Chapter04_MGT201.pdf

Management Fifteenth Edition, Global Edition Chapter 4 Managing in a Global Environment MGT 201 – Fundamentals of Management...

Management Fifteenth Edition, Global Edition Chapter 4 Managing in a Global Environment MGT 201 – Fundamentals of Management Alaa Hamade Copyright © 2021 Pearson Education Ltd. What’s Your Global Perspective? Globalization: the process of developing influence or operations in other countries Nationalism: patriotic ideals and policies that glorify a country’s values Parochialism: viewing the world solely through your own perspectives, leading to an inability to recognize differences between people Copyright © 2021 Pearson Education Ltd. Three Possible Global Attitudes Ethnocentric: view that home country has best work practices Polycentric: view that managers in the host country know the best approaches Geocentric: world-oriented view; wants to use best practices from around the globe Copyright © 2021 Pearson Education Ltd. Globalization Highlights After WWI nations became more protectionist After WWII the trend toward globalization started Numerous agreements, institutions, and events pushed for globalization Copyright © 2021 Pearson Education Ltd. Global Trade Mechanisms World Trade Organization (WTO): global organization of 161 countries that deals with the rules of trade among nations – Essentially replaced GATT ( a 1948 agreement between countries to reduce or eliminate trade barriers) Copyright © 2021 Pearson Education Ltd. Association of Southeast Asian Nations (ASEAN) Association of Southeast Asian Nations (ASEAN): a trading alliance of 10 Southeast Asian nations Copyright © 2021 Pearson Education Ltd. The European Union European Union (EU): a union of 28 democratic European nations created as a unified economic and trade entity with the euro as a single common currency Copyright © 2021 Pearson Education Ltd. Exhibit 4.1 European Union Map Exhibit 4.1 shows the members of the European Union. Copyright © 2021 Pearson Education Ltd. North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA): an agreement among the Mexican, Canadian, and U.S. governments in which barriers to trade have been eliminated – Now renegotiated and called the USMCA Copyright © 2021 Pearson Education Ltd. The Case for Globalization The Win-Win Argument: The “every country wins” argument is based on the law of comparative advantage. Essentially says a ‘rising tide floats all boats.’ Globalization benefits all trading partners. Copyright © 2021 Pearson Education Ltd. The Case Against Globalization The Downside of Globalization: Critics of globalization maintain that jobs were leaving developed high labor cost nations and flowing to cheap labor nations. Cheap goods worldwide created wage stagnation for the middle class. Globalization and capitalism together have increased wealth inequality. Some groups are harmed by globalization. Copyright © 2021 Pearson Education Ltd. Different Types of International Organizations Multinational corporation (MNC) Multidomestic corporation Global company Copyright © 2021 Pearson Education Ltd. Exhibit 4.3 How Organizations Operate Globally Exhibit 4.3 shows the different approaches companies can use to operate globally. Copyright © 2021 Pearson Education Ltd. Strategies for Operating Globally Global sourcing: purchasing materials or labor from around the world wherever it is cheapest Exporting: making products domestically and selling them abroad Importing: acquiring products made abroad and selling them domestically Licensing: an organization gives another organization the right to make or sell its products using its technology or product specifications Franchising: an organization gives another organization the right to use its name and operating methods Copyright © 2021 Pearson Education Ltd. Strategies for Operating Globally Strategic Alliance: partnership between an organization and foreign company partner(s) in which both share resources and knowledge in developing new products or building production facilities Joint Venture: A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose Foreign Subsidiary: directly investing in a foreign country by setting up a separate and independent production facility or office Copyright © 2021 Pearson Education Ltd. Managing in a Global Environment What challenges will a manager face in a new country? Copyright © 2021 Pearson Education Ltd. Political/Legal Environment U.S. managers are accustomed to a stable legal and political system Managers must stay informed of the specific laws in countries where they do business Some countries have risky political climates Copyright © 2021 Pearson Education Ltd. Economic Environment Free Market Economy: an economic system in which resources are primarily owned and controlled by the private sector Planned Economy: an economic system in which economic decisions are planned by a central government Copyright © 2021 Pearson Education Ltd. Cultural Environment National Culture—the values and attitudes shared by individuals from a specific country that shape their behavior and beliefs about what is important. Copyright © 2021 Pearson Education Ltd. Exhibit 4.5 Hofstede’s Five Dimensions of National Culture Exhibit 4.5 shows Hofstede’s Five Dimensions of National Culture. Copyright © 2021 Pearson Education Ltd.