management chapter 3

why is global diversity important

Affects every aspect of human behavior Major impact on employees work related values and attitudes Affects way organization are managed

assertiveness v nurturing

Assertiveness Assertive culture are more aggressive and competitive with focus on achievement and material possessions Ex: ( Indonesia & China) Nurturing Nurturing cultures emphasize the importance of relationships, modest, caring and quality of life Ex: ( Netherlands & France)

globe dimensions

Assertiveness Future Orientation Gender differences Uncertainty Avoidance Power Distance Social Collectivism In-Group Collectivism Performance Orientation Humane Orientation table in slides****

types of contracting

Contract Manufacturing: Company has foreign firm manufacture the products that it sells as its own Management Contracting: Company provides management service for a foreign firm

direct investment

Direct investment is the building or buying operating facilities in a foreign country. It is also called wholly owned affiliates or subsidiaries ExxonMobil uses all of the methods for going global, but it is primarily at the highest level with direct investments in all continents.

describe diversity and why it is important

Diversity refers to the variety of people with different group identities within the same workplace. Discrimination is illegal because it gives unfair treatment to diversity groups in employment decisions. But promoting diversity creates equal opportunities for all employees, so it is the right thing to do. But diversity is also beneficial to business. The global white population is decreasing while the other races are growing at a fast pace making developing and selling products and services to non-Caucasians critically important to survival and business growth. Diversity can have positive effects on financial outcomes as other races are creative at innovating and selling products and services to the growing diverse population.

workplace diversity

Diversity: refers to the variety of people with different group identities within the same workplace. Types of Workforce Diversity Age Sex Race and Ethnicity Disability Other

domestic and international business

Domestic Business: Conducts business in only one country International Business: based primarily in one country but transacts business in other countries

trade barriers (non tax barriers)

Embargo: Total ban on the importing of a product from one or more countries Quotas: Sets a limit on the number or volume of a product that can be imported or exported during a set period of time Subsidies: Include government grants, loans and a tax breaks given to domestic companies Tariff(Tax Method): direct tax on imports to make them more expensive

exchange rates and balance of payments

Exchange Rates. The exchange rate is how much of one country's currency you get for that of another country. (Exhibit 3-3) Balance of Trade. The total country exchange results in the balance of trade. The balance of trade is the difference between the value of the products (including services) it exports and the value of the products it imports. A country importing more than it exports runs a trade deficit, and a country exporting more than it imports runs a trade surplus

foreign trade

FOREIGN TRADE: conducting business with other countries Foreign trade benefits companies but it can also hurt. For example, it is difficult for the United States to compete against China because of the large difference in labor costs. Dumping: They sell products in one country at a high profit and sell in another country at a loss with the intention of driving out the competition

foreign companies

Foreign subsidiaries or Affiliates: company owned and controlled by another company making up a combined company called the holding or parent company Ex: Pepsi Co primary business include Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade

franchising

Franchising: The franchisor licensees the entire business to the franchisee for a fee and royalties McDonalds & Subway

Hofstede National Culture Diversity

Geert Hofstede surveyed more than 116,000 IBM employees in 40 countries about their work related values He identified 5 cultural dimensions in which employees differ

globe

Global Leadership and Organizational Behavior Effectiveness Extended & expanded Hoeftede's 5 dimensions into 9

business practices and global companies

Global Management Team- Leading MNC's have top level managers who are foreign nationals and subsidiaries managed by foreign nationals (EXHIBIT 3-5) Global Strategy- There is one strategy for the entire company not one per subsidiary Global Operations and Products-MNC's have standardized operations worldwide to attain economies of scale and they make products to be sold worldwide not just in local markets

business practices and global companies cont

Global Technology and R&D- Technology research and development are centralized in one country, rather than duplicated at each subsidiary, to develop world products Global Financing- MNC's search world markets to get the best rates and terms when borrowing money for the long term; short term financing is largely arranged in individual countries using local financial institutions Global Marketing- Global products and marketing are adapted for local markets. Advertisements are often developed by local agencies

Classifying Business in Global Village

Global business: buying and selling of goods amongst different countries Global village: refers to companies conducting business worldwide without boundaries

parochialism

Having narrow focus or seeing things solely from ones own perspective

global sourcing

Hiring others outside the firm to perform work worldwide AKA Outsourcing & Offshoring

importing and export

Importing: Domestic firm buys products from foreign firms and sells them at home Exporting: Domestic firm sells its products to foreign buyers

individualism v collectivism

Individualism Individualist culture believes the individual should be self-sufficient with loyalty to themselves first and the group and company second Ex:( U.S & Netherlands) Collectivism Places the group and company first Ex:( Indonesia & China)

licensing

Licensing: Licensor agrees to give a licensee the right to make its products or serves or use its intellectual property for a royalty Disney

long term v short term orientation

Long term Long term cultures look to the future and value thrift Ex: ( China & Hong Kong) Short Term Short term cultures focus on the past and present and immediate gratification Ex: ( U.S & Germany)

multinational corporations

Multinational Corporation(MNC): Has ownership in operations in two or more countries Exxon Mobil is an MNC

world trade organization: wto

Organizations and governments are working together to develop free trade among countries. Replacing the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO) is an international organization dedicated to global free trade.

the five cultural dimensions

Power distance inequality vs. Power Equality Individualism vs. Collectivism Assertiveness vs. Nurturing Uncertainty avoidance or Acceptance Long term vs. Short term

ethnocentrism

Regarding ones own ethnic group or culture as superior to others

contracting

Similar to global sourcing in larger scale Having the foreign company actually make the product for you Company dependent on the outsourcer All kinds of products and services can be contracted

taking a business global

Six activities: Global Sourcing Importing and Exporting Licensing and Franchising Contracting Strategic Alliances and Joint Ventures Direct Investment

strategic alliances and joint ventures

Strategic alliance is an agreement to share resources that does not necessarily involve creating a new company. A joint venture is created when two or more firms share ownership of a new company.

Compare and contrast the Hofstede national culture dimensions with the GLOBE initiative.

The two are similar because they both measure cultural diversity among countries. Conversely, back in the 1970s and 1980, Hofstede identified five dimensions of diversity (Power distance inequality versus power equality, Individual versus collectivism, Assertiveness versus nurturing, Uncertainty avoidance or acceptance, Long-term versus short-term orientation). GLOBE confirmed that the Hofstede five dimensions are still valid today and extended and expanded his five dimensions into nine

differentiate the common barriers to trade

There are four primary barriers to trade to protect domestic companies from foreign companies. An embargo is a total ban on the importing of a product from one or more countries; it is often based on import standards. A quota sets a limit on the number or volume of a product that can be imported or exported during a set period of time. Subsidies include government grants, loans, and tax. A tariff is a direct tax on imports, whereas embargos, quotas, and subsidies restrict trade without taxing the importing company.

trade agreements

There are six major trade agreements around the globe: North American Free Trade Agreement (NAFTA) Dominican Republic-Central American Free Trade Agreement (CAFTA-DR) Union of South American Nations (UNASUR) European Union (EU) Association of Southeast Asian Nations (ASEAN) Asia-Pacific Economic Cooperation (APEC)

transnational corp

Transnational Company type of MNC Eliminate artificial geographical barriers Don't have s single national headquarter

uncertainty avoidance or acceptance

Uncertainty avoidance Avoidance cultures like structure, security, and are less likely to take risk Ex: ( Japan & Germany) Acceptance Uncertain acceptance is more comfortable dealing with the unknown and change and take more risk Ex: ( Hong Kong)

power distance inequality v power equality

power distance being distributed between levels of management down to employees can be more accepted (Russia & China) OR Rejected as employees want to participate in decision that affects them(Denmark & Sweden)

List the six activities that make a business a global one, in order from lowest to highest cost and risk:

(1) Global sourcing, hiring others outside the firm to perform work worldwide. (2) Importing and Exporting, buying and selling products between countries. (3) Licensing, licensor agrees to give a licensee the right to make its products or serves or use its intellectual property for a royalty. Franchising, the franchisor licenses the entire business to the franchisee for a fee and royalties. 4) Contract manufacturing, a company has a foreign firm manufacture the products that it sells as its own. (5) Strategic alliance, an agreement to share resources that does not necessarily involve creating a new company. A Joint venture, created when two or more firms share ownership of a new company. (6) Direct investment, building or buying operating facilities in a foreign country. Global sourcing is the least costly and risky of these activities, and it can be a part of any of the others.

Describe the four major types of diversity groups and practices of managing diversity.

(1) range of ages in the workplace, (2) a mix of male and female sex, (3) different races and ethnicity groups (4) people with disabilities that substantially limits one or more major life activities. To manage diversity, companies cannot discriminate against any diverse group, and should promote equal opportunities for everyone. Practices that promote diversity include: (a) diversity training to teach people how to get along better with diverse workers, (b) higher-level manager mentors who prepare high-potential people for advancement (c) network diversity groups of employees throughout the organization from a diverse group that share information about how to succeed in the company.

contrast the classification of businesses in the global village

A domestic business does business in only one country. An international company is based primarily in one country but transacts business in other countries. A multinational corporation (MNC) owns operations in two or more countries. International companies are generally smaller than MNCs and are commonly importers and exporters. Whereas, MNCs tend to make the products and services in or nearer to the countries they sell to.