Cross Cultural Management

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Helen Deresky
Professor Emerita, State University of New York-Plattsburgh

Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo


Chapter 1

Assessing the Environment—Political, Economic, Legal, Technological Chapter 2

Managing Interdependence: Social Responsibility and Ethics

Assessing the Environment
Political, Economic, Legal, Technological

Opening Profile: Economic Crisis Spreads Through Financial Globalization The Global Business Environment Globalization Globality and Emerging Markets Effects of Institutions on Global Trade Effects of Globalization on Corporations Regional Trading Blocs The European Union (EU) Asia

Comparative Management in Focus: China's Economy Keeps on Chugging. The Americas Other Regions in the World The Russian Federation The Middle East Developing Economies The African Union

The Globalization of Human Capital The Global Manager's Role The Political and Economic Environment Political Risk Political Risk Assessment Managing Political Risk Managing Terrorism Risk Economic Risk The Legal Environment Contract Law Other Regulatory Issues The Technological Environment Global E-Business Conclusion Summary of Key Points Discussion Questions Application Exercises Experiential Exercise Internet Resources Case Study: Indian BPOs Waking Up to the Philippines Opportunity?

Management Focus: Intel Brings Changes to Vietnam's Economy and Culture Information Technology

OBJECTIVES: 1. To understand the global business environment and how it affects the strategic and operational decisions which managers must make. 2. To critically assess the developments, advantages and disadvantages of globalization. 3. To review the role of technology in international business. 4. To develop an appreciation for the ways in which political, economic, legal and technological factors and changes impact the opportunities that companies face. 5. To discuss the complexities of the international manager's job. 14

Chapter 1 • Assessing the Environment


Opening Profile: Economic Crisis Spreads Through Financial Globalization A perilous global crisis of confidence has revealed both the scale and the limitations of globalimtion.1 The 2009 World Economic Forum in Davos, Switzerland, announced its theme—"Shaping the Post-Crisis World." What crisis? What caused the crisis? Some of the developments as they occurred are discussed below, and the effects will no doubt be continuing as you read this book. Discuss updates in your class and how the effects are impacting international business. In September 2008, fears of a global recession fed a stock market panic as worries about toxic assets (highly leveraged securities mainly linked to risky mortgages taken out in the United States) spread from the financial sector to the credit markets and then to the broader economy.2 The American export—the subprime mortgage mess—caused the global economy to hit the brakes. The problem is that Finance has become one of the most international of industries, with banks from around the world doing business across numerous countries. However, regulation of that industry is still only national or local. Because fear gripped depositors around the world concerned that their deposits and savings will disappear, and fear led banks worldwide to cease lending to one another, the entire credit system shut down. Lending to even creditworthy companies dried up in Europe in 2008, causing the International Institute for Labor in Geneva to state:

The financial crisis is hitting the world of work. . .
The financial crisis which developed over the past year and erupted last August represents one of the most significant...
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