best mgt summary chapter 4

Globalization

The trend of the world economy toward becoming a more interdependent system.

The Global Village

Refers to the "shrinking" of time and space as air travel and the electronic media have made it easier for the people of the globe to communicate with one another.

The Global Economy

Refers to the increasing tendency of the economies of the world to interact with one another as one market instead of many national markets.

Positive Effects of Global Economy

(1) The world will be far more interconnected, leading to better and more affordable products, (2) Better communication among nations.

Negative Effects of Global Economy

(1) The movement, or outsourcing, of formerly well-paying jobs overseas as companies seek lower costs, (2) The potential for increased economic instability globally.

Megamergers

The trend of giant firms joining forces

Minifirms

(1) Small companies that can get started more easily, (2) Small companies can maneuver faster than large ones.

International Management

Management that oversees the conduct of operations in or with organizations in foreign countries.

Multinational Corporation

A business firm with operations in several countries.

Multinational Organization

A nonprofit organization with operations in several countries (e.g., World Wildlife Fund).

Ethnocentric Managers

Believe that their native country, culture, language, and behavior are superior to all others

Polycentric Managers

Take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alone.

Geocentric Managers

Accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective.

Why Companies Expand Internationally

(1) Availability of supplies, (2) New markets, (3) Lower labor costs, (4) Access to finance capital, (5) Avoidance of tariffs and import quotas.

Five Ways of Expanding Internationally

(1) Global outsourcing, (2) Importing, exporting, and countertrading, (3) Licensing and franchising, (4) Joint ventures, (5) Wholly-owned subsidiaries.

Global Outsourcing

Also called offshoring

Importing

A company buys goods outside the country and resells them domestically.

Exporting

A company produces goods domestically and sells them outside the country.

Countertrading

Bartering goods for goods.

Licensing

A company allows a foreign company to pay it a fee to make or distribute the first company’s product or service (used by manufacturing companies).

Franchising

A form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company’s brand name and a package of materials and services (used by service companies).

Joint Venture

Also known as a strategic alliance

Wholly-owned Subsidiary

A foreign subsidiary that is totally owned and controlled by an organization.

Greenfield Venture

A foreign subsidiary that the owning organization has built from scratch.

Free Trade

The movement of goods and services among nations without political or economic obstruction.

Trade Protectionism

The use of government regulations to limit the import of goods and services

Tariff

A trade barrier in the form of a customs duty, or tax, levied mainly on imports.

Revenue Tariff

Designed to raise money for the government.

Protective Tariff

Intended to raise the price of imported goods to make the domestic products more competitive.

Import Quota

A trade barrier in the form of a limit on the numbers of a product that can be imported.

Dumping

The practice of a foreign company’s exporting products abroad at a lower price than the price in the home market in order to drive down the price of the domestic product.

Embargo

A complete ban or prohibition of trade of one country with another.

Sanction

The trade prohibition on certain types of products, services, or technology to another country for specific reasons.

Trading Bloc

Also known as an economic community

Major Trading Blocs

(1) NAFTA (U.S., Canada, Mexico), (2) The European Union (28 partners in Europe), (3) APEC (21 Pacific Rim countries), (4) ASEAN (10 countries in Southeast Asia), (5) Mercosur (Latin America), (6) CAFTA-DR (Central America).

Low-context Culture

Shared meanings are primarily derived from written and spoken words (e.g., North America, Germany).

High-context Culture

People rely heavily on situational cues for meaning when communicating with others (e.g., China, Korea, Mexico).

Hofstede’s Four Cultural Dimensions

(1) Individualism/collectivism, (2) Power distance, (3) Uncertainty avoidance, (4) Masculinity/femininity.

The GLOBE Project

A massive ongoing cross-cultural investigation of nine cultural dimensions (Power distance, Uncertainty avoidance, Institutional collectivism, In-group collectivism, Gender egalitarianism, Assertiveness, Future orientation, Performance orientation, Humane orientation).

Cultural Variations

(1) Language, (2) Interpersonal space, (3) Communication, (4) Time orientation, (5) Religion, (6) Law and political stability.

Time Orientation

(1) Monochronic time: preference for doing one thing at a time, (2) Polychronic time: preference for doing more than one thing at a time.

Expatriate

A person living or working in a foreign country.