8th edition
Steven P. Robbins
Mary Coulter
LEARNING OUTLINE
Follow this Learning Outline as you read and study this chapter.
What Your Global Perspective?
● Contrast ethnocentric, polycentric, and geocentric
attitudes towards global business.
● Explain why it’s important for managers to be sensitive
to global differences
Understanding the Global Environment
● Describe the current status of the European Union.
● Discuss the North American Free Trade Agreement and
other regional trade alliances in Latin America.
● Tell about the Association of Southeast Asian Nations.
● Explain the interdependence that globalization involves.
● Discuss the role of the WTO.
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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
● Contrast MNCs, TNCs, and borderless organizations.
● 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.
● 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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European Union Countries
Copyright © 2005 Prentice Hall, Inc. All Exhibit 4.3
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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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ASEAN Members
Copyright
Source: Based on J.© 2005and
McClenahen Prentice
T. Clark,
“ASEAN at Work,” IW. May 19, 1997, p. 42.
Hall, Inc. All Exhibit 4.4
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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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How Organizations Go Global
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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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What Are Americans Like?
Americans are very informal.
Americans are direct.
Americans are competitive.
Americans are achievers.
Americans are independent and individualistic.
Americans are questioners.
Americans dislike silence.
Americans value punctuality.
Americans value cleanliness.
Sources: Based on M. Ernest (ed.), Predeparture Orientation Handbook: For Foreign Students and Scholars Planning to Study in the
United States (Washington, DC: U.S. Information Agency, Bureau of Cultural Affairs, 1984), pp. 103–05; A. Bennett, “American Culture Is
Often a Puzzle for Foreign Managers in the U.S.,” Wall Street Journal, February 12, 1986, p. 29; “Don’t Think Our Way’s the Only Way,”
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The Pryor Report, February 1988, p. 9; and B.J. Wattenberg, “The Attitudes behind American Exceptionalism,” U.S. News & World Exhibit 4.6
Report, August 7, 1989, p. 25.
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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
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Examples of Hofstede’s Cultural Dimensions
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Source: Based on G. Hofstede, “Motivation, Leadership, and Organization: Do American Exhibit 4.7
Theories Apply Abroad?” Organizational Dynamics, Summer 1980, pp. 42–63.
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The GLOBE (Global Leadership and
Organizational Behavior Effectiveness)
Framework for Assessing Cultures
• Assertiveness • Individualism/collectivism
• Future orientation • In-group collectivism
• Gender differentiation • Performance orientation
• Uncertainty avoidance • Humane orientation
• Power distance
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