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
• 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)
1. Define the four basic predispositions MNCs have toward their international operations.
Four distinct predispositions toward doing things in a particular way:
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
• 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
– 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.
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