Chapter 3

Managing the Global Environment

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

LEARNING OUTLINE
Follow this Learning Outline as you read and study this chapter.

Whats Your Global Perspective?

Contrast ethnocentric, polycentric, and geocentric attitudes toward global business. Explain why its important for managers to be sensitive to global differences.

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

LEARNING OUTLINE (contd)

Follow this Learning Outline as you read and study this chapter.

Understanding the Global Environment

Describe the current composition and currency situation of the European Union.

Discuss the North American Free Trade Agreement and other regional trade alliances in Latin America.
Define the Association of Southeast Asian Nations. Explain the interdependence that globalization involves.

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

LEARNING OUTLINE (contd)

Follow this Learning Outline as you read and study this chapter.

Understanding the Global Environment (contd)

Discuss the role of the World Trade Organization. Contrast multinational corporations, transnational corporations, and borderless organizations. Describe the different ways that organizations can go global. Define exporting, importing, licensing, and franchising. Describe global strategic alliances, joint ventures, and foreign subsidiaries.
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

LEARNING OUTLINE (contd)

Follow this Learning Outline as you read and study this chapter.

Managing in a Global Environment

Explain how the global legal-political environment affects managers. Explain the nine GLOBE dimensions for assessing cultures. Discuss the challenges of doing business globally in todays world.

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

Whats Your Global Perspective?

Ethnocentric Attitude
Belief that home country has the best work approaches and practices

Polycentric Attitude
View that managers in host country know the best approaches and practices

Geocentric Attitude
A world-oriented view that focuses on using the best approaches and people from around the globe

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

Exhibit 3.1 Global Attitudes

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

Regional Trading Alliances

The European Union (EU)
A unified economic and trade entity
Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden

Economic and monetary union (Euro)

North American Free Trade Agreement (NAFTA)

Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees)
United States, Canada, and Mexico

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

Iceland

Nor way Iceland United Kingdom

North Sea

Finland Sweden Estonia Latv ia Lithuania

Russia

Russia

Ireland
North Atlantic Ocean
English Channel

Denmark

Netherlands Belgium Luxembourg

Bay of Biscay

Belarus Poland

Exhibit 3.2 European Union Countries

Kazakhstan
Aral Sea

Germany
Czech Rep. Slov akia

European Union Countries

Ukraine
Moldov a

France
Switzerland

Austria
Slovenia

Hungar y Romania Georgia

Bla ck Sea

Portugal

Andorra

Croatia BosniaHerzegovina Serbia

Spain

Italy
T yrrhenian Sea

Montenegro Albania
Ioni an Sea

Bulgaria

Armenia Azerbaijan Turkey

Macedonia

Greece

Aegean Sea

0 0 250

250

500 Miles

500 Kilometers

Malta

Cy prus

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

RED SEA

Regional Trading Alliances (contd)

Free Trade Area of the Americas (FTAA) Southern Cone Common Market (Mercosur) Association of Southeast Asian Nations (ASEAN)
Trading alliance of 10 Southeast Asian nations

African Union

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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Exhibit 3.3 ASEAN Members

Current members My anmar

Laos

Thailand Vietnam Cambodia Philippines

Brunei Malay sia Singapore

Indonesia
Source: Based on J. McClenahen and T. Clark, ASEAN at Work, IW. May 19, 1997, p. 42.

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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The World Trade Organization (WTO)

Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995 Functions as the only global organization dealing with the rules of trade among nations Has 147 member nations Monitors and promotes world trade

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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Different Types of Global Organizations

Multinational Corporation (MNC) A firm that maintains operations in multiple countries but manages from the home country Transnational Corporation (TNC) A firm that maintains operations in several countries but decentralizes management to the local country Borderless Organization A firm that organizes along business lines without consideration to artificial geographic barriers
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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Exhibit 3.4 How Organizations Go Global

Exporting to or importing from foreign countries Hiring foreign representation or contracting with foreign managers Licensing/ Franchising Strategic Alliances Foreign Subsidiary

Low

Degree of Risk and Investment

High

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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How Organizations Go Global

Exporting
Making products at home and selling them overseas

Importing
Selling products at home that are made overseas

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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How Organizations Go Global (contd)

Internal Sales or Manufacturing
Selling or having products made in foreign factories with no physical presence

Licensing and Franchising

Giving another organization the right to use brand name, technology, or product specifications
Licensing (manufacturing organizations) Franchising (service organizations)
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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How Organizations Go Global (contd)

Strategic Alliance
Partnership between an organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities

Joint Venture
A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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Managing in a Global Environment

The Legal-Political Environment
Stability or instability of legal and political systems
Legal procedures are established and followed Fair and honest elections held on a regular basis

Differences in the laws of various nations

Effects on business activities Effects on delivery of products and services

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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 The Economic Environment Economic Systems

Market economy

Managing in a Global Environment (contd)

An economy in which resources are primarily owned and controlled by the private sector

Command economy
An economy in which all economic decisions are planned by a central government

Monetary and Financial Factors

Currency exchange rates Inflation rates Diverse tax policies

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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Managing in a Global Environment (contd)

The Cultural Environment
National Culture
Values and attitudes shared by individuals from a specific country that shape their behaviour and their beliefs about what is important May have more influence on an organization than the organization culture

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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The GLOBE* Framework for Assessing Cultures

Assertiveness Future orientation Gender differentiation Uncertainty avoidance Power distance Individualism/collectivism In-group collectivism Performance orientation Humane orientation

*Global Leadership and Organizational Behaviour Effectiveness

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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Exhibit 3.5 Globe Rankings

Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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The Challenge of Global Management

Increased threat of terrorism Economic interdependence of trading Dealing with increased uncertainty, fear, and anxiety Acknowledging cultural, political, and economic differences Avoiding parochialism
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright 2005 Pearson Education Canada Inc.

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