Page 87 - Fundamentals of Management Myths Debunked (2017)_Flat

86 Part 1 • Introduction
methods. For example, New Delhi consumers can
enjoy Subway sandwiches, Namibians can dine on
KFC fried chicken, and Russians can consume Dunkin’
Donuts—all because of franchises in these countries.
On the other hand, Anheuser-Busch InBev licensed the
right to brew and market its Budweiser beer to brew-
ers such as Labatt in Canada, Modelo in Mexico, and
Kirin in Japan.
Once an organization has been doing business
internationally for a while and has gained experi-
ence in international markets, managers may decide
to make more of a direct investment. One way to do
this is through a global strategic alliance, which is a
partnership between an organization and a foreign com-
pany partner or partners in which both share resources
and knowledge in developing new products or build-
ing production facilities. For example, Honda Motor
and General Electric teamed up to produce a new jet
engine. A specific type of strategic alliance in which
the partners form a separate, independent organization
Danish Siddiqui/Reuters for some business purpose is called a joint venture. For
Top managers of India’s Tata Global Bever-
ages and Starbucks Coffee Company, shown example, Hewlett-Packard—the company we mentioned at the beginning of this section—has
here, announced a joint venture that will own had numerous joint ventures with various suppliers around the globe to develop different
and operate Starbucks cafes in cities through-
out India. The new organization, TATA components for its computer equipment. These partnerships provide a relatively easy way for
Starbucks Ltd., will give Indian consumers an companies to compete globally.
expanded range of coffee, tea, and innovative Finally, managers may choose to directly invest in a foreign country by setting up a
beverages.
foreign subsidiary as a separate and independent facility or office. This subsidiary can be
managed as a multidomestic organization (local control) or as a global organization (central-
ized control). As you can probably guess, this arrangement involves the greatest commitment
of resources and poses the greatest amount of risk. For instance, United Plastics Group of
Westmont, Illinois, built three injection-molding facilities in Suzhou, China. The company’s
executive vice president for business development says that level of investment was necessary
because “it fulfilled our mission of being a global supplier to our global accounts.” 9

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What Do Managers Need to Know About Managing
global strategic alliance
A partnership between an organization and foreign in a Global Organization?
company partner(s) in which both share resources
and knowledge in developing new products or A global world brings new challenges for managers, especially in managing in a country with
building production facilities 10
a different national culture. A specific challenge comes from the need to recognize the dif-
joint venture ferences that might exist and then find ways to make interactions effective.
A specific type of strategic alliance in which the U.S. managers once held (and some still hold) a rather parochial view of the world of
partners agree to form a separate, independent business. Parochialism is a narrow focus in which managers see things only through their
organization for some business purpose
own eyes and from their own perspectives; they don’t recognize that people from other coun-
foreign subsidiary tries have different ways of doing things or that they live differently from Americans. This
A direct investment in a foreign country that view can’t succeed in a global village—nor is it the dominant view held today. Changing such
involves setting up a separate and independent
facility or office perceptions requires understanding that countries have different cultures and environments.
parochialism A person with a parochial attitude
A narrow focus in which managers see things
only through their own eyes and from their own cannot succeed in today’s world.
perspective