Managing in the Global Economy

Richard M. Steers, Luciara Nardon

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781317465553
• Topic: Business
• Subtopic: Economic Theory
• Index: Business

This definitive text will bring a new level of professionalism to courses in International Management. Truly global in focus, it is a comprehensive primer on the challenges and prospects of international management, with a particular emphasis on developing global managers who are skilled in economics, strategy, and general management. In addition, the authors help readers develop an in-depth understanding of the role of cultural differences in managerial effectiveness. The text is divided into three parts: the emerging global economy; culture, organization, and strategy; and managing global operations. Management topics include: organizing for international business, global business strategy, building strategic alliances, international negotiations, global staffing, managing a competitive workforce, TQM and employee involvement, and managing multicultural teams. Throughout the text, the authors integrate current conceptual materials on global management with in-depth country analyses and real-world business examples. Each chapter begins with an opening case vignette (from countries around the world) and concludes with a list of key terms and in-depth exercises (Global Manager's Workbook). The text also provides country ratings for 50 countries on economic activity, political risk, and cultural differences, as well as a 35 item instrument for students to measure their own cultural awareness

PART I


THE EMERGING GLOBAL ECONOMY

1 Managing in the Global Economy: An Introduction

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At the present time, there is a greater need for effective international and cross-cultural communication, collaboration, and cooperation, not only for the effective practice of management but also for the betterment of the human condition. Ample evidence shows that the cultures of the world are getting more and more interconnected and that the business world is becoming increasingly global. As economic borders come down, cultural barriers will most likely go up and present new challenges and opportunities for business. When cultures come in contact, they may converge in some aspects, but their idiosyncrasies will likely amplify.

—Robert House, GLOBE Research Project¹

No one ever said being a manager was easy, but it seems to get more difficult with each passing year. As competitive pressures increase across most industries and services, so, too, do the pressures on managers to deliver results. Succeeding against the odds often catapults a manager into the higher echelons of the organization, with a concomitant increase in personal rewards. But failure to deliver often slows one’s career advancement, if it doesn’t stop it altogether. The stakes are very high for both managers and their companies.

Popular slogans may help explain this turn of events. Consider Intel’s “faster-better-cheaper” or Ted Turner’s “lead, follow, or get out of the way.”² Anyway we look at it, competitive pressures are growing. Why? There are many reasons, but a principal cause lies in the world’s unrelenting drive to build—and capitalize on—a more integrated and more productive global economy that leads to lower consumer prices and higher corporate profits. When consumers go shopping in any country, most want to buy products or services of the highest possible quality for the lowest possible price. Few people enter stores and ask to pay more so that workers who made the product or provided the service can receive a higher income. Likewise, few people offer to pay more for a product so local firms can remain in business instead of going bankrupt. In the final analysis, from a consumer’s standpoint it is frequently all about money. The more companies satisfy consumer demands, the more likely they are to survive and prosper. Like it or not, this is the reality facing most contemporary organizations.

In this endeavor, the above observation by Robert House is germane. As he correctly notes, succeeding in today’s demanding global economy requires a greater degree of international and cross-cultural communication, collaboration, and cooperation than ever before. As the various cultures of the world become more interconnected, economically and politically, companies must work harder to understand and interact in cross-cultural ways. In short, companies must increasingly think in global terms, as national and even regional companies are increasingly becoming a thing of the past. During the days of the American frontier in the mid- and late 1800s, there was a popular saying: Go west, young man. Today, the advice is very different: Go global. The future has shifted unequivocally, as have the opportunities, and smart companies and their managers respond accordingly.

The responsibility of managers in all of this is to make it happen—to maximize consumer benefit and the company’s bottom line. At the same time, society asks—and often demands—that managers pay fair wages, provide safe and equitable working conditions for their employees, follow all pertinent laws and regulations in the countries where they do business, protect the environment, act in socially responsible ways, and abide by conventional ethical norms and professional standards. It is an understatement to point out that accomplishing these often conflicting goals is no easy task. In view of this, the question for today’s managers is how they can best prepare themselves for this brave new world of international business.

IMPORTANCE OF GLOBAL BUSINESS

The world facing global managers today is complex, challenging, and constantly changing. This can be illustrated in several ways. For starters, consider the sheer size and power of the global economy. While the United States has a population approaching 300 million people and a gross domestic product (GDP) of over $10 trillion, these numbers almost pale in comparison to comparable statistics on a global scale (see Chapter 3). In point of fact, no one country controls the global economy, although a small consortium of countries comes close. In many industries today, chief competitors come from around the world, and each competitor has its own unique competitive strengths. For example, the global automobile industry today includes major competitors from Japan, Germany, South Korea, France, the United Kingdom, Sweden, and the United States. Soon, other major competitors, such as China and perhaps India, will enter this crowded global market. The situation is similar in other key industries, including home electronics, information technology (IT) services, telecommunications, medical equipment, software development, pharmaceuticals, and defense technologies. In each industry, the questions are the same: Who will succeed and who will fail? And what will determine success?

Not only do companies face an increasing number of highly skilled global competitors, but many of these competitors approach business in very different ways. These differences can be seen in widely varying national laws, trade policies, business regulations, labor policies, and so forth. They can also be seen in the fundamental differences in the ways companies approach both partners and competitors. Sometimes countries have clearly formulated labor laws that are rigorously enforced and universally applied. Others have equally clear labor laws that are weakly enforced and only intermittently applied. Knowing the difference is important. Sometimes business is based on long-standing and seemingly inefficient personal friendships, instead of the “best practices” we read about in textbooks. Sometimes “benchmarking” means making products using traditional methods, instead of building products against the best competition available. And sometimes business partners have different ideas about what constitutes a legitimate sales commission. The challenge for companies and their managers is first to understand these differences—to clearly understand the local business landscape—and then to formulate appropriate responses that are consistent with the firm’s strategies, business practices, and ethical standards.

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Exhibit 1.1

World’s Largest Economies (GDP in $ billions)

Country	GDP	Country	GDP
1. United States	10,065	11. Brazil	502
2. Japan	4,141	12. India	477
3. Germany	1,846	13. South Korea	422
4. United Kingdom	1,424	14. Netherlands	380
5. France	1,309	15. Australia	368
6. China	1,159	16. Russia	310
7. Italy	1,088	17. Taiwan	282
8. Canada	694	18. Argentina	268
9. Mexico	617	19. Switzerland	247
10. Spain	581	20. Belgium	229

Source: Based on The Economist Pocket World in Figures (London: Profile Books, 2004), p. 24.

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In addition, while international trade has increased more than 600 percent in the past thirty years, some countries have benefited significantly more than others. Indeed, only seven countries account for nearly 60 percent of today’s global exports: Japan, Canada, Germany, France, Italy, the United Kingdom, and the United States.³ In other words, some countries are doing much better in the export game than others, and this success has direct consequences for national economic development and prosperity (see Exhibit 1.1). Exports stimulate the economies of producer nations and support their manufacturing and services base. At the same time, failure to export (or to be allowed to export) to foreign countries can lead to closed factories, unemployment, and economic stagnation. It is for reasons such as these that organizations such as the World Trade Organization (see Chapter 3) were established to bre...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Brief Table of Contents
• Detailed Table of Contents
• Preface
• Part I The Emerging Global Economy
• Part II Culture, Organization, and Strategy
• Part III Managing Global Operations
• Managing in the Global Economy: A Field Project
• Name and Company Index
• Subject Index