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1. Cultural/legal/political environments

2. Economic/financial environments

Section Topics

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Orientation and Controls

Ethnocentric: Home-country-oriented with home-country controls

Polycentric: Host-country-oriented with local controls

Regiocentric: Host-country-orientedwith regional and third-country controls

Reference: Howard V. Perlmutter.

Geocentric: World-oriented withstrong interdependence between home and host countries

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Influences and Pressures

Political environment• Ownership risk• Operational risk• Transfer risk• Terrorism

Economic environment• Currency exchange rates• Business restrictions• Investment restrictions• Privatization

Legal and regulatoryenvironment• Legal systems• Trade restrictions• Accounting standards• International auditing concerns

Technological environment• Varied resources• Varied capabilities• Information explosion• Privacy/security issues

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What are techniques for anticipating and balancing these pressures and influences?

Possible answers: • Global strategy • Risk assessments • Country risk profiles • Accounting for local technical issues

such as transportation, language barriers, etc.

Discussion Question

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Global Mindset

Developing cultural awareness and a global perspective

Leadership and management

Cultural intelligence

Cultural dimensions

Cross-cultural communication

Employee development

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Cultural Dimensions

Reference: Hofstede™ Cultural Dimensions.

Dimensions(Low to High)

Power

Individualism

Masculinity

Uncertainty avoidance

Long-term orientation

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• Assumptions and attitudes

• Body language• Use of space• Time• Language (high-

and low-context)

• Authority• Country profiles

Cross-Cultural Communication

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I. A limp handshake and no eye contact

II. Interviewee backs off when you move physically closer

III. Long periods of silence in interviews and group meetings

Discussion QuestionYou are sent to conduct internal audit interviews at the organization’s foreign location. How might you interpret the following interviewee responses?

Possible answers:I. These may be normal greetings in the culture.II. In some cultures people like to keep physical space

distance.III. Silence may be natural and expected in conversations.

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• Develop a clear global strategy.• Foster a global mindset.• Operate as both a centralized and

decentralized organization.• Sponsor a flexible business structure for

adaptability.• Disperse knowledge widely.• Train international managers well.• Hire employees with diverse backgrounds.

Managing Complexities

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• Break down language barriers.• Maximize technology for production and

service efficiencies.• Use cultural informants for understanding,

negotiation, and coalition building.• Continue to forecast and assess risks.• Develop crisis management plans and exit

strategies.• Foster creativity and innovation.

Managing Complexities (continued)

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• Legitimize differences; build trust.

• Agree upon values and expectations.

• Agree on team leadership style.

• Encourage participation, recognizing status/authority perceptions.

Effective Multicultural Teams

• Select the best communication modes.

• Produce the appropriate outcomes.

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Answers: 1 = B; 2 = D; 3 = C; 4 = A

Discussion Question

Strategic Orientation

Characteristics

1. International

2. Global

3. Multilocal

4. Multinational

A. Centralized and decentralized; high integration and coordination

B. Home-country headquarters and value chain with headquarters

C. Local products and standards; differentiation

D. Standardization, economies of scale, value chains anywhere

Match the orientation to the characteristics.

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Global strategy readiness

Organizational culture readiness

Global expansion readiness

Global Marketplace Entry Checklist

Has the organization met the necessary requirements to enter the global marketplace?

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Managing Training and Development in International Organizations

• Disperse training in home and host countries.

• Use the Web for distance and 24/7 course access.

• Use translators and produce materials in the related foreign languages.

• Assess knowledge and performance gaps to determine training needs.

• Offer strong orientation programs and acclimation to the related cultures.

• Sponsor expatriate assignments for managers.

• Use a variety of learning approaches, such as field experiences, coaching and mentoring, and multicultural team participation.

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Reinforcing Activity 4-2Part 4, Section B, Topics 1 and 2 Global Business Environments

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Questions?

End of Section B

Part 4, Section B