Riassunto esame Fundamentals of business administration, Prof. Monteduro Fabio, libro consigliato Fundamentals of Management (Mike Smith) McGraw-Hill Higher Education, 2011, Mike Smith

GLOBALIZATION AND NATIONAL

CULTURES

 National culture arises from a common identity; history has a strong influence on

the development of national culture; the religion has a strong influence on national

cultures; climate determines certain aspects of culture

 Hofstede, who studied cultures of 72 countries, claims that there are five main

dimensions to international cultures: 1. power distance (PD) the extent to which

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a culture accepts an unequal distribution of power. In societies with low power

distance, people strive to equalize the distribution of power and demand justification

for inequalities of power. People in societies with a high power distance accept a

hierarchical order in which everybody has a place and which needs no further

justification; 2. Individualism (IDV) the opposite of collectivism. In

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individualistic cultures, the ties between individuals are loose and everyone is

expected to look after themselves and their families. Individualist societies

emphasizes the accomplishments of a person rather than a group; 3. masculinity (MAS)

the extent to which people are assertive, ambitious, competitive and wanting to

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accumulate wealth or possessions. The masculinity side of this dimension represents

a preference in society for achievement, heroism, assertiveness and material rewards

for success. Society at large is more competitive. Its opposite, femininity, stands

for a preference for cooperation, modesty, caring for the weak and quality of life.

Society at large is more consensus oriented; 4. uncertainty avoidance (UA) the

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uncertainty avoidance dimension expresses the degree to which the members of a society

feel uncomfortable with uncertainty and ambiguity. The fundamental issue here is how

a society deals with the fact that the future can never be known. Countries exhibiting

strong UA maintain rigid codes of belief and behavior and are intolerant of unorthodox

behavior and ideas. Weak UA societies maintain a more relaxed attitude in which

practice counts more than principles; 5. long-term orientation (LTO) only emerges

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from data from students in 23 countries. When detected, it concerns preservation over

a long time. Things do not need to be rushed and another opportunity is to be expected

 Hofstede argues that understanding cultural dimensions could help communication

between cultures and countries. Understanding and respect of cultural norms can

promote successful international diplomacy as well as international business.

Diametrical cultural norms can cause a lot of problems if each individual group

doesn't accept the others

 Trompenaars's research was more systematic and scientific. It involved 15000 people

from 47 countries. He came to the view that cultures differed in three main ways: 1.

relationships between people; 2. attitudes towards time; 3. attitudes towards the

environment

 1. Relationship between people has five sub-dimensions: a. universalism vs

particularism reflects a culture's emphasis on rules and their consistent

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application (universalism) or its emphasis on flexibility and bending the rules

depending upon the person and his or her circumstances (particularism); b.

individualism vs collectivism concerns the emphasis a culture places upon the

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individual and his or her rights and responsibilities (individualism) or the interests

of the group and achieving a consensus of opinion (collectivism); c. unemotional vs

emotional is the degree to which a culture stresses detachment and objectivity in

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decision-making (unemotional) or whether subjective feelings are a part of decisions

(emotional); d. specific vs diffuse is the extent to which a culture stresses in

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depth, intense relationships (specific) or a wider range of superficial relationships

(diffuse); e. achievement vs prescription reflects the extent to which a culture

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rewards people on the basis of their achievement on their social standing, celebrity

and connections

 2. the way that time was viewed (the way that the present is viewed in relation to

the past): a. western cultures tend to see time as a linear synchronic dimension

(clear past, present, future - present time is precious); b. in sequential cultures,

time is a passing series of recurring events where opportunities will recut

 3. relationship with the environment: a. in inner-directed cultures people see

themselves as separate from the environment and attempt to control it for their

personal benefit; b. in outer-directed cultures people see themselves as a part of

nature

 Hall divided international cultures in: a. low-context cultures (UK, Canada, Germany,

USA) important communication uses written and spoken word; b. high-context cultures

(Japan) only a part of the message is communicated in words, the rest must be inferred

from contextual cues such as physical setting, the body language and even previous

history

NATIONAL LEGAL AND FINANCIAL CONTEXTS

 1. codified law (civil law) where a nation sets up a legislature to devise a

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comprehensive set of laws based upon their view of justice and morality. Civil law

starts with abstract ideas that aim to formulate general rules for the future. These

general ideas become more specific and practical as they are developed (Justinian's

Code). Financial context: countries with codified law tend to favor raising finance

by credit (banks, rich families or state). Gearing is usually high. In these countries

there are fewer accountants and accounting rules give greater focus to taxation

issues

 2. common law mainly developed by judges who make specific decision in response

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to specific situations. These decisions are taken into account in making further

judgments, i.e. they set a precedent for future cases. Sometimes the legislature will

intervene to systematize judgments and remove anomalies. Juries are very important

in deciding matters of fact. Financial context: country using common law tend to

favor raising finance by offering equity such as via the stock market. Gearing is

relatively low

 3. Islamic law (religion law) is based in religious writings. Lawyers play a

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relatively minor role and the judges have religious training as well as legal

training. Juries are not allowed and the courts are not very independent of religious

leaders. There are two main branches of Islamic law: Sunni and Shia. Financial

context: for many years the development of financial institutions was severely

restricted by the sharia's prohibition against payment or collection of interest. A

number of ways are used to overcome the ban of interest. Other approaches involve

banks giving depositors "a gift" or paying "rent" rather than interest

 4. socialist law (communist law) is based on statutes devised by a legislature.

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Party members play an important part in deciding disputes so the courts have only

limited independence from politicians and juries are rarely used for important cases.

Financial context: in a pure socialist state, the state owns and controls all

financial resources. It was usually convenient for the state to set up several banks.

Usually there would be at least a state bank and a people's savings bank. There may

be other banks for specific purposes (construction, foreign trade). Most socialist

states now also have commercial banks or at least allowed investors to purchase a

share in previously state-owned banks. The state still controls the economy and may

fiercely restrict foreign control

THE GLOBAL CONTEXT AND GLOBALISATION

 Globalization can be defined as the accelerated interdependence of economic and

business activities across national boundaries. Globalization is the process by which

the world is becoming increasingly interconnected as a result of the evolution of

worldwide systems of transport and communications. Globalization is a worldwide drive

towards a global economic system dominated by supranational corporate trade and

banking institutions that are not accountable to democratic process or national

government

 Saudi Arabia can produce oil, Australia cannot. Australia can graze sheeps, Saudi

Arabia cannot. It makes sense for Saudi Arabia to concentrate on extracting oil and

buying sheep from Australia. If all countries focus upon what they do best and trade

with other countries for things they do less well, the whole world is better off:

petrol gets cheaper and so do lamb chops

REASONS FOR GLOBALIZATION

 reasons at the organizational level: 1. economic scale if a service or product is

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made in high volumes. Often the market in one country is not big enough so

organizations try to get customers from other countries. Indeed, in some industries

it would not be economic to attempt any production on the basis of national demand;

2. other organizations "go global" when they have saturated their home market

(McDonald's); 3. some companies "go global" in search of cheaper resources. The

colonial powers established their empires in order to have cheaper access to gold,

sugar, cotton, tobacco, tea or rubber. Today firms may "go global" to gain access to

cheap labor for call centers producing trainers; some organizations "go global" to

provide a 24-hour service. By siting offices in each of the three main time zones

(London, New York, Tokyo) they will be able to trade throughout the day

STAGES OF GLOBALIZATION

 1. importing refers to buy goods and services produced across a national border.

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The party bringing in the good is called an importer. Companies import goods/services

that are not available in the local market or that, even if available, the foreign

market produces at a cheaper price and better quality. In international trade, the

importation of goods is regulated by trade agreements, and the involved jurisdictions

can limit import quotas or may impose a tariff (tax) on the goods; 2. export →

Exporting refers to selling goods and services produced in the home country to other

markets. Exporting requires significantly lower level of investment and risks than

other modes of international expansions. The lower risk of export typically results

in a lower rate of return on sales (profitability) than possible through other modes

of international business. Later an organization may export goods by setting up a

website or advertising in another country (can employ agents); 3. outsourcing →

Outsourcing is the contracting of business processes to external firms, usually in

developing countries where labor costs are cheaper. This practice has increased in

prevalence due to better technology and improvements in the educational standards of

the countries to which jobs are outsourced; 4. licensing Licensing is a business

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agreement involving two companies: one gives the other, in exchange for payment,

rights or resources (patents, copyrights, technology, managerial skills) or other

factor