Because learning changes everything.

CHAPTER 4
GLOBAL
MANAGEMENT

Managing across
Borders

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 LEARNING OBJECTIVES

4-1 Identify three influential effects on globalization.

4-2 Describe the characteristics of a successful
international manager.
4-3 Outline the ways in which companies can expand
internationally.
4-4 Discuss barriers to free trade and ways companies
try to overcome them.
4-5 Explain the value to managers of understanding
cultural differences.
4-6 Describe how to develop your cross-cultural
competency.

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 MANAGE U: WORKING SUCCESSFULLY ABROAD: DEVELOPING
CULTURAL AWARENESS

• Do Your Research
• Check Your Attitude
• Learn the Appropriate Behavior
• Become at Least Minimally Skilled in the
Language
• Pack Wisely
• Finally, Be Prepared

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 GLOBALIZATION:
THE COLLAPSE OF TIME AND DISTANCE

Competition and Globalization: Who Will Be No. 1

Tomorrow?

The Rise of the “Global Village” and Electronic

Commerce

One Big World Market: The Global Economy

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 COMPETITION AND GLOBALIZATION:
WHO WILL BE NO. 1 TOMORROW?

• The United States

remained the world’s
largest economy in
It goes without 2019.
saying that the world
is a competitive • But the World
Economic Forum
place.
ranks the United
States No. 2, behind
Singapore.

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 THE RISE OF THE “GLOBAL VILLAGE” AND
ELECTRONIC COMMERCE
• The hallmark of great civilizations has been their
great systems of communications.
• Transportation began to yield to the electronic
exchange of information.
• The world became even faster and smaller when
AT&T launched the first cellular communications
system.
• Then came the Internet, the worldwide
computer-linked “network of networks.”

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 ONE BIG WORLD MARKET:
THE GLOBAL ECONOMY
• Economies of the world are
increasingly tied together.

• Money changes hands

globally in a matter of
keystrokes.

• Global economy has a

number of benefits.

• Negative impacts of
globalization also exist.

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 YOU AND INTERNATIONAL MANAGEMENT

Why Learn about International Management?

The Successful International Manager: Geocentric,

Not Ethnocentric or Polycentric

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 WHY LEARN ABOUT INTERNATIONAL
MANAGEMENT?

• Multinational corporations
• Multinational organizations
• You may deal with foreign customers or partners
• You may deal with foreign employees or
suppliers
• You may work for a foreign firm in the United
States

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 THE SUCCESSFUL INTERNATIONAL
MANAGER: GEOCENTRIC, NOT
ETHNOCENTRIC OR POLYCENTRIC

• Ethnocentric managers—“We know best.”

• Polycentric managers—“They know best.”

• Geocentric managers—“What’s best is what’s

effective, regardless of origin.”

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 WHY AND HOW COMPANIES EXPAND
INTERNATIONALLY

Why Companies Expand Internationally

How Companies Expand Internationally

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 WHY COMPANIES EXPAND INTERNATIONALLY

• Availability of
supplies

• New markets

• Lower labor costs

• Access to finance
capital

• Avoidance of tariffs
and import quotas

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 HOW COMPANIES EXPAND
INTERNATIONALLY
FIGURE 4.1: FIVE WAYS OF EXPANDING
INTERNATIONALLY

These range from lowest risk and investment (left) to highest risk and investment (right).

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 THE WORLD OF FREE TRADE: REGIONAL ECONOMIC
COOPERATION AND COMPETITION

Barriers to International Trade

Organizations Promoting International Trade

Major Trading Blocs

Most Favored Nation Trading Status

Exchange Rates

The BRICS Countries: Important International Competitors

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 BARRIERS TO INTERNATIONAL TRADE

• Tariffs

• Import quotas

• Sanctions and embargoes

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 ORGANIZATIONS PROMOTING
INTERNATIONAL TRADE

• World Trade
The three principal
Organization
organizations
• World Bank
designed to facilitate
• International
international trade:
Monetary Fund

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 MAJOR TRADING BLOCS

• NAFTA & USMCA—

A trading bloc, also Trade Across North
known as an economic America
community, is a group of • The EU—The 27
nations within a Countries of the
geographical region that European Union
have agreed to remove • The Trans-Pacific
trade barriers with one Partnership—11
another. Pacific Rim
Countries

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 MOST FAVORED NATION TRADING STATUS

Besides joining together in trade blocs, countries will

also extend special, “most favored nation” trading
privileges to one another.

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 EXCHANGE RATES
• Americans deal in dollars with each
other, but beyond the U.S. border
we have to deal with Pounds in
England, Euros in Europe, Pesos in
Mexico, and Yuan in China.
• Because of changing economic
conditions, the values of currencies
fluctuate in relation to each other, so
that sometimes a U.S. dollar, for
example, will buy more goods and
sometimes it will buy less.

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 THE BRICS COUNTRIES: IMPORTANT
INTERNATIONAL COMPETITORS

The term BRICS stands for the five major emerging

economies of:

• Brazil, Russia, India, China, and South Africa

Though not a trading bloc as such, the BRICS are

important because they hold 40% of the world’s
population.

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 THE VALUE OF UNDERSTANDING
CULTURAL DIFFERENCES
• The importance of national culture

• Cultural dimensions: the Hofstede

and globe project models

• Other cultural variations: language,

interpersonal space, communication,
time orientation, religion, and law
and political stability

• U.S. managers on foreign

assignments: Why do they fail?

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 THE IMPORTANCE OF
NATIONAL CULTURE

• We begin learning our culture starting at an early

age through everyday interaction with people
around us.

• Because a culture is made up of so many

nuances, visitors to a different and unfamiliar
culture may experience feelings of discomfort
and disorientation.

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 CULTURAL DIMENSIONS:
THE HOFSTEDE AND
GLOBE PROJECT MODELS
• Misunderstandings and miscommunications
often arise in international business relationships
because people don’t understand the
expectations of the other side.
• Hofstede’s Model of Four Cultural Dimensions
• The GLOBE Project’s Nine Cultural Dimensions
• Recognizing Cultural Tendencies to Gain
Competitive Advantage

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 OTHER CULTURAL VARIATIONS:
LANGUAGE, INTERPERSONAL SPACE,
COMMUNICATION, TIME ORIENTATION, RELIGION, AND
LAW AND POLITICAL STABILITY
Cultural Variations:
• Language
• Interpersonal space
• Communication
• Time orientation
• Religion
• Law and political stability

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 OTHER CULTURAL VARIATIONS:
FIGURE 4.2 COMFORTABLE INTERPERSONAL
SPACE FOR DIFFERENT COUNTRIES

Source: Data taken from A. Sorokowska, P. Sorokowski, P. Hilpert, K. Cantarero, T. Frackowiak, K. Ahmadi, et al, “Preferred Interpersonal
Distances: A Global Comparison,” Journal of Cross-Cultural Psychology, March 2017, pp. 577–592.

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 OTHER CULTURAL VARIATIONS:
FIQURE 4.3 CURRENT FOLLOWERS OF THE MAJOR WORLD RELIGIONS

All population counts

are estimated. 
Sources: See “Major World Religions
Populations Pie Chart Statistics List,”
http://www.age-of-the-sage.org/mysticism/world
_ religions_populations.htm, accessed June 8,
2018; https:// www.israelnationalnews.com/
News/News.aspx/221859; http://
www.pewresearch.org/fact-tank/2017/04/07/why
-people-with-no-religion-are-projected-todecline-
as-a-share-of-the-worlds-population 

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 U.S. MANAGERS ON FOREIGN
ASSIGNMENTS: WHY DO THEY FAIL?

• Expatriates often leave their foreign

assignments early due to the challenges of
adjusting to overseas assignments and
embracing a different culture as part of everyday
living.

• There are ways, however, to overcome these

issues.

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 FIGURE 4.4 CAREER READINESS COMPETENCIES

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 CAREER CORNER:
MANAGING YOUR CAREER READINESS

Listen and observe:

• Try to take the perspective of a native.
• Look for cultural logic or set of values that may explain behavior.

Become aware of the context:

• Context refers to the situational or environmental characteristics that
influence our behavior.
• Learn to read and adapt to the existing structure, rules, customers, and
leaders in an unfamiliar situation.

Choose something basic:

• Try to learn another language if you plan to work overseas.
• Even a small effort shows respect and promotes cultural sensitivity.

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 End of Main Content

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No reproduction or further distribution permitted without the prior written consent of McGraw Hill.