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Managing in Global Environment

This document discusses key principles of managing in a global environment. It outlines the four stages of globalization that companies go through, from domestic to global, and how cultural sensitivity becomes increasingly important. Managing internationally requires understanding differences in legal, political, economic, and cultural environments across countries. Developing a global mindset allows managers to effectively lead diverse groups worldwide. Globalization presents both opportunities and challenges that managers must navigate.

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Arham Huda
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56 views21 pages

Managing in Global Environment

This document discusses key principles of managing in a global environment. It outlines the four stages of globalization that companies go through, from domestic to global, and how cultural sensitivity becomes increasingly important. Managing internationally requires understanding differences in legal, political, economic, and cultural environments across countries. Developing a global mindset allows managers to effectively lead diverse groups worldwide. Globalization presents both opportunities and challenges that managers must navigate.

Uploaded by

Arham Huda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Management Principles

Managing in a Global
Environment

By
Seema Kamran
Global Organizations
• Global Organizations

➢ Organizations that operate and compete not only domestically, but also
globally

• Why A Borderless World


➢ Business is becoming a unified, global field
➢ Companies that think globally have a competitive edge
➢ Domestic markets are saturated for many companies
➢ Consumers can no longer tell from which country they are buying
Globalization index in 2010
Globalization index in 2019
Four Stages of Globalization
Domestic stage:
market potential is limited to the home country
production and marketing facilities located at home
International stage:
exports increase
company usually adopts a multi-domestic approach
Multinational stage:
marketing and production facilities located in many
countries more than 1/3 of its sales outside the home
country
Global (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
dispersed
4 Stages of Globalization
1. Domestic 2. International 3. Multinational 4. Global

Strategic Orientation Domestically Export- Oriented Multinational Global


Oriented multi-domestic

Stage of Development Initial foreign Competitive Explosion of Global


involvement positioning international
operations

Cultural Sensitivity Of little Very important Somewhat Critically


importance important important

Manager Assumptions “One best “Many good “The least-cost “Many good
way” ways” way” ways”

SOURCE: Based on Nancy J. Adler, International Dimensions of Organizational Behavior, 4th


ed. (Cincinnati, Ohio: South-Western, 2002), 8-9.
Getting started Internationally

• Exporting – transfers products for sale in foreign


countries
• Global Outsourcing – transferring the labor of
specific tasks to low cost countries
• Licensing – allowing an operation in another
country to produce and sale company products
• Franchising – providing a foreign organization
with package of materials and services
• Direct Investing - a production facility in another
country
Getting Started Internationally
International Management
• managers will experience greater difficulties and risks when
performing management functions internationally.
The Global Marketplace
• Challenges
➢ Coping with the unexpected appearance of new
competitors
➢ Acknowledging cultural, political, and economic
differences
➢ Dealing with increased uncertainty, fear, and worry
➢ Adapting to changes in the global environment
➢ Economies of scale
➢ Brand loyalty
➢ parochialism
What’s Your Global Perspective?

• Parochialism
➢ Is viewing the world exclusively through one’s own
eyes and perspectives.
➢ Is a significant problem for managers working in a
global business world.
➢ Is falling into the trap of ignoring others’ values and
customs and strictly applying an attitude of “ours is
better than theirs” to foreign cultures.
Adopting a Global Perspective
• Ethnocentric Attitude
➢ The parochalistic 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.
Managing in A Global
Environment
• The Legal and political Environment
➢ Stability or instability of legal and political systems
❖ Legal procedures are established and followed
❖ Fair and honest elections held on a regular basis
➢ Differences in the laws of various nations
❖ Effects on business activities
❖ Effects on delivery of products and services
Concept connection….
The Economic Environment
• Economic Systems
➢ Free market economy
❖ An economy in which resources are primarily owned and controlled by the private
sector.
➢ Planned economy
❖ An economy in which all economic decisions are planned by a central government.
• Monetary and Financial Factors
➢ Currency exchange rates
➢ Inflation rates
➢ Diverse tax policies
The Cultural Environment
• 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.
Hofstede’s Cultural Dimensions
The International Business Environment
Developing a Global Mindset
• Global mindset can be defined as the ability of
managers to appreciate and influence individuals,
groups, organizations, and systems that represent
different social, cultural, political, institutional,
intellectual, and psychological characteristics
Regional Trading Agreements
• U.S.-Central America Free Trade Agreement (CAFTA)
• Free Trade Area of the Americas
• Association of Southeast Asian Nations (ASEAN)
➢ Trading alliance of 10 Southeast Asian nations
• African Union
• South Asian Association for Regional Cooperation
(SARRC)
Global Management in Today’s
World
• Challenges
➢ Openness associated with globalization
➢ Significant cultural differences (e.g., Americanization)
➢ Adjusting leadership styles and management
approaches
• Risks
➢ Loss of investments in unstable countries
➢ Increased terrorism
➢ Economic interdependence

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