UNIT I – Introduction to Management UNIT 2 – International Management and Diversity Global Business - globalization - trade agreements - how to go global

Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 1

UNIT I – Introduction to Management

UNIT 2 – International Management and Diversity Global Business - globalization - trade agreements - how to go global - why go global Organizational Culture - National Differences - Changing Organizational Cultures Diversity

UNIT 3 – Managerial Ethics andSocial Responsibility

UNIT 4 – Planning as aDecision-Making Activity

UNIT 5 – Domestic and International Issues in Planning

UNIT 6 – Organization – Design and Culture

UNIT 7 – Staffing

UNIT 8 – Communication

UNIT 9 – Direction - Teams and Group Processes

UNIT 10 – Motivation

UNIT 11 – Leadership

UNIT 12 – Control

UNIT 13 - POM/MIS/DSS

FOUNDATIONS OF MANAGEMENTUNIT 2 - International Management and Diversity

FOUNDATIONS OF MANAGEMENTFall 2008

Reading AssignmentJones and George

Chapter 2, Chapter 3, pp. 97-110Chapter 4, pp. 133-143Chapter 6, pp. 205-209








UNIT 7 – Staffing





UNIT 12 – Control



• A very different phase of globalization • Rapid pace of technological advances• Emerging Markets• Globalization of finance• Global sourcing / Offshoring• Diversity of IB participants: Born

Globals (international entrepreneurship), SMEs, Logistics firms…

• Internationalization of services• Corporate social responsibility &

ethics...

Content: The New Realities…








UNIT 7 – Staffing





UNIT 12 – Control



– Globalization is a mega trend with profound implications

– Together with the other megatrend -- advances in technology -- it has transformed business, the marketplace, and diplomacy.

– The Internet and the IT provide:– Connectivity mitigating physical distance– Virtual communities and relationships– Efficiency in value adding activities– Universal and instantaneous access to

knowledge

Globalization








UNIT 7 – Staffing





UNIT 12 – Control



Globalization - 2– Globalization is best characterized as a force that

connects national economies, a macro concept; industries are also globalizing

– Internationalization of the individual firm is a direct consequence of globalization

– Globalization can be studied as a driver, process, or consequence

– Globalization brings about both convergence and divergence

– It has profound implications for economic welfare, environment, politics

– Globalization is controversial– CSR and ethical conduct are real challenges for

the manager








UNIT 7 – Staffing





UNIT 12 – Control



Phases of Globalization• 1st Phase: 1830, peaking around 1880; Aided

by railroads, ocean transport; resulting in the rise of manufacturing and trading companies

• 2nd Phase: 1900, peaking late 1920s; Fueled by electricity and steel; early MNEs

• 3rd Phase: 1948, peaking around 1970; GATT, end of WW II, Marshall Plan; gradual reduction of barriers to trade

• 4th Phase: 1980, peaking around 1997; Fueled by Internet and other technologies: rapid liberalization in Emerging Markets

• Next phase?








UNIT 7 – Staffing





UNIT 12 – Control



Diversity of Participants

• IB participants are a diverse set– Focal firms: manufacturers or service firms– Channel intermediaries– Facilitators

• IB is not just MNE activity: SMEs, BGs– Born global companies– Smaller enterprises with entrepreneurial

drive

• Service firms are very active in IB– Professional service firms such as

engineering/design firms, accounting, banking, advertising, research, etc.








UNIT 7 – Staffing





UNIT 12 – Control



Global Business• GLOBAL BUSINESS

– The buying and selling of goods and services by people from different countries

– Includes Foreign Investment in U.S. & U.S. Investment Abroad

• Companies from many countries own U.S. businesses

• U.S. companies have made large direct foreign investments throughout the world

• Direct foreign investment worldwide is worth 1 trillion a year

• Direct foreign investment is an important and common method of conducting global business








UNIT 7 – Staffing





UNIT 12 – Control



American Companies No Longer Dominate the World Markets

• U.S. has a 31 percent share of the global high-technology market

• U.S. producers are leading suppliers of high-tech products globally

• U.S. companies product 30 percent of the world GNP

• Only 5.3 percent of multinational corporations are U.S. based

Global Integration








UNIT 7 – Staffing





UNIT 12 – Control



• Americans say they want to “Buy American”

• Country of manufacture– where the product is made– Consumers don’t know or care.

• Country of origin– company’s home country– Customers confuse country of

origin with country of manufacture.

Americans Want American-Made Goods








UNIT 7 – Staffing





UNIT 12 – Control



Trade Rules and Agreements

Tariff andNon-Tariff

Trade Barriers

TradeAgreements








UNIT 7 – Staffing





UNIT 12 – Control



Trade Barriers

Nontariff Barriers

Nontariff Barriers

TariffTariff

Voluntary export restraintsVoluntary export restraints

Government import standards Government import standards

Customs classificationCustoms classification

QuotasQuotas

SubsidiesSubsidies








UNIT 7 – Staffing





UNIT 12 – Control



Trade Agreements

Regional Trading Zones

Regional Trading Zones

General Agreementon Tariffs and Trade

(GATT)

General Agreementon Tariffs and Trade

(GATT)

European UnionEuropean Union

NAFTA NAFTA

ASEAN and APECASEAN and APEC

FTAAFTAA








UNIT 7 – Staffing





UNIT 12 – Control



GATT

• GATT made it easier and cheaper for consumers in all countries to buy foreign products– By 2005, average tariffs will be cut

worldwide by 40 percent– Tariffs were eliminated in 10 specific

industries• GATT established protections for intellectual

property








UNIT 7 – Staffing





UNIT 12 – Control



World Trade Organization (WTO)

Location: Location: Geneva, Geneva, SwitzerlandSwitzerlandEstablished: Established: 1 January 19951 January 1995Created by: Created by: Uruguay Round Uruguay Round negotiations (1988-1994)negotiations (1988-1994)Membership:Membership: 146 countries 146 countries (as of 4 April 2003)(as of 4 April 2003)Budget: Budget: 154 million Swiss 154 million Swiss francsfrancsfor 2003for 2003Secretariat staff: Secretariat staff: 550550Head: Head: Supachai Panitchpakdi Supachai Panitchpakdi (director-general(director-general

Functions:Functions: Administering WTO trade Administering WTO trade

agreementsagreements Forum for trade Forum for trade

negotiationsnegotiations Handling trade disputesHandling trade disputes Monitoring national trade Monitoring national trade

policiespolicies Technical assistance and Technical assistance and

training for developing training for developing countriescountries

Cooperation with other Cooperation with other international international organizationsorganizations

http://www.wto.org

http://www.wto.org








UNIT 7 – Staffing





UNIT 12 – Control



Regional Trade Agreements








UNIT 7 – Staffing





UNIT 12 – Control



• Originally, 12 (now 15) European countries

• 13 other countries haverecently been included

• Transformed these different countries into the European Union

• Opened up trade among member nations

• Created the “Euro” currency

Maastricht Treaty of Europe – (EU)








UNIT 7 – Staffing





UNIT 12 – Control



NAFTA

• North American Free Trade Agreement between Canada, United States, & Mexico

• Liberalizes trade among these three nations

• Eliminates most tariffs and barriers

http://www.mac.doc.gov/nafta/http://www.mac.doc.gov/nafta/








UNIT 7 – Staffing





UNIT 12 – Control



FTAA

• Free Trade Area of the Americas

• Proposed agreement to establish a free trade zone through out the Western Hemisphere– Reduce trade barriers to zero– Standardize financial markets– Process for handling trade disputes

http://www.ftaa-alca.org








UNIT 7 – Staffing





UNIT 12 – Control



ASEAN and APEC

http://www.aseansec.orghttp://www.aseansec.org

• ASEAN

– Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam

• APEC

– Australia, Canada, Chile, China, Hong Kong, Japan, Korea, Mexico, New Zealand, Papua New Guinea, Peru, Russia, Taiwan, United States, and ASEAN members (except Cambodia, Laos, and Myanmar)








UNIT 7 – Staffing





UNIT 12 – Control



How to go GlobalWays in Which Companies can enter the Global Market Place








UNIT 7 – Staffing





UNIT 12 – Control



Consistency or Adaptation?

When a multinational company has offices/plants indifferent countries and uses the same rules, guidelines, policies, and procedures

Global Consistency

When a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies

Local Adaptation








UNIT 7 – Staffing





UNIT 12 – Control



International Expansion

• Basic Question– To what extent do we customize products

and marketing for different national conditions?

• Global strategy– Selling the same standardized product and

using the same basic marketing approach in each national market

• Multi-domestic Strategy– Customizing products and marketing

strategies to specific national conditions• Helps gain local market share• Raises production costs








UNIT 7 – Staffing





UNIT 12 – Control



CooperativeContracts

StrategicAlliancesExporting

WhollyOwned

Affiliates

GlobalNew

Ventures

Forms for Global Business








UNIT 7 – Staffing





UNIT 12 – Control



Less dependence on home market sales Greater degree of control over research,

design, and production decisions

Less dependence on home market sales Greater degree of control over research,

design, and production decisions

Advantages

Many exports are subject to tariff and nontariff barriers

Transportation costs can increase price Companies may depend on foreign

importers for product distribution

Many exports are subject to tariff and nontariff barriers

Transportation costs can increase price Companies may depend on foreign

importers for product distribution

Disadvantages

Exporting








UNIT 7 – Staffing





UNIT 12 – Control



Cooperative Contracts

A domestic company receives royalty payments for allowing another company to produce its product, sell service, or use its brand name in a specified foreign market

Licensing

Franchising

A collection of networked firms in which the manufacturer or marketer of a product/service licenses the entire business to another person or organization








UNIT 7 – Staffing





UNIT 12 – Control



Allows companies to earn profits withoutinvesting more money

The licensor invests in production equipment and facilities

Helps companies avoid tariff and nontariff barriers

Allows companies to earn profits withoutinvesting more money

The licensor invests in production equipment and facilities

Helps companies avoid tariff and nontariff barriers

Advantages

Licensor gives up control over quality ofthe product or service sold by the foreign licensee

Licensees can eventually become competitors

Licensor gives up control over quality ofthe product or service sold by the foreign licensee

Licensees can eventually become competitors

Disadvantages

Licensing








UNIT 7 – Staffing





UNIT 12 – Control



Fast way to enter foreign markets

Good strategy when a company’sdomestic sales have slowed

Fast way to enter foreign markets

Good strategy when a company’sdomestic sales have slowed

Advantages

Franchisors face a loss of control

Franchising success may be culture-bound

Franchisors face a loss of control

Franchising success may be culture-bound

Disadvantages

Franchising








UNIT 7 – Staffing





UNIT 12 – Control



Strategic Alliances

StrategicAlliance

StrategicAlliance

An agreement in which companies combine key resources, costs, risk, technology, and people


JointVenture

JointVenture

A strategic alliance in which twoexisting companies collaborate toform a third, independent company

A strategic alliance in which twoexisting companies collaborate toform a third, independent company

StrategicAlliance

StrategicAlliance










UNIT 7 – Staffing





UNIT 12 – Control



Joint Ventures

Help companies avoid tariff and nontariff barriers to entry

Participating companies bear only partof the costs and risks

Advantageous to smaller local partners

Help companies avoid tariff and nontariff barriers to entry

Participating companies bear only partof the costs and risks

Advantageous to smaller local partners

Advantages

Companies must share profits Joint venture represent a merging of

four cultures With equal ownership, power struggles

and a lack of leadership

Companies must share profits Joint venture represent a merging of

four cultures With equal ownership, power struggles

and a lack of leadership

Disadvantages








UNIT 7 – Staffing





UNIT 12 – Control



Wholly Owned Affiliates (Build or Buy)

Parent company receives all of the profits and has complete control

Parent company receives all of the profits and has complete control

Advantages

Expense of building new operationsor buying existing business

Losses can be immense if the venture fails

Expense of building new operationsor buying existing business

Losses can be immense if the venture fails

Disadvantages








UNIT 7 – Staffing





UNIT 12 – Control



Finding the Best Business Climate

Access toGrowingMarkets

Access toGrowingMarkets

Location to

Build

Location to

BuildMinimalPolitical

Risk

MinimalPolitical

Risk








UNIT 7 – Staffing





UNIT 12 – Control



Themes to Address: Emerging Markets

• Some 30 high-growth, high-potential developing economies have fueled the most recent phase of globalization

• Market liberalization, rapid industrialization, modernization, and urbanization are trademarks

• Unique countries in terms of dominance of family conglomerates, political risk, partnering styles, cultural idiosyncrasies, etc.








UNIT 7 – Staffing





UNIT 12 – Control



Emerging Market Dynamics

• Source of customers, suppliers, ideas, and human capital.

• One billion new consumers will enter the global markets in the next decade!

• Household income will reach threshold level of $5,000 in many EMs.

• Consumer spending will increase from $4 trillion to more than $9 trillion by 2015, nearly matching Western Europe.








UNIT 7 – Staffing





UNIT 12 – Control



Attractions and Challenges of EMs

• Dynamic, rapidly transforming• Low competitive intensity• Dominated by family conglomerates• Political instability• Bureaucracy, redtape, lack of

transparency• Legal, institutional vacuum• Safeguarding intellectual property• Cultural distance…








UNIT 7 – Staffing





UNIT 12 – Control



• The emerging world now accounts for over half of global economic output. They are driving global growth.– the economic power is shifting away from

the advanced economies towards emerging ones, especially in Asia.

• Their share of exports has jumped to 43%.– the emerging markets have now become

low-cost source countries. In the footwear industry, besides China, Vietnam, Brazil, Romania, in Asia, India, and Thailand have become low-cost source countries.

Attractions and Challenges of EMs








UNIT 7 – Staffing





UNIT 12 – Control



The Aspiring Consumer in EMs

• Young demographics• Rapidly urbanizing• Middle class coming into its own• Engaged in technological

leapfrogging• Exposed to western brands• Rising expectations• Eager to consume material things • Highly brand conscious








UNIT 7 – Staffing





UNIT 12 – Control



Growing Markets

• Purchasing Power– comparison of a standard set of goods and

services in different countries– more means greater growth potential

• Degree of Global Competition– the number and quality of companies

already in the market








UNIT 7 – Staffing





UNIT 12 – Control



Outsourcing vs. Offshoring

• Outsourcing - the process of contracting with another organization to accomplish a non-critical responsibility more efficiently for a firm, either domestically or overseas– Payroll, Distribution, Fabrication

• Offshoring - the process of outsourcing to firms in foreign countries– Generally involves exploiting the

competitive advantage of cheaper labor








UNIT 7 – Staffing





UNIT 12 – Control



Choosing Facilities Locations

• Quality factors– work force quality– company strategy

• Quantity factors– kind of facility– tariff and nontariff barriers– exchange rates– transportation and labor costs








UNIT 7 – Staffing





UNIT 12 – Control



Minimizing Political Risk

• Political uncertainty– risk of major changes in political regimes

• Policy uncertainty– risk associated with changes in laws and

government policies directed at businesses

• Strategies– avoidance– control– cooperation








UNIT 7 – Staffing





UNIT 12 – Control



Organizational Culture

The Sociocultural Environment








UNIT 7 – Staffing





UNIT 12 – Control



• The shared knowledge, beliefs, ideals, values, common modes of behavior and ways of thinking in a society

• Shared set of beliefs, expectations, values, norms, and work routines that influence how members of an organization relate to one another and work together to achieve organizational goals

• The shared set of beliefs, expectations, values, norms and work routines that influence the ways in which individuals, groups and teams interact with one another and cooperate to achieve success









UNIT 7 – Staffing





UNIT 12 – Control




• Cultural factors are more complex than political and economic factors.

• It is imperative that international managers understand and deal with local cultures.








UNIT 7 – Staffing





UNIT 12 – Control



The Role of National Culture

Values– Ideas about what a society believes

to be good, desirable and beautiful.• Provides conceptual support for

democracy, truth, appropriate roles for men, and women.

• Usually not static but very slow to change.








UNIT 7 – Staffing





UNIT 12 – Control



The Role of National Culture

Norms– Informal, unwritten rules and codes of

conduct that prescribe how people should act in particular situations.

• Folkways—routine social conventions of everyday life

• Mores - norms that are considered to be central to functioning of society and to social life








UNIT 7 – Staffing





UNIT 12 – Control



Value System

Multiple beliefs that are compatible and supportive of one another

Greatly affect how a manager: Views other people/groups, thus

influencinginterpersonal relationships

Perceives situations and problems Goes about solving problems Determines what is and is not ethical

behavior Leads and controls employees








UNIT 7 – Staffing





UNIT 12 – Control



Attitudes, Moods and Emotions

• Attitude– A collection of feelings and beliefs

• Organizational Commitment– The collection of feelings and beliefs that

employees and managers have about their organization as a whole

• Mood– A feeing or state of mind

• Emotions– Intense, relatively short lived feelings








UNIT 7 – Staffing





UNIT 12 – Control



Factors Affecting Organizational Culture








UNIT 7 – Staffing





UNIT 12 – Control



Symbolic artifacts

Behaviors

Symbolic artifacts

Behaviors1. Surface Level1. Surface Level SEENSEEN

What people say

How decisions are made

What people say

How decisions are made

2. Expressed Values and Beliefs

2. Expressed Values and Beliefs HEARDHEARD

Beliefs and assumptions

Rarely discussed

Beliefs and assumptions

Rarely discussed

3. Unconsciously Held Assumptions and Beliefs

3. Unconsciously Held Assumptions and Beliefs

BELIEVEDBELIEVED

Levels of Organizational Culture








UNIT 7 – Staffing





UNIT 12 – Control



• Behavioral addition

– is the process of having managers and employees perform a new behavior

• Behavioral substitution

– is having managers and employees perform a new behavior in place of another behavior

• Change visible artifacts

– such as the office design and layout, company dress codes, etc.

Changing Organizational Cultures








UNIT 7 – Staffing





UNIT 12 – Control



Socialization

Organizational socialization – process by which newcomer’s learn an organization’s values and norms and acquire the work behaviors necessary to perform jobs effectively








UNIT 7 – Staffing





UNIT 12 – Control



Cultural Differences

• Recognize cultural differences

• Decide how to adapt your company to those differences

• Do not base adaptations on outdated and incorrect assumptions about a company’s culture








UNIT 7 – Staffing





UNIT 12 – Control



Becoming Aware of Cultural Differences

Cultural Dimensions

(Geert Hofstede)








UNIT 7 – Staffing





UNIT 12 – Control



Preparing for an International Assignment

Language andCross-Cultural Training

Considerationof Spouse, Family,

and Dual-Career Issues

Language andCross-Cultural Training

Considerationof Spouse, Family,

and Dual-Career Issues








UNIT 7 – Staffing





UNIT 12 – Control



Language and Cross-Cultural Training

Documentary TrainingDocumentary Training

Cultural SimulationCultural Simulation

Field ExperiencesField Experiences

Adaptability ScreeningAdaptability Screening

Intercultural TrainingIntercultural Training








UNIT 7 – Staffing





UNIT 12 – Control



Domestic and International Diversity








UNIT 7 – Staffing





UNIT 12 – Control



• The Increasing Diversity of the Workforce and the Environment– Differences among people in age, gender,

race, ethnicity, religion, sexual orientation, socioeconomic background, and capabilities/disabilities

• Diversity Concerns and Issues– The ethical imperative for equal opportunity– The illegality of unfair treatment– Diversity’s positive effect on organizational

performance– The continuing bias toward diverse

individuals

Domestic and International Diversity








UNIT 7 – Staffing





UNIT 12 – Control



Diversity Concerns

• The ethical imperative for equal opportunity

• Effectively managing diversity can improve organizational effectiveness

• The continuing bias toward diverse individuals








UNIT 7 – Staffing





UNIT 12 – Control



• AGE – Demographic Changes and Legal Constraints

• GENDER – Glass Ceiling , Pay Differentials

• RACE and ETHNICITY – Differential Growth Rates for Minority Populations

• RELIGION – Different Religious Holidays• CAPABILITIES and DISABILITIES –

Reasonable Accommodation• SOCIOECONOMIC BACKGROUND –

Widening Differentials b/w Rich and Poor

Components of Diversity








UNIT 7 – Staffing





UNIT 12 – Control



Sources of Diversity in the Workplace








UNIT 7 – Staffing





UNIT 12 – Control



• Glass Ceiling– A metaphor alluding to the invisible

barriers that prevents minorities and women from being promoted to top corporate positions.

2008: Projected New Entrants in the U.S. Labor Force

Workforce Diversity








UNIT 7 – Staffing





UNIT 12 – Control



• What a Diversity of Employees Provides– A variety of points of view and

approaches to problems and opportunities can improve managerial decision making.

– Diverse employees can provide a wider range of creative ideas.

– Diverse employees are more attuned to the needs of diverse customers.

– Diversity can increase the retention of valued organizational members.

– Diversity is expected/required by other firms

Managing Diversity








UNIT 7 – Staffing





UNIT 12 – Control



• Steps in Managing Diversity Effectively– Secure top management commitment– Strive to increase the accuracy of perceptions– Increase diversity awareness– Increase diversity skills– Encourage flexibility– Pay close attention to how organizational

members are evaluated– Consider the numbers

How to Manage Diversity








UNIT 7 – Staffing





UNIT 12 – Control



• Steps in Managing Diversity Effectively (cont’d)– Empower employees to challenge discriminatory

behaviors, actions, and remarks– Reward employees for effectively managing

diversity– Provide training utilizing a multipronged, ongoing

approach– Encourage mentoring of diverse employees– Mentoring

• A process by which an experienced member of an organization (the mentor) provides advice and guidance to an less experienced member (the protégé) and helps the less experienced member learn how to advance in the organization and in his or her career.

How to Manage Diversity (cont’d)








UNIT 7 – Staffing





UNIT 12 – Control



FOUNDATIONS OF MANAGEMENTFall 2008 - The End

Dr. Eliot S. Elfner

Professor of Business Administration

St. Norbert College

Documents

UNIT I – Introduction to Management UNIT 2 – International Management and Diversity Global Business - globalization - trade agreements - how to go global