MANAGING IN GLOBAL ENVIRONMENT

Submitted by:Neeraj mehta Neetu mehra Neha arora Neha asija Neha bhalla Neha gupta

Contents

Parochialism Adopting a global perspectives Regional trading alliances The world trade organization Different types of global organization How organization go global Managing in global environment Hofstadter's framework for assessing cultures Globes frame work for assessing culture Global management in todays world

The Global Marketplace

Opportunities and Challenges Coping with the sudden appearance of new competitors Acknowledging cultural, political, and economic differences Dealing with increased uncertainty, fear, and anxiety Adapting to changes in the global environment Avoiding parochialism

Whats Your Global Perspective?

Parochialism Is viewing the world solely through its own eyes and perspectives. Is not recognizing that others have different ways of living and working. Is a significant obstacle for managers working in a global business world. Is falling into the trap of ignoring others values and customs and rigidly applying an attitude of ours is better than theirs to foreign cultures.

Exhibit 41 Key Information About Three Global Attitudes

Adopting a Global Perspective

Ethnocentric Attitude The parochialistic belief that the best work approaches and practices are those of the home country. Polycentric Attitude The view that the managers in the host country know the best work approaches and practices for running their business. Geocentric Attitude A world-oriented view that focuses on using the best approaches and people from around the globe.

REGIONAL TRADING ALLIANCES

Countries within specified region conduct

free trade with one another. Regional trading agreements reshaped global competition . It mainly involves : 1) European Union 2) North American Free Trade Agreement (NAFTA) 3) The Association of Southeast Asian Nations (ASEAN)

THE EUROPEAN UNION

1992 1995 FORMATION OF EUROPEAN UNION COMPRISES OF 12 MEMBERS THREE COUNTRIES AUSTRIA , FINLAND AND SWEDEN JOINED THE GROUP
TEN NEW MEMBERS ARE ADDED

2004
2007

27 MEMBER COUNTRIES

IN EUROPEAN UNION

AIM To reassert their economic position against their strength of the United States and Japan ADVANTAGES It continues to assert its economic power in one of the worlds richest markets. No barrier to travel Employment Investment Trade

NORTH AMERICAN FREE TRADE AGREEMENT

NAFTA came into existence in 1992 between Mexico , Canada and U.S. Soon Canada, Mexico and Japan become leading trading partners of United States. Other Latin American Nations become part of free trade blocs. 34 countries in the Caribbean region, South America and Central America are negotiating a Free Trade Area of the Americas (FTAA).

MEXICO

CANADA

USA

 ASEAN is a trading alliance of ten Southeast Asian nations.

One of the fastest growing economic regions of the world.

OTHER TRADE ALLIANCES 53 nation African Union came into existence in

july 2002. It plan to create an economic development plan To achieve greater unity among Africas nations.

 The WTO was formed in 1995.

It evolved from the General Agreement on Tariffs and

Trade (GATT) Global organisation dealing with the rules of trade among nations. Comprises of 146 countries. Goal is to help businesses (importers and exporters) conduct their business .

a)Multinational

cOrPOratiONs{MNcs} b)Transnational cOrPOratiONs{tNcs} c)Borderless organisations

Multinationl corporations
a)Maintain operationsmultiple countries -managed home country. b)Ethnocentric attitude c)Sony,Deutsche BankAG, Merrill Lynch.

Transnatioal corporations

Borderless organisatios
a)Maintain operations eliminating structural divisions that impose artificial geographical barriers. b)Geocentric attitude c)IBM, BristolMyers Squibb

a)Maintain operations more than one country but decentralizes management to a local country. b)Polycentric attitude c)Nestle, Frito Lay

Stage one

Imports

Exports

STAGE TWO
HIRING FOREIGN REPRESENTATIONS OR CONTRACTING WITH FOREIGN MANUFACTURES

STAGE 3

FOREIGN SUBSIDIARY

JOINT VENTURE

STRATEGIC ALLIANCE

LICENSING / FRANCHISI NG

Managing in A Global Environment

The Legal Political

environment
The Economic

environment
The Cultural

environment

The Legal Political Environment

Stability of legal and

political systems
Differences in the

laws of various nations

The Economic Environment

Economic Systems

Market Economy

Command Economy

Monetary and Financial Factors

Currency exchange

rates
Inflation rates
Diverse tax policies

The Cultural Environment

National culture
Is the values and attitudes shared by individuals from a

specific country that shape their behavior and their beliefs about what is important.
May have more influence on an organization than the

organization culture.

Hofstedes Framework for Assessing Cultures

Individualism v/s Collectivism
Degree to which people prefer to act as individuals. Characterized by social framework where preference is in being in groups or organizations.

Power Distance
Extent to which a society accepts the unequal distribution of power within organizations. High power distance society accepts wide differences. Low power distance society, the differences are less.

Uncertainty Avoidance
Degree to which people tolerate risks& prefer structured rather than unstructured situations. Low uncertainty avoidance more prone to risks. High uncertainty avoidance, less prone to risks

Cont
Quantity v/s Quality of life
Degree to which values like assertiveness, material goods & money acquisition & competition prevails. Cultural Attribute which emphasizes relationships & concern.

Long term/Short term Orientation

Orientation towards life & work Long term Orientation-people look into future & value persistence. Short term orientation values past & present, emphasizes tradition & fulfilling social obligations.

GLOBE Framework for Assessing Cultures

Assertiveness
Extent of encouragement to be tough, confrontational, assertive & competitive. Opposite to modest & tender.

Future Orientation Gender Differentiation

Extent of rewards granted for future orientation behaviors i.e. planning, investing & delaying gratification.

Extent to which society maximizes gender role differences as measured by how much status & decision making responsibilities women have.

Cont
Uncertainty Avoidance
Societys reliance on social norms & procedures to alleviate the unpredictability of future events.

Power Distance

Degree to which members of society expect power to be unequally shared.

Individualism/ Collectivism

Degree to which individuals are encouraged by societal institutions to be integrated into groups within organizations & society.

Cont
In-Group Collectivism Performance Orientation Humane Orientation
Extent to which members of society involves in small groups like family, friends or organization in which they are employed.

Degree to which society rewards & encourages the group members for performance improvement & excellence.

Degree to which society encourages & rewards individuals for being fair, generous, caring & kind to others.

TECHNOLOGY MAKES THE WORLD SMALLER .

AMALGAMATION OF BUSINESS, CULTURE, HISTORY AND SOCIAL PRACTICES WITHIN OTHER CULTURES .

GROWTH OF MULTINATIONAL CORPORATIONS, OUTSOURCING AND CONTINUING ECONOMIC CHALLENGES .

OPENNESS CAUSES SERIOUS CHALLENEGES

CHALLENGES FROM THE OPENNESS ASSOCIATED WITH GLOBALIZATION CHALLENGES FROM SIGNIFICANT CULTURAL DIFFERENCES INCREASED THREAT OF TERRORISM ECONOMIC INTERDEPENDENCE OF TRADING COUNTRIES

SUCCESSFUL MANAGEMENT IN tODaYs WOrLD

INCREDIBLE SENSITIVITY

ACCOMMODATE DIVERSE VIEWS

MANAGERS

UNDERSTANDING

ADJUST LEADERSHIP STYLES

Questions
What do you mean by global perspectives? How do companies do

business globally?
Write short notes on:1.

Hofstedes framework for assessing cultures

2.

World trade organization

A broad term that refers to any and all types of international companies that maintain operations in multiple countries

a)
b) c)

Multidomestic corporation
Multinational corporation World trade organization

Exporting means making products domestically and selling them

abroad

a) b)

Correct Incorrect An organization gives another organization the right to use its name

and operating methods is called:a) b) c)

Franchising Licensing Joint venture

Purchasing labor or materials from around the world wherever it is cheapest is called global sourcing

a) b)

Correct incorrect