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This chapter is from the book

Identifying the Impact on Management

Beginning in the 1980s, there has been more interest in global management as America's global competitiveness began to diminish. The loss of global competitiveness can be seen especially in the world banking community. The world's top 10 largest banks include fewer U.S. banks now than ever before.

More firms have recognized the importance of global leadership. Companies don't just need financial resources to expand; they also must have human resources as well.

Whether your company is a MNC or a company operating exclusively in the domestic arena you are still impacted by this global environment. You are likely to find yourself accepting an international assignment—responsible for a workforce from another culture. Or at the very least, you will be working with people from other cultures. These people can be superiors, subordinates, or peers.

As a manager, you must view this globalization as an opportunity to be taken advantage of—not as a threat to be avoided. You can expect to be offered more overseas assignments yourself and expect to offer more to your employees in this global economy. Almost one half of American firms surveyed are expected to increase the number of managers they are placing in expatriate assignments.

This globalization requires new ways of thinking. As a manager, you need expanded competencies. You need to understand that differences exist. You may, therefore, need to be flexible, re-think some of your practices, and accommodate others' cultures.

While nearly all the resources of American businesses flow across national borders, people (the human resources of organizations) are one of the critical components that you must manage from a number of perspectives. You are also responsible for developing an international workforce. This is at the heart of the success of global competitiveness.

The name "cosmopolitan" manager has been used as the preferred terminology over global manager in some circles. Cosmopolitan is strictly defined as "belonging to the world." Whichever term is used, the impact is the same. To increase your marketability today, you must know about the world and the people in it.

The manager who exhibits cultural sensitivity and strong intercultural communication skills is in demand today—both in and outside America.

FYI

MNCs based in the United States employ over 100 million workers in other countries.

Monitoring trends in the external environment no longer means just keeping tabs on what is happening in the United States. Now you must monitor global trends as well. This means being familiar with the political and legal environments of various countries, socio-cultural trends, economic conditions, and technological environments. This also includes watching for changing preferences of consumers across the world because new consumers are being developed each day.

The Multicultural Workforce

People are moving across borders more extensively and freely now. Some of this movement is to take advantage of employment opportunities. People are more accessible the world over now.

Highly skilled people have left some of the developing countries to accept employment in some of the more developed countries. This has created concern for "brain drain" in those countries.

The people of a country share a set of values. But this doesn't mean that only one culture is found in a country. The United States is a good example of this. The United States is multicultural; there is no one culture, but rather many cultures represented. The multicultural aspect is often referred to today as a mosaic to better reflect the nature of the issue.

The Expatriate Manager

A global presence is required for success in many organizations today. And, this requires managers who can effectively operate overseas and are comfortable working in cultures other than their own. Cultural competencies have become critical.

U.S. multinationals are estimated to send 100,000 Americans abroad each year at a corporate investment of $1 million over four years. These managers who are sent overseas to a foreign facility are known as expatriate managers. It is increasingly likely that you will take an overseas assignment at some point in your career—whether with your current employer or a future employer.

Multinationals have three choices when filling an overseas assignment. They can select parent country nationals (known as expatriates), host country nationals (referred to as locals), or third country nationals. Transferring a German employee to a position in Australia in a Brazilian firm is an example of a third country national. An expatriate is more likely to be used when a foreign operation is newly established or when operations are established in undeveloped countries.

While you may think that the use of expatriate managers is a relatively new concept, it is not. Even before multinational corporations existed, the leaders of large empires used expatriate managers to oversee regions long distances away.

The use of expatriate management positions helps businesses become more successful. Organizations need to learn more about other cultures and their values to operate more effectively in the global arena. Foreign assignments provide you with the international expertise that has become vital. The global world demands cross-cultural leaders in business.

FYI

The cost of failed assignments by expatriate managers has been estimated to exceed $2 billion annually to American businesses.

A recent survey conducted by the National Industrial Conference Board revealed that staffing overseas positions was the second most serious consideration for top executives of multinational corporations. It has become even more important as there have been more profits at stake overseas.

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