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Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia
Lecture 4
Managing in a Global Environment
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 2
The globalisation of business
l Infrastructures have been developed l Trade barriers reduced l Global market windows have opened l Competition has intensified l How can any organisation in Australia and New Zealand, or anywhere, avoid the effects of globalisation?
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 3
Who owns what?
l A number of companies familiar to us are foreign owned l A number of well-known companies derive more than half of their revenues from global operations
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 4
Global perspectives
l Parochialism: narrow view of the world with an inability to recognise differences between people
l Ethnocentric Attitude: the parochialistic belief that the best work approaches and practices are those of the home country.
l Polycentric Attitude: the view that the managers in the host country know the best work approaches and practices for running their business.
l Geocentric Attitude: a world-oriented view that focuses on using the best approaches and people from around the globe.
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 5
Risk of cross-cultural blunders
l Management practices that work in Sydney or Auckland may not be appropriate in Beijing or Kuala Lumpur.
l Cultural sensitivity and a geocentric attitude are needed l Parochialism must be eliminated
l International experience is valued
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Regional Trading Alliances
Understanding the global
environment
European Union
(EU)
ANZ Closer Economic
Relations Agreement
(CER)
Association of South
East Asian Nations
(ASEAN)
North American
Free Trade Agreement
NAFTA
Bi-lateral free
trade
agreements
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 7
Regional trading alliances
l The European Union (EU) m A unified economic and trade entity n Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden m Economic and monetary union (Euro) l North American Free Trade Agreement (NAFTA) m Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees) n United States, Canada, and Mexico
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 8
European Union Countries (EU)
Figure 4.
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 9
Regional trading agreements (cont’d)
l Australian bilateral free trade agreements, such as with USA, Singapore, Thailand and China (under consideration). l Free Trade Area of the Americas l Southern Cone Common Market (Mercosur) l Association of Southeast Asian Nations (ASEAN) m Trading alliance of 10 Southeast Asian nations l African Union
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 10
ASEAN members
Source: Based on J. McClenahen and T. Clark, “ASEAN at Work,” IW. May 19, 1997, p. 42. Figure 4.
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The World Trade Organisation (WTO)
l Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995.
l Functions as the only global organisation dealing with the rules of trade among nations.
l Has 145 member nations.
l Monitors and promotes world trade.
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Doing business globally
l Multinationals are managed from a base in the home country l Transnationals decentralise management to the local country l Both transnational (TNC) and multinational (MNC) corporations maintain significant operations in more than one country simultaneously. l Borderless organisations eliminate structural divisions that impose artificial geographic barriers
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Hofstede ’s cultural framework
Hofstede’s framework
Individualism vs
collectivism
Power distance
Uncertainty
avoidance
Quantity vs
Quality of life
Time
orientation
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Examples of Hofstede’s Cultural Dimensions
Source: Theories Apply Abroad?”Based on G. Hofstede, “Motivation, Leadership, and organisation:Do organisational Dynamics , Summer 1980, pp. 42–63. American
Table 4.
Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia 21
The GLOBE framework for assessing
cultures
l Assertiveness l Future orientation l Gender differentiation l Uncertainty avoidance l Power distance
l Individualism/collectivism l In-group collectivism l Performance orientation l Humane orientation
GLOBE (Global Leadership and organisational Behavior Effectiveness)
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Is a global assignment for you?
Individual
Training
Previous
experience
Accurate expectations
Selection criteria
and mechanisms
Organisation
Pre -assignment adjustment:
Figure 4.8a
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Factors that affect
international adjustment
- Work adjustment
- Interaction adjustment
- General adjustment
In-country adjustment:
Figure 4.8b
Individual
Job (^) Organisational socialisation
Organisational culture
Non-work factors
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Global management in today’s world
l The push to go global has been widespread l Openness is required to be global but fundamental cultural differences make complete openness difficult. l There is a speed and ease by which misunderstandings can grow from cultural differences. l Adjusting leadership style and management approaches is the best way to negotiate diversity and harness the best rather than the worst of globalisation
