MANAGEMENT IN GLOBAL ENVIORNMENT

PRESENTED BY:AARUSHI, AASIM, ACHINT, ADITYA, ADITI, ANA

ParochialismAn obstacle for managers in global business

world.Monolingualism should be abolished.Managers who follow “ours is better then

their’s”;its difficult for them to compete with other managers.

JAPANESE AMERICANS

THREE POSSIBLE GLOBAL ATTITUDES

POLYCENTRICGEOCENTRIC

ETHNOCENTRIC

ETHNOCENTRIC

POLYCENTRIC

GEOCENTRIC

An award winner- American marketing.

When a manager ignore foreign values and custom unfortunately cross culture blunders can happen.

“EAT YOUR FINGERS OFF”

PEPSI BRINGS YOU BACK TO LIFE

Understanding the global environmentManagers of all type of organization faced with

opportunities and challenges of Managing in a global environment. In modern time global trade is being shaped by

two forces : regional trading alliance. World Trade Organization.

Regional trading allianceFew years ago global competition meant

country against country. Such as France versus Germany and

America and Japan.Regional trading agreements reshaped global

competition which mainly involves : European union (EU) North American free trade agreements

(NAFTA) Association of southeast Asian nation(ASEAN)

Map Of European Union

The European unionIn 1992 formation of European union which include

12 members.In 1995 three other country joined the group Austria,

Finland, and Sweden.In 2004 EU added 10 new members.In 2007 there is two other countries joined thus the

union include 27 member.The main aim of nation to reassert their economic

position against the united states and Japan.

North American free agreement

NAFTA came into existence in1992 between the Mexico, Canada and U.S.A . The main aim eliminating the barriers to free trade has resulted to strengthening the economic power.

Now 34 countries in the Caribbean region, south America are negotiating a free trade of Americas agreement.

Association of southeast Asiannation

It is one of the fastest – growing economic regions of the world.

The World Trade Organization The WTO was formed in 1995.It has evolved from general agreement on Tariffs and Trade (GATT)

It deal with the rules of trade among nations and the total number of members are- 146

The function of WTO is help businesses (import and Export)their business.It play an important role in monitoring and promoting global trade

Different Type of Global Organizations

1.Multinational Company (MNC)

This type of Organization has

operation in multiple country but managed

from home country.

Characteristic of Ethnocentric

attitude

Example:-Sony , Deutsche Bank

AG ,Merrill Lynch etc.

2.Transnational Corporation

(TNC)

Operational in more than one country but

decentralizes management to local

country.

Polycentric Attitude

Nestle , Frito -lay etc.

3.Borderless Organization

A firm that has eliminated structural divisions that imposeartificial geographic barriers and is organized alongbusiness lines.

Geocentric Attitude

IBM , Telefonica etc

How Organizations Go Global

Why Globalization

Reduce dependence on home market

Build more brand and shareholder value

Add revenue sources and growth markets

Award more franchises in the home country by being

global.

How Organizations Go Global

STAGE 1

Directly or

Indirectly exporting to

or importing

from foreign countries

STAGE 2

Hiring foreign

representation

OrContracting with foreign

manufactures

STAGE 3

Foreign Subsidiary

Joint Venture

Strategic Alliance

Licensing/ Franchising

ECONOMIC ENVIRONMENTAND

CULTURAL ENVIRONMENT

Economic Systems

Free market economy:

production of goods and services is in

private ownership.

Production is dictated by supply and demand.

Command economy: decisions on what to produce, how much, done by the government.

Most command economies are

moving away from the command

economy.

Mixed economy: certain economic

sectors controlled by private business, others

are government controlled.

Economic Systems

•Market economy•An economy in which resources are primarily owned and controlled by the private sector.

•Command economy•An economy in which all economic decisions are planned by a central government.

Monetary and Financial Factors

•Currency exchange rates•Inflation rates•Diverse tax policies

The Cultural Environment

National CultureIs 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.

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 value punctuality.Americans value cleanliness.

HOFSTEDE’S FRAMEWORK FOR ASSESSING CULTURESINTRODUCTIONDutch Psychologist named Dr Geert Hofstede Worked for IBMUndertook research survey from 1967-1973Data collected and analyzed from more than 100,000 people in more than 50 countriesHe scored each country using a scale of roughly 0 to 100 for each dimension

Dimensions of National culture

INDIVIDUALISM VERSUS

COLLECTIVISM

POWER DISTANC

E

UNCERTAINTY

AVOIDANCE

QUANTITY VERSUS QUALITY

OF LIFE

LONG TERM AND SHORT TERM ORIENTATIONS

INDIVIDUALISM VERSUS COLLECTIVISM

INDIVIDUALISM PEOPLE PEFER TO ACT AS INDIVIDUALSLOOK AFTER THEIR OWN INTERESTS AND THOSE OF THEIR IMMEDIATE FAMILYCOLLECTIVISMA social framework in which people prefer to

act as members of a group and protect other members of the group

personal needs are less important than the group's needs. This dimension influences the role government is expected to play in markets

POWER DISTANCE A measure of the extent to which a society accepts

the fact that power in institutions and organizations is distributed unequally.

A high power distance society accepts wide differences in power in organizations.

Employees show a great deal of respect for those in authority. Titles, rank, and status carry a lot of weight.

In contrast, a low power distance society plays down inequalities as much as possible

Superiors still have authority, but employees are not afraid off or in awe of the boss

UNCERTAINTY AVOIDANCE A low uncertainty culture allows

individuals to cope better with risk and innovation.

They're also relatively tolerant of behavior and opinions that differ from their own because they don't feel threatened by them.

On the other hand, people in a society that's high in uncertainty avoidance feel threatened by uncertainty and ambiguity and experience high levels of anxiety, which manifests itself in nervousness, high stress, and aggressiveness.

QUANTITY VERSUS QUALITY OF LIFE

Quantity of life-degree to which values such as assertiveness, the acquisition of money and material goods, and competition prevails.

Quality of life is a national cultural attribute that emphasizes relationships and concerns for others

Again like Individualism and collectivism.

LONG TERM AND SHORT TERM ORIENTATIONS

It looks at country’s orientation towards life and work.

People in long term orientation culture looks to the future and value thrift and persistence.

A short term orientation values the past and present and emphasizes respect for tradition and fulfilling social obligations.

THE GLOBE …. The GLOBE (Global Leadership &

Organizational Behavior Effectiveness) is a multi-phase, multi-method research project in which investigators around the world examine the inter-relationships between societal culture, organizational culture & organizational leadership.

The idea was conceived by Robert J. House in 1991 but the project fomally began in 1993.

THE GLOBE FRAMEWORK FOR ASSESSING CULTURES

1) Assertiveness

2) Future orientation

3) Gender differentiation

4) Uncertainty avoidance

5) Power distance

6) Individualism/ collectivism

7) In-group collectivism

8) Performance orientation

9) Humane orientation

GLOBAL RANKING OF SELECTED COUNTRIES

GLOBAL MANAGEMENT IN TODAY’S WORLD

“arguing against GLOBALIZATION is like arguing against THE LAW OF GRAVITY”- Kofi Annan

Doing business globally today isn’t easy.

Managers face serious challenges like: 1) Increased threat of terrorism

2) Economic interdependence of trading countries

3) Loss of investments in unstable countries

4) Americanization

CONCLUSION

Successfully managing in today’s global environment will require incredible sensitivity & understanding. Managers need to be aware of how their decisions & actions will be viewed, not only by those who agree, but especially, by those who disagree.

They’ll need to adjust their leadership styles & management approaches according to these diversities.

QUESTIONS What is Global Perspective? How do organizations do business

globally? Short notes (choose any two):

1) WTO 2) NAFTA 3) ASEAN MCQs :

1) Monolingualism is one of the key indicators of parochialism prevalence in a culture:

a) true b) false

2) Which one of the following regional alliances was formed after the signing of the Masstricht Treaty?

a) European Union

b) ASEAN

c) NAFTA

3) According to the GLOBE which country/countries rank the highest in Uncertainty Avoidance?

a) Sweden b) Greece c) Kuwait d) Mexico

4) National culture is more influential than an organizational culture- is justified by:

a) Legal-political environment b) Social environment

c) Cultural environment d) Economic environment