Management in the Global Village

Step 1 of 6

The Global Village

Until the industrial revolution international trade was little significant, occurring within the empires, and there was no interest in cultural differences, because people from other cultures were viewed with condescension and most of times they only have two options: join the dominant culture or die. With the Enlightenment, and its humanistic view of man, with the Industrial Revolution, and its changes in transportation and telecommunications and growth in production, with the formation of trading blocs (GATT, EU, NAFTA, Mercosul, ASEAN) and deregulation of many economic activities, there was a significant increase in trade and, therefore, in contacts between persons and organizations from many different cultural backgrounds (Schneider & Barsoux. 1997).

On a global scale, between the late 60s and 90s, intra-regional trade increased from 10% to 18% of world GDP, and outside the region trade increased of 10 to 16%; in the last 20 years, world merchandise exports increased from 11% of world GDP to 18%, becoming the foreign trade a powerful growth factor (Finuras, 1999). In 1992 trade in services exceeded, in absolute terms, trade in primary products (agricultural, minerals and fuels) (Finuras, 1999). Competition is no longer the prerogative of some sectors nor an elite of large multinational companies (Finuras, 1999).

The economic globalization brought the need to create cross-cultural products, services, brands and messages or to adapt these products, services, brands and messages to different nations' tastes and preferences. The customers are now spread worldwide, as well as suppliers and subcontractors. Companies have plants, offices and shops all around the world, working with people from much diversified cultures, languages and religions. The internationalization of human resources is a natural consequence of globalization of business (Bilhim, 2006). Furthermore, the formation of blocks with facilitation of movement of human resources increases the national staff diversity of companies, mergers and acquisitions bring foreigners for companies and partnerships and more occasional cooperation involving the contact with foreigners (Bilhim, 2006).