From National Culture

to Global Vision

Chapter 2

Globalisation of markets

Markets - defined by customers, customer needs &

products and services

Levitt - ‘converging commonality’

◦ Applies to some markets e.g.. designer clothing

Other markets are locally differentiated

Customer needs are becoming more complex

and so are markets

Globalisation of industries

Industry globalisation

◦ Configuration of value adding activities

◦ concentration vs dispersion - based on local differences e.g.. resources, skills, costs etc.

◦ Co-ordination of value adding activities

Industries often have a mix of global and local characteristics

Economic forces

Increasing incomes

Global trade

World financial

markets

Market forces

Global competition

Social forces

Consumerism

Convergence in

customer tastes

Education and

skills

Reduced trade barriers

Intellectual property rights

Privatisation

Development of trade blocs

Technical standards

Political Forces

Technological forces

Industrialisation

Transport revolution

Information and communications

revolution

Globalisation

of industries

and markets

Causes of

globalisation

The extent of globalisation

Variations from industry to industry and

market to market

Limits on globalisation

◦ Physioeconomic theory

Yip’s globalisation drivers - global and

local features within industries and

markets

Globalisation –

currents & cross currents

Currents - broad forces

producing globalisation

◦ Since ww2 (1939-45)

◦ consumer convergence

◦ global capital markets

◦ falling tariff barriers

◦ technological change

◦ emergence of global

competitors

Cross-currents - produce

complexity in globalisation

◦ Since 1960s to 1970s

◦ slow growth in some countries

pushes internationalisation

◦ erosion of sources of competitive

advantage

◦ proliferations of coalitions

◦ increased ability to tailor products

to local conditions

Trends in the macroenvironment Increasing globalisation of economic activity

ICT

Turbulence and volatility

Complexity and interconnectedness

Deindustrialisation - N America W Europe

Tensions - developed and developing nations

Regional trading blocs - EU, NAFTA, ANSEAN

Eastern Europe

Green issues

Global mission and objectives

Globalisation - requires managers with global perspectives and philosophy

Organisations are distinguished by their objectives as well as their strategies & products

Objectives help shape strategy by stating the intentions, policies and targets of the organisation

Objectives

Organisational objectives define:

◦ the purpose and raison d’être of the organisation;

◦ long and short term aims and goals of the organisation;

◦ the decision-making framework of the organisation;

◦ anticipated outcomes of its plans and actions.

Determinants of objectives

An organisation’s objectives are

determined by:

◦ the nature of its business activities

◦ the resources at its disposal (การจดัวาง/จดัการ)

◦ its culture

◦ its stakeholders and their influence

◦ the environment in which it operates

Global vision

A statement of:

◦ organisational aspirations (จดุมุง่หมาย)

◦ strategic intent

Global vision is a prerequisite to global

and transnational strategy

Vision, philosophy & transnational

strategy Philosophy will determine the orientation of

the organisation - Perlmutter EPRG matrix

Transnational strategy

Culture and global business

Culture

◦ the way people think, feel and act

◦ intangible and difficult to define

◦ the shared values, attitudes, assumptions, beliefs and norms of a group which guide individual and collective behaviour and actions

◦ Exists at level of countries, industries & organisations

◦ Each level interacts with and helps to shape the others

Globalisation has arguably produced a degree of cultural convergence between countries

Levels of Culture

National

National culture

Business culture

Organisation culture

Industry culture

Cultural Dimensions (1) Researchers have identified cultural

dimensions which can be used to

characterise the cultures of different

countries and organizations

Two main researchers

◦ Hofstede

◦ Trompenaars

Cultural dimensions

Hofstede’s dimensions power distance

uncertainty avoidance

individualism / collectivism

masculinity / femininity

long term orientation

uncertainty avoidance

Trompenaar’s dimensions relationships with people

◦ universalism vs. particularism

◦ individualism vs. communitarianism

◦ affective vs. neutral cultures

◦ specific vs. diffuse relationships

◦ achieving vs. ascribing

time

relationships to nature

Importance of culture to

international business Culture is important to business in many ways

including:

◦ Consumer behaviour

◦ Attitudes to work

◦ Ethics

◦ Leadership and Management

Managing cultural diversity creates:

◦ Opportunities (different skills, views, creativity)

◦ Challenges

Organisational culture

Organisational culture

◦ consists of the values, attitudes and beliefs

shared by the members of the organisation

which guide the ways in which they think, act

and behave

◦ varies from one organisation to another

◦ is difficult to manage as it is intangible

◦ changes over time

Determinants of organizational culture

An organization’s culture is determined by:

◦ National cultural factors

◦ Nature of the organization’s business (industry / professional

culture)

◦ Leaders and other stakeholders

◦ History

◦ Size

Johnson and Scholes represent organizational cultures

through the ‘Cultural Web’

The cultural web

Stories Symbols

Rituals and

Routines The Paradigm

Power

Structures

Control

Systems

Organizational

Structures

Cultural web II

The Paradigm

◦ the assumptions that make up the culture of an organisation constitute a paradigm for its culture

Stories

◦ signal the history of the organisation and its underlying

values, relate to successes, failures, and personalities who

have had a significant affect on the development of the

organisation

Symbols

◦ logos, buildings, offices, cars, language used etc

◦ represent nature of the organisation in terms of success, power,

hierarchy etc.

Rituals and Routines

◦ symbolise the way that things are done within the organisation

◦ can be formal, like training, or informal, like going to the pub

after work

Power Structures

◦ where power lies in the organisation - based on seniority, merit or organisational history

Control Systems

◦ measurement and rewards systems

◦ emphasise teamwork or individuality, areas of importance in the organisation's activities etc.

Organisational Structures

◦ represent and formalise power structures and is indicative of factors like power-distance etc

Cultural change

Leaders can influence organizational

culture through:

◦ Vision

◦ Communication, education and training

◦ Building trust and allaying fears

◦ Structures and reward systems

◦ Encouraging participation and neutralising

opposition