call centers in the Philippines and R&D centers in Brazil or Russia.
• Some firms are reducing outsourcing and increasing reshoring due to problems with foreign contractors and rising costs.
• Exporting is selling locally made products in foreign markets.
• Importing is buying foreign-made products and selling them in domestic markets.
• Canada's exports account for 30% of its GDP.
• Canada is finding hidden gems to export such as cosmetics, pet food, and photonic devices.
• Licensing agreements grant foreign firms the rights to make or sell a company’s products in a specific region for a fee.
• Franchising is when a foreign firm buys the rights to use another’s name and operating methods in its home country.
• Foreign direct investment (FDI) involves setting up and buying all or part of a business in another country and can sometimes result in local job creation
• A joint venture is a co-ownership arrangement where foreign and local partners pool resources and share risks.
• International joint ventures are types of global strategic alliances for mutual benefit.
• Foreign subsidiaries are local operations completely owned and controlled by a foreign firm, either built from the ground up (greenfield venture) or through acquisition.

Global Business Environments

• Legal and political systems differ, creating risks in international business, global firms must abide by local laws.
• Common legal problems include business ownership, contracts, foreign exchange, and intellectual property rights.
• Political risk refers to the potential loss due to instability and political changes.
• Political-risk analysis is used to forecast disruptive events that can threaten foreign investments.
• The World Trade Organization (WTO) promotes free trade and resolves disputes about tariffs and trade restrictions.
• WTO members should give one another most favored nation status by giving the most favorable treatment for imports and exports.
• Trade barriers include tariffs (taxes on imports) and non-tariff barriers (quotas, import restrictions).
• Regional economic alliances include NAFTA/USMCA, the European Union (EU), Asia Pacific Economic Cooperation (APEC) and the Southern Africa Development Community (SADC).
• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11) is a trade agreement between 11 countries which represent 13.4 percent of the global gross domestic product.

Types of Global Businesses

• Global corporations (multinational enterprises/corporations) have extensive international operations.
• Transnational corporations operate globally without being identified with one national home.
• The Economist magazine publishes a "Domestic Density Index" to measure corporate identity.

Pros and Cons of Global Businesses

• Host countries can benefit from global corporations through a larger tax base, increased employment, technology transfers, new industries, and local resource development.
• Host countries can be negatively affected by excessive profits, economic domination, interference with government, hiring best local talent, limited technology transfer, and disrespect for local customs.
• Global businesses can face criticism at home for cutting domestic jobs, sending investment capital abroad, and engaging in corruption.

Ethics Challenges for Global Businesses

• Increased democratization of information provides more access to reports on ethics-related outcomes from global business activity leading to public relations and financial backlash.
• Corruption is when people engage in illegal practices to further their personal business interests.
• The Corruption of Foreign Public Officials Act (CFPOA) makes it illegal for Canadian firms to engage in corrupt practices overseas.
• Corruption of Foreign Public Officials Act does not recognize the realities of business practice in many foreign nations
• Child labour is the employment of children to perform work otherwise done by adults and poses an ethical issue for global businesses.
• Sweatshops employ workers at low wages for long hours in poor working conditions and create ethical issues for global markets.
• Conflict minerals are those whose sale helps finance armed violence in regions such as the Democratic Republic of Congo.

Cultures and Global Diversity

• Culture is the shared set of beliefs, values, and patterns of behaviour common to a group of people.
• Culture shock is the confusion and discomfort a person experiences when in an unfamiliar culture.
• Culture intelligence is the ability to adapt, adjust, and work well across cultures.
• Ethnocentrism is a tendency to view one’s culture as superior to that of others.
• Key building blocks of cultural intelligence are the silent languages of culture, including context, time, and space.
• In low-context cultures, communication takes place via the written or spoken word.
• In high-context cultures what is actually said or written may convey only part, and sometimes a very small part, of the real message and the rest must be interpreted
• People in monochronic cultures often do one thing at a time.
• Members of polychronic cultures are more flexible in their views of time.
• Proxemics is the study of how people use space to communicate in different cultures.
• Cultural tightness refers to strong and clear social norms where members are expected to know the prevailing norms

Cultural Looseness

• Cultural looseness refers to relaxed and less clear-cut social norms.
• National cultures can vary in power distance, uncertainty avoidance, individualism–collectivism, masculinity–femininity, and time orientation.
• Power distance is the degree to which society accepts or rejects the unequal distribution of power among people.
• Individualism–collectivism is the degree to which a society emphasizes individual accomplishments.
• Uncertainty avoidance is the degree to which a society is uncomfortable with risk, change, and situational uncertainty.
• Masculinity–femininity is the degree to which a society values assertiveness and materialism.
• Time orientation is the degree to which a society emphasizes short-term versus long-term goals.

Global Management Learning

• Comparative management studies how management perspectives and practices differ among countries and cultures.
• Many management theories are ethnocentric because they come from a single cultural context which is often North America.
• Culture and cultural differences always have to be considered in management practices.
• Intercultural competencies are skills and personal characteristics that help us function successfully in cross-cultural situations and are valuable skills to possess.
• Perception management, relationship management, and self-management are the three pillars of intercultural competency.