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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,
Strategic alliances involve the combination of two organizations’ resources, costs, risks,
technology and people. A strategic alliance can take them 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
provide for a relatively quick way of entering a foreign market without the pressure of tariffs. Further,
they reduce the risk of entry, since both companies have to bear the costs and risks of business.
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
the traditional methods of going global would allow a company to be social entrepreneurs. On the
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Practice Being a Manager
HOMETOWN CULTURAL
Exercise Overview and Objective
This exercise uses students’ familiarity with their hometown culture to examine the role of culture in
global business, particularly in the situation of market entry. The objective is to help students recognize
successful market entry by a multinational corporation.
Preparation
Students should complete Step 1 (1-2 page paper on the major cultural features of their hometown) prior
to the in-class discussion of this exercise. It is important to remind all students that their audience for
these papers is the management of a company outside their own country of origin. For example, a
student whose hometown is Fayetteville, Arkansas, might write her paper to an audience of French
managers. A student whose hometown is Sao Paulo, Brazil, might write his paper to an audience of US
managers. Students should assume that their audience has never been to their hometown, and that they
In-Class Use
Students should be organized in small discussion groups (3-5 students). Each group should begin with
Step 3, taking turns to introduce themselves, identifying their hometown (and neighborhood/borough as
appropriate), and sharing some of the highlights from their “hometown” paper. Encourage students to
listen carefully for similarities and differences, ask questions, and make notes.
Step 4 includes the following two questions:
1. “To what degree might the company use consistent (same) approach in entering your
hometowns?” (Exercise, Step 4)
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When all groups have completed Step 5, you may begin the class discussion of the challenges of
entering global markets (including the consistency/adaptation issue). It is not necessary for the groups to
speak “as a group” in Step 6. The class discussion should operate at the individual level. You may want to
ask if any individual students found it particularly difficult to describe their “hometown culture.” Home
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
Source: A. Hanft, “Passport to America,” Inc., October 2004, 14.
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?
Reel to Real – Biz Flix
Because they are so short, the Biz Flix videos are best used to supplement your lesson plans. They are
designed to illustrate the content rather than convey all of the chapter concepts.
Video: Lost in Translation
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Segment Summary:
The 2003 film Lost in Translation based on Sofia Coppola’s Academy Award winning screenplay, stars
Discussion Questions from Text:
1. Imagine you have just arrived in Japan, and you are experiencing what Charlotte is for the first time.
Do you understand everything you see?
Students should attempt to explain some of the cultural differences found between the Japanese
culture and that of their country of origin. One source of misunderstanding in this clip is written
2. If you were managing a company that had operations in foreign countries, how important do you
think it would be to experience new places and learn about different cultures the way Charlotte does?
An expatriate is someone who lives and works outside his or her native country. For any expatriate, it
is extremely important to experience new places and learn about different cultures, as Charlotte does
3. How might it change the way you did business in those countries if you had actually been to them?
Visiting a country before doing business in that country is important because it allows a person to
4. Does Charlotte seem to be culturally sensitive or insensitive?
National culture is the set of shared values and beliefs that affects the perceptions, decisions, and
behavior of the people from a particular country. The first step in understanding culture is to
Additional Discussion Question:
1. Lost in Translation was filmed in 2003—over seven years ago. What differences would you expect to
find today in Tokyo?
One area of significance that students may make note of in this video clip is the absence of Western
language and business. The familiar logos and signs of famous multinational companies do not
Reel to Real – Management Workplace
Management Workplace videos can support several in-class uses. In most cases you can build an entire
Video: Holden Outerwear
Managing in a Global Environment
Summary:
Like so many other American brands, Holden apparel is made in China. While the company would like to
manufacture in the United States, 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
Discussion Questions from Text:
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
management, and manufacturing dispersed among many nationalities.
2. Identify Holden’s primary approach to entering the international market. What are the benefits of
this entry strategy?
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For small businesses that want to “go global,” exporting, global outsourcing, and licensing
represent low-cost ways of conducting business internationally. To reach global consumers and
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
Workplace Video Quiz
Video Segment 1
Video segment title
International Management
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?
Option a
India
Option b
Brazil
Option c
China
Option d
Mexico
Correct option
c: China
Feedback for option a
Feedback for option b
Feedback for option c
Feedback for option d
Quiz Question 2
For Holden Outerwear, managing business internationally delivers all the
following advantages except:
Option a
Low cost materials
Option b
Culture and language differences
Option c
Close contact with international fashion trends
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Option d
Dependable source of skilled labor
Correct option
b. Culture and language differences
Quiz Question 3
The benefits Holden gains by outsourcing the manufacture of its garments
overseas must be weighed against:
Option a
Legal and political risks
Option b
Limited control over international manufacturing partners
Option c
Cultural and communication barriers
Option d
All of these
Correct option
d: All of these
Video Segment 2
Video segment title
International Management
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:
Option a
Local adaptation
Option b
International commerce
Option d
Standard practices
products and operates with the same procedures in all of its locations.
and operates with the same procedures in all of its locations.
Feedback for option c
Incorrect. Global consistency means that a company sells the same
products and operates with the same procedures in all of its locations.
Feedback for option d
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Quiz Question 2
Which of the following forms of global business should Holden not use if
it wants to maximize delivery speed?
Option a
Exporting
Option b
Cooperative contracts
Option c
Franchise
Option d
Joint venture
Quiz Question 3
Which of the following developments in global trade has the potential to
negatively impact Holden’s international business?
Option a
North American Free Trade Agreement (NAFTA)
Option b
European Union (EU)
Option c
Protectionism
Option d
Association of Southeast Asian Nations (ASEAN)
Correct option
c: Protectionism
Feedback for option a
Incorrect. Protectionism is the use of trade barriers to protect domestic
companies from foreign competition.
Feedback for option b
Incorrect. Protectionism is the use of trade barriers to protect domestic
companies from foreign competition.
Feedback for option d
Incorrect. Protectionism is the use of trade barriers to protect domestic
Video Segment 3
Video segment title
International Management
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:
Option a
Availability of a quality work force
Option b
Access to rare resources
Option c
Government subsidies
Option d
More efficiency in shipping
Correct option
D: more efficiency in shipping
the number of ships it sent from China.
Correct option
a: exporting
Feedback for option a
Correct. A significant disadvantage of exporting is the cost and speed of
transportation.
Feedback for option b
Incorrect. A significant disadvantage of exporting is the cost and speed of
Feedback for option c
Incorrect. A significant disadvantage of exporting is the cost and speed of
Feedback for option d
Incorrect. A significant disadvantage of exporting is the cost and speed of
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Feedback for option c
Incorrect. Holden created the new shipping facility so that it could reduce
the number of ships it sent from China.
Feedback for option d
Correct. 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:
Option a
Political uncertainty
Option 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:
Option a
Outsource to Chinese firms
Option b
License Chinese firms to manufacture and sell Holden garments
Option c
Partner with Chinese firms to manufacture and sell Holden garments
Option d
Acquire Chinese firms to manufacture and sell Holden garments
Correct option
d: Acquire Chinese firms to manufacture and sell Holden garments
company receives all of the profits and has complete control over the
foreign facilities.
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.
Option c
Regulatory uncertainty
Option d
Commercial uncertainty
Correct option
b: policy uncertainty
Feedback for option a
Incorrect. Policy uncertainty refers to the risk associated with changes in
Feedback for option c
Incorrect. Policy uncertainty refers to the risk associated with changes in
laws.
Feedback for option d
Incorrect. Policy uncertainty refers to the risk associated with changes in
laws.
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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.
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;
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,
making trade totally free. Second, all member nations have a common external trade policy so that
nonmember nations are trading with an entire bloc of countries rather than with separate countries.
Third, people, capital, and equipment can freely cross EU borders, saving money and time. Fourth,
most of the EU members belong to a single economy, run by a centralized European bank and
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ASEAN is the Association of Southeast Asian Nations and consists of the following SE Asian
countries: Brunei, 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?
Evidence suggests, however, that some companies do not follow the phase model of globalization.
Some companies skip phases on their way to becoming more global and less domestic. Others don’t
8. What should companies consider when choosing a global location for doing business?
The first step in deciding where to take your company global is finding an attractive business climate.
Be sure to look for a growing market where consumers have strong purchasing power and foreign
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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
Additional Assignments and 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 Web site as well as any recent articles published about the organization. The
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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
globalization. The instructor should moderate the debates and debrief on the issues raised on both sides.
Supplement to “WTO Debate.” Go to the Web site of White House’s budget summary tables at
“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
international travel experience, you will need to approach this activity as a fact-finding exercise. Instruct
“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 money: “How would you
carry money on an international trip? Besides exchange rates, what other concerns about carrying money
“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 company’s training program? Why or why not?
“Language Training.” Assign students to audit an introductory foreign language class on campus.
Instruct students to attend a class on a language they do not speak. You may need to create a note that