1 / 23

Globalization

Globalization Globalization: Is the flow of goods and services, capital, and knowledge across country borders Enhances economic interdependence among countries and organizations Has changed the competitive landscape

Michelle
Download Presentation

Globalization

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Globalization Globalization: • Is the flow of goods and services, capital, and knowledge across country borders • Enhances economic interdependence among countries and organizations • Has changed the competitive landscape • To compete effectively you must understand the Institutional Environment and the Culture of each country that you operate in

  2. Country’s Institutional Environment Institutional Environment: A country’s rules, policies, and enforcement processes Three dimensions: • Economic development dimension • Political-legal dimension • Physical infrastructure dimension

  3. Country’s Institutional Environment:Economic Development Dimension Economies are classified as either: • Developed economies • Larger economies with effective capital markets • Emerging economies • Rapidly growing with underdeveloped capital markets • Developing economies • Weak economies with little capital available for growth

  4. Country’s Institutional Environment:Political-Legal Dimension • Includes a country’s political risk, regulations, laws, and enforcement • Governments develop laws to govern behavior of citizens and organizations • Some “rules” are excessive and discourage foreign investment

  5. Country’s Institutional Environment:Physical Infrastructure Dimension • Includes amount and quality of roads and highways, telephone lines, and airports • Poor infrastructure makes it difficult for foreign firms to distribute products • Countries wanting foreign investment must develop infrastructure

  6. Country’s Culture • Culture • Learned set of assumptions, values, and beliefs that have been accepted by members of a group and that affect human behavior • Focus here is on national cultures • Can influence how people observe and interpret the business world around them • Can evolve and change with time • 4 prominent dimensions

  7. Cultural Dimensions

  8. Extent to which people accept power and authority differences among people High power distance = people accept power differences Low power distance = people like to regard themselves as more or less equal Cultural Dimensions: Power Distance Power Distance Cultural Dimensions

  9. Extent to which things need to be clear or ambiguous High uncertainty avoidance = prefer clear norms that govern behavior (i.e., avoid uncertainty) Low uncertainty avoidance = have fewer rules and are comfortable in ambiguous situations (i.e., can accept uncertainty) Cultural Dimensions: Uncertainty Avoidance Cultural Dimensions Uncertainty Avoidance

  10. Individualism: Extent to which people’s identities are self-oriented; people take care of themselves and immediate family High emotional independence Emphasize and reward individual achievement Collectivism: Extent to which a people’s identities are a function of the group(s) to which they belong (family firm, community, etc.) Emotional dependence on institutions Emphasize group membership Cultural Dimensions: Individualism/Collectivism Cultural Dimensions Individualism/ Collectivism

  11. Extent to which people in a country value masculine or feminine traits Masculine = activities leading to success, money, possessions Feminine = activities showing caring of others and enhancing quality of life Cultural Dimensions: Gender Focus Gender Focus Cultural Dimensions

  12. International Market Entry Strategies Exporting Less Risk Licensing Strategic Alliances Cross-Border Acquisitions Wholly-Owned Subsidiaries More Risk

  13. International Market Entry Strategies Exporting Advantages: • Low cost • Low risk to licensor Disadvantages: • Potential trade barriers • Establishment of marketing and distributing systems in foreign market • Transportation costs • Smaller returns Manufacturing products in a firm’s home country and shipping them to a foreign market.

  14. International Market Entry Strategies Advantages: • Less capital investment • Least amount of risk Disadvantages: • Licensor has little control over product and use of brand • Smaller returns Licensing Arrangements that allow a local firm in the new market to manufacture and distribute a firm’s product.

  15. International Market Entry Strategies Advantages: • Share costs and risks between partners • Access to resources not previously available • Learn capabilities from partner Disadvantages: • Management disagreement • Share profits New types of alliances: • Outsourcing and Offshoring Strategic Alliances Cooperative arrangements between two firms in which they agree to share resources to accomplish a mutually desirable goal.

  16. International Market Entry Strategies Advantages: • Fast way to enter foreign market • Can start operations immediately Disadvantages: • Can cause controversy in local public • Integrating two previously independent companies can be challenging • Targeted acquisitions may cost a premium Acquisitions of local firms made by foreign firms to enter a new international market. Cross-Border Acquisitions

  17. International Market Entry Strategies Advantages: • Maximum control • Buffer assets from competitors in the market Disadvantages: • Complex, risky and expensive to launch • Must establish relationships with suppliers, buyers, etc. • Must learn about culture and institutional environment on your own Direct investments to establish a business in a foreign market in which the business is 100% owned and controlled by the focal firm; also called Greenfield Venture. Wholly-Owned Subsidiaries

  18. Managing International Operations:Global Focus Global Focus • Important decisions made at home office • Subsidiaries follow same strategies Advantage: • Economies of scale Disadvantage: • No flexibility for subsidiaries to make local market decisions Centralized to home office

  19. Managing International Operations:Region-Country Focus Region-Country Focus • Important decisions made by subsidiaries in local markets Advantage: • Allows subsidiaries to react quickly to changes in marketplace Disadvantage: • Expensive; difficult for home office to oversee Decentralized to subsidiaries

  20. Managing International Operations:Transnational Focus Transnational Focus • Both home office and subsidiaries make important decisions Advantages: • Good combination of global efficiency and local responsiveness • Outperforms other approaches Centralized and decentralized

  21. Managing Across Cultures:Low- and High-Context Cultures Cultural context: degree to which a situation influences behavior or perception of “appropriateness” Neither high- nor low-context cultures are right or wrong, just different HIGH-CONTEXT People pay close attention to the situation and its various elements in assessing appropriate behavior LOW-CONTEXT Situation may or may not make a difference in what is considered appropriate behavior

  22. Managing Across Cultures:Managing Multi-Cultural Teams Challenges to managing multi-cultural teams: • Dependence on electronic communication (virtual teams) • Basic communication issues • Building trust among team members with different values (swift trust: rapid development of trust in teams about task activities)

  23. Developing a Global Mindset Global mindset: cognitive attributes that allow an individual to influence individuals, groups, and organizations from diverse socio-cultural and institutional environments • Important for companies today • Having top managers from different cultures can help

More Related