Chapter 4

1
Chapter 4 Managing in a Global Environment

• Three global perspectives
• Regional trading alliances
• Types of global organizations
• How organizations go global
• Exporting, importing, licensing, franchising
• Strategic alliances, joint ventures, foreign
  subsidiaries
• GLOBE framework for assessing cultures
• Challenges of doing business in global world

2
Quiz Who Owns What?

• Ben and Gerrys ice Cream is owned by a company
  based in
• Mexico, Saudi Arabia, UK, or US?
• The Bic Pen company is based in
• Japan, UK, US, or France?
• Skippy peanut butter is a product of a company
  based in
• US, Canada, Veneduela, UK?
• The parent company of Braun electric shavers is
  located in
• Switzerland, Germany, US, or Japan?
• PowerBar nutrition energy bars are products of a
  company based in
• Brazil, Switzerland, US, or Germany?
• The company that markets Lipton tea is based in
• China, UK, Japan, US?
• Dr. Pepper and 7-up are products of a company
  based in
• US, Japan, Canada, UK?

3
Selected Companies Deriving 50 or More of
Revenues from Non-U.S. Operations (in 1997)
Table 4-1
4
Cross-Cultural Blunders
5
Examples of Regional Trading Agreements

• The European Union (EU)
• Belgium, Denmark, France, Greece, Ireland, Italy,
  Luxembourg, the Netherlands, Portugal, Spain, the
  United Kingdom, Germany, Austria, Finland, and
  Sweden
• Currency the Euro
• North American Free Trade Agreement (NAFTA)
• Eliminated barriers to free trade (tariffs,
  import licensing requirements, and customs user
  fees)
• United States, Canada, and Mexico
• Association of Southeast Asian Nations (ASEAN)
• Trading alliance of 10 Southeast Asian nations

6
European Union Countries
Exhibit 4.3
7
ASEAN Members
Source Based on J. McClenahen and T. Clark,
ASEAN at Work, IW. May 19, 1997, p. 42.
Exhibit 4.4
8
Adopting a Global Perspective

• Ethnocentric Attitude
• The parochialistic belief that the best work
  approaches and practices are those of the home
  country.
• Polycentric Attitude
• The view that the managers in the host country
  know the best work approaches and practices for
  running their business.
• Geocentric Attitude
• A world-oriented view that focuses on using the
  best approaches and people from around the globe.

9
Different Types of Global Organizations

• Multinational Corporation (MNC)
• A firm which maintains operations in multiple
  countries but manages the operations from a base
  in the home country.
• Transnational Corporation (TNC)
• A firm that maintains operations in several
  countries but decentralizes management to the
  local country.
• Borderless Organization
• A firm that has eliminated structural divisions
  that impose artificial geographic barriers and is
  organized along business lines.

10
Nestles a Transnational Corporation
11
How Organizations Go Global
Exhibit 4.5
12
Other Forms of Globalization

• Strategic Alliances
• Partnerships between and organization and a
  foreign company in which both share resources and
  knowledge in developing new products or building
  new 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
• Wholly independent organization separate and
  independent

13
Managing in a Global Environment Difficult
Because

• Different legal environments
• Different economic systems
• Different monetary and financial factors
• Different cultures! (next slide)

14
National Cultures are Very Strong

• National Culture
• Is the values and attitudes shared by individuals
  from a specific country that shape their behavior
  and their beliefs about what is important.
• May have more influence on an organization than
  the organization culture.

15
The GLOBE (Global Leadership and Organizational
Behavior Effectiveness) Framework for Assessing
Cultures

• Assertiveness
• Future orientation
• Gender differentiation
• Uncertainty avoidance
• Power distance

• Individualism/collectivism
• In-group collectivism
• Performance orientation
• Humane orientation

16
What Are Americans Like?
Americans are very informal. Americans are
direct. Americans are competitive. Americans are
achievers. Americans are independent and
individualistic. Americans are questioners. Americ
ans dislike silence. Americans value
punctuality. Americans value cleanliness.
Sources Based on M. Ernest (ed.), Predeparture
Orientation Handbook For Foreign Students and
Scholars Planning to Study in the United States
(Washington, DC U.S. Information Agency, Bureau
of Cultural Affairs, 1984), pp. 10305 A.
Bennett, American Culture Is Often a Puzzle for
Foreign Managers in the U.S., Wall Street
Journal, February 12, 1986, p. 29 Dont Think
Our Ways the Only Way, The Pryor Report,
February 1988, p. 9 and B.J. Wattenberg, The
Attitudes behind American Exceptionalism, U.S.
News World Report, August 7, 1989, p. 25.
Exhibit 4.6
17
Video - Nidek

• How did Nidek go global?
• Ethnocentric, polycentric, or geocentric
  attitude?
• What evidence of
• Differences between cultures
• Hybrids culture