Chapter 5: Globalization

Question 1

Globalization

Answer 1

Increased interaction and integration of different nations economically, politically, socially, and culturally

Question 2

Home country

Answer 2

Country in which the parent organization is headquartered

Question 3

Host country

Answer 3

Country in which an organization operates a facility or conducts other business activities

Question 4

Expatriates

Answer 4

Employees assigned to work in another country

Question 5

Third country nationals

Answer 5

Employee from a country other than the home country or the host country

Question 6

There are still 3 major groups that engage in most of the international activity:

Answer 6

1) Multinational corporations (MNCs)

Question 7

1) Multinational corporations (MNCs)

Answer 7

Companies that build facilities and sell products in a number of different countries (General Motors, Coca Cola, LV)

• They produce products at the lowest cost possible
• Looking to open new markets always
• Manufacturing is located around the world.
• They sell products which distinguishes them

Question 8

2) Multinational enterprises

Answer 8

Companies that sell their services in a number of different countries (cruises or insurance)

Question 9

3) Non-govermental organizations (NGO’s)

Answer 9

Non-profit organizations that function independently of any government and serve the world’s population (Red Cross)

Question 10

PESTLE analysis

Answer 10

Strategic framework used by organizations to assess the political, economic, sociocultural, technological, legal, and environmental factors that exist in a particular country. An assessment that organizations must conduct before they take the plunge into international business environments.

P – Political

Government policies or actions that could impact a companies profitability should it decide to do business in a specific country.

E – Economic

Level of business development within a country and how it relates to the country’s overall financial stability.

S – Sociocultural

Values, attitudes, and beliefs that shape the behaviour and preferences of a particular population.

T – Technological

Application of knowledge and expertise that will turn inputs into outputs and improve systematic processes in an organization.

L – Legal

Laws and regulations that affect business operations in a specific country.

E – Environmental

Infrastructure and ecological and geographic characteristics of a specific country that will hinder or encourage companies to expand business operations to thos location.
 

Question 11

Internationalization

Answer 11

the process of an organization crossing national borders for the first time to do business.

There are different levels of internationalization that companies pursue in an effort to expand their business globally. These approaches go from low to high risk. Taking the leap from low to high takes time and capital investment.

Question 12

Outsourcing

Answer 12

Process of contracting work to an external source that the organization used to do as part of its own operations

Question 13

Offshoring

Answer 13

Practice of basing part of a company’s operations overseas, in which the company is still in charge of the operational process

Question 14

Franchising

Answer 14

Process in which companies provide foreign businesses with a complete package of materials and services to use in exchange for a fee

Question 15

Joint venture

Answer 15

Business entity created by two or more parties, which share ownership and responsibility for the new entity

Question 16

Wholly owned foeign subsidiary

Answer 16

Company in which the parent organization owns 100% of the subsidiary’s stock

Question 17

Greenfield venture

Answer 17

Foreign subsidiary that a parent company builds from scratch rather than buys from another company

Question 18

Culture

Answer 18

A shared set of values, attitudes, norms, and beliefs that control a society’s behavior

Cultural characteristics:
* Shared (culture in common among a group)
* Learned (people born into a specific culture)
* Patterned (every action, rite, belief, and ritual within a specific culture)
* Transgenerational (teaching passed from generation to generation)
* Adaptive (changes in a culture brough about by external forces)
* Symbolic (flags statues and monuments)

Contrasts in Cultures

• Time
• Formality
• Work
• Greetings
• Age

Question 19

Self-reference criterion

Answer 19

when one encounters a new culture we look for differences between it and our own culture.

Question 20

Ethnocentrism

Answer 20

Tendency to judge another culture based on preconceptions found in one’s own culture

Question 21

Parochialism

Answer 21

Tendency to be narrow-minded on specific topics due to lack of interest in learning about them

Question 22

Hofstede’s Cultural diminutions

Answer 22

Hofstede developed a research framework on cultural values.

1) The first dimensions described in H’s research is individualism vs collectivism

2) The second dimension is power distance.

3) The third dimension is masculinity versus femineity.

4) The final dimension was uncertainty avoidance.

5) Later researchers added two mor cultural dimensions

Question 23

Individualism

Answer 23

Tendency for people to look after themselves and their immediate family

Question 24

Collectivism

Answer 24

Tendency for people in certain cultures to subordinate their own needs for the greater good of a group

Question 25

Power distance

Answer 25

Degree to which people accept an unequal distribution of power across institutions, organizations, and people

Question 26

Masculinity

Answer 26

Stands for aggressiveness, assertiveness, materialism, and empathy—traits considered traditional male values

Question 27

Femineity

Answer 27

Stands for value, quality of relationships, and passivity—traits considered to be traditional feminine values

Question 28

Uncertainty avoidance

Answer 28

A culture’s comfort level with risk and ambiguous situations

Question 29

Long term orientation

Answer 29

Based on time, this type of culture focuses on the future

Question 30

Short-term orientation

Answer 30

Based on time, this type of culture focuses on the present

Question 31

The GLOBE (Global leadership of Organizational Behavioural Effectiveness)

Answer 31

research program was founded to revaluate Hofstedes work and maybe replace it. They came up with 9 separate variables.

Question 32

A stereotype

Answer 32

A preconceived notion about an individual or a group of individuals

Question 33

The role of HRM

Answer 33

1. HR job: Their role is to correctly determine staffing strategy to be used in an international business expansion and what managers can do to ensure expatriate success. A firms strategic focus, internationalization, and foreign locations will determine if the firm decides to use an ethnocentric, polycentric, regiocentric, or geocentric approach to human resources. Each approach has their own advantages and disadvantages.
2. HR job: The second important function of HR is to select expatriate managers.
3. Cross cultural training

Question 34

Ethnocentric Approach

Answer 34

 Is the most conservative staffing approach.
 A firm seeks to fill key managerial positions with home country nationals

They understand the interworkings of the organization
Little miscommunication

Lack of development of managerial talent in the host country
Leads to low morale amoung forign employees
No one knows the market better then those who have lived in the country for years

Question 35

Polycentric Approach

Answer 35

 Seeks to have host country nationals fill key positions.

initiate knowledge gained about the local culture and business markets
Less expensive to hire a local manager than to train and transfer one for corporate headquarters

Lack of knowledge in the management position
Conflicting loyalties of the host country manager

Question 36

Regiocentric Approach

Answer 36

 Seeks to recruit regionally for an overseas management position

The new manager may be perceived by local workers as a home country national even though that may not be the case

Question 37

Geocentric Approach

Answer 37

 Seeks to recruit the very best manager for the position whether they are from the home country, host country or local region.
Expatriate selection

Question 38

Culture shock

Answer 38

Feeling of anxiety and apprehension one experiences when not knowing how to behave or act in new surroundings

Question 39

Cross-cultural training

Answer 39

helping the expatriate learn skills to help her/him improve social exchanges with host country employees

Question 40

Repatriation –

Answer 40

as expatriates return home after their assignment is over, organizations sometimes are not sure what to do with them.

Question 41

Monochronic cultures -

Answer 41

are characterized by people doing only one thing at a time.

Question 42

Polychronic cultures

Answer 42

are characterized by people participating in multiple activities at the same time

Question 43

Formality

Answer 43

In culture, the extent to which procedures are written down and followed through with almost bureaucratic precision