Chapter 4: Managing in a Global Environment
The Socio cultural Environment
1) Nation’s culture includes shared knowledge, beliefs and values and common modes of behavior, thinking among members of society
2) Cultural forces are more perplexing than political and economic factors when working or living in a foreign country
Social Values
1) Culture is intangible, pervasive and difficult for outsiders to learn
2) One way managers can comprehend and deal with is to understand difference in social values
Geert Hofstede identified 4 dimensions of national value system that influence organizational and employee working relationships
1) Power Distance
a. High power distance: People accept inequality in power, For instance countries like Malaysia, Philippines and Panama
b. Low power distance: People expect equality in power, For instance Denmark, Austria and Israel
2) Uncertainty Avoidance
a. High Uncertainty avoidance: People feel uncomfortable with uncertainty and ambiguity and thus support beliefs that support certainty and conformity, For instance countries like Greece, Portugal and Uruguay
b. Low Uncertainty avoidance: People have high tolerance towards unstructured, unclear and unpredictable’s, For instance Singapore and Jamaica
3) Individualism & Collectivism
a. Individualism: Loosely knit social framework, where individuals are expected to take care of themselves, Countries like US, Canada, Great Britain etc
b. Collectivism: Tightly knit social framework where individuals look after one another to protect member’s interest. Countries like Ecuador and China
4) Masculinity and femininity
a. Masculinity: Stands for achievements, heroism, assertiveness, work centrality and material success. Countries like Japan and Germany
b. Femininity: Stands for relationship, cooperation, group decision making and quality of life. Countries like Norway and Denmark
5) Long Term & Short Term Orientation
a. Long term: Countries with greater concern over future like China and other Asian countries
b. Short term: Countries with greater concern over past and present like Russia and West Africa
GLOBE project value dimensions
The GLOBE (Global Leadership and Organizational Behavior Effectiveness) which explained the same nine dimensions that explain the cultural differences, includes those identified by Hofstede,
1. Assertiveness – Society encourages toughness, assertiveness and competitiveness
2. Future orientation – Similar to Hofstede
3. Uncertainty avoidance – Similar to Hofstede
4. Gender differentiation – Society maximizes gender role differences
5. Power distance - Similar to Hofstede
6. Societal Collectivism – Tightly knit or loosely knit collective society
7. Individual collectivism - Similar to Hofstede
8. Performance orientation – Countries which places high emphasis on performance
9. Humane orientation – Society encourages and rewards people for being fair, generous and caring
Other Cultural Characteristics
Other cultural characteristics which influence international organizations are
1) Language
2) Religion
3) Attitudes
4) Social Organization
5) Education
v Linguistic Pluralism: Countries like India characterized by several languages
v Instrumental attitude: Countries where people are treated as resources that impediment the business success
v Humanistic attitude: Countries where people are valued more
v Ethnocentrism: Natural tendency of people to regard their own culture as superior and to downgrade or dismiss other culture
INTERNATIONAL TRADE ALLIANCES
One of the most visible changes in the international business environment in recent years has been the development of regional trading alliances and international trade agreements.
1) GATT and the World Trade Organization: The General Agreement on Tariffs and trade (GATT) and its successor, the World Trade Organization (WTO) has been initiated to ensure non-discrimination, clear procedures and the negotiation of disputes and participation of lesser developed countries in international trade. Primary use tariff concession as a tool to increase trade
2) European Union
a. To improve social and economic conditions among its members , the European Economic Community
b. Initiative of creating open markets among its members allowing people , goods and services move freely
3) North American Free Trade Agreement (NAFTA)
a. To break down tariff and trade restrictions on most of agricultural and manufacturing products among its members (US , Canada and Mexico)
4) Other Trade Alliances
a. The Association of Southeast Asian Nations (ASEAN) – Trading alliance of 10 Southeast Asian nations
b. The Central America Free Trade Agreement (CAFTA) – Low tariff and ease regulation between the US, The Dominican Republic, Guatemala, Honduras, Nicaragua and EI Salvador and many
c. Free Trade Area of the Americas (FTAA) – Free trade among 30 countries in America
The Globalization: BACKLASH
The world becomes increasingly interconnected, a backlash over globalization is occurring. Primary reason is underneath,
v Loss of jobs as companies expand their off shoring activities by exploring more and more work to countries with lower wages
Multinational Corporations
The size and volume of international businesses are so large that they are hard to comprehend. In business world, these large international firms are typically called as multinational corporations (MNC). MNC’s have following distinct managerial characteristics,
Ø 25% of revenue from operations outside the parent home country
Ø Capital, technology and people are transferred among country affiliates
Ø Controlled by a single management authority that makes key strategic decisions related to the parent and all affiliates
Ø Top managers are presumed to exercise global perspective
Managing in a Global Environment
Managers working in foreign countries often face tremendous personal difficulties, more sensitive to cultural subtleties and understand that the ways to provide proper leadership, decision making, motivation and control vary in different cultures.
Developing Cultural Intelligence
Managers in foreign countries need personal learning and growth in critical.
Cultural Intelligence (CQ) refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses.
Managing Cross – Culturally
The cultural differences in how people think and see the world affect working relationships. To be effective in an international level, managers need to interpret the culture of the country and organization in which they are working and develop the sensitivity required to avoid making costly cultural blunders. The below are some managerial aspects which differs across countries
1) Leading:
a. Leaders should be especially careful about how and in what context they criticize others , to Asians and Africans , the loss of self respect brings dishonor to themselves and family , but may not so to US
2) Decision Making:
a. In US , mid level managers may discuss a problem and give the boss a recommendation, Mexican often don’t understand participatory decision making , in contrast Arab and African notions are expected to use consultative decision making in extreme
3) Motivation:
a. Motivation must fit the incentives with culture. Some may see money as motivation factor and some may see challenging jobs
4) Controlling:
a. When things go wrong, managers in foreign countries often are unable to get rid of employees who do not work out. Some countries are protected by strong labor laws and union rules
No comments:
Post a Comment