Global Managers & The External Environment – Lecture 6 (Robbins & Coulter, 11e)

What does the term "external environment" refer to in management?

The factors and forces outside an organization that affect its performance.

Name the six major components of an organization’s external environment.

Economic, Demographic, Political/Legal, Socio-cultural, Technological, and Global factors.

Which external-environment factor includes interest rates, inflation, and business-cycle stages?

The Economic factor.

Which external-environment factor covers population age, race, gender, and income?

The Demographic factor.

Local laws, global laws, and political stability fall under which external-environment component?

The Political/Legal component.

Values, attitudes, lifestyles, and traditions are monitored under what external factor?

The Socio-cultural factor.

Scientific or industrial innovations belong to which external element?

The Technological factor.

Issues associated with globalization and the world economy are categorized under which external factor?

The Global factor.

In global management, what does MNC stand for?

Multinational Corporation – a firm that maintains operations in multiple countries.

Differentiate between a home country and a host country for an MNC.

Home country is where the company originated; host country is any foreign nation where it operates.

What attitude assumes the home country has the best work approaches and distrusts foreign employees with key decisions?

Ethnocentric attitude.

Managers who believe each foreign operation is unique and should be managed by local employees exhibit which attitude?

Polycentric attitude.

Which managerial attitude seeks the best people and practices from around the globe, regardless of nationality?

Geocentric attitude.

How does a multi-domestic corporation differ from other MNCs?

It decentralizes management to the host country, following a polycentric approach and tailoring products/strategies locally.

What characterizes a global company in the international organization typology?

Centralized management in the home country and an ethnocentric mindset.

Define a transnational (borderless) organization.

An MNC that eliminates geographic barriers and adopts a geocentric attitude to maximize global efficiency and effectiveness.

What is the simplest, least-investment step a firm can take to begin operating internationally?

Global sourcing (global outsourcing) – purchasing materials or labor worldwide where it is cheapest.

How does exporting differ from importing?

Exporting is producing domestically and selling abroad; importing is acquiring goods produced abroad and selling them domestically.

When is licensing typically used versus franchising?

Licensing is primarily for manufacturing firms to let others make/sell their products; franchising is for service firms to let others use their name and operating methods.

What is a strategic alliance?

A partnership in which organizations share resources and knowledge to develop new products or build facilities without forming a new entity.

Explain a joint venture.

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