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GLOBAL DIMENSIONS OF MANAGEMENT
CHAPTER 5
GILDAN ACTIVEWEAR
Gildan Activewear Inc. supplies activewear for the wholesale imprinted
sportswear market in the United States and Canada, as well as in Europe. The
company sells T-shirts, sport shirts, and fleece in large quantities to wholesale
distributors. Its products are sold at various venues, such as sports,
entertainment, and corporate events, and travel and tourism destinations.
 Gildan products are also used as work uniforms and similar applications
to convey individual, group, and team identity. The company was founded
in 1984. It was formerly known as Textiles Gildan Inc. and changed its
name to Gildan Activewear Inc. in 1995. Gildan Activewear Inc. is
headquartered in Montreal, Canada.
 To maintain its competitive advantage and remain a global player, Gildan
to establish operations offshore, first in Honduras in 1997, expanding to
Mexico, Haiti and the Dominican Republic and Nicaragua. The strategic
placement of these facilities has allowed Gildan to benefit from bilateral
and multilateral trade agreement. It can ship duty-free anywhere in North
America, the European Union and Australia.
 Gildan worked hard to develop a good working relationship and positive
reputation for corporate social responsibility with non-governmental
organizations and has joined the Fair Labor Association.
What are the international management challenges of
globalization?
Key concepts in the challenges of globalization:
 Global economy –
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 Globalization -
International management –
For Example -Procter & Gamble pursues a global strategy with a
presence in more than 70 countries; majority of McDonald’s sales are now
coming from outside North America, with some of its most profitable
restaurants located in places like Moscow, Russia; Budapest, Hungary,
Beijing, China.
 Global manager-
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, removing barriers that previously limited crossborder trade and business development.
 Members are linked through favorable trade and customs
laws intended to facilitate the free flow of workers, goods
and services and investments across national boundaries.
 The Euro is the common European currency.
The Americas
 North American Free Trade Agreement (NAFTA)
• Agreement for free flow of goods and services between the
Canada, Mexico, and United States
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 Free Trade of the Americas (FTAA) — Alaska to Chile — is a
possibility
 This agreement largely frees the flow of goods and
services, workers, and investments within a region that
more potential consumers than its European rivals. (EU)
Maquiladoras – are foreign manufacturing plants that operate
in Mexico with special privileges. Maquiladoras firms are
allowed to import materials, components, and equipment duty
free. They employ lower-cost Mexican labor to assemble
theses materials into finished products.
 General Motors of Mexico, Mexican engineers developed
a right-hand drive car for markets in Australia and South
Africa.
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
 Asia must be respected for what has been called a
“megamarket.” McDonald’s already has over 4,500
outlets in the region and the number is still growing. Asia
has already achieved superpower status and this respect
must not be limited to just China and Japan and what
have become known as the “Tigers” of South Korea,
Taiwan and Singapore.
 India is in the midst of economic expansion with a high
literacy rate and relatively inexpensive skilled labor. It is
emerging as a world-class for technology development
and software engineering.
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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Reasons for engaging in International Business:
1.
Profits -
2.
Customers –
3.
Suppliers -
4.
Capital –
5.
Labor -
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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Direct investment strategies require major capital commitments but
create rights of ownership and control over foreign operations.
Types of direct investment strategies:
 Joint ventures –
 Wholly owned subsidiaries –
 Criteria for choosing a joint venture partner:
– Familiar 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.
 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
What are multinational corporations and what do they do?
A multinational corporation (MNC)
-General Electric, Exxon, and Wal-Mart from the United States;
Toyota and NTT DoCoMo of Japan.
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 Mutual benefits for host country and MNC:
– Shared growth opportunities
– Shared income opportunities
– Shared learning opportunities
– Shared development opportunities
 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
 MNC complaints about host countries:
– Profit limitations
– Overpriced resources
– Exploitative rules
– Foreign exchange restrictions
– Failure to uphold contracts
 Ethical issues for MNCs:
– Corruption —
– Sweatshops —
– Child labor —
– Sustainable development —
What is culture and how does it relate to global diversity?
 Culture  Culture shock  Ethnocentrism -
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Stages in adjusting to a new culture:
 Confusion –
 Small victories –
 The honeymoon –
 Irritation and anger –
 Reality –
What is culture and how does it relate to global diversity?
Popular dimensions of culture: British Airways surveyed
international customers, a simple lesson emerged don’t assume
people from different cultures will have the same dining habits and
preferences.
Language - is a medium of culture, it provides access to the type of
cultural understanding needed to conduct business and develop
relationships. The importance of good foreign language training is
critical for the truly global manager.
Low-context cultures and high-context cultures –
High-context cultures –
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Use of space – use of interpersonal space as one of the important
“silent languages” of culture. Arabs and many Latin Americans,
prefer to communicate at much closer distances that is standard in
American practice. Misunderstandings are possible if one
businessperson moves back as another moves forward to close the
interpersonal distance
Time orientation –
 Monochronic cultures  Polychronic cultures –
 Religion – one should always be aware of religious traditions
when visiting and working in other cultures. The traveler and
businessperson should be sensitive to the rituals, holy days,
and other expectations associated with religions in foreign
countries.
 Role of contracts – In the United States a contract is viewed
as a final and binding statement of agreements. This tends to
hold true with low-context cultures. McDonald’s found this out
when the Chinese government ignored the firm’s lease on a
restaurant site in downtown Bejing and tore down the building
to make room for a development project.
What is culture and how does it relate to global diversity?
 Values and national cultures (Hofstede): -
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 Hofstede’s dimensions of national cultures:
–Power distance –
- Uncertainty avoidance –
–Individualism-collectivism –
-Masculinity-femininity –
Understanding cultural differences (Trompenaars):
Relationships with people: how they handle relationships with one
another.
Universalism versus particularism –
Individualism versus collectivism –
Neutral versus affective –
Specific versus diffuse –
Achievement versus prescription –
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Attitudes toward time
sequential view
synchronic views
–Attitudes toward environment
inner-directed
 outer-directed cultures
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. They are quick to find opportunities
in unfamiliar settings, and able to marshal economic, social
technological and other forces for the benefit of the
organization.

Planning and controlling:
-- Complexity of international operating environment- Computerbased global network allow home and field offices to share
databases, electronically , transfer documents, and even hold
conferences and make group decisions through computer
links and video conferencing.
--Political risk –is the possible loss of investment or control over
a foreign asset because of political changes in the host country.
Major risk comes from social instabilities as a result of ethnic or
other differences
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Organizing and leading - “As technology and communication
improve, we are scattering centers of excellence around the
world.”
Multinational organization structures
 Global area structure –arranges production and sales
functions into separate geographical units.
 Global product structure – product group managers who
are assisted by area specialists on the corporate staff
providing guidance on the unique needs of various
countries or regions.
Staffing international operations
 Competent locals - a guideline for staffing international
operations.
 Expatriates – employees who live and work in foreign countries
on short-term or long-term assignments.