Chap 5 - Midterm Review on Global Management and Business Strategies môn Principles of Management | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

1. Management and Globalization:
Global economy: in which resource supplies, product markets, and business competition are
worldwide rather than local or national in scope
 Globalization: is the growing interdependence among elements of the global economy
Global management: involves managing businesses and organizations with interest in more
Global manager is culturally aware and informed on international affairs (how they issue
opportunities, and challenges among countries) Why companies go globally?
+ An international business conducts for-profit transactions of goods and services across national boundaries. Example:
+ Nike does no domestic manufacturing. All of its products are made from sources abroad
+ New Balance makes use of global suppliers and licensing its products internationally, and
produces at factories in the United States.
è Both are doing international businesses for these common reasons:
+ Profits—Gain profits through expanded operations.
+ Customers—Enter new markets to gain new customers.
+ Suppliers—Get access to materials, products, and services.
+ Labor—Get access to lower-cost talented workers.
+ Capital—Tap a larger pool of financial resources.
+ Risk—Spread assets among multiple countries. How company go global?
+ There would be 2 approaches:
Market-entry strategies that involve the sale of goods or services to foreign markets without expensive investments
Direct investment strategies require major capital commitments, create rights of ownership
and control over operations in the foreign country
+ Market entry strategies ( Chiến lược thâm nhập thị trường) are the first steps in globalizing an organization:
Global sourcing: the process of purchasing materials, manufacturing components, or locating
business services around the world. ( buy material/service from around the world to make product)
Exporting: selling locally made products in foreign markets. (sell product/service from local to foreign countries)
Importing: buying foreign-made products and selling them in domestic markets. ( buy
product/service from foreign to local)
Licensing agreement: whereby foreign firms pay a fee for rights to make or sell another
company’s products in a specified region. ( relationship between licensor and licensee, sell
product with trade mark, every products they sell have to pay fee for licensor)
Example: An Phuoc sell product with the trademark from Pierre Cardin
Franchising: is a form of licensing in which the foreign firm buys the rights to use another’s
name and operating methods in its home country. ( franchiser has more power than
licensor. Franchisee must obey the rules, control by franchiser) Example: Lotteria, KFC Franchising Licensing
Chuẩn qui trình thống nhất được áp
Chỉ chú trọng đến việc bán được càng
dụng để đảm bảo chất lượng đầu ra đồng
nhiều sản phẩm càng tốt đều
è Không chú trọng chất lượng
è Hướng đến kiểm soát chất lượng
+ Insourcing refers to local job creation that results from foreign direct investment (FDI) + Types of insourcing:
oJoint venture ( công ty liên doanh): operate in a foreign country through co-ownership by foreign and local partners
+ They pool resources, share risks, and jointly operate the new business. It may exists in
the form: foreign partner buys part ownership in an existing local firm or they start up together.
+ Example: Honda VN with 3 partners
oStrategic alliances (liên minh chiến lược): a partnership in which foreign and
domestic firms share resources and knowledge for mutual gains è a form of combination
oAdv: through cooperation things they couldn’t do or would have a hard time doing alone.
For local, may bring access to technology and opportunities to learn new skills.
For outside partner, may bring access to new markets and the expert assistance of locals
that understand them and the local business context.
oDisadv: + Goals aren’t match.
+ Dishonesty and loss of business secrets.
oForeign subsidiaries: ( cong ty con) local operation completely owned by a foreign firm è is an opposite to joint ventures
Example: Unilever is a foreign subsidiary, Samsung in VN, coca cola in VN
a. GLOBAL BUSINESS ENVIRONMENT
Legal and Political Systems
+ Some of the biggest risk in international business comes from differences in legal and
political systems. Global firms are expected to abide by local laws, some of which may be unfamiliar.
+ Political risk—the potential loss in value of an investment in or managerial control
over a foreign asset because of instability and political changes in the host country. The
major threats of political risk today come from terrorism, civil wars, armed conflicts, and
new government systems and policies.
è Most global firms use a planning technique called political-risk analysis to forecast the
probability of disruptive events that can threaten the security of a foreign investment.
Trade Agreements and Trade Barriers
+ When international businesses believe they are being mistreated in foreign countries,
or when local companies believe foreign competitors are disadvantaging them, their
respective governments might take the cases to the World Trade Organization.
+ Yet trade barriers are still common. They include
Tariffs, which are taxes that governments impose on imports.
Nontariff barriers that discourage imports in nontax ways such as quotas, import restrictions.
Protectionism that give favorable treatment to domestic businesses.
èThe purpose for tariffs and protectionism is to protect local firms from foreign
competition and save jobs for local workers.
Regional Economic Alliances: nations agree to work together for economic gains. Global Businesses + Host-Country Issues
Potential host-country costs are: complaints that global corporations extract excessive
profits, dominate the local economy, interfere with the local government, do not respect
local customs and laws, fail to help domestic firms develop, hire the most talented of local
personnel, and fail to transfer their most advanced technologies. + Home-Country Issues
Global corporations can also get into trouble at home in the countries where they were
founded and where their headquarters are located.
Even as many global firms try to operate as transnationals, home-country governments and
citizens still tend to identify them with local and national interests.
Whenever a global business cuts back home-country jobs, or closes a domestic operation in
order to shift work to lower-cost international destinations, the loss is controversial.
Corporate decision makers are likely to be called upon by government and community
leaders to reconsider and give priority to domestic social responsibilities.
Ethics Challenges for Global Businesses
+ Corruption: occurs when people engage in illegal practices to further their personal business interests. + Child Labor and Sweatshops:
Child labor—the employment of children to perform work otherwise done by adults, a major
ethics issue for global businesses as they follow the world’s low-cost manufacturing from country to country
Sweatshops—business operations that employ workers at low wages for long hours in poor working conditions
3. CULTURE AND GLOBAL DIVERSITY
Culture is the shared set of beliefs, values, and patterns of behavior common to a group of people.
Culture shock is the confusion and discomfort a person experiences when in an unfamiliar culture.
Ethnocentrism is a tendency to view one’s culture as superior to that of others.
Cultural intelligence is the ability to adapt and adjust to new cultures.
The silent language of culture:
+ Context: cultures differ in their use of language in communication.
Most communication in low-context cultures takes place via the written or spoken word: say
or write what they mean and mean what they say.
In high-context cultures what is said or written may convey only part of the real message.
The rest must be interpreted from the situation, body language, physical setÝng, and even past relationships. + Time
People in monochronic cultures often do one thing at a time. It is common in the United
States, for example, to schedule meetings with specific people and focus on a specific agenda
Members of polychronic cultures are more flexible toward time. They often try to work on
many different things at once, perhaps not in any particular order, and give in to distractions and interruptions + Space
Proxemics, the study of how people use space to communicate.
Tight and Loose Cultures
+ The concept of cultural tightness-looseness:
(1) the strength of norms that govern social behavior, and
(2) the tolerance that exists for any deviations from the norms.
Values and National Cultures
+ 4 cultural dimensions: power distance, uncertainty avoidance, individualism– collectivism, and masculinity
Power distance is the degree to which a society accepts unequal distribution of power. /
accept the difference in power
Individualism–collectivism ( chủ nghĩa cá nhân - chủ nghĩa tập thể) is the degree to which a
society emphasizes individuals and their self-interests.
Uncertainty avoidance is the degree to which a society tolerates risk and uncertainty. / sth u not sure
Masculinity ( success achievement) - femininity ( the relationship with each other) is the
degree to which a society values assertiveness and materialism.
Time orientation is the degree to which a society emphasizes short-term or long-term
goals. / prefer the time, in some countries the time as accurate as possible.
Intercultural competencies are skills and personal characteristics that help us be successful in cross-cultural situations.