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Managing Global Environment
1. MANAGING IN A GLOBAL
ENVIRONMENT
Prepared By : ZAREEN SHAIKH, SZABIST Larkana
Session-4
Class-BBA-2
2. The International BusinessThe International Business
EnvironmentEnvironment
Greater difficulties and risks whenGreater difficulties and risks when
performing management functions - dueperforming management functions - due
to differences in culture, language,to differences in culture, language,
economies, laws, political stability, etc.economies, laws, political stability, etc.
3. Stages of GlobalizationStages of Globalization
1.1. Domestic StageDomestic Stage = All production and marketing facilities= All production and marketing facilities
at home.at home.
2.2. International StageInternational Stage = International Division is typically= International Division is typically
part of the structure, but is not dominant.part of the structure, but is not dominant.
3.3. Multinational StageMultinational Stage = Marketing and production in many= Marketing and production in many
countries and 1/3 of sales from outside home country.countries and 1/3 of sales from outside home country.
4.4. Global StageGlobal Stage =Making sales and acquiring(to get=Making sales and acquiring(to get
something) resources in whatever country offers thesomething) resources in whatever country offers the
best deal.best deal.
Ownership, control, and top management tend to beOwnership, control, and top management tend to be
dispersed.dispersed.
9. Hofstede’s Dimensions of CultureHofstede’s Dimensions of Culture
(National Social Values)(National Social Values)
Power DistancePower Distance
Uncertainty AvoidanceUncertainty Avoidance
Individualism/CollectivismIndividualism/Collectivism
Masculinity/FemininityMasculinity/Femininity
Time OrientationTime Orientation
10. Power DistancePower Distance
High power distanceHigh power distance means peoplemeans people
accept inequality in power amongaccept inequality in power among
institutions, organizations, and peopleinstitutions, organizations, and people
Uncertainty AvoidanceUncertainty Avoidance
High uncertaintyHigh uncertainty avoidance means thatavoidance means that
members of a society feelmembers of a society feel
uncomfortable with uncertainty anduncomfortable with uncertainty and
ambiguityambiguity
11. IndividualismIndividualism
IndividualismIndividualism reflects a value for areflects a value for a
loosely knit social framework in whichloosely knit social framework in which
individuals are expected to take care ofindividuals are expected to take care of
themselvesthemselves
CollectivismCollectivism
CollectivismCollectivism is a preference for a tightlyis a preference for a tightly
knit social framework in whichknit social framework in which
individuals look after one anotherindividuals look after one another
13. Time OrientationTime Orientation
Short-Term OrientationShort-Term Orientation means a greatermeans a greater
concern with the past and present and aconcern with the past and present and a
high value on meeting social obligations.high value on meeting social obligations.
Long-Term OrientationLong-Term Orientation means a greatermeans a greater
concern for the future and high value onconcern for the future and high value on
the saving and determination.the saving and determination.
14. Technological EnvironmentTechnological Environment
Changing at “lightning speed”
Internet and telecommunications
Increasing bandwidth/high-speed access
Reduced costs of entry/ leapfrogging
E-business
Customization (“the long end of the tail”)
E-retailing and financial services
Movement of money across borders
“E-cash” – a currency without a country
Outsourcing and offshoring
Information as a commodity
The 24-hour office – increased productivity/lower cost
15. How Organizations Go Global
Three Stages of Globalization
Stage I
Exporting products for sale overseas and importing
products from overseas to sell in the home country.
Stage II
Committing to directly sell home-country products in
overseas markets or contracting for products to be
manufactured overseas and sold in the home country.
Stage III
Licensing manufacturing and franchising services to foreign
firms to use the brand name, technology, or product
specifications developed by the firm.
17. Other Forms of Globalization
Strategic Alliances
Partnerships between an organization 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.
19. THE PROS AND CONSTHE PROS AND CONS
OF GLOBALIZATIONOF GLOBALIZATION
1. Where do you stand?
2. Key themes to consider
a. Impact on Labor
b. Impact on Equality
c. Impact on Government
d. Impact on the Environment
e. Impact on Culture and Community
20. Impact on LaborImpact on Labor
Positive effects
Increased job opportunities
Upgraded education system
Increased training
Negative effects
Job displacement
Loss of industries or
economic groups
Lowered labor standards
Downward wage pressure
Decreased union power
Diminished social contract
21. Impact on EqualityImpact on Equality
Positive effects
Increased income / reduced
poverty
Increased wages for education or
technically skilled
Improved economic conditions
Rich become richer
Greater access to goods
Lower cost of goods
Increased food supply (in some
Negative effects
Greater disparity between
haves and have-nots within
and across countries
Some downward pressure
on wages for the poorly
educated or unskilled
Worsened economic
conditions in marginalized
countries
Poor become poorer
22. Impact on GovernmentImpact on Government
Positive effects
Increased economic
development
Expanded infrastructure
Transfer of modern
management techniques
Greater interdependence
among business
partners
Negative effects
MNC power increased
MNCs externalize cost to countries
Competition results in too many
concessions
MNCs influence local policies
Companies incorporate in low tax
countries
Pressure to reduce social benefits
23. Impact on the EnvironmentImpact on the Environment
Positive effects
More efficient use of
resources
Increased demand for and
transfer of more efficient
technologies
Increased incomes lead to
greater concern for
environmental protection
Negative effects
Increased consumption
Advertising creates artificial
needs
Greater use of fossil fuels
(increased travel)
Increased surplus and scarcity
More factories require more
infrastructure
24. Impact on Culture/CommunityImpact on Culture/Community
Positive effects
Increased cultural exposure
and understanding
Closer cross-border ties
Negative effects
More mobility disrupts social
life, particularly in remote or
rural communities
Disintegration of local
communities
Cultural homogenization
and monoculture / reduced
cultural diversity
25. Globalization: Pros and ConsGlobalization: Pros and Cons
Globalization as “moral conflict”
Impacts of Globalization
Increases economic interdependence
Creates winners and losers
Implications of the debate
For academics
Need for more objective research
Need to question assumptions and be open to alternatives
For companies
Be aware of multiple stakeholder interests
Follow the guidelines of the UN Global Compact
26. ConclusionConclusion
Implications for Managers
Lifelong learning
the “most valuable asset is the ability to learn how to learn” (Thomas
Friedman, The World is Flat)
Responsiveness
be alert for changes and quick to respond
Adaptability
knowing how to work with others
being comfortable with uncertainty and ambiguity
Both a local and global perspective
see the big picture (global economy/whole organization)
understand the details of operating at the local level