Management 349 chapter 4

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
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
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
manufacturing plants allowed to operate in Mexico with special privilages in return for employing Mexican citizens
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
a company buys goods outside the country and resells them domestically
a company produces goods domestically and sells them outside the country
bartering goods for goods
a company allows a foreign company to pay it a fee to make or distribute the first company's product or service
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
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
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
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
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
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
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
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.
People living or working in a foreign country