Chapter 4 - Managing in a Global Environment

Managers with a polycentric attitude view

-Every foreign operation is -Different and hard to understand -Employees in the host country know the best -Approaches and practices for running the business

The World Trade Organization (WTO)

-Evolved from the GATT -Centered around the public protests

To succeed in a global marketplace must

-Expect competitors to suddenly -Appear at any time from any place

Multinational corporations (MNC's)

-Have only become commonplace since -The mid-1960's -Known for polycentric attitudes -Utilize decentralization to make management decisions

The difference between multidomestic and global economy

-Multi-domestic, decentralized mgt in the local country -Global, centralized mgt in home country

The European Union covers

-Border controls, taxes, and subsidies -Nationalistic policies and travel -Employment, investment, and trade

Multi-domestic corporation features

-Decision-making takes place at the local level -Nationals are hired to run the company -Marketing strategies are tailored to country's culture

Compared to many other countries, changes to the US legal-political

-Environment are considered -Fixed

Americans dislike silence

They would rather talk about the weather than deal with silence in a conversation.

Ethnocentric attitude is

-Characterized by -Parochialism views

The European Union (EU) was

-Created by the unification of -12 countries in Europe in 1992 -Economic power against US and Japan

The European Union currently consists of

-27 countries -Switzerland, Norway, and Ireland are NOT members

Multinational company

-A company that maintains -Operations in multiple countries

Parochialism is

-A tendency to view the world through a single perspective -Does NOT recognize that others have different ways of living -Americans tend to study only English

Studies indicate that successful global management requires

-An attitude which is -Best described as geocentric

The executive body of the EU

-Based in Brussels, Belgium -Is known as the Maastricht Office

Ethnocentric attitude is the

-Parochialistic belief that -The best work approaches and practices are -Those of the home country

Geocentric attitude is a world-oriented view

-That focuses on using the best -Approaches and people from around the globe -Best approaches and people (mores) from around the globe

The domestic firm and foreign firm sharing

-The cost of developing new products or -Building production facilities in -A foreign country is called a joint venture

In a global marketplace

-The entire world is a marketplace -National borders are irrelevant -The potential for organizations to grow expands dramatically

The single EU currency is called

-The euro -Is a hard currency (generally acceptable everywhere) -Exceptions: UK, Sweden, and Denmark (due to nationalism)

From an economic standpoint, a threat to

-The global manager is -Widely fluctuation rates in -Foreign countries

The reason that a nation's cultural differences are

-The most difficult to gain information about is because -Natives are least capable of explaining -The unique characteristics of their own culture

American managers must eliminate

-Their ethnocentric attitudes -If they wish to be successful in international business

Geert Hofstede developed a valuable framework

-To help managers better understand -Differences between national cultures

North American Free Trade Agreement (NAFTA)

-Trade has increased -Includes US, Mexico, and Canada -Increased imports from Mexico by 106%

Hofstede's Five Dimensions of National Culture

1. Individualism vs. Collectivism 2. Power Distance 3. Uncertainty Avoidance 4. Achievement vs. Nurturing 5. Long-Term & Short-Term Orientation

What are Americans like?

1. Very informal 2. Direct 3. Competitive 4. Achievers 5. Independent and individualistic 6. Questioners 7. Silence 8. Punctuality 9. Cleanness

Americans value cleanness

Bathing, eliminating body odors, clean clothes.

Power Distance

Hoftstede used the term 'power distance' as a measure of the extent to which a society accepts the fact that power in institutions and organizations is distributed unequally. A high power distance society accepts wide differences in power in organizations.

Individualism vs. Collectivism

Individualism is the degree to which people in a country prefer to act as individuals rather than as members of groups. In an individualistic society, people are supposed to look after their own interests and those of their immediate family, and do so because of the large amount of freedom that the individualistic society allows its citizens.

Americans are competitive

Some foreigners may find Americans assertive and overbearing.

Achievement vs. Nurturing

The fourth cultural dimension, like individualism and collectivism, is a dichotomy. Achievement is the degree to which values-such as assertiveness, the acquisition of money and material goods, and competition-prevail.

Americans are questioners

They ask a lot of questions, even of someone they have just met. Many of these questions may seem pointless ("How ya doing?") or personal ("What kind of work do you do?").

Americans are direct

They don't talk around things. To some foreigners, this may appear as abrupt and even rude behavior.

Americans value punctuality

They keep appointment calendars and live according to schedules and clocks

Americans are achievers

They like to keep score, whether at work or at play. They emphasize accomplishments.

Americans are independent and individualistic

They place a high value on freedom and believe that individuals can shape and control their own destiny.

Americans are very informal

They tend to treat people alike even when there are great differences in age and social standing.

Long-Term & Short-Term Orientation

This cultural attribute looks at a country's orientation toward life and work. People in cultures with long-term orientation look to the future and value thrift and persistence. Also, in these cultures, leisure time is NOT so important, and it is believed that the most important events in life will occur in the future.

Uncertainty avoidance

Uncertainty avoidance describes the degree to which people tolerate risk and prefer structured over unstructured situations. People in LOW uncertainty avoidance societies are relatively comfortable with risks. They are also relatively tolerant of behavior and opinions that differ from their own because they don't feel threatened by them.