Global Perspective of Management: Definition & Concept

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  • 0:04 Global Perspective of…
  • 0:29 Benefits & Drawbacks
  • 3:11 Currencies & Cultures
  • 4:30 Lesson Summary
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Lesson Transcript
Instructor: Anthony Aparicio

Tony taught Business and Aeronautics courses for eight years; he holds a Master's degree in Management and is completing a PhD in Organizational Psychology

Today's fast-paced, Internet-driven business environment calls for more than just a local perspective of management. Highly effective managers need to see things based on how their company functions in the big picture of the new global economy.

Global Perspective of Management

A global perspective is when someone can think about a situation as it relates to the rest of the world. It may seem silly to some that every business should be concerned with what goes on in another country, but today we're all connected in a lot of ways. With the use of the Internet as a means of reaching customers, every mom-and-pop store on the corner can now compete on a global scale, when you think about it.

Benefits and Drawbacks

Chances are you know someone who owns a phone. Just where did that phone come from? The person (maybe yourself) who purchased it went to the local store and paid for the new device, but what exactly did it take to get that phone to the store? Many phones are designed and have operating systems from the United States; rare minerals in the phone's circuitry mainly come from China and Mongolia; they use processors made in Korea and Taiwan; and gyroscopes (so the screen flips when you turn it) from Europe, with most of the phones being assembled back in China. Many of the items we use every day have parts from or are put together in another country.

A manager with a local mindset would not know where to start coordinating all of these parts or even figure out from where to outsource them. Outsourcing is when companies do not do all of the work themselves but hire another company (often overseas) to complete some part of the work based on cheaper labor or material costs. Managers with a global perspective are able to research where materials originate in the world and seek to take advantage of cost savings by purchasing them right from the source. Labor costs are often one of the largest considerations when it comes to manufacturing products. There are many other countries that have much lower labor costs than we do here in the United States.

After adding up all of the cost savings for materials and labor, it would seem that doing business globally is the best way to go in every case. Well, not quite! There are also some drawbacks that global managers must be aware of when it comes to using the entire world as your office. Each country has its own rules for international trade, in the form of tariffs, trade restrictions, or government regulations that are meant to protect the host country's companies and resources. Even though a nation might have the cheapest cost for a particular mineral, the costs of getting it out of the country may not be worth it in the end.

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