PowerPoint Presentation
to Accompany Chapter 5 of
Management
Canadian Edition
Schermerhorn  Wright
Prepared by: Michael K. McCuddy
Adapted by: Lynda Anstett & Lorie Guest
Published by: John Wiley & Sons Canada, Ltd.
Planning Ahead — Chapter 5 Study Questions
 What are the international management challenges of
globalization?
 What are the forms and opportunities of international
business?
 What are multinational corporations and what do they do?
 What is culture and how does it relate to global diversity?
 How do management practices and learning transfer across
cultures?
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Study Question 1: What are the international
management challenges of globalization?
 Key concepts in the challenges of
globalization:
– Global economy
– Globalization
– International management
– Global manager
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Study Question 1: What are the international
management challenges of globalization?
 Europe
– European Union (EU)
• Political and economic
alliance European
countries that agreed to
support mutual economic
growth
• Expanding to at 22
member countries with
375 million consumers
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Study Question 1: What are the international
management challenges of globalization?
 The Americas
– North American Free Trade
Agreement (NAFTA)
• Agreement for free flow of
goods and services
between the Canada,
Mexico, and United States
– Free Trade of the Americas
(FTAA) — Alaska to Chile
— is a possibility
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Study Question 1: What are the international
management challenges of globalization?
 Asia and the Pacific
Rim
– Economic power of
China and Japan
– Growth in other Pacific
Rim countries
– Asian countries
represent a third of the
global marketplace
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Study Question 1: What are the international
management challenges of globalization?
 Africa
– Increased attention to stable countries
– Beckons international business
– South African Development
Community (SADC) links 14
countries in trade and economic
development
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Figure 5.1 Africa, continent of
opportunity.
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Study Question 2: What are the forms and
opportunities of international business?
 Reasons for engaging in international
business:
– Profits
– Customers
– Suppliers
– Capital
– Labor
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Study Question 2: What are the forms and
opportunities of international business?
 Market entry strategies involve the sale of goods
or services to foreign markets but do not require
expensive investments.
 Types of market entry strategies:
– Global sourcing
–
–
–
–
Exporting
Importing
Licensing agreement
Franchising
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Figure 5.2 Common forms of international business—from
market entry to direct investment strategies.
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Study Question 2: What are the forms and
opportunities of international business?
 Direct investment strategies require major
capital commitments but create rights of
ownership and control over foreign
operations.
 Types of direct investment strategies:
– Joint ventures
– Foreign subsidiaries
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Study Question 2: What are the forms and
opportunities of international business?
 Criteria for choosing a joint venture partner:
– Familiarity with your firm’s major business.
– Strong local workforce.
– Future expansion possibilities.
– Strong local market for partner’s own products.
– Good profit potential.
– Sound financial standing.
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Study Question 2: What are the forms and
opportunities of international business?
 Complications in the global business environment:
– Environment is complex, dynamic, and highly
competitive.
– Global business executives must deal with differences
in the environment of business in different countries.
– World Trade Organization resolves trade and tariff
disputes among countries.
– Protectionism can complicate global trading
relationships.
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Study Question 3: What are multinational
corporations and what do they do?
 A multinational corporation (MNC) is a business
with extensive international operations in more
than one foreign country.
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Study Question 3: What are multinational
corporations and what do they do?
 Mutual benefits for host country and MNC:
– Shared growth opportunities
– Shared income opportunities
– Shared learning opportunities
– Shared development opportunities
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Study Question 3: What are multinational
corporations and what do they do?
 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
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Figure 5.3 What should go right and what can go
wrong in MNC-host country relationships.
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Study Question 3: What are multinational
corporations and what do they do?
 MNC complaints about host countries:
– Profit limitations
– Overpriced resources
– Exploitative rules
– Foreign exchange restrictions
– Failure to uphold contracts
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Study Question 3: What are multinational
corporations and what do they do?
 Ethical issues for MNCs:
– Corruption — illegal practices that further one’s
business interests.
– Sweatshops — employing workers at low wages for
long hours and in poor working conditions.
– Child labor — full-time employment of children for
work otherwise done by adults.
– Sustainable development — meeting current needs
without compromising future needs.
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Study Question 4: What is culture and how
does it relate to global diversity?
 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.
 Ethnocentrism
– Tendency to consider one’s own culture as superior to
others.
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Study Question 4: What is culture and how
does it relate to global diversity?
 Stages in adjusting to a new culture:
– Confusion
– Small victories
– The honeymoon
– Irritation and anger
– Reality
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Study Question 4: What is culture and how
does it relate to global diversity?
 Popular dimensions of culture:
– Language
• Low-context cultures and high-context cultures
– Interpersonal space
– Time orientation
• Monochronic cultures and polychronic cultures
– Religion
– Contracts and agreements
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Study Question 4: What is culture and how
does it relate to global diversity?
 Values and national cultures (Hofstede):
– Power distance
– Uncertainty avoidance
– Individualism-collectivism
– Masculinity-femininity
– Time orientation
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Figure 5.4 How countries compare on
Hofstede’s dimension of national culture.
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Study Question 4: What is culture and how
does it relate to global diversity?
 Understanding cultural differences (Trompenaars):
– Relationships with people:
•
•
•
•
•
Universalism versus particularism
Individualism versus collectivism
Neutral versus affective
Specific versus diffuse
Achievement versus prescription
– Attitudes toward time — sequential and synchronic
views.
– Attitudes toward environment — inner-directed and
outer-directed cultures.
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Study Question 5: How do management practices
and learning transfer across cultures?
 Comparative management
– How management systematically differs among
countries and/or cultures.
 Global managers
– Need to successfully apply management
functions across international boundaries.
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Study Question 5: How do management practices
and learning transfer across cultures?
 Planning and controlling
– Complexity of international environment makes
global planning and controlling challenging.
– Planning and controlling risks:
• Currency risk
• Political risk
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Study Question 5: How do management practices
and learning transfer across cultures?
 Organizing and leading
– Multinational organization structures
• Global area structure
• Global product structure
– Staffing international operations
• Competent locals
• Expatriates
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Figure 5.5 Alternative multinational
structures for global operations.
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Study Question 5: How do management practices
and learning transfer across cultures?
 Are management theories universal?
– North American management theories may be
ethnocentric.
• Participation and individual performance are not
emphasized as much in other cultures.
– Not all Japanese management practices can be
applied successfully abroad.
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Study Question 5: How do management practices
and learning transfer across cultures?
 Global organizational learning:
– Companies can and should learn from each other.
– Readiness for global organizational learning varies
based on managerial attitudes.
• Ethnocentric attitudes
• Polycentric attitudes
• Geocentric attitudes
– Be alert, open, inquiring, but always cautious.
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