Quản trị kinh doanh - Chapter 4: Managing in a global environment

Managing in a Global EnvironmentChapter 41Importance of International BusinessIf you are not thinking international, you are not thinking business management2Global Environment and International ManagersDifficulties Operating in Borderless WorldChallengesEconomicLegal-politicalSocio-culturalMultinational CorporationsForeign Markets - EntranceChapter 4 TopicsManagers’ Challenge: Wal-Mart Managers3A Borderless WorldBusiness is becoming a unified, global fieldCompanies that think globally have a competitive edgeDomestic markets are saturated for many companiesConsumers can no longer tell from which country they are buying4Four Stages of GlobalizationDomestic stage: market potential is limited to the home country production and marketing facilities located at homeInternational stage: exports increase company usually adopts a multi-domestic approachMultinational stage: marketing and production facilities located in many countries more than 1/3 of its sales outside the home countryGlobal (or stateless) stage: making sales and acquiring resources in whatever country offers the best opportunities and lowest cost ownership, control, and top management tend to be dispersed54 Stages of Globalization1. Domestic2. International3. Multinational4. GlobalStrategic OrientationStage of DevelopmentCultural SensitivityManager AssumptionsDomestically OrientedExport- Oriented multi-domesticMultinationalGlobalGlobalInitial foreign involvementCompetitive positioningExplosion of international operationsOf little importance“One best way”Very important“Many good ways”Somewhat important“The least-cost way”Critically important“Many good ways”SOURCE: Based on Nancy J. Adler, International Dimensions of Organizational Behavior, 4th ed. (Cincinnati, Ohio: South-Western, 2002), 8-9.6Global (stateless) CorporationsNumber is increasingAwareness of national borders decreasingRising managers expected to know a 2nd or 3rd languageCorporate Example – Nestle (Swiss)CEO Peter Brabeck–Letmathe (Austrian)Half of general managers (non-Swiss)Strong faith in regional managers who are native to the region7The InternationalBusiness EnvironmentInternational management is management of business operations conducted in more than one countryFundamental tasks do not change Basic management functions are the same - domestic or internationalGreater difficulties and risks when performing on an international scale8International Environment FactorsOrganizationEconomicEconomic developmentInfrastructureResource and product marketsPer capita IncomeExchange ratesEconomic conditionsLegal-PoliticalPolitical riskGovernment takeoversTariffs, quotas, taxesTerrorism, political instabilityLaws, regulationsSocioculturalSocio values, beliefsLanguageReligion (objects, taboos, holidays)Kinship patternsFormal education, literaryTime orientation9Economic Environment FactorsEconomic developmentInfrastructureResource and product marketsExchange ratesInflationInterest ratesEconomic growth10Economic DevelopmentCountries categorized as “developing” or “developed”Criterion used to classify is per capita incomeDeveloping countries have low per capita incomesLDCs located in Asia, Africa, and South AmericaDeveloped are North America, Europe, & JapanDriving global growth in Asia, Eastern Europe, & Latin America11InfrastructureA country’s physical facilities that support economic activitiesAirports, highways, and railroadsEnergy-producing facilitiesCommunication facilities12Resource and Product MarketsWhen operating in another country...Managers must evaluate market demandTo develop plants, resource markets must be available – raw materials and laborCorporate Example – McDonald13Exchange RatesRate at which one country’s currency is exchanged for another country’sHas become a major concern for companies doing business internationallyChanges in the exchange rate can have major implications for profitability of international operations14The Legal-Political EnvironmentPolitical Risk– due to events or actions by host governments Loss of assetsLoss of earning powerLoss of managerial controlGovernment takeoversActs of violence15Political InstabilityEvents such as riots, revolutions, or government upheavals that affect the operations of an international company16Laws and RegulationsGovernment laws and regulations differ from country to countryMake doing business a true challenge for international firmsInternet has increased impact of foreign laws on U.S. companies – expands potential for doing business on global basis17Sociocultural EnvironmentCulture – shared knowledge, beliefs, values, common modes of behavior, and ways of thinking among members of a societyIntangiblePervasiveDifficult for outsider to learnManagers need to understand difference in social values to comprehend local cultures and deal with them effectively18Hofstede’s Value DimensionsResearch = national value systems influence organizational and employee working relationshipsPower distance (high = accept inequality)Uncertainty avoidance (uncomfortable with uncertainty)Individualism and collectivism (Individualism take care of themselves)Masculinity/femininity (preference for achievement/assertiveness; femininity for relationship)Long-term/short-term orientation = 5th dimensionEthical Dilemma: The Problem in Asia19Four Dimensions of National Value20GLOBE Value DimensionsAssertivenessFuture orientationUncertainty avoidanceGender differentiationPower distanceSocietal collectivismIndividual collectivismPerformance orientationHumane orientationGlobal Leadership and Organizational Behavior Effectiveness projectMore comprehensive view of cultural similarities and differences21International Cultural InfluencesOther Cultural Characteristics LanguageReligionAttitudesSocial OrganizationEducationLinguistic pluralism – several languages existEthnocentrism – regard own culture superior22International Trade AgreementsMost visible changes in legal-political factors grow out of international trade agreements:GATTWTOEUNAFTA23International Trade AlliancesGeneral Agreement on Tariffs and Trade (GATT)Signed by 23 nations in 1947 as a set of rules Ensured nondiscrimination, clear procedures, negotiation of disputes, and participation of lesser developed countries in international tradeToday, 147 member countries abide by the rulesPrimary tools WTO uses on tariff concessions, countries agree to limit level of tariffs on imports from other WTO membersMost favored nation clause24WTOGoal, is to guide and sometimes urge the nations of the world toward free trade and open marketsEncompasses GATT and all of its agreementsHas legal authority to arbitrate disputes on 400 trade issuesPartly responsible for backlash against global trade25European UnionFormed in 1957 to improve economic and social conditionsHas grown to 25-nation allianceInitiative Europe ’92 called for creation of open markets for Europe’s 340 million consumersBiggest expansion in 2004 – 10 new members from southern and eastern EuropeObservers feared EU would become a trade barrierEU’s monetary revolution, introduction of the Euro26Nations of The EU***********Joined in 200427North American Free Trade AgreementWent into effect on January 1, 1994Merged the United States, Canada, and Mexico with more that 421 million consumersBreaks down tariffs and trade restrictions on most agriculture and manufactured productsAugust 12, 1992 agreements in number of key areas include: agriculture, autos, transport, & intellectual propertyJanuary, 2004 -10th anniversary = success and failure28Strategies for EnteringInternational MarketsExportingHighHighLowLowOwnership of Foreign OperationsCost to Enter Foreign OperationsLicensingFranchisingJoint VentureAcquisitionGreenfieldVenture29Multinational Corporations (MNC)Receives >25% total sales revenues from operations outside parent company’s home countryManaged as integrated worldwide business systemControlled by single management authorityTop managers exercise global perspective30Managing in a Global EnvironmentManagers must be sensitive to cultural subtleties Personal challenges – culture shockManaging Cross-culturallyLeadingDecision makingMotivatingControlling Managers must be culturally flexible and easily adapt to new situationsExperiential Exercise: Rate your Global Management Potential31