Chapter 3

ManagingtheGlobalEnvironment

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

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

WhatsYourGlobalPerspective?
Contrastethnocentric,polycentric,andgeocentric
attitudestowardglobalbusiness.
Explainwhyitsimportantformanagerstobesensitive
toglobaldifferences.

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

LEARNING OUTLINE (contd)

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

UnderstandingtheGlobalEnvironment
Describethecurrentcompositionandcurrencysituation
oftheEuropeanUnion.
DiscusstheNorthAmericanFreeTradeAgreementand
otherregionaltradealliancesinLatinAmerica.
DefinetheAssociationofSoutheastAsianNations.
Explaintheinterdependencethatglobalizationinvolves.

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

LEARNING OUTLINE (contd)

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

UnderstandingtheGlobalEnvironment(contd)
DiscusstheroleoftheWorldTradeOrganization.
Contrastmultinationalcorporations,transnational
corporations,andborderlessorganizations.
Describethedifferentwaysthatorganizationscango
global.
Defineexporting,importing,licensing,andfranchising.
Describeglobalstrategicalliances,jointventures,and
foreignsubsidiaries.
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

LEARNING OUTLINE (contd)

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

ManaginginaGlobalEnvironment
Explainhowthegloballegalpoliticalenvironment
affectsmanagers.
ExplainthenineGLOBEdimensionsforassessing
cultures.
Discussthechallengesofdoingbusinessgloballyin
todaysworld.

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

Whats Your Global Perspective?

EthnocentricAttitude
Beliefthathomecountryhasthebestworkapproaches
andpractices

PolycentricAttitude
Viewthatmanagersinhostcountryknowthebest
approachesandpractices

GeocentricAttitude
Aworldorientedviewthatfocusesonusingthebest
approachesandpeoplefromaroundtheglobe
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

Exhibit 3.1 Global Attitudes

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

Regional Trading Alliances

TheEuropeanUnion(EU)
Aunifiedeconomicandtradeentity
Belgium,Denmark,France,Greece,Ireland,Italy,
Luxembourg,theNetherlands,Portugal,Spain,theUnited
Kingdom,Germany,Austria,Finland,andSweden

Economicandmonetaryunion(Euro)

NorthAmericanFreeTradeAgreement(NAFTA)
Eliminatedbarrierstofreetrade(tariffs,importlicensing
requirements,andcustomsuserfees)
UnitedStates,Canada,andMexico
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

Iceland

Norway
Iceland

Ireland

United
Kingdom

North
Atlantic
Ocean

Finland
Sweden
Estonia

North
Sea

Russia

Latvia

Denmark

Lithuania
Russia

European Union
Countries

Luxembourg
Bay
of
Biscay

Portugal

Belgium

Andorra

Spain

France

Germany

250
250

Poland

Switzerland Austria Hungary

Slovenia
Romania
Croatia
BosniaHerzegovina Serbia

Italy

Moldova

Georgia

Bla ck Sea

Armenia

Montenegro Bulgaria
Macedonia
Albania
Ionian
Sea

Aral
Sea

Ukraine

Czech Rep.
Slovakia

Tyrrhenian
Sea

Kazakhstan

Belarus

Netherlands
English Channel

Exhibit 3.2
European Union
Countries

Greece Aegean

Azerbaijan
Turkey

Sea

500 Miles

500 Kilometers

Malta

Cyprus

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian
RED
SEA

Regional Trading Alliances

(contd)

FreeTradeAreaoftheAmericas(FTAA)
SouthernConeCommonMarket(Mercosur)
AssociationofSoutheastAsianNations
(ASEAN)
Tradingallianceof10SoutheastAsiannations

AfricanUnion

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

10

Exhibit 3.3 ASEAN Members

Current members

Myanmar

Laos

Thailand

Vietnam

Philippines

Cambodia

Brunei
Malaysia
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

11

The World Trade Organization

(WTO)

EvolvedfromtheGeneralAgreementon
TariffsandTrade(GATT)in1995
Functionsastheonlyglobalorganization
dealingwiththerulesoftradeamongnations
Has147membernations
Monitorsandpromotesworldtrade

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

12

Different Types of Global

Organizations

MultinationalCorporation(MNC)
Afirmthatmaintainsoperationsinmultiplecountries
butmanagesfromthehomecountry
TransnationalCorporation(TNC)
Afirmthatmaintainsoperationsinseveralcountries
butdecentralizesmanagementtothelocalcountry
BorderlessOrganization
Afirmthatorganizesalongbusinesslineswithout
considerationtoartificialgeographicbarriers
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

13

Exhibit 3.4 How Organizations

Go Global
Exporting to
or importing
from foreign
countries

Low

Hiring foreign
representation
or contracting
with foreign
managers

Licensing/
Franchising

Strategic
Alliances

Degree of Risk and Investment

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

Foreign
Subsidiary

High

14

How Organizations Go Global

Exporting
Makingproductsathomeandsellingthem
overseas

Importing
Sellingproductsathomethataremadeoverseas

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

15

How Organizations Go Global

(contd)

InternalSalesorManufacturing

Sellingorhavingproductsmadeinforeign
factorieswithnophysicalpresence

LicensingandFranchising
Givinganotherorganizationtherighttouse
brandname,technology,orproduct
specifications
Licensing(manufacturingorganizations)
Franchising(serviceorganizations)
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

16

How Organizations Go Global

(contd)

StrategicAlliance

Partnershipbetweenanorganizationanda
foreigncompanyinwhichbothshareresources
andknowledgeindevelopingnewproductsor
buildingnewproductionfacilities

JointVenture
Aspecifictypeofstrategicallianceinwhichthe
partnersagreetoformaseparate,independent
organizationforsomebusinesspurpose
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

17

Managing in a Global
Environment

TheLegalPoliticalEnvironment

Stabilityorinstabilityoflegalandpolitical
systems
Legalproceduresareestablishedandfollowed
Fairandhonestelectionsheldonaregularbasis

Differencesinthelawsofvariousnations
Effectsonbusinessactivities
Effectsondeliveryofproductsandservices

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

18

Managing in a Global
Environment (contd)

TheEconomicEnvironment
EconomicSystems
Marketeconomy

Aneconomyinwhichresourcesareprimarilyownedand
controlledbytheprivatesector

Commandeconomy

Aneconomyinwhichalleconomicdecisionsareplannedbya
centralgovernment

MonetaryandFinancialFactors
Currencyexchangerates
Inflationrates
Diversetaxpolicies

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

19

Managing in a Global
Environment (contd)

TheCulturalEnvironment
NationalCulture

Valuesandattitudessharedbyindividualsfroma
specificcountrythatshapetheirbehaviourandtheir
beliefsaboutwhatisimportant
Mayhavemoreinfluenceonanorganizationthanthe
organizationculture

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

20

The GLOBE* Framework for

Assessing Cultures

Assertiveness
Futureorientation
Genderdifferentiation
Uncertaintyavoidance
Powerdistance

Individualism/collectivism
Ingroupcollectivism
Performanceorientation
Humaneorientation

*GlobalLeadershipandOrganizationalBehaviourEffectiveness
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

21

Exhibit 3.5 Globe Rankings

Chapter 3, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian

22

The Challenge of Global

Management
Increasedthreatofterrorism
Economicinterdependenceoftrading
Dealingwithincreaseduncertainty,fear,and
anxiety
Acknowledgingcultural,political,and
economicdifferences
Avoidingparochialism
Chapter 3, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

23