Globalization and Management Concepts - Video Notes
Globalization, Global Organizations, CSR, and Ethics – Study Notes
This set of notes summarizes the transcript content on globalization, global business strategies, cultural differences, corporate social responsibility (CSR), sustainability, and managerial ethics. It preserves major and minor points, examples, and definitions, with key terms and numbers highlighted for exam review.
Globalization and the Cashew Industry: A Case in Point
Globalization: the process by which businesses or other organizations develop international influence or start operating on an international scale. integration of countries
Mary (co-author) uses cashews to illustrate how globalization shapes industries and everyday products.
Global forces behind products often operate far from the consumer, yet determine pricing, availability, and labor practices.
Early cashew industry in India:
India was the cashew capital; thousands of Indians (primarily women) were employed in labor-intensive processing.
Indian government enacted specific labor laws and regulations to protect workers.
By the 1990s, India accounted for roughly 80\% of the global cashew market.
Competitive disruption from Vietnam:
Vietnamese cashew processors invested in automated equipment, becoming more efficient than labor-intensive Indian processors.
Policies intended to protect Indian workers can unintentionally harm them by shifting processing to more efficient competitors (Vietnam).
Current shifts and flexibility of global production:
Although Vietnam had the upper hand, cashew processing appears to be shifting to countries in Africa.
Global environment is dynamic: product, competition, and workforce location can change rapidly.
Globalization is a persistent feature of modern business:
Nations and firms trade through wars, disasters, and political/economic fluctuations.
Over the past decades, many companies operate globally; geographic borders matter less for production and markets.
Examples of global reach in manufacturing and services:
BMW builds cars in South Carolina (Germany-origin company operating in the U.S.).
McDonald’s sells hamburgers in China.
Tata (an Indian company) purchased Jaguar from Ford.
IBM has more employees in India than in the United States.
Key external-environment forces (Chapter 4 reference):
Changing laws and regulations, catastrophic natural disasters, global economic meltdowns, changing competitors, immigration/protectionism debates, potential terrorist threats.
Despite these, globalization continues to grow; the world is a global village where trade occurs across borders.
Core global concepts introduced:
global village: boundaryless world where goods/services are produced and marketed worldwide.
global sourcing (global outsourcing): purchasing materials or labor from around the world where cheapest.
exporting: making products domestically and selling abroad.
importing: acquiring products made abroad and selling domestically.
Practical implications for managers:
Managers must adapt to diverse cultures, systems, and techniques.
Global opportunities require balancing cost advantages with legal, cultural, and ethical considerations.
How Organizations Go Global: Pathways and Decisions
Initial entry often begins with global sourcing to gain cost advantages with minimal investment. global sourcing: means buying ingredients or labor from abroad
When expanding, firms may advance to exporting and importing (low investment, low risk). buying or selling finished products
Licensing and franchising:
Licensing: one organization grants another the right to use its brand name, technology, or product specs for a lump-sum or sales-based fee; typically used by manufacturing firms.
Franchising: similar but more common for service organizations; example sectors include foodservice.
Global examples: Subway in New Delhi; KFC in Namibia; Dunkin’ Donuts in Russia; Budweiser licensing in Canada (Labatt), Mexico (Modelo), Japan (Kirin).
Global strategic alliances (GSAs): temporary agreements, partnerships that share resources/knowledge to develop new products or facilities.
Example: Honda and General Electric teamed to develop a jet engine.
Joint ventures: a specific type of strategic alliance where a separate independent entity is formed for a business purpose.
Example: Hewlett-Packard’s various joint ventures for components.
Direct investment via foreign subsidiary:
Establishing a separate facility or office in another country.
Management options: multidomestic (local control) vs global (centralized control).
Highest level of resource commitment and risk.
Example: United Plastics Group built three injection-molding facilities in Suzhou, China; reason: to be a global supplier to global accounts.
Stages of going global (progression):
Start with global sourcing → exporting/importing → licensing/franchising → global strategic alliance → joint venture → foreign subsidiary (multidomestic or global).
How these forms map to risk and investment:
Each successive step generally requires more investment and entails more risk but offers greater control and potential reward.
Summary of transitions between modes (conceptual):
Offshore vs onshore vs nearshore decisions depend on strategy, cost, control, and political/regulatory risk.
challenges facing the gloabal manager
stereotyping
communication barriers
cultural barriers
Types of Global Organizations: How Firms Organize Across Borders
Multinational Corporation (MNC): a firm operating in multiple countries with some level of centralized coordination.
Multidomestic corporation (a type of MNC): decisions are decentralized to local country units; local employees manage the business; strategies tailored to each country’s characteristics; common for consumer products.
Transnational (borderless) organization: artificial geographic boundaries are minimized; country of origin or location becomes less relevant; aims to maximize global efficiency and responsiveness.
Global corporation: centralized management and decision-making in the home country; treats the world market as an integrated whole; emphasis on global efficiency and control.
Real-world visuals and examples mentioned in the transcript:
Ford Focus RS as an example of a globally integrated product with a centralized engineering structure under the One Ford approach.
John Deere tractors exemplify tailored but globally oriented product strategies.
Sony’s Walkman, Handycam, and PlayStation illustrate global product development and global launches under corporate oversight.
Notes on figures:
The narrative uses captions and photos to illustrate differences among global organization types and their strategic orientations.
Managing in a Global Organization: Culture, Law, and Leadership
Global context requires awareness of national culture differences and the impact on management practices.
Parochialism: a narrow, country-centered view that fails to recognize other cultures’ values and practices; not compatible with a global village.
The need to understand different laws and political contexts:
US laws protect against age discrimination; other countries have different rules and religious, political, and economic systems.
Managers must stay informed about immigration laws and regulatory changes that affect talent mobility.
Social context and culture:
Differences in status perceptions: e.g., in France, status may be tied to seniority/education; in the US, status often reflects individual accomplishments.
Organizational success can arise from various managerial practices across cultures.
Cultural frameworks for understanding differences:
Hofstede’s framework (one of the most referenced approaches) informs how cultural differences influence work-related values and behaviors.
GLOBE (Global Leadership and Organizational Behavior Effectiveness) expands on cultural differences with nine dimensions based on large samples (over 17,000 managers across 62 societies).
Hofstede’s 5 Dimensions of National Culture (as presented in the transcript):
Power distance: the degree to which people accept unequal power distribution in institutions and organizations; ranges from low to high.
Uncertainty avoidance: the extent to which people prefer structured situations and risk avoidance.
Long-term vs short-term orientation: future persistence, thrift, and planning vs respect for tradition and fulfilling social obligations.
Individualism vs collectivism: preference for acting as individuals vs as members of a group.
Masculinity (presented as “Assertiveness” in the transcript): toughness, competitiveness, and achievement orientation vs gentler, nurturing values.
Additional cultural dimensions discussed in the transcript (associated with GLOBE and related work):
Future orientation: planning and delaying gratification vs short-term focus (examples of high/low in various countries).
Gender differentiation: the degree societies maximize gender role differences.
Uncertainty avoidance: integration with above (scope expanded in GLOBE).
Power distance: as defined above (also part of GLOBE’s set).
Individualism/collectivism: as defined above (also part of GLOBE’s set).
In-group collectivism: pride in membership in families and small groups and organizations.
Performance orientation: rewards for performance improvement and excellence.
Humane orientation: encouragement and rewards for fairness, altruism, generosity, care for others.
Practical takeaway:
The GLOBE studies both confirm Hofstede’s dimensions and extend them with additional cultural metrics to assess differences across nations.
Cross-cultural understanding is essential for effective leadership and strategic decisions in global firms.
What society expects from organizations and managers:
Case example: Blake Mycoskie and TOMS Shoes (one-for-one model): for every pair of shoes sold, a pair is donated to a child in need; TOMS expanded this model to eyewear, coffee, and bags, building social legitimacy and brand equity.
Society’s expectations include responsibility, ethics, and giving back; companies must balance profit with social impact.
Note the caution from corporate scandals (e.g., Wells Fargo, Enron, Bernard Madoff, HealthSouth) that ethical lapses can undermine legitimacy and performance.
Social responsibility (CSR) and sustainability, and their relevance to management:
Definitions:
Social responsibility (CSR): a firm’s intention beyond legal/economic obligations to do right by society; assumes the firm obeys the law and pursues economic interests while acting as a moral agent. QUESTION ON EXAM SPELL THINK OUT: ESG ENVIRONMENTAL SOCIAL GOVERNANCE
Social obligations: minimum compliance with laws and regulations to meet economic responsibilities.
Social responsiveness: responding to social needs as they arise, guided by norms and values and market-oriented decisions.
CSR vs social obligation/responsiveness differences:
CSR adds an ethical imperative to do good and avoid harm.
Responsiveness may be more reactive to social demand, while CSR is proactive and integrated into strategy.
Societal expectations on business ethics and CSR have grown: example of Walmart’s sustainability efforts as part of mainstream business practice.
Sustainability (as defined in the chapter): the ability to achieve business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into business strategies.
Emphasizes stakeholder engagement, ongoing communication, and balancing economic, environmental, and social aspects in decision making.
Ethical Behavior in Management: Perspectives, Causes, and Leadership
Real-world ethical challenges highlighted in the transcript:
Foreclosure document handling: Florida law firm altered/hidden documents for Freddie Mac and Fannie Mae audits.
Jérôme Kerviel and Société Générale: alleged massive trading scandal; questions about whether the firm laxly tolerated risky behavior.
NFL: report acknowledging high risk of long-term cognitive issues among retired players; raises questions about organizational responsibility and whistleblowing.
Core question: Are businesses unethical by default? Not necessarily, but ethical issues are common and require deliberate management.
Three ethical decision-making frameworks:
Utilitarian view: ethical decisions are based on outcomes/consequences; aim to maximize the greatest good for the greatest number.
Rights view: focus on respecting and protecting individual liberties and rights (privacy, free consent, etc.); avoid infringing on others’ rights.
Justice view: fairness and impartiality; decisions should treat similar individuals similarly (no arbitrary bias by gender, personality, or favoritism).
Factors affecting ethical decision making (beyond theories):
Individual morality, values, personality, and experiences.
Organizational culture and ethical norms.
The specific ethical issue and context.
Qualitative example: an exam-cheating dilemma in a classroom illustrating ambiguity about ethical choices.
How managers encourage ethical behavior (three-pronged approach):
Codes of ethics: formal documents outlining core values and rules; should be specific yet allow judgment.
Prevalence: ≈ 97% of organizations with >10,000 employees have codes; ≈ 93% of smaller firms have them.
Global adoption and consistency depend on management support and integration into culture.
Ethical leadership: leaders model ethical behavior and shape culture; examples include Tim Cook (Apple) prioritizing supply-chain ethics and sustainability; joining the Fair Labor Association.
Leadership tone matters: leaders must align incentives with ethical standards; rewarded unethical behavior signals tolerance for misconduct.
Ethics training: programs to improve ethical awareness and problem-solving.
Example: Yahoo! redesigned its ethics training to use more realistic, industry-relevant scenarios for a global workforce.
Training effectiveness is debated, but evidence suggests values can be taught and moral development can improve with training.
Practical guidelines for ethical leadership (exhibit-style guidance referenced in the transcript):
Be a good role model: consistent ethical behavior in actions and communications.
Tell the truth always; avoid hiding or manipulating information.
Be open about failures and share personal values with employees.
Stress shared organizational values; align reward systems with these values to reinforce ethical behavior.
Use rewards and punishments to signal acceptable and unacceptable conduct; publicize consequences of unethical actions to deter others.
Critiques and limitations:
Some ethics programs function mainly as public relations with limited real impact.
Real-world outcomes depend on sustained leadership commitment and deep cultural integration, not just formal policies.
Final takeaway:
Ethical management requires ongoing, visible leadership, formalized codes, practical training, and reward/punishment mechanisms that reinforce the desired ethical climate.
Key Examples and Takeaways to Remember
Global cashew industry example demonstrates how labor practices, regulations, automation, and regional competitiveness shift over time due to globalization; labor protections can shape where processing happens.
Globalization pathways illustrate a spectrum from low-risk, low-commitment moves (global sourcing, exporting/importing) to high-commitment moves (foreign subsidiaries, strategic alliances, joint ventures).
Different organizational forms (MNC, multidomestic, transnational, global) reflect varying balances of localization vs integration and control.
Cultural frameworks (Hofstede, GLOBE) provide tools to navigate cross-border management; remember the core dimensions and how they influence leadership, teamwork, communication, and motivation.
CSR and sustainability are mainstream managerial concerns, tying ethical considerations to long-term value creation and stakeholder engagement.
Ethics in management rests on theories (utilitarian, rights, justice) and practical governance (codes, leadership, training); an ethical climate requires consistent actions, not just policies.
Quick Reference: Key Terms and Concepts
Global village: ext{A boundaryless world where goods and services are produced and marketed worldwide.}
Global sourcing: ext{Purchasing materials or labor from around the world wherever cheapest.}
Exporting/Importing: ext{Selling domestically produced goods abroad; acquiring foreign-made goods domestically.}
Licensing vs Franchising: ext{Licensing grants rights to use technology/brand; franchising licenses operating methods/name for a fee.}
Global strategic alliance: ext{Partnership sharing resources/knowledge for new products or facilities.}
Joint venture: ext{A separate, independent entity formed by two or more firms for a shared purpose.}
Foreign subsidiary: ext{Direct investment creating a local facility/office; multidomestic vs global control.}
MNC: ext{Multinational corporation; operates in multiple countries with some centralized coordination.}
Multidomestic: ext{Decentralized management with country-specific strategies.}
Transnational: ext{Borderless organization; country of origin is less relevant.}
Global corporation: ext{Centralized decision-making in the home country.}
Hofstede’s 5 dimensions: ext{Power distance, Uncertainty avoidance, Long-term orientation, Individualism/Collectivism, Masculinity (Assertiveness).}
GLOBE nine dimensions: ext{Power distance, Uncertainty avoidance, In-group collectivism, Institutional/Individualism, Gender differentiation, Future orientation, Performance orientation, Humane orientation, and Assertiveness (contextual naming varies).}
CSR vs social obligation vs social responsiveness: ext{CSR adds an ethical imperative beyond legal/economic duties; obligation is minimum compliance; responsiveness is reactive social action.}
Sustainability: ext{Balance economic, environmental, and social goals to sustain long-term value.}
Ethical decision frameworks: utilitarian, rights, justice.
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