CH03_MGMT

8/21/2019 CH03_MGMT

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Managing in the

Global Arena

Chapter

3

Course Instructor: Saba Gulzar

Principles of

Management

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Globalization Expansion of business across the geographical

boundaries.

Globalization describes a process by which

regional economies, societies, and cultures have

become integrated through a global network of

communication, transportation, and trade.

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The Global Marketplace Opportunities and Challenges

Coping with the sudden appearance of new

competitors

Acknowledging cultural, political, and economic

differences

ealing with increased uncertainty

Adapting to changes in the global environment

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Adopting a Global Perspective

thnocentric Attitude !he belief that the best work approaches and practices are

those of the home country.

Pol!centric Attitude !he 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.

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ifferent !ypes of "nternational

#rgani$ations

Multinational Corporation "M#C$

Maintains operations in multiple countries. %&ony, 'ike, Addidas etc(

Multido%estic Corporation

"s an M'C that decentrali$es management and other decisionsto the local country. %)niliver, * + G(

Global Co%pan!

"s an M'C that centrali$es its management and other decisionsin the home country. %Microsoft, Apple Computer, AirlineCompanies(

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&or%s o' Globalization Strategic Alliances

*artnerships between and organi$ation and a foreign companyin which both share resources and knowledge in developingnew products or building new production facilities. %Mercedes +General !yres, "ntel + Computer companies(

(oint )enture A specific type of strategic alliance in which the partners agree

to form a separate, independent organi$ation for somebusiness purpose. &onyEricsson, *ak&u$uki

*porting:

Making products at home and selling them abroad. &ports

Goods, !extile *roducts, &urgical "nstruments etc

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I%porting:

"s the buying of products made in other countries for use orresale in one-s own country. ehicles and spare parts, edible

oil, plastic material etc

+icensing:

Allowing the foreign organi$ation to take charge of

manufacturing a product in its country or world region inreturn for a negotiated fee. G&/, 0ohnson + 0ohnson ,rugs and

tobacco products

&ranchising:

A speciali$ed licensing selling a foreign organi$ation the rightto use a brand name and operating know how in return for a

lumpsum payment. Mconald-s, /1C, *i$$a 2ut etc

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Managing in a Global

Environment

Managers must be sensitive to cultural values

*ersonal challenges Managing Crossculturally

3eading ecision making Motivating

Controlling

Managers must be culturally flexible and easily

adapt to new situations

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!he Economic Environment Economic environment

i. Economic development

ii. "nfrastructure

iii. 4esource and product markets

Monetary and 1inancial 1actors Currency exchange rates

"nflation rates iverse tax policies

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The Cultural or Social nviron%ent

'ational Culture

"s 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 organi$ation than the

organi$ation culture.

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&tability or instability of legal and political systems

3egal procedures are established and followed

1air and honest elections held on a regular basis

ifferences in the laws of various nations

Effects on business activities

Effects on delivery of products and services

The +egal , Political nviron%ent

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"nternational !rade Agreements

Most visible changes in legalpolitical factorsgrow out of international trade agreements5 General Agree%ent on Tari''s and Trade"GATT$

-orld Trade Organization "-TO$

uropean .nion ".$ #orth A%erican &ree Trade Agree%ent "#A&TA$

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General Agree%ent on Tari''s and Trade

"GATT$ &igned by 67 nations in 89:; as a set of rules Ensured nondiscrimination, clear procedures,

negotiation of disputes, and participation of lesserdeveloped countries in international trade.

!oday, 8:; member countries abide by the rules *rimary tools <!# uses on tariff concessions,

countries agree to limit level of tariffs on importsfrom other <!# members

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<orld !rade #rgani$ation %<!#(

Goal, is to guide and sometimes urge thenations of the world toward free trade and

open markets

Encompasses GA!! and all of its agreements

2as legal authority to arbitrate disputes on

:== trade issues

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uropean .nion ".$

1ormed in 89>; to improve economic and socialconditions

2as grown to 6>nation alliance

?iggest expansion in 6==: @ 8= new members fromsouthern and eastern Europe

E)-s monetary revolution, introduction of the Euro

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#orth A%erican &ree Trade Agree%ent "#A&TA$

<ent into effect on 0anuary 8, 899:

Merged the )nited &tates, Canada, and Mexico with

more that :68 million consumers

?reaks down tariffs and trade restrictions on most

agriculture and manufactured products

August 86, 8996 agreements in number of key areas

include5 agriculture, autos, transport, + intellectual

property

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