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Chapter 3 - Global Management

This document discusses global perspectives and managing organizations globally. It describes parochial, ethnocentric, polycentric, and geocentric attitudes. It also outlines regional trading alliances like the EU, NAFTA, and ASEAN. The document discusses the World Trade Organization and different types of global organizations. It explains how organizations go global through sourcing, exporting, importing, licensing, franchising, strategic alliances, and foreign subsidiaries. Finally, it discusses managing in a global environment and the political, economic, and cultural factors involved.

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Ayesha Rahman
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306 views19 pages

Chapter 3 - Global Management

This document discusses global perspectives and managing organizations globally. It describes parochial, ethnocentric, polycentric, and geocentric attitudes. It also outlines regional trading alliances like the EU, NAFTA, and ASEAN. The document discusses the World Trade Organization and different types of global organizations. It explains how organizations go global through sourcing, exporting, importing, licensing, franchising, strategic alliances, and foreign subsidiaries. Finally, it discusses managing in a global environment and the political, economic, and cultural factors involved.

Uploaded by

Ayesha Rahman
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 PPTX, PDF, TXT or read online on Scribd
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GLOBAL

MANAGEMENT
Chapter 3
WHAT’S YOUR GLOBAL PERSPECTIVE?

 Parochialism
 Is viewing the world exclusively through
one’s own eyes and perspectives.
 Is not recognizing that others have a
different ways of living and working.
 Is a significant problem for managers working
in a global business world.
 Is falling into the trap of ignoring others’
value and customs and strictly applying an
attitude of “ours is better than theirs” to
foreign cultures.
WHAT’S YOUR GLOBAL
PERSPECTIVE?
 Ethnocentric Attitude
 Belief
that home country has the best work
approaches and practices
 Polycentric Attitude
 Viewthat managers in host country know the
best approaches and practices
 Geocentric Attitude
A world-oriented view that focuses on using the
best approaches and people from around the
globe

3
REGIONAL TRADING ALLIANCES
 The European Union (EU)
A unified economic and trade entity
 Belgium, Denmark, France, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, the
United Kingdom, Germany, Austria, Finland, and
Sweden
 Economic and monetary union (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

4
REGIONAL TRADING ALLIANCES

 U.S.- Central America Free Trade Agreement


(CAFTA)
 Free Trade Area of the Americas
 Southern Cone Common Market (Mercosur)
 Association of Southeast Asian Nations
(ASEAN)
 African Union
 South Asian Association for Regional
Cooperation (SAARC)
ASEAN MEMBERS
SAARC MEMBERS
THE WORLD TRADE
ORGANIZATION (WTO)
 Evolved from the General Agreement on
Tariffs and Trade (GATT) in 1995
 Functions as the only global organization
dealing with the rules of trade among nations
 Has 147 member nations
 Monitors and promotes world trade

9
DIFFERENT TYPES OF GLOBAL
ORGANIZATIONS
 Multinational Corporation (MNC)
◦ A firm that maintains operations in multiple
countries but manages from the home
country
 Multidomestic Corporation (TNC)
◦ Is an MNC that decentralizes management
and other decisions to the local country.
 Global Company

Is an MNC that centralizes its management


and other decisions in the home country.

10
DIFFERENT TYPES OF GLOBAL
ORGANIZATIONS
Transnational or Borderless Organization
 Is an MNC that has eliminated structural
divisions that impose artificial geographic
barriers and is organized along business lines
that reflect a geocentric attitude
HOW ORGANIZATIONS GO
GLOBAL
 Global sourcing
 Purchasing
materials or labor from around the
world where it is cheapest
 Exporting
 Makingproducts at home and selling them
overseas
 Importing
 Selling products at home that are made overseas

13
HOW ORGANIZATIONS GO
GLOBAL (CONT’D)
 Licensing
 Giving another organization the right to make or
sell its products using its technology, or product
specifications
 Licensing (manufacturing organizations)
 Franchising
 Giving
another organization the right to use
make its name and operating methods
 Franchising (service organizations)

14
HOW ORGANIZATIONS GO
GLOBAL (CONT’D)
 Strategic Alliance
 Partnershipbetween an 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
 Directly investing in a foreign country by setting up
a separate and independent production facility or
office
15
MANAGING IN A GLOBAL
ENVIRONMENT
 The Political/Legal 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

16
MANAGING IN A GLOBAL
ENVIRONMENT (CONT’D)
 The Economic Environment
 Economic Systems
 Market economy
 Aneconomy in which resources are primarily owned and
controlled by the private sector
 Planned economy
 Aneconomy in which all economic decisions are planned
by a central government
 Monetary and Financial Factors
 Currency exchange rates
 Inflation rates
 Diverse tax policies

17
MANAGING IN A GLOBAL
ENVIRONMENT (CONT’D)
 The Cultural Environment
 National Culture
 Values and attitudes shared by individuals from a
specific country that shape their behaviour and their
beliefs about what is important
 May have more influence on an organization than the
organization culture

18
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 investment in unstable countries
 Increased threat of terrorism
 Economic interdependence of trading
 Dealing with increased uncertainty, fear, and anxiety

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