Learning Objectives

Skill Outcomes

After reading this chapter, you should be able to:4.1 Contrast ethnocentric, polycentric, and geocentric attitudes toward global business.4.2 Discuss the importance of regional trading alliances and global trade mechanisms.4.3 Describe the structures and techniques organizations use as they go international.4.4 Explain the relevance of the legal-political, economic, and cultural environments to global business.

Cultural Awareness:

Know how to be culturally aware.

Overview

Every organization is influenced by the global environment. This chapter will explore:

• What managers need to know about managing in a global environment.

• Regional trading alliances.

• How organizations go international.

• Cross-cultural differences.

The Need for Global Expansion

Global Market Perspective

Organizations aspire to go global due to the vast market potential. National borders are less relevant, enhancing growth opportunities.

Managerial Challenges

Managers must navigate cultural, economic, and political differences. New competitors can arise unexpectedly in the global market. Failing to consider global environmental changes can limit success.

Global Perspectives and Attitudes

What's Your Global Perspective?

Understanding Global Attitudes4.1 Ethnocentric, polycentric, and geocentric defined. Examples of language proficiency illustrate cultural awareness in global business.

• The need for foreign language proficiency in business transactions.

Citing Cultural Differences

Cultural Sensitivity

High monolingualism in Canada may lead to parochialism. Parochialism: The narrow view that one's own culture is superior. Ethnocentric managers believe home country practices are best.

Polycentric Attitude

Management in Host Countries

Polycentric Attitude: Managers believe local managers know best for their markets. Independent operations, with local practices being encouraged.

Geocentric Managers

Best Practices Globally

Geocentric Attitude: A world-oriented perspective focused on global best practices. Reto Wittwer as an example of a geocentric manager illustrating the need for language proficiency and cross-cultural understanding.

Regional Trading Alliances

Global Trade Impact by Populism

Global trade is reshaped by populism affecting policies and alliances. Examples of recent U.S. policies (MAGA) and their impact on global trade.

Challenges of Populism and Globalization

Dynamics of Globalization

Populism challenges traditional globalization dynamics. Examination of how globalization is changing under current political climates.

Importance of Regional Alliances

The Role of Trading Alliances

Increasing significance of regional trading alliances in global competition. Over 200 countries participating in regional trade agreements. The U.S. has agreements with 75 countries.

The European Union

EU Structure and Significance

EU consists of 27 countries, fostering economic collaboration post-Brexit. 2016 Brexit referendum implications and challenges for the EU. Ongoing efforts towards unification through economic and legal frameworks.

Current EU Economic Issues

EU Economic Challenges

Post-recession issues faced by the EU. Political tensions and economic disparities affecting unity.

USMCA Impact

Free Trade Agreement Revisions

USMCA replaced NAFTA enhancing trade relations among the U.S., Canada, and Mexico. Significant redesign of trade terms, including manufacturing requirements.

Latin American Trade Agreements

Trade and Economic Growth

Various Latin American countries partake in free-trade agreements yielding economic benefits.

Canadian Trade Expansion

Trade Beyond North America

Canadian agreements with the EU and involvement in the CPTPP.

ASEAN Trade Alliance

Southeast Asian Trade Dynamics

ASEAN's structure, economic output, and regional collaboration issues.

Importance of Asia in Global Trade

Global Impact of Asian Alliances

ASEAN’s importance Post-COVID-19, highlighting trade resilience and challenges.

Other Regional Alliances

Overview of Additional Trade Alliances

African Union, East African Community, and South Asian Association for Regional Cooperation initiatives.

Global Trade Priorities

The State of Global Trade

Importance of regional trade alliances in a shifting economic landscape.

Essential Global Trade Mechanisms

Structure of Global Trade

Global trade is facilitated by mechanisms that ensure operational effectiveness. Identifying the roles of WTO, IMF, World Bank, and OECD.

WTO Significance

Role of the WTO

WTO’s impact on trade agreements and resolution of international trade disputes.

IMF & World Bank Group

Financial Support for Global Stability

Their crucial roles in assisting countries during economic crisis times.

OECD Functions

Promoting Long-Term Economic Growth

OECD’s mission to assist member states in sustainable economic progress.

Types of International Organizations

Global Business Structures

Exploration of categories such as MNC, multidomestic, global, and transnational corporations.

Multidomestic Corporations

Structure & Management

Characteristics and operational strategies of multidomestic corporations.

Global Companies

Centralized Management

Differences in management strategies of global companies.

Transnational Organizations

Borderless Operations

Features and benefits of transnational business structures.

Going International

Stages of Global Expansion

Stages organizations take to enter international markets.

International Pathways

Overview

Global Expansion Strategies Summary of steps from global sourcing to foreign subsidiaries.

Importing and Exporting

Low-Risk Market Entry

The role of importing and exporting in global market engagement.

Licensing and Franchising

Brand Strategy Models

Licensing compared to franchising in terms of operational strategies.

Strategic Alliances

Partnership Dynamics

Types of strategic alliances and their role in international business.

Foreign Subsidiaries

Direct Investment Strategies

Overview of managing foreign subsidiaries in various organizational frameworks.

Legal-Political Environment

Understanding Different Environments

The importance of recognizing legal and political variables in international business.

Economic Environment Factors

Economic Conditions

Insight into economic conditions impacting global business decisions.

Risks in Global Business

Political Risks

Overview of political risks and their implications on business operations.

Stability of Legal-Political Environments

Adaptability Required

Managers need to adapt to differing legal-political frameworks.

Economic System Types

Types of Economic Systems

Explanation of free market and planned economies and their implications for business.

Inflation

Impact on Business

Economic Consequences of Inflation Understanding inflation's effects on currency and market stability.

Cultural Environment

Importance of Cultural Awareness

Managing across different cultural landscapes for effective global business.

Cross-Cultural Challenges

Navigating Cultural Differences

Examples of cultural misunderstandings and their resolutions in business contexts.

National vs. Organizational Culture

Cultural Influences on Business

The interaction between national culture and organizational culture in business practices.

Dimensions of National Culture

Hofstede's Framework

Overview of national cultural dimensions impacting management.

GLOBE Framework

Assessing Cultural Differences

Introduction to GLOBE's additional dimensions for evaluating cultures.

GLOBE Dimensions

Details

Specific Dimensions Explained Deep dive into GLOBE's dimensions including power distance and future orientation.

Validating Cross-Cultural Frameworks

Bridging Hofstede and GLOBE

Connection and validation of Hofstede's research with GLOBE findings.

Global Management Challenges

Addressing Global Complexity

Overview of globalization challenges faced by modern managers.

Openness Challenges

Risks of Globalization

Discussion of security and economic interdependence as challenges.

Managing a Global Workforce

Leadership in Diverse Contexts

Challenges of managing a multicultural workforce and cross-cultural partnerships.

Skills for Effective Global Management

Key Attributes for Global Leaders

Importance of cultural intelligence and global mindset in effective management.

Developing a Global Perspective

Career Implications

The significance of developing global competencies for future success.

Strategies for Cross-Cultural Competence

Enhancing Cultural Awareness

Practical strategies for improving cross-cultural interaction and understanding.

Expanding Comfort Zones

Encouraging Open-Mindedness

Steps to develop comfort with cross-cultural experiences.

Observational Techniques

Effective Interactions

Emphasizing description over judgment in cross-cultural settings.

Empathy in Cross-Cultural Dynamics

Understanding Cultural Motivations

Importance of interpreting actions from a cultural perspective.

Validation of Interpretation

Accuracy in Cross-Cultural Communication

Techniques for checking interpretations and assumptions.

Summary by Learning Objectives

Overview of Key Concepts

Recap of major topics discussed in the chapter by learning objective.

Key Takeaways

Summary of Global Business Concepts

Comprehensive review of what was covered regarding trade agreements and global trade mechanisms.

Important Terminologies

• Ethnocentric: Believing home country practices are best.

• Polycentric: Managers believing local practices are best.

• Geocentric: World-oriented approach focusing on global best practices.

• Parochialism: The perspective that one's own culture is superior to others.

• Global Trade: Trade that crosses national borders.

• Regional Trading Alliances: Agreements between countries to enhance trade.

• WTO (World Trade Organization): An international body that regulates international trade.

• IMF (International Monetary Fund): Provides financial support and stability.

• World Bank: Offers banking and financial assistance to countries.

• OECD (Organization for Economic Co-operation and Development): Promotes policies for sustainable economic growth.

• MNC (Multinational Corporation): A corporation that operates in multiple countries.

• Transnational Corporation: A firm that manages production or services across multiple countries without a centralized structure.

• Free Trade Agreement: A treaty between two or more countries to facilitate trade.

• Cultural Intelligence: The capability to relate and work effectively across cultures.

• Cross-Cultural Competence: The ability to communicate and engage effectively with individuals from different cultural backgrounds.