GLOBAL DIMENSIONS OF MANAGEMENT

global economy

The worldwide interdependence of

resource supplies, product markets, and
business competition

International management

Management activity that takes place in

organizations with business interests in
more than one country

characteristics of global managers

European Union

competitive implications for the

European Union

Euro

Countries that have joined together to

form the North American Free Trade
Agreement (NAFTA) include

The North American Free Trade

Agreement has created a market of
potential consumers larger than its

Being informed about

international developments

Being competent in working with

people from different cultures

Being transnational in outlook

Being aware of regional

developments in a changing
world

is a political and economic alliance of

European countries

Free flow of workers, goods and

services, and investments across
national boundaries.

the new common currency of the

European Union

Canada

Mexico

United States.

European Union

rival, the

describes the concerns of the countries

that negotiated the North American
Free Trade Agreement

Critics of operation of manufacturing

plants that are allowed to import
materials, components, and equipment
duty free, say they

China

The following characteristics accurately

describe Asia and the Pacific Rim

Canadian firms worried

about domination by United
States manufacturers.

American politicians were

concerned about the potential
loss of jobs to Mexico.

Mexico feared a further

intrusion of U.S. culture and
values into Mexico.

Americans complained that

Mexican businesses had lower
social standards regarding the
use of child labour and protection
of the environment.

Deny jobs to Americans and

Canadians.

Create high social costs for

Mexican border towns.

Exploit lower-cost Mexican

labour

is the worlds largest consumer

marketplace and a major exporter of
clothing, computers, electrical parts
and components, telecommunications
equipment, and sporting goods.

Asian countries are the worlds

top market for cars and
telecommunications equipment.

Low-cost labour is a business

advantage in Asian countries.

The growing availability of highly

skilled brainpower is a business

advantage in Asian countries.

discourage international business in

parts of Africa:

A low economic growth rate in

sub-Saharan Africa.

Poverty.

A continuing AIDS epidemic

South Africa is experiencing

economic recovery and attracting
outside investors.

South Africa accounts for half the

African continents purchasing
power.

Foreign investment in South

Africa increased sharply after
minority white rule ended.

describes post-apartheid South Africa:

Conducting for-profit transactions of

goods and services across national
boundaries is the foundation of

Businesses expand their operations to

the international market for many
reasons:

The process of purchasing materials,

component parts, or business services
from different countries around the

International business.

To expand profit potential.

To increase access to needed raw

materials.

To draw on the financial

resources of many nations.

To have access to lower

labour costs.

Global sourcing

world is known as

The goal of Global sourcing

is to take advantage of international

wage gaps and the availability of skilled
labour by contracting for goods and
services in low-cost foreign locations

The exporting of products involves

Selling locally made products in foreign

markets

The importing of products involves

Acquiring foreign-made products and

selling them in domestic markets

A licensing agreement

is a form of international business

through which a foreign company pays
a fee for the rights to manufacture or
sell another firms products in a
specified region

Franchising

A form of licensing in which a foreign

firm buys the rights to use anothers
name and operating methods in its
home country

A firm that establishes a direct

investment in a foreign country through
a co-ownership arrangement that pools
resources, shares risks, and shares
control of business operations is
engaging in

A joint venture

sound advice for selecting joint venture

partners in a foreign country:

Choose a foreign partner with

activities that do not compete
with or relate closely to your
firms major business.

Choose a foreign partner with a

strong local workforce.

Protectionism

Political calls for tariffs and favourable

treatment to help shelter domestic
businesses from foreign competition

The best definition of a true

multinational corporation is:

A business that has extensive

international operations in more than
one foreign country

Transnational corporation

A company that operates worldwide

without being identified with one
national home

Host countries sometimes complain

about the presence of multinational
firms. These complaints include

Multinational corporations have several

complaints about host countries:

MNCs may dominate the

local economy.

MNCs may export jobs to

other countries.

MNCs may fail to transfer

their most advanced technology.

MNCs fail to help domestic

firms develop.

Foreign exchange
restrictions.

Pressure to buy raw

materials at inflated prices.

Failure to protect
intellectual property.

Multinational corporations are often

criticized at home for

Failure to uphold contracts

Diverting labour-intensive
jobs from the domestic labour
force to foreign labour markets.

Corruption

Ethical issues in international business

include:

A sweatshop:

Diverting capital
investments away from the
domestic market.

Allowing or encouraging
corrupt practices in their foreign
subsidiaries

Engaging in illegal practices to further

ones business interests

Sweatshop operations that

employ local labour at low wages
and often in poor working
conditions.

Usage of child labour in the

manufacture of handmade
products.

Protection of the natural

environment.

employs workers at very low wages and

often in poor working conditions

Child labour involves the full-time

employment of children for work:

That is normally performed by adults

Sustainable development

meets the needs of the present

generation without compromising the
ability of future generations to meet
their needs.

Culture

A shared set of beliefs, values, and

patterns of behaviour common to a
group of people

Culture shock

is the confusion and discomfort a

person experiences when in an
unfamiliar culture

Ethnocentrism

is the tendency to view ones culture as

superior to others

This sequence accurately describes the

stages that a person goes through in
adjusting to a new culture:

descriptions of the role of interpersonal

space in cultures:

As a cultural variable, religion may:

Confusion

small victories

the honeymoon

irritation/anger

reality

Interpersonal space is a silent

language of culture.

Arabs prefer closer interpersonal

space in terms of
communication.

Americans tend to prefer wider

interpersonal space in
communication.

In Japan, executive offices

are likely to be shared even in
major corporations

Affect business practices

regarding dress, food, and
interpersonal behaviour.

Provide ethical and moral

guidance for personal and
organizational activities.

Require business people to

be sensitive to the rituals, holy
days, and other expectations
associated with the host nations

religious tradition(s).

the role of contracts in different

cultures:

Cultures vary in their use of contracts

and agreements

Comfortable with cultural

diversity.

Quick to find opportunities

in unfamiliar settings.

Able to utilize economic,

social, technological, and other
forces for the benefit of the
organization

The global manager is a person who is:

Currency risk

refers to potential loss due to

fluctuating exchange rates

Political risk

is the potential loss of ones investment

in or managerial control of a foreign
asset due to changes in the host
countrys political environment.

Expatriates

Employees who live and work in foreign

countries on short-term or long-term
assignments

To promote global organizational

learning, organizations and their
members should

Share with and learn from

one another, particularly from
excellent companies, both at
home and abroad.

Appreciate the constraints

and opportunities of different
national cultures and
environments.

Be alert, open, inquiring,

and cautious regarding the
potential merits of management

practices found in other countries

and how they are affected by
cultural variables.