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Managing in a Global
Environment

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What’s Your Global Perspective?

Globalization: the process of developing influence or
operations in other countries
Nationalism: patriotic ideals and policies that glorify a
country’s values
Parochialism: viewing the world solely through your own
perspectives, leading to an inability to recognize differences
between people

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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

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Exhibit 4.2 Nationalism vs. Globalism

Pendulum

Exhibit 4.2 shows the timeline and general shifts in attitude between globalism and
nationalism.

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The Case for Globalization

• The Win-Win Argument: The “every country wins”
argument is based on the law of comparative advantage.
• Essentially says a ‘rising tide floats all boats.’
• Globalization benefits all trading partners.

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The Case Against Globalization

• The Downside of Globalization: Critics of globalization
maintain that jobs were leaving developed high labor cost
nations and flowing to cheap labor nations.
• Cheap goods worldwide created wage stagnation for the
middle class.
• Globalization and capitalism together have increased
wealth inequality.
• Some groups are harmed by globalization.

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Globalization Today and Managerial

Implications

• Globalization will continue despite its critics because:

– The infrastructure is already in place for global trade.
– The evidence shows globalization is NOT the cause of
unemployment—technology is the culprit.
– Managers need to develop requisite skills to be a
global manager.

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Different Types of International

Organizations

• Multinational corporation (MNC)

• Multidomestic corporation
• Global company
• Transnational or borderless organization

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How Organizations Go
International

• Global sourcing: purchasing materials or labor from

around the world wherever it is cheapest

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Exhibit 4.3 How Organizations Go

Global

Exhibit 4.3 shows the different approaches companies can use to go global.

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Going Global: Exporting and

Importing
• Exporting: making products domestically and selling them
abroad
• Importing: acquiring products made abroad and selling
them domestically

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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

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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

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Going Global: Foreign Subsidiary

• Foreign Subsidiary: directly investing in a foreign country
by setting up a separate and independent production
facility or office

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Managing in a Global Environment

• What challenges will a manager face in a new country?

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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

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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

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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.

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Exhibit 4.4 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.
Americans 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 value personal space. They keep a distance when speaking and are
uncomfortable when people are too close.
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.

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What Are Kenyans Like?

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Exhibit 4.5 Hofstede’s Five Dimensions of National

Culture

Exhibit 4.5 shows Hofstede’s Five Dimensions of National Culture.

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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

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Applying Cultural Guidelines

• How do we apply this information?
• At a simplistic level it means, “When in Rome, do as the
Romans do”
• However, Hofstede and the GLO BE studies will help you
alert managers to potential problems that might emerge
due to cultural differences

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Review Learning Objective 4.1 (1 of 2)

• Define globalization, nationalism, and parochialism;
and contrast ethnocentric, polycentric, and geocentric
attitudes.
– Globalization—a process by which organizations
develop influence or operations in other countries.
– Nationalism—patriotic ideals and policies that glorify a
country’s values.
– Parochialism—viewing the world solely through your
own eyes and perspectives.

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Review Learning Objective 4.1 (2 of 2)

– Ethnocentric attitude—a parochial belief that the best
work approaches and practices are those of the home
country.
– Polycentric attitude—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.

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Review Learning Objective 4.2 (1 of 2)

• Describe the history of globalization.
– The European Union consists of 28 democratic
countries.
– NAFTA helps Canada, Mexico, and the United States
strengthen their global economic power. Appears it will
be replaced by US MCA.
– ASEAN is a trading alliance of 10 Southeast Asian
nations.
– World Trade Organization (W TO) monitors and
promotes trade relationships.

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Review Learning Objective 4.2 (2 of 2)

– The International Monetary Fund (I MF) and the World
Bank Group provide monetary support.
– The Organization for Economic Cooperation and
Development assists its member countries with
financial support.
– Pendulum is swinging back toward nationalism.
– Trump’s election on “America First” platform highlights
the change.
– Britain votes to exit the EU (Brexit).
– TPP abandoned.
– NAFTA renegotiated.

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Review Learning Objective 4.3

• Summarize the case for and against globalization.
• FOR Globalization: Based on the law of comparative
advantage that states nations are better off focusing
production on goods they can produce with the lowest
opportunity cost and then engage in trade to get other
goods. All nations benefit when this happens.
• AGAINST Globalization: Globalization is responsible for
wage stagnation in developed nations since low-wage
countries now produce most labor-intensive goods. It also
increases income and wealth inequality.

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Review Learning Objective 4.4

• Explain the different types of international
organizations.
– A multinational corporation—an international company
that maintains operations in multiple countries.
– A multidomestic organization—an MNC that
decentralizes management and other decisions to the
local country.
– A global organization—an MNC that centralizes
management and other decisions in the home country.
– A transnational organization—an MNC that has
eliminated artificial geographical barriers.

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Review Learning Objective 4.5 (1 of 2)

Describe the structures and techniques organizations
use as they go international.
– Global sourcing: purchasing materials or labor from
around the world wherever it is cheapest.
– Exporting: making products domestically and selling
them abroad.
– Importing: acquiring products made abroad and selling
them domestically.
– Licensing: gives that organization the right to use the
company’s brand name, technology, or product
specifications.

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Review Learning Objective 4.5 (2 of 2)

– Franchising: use another company’s name and
operating methods.
– Global strategic alliance: partnership between an
organization and foreign company partners
– Joint venture: a strategic alliance in which the partners
agree to form a separate, independent organization for
some business purpose
– Foreign subsidiary: direct investment in a foreign
country that a company creates by establishing a
separate and independent facility or office

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Review Learning Objective 4.6 (1 of 2)

• Explain the relevance of the political/legal, economic,
and cultural environments to global business.
– The laws and political stability of a country are issues
in the global political/legal environment with which
managers must be familiar
– Managers must be aware of a country’s economic
issues such as currency exchange rates, inflation
rates, and tax policies.

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Review Learning Objective 4.6 (2 of 2)

– Geert Hofstede identified five dimensions for assessing
a country’s culture: individualism-collectivism, power
distance, uncertainty avoidance, achievement-
nurturing, and long-term/short-term orientation.
– The GLOBE studies identified nine dimensions for
assessing country cultures.

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