Chapter 3.docx - Chapter 3 Global Market Parochialism is viewing the world solely through your own perspectives leading to an inability to recognize

Chapter 3.docx - Chapter 3 Global Market Parochialism is...

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Chapter 3: Global Market Parochialism is viewing the world solely through your own perspectives, leading to an inability to recognize differences between people. Managers might have one of three perspectives or attitudes toward international business: 1. An ethnocentric attitude is the parochialistic belief that the best work approaches and practices are those of the home country (the country in which the company’s headquarters are located). 2. A polycentric attitude is the view that the managers in the host country (the foreign country where the organization is doing business) know the best work approaches and practices for running their business. 3. A geocentric attitude is a world-oriented view that focuses on using the best approaches and people from around the globe. To be a successful global manager, an individual needs to be sensitive to differences in national customs and practices. UNDERSTANDING THE GLOBAL ENVIRONMENT Several significant forces are reshaping today’s global environment. Important features of the global environment include regional trading alliances and different types of global organizations. A. Regional Trading Alliances Regional trading alliances are reshaping global competition. Competition is no longer limited to country versus country, but region versus region. 1. The European Union (EU) is a union of 27 European nations created as a unified economic and trade entity. Three more countries (will be gaining membership soon). a. The primary motivation for the creation of the EU in February 1992 was to allow member nations to reassert their position against the industrial strength of the United States and Japan. Currently its membership covers a base of nearly have a billion people and 31% of the world’s economic output. b. Sixteen of the 27 member states of the EU have agreed to adopt the common currency of the EU, the euro. Denmark, the United Kingdom and Sweden have opted out of using the euro. c. The Lisbon Treaty, signed in December 2007, provides the EU with a common legal framework to meet current challenges facing European economies, such as climate change, security and energy needs. d. The concept of solidarity has been a challenge as individual member states struggle with the maintaining a common currency at the same time valuing protectionist measures that foster
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nationalism. Another recent struggle has been the massive debt crisis of Greece which has been bailed out by the International Monetary Fund. 2. The North American Free Trade Agreement (NAFTA) is an agreement among the Mexican, Canadian, and U.S. governments in which barriers to trade have been eliminated. a. NAFTA went into effect on January 1, 1994 and today is the world’s largest trading block in terms of GDP. Canada is currently the US’s top trading partner with Mexico being number three (China is number two). As of 2010, it remains the largest trading bloc in terms of combined GDP of its members.
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