PowerPoint Presentation

to Accompany
Management, 9/e
John R. Schermerhorn, Jr.

Chapter 5:
Global Dimensions of Management

Prepared by: Jim LoPresti

University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
 Planning Ahead —
Chapter 5 Study Questions

What are the international business

challenges of globalization?

What are multinational corporations
and what do they do?

What is culture and how does it relate
to global diversity?

How do management practices
transfer across cultures?

Management 9/e - Chapter 5 2

Study Question 1: What are the international business
challenges of globalization?

Key concepts in the challenges of

globalization:
 Global economy
 Globalization
 International management
 Global manager

Management 9/e - Chapter 5 3

Study Question 1: What are the international business
challenges of globalization?

 Global economy
 Resource supplies, product markets,
and business competition are
worldwide, rather than local
 Globalization
 The process of growing
interdependence of these components
in the global economy

Management 9/e - Chapter 5 4

Study Question 1: What are the international business
challenges of globalization?

 International management
 Management in organizations with business
interests in more than one country
 Global manager
 Informed about international developments
 Transnational in outlook
 Competent in working with multicultural people
 Aware of regional developments in a changing
world

Management 9/e - Chapter 5 5

Study Question 1: What are the international business
challenges of globalization?

 International businesses
 Conduct for-profit transactions of goods and
services across national boundaries
 Reasons why businesses go international:
 Profits
 Customers
 Suppliers
 Capital
 Labor

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Study Question 1 What are the international business
challenges of globalization?

Market entry strategies involve the sale of

goods or services to foreign markets but
do not require expensive investments.

Types of market entry strategies:
 Global sourcing
 Exporting
 Importing
 Licensing agreement
 Franchising

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Figure 5.1 Common forms of international business—from
market entry to direct investment strategies.

Management 9/e - Chapter 5 8

Study Question 1 What are the international business
challenges of globalization?

Direct investment strategies require

major capital commitments but
create rights of ownership and
control over foreign operations.

Types of direct investment
strategies:
 Joint ventures
 Foreign subsidiaries

Management 9/e - Chapter 5 9

Study Question 1 What are the international business
challenges of globalization?

Criteria for choosing a joint venture

partner:
 Familiarity with your firm’s major business.
 Strong local workforce.
 Future expansion possibilities.
 Strong local market for partner’s own
products.
 Good profit potential.
 Sound financial standing.

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Study Question 1 What are the international business
challenges of globalization?

Complications in the global business

environment:
 Environment is complex, dynamic, and highly
competitive.
 Global business executives must deal with
differences in the environment of business in
different countries.
 World Trade Organization resolves trade and
tariff disputes among countries.
 Protectionism can complicate global trading
relationships.
Management 9/e - Chapter 5 11
Study Question 2: What are multinational
corporations and what do they do?

A multinational corporation (MNC) is a

business with extensive international
operations in more than one foreign
country.

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Study Question 2: What are multinational
corporations and what do they do?

Mutual benefits for host country and

MNC:
 Shared growth opportunities

 Shared income opportunities

 Shared learning opportunities

 Shared development opportunities

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Study Question 2: What are multinational
corporations and what do they do?

Host country complaints about MNCs:

 Excessive profits
 Domination of local economy
 Interference with local government
 Hiring the best local talent
 Limited technology transfer
 Disrespect for local customs

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Figure 5.2 What should go right and what can go
wrong in MNC-host country relationships.

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 Study Question 2: What are multinational
corporations and what do they do?

MNC complaints about host countries:

 Profit limitations

 Overpriced resources

 Exploitative rules

 Foreign exchange restrictions

 Failure to uphold contracts

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 Study Question 2: What are multinational
corporations and what do they do?

Ethical issues for MNCs:

 Corruption — illegal practices that further one’s
business interests.
 Sweatshops — employing workers at low wages
for long hours and in poor working conditions.
 Child labor — full-time employment of children for
work otherwise done by adults.
 Sustainable development — meeting current
needs without compromising future needs.

Management 9/e - Chapter 5 17

Study Question 3: What is culture and how does it
relate to global diversity?

Culture
 The shared set of beliefs, values, and patterns
of behavior common to a group of people.

Culture shock
 Confusion and discomfort a person experiences
in an unfamiliar culture.

Cultural intelligence
 The ability to adapt and adjust to new cultures

Ethnocentrism
 Tendency to consider one’s own culture as
superior to others.

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Study Question 3: What is culture and how does it
relate to global diversity?

Stages in adjusting to a new

culture:
 Confusion
 Small victories
 The honeymoon
 Irritation and anger
 Reality

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Study Question 3: What is culture and how does it
relate to global diversity?

Popular dimensions of culture:

 Language
 Low-context cultures and high-context
cultures
 Interpersonal space
 Time orientation
 Monochronic cultures and polychronic
cultures
 Religion
 Contracts and agreements
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Study Question 3: What is culture and how does it
relate to global diversity?

Values and national cultures

(Hofstede):
 Power distance
 Uncertainty avoidance
 Individualism-collectivism
 Masculinity-femininity
 Time orientation

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Figure 5.3 How countries compare on Hofstede’s
dimension of national culture.

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Study Question 3: What is culture and how does it
relate to global diversity?

Project GLOBE (Global Leadership

and Organizational Behavior
Effectiveness)
 Researches the leadership,
organizational practices, and diversity
among world cultures.
 Power distance
 Uncertainty avoidance

 Gender egalitarianism

 Future orientation

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Study Question 3: What is culture and how does it
relate to global diversity?

 Project GLOBE’s nine dimensions

continued

 Institutionalcollectivism
 In-group collectivism

 Assertiveness

 Performance orientation

 Humane orientation

Management 9/e - Chapter 5 24

 Figure 5.4 Nine cultural dimensions used by Project
GLOBE researchers.

A large team of international researchers collaborated in Project GLOBE to examine societal cultures using the nine cultural dimensions
shown in the figure. When results from extensive empirical studies were analyzed for 62 countries, they were found to fall into ten culture
clusters. Countries within a cluster share many societal cultural practices; countries tend to differ significantly across clusters in their cultural
practices.
Management 9/e - Chapter 5 25
Study Question 3: What is culture and how does it
relate to global diversity?

Understanding cultural differences

(Trompenaars):
 Relationships with people:
 Universalism versus particularism

 Individualism versus collectivism

 Neutral versus affective

 Specific versus diffuse

 Achievement versus prescription

 Attitudes toward time — sequential and

synchronic views.
 Attitudes toward environment — inner-directed
and outer-directed cultures.

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Study Question 4: How do management practices
transfer across cultures?

Comparative management
 How management systematically
differs among countries and/or
cultures.

Global managers
 Need to successfully apply
management functions across
international boundaries.
Management 9/e - Chapter 5 27
Study Question 4: How do management practices
transfer across cultures?

Are management theories universal?

 U.S. management theories may be
ethnocentric.
 Participation and individual performance
are not emphasized as much in other
cultures.

 Not all Japanese management practices

can be applied successfully abroad.

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Study Question 4: How do management practices
transfer across cultures?

Global organizational learning:

 Companies can and should learn from each
other.
 Readiness for global organizational learning
varies based on managerial attitudes.
 Ethnocentric attitudes
 Polycentric attitudes
 Geocentric attitudes
 Be alert, open, inquiring, but always cautious.

Management 9/e - Chapter 5 29

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