Management A Practical Introduction Third Edition Angelo Kinicki & Brian K Williams Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 4: Global Management Managing Across Borders Globalization You & International Management Why & How Companies Expand Internationally Economic & Political-Legal Differences Regional Economic Cooperation Cultural Differences Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.1 Globalization: The Collapse Of Time & Distance Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.1 Globalization: The Collapse Of Time & Distance WHAT IS GLOBALIZATION? Globalization is the trend of the world economy toward becoming a more interdependent system Today, we are witnessing a shrinking of time and space as air travel and the electronic media have made it easier for people around the world to communicate with each other We call this the global village Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin The Global Economy Global Economy refers to the increasing tendency of economies of the world to interact with one another as one market instead of many national markets McGraw-Hill/Irwin Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc All rights rese 4.1 Globalization: The Collapse Of Time & Distance IS GLOBALIZATION A GOOD THING? Growth in jobs and income in one country means growth in jobs and income in other countries—a winwin situation However, global interdependency can be negative when negative events in one country generate negative events in other countries Outsourcing jobs also brings negative effects to the country that loses the jobs Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin The Global Economy: Positive and Negative Effects Negative Effects Can have some insecurity Economic crises in some countries can soon affect other countries Positive Effects U.S exports, international trade, and U.S workers are connected Growth of jobs and income in other countries will mean growth of jobs and income for the U.S McGraw-Hill/Irwin Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc All rights rese 4.1 Globalization: The Collapse Of Time & Distance Two types of firms are emerging in the world economy: mergers of huge companies into even bigger companies, and small, fast-moving start-up companies Companies in many industries are merging with other companies to be bigger, cross-border enterprises Almost any firm can operate globally today Thanks to the Internet and World Wide Web, small companies can get started more easily, and small companies can maneuver faster Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Globalization: The Collapse Of Time & Distance WHY SHOULD YOU LEARN ABOUT INTERNATIONAL MANAGEMENT? Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.1 Globalization: The Collapse Of Time & Distance WHY SHOULD YOU LEARN ABOUT INTERNATIONAL MANAGEMENT? International managers oversee the conduct of operations in, or with, organizations in foreign countries Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.5 The World Of Free Trade: Regional Economic Cooperation WHAT IS FREE TRADE AND REGIONAL ECONOMIC COOPERATION? Free trade means that goods and services move among nations without political or economic obstruction When governments use regulations such as tariffs, import quotas, and embargoes to limit the import of goods and services, they are being protectionist Governments use barriers to protect domestic industries from foreign competition Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.5 The World Of Free Trade: Regional Economic Cooperation There are three main types of trade barriers: Trade barriers in the form of a customs duty, or tax, levied mainly on imports are called tariffs Trade barriers that limit the numbers of a product that can be imported are import quotas Embargoes are complete bans on the import or export of certain products Groups of nations within a geographic region that have agreed to remove trade barriers with one another are called trading blocs or economic communities Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.5 The World Of Free Trade: Regional Economic Cooperation There are four major trading blocs: The North American Free Trade Agreement or NAFTA was formed in 1994 between the U.S., Canada, and Mexico NAFTA’s goal is to eliminate 99 percent of tariffs on goods trade between members The European Union was originally formed in 1957 and now includes 25 European countries The EU is the world’s largest free market Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.5 The World Of Free Trade: Regional Economic Cooperation The group of 21 Pacific Rim countries whose purpose is to improve economic and political ties is called the Asia-Pacific Economic Cooperation or APEC APEC, founded in 1989, is working toward the elimination of trade barriers Mercosur is the largest trade bloc in Latin America and has four core members—Argentina, Brazil, Paraguay, and Uruguay, and two associate members, Chile and Bolivia MERCOSUR has reduced tariffs by 75 percent Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.5 The World Of Free Trade: Regional Economic Cooperation Three organizations facilitate international trade: The World Trade Organization (WTO) is designed to monitor and enforce trade agreements The WTO, which superseded GATT in 1995, has 146 members and covers trade in goods and services The World Bank was established in 1944 to help rebuild Europe Today, it provides low-interest loans to developing nations for improving transportation, education, health, and telecommunications The International Monetary Fund (IMF) is designed to assist in smoothing the flow of money between nations The IMF was instrumental in bailing out nations affected by the Southeast Asian financial crisis Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 4: Global Management CLASSROOM PERFORMANCE SYSTEM Which trading bloc includes 21 Pacific Rim countries whose goal is to improve economic and political ties? A) the EU B) APEC C) NAFTA D) MERCOSUR Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 4: Global Management CLASSROOM PERFORMANCE SYSTEM Which trading bloc includes 21 Pacific Rim countries whose goal is to improve economic and political ties? A) the EU B) APEC C) NAFTA D) MERCOSUR Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.6 The Importance Of Understanding Cultural Differences WHY SHOULD MANAGERS UNDERSTAND CULTURAL DIFFERENCES BETWEEN COUNTRIES? Culture is the shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people Misunderstandings and miscommunications in international business often occur because of cultural misunderstandings In low-context cultures like Germany and the U.S., shared meanings are primarily derived from written and spoken words In high-context cultures like Japan and China, people rely heavily on situational cues for meaning when communicating with others Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.6 The Importance Of Understanding Cultural Differences Geert Hofstede identified four dimensions along which national cultures vary individualism/collectivism describes how loosely or tightly people are socially bonded (high) power distance refers to how much people accept inequality in power (low) uncertainty avoidance describes how strongly people desire uncertainty (low) masculinity/femininity refers to how much people embrace stereotypical male or female traits (moderately high) Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 4: Global Management CLASSROOM PERFORMANCE SYSTEM Which of the following is not one of Hofstede’s four dimensions? A) gender differentiation B) individualism/collectivism C) power distance D) uncertainty avoidance Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 4: Global Management CLASSROOM PERFORMANCE SYSTEM Which of the following is not one of Hofstede’s four dimensions? A) gender differentiation B) individualism/collectivism C) power distance D) uncertainty avoidance Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.6 The Importance Of Understanding Cultural Differences The GLOBE project is an ongoing cross-cultural investigation of nine cultural dimensions involved in leadership and organizational processes institutional collectivism - how much should leaders encourage and reward loyalty to the social unit in-group collectivism - how much pride and loyalty should people have for their family or organization power distance - how much unequal distribution of power should there be in society and organizations uncertainty avoidance - how much should people rely on social norms and rules to avoid uncertainty Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.6 The Importance Of Understanding Cultural Differences gender differentiation - how much should society maximize gender role differences assertiveness - how confrontational and dominant should individuals be in social relationships future orientation - how much should people delay gratifications by planning and saving for the future performance orientation - how much should individuals be rewarded for improvement and excellence humane orientation - how much should society encourage and reward people for being kind, fair, friendly, and generous Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.6 The Importance Of Understanding Cultural Differences Managers need to bridge cross-cultural gaps by understanding basic cultural across four areas Language - more than 3,000 different languages are spoken in the world Managers can either speak their own language, use a translator, or learn the local language Interpersonal space - how close people should be when communicating varies by culture Some cultures like the people of Latin America prefer a smaller interpersonal space, whereas others, like the people of Northern Europe prefer to be further apart Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4.6 The Importance Of Understanding Cultural Differences Time orientation - time orientation varies by culture Americans practice monochromatic time (a preference for doing one thing at a time) Arab cultures follow polychromatic time (preference for doing more than one thing at a time) Religion - Christianity has the largest following with 2.1 billion adherents, Islam is next with 1.3 billion followers, then Hinduism, Buddhism, and Judaism Organizations need to consider the impact of religious differences on employee groups Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin ... Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 4: Global Management CLASSROOM PERFORMANCE SYSTEM A manager that believes his way is best is a manager A) ... globally today Thanks to the Internet and World Wide Web, small companies can get started more easily, and small companies can maneuver faster Kinicki/Williams, Management: A Practical Introduction. .. entice companies to go international Avoidance of tariffs & import quotas - companies might establish a foreign subsidiary to avoid tariffs or quotas Kinicki/Williams, Management: A Practical Introduction