International Management: Globalization Insights

Session 2: The International Manager

• Globalization describes the growing interdependence of economies, cultures, and populations, driven by cross-border trade, technology transfer, and investment.
• International activities affect all businesses and managers today
• Economic, political, and technological changes associated with globalization dramatically affect international managers.
• Increased use and sophistication of information technology lead to lower communication costs for global goods.
• Globalization of trade increases competition due to advances in technology.
• Organizations of all sizes can now compete in a globalized market due to technology improvements.
• Small and medium-sized enterprises (SMEs) worldwide vary in their employee count.

Globalization

• Globalization is best described as thinking of the world as one place, or the growing interconnections in every sphere of activity.
• All business activities today are influenced by other countries' events and transactions across borders.
• International managers and employees are often affected by international economic and political events.

Increased Use and Sophistication of Information Technology

• Advances in technology significantly reduce the cost of communication, boosting global trade.
• As organizations adapt to globalization, the dissemination of technology expands.
• Competition increases as organizations utilize the cost savings and advances in technology.

SME's (Small and Medium-Sized Enterprises)

• Employee counts for SMEs vary from country to country.
• In the US, companies with 500 or fewer employees qualify as SMEs.
• In the EU, companies with 250 or fewer employees are considered SMEs.

More Complex and Dynamic Work Context

• Increased interconnectedness has changed business environments.
• Outsourcing, downsizing, privatization, migration, and team-based management are significant factors.
• Outsourcing is the hiring of external parties to perform tasks usually handled in-house.
• Downsizing involves shrinking an organization by reducing staff positions.

Mergers and Acquisitions

• The consolidation of companies through mergers or acquisitions is a common occurrence.
• Increased competition drives organizations to merge or acquire (take over) other companies.
• This has a direct impact on the workforce through job losses, or changes in roles/duties.

Privatization

• The transfer of businesses from public ownership to private control.
• Often believed to increase efficiency.
• Can lead to drawbacks when monopolies emerge and government income decreases.

Migration

• People moving from one location to another to settle permanently or temporarily.
• Increased interconnectedness and weakening borders affect workforce demographics in various countries.
• Migrants often contribute diverse skills and perspectives to new workplaces.
• Developed countries typically receive higher levels of migrants.

Tariffs

• Taxes on imported goods and services, used to protect domestic industries or consumers.
• These taxes make imported goods less attractive compared to domestically produced goods or services.
• Protectionism is the policy of creating barriers to foreign imports, including tariffs.

Free Trade Agreements

• Major agreements include European Union (EU), North American Free Trade Agreement (NAFTA), and Asia-Pacific Economic Cooperation (APEC).
• These agreements generally aim to reduce tariffs and facilitate trade.
• Despite agreements, protectionist measures are still employed.

Culture

• Culture is a set of shared knowledge structures consisting of norms, values, beliefs, and behavioral patterns within a society.
• Cultural differences play a crucial role in how business is done and how organizations function.
• Cultural aspects affect many aspects of management, including policies, economic systems, and politics.

Institutions

• Social structures formed for common purposes that influence behavior.
• Examples include government, education, religion, and law.

Political Systems

• Totalitarianism is a centralized, dictatorial system demanding complete obedience to the state.
• Theocratic totalitarianism is tied to religious leaders, and secular aligns with ideologies.
• These forms differ widely from democracies characterized by individual freedom.