Introduction To Organizations Management Chapter Four

Management Chapter Four competition and globalization - competitiveness is “the set institutions, policies and factors that determine the level of productivity of a country” globalization: the trend of the world economy toward becoming a more interdependent system the rise of the global village and electric commerce - the global village refers to the “shrinking of time and space as air travel and the electronic media have made it easier for the people around the globe to communicate with one another the arrival of the wed quickly led to the introduction of e-commerce or electric commerce the buying and selling of products and services through computer networks one big work market: the global economy - - the global economy refers to the increasing tendency of the economies of the world to interact with one another as one market instead of many national markets a global economy isn’t just good for megafirms like auto manufacturers. Minifirms which are considered small companies, also are thriving. positive of globalization o faster technological improvements o increased access to capital negative effects of globalization o job losses the united states o potential threats to information security data must be shares, possible loss of control over quality and standards because products or components are made hundreds or thousands of miles away and the risk of hidden or unanticipated costs, that can offset some the savings expected from moving manufacturing to countries with lower labor costs o if a nation is heavily depended on by others, and its economy falters, there can be instant regional or global instability cross-cultural awareness: is defined as the ability to operate in different cultural setting why learn about international management - - - a multinational corporation or multinational enterprise, is a business form with operation is several countries o mcdonalds is a well-known multinational corporation with more than 36,000 restaurants in over 100 a multinational organization is a nonprofit organization with operations in several countries o examples are the world health organization, the international red cross, and the church of latter day saints you may deal with foreign customers or partners o while working for a u.s. company you may have to deal with foreign customers o or you may have to work with a foreign company in some sort of joint venture - - - you may deal with foreign employees or suppliers o you may have to purchase important components, raw materials, or services your eu.s. employer from a foreign supplier you may work for a foreign firm in the unites states o you may sometime take a job with a foreign firm doing business in the united states such as an electronics, pharmaceuticals, or car company o sometimes it is even hard to know whether a u.s. company actually has foreign ownership you may work for a u.s. firm outside the unites states-or a foreign one o you might easily find yourself working abroad in the foreign operation of a u.s. company. the successful international manager: geocentric, not ethnocentric or polycentric - - - ethnocentric managers-“we know best: o ethnocentric managers believe that their native country, culture, language, and behavior are superior to all others o ethnocentric thinkers tend to believe that they can export the managers and practices of their home countries to anywhere in the world and that they will be more capable and reliable polycentric managers –“they know best.” o polycentric managers take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alone. o the attitude of polycentric managers is nearly the opposite of that of ethnocentric managers. geocentric managers—“what’s best is what’s effective, regardless of origin.” o geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective. o clearly, being an ethno- or polycentric manager takes less work. But the payoff for being a geocentric manager can be far greater. why companies expand internationally - - - - availability of supplies o mining companies, banana growers, sellers of hard woods—all have to go where their basic supplies or raw materials are located. new markets o sometimes a company will find, as cigarette makers have, that demand for their product has declined domestically but they can still make money over-seas. lower labor costs o the decline in manufacturing jobs in the United States is partly attributable to the fact that u.s. companies have found it cheaper to manufacture outside the states. access to finance capital o companies may be enticed into going abroad by the prospects of capital put up by foreign companies or subsidies from foreign governments. a sovereign wealth fund is a government-owned investment fund that often invests in foreign assets. avoidance of tariffs and import quotas o countries place tariffs (fees) on imported goods or impose import quotas—limitations on the numbers of products allowed in—for the purpose of protecting their own domestic industries. o - how companies expand internationally - - - - global outsourcing o outsourcing is defined as using suppliers outside the company to provide goods and services. o global outsourcing, or offshoring, is defined as using suppliers outside the united states to provide labor, goods, or services. importing, exporting, and countertrading o when importing, a company buys goods outside the country and resells them domestically. o when exporting, a company produces goods domestically and sells them outside the country. licensing and franchising o licensing and franchising are two aspects of the same thing, although licensing is used by manufacturing companies and franchising is used more frequently by service companies. o in licensing, a company allows a foreign company to pay it a fee to make or distribute the first company’s product or service. o franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company’s brand name and a package of materials and services. joint ventures o strategic allies are two organizations that have joined forces to realize strategic advantages that neither would have if operating alone. o a u.s. firm may form a joint venture, also known as a strategic alliance, with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country. wholly owned subsidiaries o a wholly owned subsidiary is a foreign subsidiary that is totally owned and controlled by an organization. o the foreign subsidiary may be an existing company that is purchased outright. barriers to international trade - - - tariffs o a tariff is a trade barrier in the form of a customs duty, or tax, levied mainly on imports. o a revenue tariff is designed simply to raise money for the government, such as a tax on all oil imported into the united states. o a protective tariff is intended to raise the price of imported goods to make the prices of domestic products more competitive. import quotas o an import quota is a trade barrier in the form of a limit on the numbers of a product that can be imported. o like a tariff, its intent is to protect domestic industry by restricting the availability of foreign products. o quotas are designed to prevent dumping, the practice of a foreign company’s exporting products abroad at a lower price than the price in the home market—or even below the costs of production—in order to drive down the price of the domestic product. sanctions and embargoes o a sanction is the trade prohibition on certain types of products, services, or technology to another country for specific reasons, including nuclear nonproliferation, terrorism, and humanitarian purposes. o an embargo is a complete ban or prohibition of trade of one country with another so that no goods or services can be imported or exported from or to the embargoed nation. exchange rate: is the rate at which the current of one area or country can be exchanged for the currency of another cultural dimensions - - - - - power distance—how much unequal distribution of power should there be in organizations and society? o power distance expresses the degree to which a society’s members expect power to be unequally shared. uncertainty avoidance—how much should people rely on social norms and rules to avoid uncertainty? o uncertainty avoidance expresses the extent to which a society relies on social norms and procedures to alleviate the unpredictability of future events. institutional collectivism—how much should leaders encourage and reward loyalty to the social unit? o institutional collectivism expresses the extent to which individuals are encouraged and rewarded for loyalty to the group as opposed to pursuing individual goals. in-group collectivism—how much pride and loyalty should people have for their family or organization? o in contrast to individualism, in-group collectivism expresses the extent to which people should take pride in being members of their family, circle of close friends, and their work organization. gender egalitarianism—how much should society maximize gender role differences? gender egalitarianism expresses the extent to which a society should minimize gender discrimination and role inequalities. assertiveness—how confrontational and dominant should individuals be in social relationships? o assertiveness represents the extent to which a society expects people to be confrontational and competitive as opposed to tender and modest. future orientation—how much should people delay gratification by planning and saving for the future? o future orientation expresses the extent to which a society encourages investment in the future, as by planning and saving. performance orientation—how much should individuals be rewarded for improvement and excellence? o performance orientation expresses the extent to which society encourages and rewards its members for performance improvement and excellence. humane orientation—how much should society encourage and reward people for being kind, fair, friendly, and generous? o humane orientation represents the degree to which individuals are encouraged to be altruistic, caring, kind, generous, and fair. o - - - - other cultural variations: - - - - - language o more than 7,100 different languages are spoken throughout the world, and it’s indeed true that global business speaks english, although mandarin chinese and spanish are spoken by more people globally. o it’s possible to gain some language proficiency online. interpersonal space o people of different cultures have different ideas about what is acceptable interpersonal space—that is, how close or far away one should be when communicating with another person. o the average interpersonal space for social distance, personal distance, and intimate distance across the 42 countries was 4.43 feet, 3 feet, and 1 foot, respectively. communication o research has found that cross-cultural communication competence plays a critical role for expatriates to communicate effectively. time orientation o time orientation is different in many cultures. o monochronic time. this kind of time is standard american business practice— at least until recently. that is, monochronic time is a preference for doing one thing at a time. In this perception, time is viewed as being limited, precisely segmented, and schedule driven. o polychronic time. this outlook on time is the kind that prevails in mediterranean, latin american, and especially arab cultures. polychronic time is a preference for doing more than one thing at a time. here time is viewed as being flexible and multidimensional. religion law and political stability o o o o o o - every firm contemplating establishing itself abroad must deal with other countries’ laws and business practices, which frequently involves making calculations about political risk that might cause loss of a company’s assets or impair its foreign operations. instability. even in a developed country a company may be victimized by political instability, such as riots or civil disorders. expropriation is defined as a government’s seizure of a domestic or foreign company’s assets. in 2019 vancouver authorities recommended the expropriation of two rundown, downtown hotels for $1 each. corruption. whether it’s called mordida (mexico), huilu (china), or vzyatka (russia), it means the same thing: a bribe. the foreign corrupt practices act makes it illegal for employees of u.s. companies to make “questionable” or “dubious” contributions to political decision makers in foreign nations. labor abuses. overseas suppliers may offer low prices, but working conditions can be harsh, as has been the case for garment makers in cambodia, bangladesh, india, myanmar, and pakistan.