Chapter 7: Global Management P a g e | 14
Business majors who speak no foreign languages have the lowest worldmindedness scores,
whereas other majors who speak two or more languages have the highest worldmindedness
scores. Whatever major, speaking another language increases worldmindedness.
Worldmindedness by Major and Gender Average WM Score
Male
Finance 105.35
Accounting 93.78
Marketing 113.80
General 115.22
Female
Male finance and accounting majors have the lowest worldmindedness scores. Female finance and
general majors have the highest worldmindedness scores. Except marketing majors, females have higher
worldmindedness scores than males.
Your worldmindedness score is not a fixed number. Several activities can help you improve your score,
but to do so, youll need to develop a plan, such as the one that follows.
Step 3: Develop a plan to increase your global managerial potential.
People dont change from being nationminded to worldminded overnight. Below youll find the outlines
of a plan to increase your worldmindedness. You need to fill in the details to make it work. This plan is
based on foreign languages, living overseas, global news and television, and your openness to the
different cultural experiences available right where you live!
3A. Language. Research shows that students who speak multiple languages have higher scores
3B. Living overseas. Develop a plan to study overseas. List the facts for two different overseas study
programs available at your university or another university. Be sure to specify how long the program
lasts, whether you would receive language training, where you would live, the activities in which you
would participate, and any other important details.
3C. Global news and television. Another way to increase your worldmindedness is to increase the
diversity of your news sources. Most Americans get their news from local TV and radio or from the major
3D. Local cultural experiences. Many American students wrongly assume that they have to travel
overseas to gain exposure to foreign cultures. Fortunately, many American cities and universities are rich
in such experiences. Ethnic neighborhoods, restaurants, festivals, foreign films, and art displays, along
Chapter 7: Global Management P a g e | 15
Management Workplace
Management Workplace videos can support several in-class uses. In most cases you can build an entire
50-minute class around them. Alternatively, they can provide a springboard into a group lesson plan. The
Management Workplace video for Chapter 7 would be a nice companion to your introduction to the
course on the first day teaching this chapter.
VIDEO: HOLDEN OUTERWEAR
Managing in a Global Environment
Summary:
Although an American brand, Holden apparel is made in China. The company would like to manufacture
in the United States, but government regulations, labor costs, and high corporate tax rates are too heavy a
burden. Availability of materials is another factor, as many of the pieces that Holden needs, like buttons,
snaps, and fabrics, would still have to be brought in from Asia even if the garment were made
Discussion Questions:
1. Which stage of globalization characterizes Holden Outerwears international involvement?
The four stages of globalization include the domestic stage, the international stage, the
multinational stage, and the global (stateless) stage. Answers may vary, but Oregon-based
Holden lies mostly within the international stage of corporate international development. Factors
2. Identify Holdens primary approach to entering the international market. What are the benefits of
this entry strategy?
For small businesses that want to go global, exporting, global outsourcing, and licensing
Chapter 7: Global Management P a g e | 16
3. What are the challenges of international management for leaders at Holden?
While the four management functions of planning, organizing, leading, and controlling are the
same whether a company operates domestically or internationally, managers experience greater
challenges and risks when performing functions in an international setting. In the video, Mikey
Management Workplace Video Quiz
Students are able to take the following video quiz on CourseMate. The video is broken into segments, and
each segment has related questions to make sure students understand how the clip connects to the chapter
concepts.
Video Segment 1
Video segment title Managing in a Global Environment
Start time (in sec) 0:00
Stop time (in sec) 2:31
Quiz Question 1 Which globalization hotspot has Holden selected to help produce its
Portland, Oregon-based snowboarding apparel?
a. India
b. Brazil
c. China
d. Mexico
Correct option c: China
Feedback China is the location of Holdens suppliers and contractors.
Quiz Question 2 For Holden Outerwear, managing business internationally delivers all the
following advantages except:
a. Low cost materials
Quiz Question 3 The benefits Holden gains by outsourcing the manufacture of its garments
overseas must be weighed against:
a. Legal and political risks
b. Limited control over international manufacturing partners
c. Cultural and communication barriers
d. All of these
Correct option d: All of these
Feedback All of the responses are factors that must be considered in doing global
business.
Video Segment 2
Video segment title Managing in a Global Environment
Start time (in sec) 2:31
Stop time (in sec) 4:04
Quiz Question 1 Holden sells the same line of clothes in North America, Europe, Japan, and
Korea. This model of doing global business is known as:
a. Local adaptation
b. International commerce
Quiz Question 2 Which of the following forms of global business should Holden not use if
it wants to maximize delivery speed?
a. Exporting
b. Cooperative contracts
c. Franchise
d. Joint venture
Correct option a: Exporting
Feedback A significant disadvantage of exporting is the cost and speed of
transportation.
Quiz Question 3 Which of the following developments in global trade has the potential to
negatively impact Holdens international business?
Chapter 7: Global Management P a g e | 18
Video Segment 3
Video segment title Managing in a Global Environment
Start time (in sec) 4:04
Stop time (in sec) 5:18
Quiz Question 1 The primary criterion for Holdens decision to create a consolidated
shipping facility in China was:
a. Availability of a quality work force
b. Access to rare resources
c. Government subsidies
d. More efficiency in shipping
Correct option d: More efficiency in shipping
Feedback Holden created the new shipping facility so that it could reduce the number
of ships it sent from China.
Quiz Question 2 Holden must deal with customs laws in several countries. Therefore, it
faces:
a. Political uncertainty
b. Policy uncertainty
Quiz Question 3 If Holden needs maximum control over the manufacturing and shipping of
its China-produced garments, it must adopt the following international
strategy:
a. Outsource to Chinese firms
b. License Chinese firms to manufacture and sell Holden garments
c. Partner with Chinese firms to manufacture and sell Holden garments
Additional Assignments and Activities
Review Questions
1. What is global business?
Business is the buying and selling of goods or services. Buying this textbook was a business
transaction. So was selling your first car. So was getting paid for babysitting or for mowing lawns.
Chapter 7: Global Management P a g e | 19
2. Describe the impact of global business as it relates to direct foreign investment.
Global business affects the United States in two ways: through direct foreign investment in the United
3. List and define the barriers governments erect to control trade.
A tariff is a direct tax on imported goods. It creates a trade barrier by making imported goods more
expensive than domestically produced goods. The five non-tariff barriers are:
Quotas: limit on the number or volume of imported products.
Voluntary export restraints: voluntarily imposed limits on the number or volume of products
4. Identify the major trade agreements that govern global trade.
GATT is the General Agreement on Tariffs and Trade that many countries have signed to increase the
ease of selling products and services around the world. GATT promotes global trade by:
Promising to cut tariffs worldwide by 40 percent by 2005;
Eliminating tariffs in ten specific industries;
Putting stricter limits on government subsidies;
Protecting intellectual property rights;
Sending trade disputes to the arbitration panels of the World Trade Organization (WTO).
Starting with the signing of the Maastricht Treaty in 1992, the European Union has changed trade
tremendously among member nations. First, all tariffs and other nontariff barriers have been lifted,
NAFTA the North American Free Trade Agreement is the free trade area of Canada, Mexico,
and the United States. It has changed trade tremendously by eliminating most tariff and nontariff
barriers among the member nations (the last set of barriers was eliminated by 2003). While not nearly
as developed as the European Union, NAFTA has the potential of blossoming into a larger trade
agreement if it turns into the FTAA the Free Trade Agreement of the Americas which will
ASEAN is the Association of Southeast Asian Nations and consists of the following countries:
Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,
5. What are the tradeoffs between global consistency and local adaptation?
Global consistency and local adaptation are two optional strategies that companies can use when they
6. Identify the stages in the phase model of globalization and explain the level of risk inherent in each.
The phase model of globalization says that as companies move from a domestic to a global
orientation, they use these organizational forms in sequence: exporting, cooperative contracts
(licensing and franchising), strategic alliances, and wholly owned affiliates. At each step, the
7. What is the relationship between the phase model of globalization and global new ventures?
8. What should companies consider when choosing a global location for doing business?
Chapter 7: Global Management P a g e | 21
9. Describe Hofstedes dimensions of national culture.
Hofstedes cultural dimensions are:
Power distance: the extent to which people in a country accept that power is distributed
unequally in society and organizations.
10. How can companies prepare their managers to be successful expatriate managers?
Companies wanting to send their managers overseas should provide both language and cross-cultural
training to both the managers themselves and to their families (spouse and children). There are many
types of training programs. They are:
Documentary training focuses on identifying the specific differences between the home
country and the host country to which the manager will be sent.
Chapter 7: Global Management P a g e | 22
Management Team Decision
A DIFFERENT WAY TO GO GLOBAL
Purpose
The purpose of this scenario is to have students consider the different methods for doing business in a
global market.
Setting It Up
You can introduce the case to students by asking them how a company could use charity to increase its
business, and whether doing so is an ethical way of doing business.
Purpose
Exporting, cooperative contracts, licensing, franchising, joint ventures, wholly owned affiliates, global
new ventures  as a management team wanting to take your business to the next level, you have a
smorgasbord of options available to you. But in addition to these traditional options, there is another
angle you can take, one that is becoming increasingly popular among start-up companies like yours:
social entrepreneurship. Social entrepreneurs use business skills to solve social problems. You and the
As your team discusses how and where to go global, you think about the problems youd like to
address and you look to role models to help you brainstorm and plan. You read about how Pfizera
pharmaceutical giant, not a start-upstarted a program to offer free medicines to recently unemployed
Americans. Other companies are doing the same in Africa. Peets Coffee & Tea has been working
recently to develop the economic well-being of coffee farmers in Kenya, Rwanda, Tanzania, and Uganda
by teaching them to grow better-quality coffee that Peets can market to its customers in coffee-loving
developed economies.
As much as your team wants to help others in need, you also recognize that doing good cant
come at the expense of the bottom line. In fact, Peets Coffees effort is currently run by a nonprofit and
Sources:
Chapter 7: Global Management P a g e | 23
Questions
1. What are the advantages of social entrepreneurship as a way to approach doing business in
developing economies outside the United States? What are the disadvantages?
Social entrepreneurship presents both advantages and disadvantages to organizations. First, the
advantages: By showing that they care about social issues, organizations build customer loyalty by
showing that they care about the same social issues that the customer cares about. Additionally, this
type of identification can help attract and retain new customers who are concerned with an
2. How might you combine social entrepreneurship with traditional options for going global? Can
establishing a multinational corporation or a joint venture serve the principles of social
entrepreneurship? Would some options lend themselves better to social entrepreneurship than others?
What might such a business venture look like?
Traditional methods of doing global business include exporting, cooperative contracts, and strategic
alliances. Exporting occurs when companies produce products at home and sell them abroad. The key
advantage to exporting is that it makes the organization less dependent on sales in its home country
Chapter 7: Global Management P a g e | 24
Strategic alliances involve the combination of two organizations resources, costs, risks,
technology, and people. A strategic alliance can take the form of a joint venture, in which two
existing companies collaborate to form a third company. The two founding companies remain intact
and unchanged, except that together they now own the newly created joint venture. Joint ventures
The issue of how these structures relate to social entrepreneurship depends in large part on the
type of social program that students envision for their organization. On a superficial level, an
organization does not have to establish a foreign office or branch to address social concerns; it can,
like Pfizer does, simply use some of its resources (profits) to meet a social need. In that case, any of
Develop Your Career Potential
BUILDING CULTURAL BRIDGES INSIDE AMERICAN BUSINESS
All savvy managers seem to be familiar with the Japanese custom of exchanging business cards, the
French custom of the two-hour lunch, and the South American custom of getting to know potential
business partners on a personal level before discussing business. But how many managers are aware of
the cultural differences that exist within the United States? For example, how many Manhattanites know
that in some parts of the country, businesses close down on the first day of hunting season?
Political rhetoric often refers to two Americas and the differences between the heartland and the
coasts, but many other oppositional geographic pairings also represent different sets of cultural norms.
Some other obvious examples are NorthSouth, EastWest, and the more general urbanrural. How many
businesspeople know how to be effective in all these American cultures? Much has been made of the
political and cultural implications of these divides, but not enough attention has been paid to what it
means for business.
Cultural differences were addressed in Chapter 2 (Organizational Environments and Cultures) and
Chapter 7: Global Management P a g e | 25
Activities
1. Think of yourself as a member of a particular geographical cultural group. (In the United States, we
are conditioned to think of cultural groups based on ethnicity and race, but for this exercise, think in
terms of location.) What are the characteristics of this group?
2. Once you have an outline of your geographic culture, try to identify the group most opposite to your
Additional Activities
Out-of-Class Project: Regional Trade Agreements. Divide the class into groups and assign one
regional trade agreement to each group. Each group should thoroughly research the trade agreement by
using the organizations website as well as any recent articles published about the organization. The
groups should prepare a slide presentation for the class to include the following: 1) member nations of the
trade group; 2) mission and/or major goals of the trade group; 3) key issues that the trade group currently
faces; and 4) upcoming events.
In-Class Activity: WTO Debate. The World Trade Organization has been the subject of controversy
in recent years, inciting riots in cities such as Seattle. Divide the class into two groups (or four groups if
the class is especially large). One side should be pro-WTO and should carefully study the goals and issues
surrounding the organization. The other side should be anti-WTO and should study the negative effects of
globalization. The instructor should moderate the debates and debrief on the issues raised on both sides.
Supplement to WTO Debate. Go to The WTO  In brief
Passports and International Travel. Poll your students to find out how many have a passport. Of
those who raise their hands, ask how many have traveled to a foreign country. For those students without
Chapter 7: Global Management P a g e | 26
Money and International Travel. As a companion exercise to Passports and International Travel
ask students to think about and put together some recommendations related to the following questions
about money: 1) How would you carry money on an international trip? 2) Besides exchange rates, what
other concerns about carrying money in a foreign country can you think of? 3) How would you handle
your finances if you were on a long-term stay in a foreign countrywould you convert to the host
countrys money system, or would you keep converting to and from your home currency? Again, for this
portion, instruct students without international travel experience to approach the activity as a fact-finding
exercise, and students with international travel experience to approach it as writing an entry in a travel
guidebook.
Cross-Cultural Training. Browse the Internet for different cross-cultural training packages that are
for sale. Select five good packages and provide a summary of what the training encompasses. Would you
buy this package for your companys training program? Why or why not?
Language Training. Assign students to audit an introductory foreign language class on campus.