Chapter 3: Global Management

What’s your global perspective?

● Monolingualism (belief that English e.g is the only language needed) is one
sign of parochialism /pəˈrəʊ.ki.ə.lɪ.zəm/: viewing the world using one’s own
eyes and perspectives → not recognizing the differences between people
● Ethnocentric attitude: a parochial belief that people from their home country
do best
● Polycentric attitude: a belief that people from the host country do best
● Geocentric attitude: a world-oriented view that focuses on using the best
approaches and people from around the globe.
○ A geocentric attitude requires eliminating parochial attitudes and
develop and understanding of cross-cultural differences
Understanding the Global trade environment:
Global trade today is shaped by 2 forces: regional trading alliances and trade
mechanisms that ensure global trade can happen
● Regional trading alliances: global competition and global economies are
shaped by regional trading agreements (EU, NAFTA, ASEAN, etc.) because it
helps to stimulate economic growth
● Global trade mechanisms: global trade systems ensure trades continue
effectively and efficiently. 4 important global trade mechanisms:
○ World Trade Organization (WTO): (161 members - now 164) the only
global organization that deals with trade among nations. It plays an
important role monitoring, promoting, and protecting global trade.
○ International Monetary Fund (IMF): An organization of 188 countries
(now 190) that promotes international monetary cooperation and
provides advice, loans, and technical assistance
○ World Bank Group: A group of five closely associated institutions that
provides financial and technical assistance to developing countries
○ Organization for Economic Cooperation and Development (OECD):
helps to achieve sustainable economic growth and employment, raise
the standard of living, maintain financial stability, contribute to the
development of the world economy
Doing business globally:
Different types of international organizations:
● Multinational corporations (MNC): any type of international company that
operate in multiple countries
 ○ Multidomestic corporation: an MNC that decentralized management
and other decisions to the local company → polycentric attitude
○ Global company: an MNC that centralized management and other
decisions in the home country → ethnocentric attitude
○ Transnational/Borderless corporation: An MNC that eliminates
artificial geographical barriers → geocentric attitude
How organizations go international:
1. Global sourcing: purchase materials or labor wherever it is cheapest, take
advantage of lower cost
2. Exporting of Importing
3. Licensing (cấp phép): used by manufacturing organizations that makes or sells
another company’s products
Franchising (nhượng quyền thương mại): used by service organizations that
want to use another company’s name and operating methods.
4. Make more direct foreign investment using strategic alliance: a partnership
between partners in which they share their knowledge and resources to
develop new products
Joint venture: a type of strategic alliance that partners form separate,
independent organizations (maybe to develop different components of one
product)
5. Directly invest in a foreign country by setting up foreign subsidiary: a separate
and independent facility or office
Managing in global environments:
● The Political/Legal environment
● The Economic environment
○ Understanding the type of economic system:
■ Free market economy: the resources are primarily owned and
controlled by the private sector
■ Planned economy: economic decisions are planned by a central
government
● The cultural environment: natural culture (the values and attitudes shared by
individuals from a specific country that shape their behavior and their beliefs
about what is important) has a greater effect on employees than
organization’s culture
● Managers are suggested to have:
○ Cultural intelligence: cultural awareness and sensitivity skills. It
involves:
 ■ Knowledge of culture (how they vary, how they affect work
behavior)
■ Mindfulness (paying attention to signals and reactions in
different situations)
■ Behavioral skills
○ or Global mind-set: the attribute allowing leaders to to effective in
cross-cultural environments
■ Intellectual capital: knowledge of how businesses work on a
global scale
■ Psychological capital: openness to new ideas and experiences
■ Social capital: ability to form relationships with ones different
from you
● Global Leadership and Organizational Behavior Effectiveness (GLOBE)
program: The research program that studies cross-cultural leadership
behaviors → 9 dimensions on which national cultures differ
○ Power distance: the extent to which a society accepts that power in
institutions and organizations is distributed unequally
○ Uncertainty avoidance: a society’s reliance on social norms and
procedures to alleviate the unpredictability of future events
○ Assertiveness: the extent to which a society encourages people to be
tough, confrontational, assertive, and competitive rather than modest
and tender
○ Humane orientation: the degree to which a society encourages and
rewards individuals for being fair, altruistic, generous, caring, and kind
to others
○ Future orientation: the extent to which a society encourages and
rewards future-oriented behaviors such as planning, investing in the
future, and delaying gratification
○ Institutional collectivism: the degree to which individuals are
encouraged by societal institutions to be integrated into groups within
organizations and society
○ Gender differentiation: the extent to which a society maximizes gender
role differences as measured by how much status and decision-making
responsibilities women have
○ In-group collectivism: the extent to which members of a society take
pride in membership in small groups, such as their family and circle of
close friends, and the organizations in which they’re employed
○ Performance orientation: the degree to which a society encourages
and rewards group members for performance improvement and
excellence
 Chapter 6: Managing Changes
The case for change:
● Organizational change: alternation of people, structure, or technology in an
organization
● Change agent: someone who is responsible for managing the change process
● Major factors associated with change:
○ External:
■ Changing consumer needs and wants
■ New governmental laws: truth-in-advertising, employment and
labor fair practices, environmental protection, privacy, safety
and health
■ Changing technology
■ Economic changes
○ Internal:
■ New organizational strategy
■ Change in composition of workforce
■ New equipment
■ Changing employee attitudes
The change process:
● The 2 metaphors:
○ The Calm Waters Metaphor: change is seen as an occasional disruption
in the normal flow of events. Success can be planned, and require:
■ Unfreezing the status quo. Can be done by increasing the driving
forces, decreasing the restraining forces, or combining both
■ Changing to a new state
■ Refreezing to make the change permanent → stabilize the
situation
○ The White-waters Rapids Metaphor: change is normal and expected,
and managing is a continual process
● Reactive vs Proactive change process
Areas of change:
4 areas of change:
● (People section) Organizational Development (OD): change methods that
focuses on people and the nature and quality of interpersonal work
relationships
Managing change:
● People can change if you make the change appealing
● Why do people resist change?
○ Uncertainty
○ Habit
○ Concern over personal loss
○ The belief that the change is not in the organization’s best interest
● Ways to reduce resistance to change:
○ Education and communication
○ Participation (including those individuals to participate in decision
making)
○ Facilitation and support
○ Negotiation
 ○ Manipulation and co-optation (covert/hidden/secret attempts to
influence others about the change)
○ Coercion (using force - may be illegal)
Contemporary issues in managing change:
● Leading change: managers make changes happen successfully by:
○ Make the organization chang capable
○ Understand their own roles in the process
○ Give individual employees a role in the change process
● Creating a culture for change - an organization’s culture is very resistant to
change
● Employee stress (stress: the adverse reaction people have to excessive
pressure placed on them from extraordinary demands, constraints, or
opportunities). Stressors are factors that cause stress → 5 categories of
organizational stressors:
○ Task demands - Autonomy tends to lessen stress
○ Role demands: pressure placed on employees related to their
particular roles in the organization
■ Role conflicts: Work expectations that are hard to satisfy
■ Role overload: Having more work to accomplish than time
permits
■ Role ambiguity: When role expectations are not clearly
understood
○ Interpersonal demands: pressure created by other employees
○ Organizational structure: rules, employees’ lack of opportunity to
participate in decisions
○ Organizational leadership: the supervisory style of the organization’s
managers
● Personal factors that create stress: family issues, personal economic
problems, and inherent personality characteristics
○ Type A Personality: people who have a chronic sense of urgency and an
excessive competitive drive
○ Type B personality: People who are relaxed and easygoing and accept
change easily
● To reduce stress:
○ Make sure an employee’s abilities match the job requirements
○ Performance planning program such as MBO (management by
objectives) will clarify job responsibilities, provide clear performance
goals, and reduce ambiguity through feedback
 ○ For personal related stress:
■ Employee counseling: provide stress relief
■ A time management program
■ Wellness programs
Stimulating innovation:
● Creativity vs. Innovation:
○ Creativity: ability to combine ideas in a unique way or to make unusual
associations between ideas
○ Innovation: Taking creative ideas and turning them into useful products
or work methods
● Stimulating and nurturing innovation: the right environment include 3
variables: the organization’s structure, culture, and human resource practices
○ Organic-type orgs = innovation (low formality, centralization, and work
specialization)
○ Availability of resources = key building blocks for innovation
○ Frequent communication = breakdown barriers to innovation
○ Minimizing extreme time pressure
○ Organizational structure supports creativity
● Characteristics of an innovative organization:
○ Accept ambiguity
○ Tolerate the impractical
○ Keep external controls minimal (rules, regulations, policies,...)
○ Tolerate risk
○ Tolerate conflict
○ Focus on ends rather than means
○ Provide positive feedback
○ Exhibiting empowering leadership
● Human resource variables: encourage people to become idea champion
(Individual who actively and enthusiastically supports new ideas, builds
support, overcomes resistance, and ensures that innovations are
implemented)
Disruptive innovation:
● Definition: Innovations in products, services or processes that radically change
an industry’s rules of the game
● Vs. Sustaining innovation: small and incremental changes in established
products rather than dramatic breakthroughs → sustain the status quo
● Large, profitable organizations are more vulnerable to disruptive innovations
(they have the most to lose)