Management 201 Chapter 4
Management 201 Chapter 4 Management 201
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This 4 page Class Notes was uploaded by Eliza Barrett on Monday February 1, 2016. The Class Notes belongs to Management 201 at Clemson University taught by Katherine Clark in Fall 2015. Since its upload, it has received 67 views. For similar materials see Management 2010 in Business, management at Clemson University.
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Date Created: 02/01/16
Management Chapter 4 • Competition and Globalization o Globalization: the trend of the world economy toward becoming a more interdependent system • Global village: the shrinking of time and space as air travel and electronic media have made it easier for the people around the globe to communicate with each other • Global economy: increasing tendency of the economies of the world to interact with one another as one market instead of many national markets o Positive effects: ultimately good for everyone o Negative effects: financial crises throughout the world resulted in a vast surplus funds from global investments into the US, being invested badly in a housing and credit bubble that burst (2007-2009 recession) § The movement, or outsourcing, of formerly well-paying jobs overseas as companies seek cheaper labor costs • Multination corporation (or multination enterprise): a business firm with operation in several countries o Multinational organization: nonprofit organization with operations in several counties • May deal with foreign customers or partners, foreign employees or suppliers, work for a foreign firm in the US, work for an American Firm outside the US- or for a foreign one • Ethnocentric managers: believe their native country, culture, language, and behavior, are superior to all others. Also tend to believe that they can export the managers and practices of their home countries to anywhere in the world and that they will be more capable and relable o Parochialism: a narrow view in which people see things solely through their own perspective o Bad for business • Polycentric managers: native managers in the foreign offices best understand native personnel and practices, so the home office should leave them alone (opposite of ethnocentric managers) • Geocentric managers: accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective • Why companies expand internationally o Availability of supplies o New markets o Lower labor costs § Maquiladoras: manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens o Access to finance capital o Avoidance of Tariffs and Import Quotas • How the expand internationally o Global outsourcing: (or offshoring) defined as using suppliers outside the US to provide labor, goods, or services § Outsourcing: using suppliers outside the company to provide goods and services o Importing, exporting, and countertrading § Countertrading: bartering goods for goods o Licensing and franchising § Licensing: a company allows a foreign company to pay it a fee to make or distribute the first company’s product or service § Franchising: form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company’s brand name and a package of materials and services o Joint ventures: also known as strategic alliance, form with a foreign company to share the risks and rewards of staring a new enterprise together in a foreign country o Wholly-Owned subsidiaries: a foreign subsidiary that is totally owned and controlled by an organization § Greenfield venture: a foreign subsidiary that the owning organization has built from scratch • Barriers to international trade o Trade protectionism: the use of government regulations to limit the import of goods and services o Tariff: customs duty, tax, levied mainly on imports o Import quota: limit on the numbers of a product that can be imported 2 § Designed to prevent dumping: practice of a foreign company’s exporting products abroad at a lower price than the price in the home market in order to drive down the price of the domestic product o Embargoes: a complete ban on the import or export of certain products • Organizations promoting international trade o World Trade Organization: designed to monitor and enforce trade agreements o The World Bank: provide low interest loans to developing nations for improving transportation, education, health, and telecommunications o International Monetary Fund: Designed to assist in smoothing the flow of money between nations • Trading bloc: economic community, a group of nations within a geographical region that have agreed to remove trade barriers with one another o NAFTA: North America Free Trade Agreement. Consists of US, Canada, and Mexico o The EU (European Union): consists of 28 trading partners in Europe o APEC: Asia-Pacific Economic Cooperation o ASEAN: Association of Southeast Asian Nations, 10 countries in Asia o Mercosur: Largest trading bloc in Latin America (Argentina, Brazil, Paraguay, Uruguay, and Venezuela) o CAFTA-DR: Seven countries of Central America, Central America Free Trade Agreement • Most favored nation trading status describes a condition in which a country grants other countries favorable trading treatment such as the reduction of import duties • Exchange rate: rate at which the currency of one are or country can be exchanged for the currency of another’s • Culture: a shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people o Low-context culture: shared meanings are primarily derived from written and spoken words (North America, Great Britain, Scandinavia, Germany, Switzerland) o High-context culture: people rely heavily on situational cues for meaning when communicating with others, relying on nonverbal cues as to another person’s official position, status or family connections (China, Korea, Japan, Vietnam, Mexico, many Arab cultures) • GLOBE project: massive ongoing cross cultural investigation of nine cultural dimensions involved in leadership and organizational processes 3 o Power distance- how much unequal distribution of power should there be in organizations and societies? o Uncertainty avoidance- how much should people rely on social norms and rules to avoid uncertainty o Institutional collectivism- how much should leaders encourage and reward loyalty to the social unit o In group collectivism- how much pride and loyalty should people have for their family or organization o Gender egalitarianism- how much should society maximize gender role differences? o Assertiveness- how confrontational and dominant should individuals be in social relationships? o Future orientation- how much should people delay gratification by planning and saving for the future o Performance orientation- how much should individuals be rewarded for improvement and excellence o Humane orientation- how much should society encourage and reward people for being kind, fair, friendly, and generous • How to bring about cross-cultural gaps? Understanding! o Language, interpersonal space, communication, time orientation, religion, and law and political stability § Expropriation: government’s seizure of a domestic or foreign company’s assets § Foreign Corrupt Practices Act: makes it illegal for employees of US companies to make “questionable” or “dubious” contributions to political decision makers in foreign nations § Monochronic time: preference for doing one thing at a time § Polychronic time: doing more than one thing at a time • Expatriates: people living or working in a foreign country 4