International management
Applies mgt concepts/ techniques in a multinational environment; adapting mgt practices to diff eco, poli, & cultural contexts
Multinational corporation (MNC)
Operations in more than 1 country; int'l sales; nationality mix among managers and owners
Globalization
Process of social, poli, eco, cultural and tech integration and removal of barriers among countries
Offshoring
Process by which companies undertake activities at offshore locations instead of their country of origin
Outsourcing
(Sub)Contracting activities to external locations instead of their country of origin
Globalization PROS
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Globalization CONS
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Regional integration
Implementation of a multitude of eco and/or poli steps by members states to increase their global competitiveness, including preferential trade access
Stages of regional integration
Free trade area --> customs union --> common market --> economic union
Market economy
-private enterprises reserve the right to own property
-balance between supply/demand determines prices
-state simply supports competition and efficient prices
-competition's encouraged, monopolies prohibited
Command economy
-gov't has explicit control over the price and supply of good/service
-supply/demand determined by theoretical advancements of society
-businesses are owned by the state
-usually characterized by inefficiencies
Mixed economy
-certain sectors are more subjected to gov't planning
-regulations concerning min wage standards, social security, environmental protection, etc.
Individualism
People should be free to pursue Eco and poli endeavors w/out constraint
Similar to capitalism and connected to a free market society
-private property more successful, productive, and progressive than communal property
-Betterment of society related to le
Collectivism
Views the needs/goals of society as a whole more important than that of the individual; No one rigid form of collectivism because societal goals differ greatly among cultures
Socialism
moderate form of collectivism in which there is gov't ownership of institutions, and profit is not the ultimate goal
-Democratic socialism is the more moderate form
-communism's an extreme form of socialism
Democracy
System in which gov't is controlled by citizens directly or through elections; cannot function w/out at least. 2-party system
demo <----> totalitarianism
Totalitarianism
Only one representative party exhibits control over every facet of political and human life; power maintained by suppression of opposition
-Dominant ideals include media censorship, political repression, denial of rights and civil liberties
Global foundations of law
Common law
Civil/Code law
Islamic law
Socialist law
Common law
-origins in English law
-Developed by judges through decisions in court (precedent-based)
Civil/Code law
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Islamic law
Derived from interpretation of Qur'an and teachings of Prophet Muhammad
Socialist law
Origins in Marxist socialist system; continues to influence regulations in former communist countries
world trade organization
administering trade agreements; forum trade negotiations; handling disputes; monitoring technical assistance and training for developing countries; cooperation w/other int'l organizations
NAFTA
-1994
eliminates tariffs and import/export quotas; opening of gov't procurement markets; increasing opportunities for FDI; ease of travel; removal of restrictions on agricultural products, auto parts, and energy good
shifting landscape
due to:
-economic integration and rapid growth of emerging markets
-economic potential of emerging markets
foreign direct investment
FDI
investment in property, plant, or equipment in another country
political systems
greatly influences how people conduct business; they're evaluated along: ideologies and rights of citizens
democracy <-->totalitarianism
Basic principles of international law
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principle of sovereignty
governments have the right to rule themselves as they see fit; 1 country's court system cannot be used to impose penalties in another country unless that country agrees
Nationality principle
Every country has jurisdiction over its citizens no matter where they are located
Territoriality principle
Every nation has the right of jurisdiction within its legal territory
Protective principle
Every country has jurisdiction over the behavior that adversely affects its national security, even if that conduct occurred outside the country
Act of state doctrine
A jurisdictional principle of international law that holds that all acts of other governments are considered to be valid by U.S. courts, even if such acts are inappropriate under U.S. law.
Doctrine of comity
A jurisdictional principle of international law that holds that there must be mutual respect for the laws, institutions, and governments of other countries in the matter of jurisdiction over their own citizens
Forum for hearing and settling disputes
U.S. courts can dismiss cases brought before them by foreigners; but, they're bound to examine issues like:
-where the plaintiffs are located
-where the evidence must be gathered
-where property to be used in restitution is located
Treatment and rights of aliens
Countries have the legal right to refuse admission of foreign citizens and to impose special restrictions on their conduct, their right of travel, where they can stay, and what business they may conduct.
Nations can also deport aliens
Ethics
Study of morality and standards of conduct.
Morality
codes of conduct put forward by:
-a society or some other group (e.g., religion)
-accepted by an individual for her own behavior.
Eastern philosophy
-Views the individual as a part of rather than separate from the environment/context.
-Decisions consider impacts not only on humans but also on the broader environment (social, physical, metaphysical, etc).
-Decisions are heavily grounded in relationship
Aristotelian
virtue ethics
-Focus on an individual
-A good individual does what is right for the right reasons
---Virtue theory explains what character traits and what desires are good
Utilitarianism
-Greatest good for the greatest number of people under a given set of constraints.
-An act is morally correct if it maximizes utility
-Attractive for business decision making in Western countries since it's logic is similar to an economic calculations of
Kantian philosophical traditions
Individuals have responsibilities based on a core set of general moral rules, or maxims.
Corporate Social Responsibility
CSR
Involves the voluntary actions of a firm to benefit society beyond requirements of law and direct interests of firm; closely related to ethics
Nongovernmental organization
NGO
Private, not-for-profit organization; seeks to serve society's interests by focusing on social, poli, and eco issues
Fair Trade
An organized social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability
Sustainability
Development that meets humanity's needs without harming future generations
Corruption
Misuse of power and authority in self or organizational interests at the expense of others; bribes, extortion, nepotism, cronyism, etc.
Foreign Corrupt Practices Act
makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions
Corporate governance
system by which business corporations are directed and controlled
-Specifies distribution of rights/responsibilities among participants in the corporation; differs among countries
-spells out rules/procedures for making decisions on corporate affairs
Culture
Acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior.
characteristics of culture
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culture's components
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Values
-Basic convictions that people have about: right and wrong, good and bad, and (UN)important
-Learned from culture in which the individual grows up
-Differences in cultural values may result in varying management practices.
Hofstede's Cultural Value Dimensions
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Power Distance
The extent to which less powerful members accept that power is distributed unequally.
Uncertainty avoidance
The extent to which people feel threatened by ambiguous situations; create beliefs/institutions to avoid such situations
Individualism vs. Collectivism
Nature of the relationships between the individual and the group
Masculinity vs. Femininity
-Masculinity: success, money, and things are dominant; earnings, advancement, challenge, wealth
-Femininity: caring for others and quality of life are dominant; cooperation, friendly atmosphere, employment security
Time Orientation
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Indulgence
trait related to relative happiness based on instant gratification
Restraint
a cultural characteristic based on regulating and controlling behavior according to social norms
Trompenaars's Dimensions
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individualism
people regard themselves as individuals; stress personal and individual matters; assume great personal responsibility
Communitarianism
people regard themselves as part of a group; Value group-related issues; committee decisions; joint responsibility
Universalism
belief that ideas/practices can be applied everywhere; formal rules, close adherence to business contracts
Particularism
belief that circumstances dictate how ideas/practices apply; legal contracts often modified, the way deals executed change as people get to know each other
neutral
culture in which emotions are held in check; people act stoically and maintain composure
emotional
emotions are expressed openly and naturally; people smile a lot, talk loudly, greet each other with enthusiasm
Specific
large public space shared with others and small private space guarded closely; strong separation of work and personal life
Diffuse
public and private spaces have similar size, public space guarded because shared with private space; work/private life closely linked
Achievement culture
people accorded status based on how well they perform functions; High status to high achievers
Ascription culture
status based on who or what a person is; based on age, gender, social connections
Sequential Time
only one activity at a time, appointments kept strictly, follow plans as laid out
Synchronous Time
multitask, appointments are approximate and easily changed, schedules subordinate to relationships
Inner-directed Environment
people believe in controlling outcomes; Dominant (sometimes aggressive) attitude toward environment
Outer-directed Environment
people believe in letting things take their course; "Go with the flow," flexible attitude, willingness to compromise and maintain harmony
GLOBE
Global
Leadership and Organizational
Behavior
Effectiveness
extends and integrates previous analyses of cultural attributes and variables
The Dimensions of the GLOBE Project
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strategic predispositions
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Ethnocentric predisposition
A nationalistic philosophy of management whereby the values and interests of the parent company guide strategic decisions; "Our way is the right way
Polycentric predisposition
A philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates; their way is the right way
Regiocentric predisposition
A philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis; what's best is what is effective in this region, regardless of origin
Geocentric predisposition
A philosophy of management whereby the company tries to integrate a global systems approach to decision making.
Parochialism
the tendency to view the world through one's own eyes and perspectives
Simplification
the process of exhibiting the same orientation toward different cultural groups
Organizational culture
Shared values and beliefs enabling members to understand their roles and the norms of the organization
Organizational Culture Characteristics
-Observed behavioral regularities
-Norms
-Dominant values
-Philosophy of how employees/customers should be treated
-Rules that dictate do's and don'ts
-Organizational climate or atmosphere
National cultural
values of employees may significantly impact their organizational performance
Cultural values
employees bring to the workplace are not easily changed by the organization
Family Culture
Strong emphasis on hierarchy and orientation to persons
Eiffel Tower Culture
Strong emphasis on hierarchy and orientation to task
Guided Missile Culture
Strong emphasis on equality in workplace and orientation to the task
Incubator Culture
Strong emphasis on equality and personal orientation
Surface-level diversity
age, gender, ethnicity, functional background, and organizational tenure;
Deep-level diversity
attitudes, values, personality, cognitive abilities;
Diversity Faultline
divides a group's members on the basis of one or more attributes; become stronger as more attributes align in the same way
Advantages of Diversity
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