Explain the role of the external environment and
diversity management in effective management of
multicultural organizations.
Source: Management, by Stephen P. Robbins, Mary Coulter, (2018)
https://lms.ectmoodle.ae
Bachelor of Business
Administration
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Management
Fourteenth Edition, Global Edition
Chapter 3
Global Management
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Learning Objectives
3.1 Contrast ethnocentric, polycentric, and geocentric
attitudes toward global business.
Develop your skill at collaborating in cross-cultural
settings.
3.2 Discuss the importance of regional trading alliances and
global trade mechanisms.
3.3 Describe the structures and techniques organizations
use as they go international.
3.4 Explain the relevance of the political/legal, economic,
and cultural environments to global business.
Know how to be culturally aware.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
What’s Your Global Perspective?
Parochialism: viewing the world solely
through your own perspectives, leading to an
inability to recognize differences between
people
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
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 © 2018 Pearson Education, Ltd. All Rights Reserved
Regional Trading Alliances
• Global competition and the global economy are
shaped by regional trading agreements, including:
– European Union (EU)
– North American Free Trade Agreement
(NAFTA)
– Association of Southeast Asian Nations
(ASEAN)
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
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 © 2018 Pearson Education, Ltd. All Rights Reserved
Exhibit 3-1
European Union Map
Exhibit 4-1 shows the members of the European Union.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
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
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Association of Southeast Asian Nations
(ASEAN)
• Association of Southeast Asian Nations
(ASEAN): a trading alliance of 10 Southeast Asian
nations
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Other Trade Alliances
• African Union (AU)
• East African Community (EAC)
• South Asian Association for Regional Cooperation
(SAARC)
• Trans-Pacific Partnership (TPP)
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Exhibit 3-3
TPP Map
Exhibit 4-3 shows the current members of TPP and countries indicating a desire to join.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Global Trade Mechanisms
• World Trade Organization (WTO)
• International Monetary Fund (IMF)
• World Bank Group
• Organization for Economic Cooperation and
Development (OECD)
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
World Trade Organization
• World Trade Organization (WTO): global
organization of 161 countries that deals with the
rules of trade among nations
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
International Monetary Fund and World
Bank Group
• International Monetary Fund (IMF): An
organization of 188 countries that promotes
international monetary cooperation and provides
advice, loans, and technical assistance
• World Bank Group: a group of very closely
associated institutions that provides financial and
technical assistance to developing countries
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Organization for Economic Cooperation
and Development
• Organization for Economic Cooperation and
Development (OECD): an international economic
organization that helps its 34 member countries
achieve sustainable economic growth and
employment
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
How Organizations Go International (1 of 2)
• Global sourcing: purchasing materials or labor
from around the world wherever it is cheapest
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
How Organizations Go International (2 of 2)
• Multinational corporation (MNC)
• Multidomestic corporation (IMF)
• Global company
• Transnational or borderless organization
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Exhibit 3-4
How Organizations Go Global
Exhibit 3-4 shows the different approaches companies can use to go global.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Going Global: Exporting and Importing
• Exporting: making products domestically and
selling them abroad
• Importing: acquiring products made abroad and
selling them domestically
• usually entail minimal investment and risk, which
is why many small businesses often use these
approaches to doing business globally.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Going Global: Licensing and Franchising
• 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
• The only difference is that licensing is primarily
used by manufacturing organizations that make or
sell another company’s products and franchising
is primarily used by service organizations that
want to use another company’s name and
operating methods.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Going Global: Strategic Alliances and Joint
Ventures
• 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
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Going Global: Foreign Subsidiary
• Foreign Subsidiary: directly investing in a foreign
country by setting up a separate and independent
production facility or office
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Managing in a Global Environment
• What challenges will a manager face in a new
country?
• Assume for a moment that you’re a manager
going to work for a branch of a global organization
in a foreign country. You know that your
environment will differ from the one at home, but
how? What should you look for?
• Although our discussion is presented through the
eyes of a U.S. manager, this framework could be
used by any manager, regardless of national
origin, who manages in a foreign environment.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
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 © 2018 Pearson Education, Ltd. All Rights Reserved
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 © 2018 Pearson Education, Ltd. All Rights Reserved
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 © 2018 Pearson Education, Ltd. All Rights Reserved
Exhibit 3-5
What Are Americans Like?
Characteristic
Americans are very informal. They tend to treat people alike even when great differences in age or social
standing are evident.
Americans are direct. They don’t talk around things. To some foreigners, this may appear as abrupt or
even rude behavior.
American are competitive. Some foreigners may find Americans assertive or overbearing.
Americans are achievers. They like to keep score, whether at work or at play. They emphasize
accomplishments.
Americans are independent and individualistic. They place a high value on freedom and believe that
individuals can shape and control their own destiny.
Americans are questioners. They ask a lot of questions, even of someone they have just met. Many may
seem pointless (“How ya’ doin’?) or personal (What kind of work do you do?”)
Americans dislike silence. They would rather talk about the weather than deal with silence in a
conversation.
Americans value punctuality. They keep appointment calendars and live according to schedules and
clocks.
Americans value cleanliness. They often seem obsessed with bathing, eliminating body odors, and
wearing clean clothes.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Exhibit 3-6
Hofstede’s Five Dimensions of National Culture
Exhibit 3-6 shows Hofstede’s Five Dimensions of National Culture.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Global Leadership and Organizational
Behavior Effectiveness (GLOBE)
• Power distance
• Uncertainty avoidance
• Assertiveness
• Humane orientation
• Future orientation
• Institutional collectivism
• Gender differentiation
• In-group collectivism
• Performance orientation
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Global Management in Today’s World (1 of 2)
• The Challenge of Openness
– Increased threat of terrorism
– Economic interdependence of trading countries
– Intense fundamental cultural differences
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Global Management in Today’s World (2 of 2)
• Cultural Intelligence: cultural awareness and
sensitivity skills
• Global Mind-Set: attributes that allow a leader to
be effective in cross-cultural environments
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved
Exhibit 3-7
A Global Mind-Set
Intellectual
capital:
Knowledge of international business
and the capacity to understand how
business works on a global scale
Psychological
capital:
Openness to new ideas and
experiences
Social capital: Ability to form connections and build
trusting relationships with people who
are different from you
The post UNIT 3: Environment and Organizational Culture appeared first on My Assignment Online.