BUS208: Principles of Management

2a. Describe the history of management theory to see how various theories have developed over time to the present day

The idea of managing human capital is not something new, yet the process has changed dramatically over the years. Managerial concepts have been applied throughout history to promote societal progress, economic expansion, and technological advances. Below is a brief chronology to give you a historical context.

2b. Demonstrate an understanding of, and be able to analyze the impact of, globalization on management

The differences between foreign countries and the one you are familiar with are often huge and multifaceted. Some are obvious, such as differences in language, currency, and everyday habits. But others are subtle, complex, and sometimes even hidden. Success in international business means understanding a wide range of cultural, economic, legal, and political differences between countries.

United States companies wanting to get involved in global business, there are several options for how to partner with other countries.

1. Importing involves purchasing products from other countries and reselling them in your home country.
2. Exporting entails selling products to foreign customers.
3. Franchise agreements allow a company to grant a foreign company the right to use its brand name and sell its products.
4. Licensing agreements allow a foreign company to sell a company's products or use its intellectual property in exchange for royalty fees.
5. International contract manufacturing, or outsourcing, allows a company to have its products manufactured or services provided in other countries.
6. Strategic alliances are an agreement between two companies to pool talent and resources to achieve business goals that benefit both partners.
7. Joint ventures are a specific type of strategic alliance in which a separate entity funded by the participating companies is formed to manage the alliance.
8. Foreign direct investment (FDI) is a formal establishment of business operations on foreign soil.
9. Offshoring occurs when a company sets up facilities in a foreign country that replaces U.S. manufacturing facilities to produce goods that will be sent back to the United States for sale.
10. Foreign subsidiaries (a common form of an FDI) are independent companies owned by a foreign firm.
11. Multinational corporation (MNC) is a company that operates in many countries.

The effect of globalization on management requires them to understand the skills and knowledge listed below. They must understand a variety of cultural, economic, and legal differences between countries. They must understand cultural challenges stem from differences in language, concepts of time and sociability, and communication styles. When doing business in a foreign country, they need to know the country's level of economic development. When dealing with countries whose currency is different from theirs, they must be aware of the impact that fluctuations in exchange rates will have on their profits. When doing business globally, they must deal with the challenges that come from the vast differences in legal and regulatory environments.

 

2c. Demonstrate an understanding of, and be able to analyze, the challenges of growing a business in the global environment

With business globalization as the norm in organizations, management must understand the pros and cons of trade controls. The following knowledge is necessary for making good management decisions. Protectionism is the use of controls to restrict free trade to protect domestic industries by reducing foreign competition. Tariffs are taxes on imports. Because they raise the price of foreign-made goods, they make them less competitive. Quotas are restrictions on imports that impose a limit on the quantity of a good that can be imported over a time period. They're used to protect specific industries, usually new industries or those facing strong competitive pressure from foreign firms. Embargos are quotas that ban the import or export of certain goods to or from a specific country (usually imposed for economic or political reasons). Understanding that the common reason for tariffs/quotas is to fight dumping, which is selling exported goods below the price producers would normally charge in their home markets (and often below the costs of producing the goods). Many management experts believe that governments should support free trade and stop imposing restrictive regulations on the free flow of products between nations. Others argue that governments should impose some level of trade regulations on imported goods and services.

Businesses work to ease trade barriers, and more countries are joining together to promote trade and mutual economic benefits. Management doing global business must understand these important initiatives. Free trade is encouraged by several agreements and organizations set up to monitor trade policies. The General Agreement on Tariffs and Trade (GATT) encourages free trade by regulating and reducing tariffs and providing a forum for resolving disputes. GATT achieved substantial reductions in tariffs and quotas. In 1995, its members founded the World Trade Organization (WTO), which encourages global commerce and lower trade barriers, enforces international rules of trade, and provides a forum for resolving disputes.

There are three management strategies to be considered by companies wanting to excel as a global enterprise. These strategies include:

1. implementing an effective organizational structure
2. successfully managing talent
3. developing a differentiation strategy.

Successful managers working in global business understand:

1. For an effective organizational structure, the global enterprise must arrange its internal practices for flexibility, efficiency, and responsiveness.
2. The global enterprise should disperse business centers at local and regional levels for optimum efficiency and responsiveness.
3. Talent management is a critical component to competing globally and is full of issues, including political hiring practices, a lack of workforce diversity, and a shortage of skilled workers.
4. Managers should build a talent pool that is diverse, skilled, and located across the globe to match the demands placed on global enterprises.
5. A differentiation strategy is essential for a global enterprise to sustain or gain market shares.

The natural extension of social media usage at work is that employees now use these tools to conduct local and global business. By developing clear cut guidelines for personal social media usage on the job and determining how that usage can be leveraged for an organization's benefit, a company can be positioned to take advantage of these emerging marketing tools. By setting social media goals, creating new departments, and hiring skilled workers, an organization should see a return on their investment in short order. Managers doing global business need to be aware of the following social media user landscape to have a realistic perspective on how to best leverage it in doing business with other countries.