Organizational management
WEEK 1 - Managing in a global environment
LO1.1 Define globalization, nationalism, and parochialism; and contrast ethnocentric,
polycentric, and geocentric attitudes.
Global perspective
- Globalization: the process of developing influence or operations in other countries
(A process by which organizations develop influence or operations across international
borders)
- Nationalism: patriotic ideals and policies that glorify a country’s values, your own
country’s interests
- Parochialism: viewing the world solely through your own perspectives, leading to an
inability to recognize differences between people
Nationalism = protect your country
Parochialism = limited worldview
Three Possible Global Attitudes
Managers have been found to basically have one of three attitudes that shape their acceptance
of or resistance to globalization and their style of management. These are ethnocentric,
polycentric, and geocentric.
- Ethnocentric: view that home country has best work practices
- Polycentric: view that managers in the host country know the best approaches
- Geocentric: world-oriented view; wants to use best practices from around the globe
,LO1.2 Describe the history of globalization.
IMF (International Monetary Fund) (1945): An international organization of 190 countries that
provides temporary loans, facilitates trade, and promotes global economic growth and poverty
reduction.
World Bank (1945): Provides financial and technical support to countries to encourage
sustainable economic development, reduce poverty, and improve living standards.
GATT (General Agreement on Tariffs and Trade) (1948): A global agreement to reduce or
eliminate tariffs and trade barriers between countries, aiming to promote free trade; replaced by
the World Trade Organization (WTO) in 1995.
OECD (Organisation for Economic Co-operation and Development) (1961): An economic
organization that helps its 38 member countries achieve sustainable economic growth,
employment, and improved standards of living.
ASEAN (Association of Southeast Asian Nations) (1967): A regional trading alliance of 10
Southeast Asian countries that promotes economic cooperation and development.
Fall of the Soviet Union (1991): The USSR dissolved, granting independence to its republics
and creating the Commonwealth of Independent States (CIS) to coordinate trade, lawmaking,
and security.
European Union (EU) (1992): A union of 27 European countries formed as a single economic
and trade entity to strengthen their global competitiveness.
NAFTA (North American Free Trade Agreement) (1994): A free trade agreement between the
United States, Canada, and Mexico designed to remove trade barriers and increase economic
cooperation.
WTO (World Trade Organization) (1995): The global organization that regulates trade rules
among countries, replacing GATT, to ensure fair and predictable trade practices.
SCO (Shanghai Cooperation Organization) (2003/2016): A cooperative of eight nations
(China, India, Pakistan, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan) focused on
trade, security, and regional collaboration.
USMCA (United States–Mexico–Canada Agreement) (2020): Updated NAFTA to improve
labor standards, environmental rules, intellectual property protections, and US market access,
aiming to protect American jobs.
,LO1.3 Summarize the case for and against globalization.
the case for and against globalization.
LO1.3 Summarize the case for and against globalization.law of comparative advantage
The economic proposition that a country should produce goods or service for which it has the
lowest opportunity costs
The Win-Win Argument
The “every country wins” argument was largely based on the law of comparative
advantage—that a country should produce goods or services for which it has the lowest
opportunity costs. By specializing in the products or services for which it has the lowest cost of
production, a country is best able to compete in global markets.
Economists were in near-total agreement that globalization would unleash an economic “tide”
that would raise all boats.2 It would boost every nation’s economy, increase wages, and result in
lower-priced goods for all consumers. Importantly, it would be a major force for reducing poverty
within low-income countries.
The Downside of Globalization
● Wage stagnation and job losses: Globalization is blamed for stagnant wages and the
loss of middle-class jobs in North America and Europe.
● Offshoring of production: Companies move factories and jobs from high-wage
countries to low-wage countries to reduce costs.
● Immigration pressure: The free movement of labor is said to keep wages low and
increase competition for jobs in countries like the US and the UK.
● Rising inequality: The benefits of globalization mainly go to large multinational
corporations and wealthy elites, while many workers gain little.
● Weakening of the middle class: The middle class in developed countries has been
squeezed as a result of globalization.
● Vulnerable supply chains: The COVID-19 pandemic showed the risks of depending on
global supply chains for essential goods.
● Growth of nationalism and protectionism: Public frustration with globalization has led
to more nationalist policies and reduced trust in governments.
What does this mean for Managers?
With globalization apparently here to stay, managers and aspiring managers need to ensure
they have the attitudes and skills that global management requires.
Managers need to continue to develop a geocentric attitude and build their cross-cultural
sensibilities. They have to be comfortable working with people from other cultures. And they
have to be flexible—open to accepting differences in languages, personalities, motivation, work
habits, and management styles.
, LO1.4 Explain the different types of international organizations.
Multinational corporation (MNC) = A broad term that refers to any and all types of
international companies that maintain operations in multiple countries
Multinational corporation (MNC) = A broad term that refers to any and all types of
international companies that maintain operations in multiple countries
Global company = An MNC that centralizes management and other decisions in the home
country
Transnational or borderless organization = An MNC in which artificial geographical barriers
are eliminated
LO1.5 Describe the structures and techniques organizations use as they go international.
Global sourcing = Purchasing materials or labor from around the world wherever it is cheapest
1. Exporting and importing: Exporting: Making products in your own country and selling them
to other countries. Importing: Buying products from other countries and selling them in your
own country
2. Licensing: An organization gives another organization the right to make or sell its products
using its technology or product specifications
3. Franchising: An organization gives another organization the right to use its name and
operating methods
4. Joint Venture (specific project) / strategic alliance (long time).
Strategic alliance = A partnership between an organization and foreign company partner(s) in
which both share resources and knowledge in developing new products or building production
facilities. Joint venture = A specific type of strategic alliance in which the partners agree to form
a separate, independent organization for some business purpose.
5. Foreign subsidiary
Directly investing in a foreign country by setting up a separate and independent production
facility or office
6. Multinational Corporation: The company operates in many countries and adapts to local
markets.
7. Global Sourcing: The company buys materials, products, or services from other countries to
lower costs or get better quality.
WEEK 1 - Managing in a global environment
LO1.1 Define globalization, nationalism, and parochialism; and contrast ethnocentric,
polycentric, and geocentric attitudes.
Global perspective
- Globalization: the process of developing influence or operations in other countries
(A process by which organizations develop influence or operations across international
borders)
- Nationalism: patriotic ideals and policies that glorify a country’s values, your own
country’s interests
- Parochialism: viewing the world solely through your own perspectives, leading to an
inability to recognize differences between people
Nationalism = protect your country
Parochialism = limited worldview
Three Possible Global Attitudes
Managers have been found to basically have one of three attitudes that shape their acceptance
of or resistance to globalization and their style of management. These are ethnocentric,
polycentric, and geocentric.
- Ethnocentric: view that home country has best work practices
- Polycentric: view that managers in the host country know the best approaches
- Geocentric: world-oriented view; wants to use best practices from around the globe
,LO1.2 Describe the history of globalization.
IMF (International Monetary Fund) (1945): An international organization of 190 countries that
provides temporary loans, facilitates trade, and promotes global economic growth and poverty
reduction.
World Bank (1945): Provides financial and technical support to countries to encourage
sustainable economic development, reduce poverty, and improve living standards.
GATT (General Agreement on Tariffs and Trade) (1948): A global agreement to reduce or
eliminate tariffs and trade barriers between countries, aiming to promote free trade; replaced by
the World Trade Organization (WTO) in 1995.
OECD (Organisation for Economic Co-operation and Development) (1961): An economic
organization that helps its 38 member countries achieve sustainable economic growth,
employment, and improved standards of living.
ASEAN (Association of Southeast Asian Nations) (1967): A regional trading alliance of 10
Southeast Asian countries that promotes economic cooperation and development.
Fall of the Soviet Union (1991): The USSR dissolved, granting independence to its republics
and creating the Commonwealth of Independent States (CIS) to coordinate trade, lawmaking,
and security.
European Union (EU) (1992): A union of 27 European countries formed as a single economic
and trade entity to strengthen their global competitiveness.
NAFTA (North American Free Trade Agreement) (1994): A free trade agreement between the
United States, Canada, and Mexico designed to remove trade barriers and increase economic
cooperation.
WTO (World Trade Organization) (1995): The global organization that regulates trade rules
among countries, replacing GATT, to ensure fair and predictable trade practices.
SCO (Shanghai Cooperation Organization) (2003/2016): A cooperative of eight nations
(China, India, Pakistan, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan) focused on
trade, security, and regional collaboration.
USMCA (United States–Mexico–Canada Agreement) (2020): Updated NAFTA to improve
labor standards, environmental rules, intellectual property protections, and US market access,
aiming to protect American jobs.
,LO1.3 Summarize the case for and against globalization.
the case for and against globalization.
LO1.3 Summarize the case for and against globalization.law of comparative advantage
The economic proposition that a country should produce goods or service for which it has the
lowest opportunity costs
The Win-Win Argument
The “every country wins” argument was largely based on the law of comparative
advantage—that a country should produce goods or services for which it has the lowest
opportunity costs. By specializing in the products or services for which it has the lowest cost of
production, a country is best able to compete in global markets.
Economists were in near-total agreement that globalization would unleash an economic “tide”
that would raise all boats.2 It would boost every nation’s economy, increase wages, and result in
lower-priced goods for all consumers. Importantly, it would be a major force for reducing poverty
within low-income countries.
The Downside of Globalization
● Wage stagnation and job losses: Globalization is blamed for stagnant wages and the
loss of middle-class jobs in North America and Europe.
● Offshoring of production: Companies move factories and jobs from high-wage
countries to low-wage countries to reduce costs.
● Immigration pressure: The free movement of labor is said to keep wages low and
increase competition for jobs in countries like the US and the UK.
● Rising inequality: The benefits of globalization mainly go to large multinational
corporations and wealthy elites, while many workers gain little.
● Weakening of the middle class: The middle class in developed countries has been
squeezed as a result of globalization.
● Vulnerable supply chains: The COVID-19 pandemic showed the risks of depending on
global supply chains for essential goods.
● Growth of nationalism and protectionism: Public frustration with globalization has led
to more nationalist policies and reduced trust in governments.
What does this mean for Managers?
With globalization apparently here to stay, managers and aspiring managers need to ensure
they have the attitudes and skills that global management requires.
Managers need to continue to develop a geocentric attitude and build their cross-cultural
sensibilities. They have to be comfortable working with people from other cultures. And they
have to be flexible—open to accepting differences in languages, personalities, motivation, work
habits, and management styles.
, LO1.4 Explain the different types of international organizations.
Multinational corporation (MNC) = A broad term that refers to any and all types of
international companies that maintain operations in multiple countries
Multinational corporation (MNC) = A broad term that refers to any and all types of
international companies that maintain operations in multiple countries
Global company = An MNC that centralizes management and other decisions in the home
country
Transnational or borderless organization = An MNC in which artificial geographical barriers
are eliminated
LO1.5 Describe the structures and techniques organizations use as they go international.
Global sourcing = Purchasing materials or labor from around the world wherever it is cheapest
1. Exporting and importing: Exporting: Making products in your own country and selling them
to other countries. Importing: Buying products from other countries and selling them in your
own country
2. Licensing: An organization gives another organization the right to make or sell its products
using its technology or product specifications
3. Franchising: An organization gives another organization the right to use its name and
operating methods
4. Joint Venture (specific project) / strategic alliance (long time).
Strategic alliance = A partnership between an organization and foreign company partner(s) in
which both share resources and knowledge in developing new products or building production
facilities. Joint venture = A specific type of strategic alliance in which the partners agree to form
a separate, independent organization for some business purpose.
5. Foreign subsidiary
Directly investing in a foreign country by setting up a separate and independent production
facility or office
6. Multinational Corporation: The company operates in many countries and adapts to local
markets.
7. Global Sourcing: The company buys materials, products, or services from other countries to
lower costs or get better quality.
