Question: Globalization and Host Country

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How has globalization affected different world regions? What are some of the benefits and costs of globalization for different sectors of society?

• Globalization: the process of integration among countries around the world with a vision of a single market entity:

Social Economic Political Technological Cultural

• Internationalization: the process of a business crossing national and cultural borders.

Globalization: Pros and Cons

• Benefits of Globalization: wealth, jobs, technology, lower prices.

• Criticisms of Globalization:

off-shoring of business service jobs to lower-wage countries;

growing trade deficits; slow wage growth; environmental and social impacts.pro con

Global and Regional Integration:

• Global Agreements:

World Trade Organization (WTO)

(General Agreement on Tariffs and Trade

(GATT))

• Regional Agreements:

North American Free Trade Agreement (NAFTA)

U.S.-Central American Free Trade Agreement (CAFTA)

European Union (EU)

Association of Southeast Asian Nations (ASEAN)

Free Trade Agreement of the Americas (FTAA)

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1. Define the four basic predispositions MNCs have toward their international operations.

Four distinct predispositions toward doing things in a particular way:

1. Ethnocentric

2. Polycentric

3. Regio-centric

4. Geocentric strategic predisposition

• Ethnocentric predisposition

– A nationalistic philosophy of management whereby the values and interests of the parent company guide strategic decisions.

• Polycentric predisposition

– A philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates.

• Regio-centric predisposition

– A philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis.

• Geocentric predisposition

– A philosophy of management whereby the company tries to integrate a global systems approach to decision making.

• Question In what way are parochialism and simplification barriers to effective cross-cultural management? In each case, give an example.

Cross-Cultural Differences and Similarities

• Parochialism and Simplification

– Parochialism: view world through own eyes and perspectives

– Simplification: exhibit same orientation toward different cultural groups

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• Similarities across cultures:

– Not possible to do business same way in every global location

– Procedures and strategies that work well at home can’t be adopted overseas without modifications

– Some similarities have been found

• Russia and U.S. (for example)

– Traditional management

– Communication

– Human resources

– Networking activities

– OB Mod

• Differences across cultures

– Far more differences than similarities found in cross-cultural research

– Wages, compensation, pay equity, maternity leave

– Importance of criteria used in evaluation of employees

1. In what way do formalization, specialization, and centralization have an impact on MNC organization structures?

Organizational Characteristicsof MNCs

• Formalization: use of defined structures and systems in decision making, communicating, and controlling

• Specialization: Assign individuals to specific, well-defined tasks

• Centralization: Important decisions are made at the top

2. Which cultures are more likely to focus on external controls? Which cultures would consider direct controls more important than indirect?

• Internal and external perspectives of control – one is often given more attention than the other.

• External...
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