Week 4: Recap
• Organization’s Environments
– Types
• External
– General and Task
• Internal
• External environment & uncertainty
• Corporate culture
– Types
• Adaptable, achievement, involvement & consistency
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Managing in a Global
Environment
Week 5
A Borderless World
Organizations and managers are not isolated
from international forces:
– Trade barriers have fallen
– Communication is faster, cheaper
– Consumer tastes converge
The difficulties and risks of a borderless world
are matched by benefits and opportunities
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Ranking of Countries on the
Globalization Index
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2012 KOF Index of Globalization - 208 Countries
• Global Index (convergence)
– Rank 94.
Score 54.94
• Economic globalization
– Rank 101. Score 53.02
• Social globalization
– Rank 134. Score 35.40 134.
• Political globalization
– Rank 49.
Score 85.41
• Source 2012 KOF Index of Globalization
•
Dreher, Axel; Noel Gaston and Pim Martens, 2008, Measuring Globalization - Gauging
its Consequence , New York: Springer.
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Four Stages of Globalization
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Getting Started Internationally
• Global Outsourcing
• Exporting
• May choose licensing or direct investing
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Strategies for Entering
International Markets
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The International Business
Environment
• Planning, organizing, leading and controlling
in multiple countries can be challenging
– It took McDonalds a year to figure that Hindus in India do
not eat beef
– In Africa, the baby food includes pictures to aid illiterate
consumers
– What about Ghana?
• Managers must be aware to operate in the
highly competitive global environment
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Key Factors in International
Environment
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The Economic Environment
Economic Development
Countries are either developed or developing
Resource and Product Markets
Companies must evaluate the market demand for
their products
Economic Interdependence
It has become more obvious that countries are
connected by events across the globe
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World Economic Forum Global
Competitiveness
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Bearing the Economic Crisis
(Misery Index)
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The Legal-Political Environment
Political risk is defined as the risk of lost assets,
earning power, or managerial control.
Managers must be concerned with the political
instability of global markets.
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The Sociocultural Environment
• Social Values
• Communication Differences
• Other Cultural Characteristics
– Language, religion, social organization,
education and attitudes
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The Cultural Typologies
Hofstede’s dimensions
4 dimensions
GLOBE Project
7 dimensions
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Hofstede’s Value Dimensions
1. Power Distance
2. Uncertainty Avoidance
3. Individualism and Collectivism
4. Masculinity and Femininity
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Countries and Values
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GLOBE Project Value Dimensions









Uncertainty avoidance
Gender differentiation
Power distance
Social collectivism
Individual collectivism
Assertiveness
Future orientation
Performance orientation
Humane orientation
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Assertiveness
• HIGH ASSERTIVENESS societies
–
–
–
–
–
Value competition, success, and progress.
Communicate directly and unambiguously.
Try to have control over the environment.
Expect subordinates to take initiative.
Build trust on basis of calculation.
• LOW ASSERTIVENESS societies
–
–
–
–
–
Value cooperation and warm relationships.
Communicate indirectly; try to "save face."
Try to be in harmony with the environment.
Expect subordinates to be loyal.
Build trust on basis of predictability.
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Future orientation
• HIGH FUTURE ORIENTATION societies
–
–
–
–
Propensity to save now for the future.
Emphasize working for long-term success.
Organizations tend to be flexible and adaptive.
View material success and spiritual fulfillment as an
integrated whole.
• LOW FUTURE ORIENTATION societies
–
–
–
–
Propensity to spend now, rather than save.
Prefer gratification as soon as possible.
Organizations tend to be inflexible and maladaptive.
View material success and spiritual fulfillment as separate,
requiring trade-offs
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PERFORMANCE ORIENTATION
• HIGH PERFORMANCE
ORIENTATION societies
– Value competitiveness
and materialism.
– View formal feedback
as necessary for
performance
improvement.
– Value what one does
more than who one is.
– Expect direct, explicit
communication.
• LOW PERFORMANCE
ORIENTATION societies
– Value societal and family
relationships. Value
harmony with the
environment.
– View formal feedback as
judgmental and
discomfiting.
– Value who one is more
than what one does.
– Expect indirect, subtle
communication.
HUMANE ORIENTATION societies
• HIGH HUMANE ORIENTATION societies
– The interests of others are important. People are motivated primarily
by a need for belonging and affiliation.
– Members of society are responsible for promoting the well-being of
others.
– Child labor is limited by public sanctions.
– People are urged to be sensitive to all forms of racial discrimination.
• LOW HUMANE ORIENTATION societies
– One's own self-interest is important. People are motivated primarily
by a need for power and material possessions.
– The state provides social and economic support for individuals' wellbeing.
– Child labor is an issue of low importance.
– People are not sensitive to all forms of racial discrimination.
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Country Ranking on Selected GLOBE
Value Dimensions
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High-Context and
Low-Context Cultures
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Other Cultural Characteristics
Language
Religion
Social Organization
Education
Ethnocentrism – a
tendency to regard
your own culture as
superior
Attitudes
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Developing Cultural Intelligence
• Cultural intelligence – ability to use reasoning
and observation skills
– Culturally flexible
– Adapt to new situations
• Cognitive, emotional and physical intelligence
• Managers must study the language and learn
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International Trade Alliances
• General Agreement on Tariffs and Trade (GATT)
– 23 nations in 1947, a set of rules for fair trade
• World Trade Organization (WTO)
– Maturation of GATT into permanent global institute
• European Union
– 1957 Alliance to improve economic and social
conditions among members; evolved to 27-nation
European Union
• North American Free Trade Agreement (NAFTA)
– Merged the United States, Canada and Mexico into
trading bloc
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African Trade Alliances
• Economic Community of West African States
(ECOWAS)[9]
• Economic Community of Central African States
(ECCAS)
• African Free Trade Zone (AFTZ
• Common Market for Eastern and Southern Africa
(COMESA)
• Southern African Development Community
(SADC)
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European Union
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China and Southeast Asia Nations
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Serving the Bottom
of the Pyramid (BOP)
• Corporations can alleviate poverty and social ills
by selling to the world’s poorest people
• More than 4 billion people who are the lowest
on the economic “pyramid”
• These people have not traditionally been
served
• Many companies are adopting BOP strategies
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The Globalization Backlash
• 53% of American believe free trade has hurt the
United States
• The United States’ primary concern is the loss of
jobs
• Business leaders insist that economic benefits
flow back to the U.S. economy
– Lower prices
– Expanded markets
– Increased profits and funds for innovation
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An Asian View of Cultural Difference
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Some questions to consider
• Why do you think many people are so frightened by
globalization? Based on what is occurring in the world today,
do you expect the globalization backlash to grow stronger or
weaker over the next decade?
• How might the social value of low versus high power distance
influence how you would lead and motivate employees?
What about the value of low versus high performance
orientation?
• THANK YOU, Any Questions?
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