Viewing the world solely through one's own eyes and perspectives.

"Ours is better than theirs" to foreigners

Parochialistic belief that the best work approaches and practices are those of the home country.

Managers with an ethocentric attitude believe that people in foreign countries don't have the needed skills, expertise, knowledge, or experience to make the best business deicisions as people in the home country  do.

View that employees in the host country (the foreign country in which the organization is doing business) know the best work approaches and practices for running their business.

Managers with this attitude view everyone foreign operation as different and difficult to understand. Thus they are likely to let employees int he host country figure out how to best do things.

wortd-oriented view that focuses on using the best approaches and people from around the globle.

managers with this type of attitude have a global view and look for the best approaches and people, regardless of origin.

A geocentric attitude requires eliminating parochial attitudes amd developing an understanding of cross-cultural differences.

Global Environment

Current Status of the EU, NAFTA, ASEAN

EU consists of 27 democratic countries

NAFTA = helps Canada, Mexico, and USA

ASEAN = trading alliance of 10 nations in Southeast Asia

The World Trade Organization

WTO

Multilateral trading system

* Formed in 1995, evolved from General Agreement on Tariffs and Trade (GATT), a trade agreement in effect since the end of World War II.

Membership = 153 countries

WTO's goal is to help countries conduct trade through a system of trade rules.

Diffent types of International Organizations

Multinational Corporation (MNC)

Multinational Corporation (MNC)

any type of international company that maintains operations in multiple countries

Diffent types of International Organizations

Multinational Corporation (MNC)

multidomestic corporation

Multidomestic Corporation

- type of MNC

- decentralizes management and other decisions to the local country.

- reflects the domestic successes by managing foreign operations from its home country

= products adapted to meet the needs of local markets

= hiring of local employees to manage the business, and design marketing strategies that are tailored the countries unique characteristics

Diffent types of International Organizations

Multinational Corporation (MNC)

global company

Global Company

- another type of MNC

- centralizes its management and other decisions in the home country

- approach to globalization reflects the ethnocentric attitude

- global companies treat the world market an integrated whole and focus on the need for global efficeny, these companies may have considerable global holdings, management decisions with companywide implications are made from headquarters in the home country

ex: Sony, Deutsche Bank AG, Merrill Lynch

Diffent types of International Organizations

Multinational Corporation (MNC)

transnational, or borderless, organization

transnational organization

- type of MNC, reflects geocentric attitude

- elminated artificial geographic barriers and uses the best work practices and approaches, regardless of where they're from

Ex: IBM, Ford ("One Ford"), Thomson SA

How Organizations Go International

Minimal Investment

• Global Sourcing

- Exporting and Importing

- Licensing

- Franchising

Significant Global Investment

• Strategic Alliance

           - Joint Venture

• Foreign Subsidiary

Global Sourcing

aka

Global Outsourcing

Gets into the global market with minimal investment

- purchasing materials or labor from around the world based on lower cost.

- goal is to take advantage of lower costs in order to be more competitive

- altho it is the first step of going international, approach is continued to be used for its competitive advantage that it offers

Next step of going international.

- exporting the organization's product's to other countries - making products domestically and selling them abroad

- importing, which involves acquiring products made abroad and selling them domestically

exporting and importing usually entail minimal investment and risk

- Involve one organization giving another organization the right to use its brand name, technology, or product specifications in return for a lump-sum payment or a fee.

- Licensing = primarily used by manufacturing organizations that make or sell another company's productss

- Franising = primarily used by service organizations that want to use another company's name and operating methods

Managers may choose to directly invest in a foreign country by setting up a foreign subsidary as a seperate and independent facility or office.

subsidiary can be managed as a multidomestic organization (local control) or as a global organization (centralized control)

this arrangement involves the greatest commitment of resource and poses the greatest amt of risk

The laws and political stability of a country are issues in the global political/legal environment with which managers must be familar.

Aon Corporation Political Risk Assessment:

Highest: Nigeria, Venezuela

Elevated Risk: China, India, Mexico, Turkey, Saudi Arabia, South Africa, Argentina, Thailand, Colomnia, Pakistan, Philippines, Algeria, and Eygpt

A global manager must be aware of economic issues when doing business in other countries. Know the economic system.

* Free Market Economy = one in which resources are primarily owned and controlled by the private sector

* Planned Economy = one in which economic decisions are planned by a central government

Be aware of issues such as: currency exchange rates, inflation rates, and tax policies.

The Cultural Environment

National Culture

the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important

* influential as organizational culture may be on managerial practice, national culture is even more influential

Hofstede's Framwork for Assessing Cultures

5 dimensions

Geert Hofstede indentified five dimensions for assessing a country's culture:

1. individualism-collectivism

2. power distance

3. uncertainty avoidance

4. achieevement-nurturing

5. long-term/short-term orientation

Hofstede's Framwork for Assessing Cultures

1. Individualistic-Collectivistic

Individualistic - people look after their own and family interests

Collectivistic - people expect group to look after and protect them

INDE: USA, Canada Australia

Middle: Japan

COLL: Mexico, Thailand

Hofstede's Framwork for Assessing Cultures

2. Power Distance

High power distance - accepts wide differences in power, great deal of respect for those in authority

Low power distance - plays down inequalities: employees are not afraid to approach nor are ina we of the boss

HI: Mexico, SIngapore, France

Mi: Italy, Japan

LO: United States, Sweden

Hofstede's Framwork for Assessing Cultures

3. Unvertainty Avoidance

High uncertainty avoidance - threatened with ambiguity and experience high lvls of anxiety

Low uncertainty avoidance - comfortable with risks; tolerant of different behavior and opinions

HI: Italy, Mexico, France

MI: United Kingdom

LO: Canada, United States, Singapore

Hofstede's Framwork for Assessing Cultures

4. Achievement-Nurturing

Achievement - Values such as assertiveness, acquiring money and goods, and competition prevail

Nurturing - values such as relationships and concern for others prevail

Achievement: USA, JPN, Mexico

MI: Canada, Greece

Nurturing: France, Sweden

Hofstede's Framwork for Assessing Cultures

5. Long-term / Short-term Orientation

Long-Term orientation = people look tot he future and value thrift and persistence

Short-Term Orientation = people value tradition and the past

ST: Germany, Australia, United States, Canada

LT: China, Taiwan, Japan

The GLOBE Framework for Assessing Cultures

=

Global Leadership and Organizational Behavior Effectiveness

- Extended Hofstede's work by investigating cross-cultural leadershup behaviors

- 9 dimensions

power distance, uncertainty avoidance, assertiveness, hu mane orientation, future orientation, institutional collectivism, gender differentiation, in-group collectivism, performance orientation

The GLOBE Framework for Assessing Cultures

Power Distance

The GLOBE Framework for Assessing Cultures

uncertainty avoidance

The GLOBE Framework for Assessing Cultures

assertiveness

The GLOBE Framework for Assessing Cultures

humane orientation

The GLOBE Framework for Assessing Cultures

future orientation

The GLOBE Framework for Assessing Cultures

institutional collectivism

The GLOBE Framework for Assessing Cultures

gender differentiation

The GLOBE Framework for Assessing Cultures

in-group collectivism

The GLOBE Framework for Assessing Cultures

performance orientation

main challenges of sdoing business globally in today

s world involve the openness associated with globalization and the significant cultural differences between countries