The Organisational Environment and Global Dimensions of Management

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Today's organisations tend to be global, spanning many countries and crossing many borders. This articles discusses the benefits and issues faced by multinationals, be it political, cultural, environmental or economical.

This article is a topic within the subject Managing Organisations and People.

Contents

Required Reading

Robbins et all, Managing Organisations and People MGMT1001, compiled from Management (6th ed) and Organisational Behaviour (6th ed), (3rd ed, Sydney, Pearson Australia, 2012), pp. 41-74 (Chapter 2).

Global Perspectives

[1]There are four main views of the global market (that is the ability to buy and sell anywhere on the planet):

  • Parochialism - viewing the world only through ones eyes. People with this perspective ignore other cultures and ways of operating.
  • Ethnocentrism - the view that the best work is done in the home country; foreign workers lack the skill and knowledge to work efficiently and effectively. This view is an extension of parochialism
  • Polycentrism - the view that managers in the home country know the best work practices for their operations
  • Geocentrism - the view that the best work can be done by people from around the world

It is important to understand that the global environment crosses not just physical borders but also cultural, political and economic ones. Hence practices that are acceptable and work in Australia may fail in China, Japan, Peru or even the US.

Trade Agreements

[2]Another aspect that shapes the global environment is trade agreements. These are agreements between allied countries, or even just countries in the same reason that outline what kind of competition and trade is and isn't allowed.

Some examples of regional trading alliances are:

  • The Australian-New Zealand Closer Economic Relations Agreement (CER)
  • Australian Bilateral Free Trade Agreement
  • The EU
  • North American Free Trade Agreement (NAFTA)

Some examples of Global Trading agreements or mechanisms are:

  • World Trade Organisation (WTO)
  • International Monetary Fund (IMF)

Cultural Environment

[3]Another consideration to take into account when dealing with the global environment is the cultural differences. Every country/nation has their own set of values and ways of doing things, and the same can be said for organisations. The first class is known as the national culture while the latter is known as the organisational culture. Research has shown that employees value and are more influenced by national values.

Hofstede's Framework for Assessing Cultures

[4]Hofstedes's framework is widely used as a means of classifying cultures according to five dimensions. It helps people from other countries briefly understand how other countries operate and what values individuals in those countries have. The five dimensions are:

  1. Individualistic/Collective- the degree to which people look after their own or expect others to take care of them
  2. High/Low Power Distance- the degree to which individuals respect/admire authority
  3. High/Low Uncertainty Avoidance- the degree to which people are afraid of or accept uncertainty and risk
  4. Achievement/Nurturing- the degree to which assertiveness and competition are valued over relationship building and concern for others
  5. Long/Short Term Orientation the degree to which people value tradition and the past over continuous change

The frameworks helps managers find markets with similar cultural dimensions with the assumption that similarities will ensure success.

The GLOBE Framework for Assessing Cultures

[5]The GLOBE (Global Leadership and Organisational Behaviour Effectiveness) frameowrk extends Hofstede's framework to give managers a better understanding of cultural differences in leadership and behaviour. The GLOBE framework analyses cultures based on the following 9 dimensions:

  1. Assertiveness
  2. Future Orientation
  3. Gender Differentiation
  4. Uncertainty Avoidance
  5. Power Distance
  6. Individualism/Collectivism
  7. In Group Collectivism
  8. Performance Orientation
  9. Humane Orientation

Challenges of Managing in the Global Environment

[6]There are two main challenges faced by managers in the global environment: Openness and sustainability.

Openness

[7]The challenge of openness is perhaps better described by 'globalisation'. While there are wider markets to trade in and many more opportunities, the challenges are also increasing. These can be the effect of terrorism, hacking, economic interdependence of countries and cultural differences as well as media coverage, and open information on websites.

Sustainability

[8]the challenge of sustainability refers to the increasing awareness of global warming and the laws put in place against companies wasting or harming the environment. Other regulations may be the use of green energy and taxes, all of which should be kept in mind when managing today.

End

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References

"Textbook" refers to Robbins et all, Managing Organisations and People MGMT1001, compiled from Management (6th ed) and Organisational Behaviour (6th ed), (3rd ed, Sydney, Pearson Australia, 2012).

  1. Textbook p. 50
  2. Textbook p. 53
  3. Textbook p.66
  4. Textbook p. 67
  5. Textbook p. 68
  6. Textbook p. 69
  7. Textbook p. 69
  8. Textbook p. 72
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