The global market place in which managers participate is very complex and competitive. As trade barriers, geographic boundaries and political borders come down the opportunities for many organisations are increasing.
Organisations can choose to enter the global market place in a number of different ways. Regardless of how they choose to do this, if an organisation goes into the global market with the view that "our way is the best and only way", then their chances of success are not good. This view is termed "parochialism".
All managers must seek to recognise, understand and respect foreign customs and market differences.
1. Global perspectives:.
Managers adopt one of three views of international business:.
(a) Ethnocentric perspective - this is the parochial belief that the best work practices and approaches are those of the home nation.
Advantages of this view are that organisations will have simple structures and managers can exercise closer control.
Disadvantages this view are that decision-making may be less effective. There is no flexibility for employees working in foreign locations and there will be difficulties in building good business relationships in the host nation.
(b) Polycentric perspective - this is the view that managers in the overseas, host nation know the best work practices for running operations in that nation.
Advantages of this view are that the managers working in the overseas operation will have extensive knowledge of how best to run the workplace and meet market demand. Local managers are likely to be more committed and have higher morale than managers imported from the home country. Also the host government is more likely to provide support.
Disadvantages of this view are that duplication of work efforts and facilities in both the home nation and foreign host nation leads to inefficiencies and ineffective use of resources. It is also difficult to maintain a single focus on global objectives as operations in each nation concentrate on their own operations.