Chapter 4 Flashcards
What’s Your Global Perspective? (1 of 4)?
Parochialism
Viewing the world solely through your own perspective, leading to an inability to recognize differences among people.
Ethnocentric Attitude
The belief that the best work approaches and practices are those of the home country.
Polycentric Attitude
The view that managers in the host country know the best approaches and practices for running their businesses.
Geocentric Attitude
A world-oriented view that focuses on using the best approaches and people from around the globe.
Key Information About Three Global Attitudes:
Advantages:
Ethno: Simpler Structure
Poly: Extensive knowledge of foreign market and workplace
Geo: Extensive understanding of global issues
Drawbacks:
Ethno: More ineffective management, and inflexibility
Social and Political drawbacks
Poly: Duplication of work and reduced efficiency
Difficult to maintain global objectives
Geo: Managers must have both local and global knowledge
Difficult to achieve
Understanding the Global Environment: European Union (EU)
A union of 27 European countries that forms an economic and political entity.
Removal of barriers to travel, employment, investment, and trade leading to economic efficiencies for European companies.
Use the Euro as a common European currency.
Understanding the Global Environment: United States–Mexico–Canada Agreement (USMCA)
An agreement among the Canadian, U.S., and Mexican governments that replaced NAFTA in which barriers to free trade were reduced to the benefit of the three countries.
Previously known as North American Free Trade Agreement (NAFTA).
Doing Business Globally (1 of 10): Types of International Organizations
Multinational Corporation (MNC): A firm that maintains operations in multiple countries.
Multidomestic Corporations: An MNC that maintains significant operations in more than one country but decentralizes management to the local country.
Global Company: An MNC that centralizes management and other decisions in the home country.
Transnational or Borderless Organizations: An MNC in which artificial geographical barriers are eliminated.
Born Globals are international companies that choose to go global from inception.
Chart Minimal Global Investment is on the left <—> Significant Global Investment
Left :
Global Sourcing (left)
Purchasing materials or labor from around the world, wherever it is cheapest.
Middle:
Exporting
Making products at home and selling them abroad.
Importing
Acquiring products made abroad and selling them at home.
Licensing
An organization gives another organization the right to make or sell its products using its technology or product specifications.
Franchising
An organization gives another organization the right to use its name and operating methods
Right:
Strategic Alliance
A partnership between a domestic and a foreign company in which both share resources and knowledge in developing new products or building new production facilities.
Joint Venture
A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose.
Foreign Subsidiaries
An approach that involves a direct investment in a foreign country by setting up a separate and independent production facility or office.
Managing in a Global Environment: Legal-Political Environment
Stability or instability of legal and political systems
– Legal procedures are established and followed.
– Fair and honest elections held on a regular basis.
Differences in the laws of various nations
– Effects on business activities.
– Effects on delivery of products and services.
The Economic Environment: Economic Systems
Free market economy: An economic system in which resources are primarily owned and controlled by the private sector.
Planned economy: An economic system in which economic decisions are planned by a central government.
The Economic Environment
- Currency exchange rates
- Inflation rates
- Diverse tax policies
Challenge of openness:
* Terrorism
* economic interdependence
Workforce challenges:
* Work experience, pay levels & communication
* Multicultural work teams
