Management 349 chapter 4

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Globaization

the trendof the world economy toward becoming a more interdependent system

The global Village

refers to the "shrining" of time and apace as asir travel and the electronic media have made it easier for the people of the globe to communitcate with one another

E-commerce or electronic commerce

the buying and selling of products and services through computer networks

Global Economy

refers to the increasing tendency of the economies of the world to interact with one another as one market instead of many national markets

Capital

The money used to build businesses--moves globally and moves in a matter of keystrokes.

Minifirms operating Worldwide :two important results

(1)Small companies can get started more easily (2) Small companies can maneuver faster

Multinational corporation or multinational enterprise

is a buswiness firm with operations in several countries

Multinational Organization

a nonprofit organization with operations in several countries

Ethnocentric managers

believe that their native country, culture, language, and behavior are superior to others

Parochialsm

a narrow view in which people see things solely through their own perspective

Polycentric Managers "They know Best"

they take the view that native managers in the foreign offices best understand native personnel and pratices, and so the home office should leave them alone.

Geocentric Managers- " What's Best Is What's Effective, regardless of Orgin"

These managers accept that there are differences and similarties between home and foreign personnel and practices and that they should use whatever techniques are most effective.

Why Companies Expand Internationally

(1) Availability of Supplies (2) New Markets (3)Lower Labor Costs (4) Access to Finance Capital (5) Avoidance of Taqriffs & Import Quotas

Product Life Cycle

the natural rise and fall in the sales life of a product

Maquiladoras

manufacturing plants allowed to operate in Mexico with special privilages in return for employing Mexican citizens

Outsourcing

is defined as using suppliers outside the company to provide goods and services

Global outsourcing

is defined as using suppliers outside the United States to provide labor, goods, or services

Importing

a company buys goods outside the country and resells them domestically

Exporting

a company produces goods domestically and sells them outside the country

Countertrading

bartering goods for goods

Licensing

a company allows a foreign company to pay it a fee to make or distribute the first company's product or service

franchising

a 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

Strategic Allies

are two organizations that have joined forces to realize strategic advantages that neither would have if operating alone.

Joint Venture

also known as a strategic alliance, with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country.

Wholly-owned subsidiary

is a foreign subsidiary that is totally owned and controlled by an organization

Greenfield Venture

is a foreign subsidiary that the owning organization has built from scratchc

Free Trade

the movement of goods and services among nations without political of economic onstruction

Trade Protectionism

the use of government regulations to limit the import of goods and services

Tariff

Is atrade barrier in the formof a customs duty, or tax, levied mainly on imports

Import Quota

is a trade barrier in the form of a limit on the numbers of a product that can be imported

Dumping

The pratice of a foreign company's exporting products abroad at a lower price than the price in the home market---or even below the costs of production --- in order to drive down the price of the domestic product

Embargo

is a complete ban on the import or export of certain products

The World Trade Organization (WTO)

is designed to monitor and enforce trade agreements (consists of 151 members)

The World Bank

is to provide low-interest loans to developing nations for improving transportation, education, health, and telecommunications.

International Monetary Fund (IMF)

Is designed to assist in smoothing the flow of money between nations

Exchange Rate

The rate in which on country's currency can be exchanges for another country's currency

Major Trading Blocs:

NAFTA, EU, APEC, & Mercosur

NAFTA

is a trading bloc consisting of the United States, Canada, and Mexico

EU (European Union)

consists of 27 trading partners in Europe. A union of borderlss neighbors and the world's largest free market.

APEC (Asia-Pacific Economic Cooperation)

is a group of 21 Pacific Rim countries whose purpose is to improve economic and political ties

Mercosur (ten countries in Latin America)

is the largest trade bloc in Latin American and has four core members - Argentina, Brazil, Paraguay, and Uruguaqy, with Venezuela schedules to become a full member upon ratification by other countries --- and five associate members: Bolivia, Chile, Colombia, Ecuador, and Peru

CAFTA (Seven Countries of Central America)(The Central America Free Trade Agreement)

Which involves the United States and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua and which is aimed at reducing tariffs and other barriers to free trade.

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

Culture

is the shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people

Low-Text Culture

in which shared meanings are primarily derived from written and spoken words

High-Text Culture

In which people rely heavily on situational cues for meaing when communicating with others

Geert Hofstede

Dutch researcher and IBM psychologist

Hofstede model for four cultural dimensions

which identified four dimensions along which national cultures can be placed: (1) individualism/collectivism, (2) power distance (3) uncertainty, avoidance, and (4) masculinity/feminity

individualism/collectivism

how loosely or tightly are people socially bonded

power distance

How much do people accept inequality in power

uncertainty, avoidance

How strong do people desire certainty

masculinity/feminity

How much do people embrace stereotypical mal or female traits

Robert J House

The GLOBE Project's nine Cultural Dimensions started in 1993

The GLOBE project

is a massive and on going cross-cultural investigation of nine cultural dimensions involved in leadership and organizational processes

(1)Power Distance - how much unequal distribution of power should there be in organizations and society

Expresses the degree to which a society's members expect power to be unequally shared

(2)Uncertainty avoidance - How much should people rely on scial norms and rules to avoid uncertainty

Expresses the extent to which a society relies on social norms and procedures to alleviate the unpredictability of future events

(3)Institutional collectivism - how much should leaders encourage and reward loyalty to the socal unit

expresses the extent to which individuals should be encouraged and rewarded for loyalty to the social group as opposed to the pursuit of individual goals

(4)In-group collectivism - how much pride and loyalty should people have for their family or organization

expresses the extent to which people should take pride in being members of their family, circle of close friends, and their work organiation.

(5)Gender egalitarianism - how much should society maxsimize gender role differences

Expresses the extent to which a society should minimize gender discrimination and role inequalities

Assertiveness - how confrontational and dominant should individuals be in social relationships

represents the extent to which a society expects people to be confrontational and competitive as opposed to tender and modest

Future Orientation- How much should people delay gratification by planning and saving for the future?

Expresses the extent to which society encourages investment in the future as by planning and saving

Performance Orientation - How much should individuals be rewarded for improvement and excellence

Expresses the extent to which society encourages and rewards its members for performance improvement and excellence

Humane Orientsation - How much should society encourage and reward people for being kind, fair, friendly and generous

represents the degree to which individuals are encouraged to be altruistic, caring, kind, generous, and fair.

Other Cultural Variations

Language, Interpersonal Space, Time Orientation, Religion

Monochronic Time

is a preference for doing one thing at a time

Polychronic Time

is a preference for doing more than one thing at a time.

Expatriates

People living or working in a foreign country

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