Economy and 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?

international business challenges of globalization?
Key concepts in the challenges

of globalization:
Global economy
Globalization
International management
Global manager

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

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

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

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

business—from market entry to direct investment strategies.

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

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.

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.

corporations and what do they do?
A multinational corporation (MNC) is

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

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

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

and what can go wrong in MNC-host country relationships.

corporations and what do they do?
MNC complaints about host countries:
Profit

limitations
Overpriced resources
Exploitative rules
Foreign exchange restrictions
Failure to uphold contracts

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.

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.

and how does it relate to global diversity?
Stages in adjusting

to a new culture:
Confusion
Small victories
The honeymoon
Irritation and anger
Reality

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

and how does it relate to global diversity?
Values and national

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

Hofstede’s dimension of national 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

and how does it relate to global diversity?
Project GLOBE’s nine

dimensions continued

Institutional collectivism
In-group collectivism
Assertiveness
Performance orientation
Humane orientation

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.

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.

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.

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.

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.