gms midterm!
Chapter 1: Management Today
1.1 Working Today——————————————————————
• Talented people – what they know, learn, + achieve – is the source of organizational performance.
Intellectual capital (2 definitions)
(a) The combined brainpower + shared knowledge of an organization's employees
(b) The package of intellect, skills, + capabilities that sets us apart, making us valuable to potential employers.
To organizations → strategic asset as human creativity, insight, + decision- making can be converted into superior performance.
To Individuals – it’s a personal asset, one to be nurtured + continually updated.
MAINTAINING TALENT: “Career success requires A LOT of initiative, self-awareness, + continuous learning”
• Technology – tests our talents + intrudes into every aspect of our lives
We are continuously bombarded w /advertisements for the latest developments:
smartphones, apparel, cars, homes
We struggle to keep up w/ our social media involvements, stay connected w/ messaging, + deal w/ inboxes all of email + voicemail
→ To bridge the gap between diff generations of the workplace we use REVERSE MENTORING!
REVERSE MENTORING - When a younger/newer employee mentors an older/more experienced one.
Tech IQ: to use current technologies at work + in your personal life, combined w/ the commitment to keep yourself updated as technology continues to evolve.
Intellectual capital = commitment x competency
• Globalization: the worldwide interdependence of resource flows, product markets, + business competition.
Government leaders worry about the competitiveness of nations.
Emerging markets will power global growth in the future.
Low-income markets are opportunities for wealthy companies.
The Shamrock Organization:
1st leaf – Full-time employees – standard career paths.
2nd leaf – “freelancers”
3rd leaf – part-timers w/o benefits (first to loose their jobs when employers face economic difficulties).
*Emerging Market Companies
- 60% of all low + medium-tech manufacturing worldwide
- Total Value-add in high-tech manufacturing: from a low 26% in the 1970s → 48% now
• Ethics – A code of moral principles that sets standards for conduct that is “good” + “right” as well as “bad” + “wrong.”
1.2 Organizations as Systems —————————————————
Organization: collection of ppl working together to achieve a common purpose
- A unique social phenomenon that enables its members to perform task far beyond the reach of individual accomplishment (synergy)
- The broad purpose of any organization: to provide goods or services of value to customers + clients.
- A clear sense of purpose tie to QUALITY PRODUCTS + SERVICES, CUSTOMERS SATISFACTION, SOCIAL RESPONSIBILITY can be an important source of organizational strength + performance advantage
- All organizations are OPEN SYSTEMS that interact w/ their environments in a continual process obtaining resource inputs people information resources + capital + transforming them into outputs in the form of finished goods + services for customers
value chain: organizations create value when they use resources well to produce good products + take care of their customers
a simple way to assess the impact of any organization is to ask: how is the world different because it existed?
value creation depends on who you ask
Bottom line: total amount of money that a company has made or lost over a particular period of time
triple bottom line: evaluation of organizational performance on economic, social + environmental criteria
3 p's of organizational performance?
1. Profit - is the decision economically sound
2. People - does the decision treat people w/ respect + dignity
3. Planet - is a decision good for the environment
*None of the sustainable frameworks will be enough as long as they lack the suitable pace + scale - the necessary radical intent to - needed to stop us all over shooting our planetary boundaries
productivity: an overall measure of the quantity + quality of work performance of the resource utilization taken into account
performance effectiveness: an output measure of task or goal accomplishment
performance efficiency: an input measure of that resource costs associated w/ goal accomplishment
Workplace changes that impact management
focus on valuing human capital
demise of “command control”
emphasis on teamwork
preeminence of Technology
importance of networking
New Workforce expectations
concern for sustainability
1.3 Managers———————————————————————
Importance of human resources + miniatures
Ppl are not costs to be controlled
High performing organizations treat people as valuable strategic assets
3 takeaways:
1. give leaders broad authority
2. encourage them to think like CEOs
3. challenge strong performance early w/ big opportunities
Manager’s main roles:
1) directly support supervise + help activate the work efforts of others
2) the people who managers help are the ones whose contributions represent the real work of the organization
Lvls of mgmt:
1. board of directors – make sure the organization is run well
2. Top managers – performance of an organization as a whole or its major parts
3. middle managers – the large departments or divisions
4. team leaders – supervise non-managerial workers
Types of managers:
Line managers are responsible for work activities that directly affect organizations outputs
staff managers use technical expertise to advise + support the efforts of line workers
functional managers are responsible for a single area of activity
Quality of Work Life (QWL): An indicator of the overall quality of human experiences in the workplace
QWL Indicators?
Respect
Fair pay
Safe working conditions
Opportunities to learn + progress in a career
Protection of individual rights
Organization is an UPSIDE-DOWN PYRAMID
- A manager’s job is to support workers' efforts
- the best managers are known for helping + supporting
- customers at the top served by workers who are supported by managers
1.4 Management Process ———————————————————
Managers achieve high performance for their organizations by best utilizing its human + material resources
Management: process of planning, organizing, leading, + controlling the use of resources to accomplish performance goals
all managers are responsible for the four functions
the functions are carried on continually
Mintzberg’s common management roles:
Characteristics of managerial work:
Long hours
intense pace
fragmented + varied tasks
Many communication media
filled w/ interpersonal relationships
Managerial agendas + networks:
agenda setting: develops action priorities for accomplishing goals + plans
Networking: process of building + maintaining positive relationships w/ people who can help advance agendas
social capital: capacity to attract support + help from others
1.5 Learning How To Manage —————————————————
Learning: the change in the behavior that results from experience
Lifelong learning: the process of continuously learning from daily experiences + opportunities
Katz’ essential managerial skills:
Chapter 7: Data + Decision Making
7.1 Information, Technology, + Management —————————————
Important competencies managers must have today
1. technological competency: to underst+ new technologies + to use them to their best advantage
2. Informational competency: to locate gather organize + display information for decision making + problem solving
3. analytical competency: to evaluate + analyze information to make actual decisions + solve real problems
Data vs. information
Data: raw facts + observations
Information: data made useful + meaningful for decision making
Big data exist in huge quantities + is difficult to process w/o sophisticated mathematical + analytical techniques
Data production today – Bernard Marr (technology advisor to gov’ts + companies) helps orgs improve their business performance, use data more intelligently, + understand the implications of new tech
Consequences of big data:
* ex. kids today are less fit than their parents were b/c of excessive screentime
- secondary school boards had to implement rules against cellphone use
BIG DATA = STRUCTURED + UNSTRUCTURED
data mining: analyzing data to produce useful information for decision makers
management Analytics: systematic evaluation analysis of data to make informed decisions
Information drives management decision-making!!!
characteristics of useful information? (CHURT)
Timely
High quality
Complete
Relevant
understandable
bad data: Information that can be erroneous, misleading + w/o general formatting
Management analytics + bad data: “despite leaders considering data + analytics capability, top investment priority faith in the data businesses rely upon is low”
ex. we cannot trust chat gpt because it can make up sources
Management information systems examples:
1. Business intelligence (BI): Information Systems to extract + report data in organized ways that are useful both to decision makers
2. executive dashboards: visually update + display key performance metrics (or key performance indicators - KPIs) + information on a real-time basis
Information exchanges with the EXTERNAL ENVIRONMENT:
- gather intelligence information
- provide public information
Information exchanges within the organization (INTERNAL ENVIRONMENT):
- Facilitates decision making
- facilitates problem solving
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Managers as info processors:
continually gather share + receive information
+ as electronic as it is, it is face-to-face
always on, always connected
*More ppl working from home after COVID-19
7.2 Problem Solving + Managerial Decisions ————————————
Problem solving: identifying discrepancy between actual + desired performance + taking action to resolve it
Decision: Choice among possible alt courses of action
performance threat: something is wrong or has the potential to go wrong
performance opportunity: situation offers the chance for a better future at the right steps are taken
problem solving approaches OR styles
problem avoiders: Inactive in gathering info + solving problems
problem solvers: reactive in gathering info + solving problems
problem Seekers: proactive + anticipating problems + opportunities + taking appropriate action to gain an advantage
Managers can approach problems in…
Systematic thinking: approaches problems in a rational step by step + analytical fashion
Intuitive thinking: approaches problems + flexible + spontaneous fashion
Multidimensional thinking: applies both intuitive + systematic thinking
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Manager's face 2 types of problems
structured problems: familiar straightforward + clear with respect to info needs
Programmed decisions apply solutions that are readily available for past experiences to solve structured problems
Construction problems: full of ambiguity + information deficiencies
non program decisions apply specific solution to meet the dem+s of a unique problem
Commonly faced by higher lvl mgmt
Crisis decision making: crisis involves an unexpected problem that can lead to disaster if not resolve quickly inappropriately.
Rules for crisis management:
figure out what is going on
remember that speed matters
Remember that slow counts, too
Respect the danger of the unfamiliar
value the skeptic
be ready to “fight fire w/ fire”
Managers make decisions with various amounts of information:
Certain environment: Offers complete information on possible action alternatives + their consequences
risk environment: lacks complete information but offers probabilities of the likely outcomes for possible action alternatives
uncertain environment: lacks so much information that is difficult to assign probabilities to the likely outcomes of alternatives
7.3 The Decision-Making Process ———————————————————
Find + Define the problem
- common mistakes + defining problems:
Too broad or too narrow problem
Focusing on symptoms instead of causes
Choosing wrong problem to deal with
generate + evaluate alt solutions
- POTENTIAL SOLUTIONS are formulated + more information together data are analyzed the advantage + disadvantages are identified
choose a preferred course of action
- common mistakes: abandoning search for alts too quickly
- 2 diff approaches:
Behaviourial model leading → staisficing decisions
Herbert Alex+er Simon ~BOUNDED RATIONALITY B/C
Limits to our thinking capacity
Incomplete available info
Time constraints
Classical model leading → optimizing decisions
implemented the decision: to ensure solution decided upon becomes a reality
- managers need to have willingness + ability to implement action plans
Problem: lack of participation error should be avoided
evaluate results: comparing actual vs. desired results
- positive + neg consequences of chosen course of action should be examined
→ if actual results fall short of desired results, managers returns to previous decision making process step
AT ALL STEPS, CHECK ETHICAL REASONING!
1) Utility: satisfy all constituents or stakeholders
2) Rights: respect rights + duties of everyone
3) Justice: consistent with the canons of justice
4) Caring: conistsent with my responsibilities to care
Issues in decision making: How do decision errors happen?
Heuristics: Strategies for simplifying decision making
availability bias: bases a decision on recent information or events
Representativeness bias: bases a decision on similarity to other situations
Anchoring + adjustment bias: bases a decision on incremental adjustment from a prior decision point
Framing error: How to solve a problem in the context perceived (positive or negative)
Confirmation error: Focus on information that confirms the decision already made
Escalating commitment: a course of action even though it is not working
Creative decision making
Big-c: ordinary things are done by sectional people
Little-c: average people come up with unique ways to deal with daily events + situations
Elements of creativity:
Task expertise
Task motivation
Creativity skills
3 types of situational creativity drivers:
Team creativity skills
management support
organizational culture
Chapter 2: Management Learning Past → Present
GREAT MGMT ISN’T NEW + ISN’T ALL ABOUT TECH!
As far back as 5000 BC (ancient sumerians used written records to improve gov’ + business activities)
Why is important to learn from the past? To perfect new ideas + approaches to best match current business realities.
2.1 Classical management approaches —————————————————
1. Scientific management ~ Frederick Winslow Taylor
* Wasted motions resulted in efficiency + low performance
* if workes were taught to do their jobs in best ways + were helped + guided by supervisors
4 guiding principles:
1) rules of motion
2) select worker w/ right abilities
3) train workers + give incentives
4) support workers by planning + smoothing the way as they do their work
ex. Frank + lillian gillbreth pioneered the use of motion studies as a management tool
(cut down # of motions used by bricklayers + tripled their productivity)
Contributions Scientific management:
make results-based compensation a performance incentive
carefully design jobs with efficient to work methods
carefully select workers with abilities to perform the job
train workers to execute activities to the best of their abilities
train supervisors to support workers
2. Administrative ~ Henri Fayol (published “Administration Industrielle et Generale” (GENERAL + INDUSTRIAL MANAGEMENT)
Rules/Duties of management:
Foresight: to complete a plan of action for the future
Organization: to provide + mobilize resources to implement the plan
Comm+: to lead, select, + evaluate workers to get the best work towards the plan
Coordination: to fit diverse effort together + ensure information is shared + problems solved
control: to make sure things happen according to plan + taking necessary corrective action
3. Bureaucratic ~ Max Weber (political economist who had a major impact of management + sociology)
An ideal, intentionally rational, + very efficient form of organization
based on principles of logic, order, + legitimate Authority
Characterisics of bureaucratic organizations:
clear division of labor
clear hierarchy of authority
formal rules + procedures
Impersonality
careers based on merit
Disadvantages of Bureaucracy:
Excessive paperwork or “ red tape”
Slowness in h+ling problems
rigidity in the face of Shifting needs
resistance to change
employee apathy
2.2 Behavioural management approaches – elements affecting human behavior in orgs ———————————————————————————————
1. Follet’s organizations as communities ~ mary parker follet (contributed to the transition from classical thinking → behavioural management)
Groups + human cooperation:
- Groups allow individuals to combine the talents for a greater good
- Orgs are cooperating communities of managers + coworkers
Manager's job is to help people cooperate + achieve an integration of goals + interests
Forward-looking management Insights:
making every employee an owner creates a sense of collective responsibility
precursor of employee ownership, profit sharing, + gain sharing
business problems involve a variety of interrelated factors
precursor of systems thinking
private profits relative to public good
precursor of managerial ethics + social responsibility
2. Hawthorne studies examined HOW ECONOMIC INCENTIVES + PHYSICAL CONDITIONS affect WORKER OUTPUT (productivity)
NO CONSISTENT RELATIONSHIP FOUND!
2 groups: Experiment group (improved working conditions) + Control group (no changes to original working conditions)
* performance in both groups increased even after removing the incentives b/c:
new social setting lead workers to do a good job
good human relations = higher productivity
Employee attitudes + group processes:
- some things satisfied some workers but not others
- people restricted opportunity to group norms (to avoid layoffs)
Lessons from hawthorne studies:
- social + human concerns are accused of productivity
- Hawthorne effect: ppl are singled out for special attention perform as expected
3. Maslow's theory of human needs ~ Abraham Maslow
Need: physiological psychological deficiency a person feels compelled to satisfy
Deficit principle: satisfied need is not a motivator of behavior
promotion principle: a need becomes a motivator once the proceeding lower level need is satisfied
both principles used to operate at self-actualization level
Mcgregor’s theory x + theory y
Theory x assumes that workers:
- Dislike work
- lack ambition
- are irresponsible
- resist change
- prefer to be led
Theory Y assumes that workers are:
- willing to work
- willing to accept responsib
- capable of self-control
- capable of self-direction
- imaginative + creative
according to McGregor, managers create SELF-FULFILLING PROPHECIES:
Theory X managers create situations where workers become dependent, passive, + reluctant
Theory Y managers create situations where workers respond with initiative + high performance
Central to Notions of empowerment + self-management
Argyris’ personality + organization
– Argyris’ adult personality - practices inhibit worker maturation inconsistent of the mature adult personality
Mention practices should accommodate the mature personality by:
increasing task responsibility
increasing task variety
using participative decision-making
2.3 Modern management approaches ——————————————————
1. Organizations as systems
System: Collection of interrelated parts of function together to achieve a common purpose
Subsystem: smaller component of a larger system
open systems: organizations that interact with their environments
2. Contingency thinking tries to MATCH MANAGERIAL REPSONSES W/ PROBLEMS (SITUATION)
NO “ONE BEST WAY” TO MANAGE
The appropriate way to manage depends on the situation
3. Quality management
QUALITY + COMPETITIVE ADVANTAGE are linked
Total Quality Management (TQM): comprehensive approach to continuous Improvement for the entire organization
ISO certification: Global quality management st+ards
- refine an upgrade quality to meet ISO requirements
4. Quantitative analysis + tools
Analytics: use of large databases + mathematics to solve problems + make informed decisions using systematic analysis
Evidence based management: making management decisions on hard facts about what really works
Chapter 8: Planning Processes + Techniques
8.1 Why + How Managers Plan ——————————————————
importance of planning
the planning process
the benefits of planning
planning + time management
types of plans used by managers:
long-term + short-term plans
strategic + tactical plans
operational plans
planning tools + techniques:
Forecasting
attempts to predict the future
Qualitative forecasting uses expert opinions
Quantitative forecasting uses mathematical models + statistical analysis of historical data + surveys
contingency planning
identifying alternative courses of action to take when things go wrong
anticipate changing conditions
contain trigger points to indicate when to activate plan or specific course of action
scenario planning
long-term version of contingency planning
identifying alternative future scenarios
plans made for each future scenario
increases organizations flexibility preparation for future shocks
Benchmarking: use of external + internal comparisons to better evaluate current performance
adopts best practices: things people + organizations do that lead to Superior performance
use of Staff planners: Experts who assistant all steps of the planning process
they help bring focus + expertise to a wide variety of planning tasks
communication between staff planners + my managers is essential for the success of the planning process
implementing plans to achieve results:
goal setting
goal management
goal alignment
participation + involvement
planning is the first management function - it's at the stage for the others by providing a sense of direction
Planning: the process of setting objectives + determining how best to accomplish them
“anticipating the future needs of the market before the dem+ asserts itself”
Objectives + goals: identify the specific results or desired outcomes that one intends to achieve
Plan: statement of action steps to be taken in order to accomplish this objectives (goals)
steps in the planning process:
Define your objectives
determine where you st+ vis a vis objectives
develop promises regarding the future conditions
analyze Alternatives + make a plan
implement the plan + evaluate results
benefits of planning:
improves focus + flexibility
improves action orientation
improves coordination + control
improves time management
personal time management tips:
do say no to request that distract from what you should be doing
don't get bogged down in details that can be addressed later
through screen telephone calls, emails, + meeting requests
don't let drop + visitors, text messaging use up your time
do prioritize your important + urgent work
don't become calendar bound by letting others controller schedule
do follow a priorities; do most important + urgent work first
* There’s not enough hours in the day to get everything done.
The digital age has increased the number of decisions people have to make + that there's less time available to make decisions
8.2 Types of Plans Used by Managers
types of plans:
long-term (3+ years into the future)
short-term plans (1 year or less)
Strategic plans: set broad, comprehensive, + long-term action directions to the entire organization or major division
vision: clarifies purpose of the organization + what hopes to be in the
tactical plans: specify how the organization's resources are used to implement strategy
- tactical plans + business often takes the form of FUNCTIONAL PLANS
FUNCTIONAL PLANS - How different components within the organization will help accomplish the overall strategy
Production plans, financial plans, facility plans logistics plans, marketing plans, HR plans
operational plans - describe short-term activities to implement strategic plans
Policies: standing plans that communicate guidelines for decisions
Love contracts: employees pledged the Romantic relationships in the office on interfere with their work
Procedures: rules that describe actions to be taken in specific situations
Budgets: single-use plans that commit resources to projects or activities
Flexible budgets vary according to level of activity
“rolled over” budgets are renewed each period
Zero based budgets: allocate resources as if each budget were br+ new
There is no guarantee that any past funding will be renewed; all proposals old + new must compete for available funds at the start of each new budget cycle
HOWEVER…increasing environmental complexity + dynamism of recent years has severely tested the concept of “long-term” planning
plans are subjected to frequent revisions
goal setting (SMART GOALS)
Specific: desired outcomes clear to anyone
Measurable: no doubt when accomplished or missed
Attainable: challenging but realistic to accomplish
Relevant: focused on important results
Timely: linked to due dates + timetable
Solution: goal alignment between team leader + team member
Jointly plan: set objectives, st+ards, choose actions
individually Act: perform tasks (member), provide support (leader)
jointly control: review results, discuss implications, renew cycle
*** COLLECTIVE EFFORT + COMMITMENT**
participatory planning includes all planning steps the people who will be affected by the plans + asked to help implement them.
participatory planning…
unlocks motivational potential goal-setting
management by objectives (MBO) promotes participation
participation increases underst+ing acceptance of plan + commitment to success
ex. jeff bezos ~ # of ppl involved in decision making process (2 pizz teams)
- if the team is too big, there are some pp who are free riding
Chapter 5: Global Management + Cultural Diversity
5.1 Management + Globalization
1. Management + Globalization
Global Management
why companies go global
how companies go global
Global business environments
2. Global businesses
types of global businesses
pros + cons of global businesses
ethics challenges for Global businesses
3. Culture + Global Diversity
cultural intelligence
silent languages of culture
tight + loose cultures
values + national cultures
4. Global Management Learning
are management theories Universal?
Intercultural competencies
Global learning goals
Key Concepts in the challenges of globalization:
global economy: resources markets + competition are worldwide + scope
Internationalization: process of “increasing involvement in international operations”
globalization / deglobalization:
growing interdependence among elements in the global economy
worldwide interdependence of resource flow, product markets, + business competition
Distance: Metaphor that represents the degree of dissimilarities between countries
World 3.0: balancing cooperation in the global economy with national identities + interests
Global Management: managing business + organizations with interest in more than one country
Global manager is culturally aware + formed on international affairs
International businesses: conducting for profit transactions of goods + services across National boundaries
reasons why businesses Go Global:
Customers
Suppliers
Capital
Labour
Risk
internationalization motives
1) DUNNING’s 4 motives:
Market seeking
efficiency seeking
natural resource seeking
strategic assets seeking
2) CUERVO-CAZURRA, NARULA + UN’S 4 motives:
Sell more: the company explores existing resources at home + obtains better host country conditions
buy better: the company explodes existing resource abroad + avoids poor Home Country conditions
Upgrade: the company explores for new resources + obtains better host country conditions
Escape: the company scores for new resources + avoids poor Home Country conditions
for internationalization motives - a company may also explore the opportunities in different markets in order to take advantages + in some cases extend the product life cycle
Market entry strategies involve the sale of goods or services to foreign markets but do not require expensive Investments
Global sourcing
Exporting
Importing
licensing agreement
Franchising
types of foreign direct investment ( FDI) strategies:
joint venture
strategic Alliance
owned subsidiary (sometimes called WOS)
Q: What conditions will affect the decisions of firms on how to internationalize their activities?
Dunning - Eclectic Paradigm OLI Model
- ownership, location, + internationalization advantages (OLI)
1) Ownership advantages: resources owned by the org that can be transferred across locations which includes trademarks, production techniques + process, managerial skills + other resources not available to the competitors
2) Location advantages: implications of choosing to produce or to perform activities in a specific location (country or region)
3) internationalization advantages: to internalize or to incorporate activities that add value to its business
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evolution of Concepts - new elements —
→ although economic factors are certainly important to explain the formation, growth, + expansion affirms within + across national borders, they are not sufficient to explain the additional complexity when a firm decides to exp+ its activities across national borders
Economic factors: investigate the economic elements that affect the internationalization of firms
behavioral elements: explaining the additional challenges (+ perhaps opportunities) a firm faces + foreign host countries when compared to indigenous (local) firms
behavioral theories: the uppsala internalization model
included the psychic distance concept to explain the internationalization behavior firms
psychic distance: “ the sum of factors preventing the flow of information from into the market”
Includes several elements: “language, culture, political systems, level of Education, level of industria development, etc”
firms behave in a risk averse manner = it means that when the perceived risk goes down the firm increases its commitment to the foreign market
Establishment chain (status in the internationalization process):
1. Non-regular (sporadic) export
2. regular exports with independent agent/distributor
3. establishment of a sales office / subsidiary
4. production subsidiary
Common forms of global business
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ex. The haier group - plan in camden, south caroline
small data to satisfy individual customer needs, however the company faced a huge culture shock at the plant in Camden South Caroline
Cultural differences can have a huge impact on the internationalization of firms
Cultural Distance Index ~ Kogut + Singh
1st statistical study on the implications of cultural distance to the selection of entry mode
when investing in culturally distant countries foreign firms can choose to partner with local firms in order to gain local knowledge + share the risk associated to the investment (higher commitment = higher risk)
How companies Go Global:
global sourcing: purchasing materials or services around the world for local use
Exporting: selling locally made products in foreign markets
Importing: buying foreign made products + selling them domestically
75% of Canadian exports go to the US, representing only 12% of US imports
Licensing agreement: one firm pays for rights to make or sell another companies products
ex. LARGEST TRADEMARK INFRIGEMENT of New Balance in China is associated with the potential risk of Licensing (slanted N logo + owed US shoe company $1.5 million in damages _ legal costs)
franchising: a fee is paid for rights to use another firm's name, br+ing, + methods
Insourcing: local job creation that results from foreign direct investment
joint ventures: operates in a foreign country through a co-ownership by Foreign + local partners
criteria for choosing a joint venture partner:
- familiarity with your firms major
- strong local workforce
- values its customers
- future expansion possibilities
- strong local market for partners own products
- good profit potential
- sound financial st+ing
Strategic alliances: a partnership in which foreign a domestic firms share resources + knowledge for Mutual gains
foreign subsidiaries: local operation completely owned by a foreign firm
Besides cultural differences… there are Global business environments:
legal + political systems
deferring laws + practices regarding….
business ownership
negotiation + implementation of contract
foreign currency exchange
Protection of intellectual property rights
Counterfeit merch+ise
political risk: potential loss + value of a foreign investment due to instability + political changes in the host country
political risk analysis (expertise/experience): forecast political disruptions that threaten the value of a foreign investment
ex. Brexit, US trade Wars - mexico - china, Bolivia - Venezuela - China, Canada + India
trade agreements + trade barriers
World trade organization
Most favored nation status
Tariffs
Non tariff barrier (quotas restrictions, etc)
Regional economic alliances
USMCA (replacement for the NAFTA - North American free trade)
EU = Europea Union
APEC = Asia Pacific economic cooperation
ASEAN = Association of Southeast Asian Nations
SADC = South Africa development community
MERCOSUR = mercado comun del sur
Deglobalization: process of “weakening interdependence among nations”
The Bullwhip effect affecting Global Supply chains: a phenomenon we're ordering patterns experience increased ovariance towards upstream stages of the supply chain
5.2 Global Businesses
Types of global businesses:
1. Global corporation: MNE (multinational enterprise) or MNC (multinational corporation) w/ extensive business operations in more than 1 foreign country
2. Transnational corporation: a global corporation that operates worldwide on a borderless basis
Host country complains about MNCs:
Excess profit
Domination of local economy
Interference w/ local gov’t
Hiring the best local talent
Limited tech transfer
Disrespect for local customs
ex. War in Ukraine – disruption in global value chains + increased pressure + interference of MNCs with local gov’t (brazil imports fertilizer from Russia, so they have to find alt country to avoid conflict between Russia + Ukraine – Canada – to import fertilizer but Canada may not be able to produce as much as Russia…
Globalization gap: large multinationals + industrialized nations gaining disproportionately from globalization → a matter for social and personal concern?
MNCs complaints about host countries:
Profit limitations
Overpriced resources
Exploitative rules
Foreign exchange restrictions
Failure to uphold contracts
Mutual benefits for host country + global corp or MNC:
Shared growth opportunities
Shared income opportunities
Shared learning opportunities
Shared development opportunities
Ethical challenges for Global Businesses:
Corruption: illegal practices that further one’s business interests
corruption of foreign public officials act – makes it illegal for Canadian firms + their representatives to engage in corrupt practices overseas
- bribes to foreign officials
- excessive commissions
- non monetary gifts
Child labor + sweatshops
Child labor: employment of children for work otherwise done by adults
Sweatshops: employment of workers at very low wages for long hrs in poor working conditions
ex. Nike employs sweatshops (impacts their sales + relationship with investors)
Conflict minerals
5.3 Cultures + Global Diversity
Culture: shared set of beliefs, values, + patterns of behavior common to a group of ppl
Hofstede defines culture as the “collective programming of the mind distinguishing the members of 1 group or category of ppl from others”
Cultural values remain consistent over time!
Culture shock: confusion + discomfort a person experiences in an unfamiliar culture
Stages in adjusting to a culture:
• Confusion: First contacts with the new culture leave you anxious, uncomfortable, + in need of information + advice.
• Small victories: Continued interactions bring some “successes,” and your confidence grows in handling daily affairs.
• The honeymoon: A time of wonderment, cultural immersion, and even infatuation with local ways that are viewed positively.
• Irritation and anger: A time when the negatives overwhelm the positives + the new culture becomes a target of your criticism.
Cultural intelligence: to adapt + adjust to new cultures
Ethnocentrism: the tendency to consider one’s own culture as superior to others
Silent languages of culture:
Context: “parts of a discourse that surround a word or passage and can throw light on its meaning”
High + low context cultures ~ Edward T. Hall (1959) – compares cultures (high context x low context):
Low-context cultures emphasize communication via spoken or written words
- US, Canada, Germany (very specific, more direct, speak up issues right away)
High-contrast cultures rely on nonverbal and situational cues + spoken or written words
- Thailand, Malaysia
Proxemics: study of how ppl use SPACE to communicate
- In NA, ppl value “personal space”
- Many Latin + Asian cultures expect much less personal space
Time
Monochronic cultures: ppl tend to do 1 thing at a a time (ex. canada)
Polychronic cultures: time is used to accomplish many diff things at once (ex. egypt)
Tight + loose cultures
Cultural tightness-looseness:
TIGHT = strength of norms that govern social behavior (ex. Japan, Korea, Malaysia)
LOOSE = tolerance for any deviation from norms (ex. Australia, brazil, hungary)
Values + national cultures (Hofstede):
Power distance
Uncertainty avoidance
Individualism-collectivisim
Masculinity-femininity
Time orinetation
Indulgence vs restraint
5.4 Global Management Learning
Comparative management: how management practice systematically differ among countries and/or cultures
Intercultural competencies: skills + personal characteristics that helps us be successful in cross-cultural situations
Global managers (know how to adapt) - need to successfully apply management functions across internationl boundaries
Global learning goals:
Not universal
Engage critcial thinking
Look everywhere for new management ideas
Always consider culture