Chapter 4: Managing in a Global Environment

Question 1

What is globalisation?

Answer 1

• With the entire world as a market and national borders becoming increasingly meaningless, the potential for organizations to grow and expand is almost unlimited.
• A study reveals that companies that operated in multiple countries had twice the sales growth and significantly higher profitability than strictly domestic firms.
• Report on management practices warns that NO company, largest in the country or small suburban service company can be completely immune to the influence of global competition.

Question 2

What is the global marketplace?

Answer 2

• Opportunities and Challenges
– Coping with the sudden appearance of new
competitors
– Acknowledging cultural, political, and economic
differences
– Dealing with increased uncertainty, fear, and
anxiety
– Adapting to changes in the global environment
– Avoiding parochialism (narrowly restricted in
scope or outlook)

Question 3

How do organizations go global?

Answer 3

• Importing - acquiring products made abroad
and selling them domestically.
• Licensing - an organisation gives another
organisation the right to make or sell its
products using its technology or product
specifications.
• Franchising - an organisation gives another
organisation the right to use its name and
operating methods.
• Strategic Alliance - a partnership between an
organisation and one or more foreign
company partner(s) in which both share
resources and knowledge in developing new
products or building production facilities.
• Joint Venture - a specific type of strategic
alliance in which the partners agree to form a
separate, independent organisation for some
business purpose.
• Foreign Subsidiary - directly investing in a
foreign country by setting up a separate and
independent production facility or office.

Question 4

What are the global perspectives?

Answer 4

• Parochialism
- Viewing the world solely through your won perspective, leading to an inability to recognise differences between people.
• Ethnocentric Attitude
- The parochialistic belief that the best work approaches and practices are those of the home country.
• Polycentric Attitude
- The view that the managers in the host county know the best work approaches and practices for running their business.
• Geocentric Attitude
- A world-oriented view that focuses on using the best approaches and people from around the globe.

Question 5

What is involved in the cultural environment?

Answer 5

National Culture - the values and attitudes
shared by individuals from a specific country
that shape their behavior and beliefs about
what is important.
• Global Leadership and Organisational
Behavior Effectiveness (GLOBE) program - a
research program that studies cross-cultural
leadership behaviors.