Transcript Management 3e - Gary Dessler

Principles and Practices for Tomorrow’s Leaders
Gary Dessler
CHAPTER
Managing in a Global
Environment
17
The Environment of Managing
PowerPoint Presentation by Charlie Cook
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Chapter Objectives
After studying this chapter and the case exercises at
the end, you should be able to:
1. List the sociocultural and legal/political errors
managers make when expanding abroad.
2. Tell a manager why a company is (or is not) a
suitable candidate for expanding into a specific
country, based on the cultural, and geographic
distance between that country and the
company’s home country.
3. List the reasons why you would (or would not)
be a good global manager.
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17–2
Chapter Objectives (cont’d)
4. Specify the basic global strategy a manager
should pursue, and why.
5. Specify the type of basic global organization
structure a manager should use, and why.
6. Tell a manager what he or she did wrong in
leading and motivating employees abroad.
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17–3
Ways of Doing Business Abroad
• Exporting
 Selling abroad, either directly to target customers or
indirectly by retaining foreign sales agents and
distributors.
• Licensing
 An arrangement whereby a firm (the licensor) grants
a foreign firm the right to use intangible property.
• Franchising
 The granting of a right by a parent company to
another firm to do business in a prescribed manner.
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17–4
Ways of Doing Business Abroad (cont’d)
• Foreign Direct Investment
 Operations in one country controlled by entities in a
foreign country.
• Strategic Alliance
 An agreement between potential or actual
competitors to achieve common objectives.
• Joint Venture
 The participation of two or more companies in an
enterprise such that each party contributes assets,
owns the entity to some degree, and shares risk.
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17–5
Ways of Doing Business Abroad (cont’d)
• Wholly Owned Subsidiary
 A firm that is owned 100% by a foreign firm.
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17–6
The Language of International Business
• International Trade
 The export or import of goods or services to
consumers in another country.
• International Business
 Any firm that engages in international trade or
investment; also refers to business activities that
involve the movement of resources, goods, services,
and skills across national boundaries.
• International Management
 The performance of the management process across
national boundaries.
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17–7
The Language of International Business
• Multinational Corporation (MNC)
 A company that operates manufacturing and
marketing facilities in two or more countries:
managers of the parent firm, whose owners are
mostly in the firm’s home country, coordinate the
MNC’s operation.
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17–8
The Economic Environment
• Economic Systems
 Market economies
 Supply
and demand determine what is produced, in
what quantities, and at what prices.
 Command economies
 Yearly
targets on five-year plans with specific
production goals are set by the government which also
sets prices for each sector of the economy.
 Mixed economies
 Some
sectors are left to private ownership and free
market mechanisms, while others are largely owned
and managed by the government.
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17–9
The Economic Environment (cont’d)
• Economic Development
 A measure of the how extensively the industrial
infrastructure is developed for a given country.
• Gross Domestic Product (GDP)
 The market value of all goods and services that have
been bought for final use during a period of time, and,
therefore, is the basic measure of a nation’s
economic activity.
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17–10
The Economic Environment (cont’d)
• Exchange Rate
 The rate at which one country’s currency can be
exchanged for another country’s currency.
• Trade Barrier
 A governmental influence that is usually aimed at
reducing the competitiveness of imported products or
services.
• Tariff
 A government tax on imports.
• Quota
 A legal restriction on the import of particular goods.
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17–11
The Economic Environment (cont’d)
• Exchange Rate
 The rate at which one country’s currency can be
exchanged for another country’s currency.
• Trade Barrier
 A governmental influence that is aimed at reducing
the competitiveness of imported products or services.
 Tariff: A government
tax on imports.
 Quota:A legal restriction on the import of particular
goods.
 Subsidy: A direct payment a country makes to support a
domestic producer.
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17–12
Economic Integration and Free Trade
• Free Trade
 All trade barriers among participating countries are
removed, so there is an unrestricted exchange of
goods among these countries.
• Economic Integration
 The result of two or more nations minimizing trade
restrictions to obtain the advantages of free trade.
• Free Trade Area
 A type of economic integration in which all barriers to
trade among members are removed.
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17–13
Economic Integration
• Customs Union
 A situation in which trade barriers among members
are removed and a common trade policy exists with
respect to nonmembers.
• Common Market
 A system in which no barriers to trade exist among
member countries, and a common external trade
policy is in force that governs trade with nonmembers
 Factors of production, such as labor, capital, and
technology, move freely among members.
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17–14
Levels of Economic Integration
FIGURE 17–1
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17–15
European
Union (EU)
Organizational
Structure
Source: From “Survey of Europe,”
The Economics, October 23, 1999,
p. 0. @ 00 The Economist
Newspaper Group, Inc. Reprinted
with permission. Further reproduction
prohibited. www.economist.com.
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FIGURE 17–2
17–16
Legal and Political Environment
• Common Law
 A legal system where tradition and precedent—not
written statutes—govern legal decisions. Other
• Code Law
 A legal system that uses a comprehensive set of
written statutes.
• International Law
• A body of law is embodied in treaties and other
types of agreements among nations.
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17–17
The Technological Environment
• Technology transfer
 The transfer, often to another country, of systematic
knowledge for the manufacturing of a product, for the
application of a process, or for the rendering of a
service; it does not extend to the mere sales or lease
of goods.
 Successful technology requires:
 A needed
and suitable technology.
 Favorable social and economic conditions.
 The willingness and ability of the receiving party to use
and adapt the technology
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17–18
Determinants of Global Distance
Source: Adapted from Pankaj Ghemawat, “Distance Still
Matters,” Harvard Business Review, September, 2001, p. 140.
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FIGURE 17–3
17–19
Industry Sensitivity to Distance
Source: Pankaj Ghemawat, “Distance Still Matters,”
Harvard Business Review, September 2001, pp. 142–43.
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FIGURE 17–4
17–20
International Expansion
• Factors before expanding abroad:
 Cultural distance (languages and religions)
 Administrative distance (absence of shared monetary
or political associations)
 Geographic distance (physical remoteness)
 Economic distance (differences in consumer
incomes).
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17–21
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17–22
Managing Globally
• Ethnocentric
 A management philosophy that leads to the creation
of home-market-oriented firms.
• Polycentric
 A management philosophy oriented toward pursuing
a limited number of individual foreign markets.
• Regiocentric (also Geocentric)
 A management philosophy oriented toward larger
areas, including the global marketplace.
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17–23
Environmental Influences and Global Strategy
Source: Adapted from Figures 2 and 5 and discussion in Sumantra Ghoshal and Nitin Nohria, Reprinted from John
Daniels and Lee Radebaugh, International Business (Upper Saddle River, NJ: Prentice Hall, 2001), p. 529. “Horses for
Courses: Organizational Forms for Multinational Corporations,” Sloan Management Review, Winter 1993, pp. 23–36.
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FIGURE 17–5
17–24
International Organizations
FIGURE 17–6
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17–25
Values
• Values
 Basic beliefs about what is important and
unimportant, and what one should and should not do.
 Hofstede’s measures of global values:
 Power
distance (acceptance of inequality)
 Individualism versus collectivism
 Masculinity versus femininity (assertiveness versus
caring)
 Uncertainty avoidance (desire for certainty and stability)
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17–26
Country
Clusters
Based on
Power
Distance
Source: Source: Adapted from G. Hofstede, Culture’s
Consequences (Beverly Hills, CA: Sage Publications, 1984).
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FIGURE 17–7
17–27
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17–28
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17–29