MANAGING IN GLOBAL

ENVIRONMENT

Submitted by:-Neeraj mehtaNeetu mehra

Neha aroraNeha asija

Neha bhallaNeha 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• Globe’s frame work for assessing culture• Global management in today’s world

The Global MarketplaceOpportunities 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 environmentAvoiding parochialism

What’s 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 4–1 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 UNION1992

• FORMATION OF EUROPEAN UNION

COMPRISES OF 12 MEMBERS

1995

• THREE COUNTRIES – AUSTRIA , FINLAND AND SWEDEN JOINED THE GROUP

2004 •TEN NEW MEMBERS ARE ADDED

2007• 27 MEMBER COUNTRIES IN EUROPEAN

UNION

AIM – To reassert their economic position against their strength of the United States and JapanADVANTAGES – It continues to assert its economic power in one of the world’s richest markets.● No barrier to travel●Employment●Investment●Trade

NORTH AMERICAN FREE TRADE AGREEMENT

CANADA

USA

MEXICO

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).

ASSOCIATION OF SOUTHEAST ASIAN NATIONS(ASEAN)

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 Africa’s nations.

THE WORLD TRADE ORGANIZATION

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{MNC’s}

b)Transnational corporations{TNC’s}

c)Borderless organisations

Different types of Global Organisations

Multinationl corporations• a)Maintain

operations- multiple countries -managed home country.

• b)Ethnocentric attitude

• c)Sony,Deutsche BankAG, Merrill Lynch.

Transnatioal corporations• a)Maintain

operations - more than one country but decentralizes management to a local country.

• b)Polycentric attitude

• c)Nestle, Frito -Lay

Borderless organisatios• a)Maintain

operations - eliminating structural divisions that impose artificial geographical barriers.

• b)Geocentric attitude

• c)IBM, Bristol-Myers Squibb

How organisations go global?

Imports

Exports

Stage one

HIRING FOREIGN REPRESENTATIONS

OR CONTRACTING WITH FOREIGN

MANUFACTURES

STAGE TWO

STAGE 3

FOREIGN

SUBSIDIARY

JOINT VENTUR

E

STRATEGIC

ALLIANCE

LICENSING/

FRANCHISING

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.

Hofstede’s 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

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.

Cont…

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

Assertiveness

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

Future Orientation

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

Gender Differentiatio

n

GLOBE Framework for Assessing Cultures

•Society’s reliance on social norms & procedures to alleviate the unpredictability of future events.

Uncertainty Avoidance

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

Power Distance

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

Individualism/Collectivism

Cont…

•Extent to which members of society involves in small groups like family, friends or organization in which they are employed.

In-Group Collectivism

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

Performance Orientation

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

Humane Orientation

Cont…

GLOBAL MANAGEMENT IN TODAY’S WORLD

IMPORTANCE

1 • TECHNOLOGY MAKES THE WORLD SMALLER .

2• AMALGAMATION OF

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

3• GROWTH OF

MULTINATIONAL CORPORATIONS, OUTSOURCING AND CONTINUING ECONOMIC CHALLENGES .

OPENNESS CAUSES SERIOUS CHALLENEGES

CHALLENGES FROM THE OPENNESS

ASSOCIATED WITH GLOBALIZATION

CHALLENGES FROM

SIGNIFICANT CULTURAL

DIFFERENCESINCREASED THREAT OF TERRORISM

ECONOMIC INTERDEPENDENCE

OF TRADING COUNTRIES

SUCCESSFUL MANAGEMENT IN TODAY’S WORLD

MANAGERS

QuestionsWhat do you mean by global perspectives? How do companies

do business globally?

Write short notes on:-

1. Hofstede’s 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) Multidomestic corporation

b) Multinational corporation

c) World trade organization

Exporting means making products domestically and

selling them abroad

a) Correct

b) Incorrect

An organization gives another organization the right to

use it’s name and operating methods is called:-

a) Franchising

b) Licensing

c) Joint venture

Purchasing labor or materials from around the world

wherever it is cheapest is called global sourcing

a) Correct

b) incorrect