MANA 3319A PANDEY

Managing in a Global Environment

September 5, 2007

Dimensions of Culture Culture:- the collective programming of the

mind Culture shock- a person is exposed to a

new culture with different norms, customs, expectations, has difficulty in adjusting

Dimensions Power Distance Individualism Uncertainty avoidance Masculinity/feminity Long-term/short term orientation www. http://www.geert-hofstede.com

Why does this car Cost $20,000? 6000- assembly 3000- sophisticated

parts- engine etc 800- small parts 500- Advertising 1000- data

processing 7600- legal,

banking, insurance fees

6000- South Korea 3000- Japan 800- Taiwan

Singapore and Japan

500- Great Britain 1000- Ireland 7600- United

States.

Change in world Business

Global Shift: The effects of changes in the competitive landscape prompted by worldwide competition.

What are the ways in which world output and world trade have changed?

How International Business has changed

Lowered trade barriers General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO)

Integrated Economic Markets The European Union (EU) The North American Free Trade Act (NAFTA) Central American-Dominican Republic Free

Trade Agreement (CAFTA) The Association of Southeast Asian Nations

(ASEAN) The Asia Pacific Economic Cooperation (APEC)

So what is changing?

Global consumer preferences Tastes and preferences are converging Presence of mass media, exposure to goods from

various countries, and standardized products

Globalized production Cost efficiency – Outsourcing,

So what is changing?(cont.) Technological innovations

Advances in communications, information processing, and transportation technology

Fiber optics, wireless technology, the Internet and World Wide Web, and satellite technology

Management across cultures Adaptation to business strategies, structures,

operational policies, and human resource programs

Changing Environments

1. Business 2. Legal

Common law Civil law Muslim Law

3. Cultural

Foreign expansion- Questions firms need to ask.

1. Where Large domestic market Wealth of customers high likely to grow Available resources Firms offerings are suitable to the

market( coals to New Castle)

A positive business environment exists

2. When?1. Timing is key2. First mover advantage3. Pioneering costs

Questions firms need to ask.

How much?Lowest if the firm simply decides to export its products to the foreign locationHighest if the firm decides to have a

wholly owned subsidiary in the foreign country

4. Which way?

Modes of EntryExporting – entering new markets by

sending products to other countries, still maintaining production facilities within the domestic borders

Turnkey projects – specialized type of exporting, where the firm handles the startup of the company and a local client is then handed the key

Licensing – entering new markets by transferring the rights to produce and sell products overseas to a foreign firm

Modes of Entry Franchising – entering new markets in which the

franchise pays a fee for using the brand name and agrees to follow the standards and rules

Joint venture – means of entering new markets where two or more independent firms agree to establish a separate firm

Strategic alliance – cooperative arrangements between competitors or potential competitors from different countries

Wholly owned subsidiary – entering new markets in which a firm fully owns its subsidiary in foreign countries

Examples of Strategic Alliances

General Electric – Snecma of France

Toshiba – IBMMitsui – General ElectricGM – DaewooTexas Instrument – Compel

CommunicationsCanon – Hewlett-PackardMitsubishi – Caterpillar

Basic Approaches to Managing an International Subsidiary Ethnocentric Approach- top

management and key positions filled with people from the home country (expatriates)

Polycentric Approach- staffed by nationals of the host country

Geocentric Approach- staffed by qualified people from other countries

Third Country Nationals- citizens from other countries.

Can you give examples of these.

Why International Assignments End in Failure

Career blockage – the feeling that working abroad has gotten their career sidetracked, while people back home are climbing the corporate ladder

Culture shock – the inability to adjust to a different cultural environment

Lack of pre-departure cross-cultural training – little if any is offered to expatriates before going to a different country.

Why International Assignments End in Failure( Contd.)

Overemphasis on technical qualifications – the expatriate may lack cultural adaptability, even though they have the technical skills

Getting rid of a troublesome employee – provides the ability to solve interpersonal conflict, but at a huge expense to the company

Family problems – inability or unwillingness of the expatriate’s family to adapt to life in another country

Key HR Management Factors for Global FirmsSelection

Selection criterion should include cultural sensitivity

Training Length of assignment determines depth of

training Cross-cultural training is critical to success

Career Development International assignments should be part of

career advancement planCompensation and Benefits

Incentives and quality-of-life concerns

Cross-cultural Training Impression Management – High intensity.

Assessment center, field experiences, simulations, sensitivity training

Affective Approach- Language training, role-playing, critical incidents, cases, stress-reduction training, moderate language training

Information-Giving Approach- area briefing, cultural briefing, films/ books/ interpreters, survival-level language

Ethics and Social Responsibility

Globalization greatly increases the possibility that managers will face an ethical dilemma.

Different cultures have different notions of right and wrong.

U.S. Foreign Corrupt Practice Act (1977).

Many firms and industry groups have developed their own codes of conduct for foreign operations.