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The document discusses several topics related to managing organizations globally: 1) It contrasts three views toward global business - ethnocentric, polycentric, and geocentric - which vary based on their beliefs about cultural superiority and openness to foreign practices. 2) It describes the current status of major regional trading alliances like the EU and NAFTA, noting recent developments and outstanding issues. 3) It contrasts four types of multinational corporations - multinational, multidomestic, global, and transnational - based on how they decentralize decision-making across countries.

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123 views

Answer

The document discusses several topics related to managing organizations globally: 1) It contrasts three views toward global business - ethnocentric, polycentric, and geocentric - which vary based on their beliefs about cultural superiority and openness to foreign practices. 2) It describes the current status of major regional trading alliances like the EU and NAFTA, noting recent developments and outstanding issues. 3) It contrasts four types of multinational corporations - multinational, multidomestic, global, and transnational - based on how they decentralize decision-making across countries.

Uploaded by

Danu Driya
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 3 (Managing in Global Environment):

1. Contrast ethnocentric, polycentric, and geocentric attitudes toward global


business?
The ethnocentric, polycentric, and geocentric views vary by their degree to which
the holder adheres to the belief that their culture is the best and their willingness to
accept best approaches from other cultures. An ethnocentric attitude is the
parochialistic belief that the best work approaches and practices are those of the
home country (the country in which the company’s headquarters are located). A
polycentric attitude is the 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. A geocentric attitude is a
world-oriented view that focuses on using the best approaches and people from
around the globe. Managers with this type of attitude have a global view and look
for the best approaches and people regardless of origin.

2. Describe the current status of each of the various regional trading


alliances?

Recently, the EU is the most active of all of the regional trading alliances. With
the adoption of majority of the guiding principles established in their charter, these
countries are pushing forward on reforms that will solidify the political, economic
and social commonalities between their countries. However, this is not to say that
the EU does not have its problems, with fears that the economic turmoil in weaker
EU countries like Greece could spread to other member states. NAFTA has seen
less recent development as the partners (US, Mexico, & Canada) are not seeking to
push for reforms other than free trade. For the most part, the members of NAFTA
are pleased with the economic growth results attributed to the agreement. Issues
regarding certain specifics of NAFTA, such as investor disputes and claims of
dumping, are still to be resolved.

2. Contrast multinational, multidomestic, global, and transnational


organizations.
A multinational corporation (MNC) refers to a broad group of organizations and
refers to any type of international company that maintains operations in multiple
countries. The types of MNC vary with respect to the degree to which they
decentralize decision making across countries in which they operate. One type of
MNC is a multidomestic corporation, which decentralizes management and other
decisions to the local country. A global company is a MCN which centralizes its
management and other decisions in the home country. This type of company takes
a world view of operations, seeking to maximize efficiency by producing goods
that have a global appeal. Finally, the transnational company eliminates artificial
geographical barriers and seeks the best possible arrangement without regard to
country to maximize efficiencies and competitive advantage.

4. What are the managerial implications of a borderless organization?

In a borderless organization, artificial geographic borders do not separate


functions, divisions, or activities. The managerial implications of such an
organization are that it is infinitely more flexible in its ability to respond to
changing marketplace conditions. However, this type of organization is much more
difficult to control.

5. Describe the different ways organizations can go international?

 Management makes its first attempt to go international by using global


sourcing, in which companies take advantage of lower costs and minimal
risk.
 Managers may go international by exporting products to other countries
and/or importing products from other countries. Exporting and importing
involve minimal risk and provide more control over the company’s
product(s).
 In licensing (primarily used by manufacturers) and franchising (mainly used
by service organizations), management continues to look at ways to enter the
global market, and at the same time, avoid investing a lot of capital.
 Strategic alliances and joint ventures allow partners to share both the risks
and the rewards incurred in business conducted by the partners through the
alliance.
 Establishing a foreign subsidiary involves the greatest commitment of
resources and the greatest amount of risk of all of the stages of going
international. Companies setting up a foreign subsidiary do not have to share
profits with a partner but, at the same time, do not have a partner who will
share the loss if a business enterprise fails.
6. Explain how the global political/legal and economic environments affect
managers of global organizations.

The external environment includes both political/legal and economic factors. As


part of the environment, both of these factors influence organizational
performance. For global organizations, these factors become more important and
complex because organizations now have to deal with the political and economic
environments of the countries in which they operate. For example, now managers
not only have to know what is legal (or illegal) in their home country but also the
countries in which they sell or manufacture their products or services.

7. Can the GLOBE framework presented in this chapter be used to guide


managers in a Thai hospital or a government agency in Venezuela? Explain.

Yes, the GLOBE framework discussed in Chapter 3 is applicable to both


situations. Managers must first understand the unique cultural characteristics of
each country in order to modify management decisions and practices.

8. What challenges might confront a Mexican manager transferred to the


United States to manage a manufacturing plant in Tucson, Arizona? Will
these issues be the same for a U.S. manager transferred to Guadalajara?
Explain.

The Mexican manager would have to become familiar with the legal-political,
economic, and cultural environments of the United States. The cultural
environment would be particularly challenging, since the national culture of
Mexico varies greatly from the national culture of the United States in three out of
five of Hofstadter’s dimensions. On the individualism-collectivism dimension,
Mexico is a more collective society, whereas the United States is more
individualistic. In the power distance dimension, Mexico rates high, while the
United States rates low. In the uncertainty avoidance dimension, Mexico again
rates high, while the United States rates low.
9. How might the cultural differences in the GLOBE dimensions affect how
managers (a) use work groups, (b) develop goals/plans, (c) reward outstanding
employee performance, and (d) deal with employee conflict?

There are multiple ways to address this question. First, students may address each
item by referring to one of the nine dimensions presented in the GLOBE
model. For example, a) institutional collectivism,

b) Future orientation.

c) Performance orientation.

d) Assertiveness,

Or, students may attempt to use multiple dimensions to address each


item. On reflection, it is possible to see many combinations of how the dimensions
would impact the items presented in the question.

10. Is globalization good for business? For consumers? Discuss.

Yes ultimately, it is best for companies and consumers when there is free and fair
trade between companies. Global competition will produce better, more
innovative products and is a powerful driver for global economic
development. However, while there are arguments that globalization does not help
local businesses, the premise for this point of view lies in virtues of protectionism
and the fact that many countries do not play by the rules and that some companies
do not have the interest of consumers at heart.

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