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Management
Chapter Six
McGraw-Hill/I rwin Copyright 2013 by The McGraw-Hill Companies, I nc. All rights reserved.
Learning Objectives
LO1 Discuss what integration of the global
economy means for individual companies and
their managers
LO2 Describe how the world economy is becoming
more integrated than ever before
LO3 Define the strategies organizations use to
compete in the global marketplace
LO4 Compare the various entry modes
organizations use to enter overseas markets
6-2
Learning Objectives (cont.)
LO5 Explain how companies can approach
the task of staffing overseas operations
LO6 Summarize the skills and knowledge
managers need to manage globally.
LO7 Identify ways in which cultural
differences across countries influence
management
6-3
The Role of Outsourcing
Outsourcing
Contracting with an
outside provider to
produce one or more
of an organizations
goods or services.
Offshoring
Moving work to other
countries.
6-4
Factors to Consider for Offshoring
What is the competitive advantage of the
products they offer?
Is the business in its early stages?
Can production savings be achieved
locally?
Can the entire supply chain be improved?
6-5
The Global Economy
6-6
Figure 6.4
European Unification
Europe is
integrating
economically to
form the biggest
market in the world
Certain structural
issues within
Europe need to be
corrected for the
EU to function
effectively.
6-7
The Americas
North American Free Trade Agreement
(NAFTA)
An economic pact that combined the
economies of the United States, Canada,
and Mexico into the worlds largest trading
bloc
6-8
Organizational Models
6-9
Figure 6.6
Entry Mode
Franchising
the company sells limited rights to use its
brand name to franchisees in return for a
lump-sum payment and a share of the
franchisees profits.
6-10
Managing across Borders
Expatriates
Parent-company
nationals who are
sent to work at a
foreign subsidiary
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Understanding Cultural Issues
Ethnocentrism
The tendency to judge
others by the
standards of ones
group or culture,
which are seen as
superior
Culture shock
The disorientation and
stress associated with
being in a foreign
environment.
6-12
Understanding Cultural Issues
Power distance
the extent to which a
society accepts the
fact that power in
organizations is
distributed unequally
Individualism/
collectivism
the extent to which
people act on their
own or as a part of a
group.
6-13
Understanding Cultural Issues
Uncertainty
avoidance
the extent to which
people in a society feel
threatened by
uncertain and
ambiguous situations.
Masculinity/
femininity
the extent to which a
society values quantity
of life over quality of
life
6-14
Understanding Cultural Issues
Inpatriate
A foreign national
brought in to work at
the parent company.
6-15