Managing in global environment

Managing in a Global Environment

• Global Perspective• Understanding the Global Environment• Doing Business Globally• Managing in a Global Environment

Global Perspective

Monolingualism is one sign that a nation suffers from parochialism, which is viewing the world solely through one’s own eye and perspective.

Parochialism is a significant obstacle for managers working in a global business world. Its not unusual for Germans, Italians to speak three or four languages. May be that is the reason of their best management. As wide knowledge of languages is important for successful management.

Global Perspective

There are three types of global attitude…

1. Ethnocentric attitude

2. Polycentric attitude

3. Geocentric attitude

Global Perspective

Ethnocentric Polycentric Geocentric

Orientation Home country Host country World

Advantages • Simpler structure• More tightly controlled

• Extensive knowledge of foreign market• More support from host government• Committed local managers with high morale

• Forces understanding of global issues • Balanced local and global objectives

Draw backs • More ineffective management• Inflexibility• Social and political black lash

• Duplication of work• Reduced efficiency

• Difficult to achieve • managers must have local and global knowledge

Understanding the global environment

Managers in all sizes and types of organizations are faced with the opportunities and challenges of managing in a global environment, so it is important for a manager to understand the global environment.

Regional trading

1. The Europeans Union:

A union of 25 Europeans nations created as a unified economic and trade entity.


For example:

• Unilever PLC of the united kingdom is a powerful force in consumer products.

• Nokia of Finland is a dominant player in cell phones.


2. North American Free Trade agreement:

An agreement among the Mexican, Canadian and U.S government in which barriers to trade have been eliminated.

3. Association of South East Asian nation (ASEAN):

A trading alliance of 10 South East Asian nations.


The World Trade Organization

A global organization of 149 countries that deals with the rules of trade among nations.

The WTO was formed in 1995 and evolved from the General Agreement on Tariffs and Trade. Today WTO is the only global organization dealing with the rules of trade among nations.

Doing Business Globally Different types of national organizations

1. Multinational Corporations:

A broad team term that refers to any and all types of international companies that maintain operations.

2. Multidomestic Corporation:

An international company that decentralized management and other decisions to the local country.

3. Global Company:

An MNC that centralize management and other decision in the home country.

4. Transnational:

An MNC that eliminates artificial geographical barriers.

5. Born Global:

Businesses that choose to go global from inception.

Doing Business Globally

How organization go international?

When organization go internationally, they often use different approaches depending on whether they are just starting or whether they have been doing business internationally for a while.

Doing Business Globally

Minimal Investment:• Global sourcing

Medium Investment:• Exporting - Importing• Licensing• Franchising

Significant Investment:• Strategic alliance• Joint venture• Foreign subsidiary

Doing Business GloballyFor example:

Fast food giant KFC is like many big franchise firms opening more new outlets overseas. Along the way company is making appropriate changes in its menu offerings such as substituting juices and fruits for coke and fries.

Managing In a Global Environment

Any manager who finds himself in a foreign country faces a lot of new challenges. It is very difficult to manage an organization in a global environment.

Challenges

1. The legal political environment:

Managers in a global organization must stay informed of the specific laws in countries where they run business.


For example:

Many large businesses have postponed doing business in China because the government controls what organization do and how they do it. As Chinese consumers gain more power, however, that attitude is likely to change.


2. The Economical Environment:

The global managers must be aware of economic issues when doing business in other countries.

Basically there are two types of economic environment…

i. Market Economy:

An economic system in which resources are primarily owned and controlled by the private sector.

ii. Command Economy:

An economic system in which all economic decisions are planned by a central government.


3. Cultural Environment:

Every country has its own culture so it is very necessary to get knowledge about culture of that specific country.

• National Culture

The value and attribute shared by individuals from a specific country that shape their behavior and beliefs about what is important.