Chapter 2

International Management and Cultural Diversity

2

The Multinational Corporation Has units in two or more countries

plus its own Most of best-known companies are

MNCs Transnational corporation is an

MNC that operates worldwide without one national headquarters (operates round the clock through different time zones)

3

Trade Agreements Among Countries

NAFTA (U.S., Canada, and Mexico) CAFTA (U.S. plus Central America) EU (25-European nation alliance) WTO (liberalizes free trade

throughout world) Trade agreements have facilitated

global outsourcing and offshoring.

4

Sensitivity to Cultural Differences

Cultural sensitivity (awareness of customs; adapting behavior)

Multicultural worker (believes all cultures are good)

Minimize cultural mistakes (e.g., rushing a deal in Mexico)

5

Challenges Facing Global Managerial Worker

Developing global leadership skills Currency fluctuations Balance of trade problems Human rights violation and corruption Culture shock (“I can’t take this place.”) Piracy of property rights and

merchandise, including “knock-offs”

6

Methods of Entry into World Markets

1. Exporting2. Licensing and franchising3. Local assembly and packaging4. Strategic alliances and joint

ventures5. Direct foreign investment6. Global start-up

7

Success Factors in the Global Marketplace

Think globally, act locally. Recruit and select talented

nationals and domestic workers. Hire and develop multicultural

workers. Research and assess potential

markets.

8

Competitive Advantage of Diversity

1. Marketing advantage including more sales and profits

2. Reduced costs (less turnover)3. Recruit additional talent4. Useful ideas for publicity/advertising5. Fewer cultural bloopers 6. Creativity advantage (diverse ideas)

9

Potential Problems with Diversity

1. Diverse group members may not work harmoniously with each other.

2. Potential for conflict is high if group membersa. do not support each other,b. do not share knowledge.

3. Groups may be less cohesive.

10

Organizational Practicesto Encourage Diversity

Corporate policies favoring diversity (e.g., monitor promotions)

Employee network groups (e.g., Latino Employee Network at Frito-Lay )

Diversity training (encourages harmony by developing empathy for differences)