28. In
a global marketplace ____________.
a. the
entire world is a marketplace
b. national
borders are irrelevant
c. the
potential for organizations to grow expands dramatically
d. all of the above
(d; moderate; p. 78)
29. In
a global marketplace managers must _____________.
a. deal
with economic, political, and cultural differences
b. expect
competitors to suddenly appear at any time from any place
c. not
take specific differences of a local environment into consideration
d. a and b
(d; moderate; p. 78)
30. One reason for parochialism
in the United States is that Americans tend to study _____________ in school.
a. only English
b. only two languages
c. English and French
d. English
and German
(a; easy; p. 79)
31. Which of the following
describes the current state of the world use of languages?
a. Germans and Italians,
unlike other Europeans, only speak their native language.
b. Americans tend to study
many other languages in school.
c. Most Japanese begin
learning English by their third year of high school.
d. Americans tend to think of
English as the only international business language.
(d; moderate; p. 79)
32. Ethnocentric
views concentrate on their _____________.
a. home
country
b. host
country
c. world
orientation
d. racial orientation
(a; easy; p. 80)
33. _____________ is a sign
that Americans suffer from parochialism.
a. Multinationalism
b. Monolingualism
c. Geocentrism
d. Polycentrism
(b; moderate; p. 79)
34. Parochialism is
____________.
a. acceptance of diverse
points of view
b. a desire to leave one’s
own culture for a foreign culture
c. a tendency to view the
world through a single perspective
d. recognition of diverse
religious beliefs
(c; moderate; p. 79)
35. For U.S. businesses to have
successful global management, which of the following statements provides the
best advice?
a. Americans should continue
to push for the use of English only.
b. Stick to your own customs
to avoid embarrassing incidents.
c. Make sure foreign
businesspeople know you are American so they will speak to you in English.
d. Develop an understanding
of multicultural differences.
(d; moderate; p. 80)
36. Which of the following is
the least favorable attitude for an American manager who wishes to be
successful in international business?
a. multicultural
b. multicountry
c. ethnocentric
d. polycentric
(c; easy; p. 80)
37. Managers with a(n) ___________ attitude
view every foreign operation as different and hard to understand.
a. geocentric
b. ethnocentric
c. selfless
d. sensitive and caring
(b; moderate; p. 80)
38. Successful global management requires an
attitude that is best described as _____________ .
a. ethnocentric
b. parochial
c. polycentric
d. geocentric
(d; easy; p. 80)
39. A(n) __________ attitude is characterized
by parochialism.
a. geocentric
b. nonlinguistic
c. selfless
d. ethnocentric
(d; moderate; p. 80)
40. A(n) _____________ attitude
is the view that host-country managers know the best practices for running
their operations.
a. ethnocentric
b. polycentric
c. geocentric
d. international
(b; easy; p. 80)
41. The geocentric attitude is
a _____________ view.
a. national
b. world
c. culture-bound
d. narrow
(b; moderate; p. 80)
42. _____________ management
requires enhanced sensitivity to differences in national customs and practices.
a. Ethnocentric
b. Polycentric
c. Global
d. Parochial
(c; moderate; p. 81)
43. Successful global
management requires ______________.
a. rigid application of
home-country practices
b. enhanced sensitivity to
differences in national customs and practices
c. Americanization of
foreign managers
d. teaching English to
foreign nationals
(b; moderate; p. 81)
UNDERSTANDING THE GLOBAL ENVIRONMENT
44. The _____________ was created by the
unification of 12 countries in Europe.
a. European
Common Market
b. European
Union
c. Western
European Alliance
d. Trans-European Market (TEM)
(b; moderate; p. 81)
45. The _____________ is a collection of
countries that use a common currency.
a. European
Common Market
b. European
Union
c. Western
European Alliance
d. Economic and Monetary Union (EMU)
(d; difficult; p. 82)
46. The principle reason for formation of the
regional trading alliance in Europe was to reduce the power of the United
States and _________.
a. Canada
b. Mexico
c. Japan
d. Russia
(c; moderate; p. 82)
47. The
European Union covers ______________.
a. border
controls, taxes, and subsidies
b. nationalistic
policies and travel
c. employment,
investment, and trade
d. all of the above
(d; moderate; p. 82)
48. The single EU currency will
be called the ____________.
a. franc
b. franc-mark
c. pound
d. euro
(d; moderate; p. 82)
49. The
European Union consists of ___________.
a. 12
countries
b. 15
countries
c. 12
countries with plans to add more
d. 25 countries with plans to add 2 more in
2007
(d; difficult; p. 81)
50. Within the members of the North American
Free Trade Agreement, trade has ___________ since the treaty was signed.
a. decreased
initially, but increased steadily
b. increased
c. decreased
d. increased in commodities, but decreased
in manufactured goods
(b; moderate; p. 82)
51. The
primary motivation for joining the European Union was ______________.
a. to
reduce the economic competitiveness with other parts of the world
b. to
increase the political power of European countries in worldwide peace
negotiations
c. to
control tax exemptions within Europe and encourage intermember cooperation in
apprehending tax cheaters
d. to
reassert their economic power against America and Japan
(d; moderate; p. 82)
52. The
North American Free Trade Agreement _________________.
a. includes
Mexico, Canada, and the United States
b. includes
Mexico, Brazil, and Columbia
c. reduced
trade between the United States and Canada
d. reduced the economic power of Canada and
the United States and increased the power of Mexico
(a; easy; p. 82)
53. Thirty-six countries in the Caribbean
region, South America, and Central America are developing a regional trade
alliance called __________.
a. NAFTA
b. FTAA
c. Mercosur
d. ASEAN
(b; difficult; p. 83)
54. The
overall effect of the North American Free Trade Agreement was to
________________.
a. eliminate
the need for import licensing
b. increase
the customs user fees while reducing tariffs
c. reduce
trade between Mexico and the United States
d. increase trade between the United States
and Venezuela
(a; moderate; p. 83)
55. International businesses
have been around since about what date?
a. the fifteenth century
b. the seventeenth century
c. the nineteenth century
d. the twentieth century
(c; difficult; p. 84)
56. Multinational corporations
(MNCs) have only become commonplace since approximately what date?
a. mid-1960s
b. mid-1970s
c. 1945
d. mid-1980s
(a; moderate; p. 84)
57. The
Association of Southeast Asian Nations includes ________________.
a. the
members of the European Union and India
b. the
members of the North American Free Trade Agreement and the European Union
c. the
countries of the former Soviet Union
d. none of the above
(d; difficult; p. 83)
58. Multinational
corporations are known for _______________.
a. ethnocentric
attitudes
b. polycentric
attitudes
c. multicentric
attitudes
d. having their holdings in one country
(a; moderate; p. 84)
59. Transnational
corporations _________________.
a. maintain
operations in multiple counties, but do not allow managers in each country to
make their own decisions
b. utilize
ethnocentric attitudes in financial decisions, but favor polycentric views in
human resources issues
c. utilize
decentralization to make decisions in management in local countries
d. follow
the tastes, preferences, and values of the home country
(c; moderate; p. 84)
60. When
an organization drops its structure based on countries and reorganizes
according to industries, it is pursuing a global organizational operation known
as ___________.
a. ethnocentrism
b. polycentrism
c. borderless
organization
d. multinational organization
(c; moderate; p. 85)
61. Borderless
organizations are developed to _________________.
a. increase
efficiency
b. increase
effectiveness
c. become
more aggressive in international sales
d. all of the above
(d; moderate; p. 85)
62. A
borderless organization __________________.
a. utilizes
ethnocentrism
b. focuses
its efforts on a polycentric attitude
c. globalizes
by eliminating structural divisions that impose artificial geographical
barriers
d. is another version of a multinational
organization
(c; difficult; p. 85)
63. Which of the following is a
basic definition of a multinational corporation?
a. a company that maintains
significant operations in at least two different countries
b. a company that maintains
significant operations in at least two different countries but is based in one
home country
c. a company that maintains
significant operations in at least two different countries and has multiple
home bases
d. a company that does
business and pays taxes in at least two countries
(b; difficult; p. 84)
64. Which of the following is
the basic difference between multinational corporations and transnational
corporations?
a. Multinational corporations
typically do business with more countries than transnational corporations do.
b. Transnational corporations
are run by the parent company but must be owned by a local, national company.
c. Decision making in
transnational corporations takes place locally rather than from the home
country.
d. Multinational corporations
pay more in taxes than transnational corporations do.
(c; difficult; p. 84)
65. Which of the following is not
a feature of a transnational corporation?
a. decision making takes
place at the local level.
b. nationals are typically
hired to run operations in each country.
c. marketing strategies are
tailored to each country’s culture.
d. products are manufactured
only in the local country.
(d; easy; p. 84)
66. Which of the following
types of global organizations reflects the polycentric attitude?
a. multinational
b. transnational
c. polycentric
d. regional
(b; difficult; p. 84)
HOW ORGANIZATIONS GO GLOBAL
67. How many stages are there
in an organization’s evolution into a global organization?
a. one
b. two
c. three
d. five
(c; easy; p. 85)
68. In
an attempt to be more aggressive, a company might export and import more. This
is referred to as the ____________.
a. Stage
I of doing business globally
b. Stage
II of doing business in a polycentric manner
c. Stage
III of business incorporation
d. abnormal operations for an geocentric
organization
(a; difficult; p. 85)
69. In
Stage II of doing business globally, an organization would ________________.
a. begin
importing and exporting
b. begin
importing, but not exporting goods
c. send
employees to foreign countries as salespeople or hire brokers in other
countries
d. keep employees in the home country
(c; moderate; p. 85)
70. In
Stage III of doing business globally, an organization would utilize
______________.
a. licensing
and franchising
b. strategic
alliances
c. joint
ventures
d. all of the above
(d; moderate; p. 85)
71. Which of the following
characterizes the first stage of an organization’s global evolution?
a. exporting its products to
other countries
b. cross-culturally training
its managers
c. hiring foreign brokers to
represent the organization’s product line
d. sending domestic employees
on regular foreign business trips
(a; difficult; p. 85)
72. Which of the following
characterizes Stage II of an organization’s global evolution?
a. exporting its products to
other countries
b. cross-culturally training
its managers
c. hiring foreign
representation
d. licensing another firm to
use its brand name
(c; difficult; p. 85)
73. Joint ventures are also
termed ____________.
a. licenses
b. franchises
c. foreign subsidiaries
d. strategic alliances
(d; moderate; p. 86)
74. Creating a strategic
alliance occurs during which stage of an organization’s global evolution?
a. I
b. II
c. III
d. IV
(c; easy; p. 85)
75. A domestic firm and a
foreign firm sharing the cost of developing new products or building production
facilities in a foreign country is called a ____________.
a. franchising agreement
b. joint venture
c. foreign subsidiary
d. brokering agreement
(b; moderate; p. 86)
76. Which of the following
characterizes Stage III of an organization’s global evolution?
a. Cross-culturally training
its managers
b. Sending domestic employees
on regular foreign business trips
c. Hiring foreign brokers to
represent the organization’s product line
d. Management may create a
joint venture
(d; difficult; p. 86)
77. _____________ present(s)
the greatest risk to an organization going international.
a. Joint ventures
b. Strategic alliances
c. Licensing
d. Foreign subsidiaries
(d; difficult; p. 86)
MANAGING IN A GLOBAL ENVIRONMENT
78. Which of the following is not
listed by your textbook as an area of significant challenge for an American
manager working in a foreign country?
a. legal environment
b. economic environment
c. cultural environment
d. religious environment
(d; difficult; p. 87)
79. From
an economic standpoint, a threat to the global manager is _________________.
a. widely
fluctuating inflation rates in foreign countries
b. marginal
revenues exceeding marginal costs
c. a
stable exchange rate between currencies in various countries
d. all of the above
(a; easy; p. 87)
80. Compared to many other
countries, the U.S. legal–political environment is considered ____________.
a. radical
b. stable
c. unstable
d. fixed
(b; moderate; p. 87)
81. Compared to many other
countries, changes to the U.S. legal–political environment are considered
___________.
a. very fast and effective
b. fast, but not efficient
c. radical
d. slow
(d; moderate; p. 87)
82. The reason that a nation’s
cultural differences are the most difficult to gain information about is
because __________________.
a. people tend to be
sensitive about their own culture
b. providing this information
to foreign organizations reduces a competitive business advantage
c. there is little written
on the issue
d. “natives” are least capable of
explaining the unique characteristics of their own culture
(d; difficult; p. 89)
83. According to the textbook,
the most valuable framework to help managers better understand differences
between national cultures was developed by ______________.
a. Milton Friedman
b. Michael Porter
c. Geert Hofstede
d. Abraham Maslow
(c; moderate; p. 90)
84. _____________ is a cultural
dimension in which people expect others in their group to look after them and
protect them when they are in trouble.
a. Power distance
b. Collectivism
c. Quantity of life
d. Uncertainty avoidance
(b; easy; p. 90)
85. Which of the following
would you find in a country with a high power distance?
a. Society accepts narrow
differences in organizations.
b. Title carries little
power, but status power is high.
c. There is little respect
for those in authority.
d. In a meeting, organizational
representatives have widely different status and titles.
(d; moderate; p. 90)
86. _____________ is a cultural
measure of the degree to which people will tolerate risk and unconventional
behavior.
a. Power distance
b. Uncertainty avoidance
c. Quantity of life
d. Quality of life
(b; easy; p. 90)
87. According to the textbook,
organizations in which of the following cultures are likely to have formal
rules and little tolerance for unusual ideas and behaviors?
a. high power distance
b. low power distance
c. high uncertainty
avoidance
d. low uncertainty avoidance
(c; easy; p. 90)
88. In a society with a large ______________,
titles, rank, and status carry a lot of weight.
a. collectivism
b. power
distance
c. compassionate
conservatism
d. uncertainty avoidance
(b; difficult; p. 90)
89. _____________ is a national
culture attribute describing the extent to which societal values are
characterized by assertiveness and materialism.
a. Power distance
b. Uncertainty avoidance
c. Quantity of life
d. Quality of life
(c; moderate; p. 90)
90. _____________ is a national
culture attribute that reflects the emphasis placed on relationships and
concern for others.
a. Power distance
b. Uncertainty avoidance
c. Quantity of life
d. Quality of life
(d; moderate; p. 90)
91. Which of the following is
most like the United States in terms of power distance, uncertainty avoidance,
and quantity-of-life dimensions?
a. Singapore
b. Great
Britain
c. Portugal
d. Pakistan
(b; easy; p. 90)
Scenarios
and Questions
For each of the following choose the
answer that most completely answers the question.
WHAT’S YOUR GLOBAL PERSPECTIVE?
First Visit Abroad (Scenario)
Bill Sanderson is halfway over the
Atlantic and is excited about his first European business trip. His goal is to
scout out potential locations and basically provide input on how the company
should proceed with expansion abroad. There are many options, including
maintaining the business’ head office in the United States and sending
over company representatives when necessary or developing a separate company in
Europe and hiring locals as managers. In any case, he is confident about this
trip but is somewhat concerned about the strange habits and foreign languages
(if only they would just speak English like everyone else!).
92. Bill’s tendency to view the
world only through his U.S.-based eyes and perspectives is an international
business problem known as which of the following?
a. nondiversity
b. discrimination
c. parochialism
d. monolingualism
(c; moderate; p. 79)
93. If Bill’s company decided
to open another company in France but maintain the base in the United States,
it would be considered _________________.
a. a transnational
corporation
b. an international company
c. a regional trade alliance
d. a multinational corporation
(d; moderate; p. 84)
94. If Bill’s company decides
to open a completely new operation in Germany, tailoring the company to local
customs and marketing strategies and hiring local managers, they would be
considered _______________.
a. a transnational
corporation
b. an international company
c. a regional trade alliance
d. a multinational
corporation
(a; moderate; p. 84)
95. If Bill’s company
eliminated country-designated locations and reorganized based on industry
groups, it would best be considered a __________________.
a. borderless organization
b. transnational organization
c. global business alliance
d. multinational corporation
(a; moderate; p. 85)
96. If Bill is to become
successful as a global manager, he must _______________.
a. attempt to change other
cultures to American ways
b. learn and accept other
cultures
c. compete internationally
but remain in the United States
d. learn to manipulate other
business cultures
(b; moderate; p. 85)
Jane wants to expand her career opportunities in
international operations of a company. She is 19 years old and currently
attends a university. She has only lived in her current country and has never
traveled to foreign countries.
97. Jane decides to enroll in a foreign
language class to help her overcome her ______________.
a. parochialism
b. ethnocentric
attitude
c. monolingualism
d. polycentric attitudes
(c; moderate; p. 79)
98. In talking with her advisor at the
university, Jane decides she probably has a(n) __________ attitude, as she has
never traveled abroad and only relates well to people from her home country.
a. parochialistic
b. polycentric
c. ethnocentric
d. geocentric
(c; moderate; p. 80)
99. Jane becomes involved with an
international student association to give her experiences that will allow her
to understand the views of students from other countries. She is trying to
become more _________ in her attitude.
a. parochialistic
b. polycentric
c. ethnocentric
d. geocentric
(d; difficult; p. 80)
100. Jane selects a class that helps to learn
about licensing, franchises, strategic alliances, and joint ventures. She hopes
to find an employer who is or plans to move toward being in _________ of their
global business operations.
a. Stage
I
b. Stage
II
c. Stage
III
d. Stage IV
(c; moderate; p. 85)
101. In the university catalog she finds a class
description that includes the acronyms, EU, NAFTA, FTAA, and ASEAN. These refer
to ________________.
a. regional
trade alliances
b. foreign
airlines
c. soccer
teams in Europe
d. new multinational corporations
(a; difficult; p. 81)
Theodore and James have formed an entrepreneurial
venture to develop software for banks and other financial institutions. Their
company is growing, but in looking for opportunities in the future, they decide
to explore international operations.
What is Your Global Perspective?
102. Theodore and James feel that people in
foreign countries will not have the skills, expertise, knowledge, or experience
to write, sell, or install the software. They have a(n) _________ attitude.
a. self-righteous
b. ethnocentric
c. polycentric
d. geocentric
(b; moderate; p. 80)
103. After Theodore and James began their
company’s operations in the United States, they realized that a regional trade
agreement existed that would allow them to avoid tariffs in ___________.
a. Japan
and Germany
b. Europe
c. Western,
but not Eastern Europe
d. Mexico and Canada
(d; difficult; p. 82)
104. The international operations in this firm
grew. Theodore and James have come to see that decentralized management using
foreign nationals to run operations in their home countries works well. Their
firm has developed into a(n) ____________ organization.
a. transnational
b. multinational
c. borderless
d. international
(a; moderate; p. 84)
105. A new and exciting opportunity has appeared
that enables Theodore and James to form a joint venture with an insurance
company in Japan. This will move their firm into a global role of a ___________
organization.
a. Stage
I
b. Stage
II
c. Stage
III
d. multinational
(c; difficult; p. 85)
106. Theodore
and James decide to allow a firm in Europe to use the rights to their software,
its brand name, and software specifications in return for a lump-sum payment.
This agreement is known as a ________________.
a. strategic
alliance
b. licensing
agreement
c. franchise
d. foreign subsidiary
(c; difficult; p. 86)
UNDERSTANDING THE GLOBAL ENVIRONMENT
A Foreign Alliance Talk (Scenario)
As manager of the international
department for your company, you have been asked by the local Chamber of
Commerce to deliver a speech on foreign trade. The Chamber president even goes
so far as to say “and be sure to include the EU, NAFTA, and all that stuff
because we’re afraid that Ross Perot is right—all the good jobs will leave the
United States.” As you pour over your notes, you are trying to decide what is
the best information you can present in the allotted half hour.
107. One of the hottest topics of
your talk will be NAFTA, an issue that has the attention of the local business
community. You realize that the results are not in, but one outcome that seems
certain is that ______________.
a. the United States will
definitely come out the worst of the three nations
b. Canada will profit the
most in this arrangement
c. the expansion of NAFTA
would be essential to North America’s future competitiveness and economic power
d. U.S. high-tech companies,
such as computer manufacturers, will be hit hard
(c; difficult; p. 82)
108. You will close by giving
them a likely view of the future of NAFTA, which suggests that _______________.
a. it will likely disband by
the year 2010
b. it is expected to merge
with the EU by 2020
c. other Latin American
counties will soon become partners
d. Cuba is the next partner
in NAFTA
(c; moderate; p. 83)
MANAGING IN A GLOBAL ENVIRONMENT
A Different View (Scenario)
John has done well in his company. In
only 5 years, he has risen to the position of divisional manager. However, he
knows that in order to rise to the level of senior management, he needs to
spend some time managing abroad in his company’s foreign subsidiaries. Although
he has traveled to foreign countries on business and vacations, he has never
lived abroad and wonders what differences he would find. He is considering
applying for a new foreign-based position, but first wants to learn about some
basic differences between managing in the United States and managing in a
foreign country. He researched the topic of international management and found
many helpful facts about countries and their people.
109. John found out that,
compared to managers in many other countries, U.S. managers are accustomed to
legal and political systems that are ____________.
a. stable
b. fixed
c. boring
d. extreme
(a; easy; p. 87)
110. John found out that
wealthier nations, such as the United States, tend to ______________.
a. have high uncertainty
avoidance
b. be individualistic
c. be collectivist
d. have large power distance
(b; moderate; p. 90)
111. John also
found out that in some countries, such as Venezuela, titles, rank, and status
carry a lot of weight. These countries have a large _________________.
a. uncertainty avoidance
b. quality of life
c. quantity of life
d. power distance
(d; moderate; p. 90)
112. John knew that he did not
want to manage in a country where the people have high anxiety, nervousness,
and stress. He will, therefore, try to avoid countries characterized as having
high _______________.
a. uncertainty avoidance
b. quality of life
c. quantity of life
d. power distance
(a; moderate; p. 90)
The European Expansion (Scenario)
You have been hired by a company to
look at the ways to best move the company into the European market but you have
to first determine what kind of company you are dealing with.
113. If
the company that has hired you is primarily used by manufacturing
organizations, it is a ___________.
a. licensing
company
b. franchising company
c. strategic alliance
d. joint venture
(a; moderate; p. 86)
114. If
the company that has hired you is primarily used by service organizations, it
is a ______________.
a. licensing
company
b. franchising company
c. strategic alliance
d. joint venture
(b; moderate; p. 86)
115. If the company that has
hired you is really a partnership between an organization and a foreign
company in which both share resources
and knowledge in developing new products, than it is a _______________.
a. licensing
company
b. franchising company
c. strategic alliance
d. joint venture
(c; moderate; p. 86)
The Overseas Assignment (Scenario)
Christopher has a degree in business administration
and has worked for a major corporation for 5 years. He is offered a chance to
work in another country.
116. Through
research on the Internet, Christopher finds that in this country’s social
framework, people are expected to look after others in their family (or
organization) and protect them when they are in trouble. This society tends to
support ______________.
a. collectivism
b. parochialism
c. individualism
d. monotheism
(a; difficult; p. 90)
117. This new country’s people are favorably
influenced by Christopher’s job title, and the status given by his experience
of having worked in the home office for 5 years. This country has a large _______________.
a. interest
in attracting foreign executives
b. sense
of uncertainty avoidance
c. uncertainty
avoidance
d. power
distance
(d; difficult; p. 90)
118. Through talking to executives in the
international division, Christopher realizes that his home country has the
highest individualism, low power distance and uncertainty avoidance, and a high
quantity of life. He probably lives in _____________.
a. Great
Britain
b. Japan
c. United
States
d. Canada
(c; difficult; p. 90)
Essay Questions
WHAT’S YOUR GLOBAL PERSPECTIVE?
119. In a short essay, define
parochialism. Next, discuss why parochialism is a problem for U.S. managers and
discuss reasons why it is important to overcome parochialism in today’s
business environment.
Answer
Parochialism is when a
person views the world solely though his or her own eyes and perspectives.
People with a parochial attitude do not recognize that other people have
different ways of living and working. Parochialism is a significant obstacle for
many managers working in a global business world. If managers fall into the
trap of ignoring foreign values and customs and rigidly apply an attitude of
“ours is better than theirs” to foreign cultures, they will find it difficult
to compete with other managers and organizations around the world that are
seeking to understand foreign customs and market differences.
(easy; p. 79)
120. In a short essay, list and
discuss the three attitudes managers might have toward international business.
Answer
a. Ethnocentric attitude—the
parochialistic belief that the best work approaches and practices are those of
the home country. Managers with an ethnocentric attitude believe that people in
foreign countries do not have the needed skills, expertise, knowledge, or
experience to make the best business decisions as people in the home country
do. They wouldn’t trust foreign employees with key decisions.
b. Polycentric attitude—the
view that managers in the host country know the best work approaches and
practices for running their business. Managers with a polycentric attitude view
every foreign operation as different and hard to understand. Thus, these
managers are likely to leave their foreign facilities alone and let foreign
employees figure out how best to do things.
c. Geocentric attitude—this
is a world-oriented view that focuses on using the best approaches and people
from around the globe. Managers with this type of attitude believe that it’s
important to have a global view both at the organization’s headquarters in the
home country and in the various foreign work facilities. Major issues and
decisions are viewed globally by looking for the best approaches and people
regardless of origin.
(moderate; p. 80)
UNDERSTANDING THE GLOBAL ENVIRONMENT
121. In a short essay, describe
three major regional trading alliances.
Answer
a. The European Union—the
signing of the Maastricht Treaty created the formation of the European Union.
This treaty united 12 countries—Belgium, Denmark, France, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, and
Germany—as a unified economic and trade entity. Three other countries—Austria,
Finland, and Sweden—joined the group in 1995. The current EU membership covers
a population base of over 374 million people. The primary motivation for the
joining of these European nations was to allow them to reassert their economic
position against the strength of the United States and Japan.
b. North American Free Trade
Agreement (NAFTA)—when the Mexican, Canadian, and U.S. governments reached
agreements on key issues covered by NAFTA on August 12, 1992, a vast economic
bloc was created. Since 1994, when NAFTA went into effect, and 1998, U.S. trade
with Canada increased 56 percent to $329.9 billion, and U.S. trade with Mexico
increased 113 percent to $173.4 billion. Eliminating the barriers to free trade
has resulted in a strengthening of the economic power of all three countries.
c. Association of Southeast
Asian Nations (ASEAN)—the ASEAN is a trading alliance of 10 Southeast Asian
nations. During the years ahead, Asia, and particularly the Southeast Asian
region, promises to be one of the fastest-growing economic regions of the
world. It will be an increasingly important regional economic and political
alliance whose impact eventually could rival that of both NAFTA and the EU.
(moderate; p. 81)
122. In a short essay, explain
the difference between a multinational corporation (MNC), a transnational
corporation (TNC), and a borderless organization. Include examples of companies
for each of the types of organizations discussed.
Answer
a. Multinational
corporation—these organizations—which maintain significant operations in
multiple countries but are managed from a base in the home country—inaugurated
the rapid growth in international trade. With its focus on control from the
home country, the MNC is characteristic of the ethnocentric attitude. Some
examples of companies that can be considered MNCs include Sony, Deutsche Bank
AG, ExxonMobil, and Merrill Lynch. Although these companies have considerable
global holdings, management decisions with company-wide implications are made
from headquarters in the home country.
b. Transnational corporation
(TNC)—this company maintains significant operations in more than one country
but decentralizes management to the local country. This type of organization
doesn’t attempt to replicate its domestic successes by managing foreign
operations from its home country. Instead, nationals typically are hired to run
operations in each country, and marketing strategies for each country are
tailored to that country’s unique characteristics. This type of global
organization reflects the polycentric attitude. For example, Switzerland-based
Nestlé, the world’s largest food company, can be described as a transnational.
With operations in almost every country on the globe, its managers match the
company’s products to its consumers. In parts of Europe, Nestlé sells products
that are not available in the United States or Latin America.
c. Borderless
organization—because of the increasingly global environment, many large
well-known companies are moving to more effectively globalize their management
structure by eliminating structural divisions that impose artificial
geographical barriers. The borderless organization approaches global business
from a geocentric attitude. For example, IBM dropped its organizational
structure based on country and reorganized into 14 industry groups. Borderless
management is an attempt by organizations to increase efficiency and
effectiveness in a competitive global marketplace.
(difficult; p. 84)
HOW ORGANIZATIONS GO GLOBAL
123. In a short essay, list and
explain Hofstede’s five dimensions of national culture.
Answer
a. Individualism versus
collectivism—individualism refers to a loosely knit social framework in which
people are supposed to look after their own interests and those of their
immediate family. They can do so because of the large amount of freedom that an
individualistic society allows its citizens. The opposite is collectivism,
which is characterized by a tight social framework in which people expect
others in groups of which they are a part to look after them and to protect
them when they are in trouble. In exchange, they feel they owe absolute loyalty
to the group.
b. Power distance—Hofstede
used the term power distance as a measure of the extent to which a
society accepts the fact that power in institutions and organizations is
distributed unequally. A large power distance society accepts wide differences
in power in organizations. Employees show a great deal of respect for those in
authority. Titles, rank, and status carry a lot of weight. When negotiating in
large power distance countries, companies find that it helps to send
representatives with titles at least as impressive as those with whom they are
bargaining do. In contrast, a low power distance society plays down
inequalities as much as possible. Superiors still have authority, but employees
are not afraid of or in awe of the boss.
c. Uncertainty
avoidance—uncertainty avoidance is a cultural measure of the degree to which
people tolerate risk and unconventional behavior. A society that’s high in
uncertainty avoidance is characterized by a high level of anxiety among its
people, which manifests itself in nervousness, high stress, and aggressiveness.
Because people in these cultures feel threatened by uncertainty and ambiguity,
political and social mechanisms are created to provide security and to reduce
risk. Organizations in these cultures are likely to have formal rules and
little tolerance for unusual ideas and behaviors.
d. Quantity
versus quality of life—some cultures emphasize the quantity of life and value
things such as assertiveness and the acquisition of money and material goods.
Other cultures that emphasize quality of life value relationships and show
sensitivity and concern for the welfare of others.
e. Long-term and short-term
orientation—people in long-term orientation cultures look to the future and
value thrift and persistence. A
short-term orientation values the past and present and emphasizes respect for
tradition and fulfilling social obligations.
(moderate; p. 90)
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