BNAD 302 9/12/13 Lecture 5 Outline of Last Lecture I. The Organizations EnvironmentII. Defining Ethics and ValueIII. 4 Approaches to Deciding Ethical DilemmasIV. Social Responsibilities Required of a ManagerOutline of Current Lecture I. Globalization: The collapse of time and distanceII. The Successful International ManagerIII. How companies expand internationallyIV. International TradeV. The Importance of National CultureCurrent LectureI. Globalization: The collapse of time and distancea. Globalization: The trend of the world economy becoming a more interdependentsystemb. Global Village: the “shrinking” of time and space as air travel and the electronic media have made it much easier for the people of the globe to communicate with one anotherc. E-Commerce: The buying and selling of products and services through computer networksi. U.S. retail e-commerce sales were estimated at $48.2 billion in the thirdd. Global Economy: the increasing tendency of the economies of the world to interact with one another as one market instead of many national marketsi. Positive effect: more markets for American exportii. Negative effect: vast surplus funds from global investments flowed into U.S. that were invested badly in subprime mortgagese. Mini-firms operating worldwidei. Small companies can get started more easilyii. Small companies can maneuver fasterII. The Successful International ManagerThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.a. Ethnocentric managers: believe that their native country, culture, language, and behavior are superior to all othersb. Parochialism: narrow view in which people see things solely through their own viewc. Geocentric managers: accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effectived. Polycentric managers: take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alonee. Being an Effective Road Warriori. Lesson 1: Frequent travel may be needed because personal encounters are essentialii. Lesson 2: Travel may be global, but understanding must be localiii. Lesson 3: Frequent travel requires frequent adjustmentsIII. How companies expand internationallya. Global Outsourcing: using suppliers outside the U.S. to provide labor, goods, or servicesb. Importing: a company buys goods outside the country and resells them domesticallyc. Exporting: a company produces goods domestically and sells them outside the countryd. Countertrading: bartering goods for goodse. Licensing: a firm allows a foreign company to pay it a fee to make or distribute the firm’s product or servicef. Franchising: a firm allows a foreign company to pay it a fee and a share of the profit in return for using the firm’s brand name and a package of materials and servicesg. Joint ventures i. formed with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country ii. also known as a strategic allianceh. Wholly-owned subsidiary: foreign subsidiary that is totally owned and controlled by an organizationi. Greenfield venture: a foreign subsidiary that the owning organization has built from scratch.IV. International Tradea. Barriers to International Tradei. Tariff: A tax levied on goods entering a countryii. Quota: Limit on the amount of a product entering a countryiii. Boycott: Exclusion of products from a countryiv. Exchange Control: Foreign exchange must be sold to a control agencyv. Market Grouping: Common trade alliancevi. Trade Agreement: An agreement to stimulate international tradeb. Organizations Promoting International Tradei. World Trade Organization (WTO): designed to monitor and enforce trade agreements1. Agreements are based on the General Agreement on Tariffs and Trade (GATT)2. Consists of 153 countriesii. World Bank 1. purpose is to provide low-interest loans to developing nations for improving transportation, education, health, and telecommunicationsiii. International Money Fund (IMF) 1. designed to assist in smoothing the flow of money between nationsc. Major Trading Blocsi. Trading Bloc: group of nations within a geographic region that have agreed to remove trade barriers with one anotherii. also known as an economic community1. NAFTA – U.S., Canada, Mexico2. European Union – 27 trading partners in Europe3. APEC – group of 21 Pacific Rim countries4. ASEAN - trading bloc of 11 countries in Asia5. Mercosur – trading bloc in Latin America6. CAFTA – Central AmericaV. The Importance of National Culturea. Culture: shared set of beliefs, values, knowledge, and patterns of behavior common to a group of peopleb. Cultural Dimensionsi. Low-Context Culture: shared meanings are primarily derived from written and spoken wordsii. High-Context Culture: people rely heavily on situational cues for meaning when communicating with othersc. The Globe Projects Nine Cultural Dimensionsi. Power distance, Uncertainty Avoidance, Institutional Collectivism, In-group Collectivism, Gender