What Your Global Perspective? Define parochialism and explain why it can lead to problems. Contrast ethnocentric, polycentric, and geocentric attitudes towards global business. Describe the advantage and drawbacks of the three attitudes towards global business Understanding the Global Environment Describe the benefits from free trade. Tell why the European Union began Describe the current status of the European Union Discuss the North American Free Trade Agreement.

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Copyright © 2005 Prentice Hall, Inc.Copyright © 2005 Prentice Hall, Inc.
All rights reserved.All rights reserved.
8th
edition
Steven P. Robbins
Mary Coulter

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rights reserved. 4–2
L E A R N I N G O U T L I N E
Follow this Learning Outline as you read and study this chapter.
What Your Global Perspective?
• Define parochialism and explain why it can lead to
problems.
• Contrast ethnocentric, polycentric, and geocentric
attitudes towards global business.
• Describe the advantage and drawbacks of the three
attitudes towards global business
Understanding the Global Environment
• Describe the benefits from free trade.
• Tell why the European Union began
• Describe the current status of the European Union
• Discuss the North American Free Trade Agreement.

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L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.
Understanding the Global Environment (cont’d)
• Describe other regional trade alliance in Latin America.
• Tell about the Association of Southeast Asian Nations.
• Describe other regional trade alliances.
• Explain the interdependence that globalization involves.
• Describe the formation of the World Trade Organization.
• Discuss the role of the WTO.
Doing Business Globally
• Contrast MNCs, TNCs, and borderless organizations.
• Relate MNCs, TNCs, and borderless organizations to the
three attitudes towards global business.

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L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.
Doing Business Globally
• Describe the three stages organizations go through as
they go global.
• Define exporting, importing, licensing, and franchising.
• Describe global strategic alliances, joint ventures, and
foreign subsidiaries.
Managing in a Global Environment
• Explain how the global legal-political environment affects
managers.
• Describe the effect of the global economic environment
on managers.
• Discuss Hofstede’s five dimensions for assessing
cultures.

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L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.
Managing in a Global Environment (cont’d)
• Explain the nine GLOBE dimensions for assessing
cultures.
• Discuss the challenges of doing business globally in
today’s world.

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Managing in a Global Environment
• Challenges
Coping with the sudden appearance of new
competitors
Acknowledging cultural, political, and economic
differences
Dealing with increased uncertainty, fear, and anxiety
Adapting to changes in the global environment
Avoiding parochialism

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Adopting a Global Perspective
• Ethnocentric Attitude
The parochialistic belief that the best work
approaches and practices are those of the home
country.
• Polycentric Attitude
The view that the managers in the host country know
the best work approaches and practices for running
their business.
• Geocentric Attitude
A world-oriented view that focuses on using the best
approaches and people from around the globe.

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Regional Trading Agreements
• The European Union (EU)
A unified economic and trade entity
 Belgium, Denmark, France, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, the
United Kingdom, Germany, Austria, Finland, and
Sweden
Economic and monetary union (Euro)
• North American Free Trade Agreement (NAFTA)
Eliminated barriers to free trade (tariffs, import
licensing requirements, and customs user fees)
 United States, Canada, and Mexico

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Regional Trading Agreements (cont’d)
• Free Trade Area of the Americas
• Southern Cone Common Market (Mercosur)
• Association of Southeast Asian Nations
(ASEAN)
Trading alliance of 10 Southeast Asian nations
• African Union

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The World Trade Organization (WTO)
• Evolved from the General Agreement on Tariffs
and Trade (GATT) in 1995.
• Functions as the only global organization
dealing with the rules of trade among nations.
• Has 145 member nations.
• Monitors and promotes world trade.

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Different Types of Global Organizations
• Multinational Corporation (MNC)
A firm which maintains operations in multiple
countries but manages the operations from a base in
the home country.
• Transnational Corporation (TNC)
A firm that maintains operations in several countries
but decentralizes management to the local country.
• Borderless Organization
A firm that has eliminated structural divisions that
impose artificial geographic barriers and is organized
along business lines.

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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.

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Other Forms of Globalization
• Strategic Alliances
Partnerships between and 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.

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Managing in A Global Environment
• The Legal Environment
Stability or instability of legal and political systems
 Legal procedures are established and followed
 Fair and honest elections held on a regular basis
Differences in the laws of various nations
 Effects on business activities
 Effects on delivery of products and services

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The Economic Environment
• Economic Systems
Market economy
 An economy in which resources are primarily owned
and controlled by the private sector.
Command economy
 An economy in which all economic decisions are
planned by a central government.
• Monetary and Financial Factors
Currency exchange rates
Inflation rates
Diverse tax policies

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The Cultural Environment
• National Culture
Is the values and attitudes shared by individuals from
a specific country that shape their behavior and their
beliefs about what is important.
May have more influence on an organization than the
organization culture.

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Hofstede’s Framework for Assessing
Cultures
• Individualism versus Collectivism
• Power Distance
• Uncertainty Avoidance
• Quantity versus Quality of Life
• Long-term versus Short-term Orientation
Individualism: the degree to which people in a country
prefer to act as individuals.
Collectivism: a social framework in which

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The GLOBE (Global Leadership and
Organizational Behavior Effectiveness)
Framework for Assessing Cultures
• Assertiveness
• Future orientation
• Gender differentiation
• Uncertainty avoidance
• Power distance
• Individualism/collectivism
• In-group collectivism
• Performance orientation
• Humane orientation