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Chapter 4 – Managing in a Global Environment Three global perspectives Regional trading alliances Types of global organizations How organizations go global Exporting, importing, licensing, franchising Strategic alliances, joint ventures, foreign

subsidiaries GLOBE framework for assessing cultures Challenges of doing business in global

world

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Quiz: Who Owns What? Ben and Gerry’s ice Cream is owned by a company based in:

Mexico, Saudi Arabia, UK, or US? The Bic Pen company is based in:

Japan, UK, US, or France? Skippy peanut butter is a product of a company based in:

US, Canada, Veneduela, UK? The parent company of Braun electric shavers is located in:

Switzerland, Germany, US, or Japan? PowerBar nutrition energy bars are products of a company based

in: Brazil, Switzerland, US, or Germany?

The company that markets Lipton tea is based in: China, UK, Japan, US?

Dr. Pepper and 7-up are products of a company based in: US, Japan, Canada, UK?

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Selected Companies Deriving 50% or More of Revenues from Non-U.S. Operations (in 1997)

Company Non-U.S. Income as Percentage of Total

AlfacExxonManpowerColgate-PalmoliveCoca-ColaGilletteMobilCPC InternationalAvon ProductsIBMCiticorpDigital EquipmentTexacoHewlett Packard

84.377.468.868.468.368.067.664.464.062.362.361.555.954.1

Table 4-1

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Cross-Cultural Blunders

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Examples of Regional Trading Agreements The European Union (EU)

Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden

Currency = the Euro North American Free Trade Agreement (NAFTA)

Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees)

United States, Canada, and Mexico Association of Southeast Asian Nations (ASEAN)

Trading alliance of 10 Southeast Asian nations

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Exhibit 4.3Exhibit 4.3

European Union Countries

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Exhibit 4.4Exhibit 4.4

ASEAN Members

Source: Based on J. McClenahen and T. Clark, “ASEAN at Work,” IW. May 19, 1997, p. 42.

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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.

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Different Types of Global Organizations Multinational Corporation (MNC)

A firm which maintains operations in multiple countries but manages the operations from a base in the home country.

Transnational Corporation (TNC) A firm that maintains operations in several countries

but decentralizes management to the local country. Borderless Organization

A firm that has eliminated structural divisions that impose artificial geographic barriers and is organized along business lines.

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Nestle’s – a Transnational Corporation

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Exhibit 4.5Exhibit 4.5

How Organizations Go Global

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Other Forms of Globalization Strategic Alliances

Partnerships between and organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities.

Joint Venture A specific type of strategic alliance in which the

partners agree to form a separate, independent organization for some business purpose

Foreign Subsidiary Wholly independent organization – separate and

independent

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Managing in a Global Environment – Difficult Because… Different legal environments Different economic systems Different monetary and

financial factors Different cultures! (next slide)

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National Cultures are Very Strong 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.

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The GLOBE (Global Leadership and Organizational Behavior Effectiveness) Framework for Assessing Cultures

Assertiveness Future orientation Gender

differentiation Uncertainty

avoidance Power distance

Individualism/collectivism

In-group collectivism

Performance orientation

Humane orientation

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Exhibit 4.6Exhibit 4.6

What Are Americans Like?Americans are very informal.Americans are direct.Americans are competitive.Americans are achievers.Americans are independent and individualistic.Americans are questioners.Americans dislike silence.Americans value punctuality.Americans value cleanliness.

Sources: Based on M. Ernest (ed.), Predeparture Orientation Handbook: For Foreign Students and Scholars Planning to Study in the United States (Washington, DC: U.S. Information Agency, Bureau of Cultural Affairs, 1984), pp. 103–05; A. Bennett, “American Culture Is Often a Puzzle for Foreign Managers in the U.S.,” Wall Street Journal, February 12, 1986, p. 29; “Don’t Think Our Way’s the Only Way,” The Pryor Report, February 1988, p. 9; and B.J. Wattenberg, “The Attitudes behind American Exceptionalism,” U.S. News & World Report, August 7, 1989, p. 25.

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Video - Nidek How did Nidek go global? Ethnocentric, polycentric, or

geocentric attitude? What evidence of:

Differences between cultures Hybrids culture