MGT360 ORGLAB 2 Study

What is globalization?

The process of developing influence or operations in other countries; countries and businesses become more connected.

What is nationalism?

Patriotic ideals and policies that glorify a country's values; a country puts its own interests first.

What is parochialism?

Viewing the world solely through your own perspectives, leading to an inability to recognize differences between people; seeing the world mainly through your own perspective.

What are the three possible global attitudes?

• Ethnocentric: home-country work approaches and practices are best.

• Polycentric: managers in the host country know the best approaches.

• Geocentric: a world-oriented view that uses the best practices and sources around the globe.

What were the major early globalization trends?

• After World War I, nations became more protectionist.

• After World War II, the trend toward globalization started.

• Numerous agreements, institutions, and events pushed for globalization.

What was the Bretton Woods Conference?

In 1944, it produced an agreement establishing rules for commercial and financial relations among the United States, Canada, Western Europe, Australia, and Japan.

What is the International Monetary Fund (IMF)?

An organization of 190 countries that promotes international monetary cooperation and financial stability and provides advice, loans, and technical assistance.

What is the World Bank Group?

A group of closely associated institutions that provides financial and technical assistance to developing countries and supports development and improved living standards.

What was GATT?

A 1948 agreement between countries to reduce or eliminate trade barriers.

What is the World Trade Organization (WTO)?

A global organization of 164 countries that deals with rules of trade among nations, regulates trade disputes among members, and essentially replaced GATT; it provides a framework for international trade rules.

What is the European Union (EU)?

A union of 28 democratic European nations created as a unified economic and trade entity with the euro as a single common currency; it helps countries cooperate and trade.

What was NAFTA?

Established in 1994, it sought to eliminate barriers to free trade among Canada, Mexico, and the United States and strengthen their economic power; it was revised to USMCA.

What is USMCA?

Formed in 2020, it modified NAFTA and is often called NAFTA 2.0. Provisions included increased U.S. access to Canada's dairy markets, new labor requirements for Mexico, increased environmental regulations, and updated intellectual-property and data-trade protections.

What is ASEAN?

A trading alliance of 10 Southeast Asian nations.

What is the OECD?

An international economic organization that helps its 38 member countries achieve sustainable economic growth and employment.

What is the World Economic Forum?

Founded in 1974, it is a Swiss non-profit foundation that brings world leaders together each year to discuss factors of common interest.

What happened in the fall of the Soviet Union?

In December 1991, the Soviet Union was officially dissolved, self-governing independence was granted to former Soviet republics, and the Commonwealth of Independent States was created.

What is the Mercosur Trade Agreement?

A 1991 trade bloc including Argentina, Brazil, Paraguay, and Uruguay.

What is the Shanghai Cooperation Organization?

Formed in 2003, it is an eight-nation group that pledged to promote free trade among other goals.

What is Made in China 2025?

A 2015 Chinese government-led initiative to make China dominant in high-tech manufacturing by 2025.

What was the Trans-Pacific Partnership (TPP)?

A 2016 trade agreement among 12 nations, originally including the United States, Canada, Mexico, and Japan; it was not fully implemented after the United States withdrew.

What was Brexit and the Trade and Cooperation Agreement?

• Brexit: in June 2016, United Kingdom citizens voted to remove themselves from the EU because they felt UK needs and interests had shifted to the greater EU.

• Trade and Cooperation Agreement (2021): formalized UK-EU trade relations after Brexit.

What is AfCFTA?

The African Continental Free Trade Area, formed in 2021, created the largest free trade area in the world and includes 54 countries.

What did the COVID-19 pandemic show about globalization?

It highlighted vulnerabilities of globalization, including risks from relying on inputs and products from other countries and disruption across connected operations.

What is the case for globalization?

The win-win argument is based on comparative advantage: nations focus production on goods they can produce with the lowest opportunity cost and trade for other goods; a rising tide floats all boats and all trading partners benefit.

What is the case against globalization?

Jobs can leave developed, high-labor-cost nations for cheap-labor nations; cheap goods can create middle-class wage stagnation; globalization and capitalism can increase wealth inequality; and some groups are harmed.

What are comparative advantage, opportunity cost, and absolute advantage?

• Comparative advantage: specialize in what you give up the least to produce; asks who gives up less of another task.

• Opportunity cost: the best alternative you give up when choosing.

• Absolute advantage: asks who can produce more with the same resources.

What are globalization's efficiency, people, and resilience trade-offs?

• Efficiency: lower costs and larger markets versus dependence on distant suppliers.

• People: new jobs and opportunities versus job loss and wage pressure in some places.

• Resilience: access to more sources and continued operation when something goes wrong, but disruption can spread across connected operations.

Why will globalization continue, and what does it mean for managers?

The infrastructure for global trade is already in place. Evidence indicates technology, not globalization, is the culprit behind unemployment. Managers need global-manager skills, and managers who speak more than one language will be in high demand.

What is a multinational corporation (MNC)?

An international company that maintains operations in more than one country.

What are the three main types of MNCs?

• Multidomestic: decentralizes management and decisions to the local or host country; local managers adapt operations.

• Global: centralizes management and decisions in the home country; headquarters emphasizes common practices.

• Transnational or borderless: eliminates artificial geographical barriers; teams combine knowledge across countries and integrate worldwide.

What is the supplier trade-off between one low-cost supplier and several suppliers?

• One low-cost supplier: lower spending but fewer backup options.

• Several suppliers: greater cost and coordination but more alternatives.

What is the progression of global investment in Exhibit 6-3?

From minimal to significant investment: 1. Global sourcing, 2. Exporting and importing, 3. Licensing, 4. Franchising, 5. Strategic alliance or joint venture, 6. Foreign subsidiary. As ownership grows, investment and commitment often grow.

What is global sourcing or outsourcing?

Purchasing materials or labor around the world wherever it is cheapest. Its goal is to use lower costs to become more competitive; it is often the first step in going international. Examples include outsourcing IT work such as website development or system maintenance and buying coffee beans from a foreign supplier.

What are exporting and importing?

• Exporting: making products domestically and selling them abroad, such as sending packaged coffee to foreign customers.

• Importing: acquiring products made abroad and selling them domestically, such as bringing foreign-made machines into the home country.

What are the three broad ways organizations go international?

• Buy or sell across borders: global sourcing and exporting/importing.

• Work through partners: licensing, franchising, strategic alliances, and joint ventures.

• Own a foreign operation: foreign subsidiary.

What are licensing and franchising?

• Licensing: an organization gives another organization the right to make or sell its products using its technology or product specifications, such as using a cafe's logo or recipe.

• Franchising: an organization gives another organization the right to use its name and operating methods, such as using a cafe's menu, training, and operating system.

What are a strategic alliance and a joint venture?

• Strategic alliance: a partnership with foreign company partners that shares resources and knowledge to develop new products or build production facilities.

• Joint venture: a specific strategic alliance in which partners form a separate, independent organization for a business purpose.

What is a foreign subsidiary?

Direct investment in a foreign country by establishing a separate, independent production facility or office. It provides greater control over key decisions but requires more investment, management responsibility, and exposure.

What is the global political/legal environment?

It includes laws and political stability. U.S. managers are accustomed to a stable legal and political system, but managers must stay informed of the specific laws where they do business; some countries have risky political climates. Relevant issues include employment rules, permits, ownership, and stability.

What are free-market and planned economies?

• Free-market economy: resources are primarily owned and controlled by the private sector.

• Planned economy: economic decisions are planned by a central government. Economic systems differ in the roles of markets and government.

What economic issues matter in global business?

• Currency: how much foreign money is worth.

• Inflation and costs: how quickly prices and expenses are rising.

• Taxes and interest: what affects profits and borrowing costs.

• Demand and infrastructure: whether customers can buy and the organization can deliver.

What is national culture, and why does it matter?

is the values and attitudes shared by people from a country that shape behavior and beliefs about what is important. Managers must consider shared values, norms, assumptions, authority, communication, rewards, speaking up, feedback, and whether people will interpret the approach as intended.

What are Hofstede's five dimensions of national culture?

Individualism-collectivism, power distance, uncertainty avoidance, achievement-nurturing, and long-term/short-term orientation.

What is individualism versus collectivism in Hofstede's framework?

• Individualistic: people look after their own and family interests; examples are the United States, Canada, and Australia.

• Collectivistic: people expect the group to look after and protect them; examples are Mexico and Thailand. Japan is positioned in between.

What is power distance in Hofstede's framework?

High power distance accepts wide differences in power and shows great respect for authority; Mexico, Singapore, and France are examples. Low power distance plays down inequalities; employees are not afraid to approach or disagree with the boss; the United States and Sweden are examples. Italy and Japan are in the middle.

What is uncertainty avoidance in Hofstede's framework?

High uncertainty avoidance means people are threatened with ambiguity and experience high anxiety; Italy, Mexico, and France are examples. Low uncertainty avoidance means people are comfortable with risk and tolerant of different behavior and opinions; Canada, the United States, and Singapore are examples. The United Kingdom is in the middle.

What is achievement versus nurturing in Hofstede's framework?

• Achievement: assertiveness, acquiring money and goods, and competition prevail; examples are the United States, Japan, and Mexico.

• Nurturing: relationships and concern for others prevail; France and Sweden are examples. Canada and Greece are in the middle.

What is long-term versus short-term orientation in Hofstede's framework?

• Long-term: people look to the future and value thrift and persistence; examples are Germany, Australia, the United States, and Canada.

• Short-term: people value tradition and the past; examples are China, Taiwan, and Japan.

What are the nine GLOBE dimensions?

Power distance, uncertainty avoidance, assertiveness, humane orientation, future orientation, institutional collectivism, gender differentiation, in-group collectivism, and performance orientation. GLOBE asks, for example, how accepted unequal authority is and how strongly people prefer clear rules.

How should managers apply cultural information?

At a simplistic level: 'When in Rome, do as the Romans do.' Hofstede and GLOBE alert managers to potential cultural problems and help them consider what behavior earns trust and recognition. Cultural intelligence means notice, ask, adapt, and check; use a global mindset.

What is planning?

A management function involving setting goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities.

What is formal planning?

Planning with specific, time-oriented goals that are written and shared.

What are the four purposes of planning?

• Provide direction.

• Reduce uncertainty.

• Minimize waste and redundancy.

• Establish goals or standards used in controlling. The planning cycle is define, design, execute, and control; control requires a reference point.

How does planning provide direction?

It tells managers and nonmanagers what their organization or work unit is trying to accomplish and what they must contribute. Plans should state assumptions and constraints and align, fit, measure, and adapt.

How does planning reduce uncertainty?

It forces managers to look ahead, consider the impact of change, and develop appropriate responses.

How does planning minimize waste and establish control?

Coordinating work activities makes inefficiency and redundancy obvious so they can be eliminated. Planning establishes goals or performance standards used in controlling.

What is the relationship between planning and performance?

Formal planning is generally associated with positive financial results, but quality of planning and implementation matters more than extent. External factors, constraints such as budget or lack of people/resources, and shocks can reduce planning's impact; the time frame also influences the relationship.

What are goals or objectives?

Desired outcomes for individuals, groups, or the entire organization. They provide direction and a way to measure progress. To manage goals: clarify current and upcoming goals, rank urgency versus importance, schedule time and limit distractions, and reassess priorities with new information.

What are plans, stated objectives, and real objectives?

• Plans: documents outlining how goals will be met.

• Stated objectives: what the organization says and wants stakeholders to believe its goals are.

• Real objectives: goals actually pursued, shown by decisions, outcomes, and resource use.

What are the five categories for classifying plans?

• Breadth: strategic or operational.

• Time frame: long-term or short-term.

• Specificity: directional or specific.

• Frequency of use: single-use or standing.

• Planning conditions: static or scenario.

What are strategic and operational plans?

• Strategic plan: applies to the entire organization and establishes overall goals; it is leadership strategy.

• Operational plan: encompasses a particular operational area and specifies how objectives will be achieved; middle managers translate strategy into action. Missions are broad statements of organizational purpose, and objectives and resource choices should reflect the mission.

What are long-term, short-term, and intermediate plans?

• Long-term: beyond three years; often five years or more and strategic.

• Short-term: one year or less; often operational and detailed.

• Intermediate: between short-term and long-term plans and provides longer direction.

What is a specific plan?

A clearly defined plan with no room for interpretation: a precise, fixed route with predetermined steps and detailed instructions. Example: a retail manager increases sales by 10 percent in three months.

What is a directional plan?

A flexible plan that sets general guidelines rather than an exact route. It relies on managerial judgment and is best under changing or uncertain conditions.

What are single-use and standing plans?

• Single-use: a one-time plan for a unique situation, such as opening stores in a new country.

• Standing: an ongoing plan for repeated activities, such as a nondiscrimination and anti-harassment policy.

What is a static plan?

A plan made on the assumption that the business environment and internal conditions will remain unchanged; for example, planning 20 percent more holiday inventory for a retail store.

What are scenario plans and scenarios?

• makes assumptions about the future and determines how the company will respond, such as preparing for strong, average, and low sales.

• a consistent view of what the future is likely to be. Steps: identify what could change, construct possibilities, prepare actions, and monitor signals so delay and confusion decrease when reality unfolds.

What are the three contingency factors in planning?

• Level in the organization.

• Degree of environmental uncertainty.

• Length of future commitments. Planning should extend far enough to evaluate and fulfill commitments made today and ensure necessary resources are available.

How does organizational level affect planning?

Top executives focus on strategic planning, first-level managers focus on operational planning, and middle-level managers handle both. Strategic planning is mainly for senior managers and operational planning mainly for lower-level managers, although each level needs context about the other.

How does environmental uncertainty affect planning?

High uncertainty calls for shorter horizons, directional and short-term plans, more scenarios, and flexibility. Low uncertainty means slower, more stable change. A current decision commits future resources and limits future options, so planning horizons must be long enough to understand consequences without becoming unrealistic.

What is traditional objective-setting?

A top-down approach in which top managers set objectives that flow down and become subgoals for each organizational area. What a company claims to value should be compared with how it allocates money, time, and resources and what behavior or results it rewards.

What problem can traditional objective-setting create?

Objectives can be distorted at each level: 'improve the company's performance' can become 'improve division profits,' then 'increase profits regardless of means,' then 'do not worry about quality; just work fast.' Managers should look for patterns over time and audit misalignments.

What is Management by Objectives (MBO)?

A process of setting mutually agreed-upon goals and using those goals to evaluate employee performance. Managers and employees work together, objectives cascade through the organization, and they become operational objectives at each level; feedback supports the process.

How do MBO objectives cascade?

Overall organizational objectives cascade into divisional, departmental, and individual objectives. Each individual objective should support the higher-level objective, moving from broad to specific.

What does SMART mean?

• Specific: state the understood desired outcome and scope.

• Measurable: attach an observable, trackable quantity or indicator.

• Achievable: realistic enough to sustain effort while requiring stretch.

• Relevant: connects to higher-level priorities.

• Time-bound: specifies when results will be achieved and reviewed.

Does MBO work?

Assessing MBO is complex. If ability and goal acceptance are held constant, specific and difficult goals lead to higher performance. Difficult goals, specificity, feedback, and participation can improve effort, strategy, aspiration, and commitment. If a goal seems impossible rather than challenging, desire to achieve it declines and abandonment becomes more likely.

What is environmental scanning?

Screening information to detect emerging trends; it means watching for trends in the environment.

What are general-environment scanning sources?

• Political: lobbyists and political representatives.

• Economic: Fed minutes and financial news.

• Social: social media.

• Technological: patent reports. These are broad forces affecting many organizations.

What are specific-environment scanning sources?

• Industry: business media and industry associations.

• Competitors: websites and others in the industry.

• Suppliers: vendors.

• Customers: surveys and focus groups. These actors are closest to the organization.

What is competitive intelligence?

Gathering information about competitors to anticipate their actions rather than merely react. It should use publicly available information and be gathered ethically and legally, such as websites, press releases, government filings, and annual reports. Corporate espionage is improper gathering of protected information.

How can AI support planning?

Business leaders see AI as an opportunity to manage and grow businesses. A survey of 1,500 CEOs found 75 percent believe they risk going out of business if they do not integrate AI into management. AI can analyze large volumes of data and spot patterns in customers, operations, workforce skills, and scenarios.

How should managers use AI in planning?

Use AI to frame the problem, validate accuracy, challenge or generate alternatives, and then decide with human input. AI supports decisions; it does not replace human decision-making.

What does creating clarity mean in management?

It means providing explicit guidance from the manager.

What does it mean to operate in ambiguity?

Accepting limits to control when conditions or information are uncertain.

What should plans make explicit?

Plans should state their assumptions and constraints.

How can managers test whether an operational plan fits the mission?

Ask whether the objectives and resource choices reflect the organization's broad statement of purpose.

Why do goals need defined outcomes?

Without a defined outcome, success and deviation remain ambiguous.

What do a company's real objectives reveal?

Its true priorities, shown by its decisions, outcomes, and how it spends resources.

How can managers infer what a company truly values?

Look at where it allocates money, time, and resources and what behavior or results it rewards.

What should managers do about traditional-objective misalignment?

Look for consistent patterns over time and audit misalignments between stated goals, resource allocation, and rewards.

Why do specific, difficult goals improve performance?

They give a clear target, encourage greater effort, and allow feedback to adjust effort, strategy, and future goals.

How can employee participation help MBO?

Participation can raise aspiration and commitment because managers and employees work together on goals.

When is a directional plan especially useful?

When conditions are changing or uncertain and managers need flexibility, adaptability, and judgment.

How do scenario plans help when the future unfolds?

They prepare responses to possible conditions in advance, reducing delay and confusion when reality unfolds.

What is the commitment concept in planning?

A plan should extend far enough to evaluate and fulfill commitments made today and to understand how current decisions commit future resources or limit future options.

How does planning horizon differ under low and high uncertainty?

Low uncertainty allows a slower, more stable planning approach; high uncertainty calls for more flexibility, more scenarios, and shorter horizons.

What questions can managers ask when applying national-culture information?

Will people interpret our approach as intended? How do authority, communication, feedback, individual rewards, and speaking up differ?

What is the difference between competitive intelligence and corporate espionage?

Competitive intelligence is legitimate, ethical analysis of publicly available information; corporate espionage is improper gathering of protected information.

What planning uses can AI support?

AI can help identify customer behavior, forecast operational demand, identify workforce skill needs, and generate scenarios or alternatives for human review.