Global Dimensions of ManagementKey Global EventsCollapse of the Soviet UnionOpening of ChinaImproved Access (Telecommunications)Steady Growth in MNCsThe European CommunityNAFTA - GATT

International ManagementThe conduct of business and other operations in foreign countries.

Working overseas in the foreign operation of a domestic firm. Working overseas for a foreign firm. Working as a domestic employee of a foreign firm operating in your country.

Why Organizations Go International

ProfitsNew MarketsRaw MaterialsFinancial CapitalLower Labor Costs

The Global EconomyBased on the worldwide interdependence of resource supplies, product markets, and business competition.The European UnionThe AmericasAsia and the Pacific RimRussiaNAFTAGATTAsia-Pacific Economic ForumAfricaMaquiladorasChinaWTO

International BusinessThe conduct of for-profit transactions of goods and services across national boundaries.

International Business StrategiesMarket Entry

Global SourcingExportingImportingLicensing Franchising

Direct Investment

Joint VenturesWholly Owned Subs

Multinational CorporationsA business firm with extensive international operations in more than one foreign country

MNOs are organizations like the Red Cross, whose nonprofit missions and operations span the globe.

Types of MNCsTransnational Corporations

Strive to operate on a borderless basis and without being identified with one national home.

Ethnocentric

Strict headquarters control over foreign operations, expects to operate the same way it does at home.

Types of MNCsPolycentric

Gives it foreign operations more operating freedom, respects market differences among countries, and treats each country as a separate competitive domain.Geocentric

Like Traditional it seeks total integration of global operations by operating without "home country" prejudices, making major decisions for global perspective, and employing senior executives from many different countries.

Environmental Challenges in the Global Economy Economic DifferencesCentralized vs Free Market EconomiesTransition to PrivatizationTrade Alliances and Policies

Legal Political Differences Democratic vs Totlaitarian Systems Diverse Legal Codes

Environmental Challenges in the Global Economy Educational DifferencesDifferent School SystemsLiteracy LevelsAvailability of Skilled Labor

Socio-Cultural Differences Different Cultures Culture Shock Ethnocentrism

Host Country Complaints of MNCsExtract excessive profits.Dominate the local economy.Interfere with the local government.Fail to help domestic firms develop.Hire the best local personnel.Fail to transfer advanced technologies.Fail to respect local customs, laws, and needs.

MNCs ComplaintsProfit limitations.Overpriced resources.Exploitative rules.Foreign exchange restrictions.Failure to meet contract obligations.

Popular Dimensions Of CultureLanguageUse of SpaceTime Orientation

Monochronic vs PolychronicReligionUse Of Contracts

Hofstede's Dimensions Of CulturePower Distance

The degree to which a society accepts the unequal distribution of power in organizations.Uncertainty Avoidance

The degree to which a society tolerates risk and situational uncertainties.

Hofstede's Dimensions Of CultureIndividualism - Collectivism

The degree to which a society emphasizes individual self-interest, or the collective values of groups.Masculinity - Femininity

The degree to which a society emphasizes assertiveness and material concerns, or relationships with others and concerns for feelings.

Hofstede's Dimensions Of CultureTime Orientation

The degree to which a society emphasizes short term considerations versus greater concern for the future.

HighLowPower DistancePhilippinesAustriaUSUncertainty AvoidanceGreeceSingaporeUSIndividualismUSAVenezuelaJapanMasculinityJapanSwedenUSTime OrientationUSAJapan

Apply the Management Functions Across CulturesComparative Management

The study of how management practices systematically differ from one country and/or culture to the next.Political-Risk Analysis

Involves forecasting the probability of various events that can threaten the securityof a foreign investment.

Comparative Management PracticesWe can look to Hofstede's Model to understand how strong cultural influences can impact the compatibility of management theories when applied across international borders.

Comparative Management PracticesNotwithstanding the stories proclaiming the success of the Japanese management system. we should hesitate to accept any practice, no matter how well it appears to work somewhere else, as a universal prescription to action.