Place Slide Title Text Here JOHN R SCHERMERHORN

Place Slide Title Text Here JOHN R. SCHERMERHORN, JR. MANAGEMENT 12 th Edition Chapter 5 Global Management and Cultural Diversity © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -1 1 -1

Planning — Chapter Place Slide Ahead Title Text Here 5 Study Questions 1. What are the management challenges of globalization? 2. What are global businesses and what do they do? 3. What is culture and how does it impact global management? 4. How can we benefit from global management learning? © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Chapter 5 Learning Place Slide Title Text Here Dashboard 1. Management and Globalization 1. 2. 3. 4. Global management Why companies go global How companies go global Global business environments 2. Global Businesses 1. 2. 3. 4. Types of global businesses Pros and cons of global businesses Ethics challenges for global businesses Global business environments © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Chapter 5 Learning Place Slide Title Text Here Dashboard 3. Culture and Global Diversity 1. 2. 3. 4. Cultural intelligence Silent languages of culture Tight and loose cultures Values and national cultures 4. Global Management Learning 1. 2. Are management theories universal? Global learning goals © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization • Key concepts in the challenges of globalization: – Global economy – Globalization – Global management – World 3. 0 – Global manager © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization • Global economy – Resources, markets, and competition are worldwide in scope • Globalization – The process of growing interdependence among elements in the global economy • World 3. 0 – Nations cooperate while respecting different national characters and interests © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization • Global management – Managing in organizations with business interests in more than one country • Global manager – Is culturally aware and informed on international affairs © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -7

1: Management Place. Takeaway Slide Title Text Here and Globalization • International businesses – Conducting for-profit transactions of goods and services across national boundaries • Reasons why businesses go global: Profits Customers Suppliers Capital © 2013 John Wiley & Sons, Inc. All rights reserved. Labor Risk 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization • Market entry strategies – involve the sale of goods or services to foreign markets but do not require expensive investments © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -9

1: Management Place. Takeaway Slide Title Text Here and Globalization • Types of market entry strategies: – – – Global sourcing Exporting Importing Licensing agreement Franchising • Types of direct investment strategies: – Joint venture – Strategic alliance – Foreign subsidiary © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Place Slide Title Text Here Figure 5. 1 Common forms of global business—from market entry to direct investment strategies © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization Global sourcing • the process of purchasing materials or services around the world for local use Exporting • selling locally made products in foreign markets Importing • buying foreign-made products and selling them domestically Licensing agreement • one firm pays fee for rights to make or sell another company’s products Franchising • a fee is paid for rights to use another firm’s name and operating methods © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 1: Management and Globalization? Place Slide Title Text Here Insourcing refers to local job creation that results from foreign direct investment © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 1: Management and Globalization Place Slide Title Text Here Types of insourcing: Joint ventures Strategic alliances Foreign subsidiaries operates in a foreign country through coownership by foreign and local partners a partnership in which foreign and domestic firms share resources and knowledge for mutual gains local operation completely owned by a foreign firm © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 1: Management Place Slide Title Text Here and Globalization? Criteria for choosing a joint venture partner: • • Familiarity with your firm’s major business Strong local workforce Future expansion possibilities Values its customers Strong local market for partner’s own products Good profit potential Sound financial standing © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization Global business environments Legal and political systems Trade agreements and trade barriers Regional economic alliances © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization Legal and political systems – Differing laws and practices regarding • Business ownership • Foreign currency exchange • Protection of intellectual property rights – Counterfeit merchandise © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization Legal and political systems – Political risk • Potential loss in value of a foreign investment due to instability and political changes in the host country – Political risk analysis • Forecast political disruptions that threaten the value of a foreign investment © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization • Trade Agreements and Trade Barriers – World Trade Organization • • Most favored nation status Tariffs Nontariff barriers Protectionism © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

1: Management Place. Takeaway Slide Title Text Here and Globalization Regional Economic Alliances – NAFTA – North American Free Trade Agreement – EU – European Union – APEC – Asia Pacific Economic Cooperation – ASEAN – Association of Southeast Asian Nations – SADC – Southern Africa Development Community © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses • Types of global businesses: – Global corporation • MNE (multinational enterprise) or MNC (multinational corporation) with extensive business operations in more than one foreign country – Transnational corporation • A global corporation that operates worldwide on a borderless basis © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses • Mutual benefits for host country and global corporation or MNC: – Shared growth opportunities – Shared income opportunities – Shared learning opportunities – Shared development opportunities © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Place Slide Title Text Here Figure 5. 2 What should go right and what can go wrong in MNC-host country relationships © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses • Host country complaints about MNCs: – Excessive profits – Domination of local economy – Interference with local government – Hiring the best local talent – Limited technology transfer – Disrespect for local customs © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses • MNC complaints about host countries: – Profit limitations – Overpriced resources – Exploitative rules – Foreign exchange restrictions – Failure to uphold contracts © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses Ethical challenges for Global Businesses: • Corruption • Sweatshops • Child labor © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses • Ethical issues for Global Businesses: – Corruption – illegal practices that further one’s business interests – Foreign Corrupt Practices Act – makes it illegal for U. S. firms and their representatives to engage in corrupt practices overseas • Bribes to foreign officials • Excessive commissions • Non monetary gifts © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 2: Global Place Slide Title Text Here Businesses • Child labor and Sweatshops: – Child labor – full time employment of children for work otherwise done by adults – Sweatshops – employ workers at very low wages for long hours in poor working conditions © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Culture • The shared set of beliefs, values, and patterns of behavior common to a group of people Culture shock • Confusion and discomfort a person experiences in an unfamiliar culture Cultural intelligence • The ability to adapt and adjust to new cultures Ethnocentrism • Tendency to consider one’s own culture as superior to others © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Confusion Stages in adjusting to a new culture: Small victories The honeymoon Irritation and anger Reality © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Context Silent languages of culture • Low context • High context Space • Proxemics Time • Monochronic • Polychronic © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Context – Low context cultures - emphasize communication via spoken or written words • United States • Canada • Germany © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Context – High context cultures – rely on nonverbal and situational cues as well as on spoken or written words • Thailand • Malaysia © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Time – Monochronic cultures – people tend to do one thing at a time • United States, Canada, Germany – Polychronic cultures – time is used to accomplish many different things at once • Egypt, Saudi Arabia, Mexico © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Space – Proxemics – study of how people use space to communicate • In the U. S. people value “personal space” • Many Latin and Asian cultures expect much less personal space © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Tight and Loose Cultures – Cultural tightness-looseness • • Strength of norms that govern social behavior Tolerance for any deviance from norms Tight = Japan, Korea Loose = Brazil, Hungary © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 3: Culture and Global Diversity Place Slide Title Text Here Values and national cultures (Hofstede): Power distance Uncertainty avoidance Individualismcollectivism Masculinityfemininity © 2013 John Wiley & Sons, Inc. All rights reserved. Time orientation 5 -

Place Slide Title Text Here Figure 5. 3 How countries compare on Hofstede’s dimension of national culture © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 4: Global Management Learning Place Slide Title Text Here • Comparative management – How management systematically differs among countries and/or cultures • Global managers – Need to successfully apply management functions across international boundaries © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -

Takeaway 4: Global Management Learning Place Slide Title Text Here Global learning goals: – Not universal – Engage critical thinking – Look everywhere for new management ideas – Always consider culture! © 2013 John Wiley & Sons, Inc. All rights reserved. 5 -