History of Management

Thought and Practice

Global Dimensions of Management

Annisa Fitrohqolbina 15311234

Management (IP)
Faculty of Economic
Islamic University of Indonesia
Yogyakarta, 2015

Where Your Global Perspective?

English is the primary international language learned by most even almost all countries in
the world, including America. But Americans only learn the English language only. Americans
tend to regard English as the only language of international business and did not see the need to
learn another language.
Monolingualisme is one sign that Americans suffer from parochialism, which means they
view the world solely from the point of view and their own eyes. Parochialism is a significant
obstacle for many managers USA. If managers fall into the trap of ignoring the value and foreign
culture and to quickly implement an attitude of "ours is better than theirs" to foreign cultures, the
managers will have difficulty competing with managers and organizations elsewhere in the world
are trying to understand the customs foreign and differences between markets. , This is a major
obstacle to managers globally oriented. In addition, there are 3 major global attitude, which is as
follows.

Ethnosentric (home country-oriented)

Parokhialistis belief is that the approaches and practices that work best are those of the
country of origin (the country in which the corporate headquarters is located). The
manager with the ethnocentric attitude that in many foreign countries do not have the
skills expertise, knowledge,, or experience to make the best business decisions such as
those in his home country. They do not want to entrust important decisions or technology
to its foreign employees

Polisentric (host country-oriented)

Is the view that managers in the host country (the foreign country where the
business organization) knows best approaches and working practices to run
their business. Managers with polycentric attitude will view each foreign
operation as a different and difficult to understand. With so managers tend to
let foreign facilities and foreign employees to think about their own way of
taking care of everything is best.

Geosentric (world oriented)

Oriented view of the world is focused on the use of the approach and the best people
from all over the world. Managers with that type of attitude convinced that the necessary
global view at the headquarters of the organization in the country of origin and in the
various working facilities overseas. Sought is the best approach and human resources for
the company

 Understanding the Global Environment

Global environment are factors that affect the company's ability to conduct global
business to sell goods and services in order to achieve company goals. Global business is
an activity or activities of the fulfillment by buying and selling goods and services from
or to a different country. Global business activity is the need for process management.
Global management is the management of the organization carrying on business in more
than one country. Companies that do business globally is no longer a novelty, because it
has long been a lot of companies that sell their products to other countries
Managers in all sizes and types of organizations are faced with the opportunities and
challenges of global environmental management. When trade is allowed to flow freely,
the countries to benefit from economic growth and productivity profit because they
specialize in producing the goods they deem best and importing goods more efisiesn if
produced elsewhere. Global trade is made up of two forces, the regional trade alliances
and agreements negotiated through the World Trade Organization.

There are three things that must be taken to ensure that this strategic alliance is
successful, namely:
a) Selection of partners, which must be clear who will we get the cooperation, whether
the partners can work together achieve the goals and objectives of strategic alliances and
did not take advantage of its alliance soon. And future as a company that will do the
alliance strategy, we have taken various steps such as, searching information about
partners and collect the data and find out about the partner.

b) The structure of the alliance, which determines a structure to occur fairness in the
imposition of risk and avoid the use of partner for his own benefit.

c) Handling of the alliance, in that it can be done with technology security, or the
determination of the contract, where there is a clear agreement or contract, equitable
between the company and its partners with a solid commitment to avoid the risk of
unwanted

 Regional Trade Alliance

European Union
The European Union is an organization of intergovernmental and supranational, which consists
of the European countries, which since January 1, 2007 has had 27 member states. This union
was established on behalf of those under the EU Treaty (better known as the Maastricht Treaty)
in 1992.
Before the creation of the European Union, each country that has a border control, taxes,
subsidies, nationalistic policies, and industry-industry protection. Now, as a single market, there
are no national barriers to travel jobs, investment, and trade. The EU did a remarkable step
toward full unification when 12 of the 15 countries to be part of the Union of Finance and
Economics, the official system which is responsible for the development of the euro, the single
European currency. At this time, the UK, Denmark and Sweden have chosen not to participate.
From the turn of name from "European Economic Community" to "European Community" to the
"EU" signifies that this organization has been transformed from an economic union into a
political entity. This trend is characterized by an increasing number of policies in the EU.
The EU has several external policy, which is as follows.
A common external customs tariff, and the same position in international trade negotiations.

Funding for programs in the candidate countries and the member countries of Eastern Europe,
as well as aid to many developing countries through the Phare program and TACIS her.

The establishment of a single market through the European Energy Community South East
Europe Energy Community Treaty
In addition the EU also has cooperation and harmonization in other areas, such as:
Freedom for EU citizens to vote in local government elections and the European Parliament in
any member states as well
Cooperation in criminal matters, including sharing of intelligence (through EUROPOL and the
Schengen Information System), agreement on a common definition of the crime and extradition
procedures.

A common foreign policy as a future goal, however this is still a new long will materialize. The
division between the member states (in the letter of eight) and members who had not yet joined
(the letter Vilnius) during the invasion of Iraq in 2003 highlighted how far the target is in front
before he can become a reality.

A common security policy as a target, including the establishment of the European Rapid
Reaction Force to 60,000 members for the purposes of maintaining peace, an EU military staff
and an EU satellite center (for the purposes of intelligence).

A common policy on asylum and immigration.

Co-financing for research and technological development, through the Draft Programme for
Research and Technological Development for four years. Program Design Sixth valid from 2002
to 2006.
In terms of politics, the European Union has competences that are based on EU treaties and the
principle of subsidiarity which states that EU action can only be taken when an objective can not
be achieved adequately by only a member state. The law proclaimed by the EU institutions
incurred in some way, in general the law can be classified into two groups: the law that went into
effect without the need to measure the implementation of a national scale, and the laws that apply
to those needs. The main motivation for the unification of European countries it is that allows
them to reaffirm their position in the power industry the United States and Japan. Because
working in separate countries with barriers to one another, the European industry is not able to
develop the efficiency of businesses in the United States and Japan. European employers will
continue to play an important role in the global economy.
North America Free Trade Agreement (NAFTA)
North American Free Trade Agreement is an organization consisting of countries
Utara.Organisasi America was founded in 1994 by three countries, namely the United States,
Canada, and Mexico.
Charter states that NAFTA is tasked with coordinating economic activities, including trade
relations; communications; cultural activities; citizenship, passports, and visas; social activities;
and health activities. NAFTA headquarters are in Washington, DC, Ottawa, and Mexico City

 Association of Southeast Asian Nation (ASEAN)

Is a geo-political organization and economy of the countries in Southeast Asia, which was
founded in Bangkok, August 8, 1967 through the Bangkok Declaration by Indonesia, Malaysia,
Philippines, Singapore, and Thailand. The organization aims to boost economic growth, social
progress and cultural development of its member countries, and promote peace in the level
regionalnya.Negara ASEAN members held a rally in every November.

ASEAN's main principles are as follows:

- Respect for the independence, sovereignty, equality, territorial integrity, national and national
identity of each country
- The right for each country to lead a national presence freer than interference, subversion or
coercion outsiders
-No Interference in domestic affairs of fellow members
- Completion of a difference or dispute peacefully
- Reject the use of deadly force
- Effective cooperation among members
In the years that will be coming, Asian, and especially Southeast Asia region, it will probably be
one of the areas fastest growing economies in the world. The region will be regional economic
and political alliances are increasingly important in the end is able to counter the impact of
NAFTA and the European Union.
Other Trade Alliance
Rest of the world continue to strive to create a regional trade alliance. For example, the African
Union is a union consisting of 54 countries Afrika. only African country that is not fully joined
the UA is Morocco. Founded on July 9th 2002.
UA was formed as a successor to the Organisation of African Unity (OAU) The decision made
by the UA foremost African Union Assembly, in the years meeting of heads of state and
government of the countries members .Sekretariat UA, African Union Commission,
headquartered in Addis Ababa, Ethiopia. members of this alliance plans to create an economic
development plan and work to achieve greater unity among African countries. Like members of
other trade alliances, these countries hope to gain economic, social, cultural, and trade of their
associations.

 World Trade Organization

Global growth and trade between the countries does not happen by itself. Systems and
mechanisms necessary so that trade relations can be developed effectively and efficiently. One of
the most important mechanism is the so-called multilateral trading World Trade Organization
(World Trade Organization / WTO).
World Trade Organization (WTO) or the World Trade Organization is the only international body
that specifically regulate interstate commerce issues. Established on January 1 of the WTO
multilateral trade 1995.Sistem governed by an agreement which contains the basic rules of
international trade as a result of negotiations that have been signed by countries
anggota.Persetujuan is a contract between the member states which binds the government to
adhere to them in the implementation of policies trade in their respective countries. Although
signed by the government, its main purpose is to help producers of goods and services, exporters
and importers in trading activities. The Government of Indonesia has one of the founders of the
Word Trade Organization (WTO) and has ratified the Agreement Establishing the WTO through
Act No. 7 of 1994.
Regarding the function or purpose of the WTO can be seen in Article III of the WTO,
namely:
1. support the implementation, setup, and implementation of agreements that have been reached
to the target memujudkan the agreement,
2. as a negotiating forum for member countries of the agreements that have been achieved and its
annexes, including decisions determined later in the Ministerial Talks,
3. organize the implementation of the provisions regarding the settlement of trade disputes;
4. regulating mechanism in the field of trade policy review, and
5. create a framework of global economic policy making in cooperation with the International
Monetary Fund (IMF) and World Bank (World Bank), as well as affiliated agencies.
WTO has several important objectives, which are as follows.
encourage the flow of interstate commerce, by reducing and removing obstacles that may
interfere with the smooth flow of trade in goods and services.
facilitate negotiations by providing a more permanent negotiating forum. It is given that
international trade negotiations in the past the process is very complex and time consuming.

Another important goal is to resolve the dispute, given the trade relations often lead to conflict a conflict of interest. Although there has been approval - approval within the agreed WTO
members, it is still possible there is a difference of interpretation and abuse so that the necessary
legal procedures and neutral dispute resolution has been agreed. With the rule - the WTO rules
that apply equally to all members, whether individuals, companies or governments will have
greater certainty about the trade policy of a country. The binding of a country with the rule - the
WTO rules will minimize the possibility of a change - sudden changes in trade policy of a
country (more predictable)
Differences Global Organization Type
Organizations doing business globally is not something new. DuPont started doing
business in China in 1863.Ford Motor Company opened the first branch of its sales abroad in
France in 1908. In the 1920s, other companies including Fiat, Unilever and the Royal Dutch /
Shell has become a multinational. But then in the mid 1960s anperusahaan Multinational (MNC)
became prevalent, followed by the emergence of Transnational Corporations (TNCs).

Multinational Corporation (MNC) is a company doing business in many countries; These

companies are usually very large. Such companies have offices, factories or offices in many
countries. They usually have a central office where they coordinate global management. Very
large multinational companies have the funds passing through the funds of many countries. They
can have a strong influence in global politics, because of the influence they are very large
economies like the politicians, and also financial resources are very well off for public relations
and political lobbying. Because of the international reach and mobility of PMN, regions within
countries, and the state itself, have to compete so that these companies can put their facilities
(with as well as income tax, employment, and other economic activity) in the region. To be able
to compete, countries and regional political districts often offer incentives to PMN, such as tax
cuts, government assistance or better infrastructure or labor and environmental standards are
adequate.

There are two fundamental characteristics of multinational companies, that they are a very large
size and the fact that their business operations are spread throughout the world it tends to be
managed centrally by its leaders at its headquarters based in the country of origin. Their sizes are
so large would give economic power (and sometimes also political forces) are very large, so they
are a major force (about 40%) that caused the ongoing globalization of trade in fast. With the
world enormous power, they are in fact often dominate various trade commodities in developing
countries (tobacco, noodles, instant oatmeal, etc.).

Transnational Corporation (TNC). Transnational companies are companies that produce goods or
services in more than one State. Companies such as bias in the form of small companies that
have one or two factories in other countries, or even giant corporations that operate diseantero
this planet. TNCs are some examples of coca-cola, General Motors, Coltgate Palmolive, Kodak
and Mitsubishi. If TNCs have a national basis, they are oriented towards global markets and
global benefits.

Trans-national companies are the heart of the global economy. Two thirds of trade is derived
from such this companies. TNCs also instrumental in spreading global role new technology
diseantero world, and the main actors in the financial markets international. More than 400 TNCs
have an annual income of more than 10 billion dollars a year 1996.pada year Similarly, only 70
countries whose gross national product is equal to that amount. In other words, trans-national
corporate income is greater than the income of the world's countries. However, Transnational
Corporations or Multinational said as a driver of economic growth in Developing Countries and
contribute better to the development is just a tool of domination over the nations Strong countries
weaker, to dominate world trade. This is indicated by 80% of the world trade controlled by the
State-Developed countries and the percentage of world income gap between Developed and
Developing Countries big increasingly. Coca Cola which is a product of the Transnational
Corporations (TNCs) also have a negative impact also for the health and culture.

Organization Without Border (Borderless Organization)

Organization without borders it can be said to approach global business from a geometrical point.
For example, IBM has released its organizational structure based on state and set it back into
fourteen groups industri.Bristol-Myers Squibb changing consumer businesses to become more
aggressive in international sales and put a new executive who handles drugs for consumers
around the world, such as Bufferin and Excedrin. And Telefonica's of Spanish eliminate
geographical divisions between its headquarters in Madrid and widespread telephone company.
Instead, the company will be organized by lines of business, such as Internet services, mobile
phones and media operations. Management without borders is the organization's efforts to
improve efficiency and effectiveness in the fierce global market competition

 How Organizations Become Global

1. Import
to become a global approach that includes selling the product in the country of origin made
abroad.
2. Doing license
approach to become a global organization that includes the manufacturer gives to other
organizations better to use the brand, technology or specialization your product
3. Franchising
approach to become a global organization providing services to other organizations include the
right to use the brand, technology or product specifications you
4. The strategic alliance
to become a global approach involves partnerships between certain organizations with foreign
companies which both share
5. Joint ventures
global approaches to be certain that the strategic alliance in which his partner agreed to form a
separate organization from the independent to achieve specific business goals
6. Foreign subsidiary
to become a global approach that includes direct investments in foreign countries to characterize
the production facility or a separate office or independent
resources and knowledge to develop new products or build production facilities
Managing in the Global Environment
Political-Legal Environment
The political system in question is the governance system of a two-dimensional negara.Ada used
to measure the political system, namely, the degree of emphasis on collectivism and the degree
of emphasis on democracy.
1. Collectivism
a system that put the interests or collective goals (shared / common) than interest / freedom of
the individual (personal). And the opposite of collectivism is individualism.

2. Democracy
political system that leads to the condition that the administration is done by people who are
chosen through elections. And opponent of democracy is totalitarianisme.Totalitarianisme is a
form of government that controls the absolute or dictatorial control.
The manager at a number of global organizations have to constantly get information about the
business.
Economic Environment
Global managers must be aware about economic matters when doing business in other countries.
The first is to understand the type of economic system in the country where the business is
dijalankan.Dua main types of market economy and command economy. However, in practice, the
economic system can be divided into three types, namely:
a) The market economy
Is a purely economic system, in which goods and services are produced entirely by the state, the
amount is not planned by anyone, depending on the interaction between demand and supply.

b) Economy of command
An economic system in which goods and services produced and the price determined by the
government.

c) Mixed economy
An economic system that is between a market economy and command economy, in this system
there are certain sectors that are governed by the market or on the interaction of demand and
supply and also there are some other sectors that are planned by the government.
Managers need to know the system in these countries because it has the potential to limit the
decisions and other economic. That need to be understood by managers include currency
exchange rates, inflation rates, and various tax policy. Global corporate profits may dramatically
change depending on the strength of its domestic currency and the currency of the countries in
which it operates. Any devaluation of the currency of a country will greatly affect the level of
corporate profits. Strength of the currency of certain foreign countries may also influence the
decisions of managers. Inflation means that prices of products and services are rising. However,
it also affects interest rates, currency exchange rates, cost of living, and public interest in the
political and economic system a country. Management need to monitor outcomes inflation trends

so they can make good decisions and anticipate all changed the possibly take place in policy
finances of a country. Tax policy is a major concern for global managers. Some countries tan
house being more restrictive than the country of origin of the organization. Other countries are
much lighter policies. The only certainty is that setting taxation is different in different countries.
The manager requires a certain knowledge of the various tax laws in the countries where they
operate in order to minimize their company's overall tax liability.
Environmental Culture
Each organization has a different internal different cultures. Country also have culture as
well, as it has long been said by the expert anthropology to us. Such as national culture (national
culture) are the values and attitudes held by certain countries that shape the behavior and their
beliefs about what is considered important.
Research shows that national culture has a greater influence on employees than their
organizational culture.

Hofstede Framework
Geert Hofstede has put forward the concept of culture in organizational theory, in this case
as one dimension in understanding organizational behavior. This concept becomes important in
economic theory and management at this time, in the era of globalization, when many
multinational companies operating in different countries with a wide variety of different cultures.
Power Distance
According to Hofstede, "power distance" is a level of trust or acceptance of an unequal power
between people. Cultures in which some people considered more superior than others because of
social status, gender, race, age, education, birth, attainment, background or other factors is a form
of high power distance. In the countries that have a high power distance, people accept more
autocratic power relations and patrenalistik. Meanwhile cultures with low power distance tend to
see similarities between people and more focus on the status achieved than is carried by a person.

Individualism vs. Collectivism

Individualism is the opposite of collectivism, which is the level at which an individual is
integrated into the group. From the individualist side we see that there is a loose bond between
individu. Every people are expected to take care of themselves each and immediate family.
Meanwhile from the collectivist side, we see that from birth people are already integrated into
the group. Even distant relatives often also involved in the care of relatives and relatives.

Uncertainty Avoidance
One of the dimensions of Hofstede is about how a national culture associated with uncertainty
and ambiguity, and how they adapt to change. In countries that have large uncertainty avoidance,
tend to uphold the conformity and safety, avoid risk and rely on formal rules and rituals. Belief is
only given to family and closest friends. It would be difficult for a negotiator from outside to
build relationships and gain the trust of them. In countries with low uncertainty avoidance, or
have a higher tolerance for uncertainty, they tend to be more accepting of risk, can solve the
problem, have a flat organizational structure, and have a tolerance for ambiguity. For people
from outside the community, it will be easier to live a relationship and gaining trust.

Quantity vs. Quality of Life

The fourth dimension of culture such as individualism and collectivism, is a branching. Quantity
of life is the rate at which values, such as assertiveness, possession of money and goods, and
competition emerge. Quality of life is a national culture attribute that emphasizes relationships
and caring for others

Orientation Long Term and Short Term

The last cultural attributes of Hofstede see the orientation of a country to live and work. People
who are in a long-term orientation cultures look to the future and appreciate the savings and
perseverance. Short-term orientation to appreciate the past and the present and emphasize respect
for tradition and fulfilling social obligations.
Global Management in the World Today
Doing global business today is not easy. Managers face serious challenges . Challenge
increased from association open to globalization and of significant cultural differences. Rapid
changes, which occur in the business environment has been automatically requires every
business to always pay attention and response to this environment condition. That company to
then formulate a strategy to be able to anticipate change and goal achievement company. By on
the importance of strategy formulation, process the formulation of the strategy is a series of
activities to find the right strategy for the company. The series of activities that are required
include environmental analysis company, both internal and external. Analis environment is
useful to know the strengths, weaknesses, opportunities and threats that may facilitate or hinder
the development of the company.

The era of economic globalization is accompanied by the rapid development of

technology, impact on increasing competition and the rapid changes in the business environment.
Goods of domestic production now must directly compete with products from abroad, and
companies must accept the fact that the rapid development of technology resulted in rapid
obsolescence of production facilities, increasingly short product life cycles, and the benefits
would be even lower , The business environment faced by firms in the world are increasingly
turbulent (turbulent), especially since the global crisis and a change of government following the
social unrest in the country at the beginning of 2009. Moreover, the internal condition of most
companies has deteriorated and the bankruptcy of some companies, bringing attention to
influence and impact factors external environment becomes very important. Changes in the
business environment will occur at any time, usually in the form of motion changes from one or
a combination of environmental factors outside the company, both at the national, regional and
global. Most of their impact proved to have influenced the arrival of a lot of business
opportunities (business opportunities), but many also recorded a case of external factors which
become obstacles in trying (business threats and constraints).
The success of managing the current global environment will require sensitivity and
understanding remarkable. Thus, managers need to be aware that what they decide and do will be
noticed not only by those who might disagree, but most importantly by those who disagree. By
it, the managers need to adjust leadership style and management approach to accommodate
differences in views .but, as is usually the manager will need to be able to do this while as far as
possible remain efficient and effective in achieving organizational goals.

Conclusion
In managing the global market, the most basic thing we should have is a good global
viewpoint, we also have to always know the latest news about global organizations are an
important influence in the world economy, as well as global environmental know very well.