Global Dimensions of

Management
Key Global Events
• Collapse of the Soviet Union
• Opening of China
• Improved Access (Telecommunications)
• Steady Growth in MNC’s
• The European Community
• NAFTA - GATT
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 International Management
The conduct of business and other
operations in foreign countries.
• Working overseas in the foreign
operation of a domestic firm.
• Working overseas for a foreign firm.
• Working as a domestic employee of a
foreign firm operating in your country.

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Why Organizations Go
International

• Profits
• New Markets
• Raw Materials
• Financial Capital
• Lower Labor Costs
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 The Global Economy
Based on the worldwide interdependence of
resource supplies, product markets, and
business competition.
GATT WTO
The Americas
The European Union
NAFTA Africa
Russia Maquiladoras
China Asia and the Pacific Rim
Asia-Pacific Economic
Forum 4
 International Business
• The conduct of for-profit
transactions of goods and services
across national boundaries.

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 International Business
Strategies
• Market Entry • Direct Investment

– Global Sourcing – Joint Ventures

– Exporting – Wholly Owned
– Importing Subs
– Licensing
– Franchising
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Multinational Corporations
• A business firm with extensive
international operations in more
than one foreign country

MNO’s are organizations like the Red

Cross, whose nonprofit missions and
operations span the globe.
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 Types of MNCs
• Transnational Corporations
Strive to operate on a borderless basis and
without being identified with one national home.

• Ethnocentric
Strict headquarters control over foreign operations,
expects to operate the same way it does at home.

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 Types of MNCs
• Polycentric
Gives it foreign operations more operating freedom,
respects market differences among countries, and
treats each country as a separate competitive domain.
• Geocentric
Like Traditional it seeks total integration of global
operations by operating without "home country"
prejudices, making major decisions for global
perspective, and employing senior executives from
many different countries.

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 Environmental Challenges in
the Global Economy
• Economic Differences
– Centralized vs Free Market Economies
– Transition to Privatization
– Trade Alliances and Policies

• Legal Political Differences

– Democratic vs Totlaitarian Systems
– Diverse Legal Codes

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 Environmental Challenges in
the Global Economy
• Educational Differences
– Different School Systems
– Literacy Levels
– Availability of Skilled Labor
• Socio-Cultural Differences
– Different Cultures
– Culture Shock
– Ethnocentrism
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 Host Country Complaints of
MNC’s
• Extract excessive profits.
• Dominate the local economy.
• Interfere with the local government.
• Fail to help domestic firms develop.
• Hire the best local personnel.
• Fail to transfer advanced technologies.
• Fail to respect local customs, laws, and
needs.
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 MNC’s Complaints
• Profit limitations.
• Overpriced resources.
• Exploitative rules.
• Foreign exchange restrictions.
• Failure to meet contract obligations.

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Popular Dimensions Of
Culture
• Language
• Use of Space
• Time Orientation
Monochronic vs Polychronic
• Religion
• Use Of Contracts
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 Hofstede's Dimensions Of
Culture
• Power Distance
The degree to which a society accepts
the unequal distribution of power in
organizations.
• Uncertainty Avoidance
The degree to which a society tolerates
risk and situational uncertainties.
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 Hofstede's Dimensions Of
Culture
• Individualism - Collectivism
The degree to which a society emphasizes
individual self-interest, or the collective
values of groups.
• Masculinity - Femininity
The degree to which a society emphasizes
assertiveness and material concerns, or
relationships with others and concerns for
feelings.
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 Hofstede's Dimensions Of
Culture
• Time Orientation
The degree to which a society
emphasizes short term considerations
versus greater concern for the future.

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 High Low
Power Distance
Philippines US Austria

Uncertainty Avoidance
Greece US Singapore
Individualism
USA Japan Venezuela

Masculinity
Japan US Sweden
Time Orientation
USA Japan
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 Apply the Management
Functions Across Cultures
• Comparative Management
The study of how management practices
systematically differ from one country
and/or culture to the next.
• Political-Risk Analysis
Involves forecasting the probability of
various events that can threaten the
security of a foreign investment.
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 Comparative Management
Practices

• We can look to Hofstede's Model

to understand how strong
cultural influences can impact
the compatibility of management
theories when applied across
international borders.

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 Comparative Management
Practices
• Notwithstanding the stories
proclaiming the success of the
Japanese management system.…
we should hesitate to accept any
practice, no matter how well it
appears to work somewhere else,
as a universal prescription to
action.
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