Page 84 - Fundamentals of Management Myths Debunked (2017)_Flat

CHAPTER 3 • Integrative Managerial Issues 83
What Is Globalization and How Does It Affect
Organizations?

3-1 Explain “It’s like being in an emergency
globalization and room, doing triage.”
its impact on
organizations. That was the reaction of Hewlett-Packard’s senior vice
president for operations after learning that a catastrophic
2
earthquake and tsunami had hit Japan. Not long after
getting the news, company managers in Japan, Taiwan, and the United States gathered in a
“virtual situation room” to instantly share information. This analogy of an emergency room
is very apt, according to experts, because today’s global supply chains are like intricate in-
terconnected biological systems. They can respond and self-heal as needed, but they’re also
susceptible to weaknesses. Normally, the global flow of goods will adapt, day in and day out,
to all kinds of glitches and setbacks. However, when a disaster strikes (for instance, an earth-
quake, a volcano eruption, labor unrest, political upheavals, floods or hurricanes or tornadoes
or blizzards anywhere in the world), you really grasp the fragility of the global supply chain. 3
An important issue that managers must deal with is globalization. (Remember our discus-
sion of the global arena in Chapter 2 as one component of the external environment.) Major
events such as catastrophic natural disasters, global economic meltdowns, or terrorist threats
have created challenges for managers doing business globally. Despite such challenges,
globalization isn’t about to disappear. Nations and businesses have been trading with each
other for centuries through all kinds of disasters and economic ups and downs. Over the last
couple of decades, we’ve seen an explosion of companies—big and small—operating almost
anywhere in the world. Geographic borders mean little when it comes to doing business. For
instance, BMW, a German firm, builds cars in South Carolina. McDonald’s sells hamburgers
in China. Tata, an Indian company, purchased the Jaguar brand—which started as a British
company—from Ford Motor Company, a U.S. company. And look at these so-called American
companies that get well over half of their annual revenues from sales outside the United States.

Global Sales (outside the United States) for:
Avon—89 percent
McDonald’s—63 percent
IBM—58 percent
Coke—56 percent
GE—52 percent
Apple—52 percent 4

Although the world is still a global village—that is, a boundaryless world where goods
and services are produced and marketed worldwide—how managers do business in that
global village is changing. To be effective in this boundaryless world, managers need to adapt
to this changed environment, as well as be more understanding of cultures, systems, and tech-
niques that are different from their own.

What Does It Mean to Be “Global”?
There are three different ways for organizations to be considered “global.” For instance, orga-
nizations are considered global if they exchange goods and services with consumers in other
countries. Such ❶ marketplace globalization is the most common approach to being global. global village
However, many organizations, especially high-tech organizations, are considered global be- A boundaryless world where goods and services
cause they ❷ use managerial and technical employee talent from other countries. One factor are produced and marketed worldwide