Chapter 2
International
Management and
Cultural Diversity
The Multinational
Corporation



Has units in two or more countries plus
its own
Most of best-known companies are
MNCs
Transnational corporation is an MNC
that operates worldwide without one
national headquarters (operates round
the clock through different time zones)
2
Trade Agreements
Among Countries





NAFTA (U.S., Canada, and Mexico)
CAFTA (U.S. plus Central America)
EU (25-European nation alliance)
WTO (liberalizes free trade throughout
world)
Trade agreements have facilitated
global outsourcing and offshoring.
3
Sensitivity to
Cultural Differences



Cultural sensitivity (awareness of
customs; adapting behavior)
Multicultural worker (believes all
cultures are good)
Minimize cultural mistakes (e.g.,
rushing a deal in Mexico)
4
Challenges Facing Global
Managerial Worker






Developing global leadership skills
Currency fluctuations
Balance of trade problems
Human rights violation and corruption
Culture shock (“I can’t take this place.”)
Piracy of property rights and
merchandise, including “knock-offs”
5
Methods of Entry into World
Markets
1.
2.
3.
4.
5.
6.
Exporting
Licensing and franchising
Local assembly and packaging
Strategic alliances and joint
ventures
Direct foreign investment
Global start-up
6
Success Factors in the Global
Marketplace




Think globally, act locally.
Recruit and select talented
nationals and domestic workers.
Hire and develop multicultural
workers.
Research and assess potential
markets.
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Competitive Advantage of
Diversity
1.
2.
3.
4.
5.
6.
Marketing advantage including more
sales and profits
Reduced costs (less turnover)
Recruit additional talent
Useful ideas for publicity/advertising
Fewer cultural bloopers
Creativity advantage (diverse ideas)
8
Potential Problems with
Diversity
1.
2.
3.
Diverse group members may not
work harmoniously with each
other.
Potential for conflict is high if
group members
a. do not support each other,
b. do not share knowledge.
Groups may be less cohesive.
9
Organizational Practices
to Encourage Diversity



Corporate policies favoring diversity
(e.g., monitor promotions)
Employee network groups (e.g.,
Latino Employee Network at FritoLay )
Diversity training (encourages
harmony by developing empathy
for differences)
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