Resources Read/review the following resources for this activity: Textbook: All Chapters Lecture (PDF): Presentation (Luthans 10e) – All Chapters (in Course Documents) A minimum of 15-20 resources which can be a combination of websites, journal articles,

20180629174652course_documents_20180629.zip

Home >Applied Sciences homework help >Resources Read/review the following resources for this activity: Textbook: All Chapters Lecture (PDF): Presentation (Luthans 10e) – All Chapters (in Course Documents) A minimum of 15-20 resources which can be a combination of websites, journal articles,

Presentations/Luthans_10e_PPT_Ch01.pdf

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter One

Globalization and International Linkages

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Assess the implications of globalization for countries, industries, firms, and communities

• Review the major trends in global and regional integration

• Examine the changing balance of global economic power and trade and investment flows among countries

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued)

• Analyze the major economic systems and recent developments among countries that reflect those systems

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Social Media

• Changed the way in which people connect

• Changed global business strategy

• Changed the way in which international business is conducted

• Impacted international diplomacy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Communication Platforms

• Can be accessed by individuals and groups from any location

• Offer myriad opportunities for companies to identify and target discrete groups

• Revolutionize nature of management by allowing direct interaction between producers and consumers

• Accelerate the already rapid pace of globalization and integration

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Management

• Process of completing activities with and through other people

• International management is the process of:

– Applying management concepts and techniques in a multinational environment

– Adapting management practices to different economic, political, and cultural contexts

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multinational Corporations (MNCs)

• Firms that have:

– Operations in more than one country

– International sales

– Mix of nationality among managers and owners

• Managers are required to develop international management expertise

• Increasingly coming from developing nations like China and India

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Globalization and Internationalization

• Globalization

– Process of social, political, economic, cultural, and technological integration among countries around the world

– Evidence can be seen in increased levels of trade, capital flows, and migration

• Internationalization

– Process of a business crossing national and cultural borders

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Factors That Facilitate Globalization

• Technological advances in transnational communications, transport, and travel

• Offshoring

– Companies undertake some activities at offshore locations instead of in their home countries

• Outsourcing

– Subcontracting or contracting out of activities that had previously been performed by the firm to external organizations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Benefits of Globalization

Wealth

Better jobs

Access to technology

Lower prices

Availability of goods

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Criticisms of Globalization

• Offshoring of service jobs to lower-wage countries

– Companies and countries place downward pressure on wages and working conditions

• Growing trade deficits and slow wage growth could lead to economic collapse

• Concerns over environmental and social impacts

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Global Agreements

• General Agreement on Tariffs and Trade (GATT)

– Helped in the dramatic reduction of tariff and nontariff barriers among nations

• World Trade Organization (WTO)

– Oversees rules and regulations for international trade and investment

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Regional Agreements

North American Free Trade Agreement (NAFTA)

U.S.–Singapore Free Trade Agreement

U.S.–Central American Free Trade Agreement (CAFTA and CAFTA- DR)

European Union (EU)

Transatlantic Trade and Investment Partnership (T-TIP)

Association of Southeast Asian Nations (ASEAN)

Trans-Pacific Partnership (TPP)

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

North American Free Trade Agreement (NAFTA)

• Member nations include the United States, Canada, and Mexico

• Helped eliminate tariffs and import and export quotas

• Opened government procurement markets to companies in the other two nations

• Increased opportunity to make investments in each other’s country

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

North American Free Trade Agreement (NAFTA) (continued)

• Increased the ease of travel between countries

• Removed restrictions on agricultural products, auto parts, and energy goods

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Changing Global Demographics

• Factors contributing to the increase in the median global population age

– Increase in global life expectancy due to improvements in technology and healthcare

– Increase in time spent in retirement due to increase in life expectancy

– Decline in global fertility rate

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Shifting Balance of Economic Power in the Global Economy

• Result of economic integration and rapid growth of emerging markets

• Emerging and developing nations might play a dominant role in the global economic system

– BRIC countries - Brazil, Russia, India, and China

– E7 - Seven major emerging economies (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey)

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Shifting Balance of Economic Power in the Global Economy (continued)

– N-11 - Next wave of emerging markets (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam)

– African countries can benefit from the increase in price of commodities

• Gas and oil, agricultural products, and mineral and mining products

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 1.7 - Changing Global Demographics: Developing Countries on the Rise

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Trends in Trade and International Investments

• Since the global recession in 2009 , global trade and investment have continued to grow

• Foreign direct investment (FDI)

– Amount invested in property, plant, or equipment in another country

– Growing at a slow but steady rate in the years since the global recession

– May reach $1.7 trillion by 2017

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Global Economic Systems

Market economy

Command economy

Mixed economy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Market Economy

• Exists when private enterprises reserve the right to own property and monitor production and distribution of goods and services

• Management is effective

– Private ownership provides local evaluation and understanding

• Least restrictive form of economy

– Resource allocation is determined by the law of demand

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Market Economy (continued 1)

• General balance between supply and demand sustains prices

– Imbalance creates price fluctuation

• Competition is encouraged

– Helps promote innovation, economic growth, high quality, and efficiency

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Market Economy (continued 2)

• Optimal growth is facilitated by focusing on how to best serve the customer

• Monopolies or restrictive business practices may be prohibited to maintain the integrity of the economy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Command Economy

• Government holds explicit control over the price and supply of a good or service

• Businesses are owned by the state

– Ensures that investments and other business practices are done in the best interest of the nation

– Management ignores demographic information

• Creates an environment where little motivation exists

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Mixed Economy

• Combination of market and command economy

• Helps raise the standard of living

– Aided by regulations concerning minimum wage standards, social security, environmental protection, and the advancement of civil rights

• Ownership of organizations that are critical to the nation may be transferred to the state

– Subsidizes costs and allows the firms to flourish

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Evaluation of the World’s Economies

Established economies

• North America

• European Union

• Japan

Emerging economies

• Central and Eastern Europe

• China

• Other emerging markets of Asia (South Korea, Hong Kong, Singapore, and Taiwan)

• India

Developing economies

• South America

• Middle East and Central Asia

• Africa

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

North America

• One of the four largest trading blocs in the world

– Combined purchasing power of the United States, Canada, and Mexico is more than $19 trillion

• Free-market-based economy provides considerable freedom in decision-making processes

– International firms receive the benefit of greater flexibility and lower barriers

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

North America (continued 1)

• The United States

– Firms maintain dominant global positions in technology-intensive industries

– Considered to be a lucrative market for expansion by foreign MNCs

– Canada is the largest trading partner

• Most of the largest foreign-owned companies in Canada are totally or heavily U.S.-owned

• Legal and business environments are similar to that in the U.S.

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

North America (continued 2)

• Mexico

– Strongest Latin American economy

– Has free-trade agreements with over 46 countries

– Competes with Asia for the U.S. market and has the benefit of proximity and lower-cost labor

• Facilitated by the maquiladora system

– Increased trade with both Europe and Asia

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

European Union (EU)

• Objectives and goals

– Eliminate all trade barriers among member nations

– Follow a single currency (euro) and a regional central bank

• Firms have the benefit of:

– Manufacturing high-quality, low-cost goods

– Shipping manufactured goods across the EU without paying duties or being subject to quotas

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

European Union (EU) (continued)

• Challenges

– Absorbing its eastern neighbors that could result in a giant, single European market

– Large deficits faced by several European governments

• Resulted from structural conditions and shorter-term economic pressures

• Placed pressure on the euro

– Maintaining a unified EU in the coming decades

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Japan

• Unprecedented economic success in the 1970s and 1980s

– Huge positive trade balance

– Strong yen

– Gained recognition as the world leader in manufacturing and consumer goods

• Remains a formidable international competitor and is well poised in all major economic regions

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Japan (continued)

• Early success can be attributed to:

– The Ministry of International Trade and Industry (MITI)

• Governmental agency that identifies and ranks national commercial pursuits and guides the distribution of national resources to meet these goals

– Keiretsus

• Large, vertically integrated corporations whose holdings supply much of the assistance needed in providing goods and services to end users

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Emerging and Developing Economies

• Face relatively low GDP per capita

• Have an unskilled or semiskilled workforce

• Involve considerable government intervention in economic affairs

• Can be viewed as developing economies that exhibit sustained economic reform and growth

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Russia

• Dismantled price controls

• Privatized businesses previously owned by the government

• Direct investment and membership in International Monetary Fund (IMF) helped to raise GDP and decrease inflation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Russian Economy

• Early economy was boosted by abundant oil and high global energy prices

– Recent decreases in demand have pushed Russia into a recession

• Likely to undergo many years of economic instability and recurrent political problems

• Challenges - Persistent crime, corruption, and lack of public security

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Central and Eastern Europe

• Hungary

– Privatization of state-owned businesses

– Joint ventures between local and western firms

– Receives direct investments from MNCs

• Poland

– Only economy in the EU to continue to grow during the global recession of 2008–2009

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Central and Eastern Europe (continued)

• Key for Albania and other Eastern European countries is to make themselves less risky and more attractive for international business

– Maintain social order

– Establish rule of law

– Rebuild collapsed infrastructure

– Get factories and other value-added, job- producing firms up and running

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

China

• Considerable decline in GDP

• Current challenges

– Massive savings glut in corporate sector

– Globalization of manufacturing networks

– Vast developmental needs

– Unemployment (15–20 million new jobs required annually)

– Social unrest

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

China: Major Risk for Investors

• Caused due to:

– Delicate nature of the one country, two systems balance (communism and capitalism)

– Concerns about undervaluation of China’s currency

– Unpredictable and fluid nature of policies toward foreign firms

• Trade relations with developed nations remain tense

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Economic Performance in Emerging Markets of Asia

• South Korea

– Chaebols: Large, family-held conglomerates that have considerable economic and political power

– Has a solid economy with moderate growth and inflation, low unemployment, an export surplus, and fairly equal distribution of income

• Hong Kong

– Headquarters for some of the most successful multinational operations in Asia

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Economic Performance in Emerging Markets of Asia (continued 1)

• Singapore

– Emerged as an urban planner’s model and the leader and financial center for Southeast Asia

• Taiwan

– Progressed from a labor-intensive economy to one dominated by technologically sophisticated industries

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Economic Performance in Emerging Markets of Asia (continued 2)

• Thailand, Malaysia, Indonesia, and Vietnam

– Have a large population base with inexpensive labor despite lack of natural resources

– Known to have social stability but have suffered from turmoil in the aftermath of recent economic crisis

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

India

• Recent trend of locating software and higher value-added services has bolstered middle- and upper-class market for goods and services

• Attractive to U.S. and British investors

– Presence of English-speaking, well-educated, and technologically sophisticated workers

– Availability of government funds for economic development

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

South America

• Faced many economic problems

– Accumulated heavy foreign debt obligations

– Experienced severe inflation

• Implemented economic reforms to reduce debt

– Periodic economic instability and the emergence of populist leaders have had an impact on the attractiveness of countries in this region

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

South America: Brazil

• Attracted considerable foreign investment

– Through privatization of power, telecommunications, and other infrastructure sectors

• Benefited from one of the most stable governments throughout Latin America

– Undisputed economic leader of South America

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

South America: Brazil (continued)

• Long-term prospects are still potentially positive due to:

– Presence of a large and relatively well-educated population

– Availability of ample natural resources

– Existing industrial base

– Strategic geographic position

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chile

• Economic growth has fluctuated between three and six percent since the 2000s

• Attracts FDI, mainly dealing with gas, water, electricity, and mining

• Continues to participate in globalization

– Engages in trade agreements with Mercosur, China, India, the EU, South Korea, and Mexico

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Argentina

• Has an overall strong economy

– Due to abundance of natural resources, highly literate population, export-oriented agriculture, and diversified industrial base

• Has suffered recurring economic problems

– Inflation, external debt, capital flight, and budget deficits

• Economic growth has slowed since the global recession

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Middle East and Central Asia

• Possess large oil reserves

• Have highly unstable geopolitical and religious forces

– Try to balance these forces with economic viability and activity in the international business arena

• Rely almost exclusively on oil production

• Have made large investments in U.S. property and businesses

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Africa

• Has considerable natural resources but remains very poor and undeveloped

– International trade is only beginning to serve as a major source of income

• Risk for foreign investors arises from:

– Overwhelming diversity of the population

– Major political instability

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Africa (continued 1)

• Economic setbacks are caused due to:

– Tragic tribal wars

– Spread of diseases such as AIDS, malaria, and Ebola

– Lack of institutions, infrastructure, and economic capacity to take full advantage of globalization

– Poverty, malnutrition, illiteracy, corruption, social breakdown, vanishing resources, overcrowded cities, drought, and homeless refugees

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Africa (continued 2)

• Economic growth and dynamism have accelerated in recent years

– Rise in GDP

– Growth in telecommunications, banking, and retailing

• Rate of return on foreign investment in Africa is higher than for any other region

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the International Business Consultant: Walmart in India

• In light of this situation, what would your recommendation be to Walmart?

• Should it stick with the wholesale focus, or should it pursue another joint venture with an Indian partner?

• Alternatively, should it maintain a “wait and see” approach in hopes that the Indian government will finally reform its restrictions on foreign investment?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

• How has globalization affected different world regions?

– What are some of the benefits and costs of globalization for different sectors of society (companies, workers, communities)?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

• How has NAFTA affected the economies of North America and how has the EU affected Europe?

– What importance do these economic pacts have for international managers in North America, Europe, and Asia?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

• Why are Russia and Eastern Europe of interest to international managers?

– Identify and describe some reasons for such interest and also risks associated with doing business in these regions

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 3)

• Many MNCs have secured a foothold in Asia, and many more are looking to develop business relations there

– Why does this region of the world hold such interest for international management?

– Identify and describe some reasons for such interest

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 4)

• Why would MNCs be interested in South America, India, the Middle East and Central Asia, and Africa, the less developed and emerging countries of the world?

– Would MNCs be better off focusing their efforts on more industrialized regions? Explain

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 5)

• MNCs from emerging markets (India, China, Brazil) are beginning to challenge the dominance of developed country MNCs

– How might MNCs from North America, Europe, and Japan respond to these challenges?

Presentations/Luthans_10e_PPT_Ch02.pdf

© 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 2

The Political, Legal, and Technological Environment

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Introduce the basic political systems that characterize regions and countries around the world and offer brief examples of each and their implications for international management

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued)

• Present an overview of the legal and regulatory environment in which MNCs operate worldwide, and highlight differences in approach to legal and regulatory issues in different jurisdictions

• Review key technological developments, including the growth of e-commerce, and discuss their impact on MNCs now and in the future

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Social Media and Political Change

• Role of social media as an organizing tool, a journalistic tool, and a support-building tool in the context of political change underscores:

– Technological progress

– Political conflict and change

• Managing the political and legal environment will be a challenge for international managers

– Need to keep track of the rapid changes in the technological environment of global business

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political Environment

• Ideology underlies the actions of government

– Reflects beliefs and values and behavior and culture of nations and their political systems

• Dimensions in evaluating political systems

– Rights of citizens based on a system of government, ranging from democratic to totalitarian

– Focus of political system on individualism or collectivism

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political Environment (continued)

• Democratic nations emphasize individualism

• Totalitarian nations lean toward collectivism

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Individualism

• People should be free to pursue economic and political endeavors without constraint

• Similar to capitalism and connected to free- market society

– Private property is more successful, productive, and progressive than communal property

– Encourages betterment of society, which is related to level of freedom individuals have to pursue economic goals

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Individualism (continued 1)

• Research has shown that team performance is negatively influenced by individualists

• Competition stimulates motivation and encourages increased efforts to achieve goals

• Principles were evolved by David Hume, Adam Smith, and Aristotle

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Individualism (continued 2)

• International managers must remain alert as to how political changes may impact their business

– Continuous struggle for a foothold in government power affects leaders in office

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Collectivism

• Views the needs or goals of society as a whole as more important than individual desires

• Plato believed individual rights should be sacrificed and property should be commonly owned

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Collectivism (continued)

• Has no rigid form as societal goals differ greatly among cultures

– Reflects some attributes of fascism

• Nationalism and authoritarianism

• Militarism and corporatism

• Collectivism

• Totalitarianism

• Anticommunism

• Opposition to economic and political liberalism

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Socialism

• Society in which there is government ownership of institutions but profit is not the ultimate goal

• Has been practiced in China, North Korea, Cuba

• Democratic socialism

– More moderate form of socialism

– Practiced by Great Britain’s Labour Party, Germany's Social Democrats, and in France, Spain, and Greece

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Socialism (continued)

• Modern socialism draws on philosophies of Karl Marx, Friedrich Engels, and Vladimir Ilyich Lenin

– Marx believed that governments should own businesses because in a capitalistic society only a few would benefit

• Communism - Extreme form of socialism

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Social Democracy

• Socialist movement that achieved its goals through nonviolent revolution

• Reasons for not being viable

– Businesses that were nationalized were inefficient due to the guarantee of funding and the monopolistic structure

– Citizens suffered a hike in both taxes and prices, which was contrary to the public interest and the good of the people

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Social Democracy (continued)

• Reasons for nationalization of businesses

– Ideologies of the country encourage the government to extract more money from the firm

– Government believes the firm is hiding money

– Government has a large investment in the company

– Government wants to secure wages and employment status because jobs would otherwise be lost

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political Systems: Democracy

• Government is controlled by citizens either directly or through elections

• Democratic society cannot exist without at least a two-party system

– Once elected, representative is held accountable to the electorate for his or her actions

– Apart from getting reelected, the number of terms is limited

– Winner can get voted out if he or she does not adhere to the goals of the majority ruling

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political System: Totalitarianism

• Only one representative party, which exhibits control over every facet of political and human life

• Power maintained by suppression of opposition

– Dominant ideals - Media censorship, political repression, and denial of rights and civil liberties

• Common form - Communist totalitarianism

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political Environment in China

• Making trade liberalization a top priority since joining WTO in 2001

• Supporting a more open and democratic society

• Shifting toward greater tolerance of individual freedoms

• Seeking to unleash a more dynamic market economy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political Environment in the Middle East

• In Iran and Saudi Arabia, laws and government are based on Islamic principles

• Arab countries operate business that is in many ways similar to the West

– Seeking modern technology and having the financial ability to pay for quality services

• Worldwide fallout from war on terrorism has made business environment risky and potentially dangerous

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Legal and Regulatory Environment

• Many different laws and regulations in global business operations create confusion and pose challenges to MNCs

• Adhering to disparate legal frameworks can prevent MNCs from capitalizing on manufacturing economies

• MNCs must carefully evaluate legal framework in each market before doing business

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Global Foundations of Law

Islamic law Socialist law

Common law Civil or code law

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Islamic Law

• Derived from interpretation of the Qur’an and teachings of Prophet Muhammad

• Found in most Islamic countries in the Middle East and Central Asia

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Socialist Law

• Originates from Marxist socialist system

• Continues to influence regulations in former and current communist countries

– Soviet Union

– China and Vietnam

– North Korea and Cuba

• Forces MNCs to shy away from countries that follow this law

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Common Law

• Derives from English law

• Foundation of legal system in:

– United States

– Canada

– England

– Australia

– New Zealand

– Several other nations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Civil or Code Law

• Derived from Roman law

• Found in non-Islamic and nonsocialist countries

– France

– Some Latin American countries

– Louisiana in U.S.

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

International Law

• Sources

– Laws of individual countries

– Treaties - Universal, multilateral, and bilateral

– Conventions - Geneva Convention on Human Rights or the Vienna Convention of Diplomatic Security

• Contains unwritten understandings that arise from repeated interactions among nations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Principle of Sovereignty

• Holds that governments have the right to rule themselves as they see fit

– One country’s court system cannot be used to rectify injustices or impose penalties in another country unless that country agrees

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Jurisdictional Principles of International Law

• Nationality principle: Every country has jurisdiction over its citizens no matter where they are located

• Territoriality principle: Every nation has the right of jurisdiction within its legal territory

• Protective principle: Every country has jurisdiction over the behavior that adversely affects its national security

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Jurisdictional Principles of International Law (continued 1)

• Doctrine of comity

– Mutual respect for laws, institutions, and governments of other countries in the matter of jurisdiction over their own citizens

– Part of international custom and tradition and not part of international law

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Jurisdictional Principles of International Law (continued 2)

• Act of state doctrine

– All acts of other governments are considered to be valid by U.S. courts

• Even if such acts are inappropriate under U.S. law

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Treatment and Rights of Aliens

• Countries have the legal right to:

– Refuse admission of foreign citizens

– Impose special restrictions on a foreign citizen’s conduct, their right of travel, where they can stay, and what business they may conduct

• Nations can deport aliens, which may result in worker shortages

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Forum for Hearing and Settling Disputes

• U.S. courts:

– Can dismiss cases brought before them by foreigners

– Are bound to examine issues such as:

• Where the plaintiffs are located

• Where the evidence must be gathered

• Where the property to be used in restitution is located

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Financial Services Regulation

• Global financial crisis of 2008–2010 underscored:

– Integrated nature of financial markets around the world

– Reality that regulatory failure in one jurisdiction had severe and immediate impacts on others

• Crisis and its broad economic effects have prompted regulators to tighten the financial services regulation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Foreign Corrupt Practices Act (FCPA)

• Makes it illegal to influence foreign officials through personal payment or political contributions

• Objectives of the FCPA

– Stop U.S. MNCs from initiating or perpetuating corruption in foreign governments

– Upgrade the image of both the United States and its businesses abroad

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Foreign Corrupt Practices Act (FCPA) (continued)

• Implementation allowed the U.S. Justice Department to uncover several developments

– MNCs found that they could live within the guidelines set down by the FCPA

– Many foreign governments applauded the investigations under the FCPA

• Helped them crack down on corruption in their own country

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Bureaucratization

• Restrictive foreign bureaucracies are one of the biggest problems facing MNCs

– Particularly true when bureaucratic government controls are inefficient and left uncorrected

• In many developing and emerging markets, bureaucratic red tape impedes business growth and innovation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Regulation of Trade and Investment

• Individual countries use legal and regulatory policies to affect the international management environment

• Trade practices that distort trade

– Countries engage in government support

– MNCs are required to accept local partners

– MNCs are mandated to employ a certain percentage of local workers or produce a specific amount in their country

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Regulation of Trade and Investment (continued)

• Trade agreements require that countries extend most-favored-nation status

– Questioned by regional trade agreements

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Trends in Technology, Communication, and Innovation

• Computers, telephones, televisions, and wireless forms of communication have merged to create multimedia products

– Allow users anywhere in the world to communicate with one another

• Internet allows people to obtain information from several sources

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Trends in Technology, Communication, and Innovation (continued 1)

• Open-source model allows for free and legal sharing of software and code

– Can be utilized by underdeveloped countries in an attempt to gain competitive advantage while minimizing costs

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Trends in Technology, Communication,

and Innovation (continued 2) • For-profit and nonprofit firms have created

low-cost computers

– Provided them to several children in the developing world

• Great potential exists for disruptions as the world relies more and more on digital communication and imaging

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Areas of International Management Affected by Technology

• Biotechnology and nanotechnology

• Satellites

• Automatic translation telephones

• Artificial intelligence and embedded learning technology

• Silicon chips

• Advancements in computer chip technology

• Supercomputers

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Biotechnology

• Creation of agricultural or medical products through industrial use and manipulation of living organisms

• Advancement has led to pharmaceutical competition and cloning of animals

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Types of E-Business

Business to business (B2B)

Business to consumer (B2C)

E-retailing Financial services

(e-cash)

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Telecommunications

• Technological leapfrogging is allowing the entire world to have global access to affordable cell phone services

• Merging of telephone and the Internet has replaced access via computers

• Wireless technology has been beneficial to less developed countries

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Telecommunications (continued)

• Reason for the rapid increase in telecommunications services

– Many countries believe that without an efficient communications system, their economic growth may stall

• Governments cede control to private industry to attract foreign investments

• Developing countries are eager to attract telecommunication firms and offer liberal terms

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Technological Advancements, Outsourcing, and Offshoring

• Technology has reduced and eliminated middle management and white-collar jobs

• Global competition has forced MNCs to outsource or offshore production

• Emerging technology has made work more portable

– Advantage - Reduction in cost of doing business

– Disadvantage - Loss of jobs or reduction in salaries

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the International Management Consultant

• If you are a consultant for a business looking to expand in Europe, is Greece even an option?

• Do the facts that its population is comprised largely of government workers, that the citizens were largely in favor of defaulting on its national debt, and that the country nearly left the European Union constitute a deal breaker?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the International Management Consultant (continued)

• If the government does, in fact, implement the agreed-upon austerity measures, would that be a sign that the country is on the right track?

• What other concerns would you have about entering the Greek market?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. In what ways do different ideologies and political systems influence the environment in which MNC’s operate?

– Would these challenges be less for those operating in the EU than for those in Russia or China?

• Why or why not?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

2. How do the following legal principles impact MNC operations: the principle of sovereignty, the nationality principle, the territoriality principle, the protective principle, and principle of comity?

3. How will advances in technology and telecommunications affect developing countries? Give some specific examples

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

4. Why are developing countries interested in privatizing their state-owned industries?

– What opportunities does privatization have for MNCs?

Presentations/Luthans_10e_PPT_Ch03.pdf

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Insert Photo Credit Here

Chapter 3

Ethics, Social Responsibility, and Sustainability

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Examine ethics in international management and some of the major ethical issues and problems confronting MNCs

• Discuss some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued)

• Explain some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Sustaining Sustainable Companies

• Shift in focus from traditional market- responsive strategies to broader approaches

– Help incorporate business and social or environmental goals

• Triple bottom line approach

– Simultaneously considers social, environmental, and economic sustainability

– Could help harness business and managerial skills to impact human and environmental conditions

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Ethics

• Study of morality and standards of conduct

• Victim of subjectivity as it yields to the will of cultural relativism

– Cultural relativism - Belief that:

• Ethical standard of a country is based on the culture that created it

• Moral concepts lack universal application

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Ethical Dilemmas

• Dilemmas arising from conflicts between ethical standards of a country and business ethics are most evident in:

– Employment and business practices

– Recognition of human rights, including women in the workplace

– Corruption

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Corporate Social Responsibility (CSR) versus Ethics

CSR

• Actions taken by a firm to benefit society beyond the requirements of the law and the direct interests of the firm

• Based more on voluntary actions

Ethics

• Study of or the learning process involved in understanding morality

• Area of ethics has a lawful component and implies right and wrong in a legal sense

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Ethical Theories and Philosophy

Kantian philosophical

traditions

Aristotelian virtue ethics

Utilitarianism Eastern

philosophy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Kantian Philosophical Traditions

• Entities have responsibilities based on a core set of moral principles that go beyond those of narrow self-interest

• Reject consequences as morally irrelevant when evaluating the choice of an agent

• Ask one to consider choices as implying a general rule, or maxim

– Must be evaluated for its consistency as a universal law

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Aristotelian Virtue Ethics

• Focus on core, individual behaviors and actions and how they express and form individual character

• Consider social and institutional arrangements and practices in terms of their contribution to the formation of good character in individuals

• For Aristotle, moral success and failure largely come down to a matter of right desire, or appetite

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Aristotelian Virtue Ethics (continued)

• Virtue theory

– States that one’s formation is a social process

– Relies heavily on existing practices to provide an account of:

• What is good

• What character traits contribute to pursuing and realizing the good in concrete ways

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Utilitarianism

• Form of consequentialism

• Favors the greatest good for the greatest number of people under a given set of constraints

• Acts are morally correct if they maximize utility

– Attained when the ratio of benefit to harm is greater than the ratio resulting from an alternative act

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Eastern Philosophy

• Broadly includes various philosophies of Asia

– Indian philosophy, Chinese philosophy, Iranian philosophy, Japanese philosophy, and Korean philosophy

• Holds that:

– People are an intrinsic and inseparable part of the universe

– Attempts to discuss the universe from an objective viewpoint are inherently absurd

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Human Rights Issues

• Present challenges for MNCs

– Absence of universally adopted standards of what constitutes acceptable behavior

• Basic rights

– Life, freedom from slavery or torture, freedom of opinion and expression, and a general ambiance of nondiscriminatory practices

• Women’s rights and gender equity can be considered a subset of human rights

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Issues Faced by Women in the Workplace

• Most still experience the effects of a glass ceiling

– Lack of promotions to upper management positions

– Partially due to social factors and perceived levels of opportunity or lack thereof

– Pervasive throughout the world

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Issues Faced by Women in the Workplace - Examples

• Japan

– Women employees are subject to sexual harassment, two-track recruiting processes, and unequal opportunities for growth

• France, Germany, and Great Britain

– Witnessed an increase in the number of women in managerial positions but only in low-level managerial positions

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Labor Policy Issues

Political, economic, and cultural differences interfere with the establishment of a universal foundation for employment practices

Difficulty in deciding working conditions, expected consecutive work hours, and labor regulations

Frequent offshoring due to differences in labor costs

Ensuring that all contractors along the global supply chain are compliant with company standards

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Labor, Employment, and Business Practices in China

• Workers are not paid well

– Forced to work 12-hour days, seven days a week to meet demand

– Some cases involve the usage of child labor

• Example - Foxconn

– 2010 - Issue of low wages headlined after a number of workers committed suicide

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Environmental Protection and Development

• Poor countries are more focused on improving the welfare of their citizens

• Environmental Kuznets Curve (EKC)

– Relationship between per capita income and the use of natural resources and/or the emission of wastes has an inverted U-shape

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Environmental Kuznets Curve (EKC)

• Reasons behind the inverted U-shape of the EKC

– Composition of production and/or consumption

– Preference for environmental quality

– Institutions that are needed to internalize externalities

– Increasing returns to scale associated with pollution abatement

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 3.1 - Environmental Kuznets Curve

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Environmental Protection and Development (continued)

• United Nations Climate Change Conference, 2015

– Tried to achieve an international consensus on environmental reform

– Adopted the Paris Agreement

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Phenomena in Response to Globalization

• Difficulty in attempts to balance organizational and cultural roots

• Offshoring low-cost labor-intensive practices

• Transferring a large percentage of current employees of all types to foreign locations

– Creates issues related to corporate citizenship

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Reconciling Ethical Differences across Cultures

• Integrative Social Contracts Theory (ISCT)

– Attempts to navigate a moral position that does not force decision makers to engage exclusively in relativism versus absolutism

– Offers one framework to help reconcile fundamental contradictions in international business ethics between home and host countries

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Corporate Social Responsibility (CSR)

• Social, economic, and environmental expectations of each company are based on the desires of the stakeholders

– Pressurize MNCs to pay greater attention to CSR

• Nongovernmental organizations (NGO)

– Private, not-for-profit organizations

– Seek to serve society’s interests by focusing on social, political, and economic issues

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Nongovernmental Organizations

• Urge MNCs to be more responsive to a range of social needs in developing countries

• Activism has helped generate substantial changes in corporate management, strategy, and governance

• Regarded as counterweights to business and global capitalism

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Nongovernmental Organizations (continued)

• Collaborate with MNCs on social and environmental projects

– Contribute to the well-being of the community and to the reputation of the MNC

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Responses to Social and Organizational Obligations

• MNCs follow codes of conduct, including the U.N. Global Compact, the Global Reporting Initiative, and “SA8000” standards

– Commit to maintain certain standards in their domestic and global operations

– Help offset the concern that companies move jobs to avoid higher labor or environmental standards

– Contribute to raising the standards in the developing world

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Responses to Social and Organizational Obligations (continued)

• Fair trade

– Organized social movement and market-based approach

– Aims to help producers in developing nations obtain better trading conditions and promote sustainability

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Sustainability

• Development that meets humanity’s needs without harming future generations

• Helps companies recognize that dwindling resources will eventually halt productivity

• World Economic Forum, Davos, Switzerland

– Focused on how sustainable consumption can be used to ease problems related to the need for rapid business scaling

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Corporate Governance

• System by which businesses are directed and controlled

– Specifies distribution of rights and responsibilities among stakeholders

– Spells out rules and procedures for corporate decision-making

• Provides the structure for setting company objectives and means for attaining those objectives and maintaining performance

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Corporate Governance (continued)

• Rules and regulations differ among countries and regions

– The UK and U.S. systems are outsider systems because of dispersed ownership of equity among a large number of outside investors

– Many continental European countries are insider systems in which ownership is more concentrated

• Differences in legal systems affect shareholders’ and other stakeholders' rights

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Corporate Governance: Crony Capitalism

• Occurs in nations with:

– Less well-developed legal and institutional protections

– Poor property rights

• Emerges where weak corporate governance and government interference can lead to:

– Poor performance

– Risky financing patterns

– Macroeconomic crises

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Foreign Corrupt Practices Act (FCPA)

• Makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through:

– Personal payments

– Political contributions

• In complying with the provisions, U.S. firms must be aware of changes in the law

– Makes FCPA violators subject to Federal Sentencing Guidelines

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Other Anticorruption Measures

• Formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials

– Includes nations that belong to the Organization for Economic Cooperation and Development (OECD)

– Fails to outlaw most payments to political party leaders but does indicate growing support for antibribery initiatives

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Other Anticorruption Measures (continued)

• Organization of American States (OAS) Inter- American Convention Against Corruption

– Established by Latin American countries

• Transparent Agents Against Contracting Entities (TRACE) standard

– Developed as a means of preventing the shift of corrupt practices to suppliers and intermediaries

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

International Assistance

• Governments and corporations are collaborating to provide assistance to locales through global partnerships

• Recent study identified the top priorities around the world for development assistance

– Uses a cost-benefit analysis of where investments would have the greatest impact

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 3.3 - Copenhagen Consensus Development Priorities

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 3.4 - U.N. Sustainable Development Goals

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

In the International Spotlight - Cuba

• Would you advise a company to become an early investor in Cuba?

• Do you think Airbnb’s investment in Cuba will eventually see success and become a reliable profit stream?

• Do you think Cuba will ultimately become an attractive long-term tourist destination for Americans?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. How might different ethical philosophies influence how managers make decisions when it comes to offshoring of jobs?

2. What lessons can U.S. multinationals learn from the political and bribery scandals in recent years, such as those affecting contractors doing business in Iraq (Halliburton) as well as large MNCs such as Siemens, HP, and others? Discuss two

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

3. In recent years, rules have tightened such that those who work for the U.S. government in trade negotiations are now restricted from working for lobbyists for foreign firms

– Is this a good idea? Why or why not?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

4. What are some strategies for overcoming the impact of counterfeiting?

– Which strategies work best for discretionary (for instance, movies) versus nondiscretionary (pharmaceutical) goods?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 3)

5. Why are MNCs getting involved in corporate social responsibility?

– Are they displaying a sense of social responsibility, or is this merely a matter of good business? Defend your answer

Presentations/Luthans_10e_PPT_Ch04.pdf

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 4

The Meanings and Dimensions of Culture

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Define the term culture, and discuss some of the comparative ways of differentiating cultures

• Describe the concept of cultural values, and relate some of the international differences, similarities, and changes occurring in terms of both work and managerial values

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued)

• Identify the major dimensions of culture relevant to work settings, and discuss their effects on behavior in an international environment

• Discuss the value of country cluster analysis and relational orientations in developing effective international management practices

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Culture

• Acquired knowledge that people use to interpret experience and generate social behavior

– Forms values

– Creates attitudes

– Influences behavior

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Characteristics of Culture

• Learned

• Shared

• Transgenerational

• Symbolic

• Patterned

• Adaptive

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Areas Affected by Culture

• Technology transfer

• Managerial attitudes

• Managerial ideology

• Business-government relations

• Human thinking and behavior

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Priorities of Cultural Values

United States Japan Arab Countries

Freedom Belonging Family security

Independence Group harmony Family harmony

Self-reliance Collectiveness Parental guidance

Equality Age/seniority Age

Individuality Group consensus Authority

Competition Cooperation Compromise

Efficiency Quality Devotion

Time Patience Patience

Directness Indirectness Indirectness

Openness Go-between Hospitality

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Centralized versus Decentralized Decision Making

• Centralized - Top managers make all important organizational decisions

• Decentralized - Decisions are diffused throughout the enterprise

– Middle- and lower-level managers actively participate in and make key decisions

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Safety versus Risk

• Organizational decision makers are risk-averse and have great difficulty with conditions of uncertainty in some societies

• Some societies encourage risk taking and decision making under uncertainty is common

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Individual versus Group Rewards

• Individual rewards - Given to personnel who do outstanding work in the form of bonuses and commissions

• Group rewards - Required by cultural norms, and individual rewards are frowned upon

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Informal versus Formal Procedures

• Informal societies - Much is accomplished through informal means

• Formal societies - Formal procedures are set forth and followed rigidly

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: High versus Low Organizational Loyalty

• High loyalty - People identify very strongly with their organization or employer

• Low loyalty - People identify with their occupational group

– Such as engineer or mechanic

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Cooperation versus Competition

• Some societies encourage cooperation between their people

• Others societies encourage competition between their people

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Short-term versus Long-term Horizons

• Some cultures focus most heavily on short- term horizons

– Such as short-range goals of profit and efficiency

• Some cultures are more interested in long- range goals

– Such as market share and technological developments

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cultural Impact on International Management: Stability versus Innovation

• Culture of some countries encourages stability and resistance to change

• Culture of others puts high value on innovation and change

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 4.1 - Model of Culture

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 4.2 - Comparing Cultures as Overlapping Normal Distributions

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 4.3 - Stereotyping from Cultural Extremes

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Values

• Basic convictions that people have about:

– Right and wrong

– Good and bad

– Important and unimportant

• Learned from the culture in which an individual is reared

• Differences in cultural values may result in varying management practices

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Hofstede’s Cultural Dimensions

• Power distance

• Uncertainty avoidance

• Individualism and collectivism

• Masculinity and femininity

• Time orientation

• Indulgence versus restraint

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Power Distance

• Extent to which less powerful members accept that power is distributed unequally

– High-power-distance countries

• People blindly obey superiors

• Centralized with tall organizational structures

• Examples - Mexico, South Korea, and India

– Low-power-distance countries

• Decentralized with flatter organizational structures

• Have smaller ratio of supervisor to employee

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Uncertainty Avoidance

• Extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid these

– High-uncertainty-avoidance countries

• High need for security and strong belief in experts and their knowledge

• Highly structured organizational activities, more written rules, and less managerial risk taking

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Uncertainty Avoidance (continued)

– Low-uncertainty-avoidance countries

• Less structured organizational activities, fewer written rules, more managerial risk taking, higher labor turnover, and more ambitious employees

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Individualism and Collectivism

• Individualism: Tendency of people to look after themselves and immediate family only

– Highly individualistic countries - Wealthier, support the Protestant work ethic, have greater individual initiative, and promote based on market value

• Collectivism: Tendency of people to belong to groups and to look after each other in exchange for loyalty

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Masculinity and Femininity

• Masculinity: Dominant social values are success, money, and things

• Femininity: Dominant social values are caring for others and quality of life

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Time Orientation

• Defined as dealing with society’s search for virtue

– Long-term-oriented societies - Focus on the future and on achieving long-term results, are able to adapt traditions when conditions change, and tend to save and invest

– Short-term-oriented societies - Focus on quick results, do not tend to save, believe in absolutes, and value stability and leisure

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Indulgence versus Restraint

• Indulgent societies encourage instant gratification of natural human needs

– Perceived happiness, life in control, positive emotions, and satisfaction of basic needs

• Restrained cultures regulate and control behavior based on social norms

– Less happiness, sense of helplessness, less likely to remember positive emotions, and unmet basic needs

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Trompenaars’s Cultural Dimensions

• Universalism versus particularism

• Individualism versus communitarianism

• Neutral versus emotional

• Specific versus diffuse

• Achievement versus ascription

• Time

• Environment

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Universalism versus Particularism

• Universalism: Belief that ideas and practices can be applied everywhere without modification

– Countries with high universalism - Formal rules and close adherence to business contracts

• U.S., UK, Germany, Sweden, and Australia

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Universalism versus Particularism (continued)

• Particularism: Belief that circumstances dictate how ideas and practices should be applied

– Countries with high particularism - Legal contracts are modified and the way deals are executed change as people get to know each other

• China, Indonesia, and Venezuela

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Individualism versus Communitarianism

• Individualism - People regard themselves as individuals

– Stress personal and individual matters and assume personal responsibility

• Communitarianism: People regard themselves as part of a group

– Value group-related issues, achieve in groups, and assume joint responsibility

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Neutral Culture versus Emotional Culture

• Neutral: Emotions are held in check

– High-neutral cultures - People act stoically and maintain composure

• Emotional: Emotions are expressed openly and naturally

– High-emotional cultures - People smile a lot, talk loudly, and greet each other with enthusiasm

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Specific versus Diffuse

• Specific culture

– Large public space is shared with others and small private space is guarded closely and shared with only close friends

– People are open and extroverted and have a strong separation of work and personal life

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Specific versus Diffuse (continued)

• Diffuse culture

– Public and private spaces are similar in size

– Public space is guarded because entry into public space affords entry into private space

– People are indirect and introverted and work and private life are closely linked

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Achievement versus Ascription

• Achievement culture: People are accorded status based on how well they perform their functions

– High status is given to high achievers

• Ascription culture: Status is attributed based on who or what a person is

– Status is based on age, gender, or social connections

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Time Orientation

• Sequential - Only one activity at a time, appointments are kept strictly, and plans are followed as laid out

• Synchronous - Multitasking, appointments are approximate and easily changed, and schedules are subordinate to relationships

• Cultures can be past- or present-oriented or future-oriented

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Dealing with Environment

• Inner-directed - People believe in controlling outcomes

– Dominant attitude toward environment

• Outer-directed - People believe in letting things take their own course

– Flexible attitude, characterized by a willingness to compromise and maintain harmony with nature

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

GLOBE Project

• GLOBE - Global Leadership and Organizational Behavior Effectiveness

• Extends and integrates previous analyses of cultural attributes and variables

• Evaluates nine different cultural attributes using middle managers from different organizations in many countries

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Phases of GLOBE Project

• First two phases - Evaluate nine different cultural attributes using middle managers from different organizations in many countries

– Scholars surveyed managers in financial services, food processing, and telecommunications industries

• Third phase - Examines the interactions of culture and leadership in upper-level management positions

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

GLOBE's Cultural Dimensions

• Uncertainty avoidance

• Power distance

• Collectivism I: Societal collectivism

• Collectivism II: In-group collectivism

• Gender egalitarianism

• Assertiveness

• Future, performance, and humane orientations

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

GLOBE Country Analysis

• Corresponds with those of Hofstede and Trompenaars

– Variations - Variable definitions and methodology

• GLOBE provides a current comprehensive overview of general stereotypes that can be analyzed for greater insight

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the Management Consultant

• As a consultant looking for opportunities in Africa, how would you gauge the prospects of moving a business into South Africa?

• What are your immediate concerns about this move? What are the pros and cons of opportunities in South Africa?

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the Management Consultant (continued)

• How does the fact that traditional South African companies are increasing their presence in other African countries factor into your decision?

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. What is meant by the term culture?

– In what way can measuring attitudes about the following help differentiate between cultures: centralized or decentralized decision making, safety or risk, individual or group rewards, high or low organizational loyalty, cooperation or competition?

• Use these attitudes to compare the United States, Germany, and Japan, and based on your comparisons, what conclusions can you draw regarding the impact of culture on behavior?

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

2. What is meant by the term value?

– Are cultural values the same worldwide, or are there marked differences?

– Are these values changing over time, or are they fairly constant?

– How does your answer relate to the role of values in a culture?

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

3. What are the four major dimensions of culture studied by Geert Hofstede?

– Identify and describe each

– What is the cultural profile of the United States? Of Asian countries? Of Latin American countries? Of Latin European countries?

• Based on your comparisons of these four profiles, what conclusions can you draw regarding cultural challenges facing individuals in one group when they interact with individuals in one of the other groups?

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 3)

• Why do you think Hofstede added the fifth dimension of time orientation and the sixth dimension related to indulgence versus restraint?

4. As people engage in more international travel and become more familiar with other countries, will cultural differences decline as a roadblock to international understanding, or will they continue to be a major barrier?

– Defend your answer

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 4)

5. What are the characteristics of each of the following pairs of cultural characteristics derived from Trompenaars’s research: universalism vs. particularism, neutral vs. emotional, specific vs. diffuse, achievement vs. ascription?

– Compare and contrast each pair

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 5)

6. How did project GLOBE build on and extend Hofstede’s analysis? What unique contributions are associated with project GLOBE?

7. In what way is time a cultural factor? In what way is the need to control the environment a cultural factor?

– Give an example for each

Presentations/Luthans_10e_PPT_Ch05.pdf

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 5

Managing across Cultures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Examine the strategic dispositions that characterize responses to different cultures

• Discuss cross-cultural differences and similarities

• Review cultural differences in select countries and regions, and note some of the important strategic guidelines for doing business in each

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategic Predispositions

• Firm allows values and interests of the parent company to guide strategic decisions

Ethnocentric

• Company makes strategic decisions tailored to suit the cultures of the countries where the MNC operates

Polycentric

• Firm blends its own interests with those of its subsidiaries on a regional basis

Regiocentric

• Company integrates a global systems approach to decision making

Geocentric

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 5.1 - Orientation of an MNC under Different Profiles

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Globalization Imperative

• Belief that one worldwide approach to doing business is key to efficiency and effectiveness

• Effective multinational companies (MNCs) should make efforts to address local needs

– Regional strategies can be used effectively to capture and maintain worldwide market niches

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Need for Unique Strategies for Different Cultures

• Diversity of worldwide industry standards

• Continual demand by local customers for differentiated and locally-sourced products

• Difficulty of managing global organizations

• Local units should be allowed to use their own abilities and talents unconstrained by headquarters

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Delivery of Marketing Message

Nationality Nature of advertising

Germans • Factual and rational • Spots feature a standard family of two parents, two children, and

grandmother

French • Avoidance of reasoning or logic • Emotional, dramatic, and symbolic • Spots are viewed as cultural events and reviewed as if they were

literature or films

British • Laughter is valued • Typical broad, self-deprecating commercial mocks both the

advertiser and consumer

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Challenges Faced by MNCs

• Staying abreast of local market conditions and not assuming that all markets are same

• Knowing the strengths and weaknesses of its subsidiaries and assisting them in addressing local demands

• Giving more autonomy to the subsidiary

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Barriers to Cross-Cultural Management

• Tendency to view the world through one’s own eyes and perspectives

Parochialism

• Process of exhibiting the same orientation toward different cultural groups

Simplification

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 5.2 - Six Basic Cultural Variations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cross-Cultural Similarities

• Russia and U.S.

– Traditional management, communication, human resources, and networking activities

– Organizational behavior modification interventions

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cross-Cultural Similarities (continued)

• Korea and U.S.

– Organizational commitment relates to employees' position in the hierarchy, tenure in their current position, and age

– Commitment increases with positive perceptions of organizational climate

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Cross-Cultural Differences

Examples Human resource management differences

Mexico • Concept of an hourly wage plays a minor role

Austria and Brazil • Employees with one year of service are automatically given 30 days of paid vacation

Some jurisdictions in Canada

• Legislated pay equity between male- and female- intensive jobs

Japan • Compensation levels are determined by age, length of service, and educational background

United Kingdom • Employees are allowed up to 40 weeks of maternity leave, and employers must provide a government- mandated amount of pay for 18 of those weeks

Majority of large Swedish companies

• Head of human resources is on the board of directors

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Approaches for Formulating Effective Compensation Strategies in Different Clusters

Examples Strategies

Pacific Rim countries • Incentive plans should be group-based

Japan, Hong Kong, Malaysia, the Philippines, and Singapore

• High salaries should be paid to senior-level managers

Italy and Belgium • Higher salaries should be paid to local senior- level managers

Portugal and Greece • Profit-sharing plans are effective

Denmark, the Netherlands, and Germany

• Personal-incentive plans are useful

Great Britain, Ireland, and the United States

• Compensation plans should provide opportunity for earnings, recognition, advancement, and challenge

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

GLOBE Project

• Provides an extensive breakdown of:

– How managers behave

– How different cultures can affect the perspectives of managers

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Business in China

• Primary criterion - Technical competence

• Value is placed on punctuality, patience, guanxi networking, and reciprocity

– Guanxi: Good connections

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Business in Russia

• Building personal relationships with partners is important

• Working with local consultants can be valuable

• Gift-giving is considered ethical when engaging in business transactions

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Business in India

• India has become a desirable market because of unsaturated consumer markets with cheap labor and production locations

• Bureaucratic restrictions have been lifted to attract foreign investment and raise economic growth rate

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Business in France

• Social interactions are affected by class stereotypes

• French organizations tend to be highly centralized and have rigid structures

• Management is autocratic in nature

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Business in Brazil

• Brazilian businesspeople tend to have a relaxed work ethic

• Face-to-face interaction is preferred

• Patience is key when managing business

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Business in Arab Countries

• Arab businesspeople:

– Follow a fatalistic approach to time

– Tend to attach a great deal of importance to status and rank

• Business-related discussions may not occur until the third or fourth meeting

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. Define the four basic predispositions MNCs have toward their international operations

2. If a locally based manufacturing firm with sales of $350 million decided to enter the EU market by setting up operations in France, which orientation would be the most effective: ethnocentric, polycentric, regiocentric, or geocentric? Why?

– Explain your choice

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

3. In what ways are parochialism and simplification barriers to effective cross- cultural management?

– Give an example for each case

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

4. Many MNCs would like to do business overseas in the same way that they do business domestically

– Do research findings show that any approaches that work well in the U.S. also work well in other cultures?

• If so, identify and describe two

Presentations/Luthans_10e_PPT_Ch06.pdf

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 6

Organizational Cultures and Diversity

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Define exactly what is meant by organizational culture, and discuss the interaction of national and MNC cultures

• Identify the four most common categories of organizational culture that have been found through research, and discuss the characteristics of each

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued)

• Provide an overview of the nature and degree of multiculturalism and diversity in today’s MNCs

• Discuss common guidelines and principles that are used in building multicultural effectiveness at the team and the organizational levels

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Deloitte: Key Findings regarding Culture and Global Leadership

• Cultural diversity

– Lies in the eye of the beholder

– Positively contributes to professional and personal enjoyment of the project and project outcome

– Indirectly encourages project members to rethink their usual working habits and expectations

– Dominance amongst team members reduces bias to interact with people who have common characteristics

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Advantages of Global Virtual Teams

Working virtually can reduce team process losses associated with any cliques commonly experienced by face-to-face teams

Having members span many different time zones can literally keep a project moving around the clock

Cohesive teams that are capable of quickly solving complex problems and making effective decisions provide a competitive advantage

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Organizational Culture

• Pattern of shared basic assumptions that:

– Is learned by the group as it solves problems of external adaptation and internal integration

– Have worked well enough to be considered valid

– Are to be taught to new members as the correct way to perceive, think, and feel in relation to those experiences

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Characteristics of Organizational Culture

• Observed behavioral regularities, as typified by common language, terminology, and rituals

• Norms, as reflected by things such as:

– Amount of work to be done

– Degree of cooperation between management and employees

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Characteristics of Organizational Culture (continued 1)

• Dominant values that the organization advocates and expects participants to share

– Include high product and service quality, low absenteeism, and high efficiency

• Philosophy that is set forth in the MNC’s beliefs regarding how employees and customers should be treated

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Characteristics of Organizational Culture (continued 2)

• Rules that dictate the dos and don’ts of employee behavior

– Relate to areas such as productivity, customer relations, and intergroup cooperation

• Organizational climate or overall atmosphere of the enterprise

– Reflected in the participants’ interaction with others, behavior with customers, and perception of how the higher-level management treats them

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Interaction between National and Organizational Cultures

• Diagnosing Organizational Culture for Strategic Application (DOCSA)

– Set of proprietary cultural-analysis techniques and programs that help identify the dimensions of organizational culture

– Proposed by Hofstede

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 6.1 - Dimensions of Corporate Culture

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Interaction between National and Organizational Cultures (continued)

• Even in the presence of multinational alliances, partners will bring different organizational cultures with them

• Difficult for an MNC with a strong organizational culture to break into foreign markets

– Unfamiliarity with divergent national cultures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Steps to Integrate Organizational Cultures

Identify the expectations of all involved parties and facilitate communication between departments and individuals in the structure

Groups have to determine who has authority over the resources

Mechanisms are developed to identify most important organizational structures and management roles

Two groups have to establish the purpose, goals, and focus of their merger

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Determining Organizational Culture

• Important aspects

– General relationship between the employees and their organization

– Hierarchical system of authority that defines the roles of managers and subordinates

– General views that employees hold about the MNC’s purpose, destiny, goals, and their place in them

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 6.2 - Organizational Cultures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Family Culture

• Strong emphasis on hierarchy and orientation to the person

– Results in a family-type environment that is power-oriented and headed by a leader who is regarded as a caring parent

• Management assumes a parental relationship with personnel

– Ensures proper treatment of employees and their continued employment

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Family Culture (continued)

• Characterized by traditions, customs, and associations

– Bind the personnel together

– Make it difficult for outsiders to become members

• Can catalyze and multiply energies of personnel and appeal to their deepest feelings and aspirations

• Foreign to most managers in the United State

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Eiffel Tower Culture

• Strong emphasis on hierarchy and orientation to the task

• Jobs are well defined, employees know what they are supposed to do, and all activities are coordinated from the top

– Culture is narrow at the top and broad at the base

• Relationships are specific, and status remains with the job

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Eiffel Tower Culture (continued 1)

• Managers seldom create off-the-job relationships with employees

• Operates like a formal hierarchy, which is impersonal and efficient

– Each role is described, rated for difficulty, complexity, and responsibility and has a salary attached to it

– Jobs are awarded to the best fit between role and person

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Eiffel Tower Culture (continued 2)

• Learning involves the accumulation of skills necessary to fit a role, and organizations:

– Use qualifications in deciding how to schedule, deploy, and reshuffle personnel to meet needs

– Employ assessment centers, appraisal systems, training and development programs, and job rotation to manage personnel

• Ill-equipped to handle things when changes need to be made

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Guided Missile Culture

• Strong emphasis on equality in the workplace and orientation to the task

– Work-oriented culture where the work is undertaken by teams or project groups

• Egalitarian and task-driven

• Changes can happen quickly

– Loyalty to profession and project are often greater than loyalty to the organization itself

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Motivation in Guided Missile Culture

• Tends to be more intrinsic

– Team members become enthusiastic about, and identify with, the struggle toward attaining their goal

– Helps minimize both intragroup and intergroup conflicts

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Incubator Culture

• Strong emphasis on equality and personal orientation

• Little formal structure

– Based on the premise that an organization’s role is to serve as incubators for self-expression and self- fulfillment of their members

• Participants confirm, criticize, develop, and find resources for, or to help complete, the development of an innovation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Incubator Culture (continued)

• Creates an environment where participants thrive on an intense, emotional commitment to the nature of work

• Changes are fast and spontaneous

• Motivation remains highly intrinsic and intense

• Leadership is achieved and not gained by position

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Table 6.3 - Summary Characteristics of the Four Corporate Cultures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multiculturalism and Diversity

• Effect varies depending on the stage of the firm in its international evolution

– Phase I - Domestic corporations

– Phase II - International corporations

– Phase III - Multinational corporations

– Phase IV - Global corporations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 6.4 - International Corporation Evolution

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 6.5 - Locations of International Cross-Cultural Interaction

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Impact of International Cultural Diversity

• Affect neither the firm’s organizational culture nor its relationship with its customers or clients

• Can be impacted only by domestic multiculturalism

Domestic firms

• Strongly impact external relationships with potential buyers and foreign employees

• Diversity focus is from the inside out

International firms

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Domestic Multiculturalism

• Culturally distinct populations can be found within organizations almost everywhere in the world

• Can be examined within the same ethnic groups

– Example - Among small Chinese family businesses, the viewpoints of the older generation differ sharply from those of the younger generation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Group Multiculturalism

• Members have similar backgrounds and generally perceive, interpret, and evaluate events in similar ways

Homogeneous groups

• All members but one have the same background

Token groups

• Two or more members represent each of two distinct cultures

Bicultural groups

• Composed of individuals from three or more different ethnic backgrounds

Multicultural groups

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Potential Problems of Diversity

• Rooted in people’s attitudes

• Include:

– Erroneous perceptions caused by preconceived stereotypes

– Inaccurate biases

– Inaccurate communication or miscommunication

• Result of using unclear words, manner in which situations are interpreted, and differences in perceptions of time

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Advantages of Diversity

• Enhances creativity, leads to better decisions, and results in more effective and productive performance

• Helps generate more and better ideas

• Prevents groupthink

– Social conformity and pressures on individual members of a group to conform and reach consensus

• Enhances relationships with customers

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 6.6 - Group Effectiveness and Culture

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multicultural Team Effectiveness

• Focus of attention must be determined by the stage of team development

– Entry stage - Focus on building trust and developing team cohesion

– Work stage - Focus is directed toward describing and analyzing the problem or task that has been assigned

– Action stage - Focus shifts to decision making and implementation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multicultural Team Effectiveness - Guidelines

Select team members based on task-related abilities and not based on ethnicity

Team members must recognize and be prepared to deal with their differences

Team leader must help the group to identify and define its overall goal

Distribute power according to each person’s ability to contribute to the task

Provide the team with positive feedback on their process and output

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

In the International Spotlight - Nigeria

• If you were a consultant for Filmhouse, how would you advise Kene Mpkaru regarding his next moves in Nigeria?

• What specific aspects of the country would be positive for the company? What factors are negatives?

• How would you deal with the wealth gap in the country?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

In the International Spotlight - Nigeria (continued)

• Would you advise Filmhouse to concentrate on Nollywood productions or would you try to attract Hollywood movies?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. Some researchers have found that when Germans work for a U.S. MNC, they become even more German, and when Americans work for a German MNC, they become even more American

– Why would this knowledge be important to these MNCs?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

2. When comparing the negotiating styles and strategies of French versus Spanish negotiators, a number of sharp contrasts are evident

– What are three of these, and what could MNCs do to improve their position when negotiating with either group?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

3. In which of the four types of organizational cultures—family, Eiffel Tower, guided missile, incubator—would most people in the United States feel comfortable?

– In which would most Japanese feel comfortable?

– Based on your answers, what conclusions could you draw regarding the importance of understanding organizational culture for international management?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 3)

4. Most MNCs need not enter foreign markets to face challenges of dealing with multiculturalism

– Do you agree or disagree with this statement?

– Explain your answer

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 4)

5. What are some potential problems that must be overcome when using multicultural, diverse teams in today’s organizations?

– What are some recognized advantages?

– Identify and discuss two of each

6. A number of guidelines can be valuable in helping MNCs to make diverse teams more effective

– What are five of these?

Presentations/Luthans_10e_PPT_Ch07.pdf

Chapter 7

Cross-Cultural Communication and Negotiation

Learning Objectives

• Define the term communication, examine some examples of verbal communication styles, and explain the importance of message interpretation

• Analyze the common downward and upward communication flows used in international communication

Learning Objectives (continued 1)

• Examine the language, perception, culture of communication and nonverbal barriers to effective international communications

• Present the steps that can be taken to overcome international communication problems

Learning Objectives (continued 2)

• Develop approaches to international negotiations that respond to differences in culture

• Review different negotiating and bargaining behaviors that may improve negotiations and outcomes

World of International Management - Netflix's Negotiations

• Faces setbacks due to negotiation and communication difficulties in:

– China - Setbacks due to a long negotiation process

– Russia - Setbacks because of Netflix’s lack of communication and negotiation prior to entry

Communication

• Process of transferring meanings from sender to receiver

• Advent of the telephone, Internet, and personal communication devices has influenced the way people communicate

• Types - Verbal or nonverbal

Verbal Communication Styles - Context

• Information that surrounds a communication and helps convey the message

– Plays a key role in explaining many communication differences

• High-context societies

– Messages are often highly coded and implicit

• Low-context societies

– Messages are often explicit and speaker says precisely what s/he means

Table 7.1 - Major Characteristics of Verbal Styles

Indirect and Direct Styles

• High-context cultures - Messages are implicit and indirect

– Voice intonation, timing, facial expressions play important roles in conveying information

• Low-context cultures - People often meet only to accomplish objectives

– Direct and focused in their communications

Degrees of Communication Quantity

• Elaborate style - Most popular in high-context cultures that have a moderate degree of uncertainty avoidance

– Widely used in Arabic countries

– Involves talking, detailed descriptions, and repetition

• Exacting style - Focuses on precision and use of the right amount of words to convey the message

Degrees of Communication Quantity (continued)

– More common in low-context, low-uncertainty- avoidance cultures

• Used in England, Germany, and Sweden

• Succinct style

– More common in high-context cultures with considerable uncertainty avoidance

– People say few words and allow understatements, pauses, and silence to convey meaning

– Most common in Asia

Contextual Styles

• Focus on the speaker and the relationship of parties

– Associated with high-power-distance, collective, and high-context cultures

– Speakers choose words that indicate their status relative to the status of the others

Personal Styles

• Focus on the speaker and the reduction of barriers between the parties

– More popular in low-power-distance, individualistic, and low-context cultures

– Speaker uses first names while addressing others

Affective Styles

• Characterized by language that requires the listener to carefully note what is said and to observe how the message is presented

– Meaning is conveyed nonverbally and requires the receiver to use intuitive skills to decipher the message

– Common in collective, high-context cultures

• Middle East, Latin America, and Asia

Instrumental Styles

• Goal-oriented

• Focuses on the sender who clearly lets the other party know what s/he wants the other party to know

– Found in individualistic, low-context cultures

• Switzerland, Denmark, and the United States

Table 7.2 - Verbal Styles Used in 10 Select Countries

Interpretation of Communications

• Effectiveness of communication is determined by how closely the sender and receiver have the same meaning for the same message

– If the meaning is different, effective communication will not take place

Downward Communication

• Transmission of information from manager to subordinate

• Purpose - Convey orders or information

– Managers use this channel for instructions and performance feedback

– Channel facilitates the flow of information to those who need it for operational purposes

– Sending mixed signals is never helpful in communication

Downward Communication (continued)

• Challenges posed by downward communication in an international context

– Communication is direct and extends beyond business matters in European countries

– Communication is less direct in Asian countries

Upward Communication

• Transfer of information from subordinate to superior

• Purpose - Provide feedback, ask questions, or obtain assistance from higher-level management

– Upward communication is not popular outside Asian countries

Communication Barriers - Language

• Knowledge of the language used at the headquarters of an MNC is essential for personnel placed in a foreign assignment

• Fluency, technical knowledge, and writing skills

• Misinterpretations often result from unskilled use of a language

• Inadequate language training

Cultural Barriers in Language

• Geographic, cultural, and institutional distance challenge international managers

• Native speakers might deviate from the standard business communication practices of other cultures

Perceptual Barriers

• Perception

– Person’s view of reality

• Advertising messages

– Misunderstandings caused when words are misinterpreted by others

• View of others

– May be different from what one thinks

– Perceptions influence how individuals see others

Nonverbal Communication

• Transfer of meaning through means such as body language and use of physical space

• Types

– Kinesics

– Proxemics

– Chronemics

– Chromatics

Table 7.7 - Common Forms of Nonverbal Communication

Kinesics

• Study of communication through body movement and facial expression

• Areas of concern - Eye contact, posture, and gestures

• Oculesics: Area of communicating through the use of eye contact and gaze

• Haptics: Communicating through the use of bodily contact

Proxemics

• Study of the way people use physical space to convey messages

– Intimate distance: Used for very confidential communications

– Personal distance: Used for talking with family and close friends

– Social distance: Used to handle most business transactions

– Public distance: Used when calling across room or giving a talk to a group

Figure 7.2 - Personal Space Categories for Those in the U.S.

Chronemics

• Way in which time is used in a culture

• Types

– Monochronic time schedule: Things done in linear fashion

• Used in societies which consider time schedules important and time to be a controllable factor that needs to be used wisely

Chronemics (continued)

– Polychronic time schedule: Several things are done at the same time

• Place higher value on personal involvement than on getting things done on time

• Consider personal relationships more important than time schedules

Chromatics

Use of color to communicate messages

Knowing the importance and the specifics of chromatics helps avoid embarrassing situations

Achieving Communication Effectiveness

• Open feedback systems

– Personal - Face-to-face, phone, or e-mail

– Impersonal - Reports, budgets, or plans

• Provide language training

– Non-native speakers of English need to be provided training to aid them in making face-to- face conversations and telephonic conversations

– Written communication is important in achieving effectiveness

Achieving Communication Effectiveness (continued)

• Provide cultural training

– At least one party has to understand the other’s culture

• Increase flexibility and cooperation

– Improves effectiveness in communication and understanding and cooperation

Negotiation

• Process of bargaining with one or more parties to arrive at a solution that is acceptable to all

• Follows assessing political environments

• Used in creating joint ventures with local firms

– Once a firm starts operating, additional areas of negotiation are included

Types of Negotiations

• Distributive negotiation: Occurs when two parties with opposing goals compete over a set value

• Integrative negotiation: Involves cooperation between two groups to integrate interests, create value, and invest in an agreement

Table 7.8 - Negotiating Types and Characteristics

Negotiation Process

• Planning

– Involves identifying objectives, exploring options to attain objectives, and finding areas of common ground between parties

• Interpersonal relationship building

– Getting to know people on the other side

• Exchanging task-related information

– Parties setting forth its position on critical issues

Negotiation Process (continued)

• Persuasion

– Success of a negotiation depends on:

• Understanding each parties’ position

• Identifying areas of similarity and difference

• Creating new options

• Working toward a solution

• Agreement

– Granting of concessions and hammering out of a final agreement

Understanding Cultural Differences

• Counterpart’s home culture should not be identified too quickly

• Western bias toward doing should be approached with caution

• Tendency to formulate simple, consistent, and stable images should be counteracted

Understanding Cultural Differences (continued)

• Significance of all aspects of the culture should not be assumed to be equal

• Differences might exist between the norms for interactions involving outsiders and between the compatriots

• Familiarity with counterpart's culture should not be overestimated

Negotiation Tactics

• Location

– Businesses choose a neutral site to avoid gaining advantage of a location and to finish negotiations soon due to the cost of staying at site

• Time limits

– Important negotiation tactic when one party is under a time constraint

Negotiation Tactics (continued)

• Buyer-seller relationship

– Different for certain countries

• Americans believe in trading favors

• Japanese believe they should get most out of a purchase

• Brazilians are deceptive and self-interested

Principles of Negotiation Tactics

• Separate the people from the problem

• Focus on interests over positions

• Generate a variety of options before settling on an agreement

• Insist that the agreement be based on objective criteria

• Stand ground

Bargaining Behaviors

• Verbal and nonverbal

– Verbal behaviors are important as they improve the final outcome and are critical to the success of a negotiation

• Use of extreme behaviors

– Some begin with an extreme offer or request, while some begin with an initial position that is close to the one they are seeking

Bargaining Behaviors (continued)

• Promises, threats, and other behaviors

– Influenced by culture and are designed to influence the other party

• Nonverbal behaviors

– Silent language (silent periods, facial gazing, touching, and conversational overlaps)

Be the International Management Consultant - China

• If you are working as a consultant for Coca Cola, how does the dismissal of the deal by the Chinese government affect your continued investment in the country?

• What more could private business, like Coca Cola, do to convince the government that new enterprise can bring positive economic development to the country?

Be the International Management Consultant - China (continued)

• Is the prospect of China’s sheer volume of potential customers too good to pass up?

– Do the actions of the government and the country’s recent stock market woes indicate a signal that investment should be reconsidered?

Review and Discuss

• How does explicit communication differ from implicit communication? Which is one culture that makes wide use of explicit communication? Implicit communication? Describe how one would go about conveying the following message in each of the two cultures you identified: “You are trying very hard, but you are still making too many mistakes”

Review and Discuss (continued 1)

• One of the major reasons that foreign expatriates have difficulty doing business in the United States is that they do not understand American slang

– A business executive recently gave the authors the following three examples of statements that had no direct meaning for her because she was unfamiliar with slang

Review and Discuss (continued 2)

– “He was laughing like hell”

– “Don’t worry. It’s a piece of cake”

– “Let’s throw these ideas up against the wall and see if any of them stick”

– Why did the foreign expat have trouble understanding these statements, and what could be said instead?

Review and Discuss (continued 3)

• Yamamoto Iron & Steel is considering setting up a minimill outside Atlanta, Georgia

– At present, the company is planning to send a group of executives to the area to talk with local and state officials regarding this plant

• In what way might misperception be a barrier to effective communication between the representatives for both sides? Identify and discuss two examples

Review and Discuss (continued 4)

• Diaz Brothers is a winery in Barcelona

– The company would like to expand operations to the United States and begin distributing its products in the Chicago area

• If things work out well, the company then will expand to both coasts. In its business dealings in the Midwest, how might culture prove to be a communication barrier for the company’s representatives from Barcelona? Identify and discuss two examples

Review and Discuss (continued 5)

• Why is nonverbal communication a barrier to effective communication? Would this barrier be greater for Yamamoto Iron & Steel (question 3) or Diaz Brothers (question 4)? Defend your answer

• For U.S. companies going abroad for the first time, which form of nonverbal communication barrier would be the greatest, kinesics or proxemics? Why? Defend your answer

Review and Discuss (continued 6)

• If a company new to the international arena was negotiating an agreement with a potential partner in an overseas country, what basic steps should it be prepared to implement? Identify and describe them

• Which elements of the negotiation process should be done with only your group? Which events should take place with all sides present? Why?

Review and Discuss (continued 7)

• An American manager is trying to close a deal with a Brazilian manager, but has not heard back from him for quite some time

– The American is getting very nervous that if he waits too long, he is going to miss out on any backup options lost while waiting for the Brazilian

• What should the American do? How can the American tell it is time to drop the deal? Give some signs that suggest negotiations will go no further

Review and Discuss (continued 8)

• Wilsten Inc. has been approached by a Japanese firm that wants exclusive production and selling rights for one of Wilsten’s new high-tech products

– What does Wilsten need to know about Japanese bargaining behaviors to strike the best possible deal with this company? Identify and describe five

Presentations/Luthans_10e_PPT_Ch08.pdf

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 8

Strategy Formulation and Implementation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Discuss the meaning, needs, benefits, and approaches of the strategic planning process for today’s MNCs

• Understand the tension between pressures for global integration and national responsiveness and the four basic options for international strategies

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued 1)

• Identify the basic steps in strategic planning, including environmental scanning, internal resource analysis of the MNC’s strengths and weaknesses, and goal formulation

• Describe how an MNC implements the strategic plan, such as how it chooses a site for overseas operations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued 2)

• Review the three major functions of marketing, production, and finance that are used in implementing a strategic plan

• Explain specialized strategies appropriate for emerging markets and international new ventures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Pharmerging Markets

• Emerging markets hold tremendous growth potential for the pharmaceutical industry

– Reason for disproportionate sales growth

• Companies will have to increasingly depend on consumers in developing economies to continue to maintain growth

– Expanding into emerging markets is accompanied by difficult growing pains

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Indian Drug Markets

• Are uniquely positioned for manufacturing

• Offer attractive labor costs and skilled workforce

• Face issues related to protection of intellectual property, quality and safety, and pricing and profit margin

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategic Management

• Process of:

– Determining an organization’s basic mission and long-term objectives

– Implementing a plan of action for pursuing the mission and attaining the objectives

• Required to keep track of firms' increasingly diversified operations in a continuously changing international environment

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategic Planning

• Helps an MNC coordinate and monitor its far- flung operations and deal with:

– Political risk

– Competition

– Currency instability

• Evidence for effectiveness of planning is mixed

– Planning does not always result in higher profitability

– Specifics will dictate the success of the process

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Approaches to Formulating and Implementing Strategy

Focusing on the economic imperative

Addressing the political imperative

Emphasizing the quality imperative

Implementing an administrative coordination

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Economic Imperative

• Worldwide strategy based on:

– Cost leadership

– Differentiation

– Segmentation

• MNCs sell products for which a large portion of value is added in upstream activities of industry’s value chain

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Economic Imperative (continued)

– Much of a product’s value is created through research and development, manufacturing, and distribution

• Used when a product is regarded as a generic good and does not have to be sold based on name brand or support service

• Global sourcing - Useful in formulating and implementing strategy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Political Imperative

• Strategy formulation and implementation utilizing strategies that are country-responsive and designed to protect local market niches

• MNCs sell products for which a large portion of value is added in downstream activities of value chain

– Success of product/service depends on marketing, sales, and service

– Country-centered/multi-domestic strategy is used

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Quality Imperative

• Takes two interdependent paths

– Change in attitudes and raising of expectations for service quality

– Implementation of management practices designed to make quality improvement an ongoing process

• Total quality management (TQM)

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Forms of TQM

• Cross-train personnel to do jobs of all members in work group

• Process reengineering designed to help identify and eliminate redundant tasks and wasteful effort

• Reward system designed to reinforce quality performance

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

TQM Summarized

• Quality - Operationalized by meeting or exceeding customer expectations

• Quality strategy - Formulated at top management level and diffused throughout the organization

• TQM techniques - Traditional inspection and statistical quality control and cutting-edge human resource management techniques

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Administrative Coordination

• MNC makes strategic decisions based on merits of the individual situation

– Does not use a predetermined economic or political strategy

• Used when rapid, flexible decision making is needed to close the sale

• Least common approach to formulation and implementation of strategy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Global Integration versus National Responsiveness

• Global integration

– Production and distribution of products and services of a homogenous type and quality on a worldwide basis

• National responsiveness: Need to:

– Understand different consumer tastes in segmented regional markets

– Respond to different national standards and regulations imposed by autonomous governments and agencies

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Basic International Strategies

• International strategy: Mixed strategy combining low demand for integration and responsiveness

• Multi-domestic strategy: Differentiated strategy emphasizing local adaptation

• Global strategy: Integrated strategy based primarily on price competition

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Basic International Strategies (continued)

• Transnational strategy: Integrated strategy emphasizing both global integration and local responsiveness

• Appropriateness of each strategy depends on pressures for cost reduction and local responsiveness in each country served

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Steps in Formulating Strategy

• Scanning the external environment for opportunities and threats

• Conducting an internal resource analysis of company strengths and weaknesses

• Formulating goals in light of the external scanning and internal analysis

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Environmental Scanning

• Provides management with accurate forecasts of trends

– Related to external changes in geographic areas where the firm is doing business or considering setting up operations

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Environmental Scanning (continued)

• Changes:

– Relate to environmental factors that can affect the company

– Include the industry or market, technology, regulatory, economic, social, and political aspects

• Central to discovering if an MNC can survive in a particular region

– Effective only when it is done consistently

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Internal Resource Analysis

• Helps firms evaluate their current managerial, technical, material, and financial resources and capabilities

– To better assess their strengths and weaknesses

• Determines firms' ability to take advantage of international market opportunities

• Identifies key success factors (KSF) that will dictate how well a firm is likely to do

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Goal Setting

• Precedes the first two steps of environmental scanning and internal analysis

• More specific goals for strategic plan come from external scanning and internal analysis

• Areas for formulation of MNC goals

– Profitability, marketing, operations, finance, and human resources

• Profitability and marketing goals top the plans and tend to be more externally environmentally responsive

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategy Implementation

• Process of providing goods and services in accord with a plan of action

• Includes:

– Consideration of location for implementation

– Execution of entry and ownership strategies

– Implementation of functional strategies in marketing, production, and finance

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Considerations in Selecting a Country

• Advanced industrialized countries that offer large markets for goods and services

• Amount of government control and restrictions on foreign investment

• Specific benefits offered by host countries

– Low tax rates, rent-free land and buildings, low- interest or no-interest loans, subsidized energy and transportation rates, and good infrastructure

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Considerations for Choosing a Specific Locale

• Access to markets

• Proximity to competitors

• Availability of transportation and electric power

• Desirability of location for employees coming in from outside

• Nature of workforce

• Cost of doing business

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Frontier Markets

• Unique subset of emerging economies

• Less correlated to ups and downs of the global economy

• Offer potentially high rewards, but with high risk

• Business initiatives require careful strategic considerations

– Potential strategy - Joint-venture with a local company with cultural knowledge of the market

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Role of Marketing in Implementation

• Strategy implementation must be determined on a country-by-country basis

– May be dictated by the overall strategic plan, which is based on market analysis

• Marketing strategy involves four Ps

– Product

– Price

– Promotion

– Place

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Role of Production in Implementation

• Production traditionally has been handled through domestic operations when exporting goods to foreign markets

• Recent trends

– Consideration of worldwide production

– Global coordination of operations

– Farming the product out to low-cost sites

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Role of Production Finance in Implementation

• Transferring funds or borrowing funds in international money markets is less expensive than relying on local sources

• Issues

– Reevaluation of currencies

– Inherent risk of volatile monetary exchange rates

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Specialized Strategies

• Strategies for developing and emerging markets

• Strategies for international entrepreneurship and new ventures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategies for Emerging Markets

• MNCs are increasingly focusing on emerging economies

– Foreign direct investment (FDI) flows into developing countries

• Emerging markets present exceptional risks due to political and economic volatility

– Corruption

– Failure to enforce contracts

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategies for Emerging Markets (continued)

– Red tape and bureaucratic costs

– General uncertainty in legal and political environment

• Types

– First-mover strategies

– Strategies for the base of the pyramid

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

First-Mover Strategies

• First-mover or early-entry positioning - Being the first or one of the first to enter a market

– Capturing learning effects important for increasing market share

– Achieving scale economies that accrue from opportunities for capturing that greater share

– Developing alliances with the most attractive local partner

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

First-Mover Strategies (continued)

• Privatization supports the competitive effects of first-mover positioning

– First movers who succeed in taking over newly privatized state-owned enterprises possess a significant advantage over later entrants

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategies for Base of Pyramid (BOP)

• Strategy targeting low-income customers in developing countries

• BOP forces companies to consider smaller- scale strategies

• Ideal for incubating new, leapfrog technologies that reduce environmental impacts and increase social benefit

• Business models can travel profitably to higher-income markets if successful

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategies for Base of Pyramid (BOP) (continued)

• Challenging to implement - Companies must:

– Offer affordable goods that are highly available in a community that is willing to accept the product

– Bring awareness of the product to the general populace

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

International Entrepreneurship

• Combination of innovative, proactive, and risk-seeking behavior

– Crosses national borders and is intended to create value in organizations

• Innovative firms tend to grow faster when they internationalize earlier

• Venture performance is improved by technological learning gained from international environments

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Born-Global Firms

• Firms that engage in significant international activity a short time after being established

• Successful born-global firms leverage a distinctive mix of orientations and strategies

– Global technological competence

– Unique-products development

– Quality focus

– Leveraging of foreign distributor competencies

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the Management Consultant

• Given that the country is actively seeking foreign investors and appears to be creating a pro-business atmosphere, what non-oil businesses do you think would be best suited for expanding into Saudi Arabia?

– If you were a foreign investor, what concerns would you have about the country? Would you make an investment in the country?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. Of the four imperatives discussed in this chapter—economic, political, quality, and administration—which would be most important to IBM in its efforts to make inroads in the Pacific Rim market?

– Would this emphasis be the same as that in the United States, or would IBM be giving primary attention to one of the other imperatives? Explain

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

2. Define global integration as used in the context of strategic international management

– In what way might globalization be a problem for a successful national organization that is intent on going international?

• In your answer, provide an example of the problem

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

3. Some international management experts contend that globalization and national responsiveness are diametrically opposed forces, and that to accommodate one, a multinational must relax its efforts in the other

– In what way is this an accurate statement? In what way is it incomplete or inaccurate?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continue 3)

4. Consider that both a retail chain and a manufacturing company want to expand overseas

– What environmental factors would have the most impact on these companies?

– What ratio of environmental scanning to internal analysis should each employ?

– What key factors of success differentiate the two?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 4)

5. Anheuser-Busch is attempting to expand in India, where beer is not widely consumed and liquor dominates the market

– What areas should be targeted for strategic goals?

– What could be some marketing implications in the Indian market?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 5)

6. What particular conditions that MNCs face in emerging markets may require specialized strategies?

– What strategies might be most appropriate in response?

– How might a company identify opportunities at the “base of the pyramid” (i.e., low-income markets)?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 6)

7. What conditions have allowed some firms to be born global?

– What are some examples of born-global companies?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 7)

8. Mercedes changed its U.S. strategy by announcing that it is developing cars for the $30,000 to $45,000 price range (as well as its typical upper-end cars)

– What might have accounted for this change in strategy?

• In your answer, include a discussion of the implications from the standpoints of marketing, production, and finance

Presentations/Luthans_10e_PPT_Ch09.pdf

Chapter 9

Entry Strategies and Organizational Structures

Learning Objectives

• Describe how an MNC develops and implements entry strategies and ownership structures

• Examine the major types of entry strategies and organizational structures used in handling international operations

• Analyze the advantages and disadvantages of each type of organizational structure, including the conditions that make one preferable to others

Learning Objectives (continued)

• Describe the recent, nontraditional organizational arrangements coming out of mergers, joint ventures, keiretsus, and other new designs including electronic networks and product development structures

• Explain how organizational characteristics such as formalization, specialization, and centralization influence how the organization is structured and functions

Entry Strategies and Ownership Structures

Export/import operations

Wholly owned subsidiaries

Mergers/acquisitions

Alliances and joint ventures

Licensing Franchising

Export/Import

• Only available choices for small and new firms wanting to go international

• Permits larger firms to begin international expansion with minimum investment and risk

– Paperwork can be turned over to an export management company or handled through the firm’s export department

• Permits easy access to overseas markets

• Strategy is usually transitional in nature

Wholly Owned Subsidiary

• Overseas operation that is totally owned and controlled by an MNC – Based on the belief that managerial efficiency is

better without outside partners

• Prohibited in many newly developing countries as some countries: – Worry that MNCs could drive out local enterprises – View this as an attempt to export jobs

• Faces high risk with large investments in one area

Mergers and Acquisitions

• Cross-border purchase or exchange of equity involving two or more companies

• Opted by MNCs to quickly expand resources or construct high-profit products in a new market

• Cultural differences and time constraints are the major barriers

• Transition costs pose a problem in the postmerger environment

Alliances and Joint Ventures

• Alliance: Any type of cooperative relationship among different firms

• Joint venture (JV): Agreement under which two or more partners own or control a business

– Called international join venture(IJV) when the partners are from different countries

• Types - Nonequity ventures and equity joint ventures

Advantages of Alliances and Joint Ventures

• Improvement of efficiency

• Access to knowledge

• Mitigating political factors

• Overcoming collusion or restriction in competition

Strategic Alliance Recommendations

• Know the partners well before an alliance is formed

• Expect differences in alliance objectives among partners from different countries

• Realize that the desired resource profiles need not be complementary to the firm’s resources

• Be sensitive to the alliance partner's needs

• Work on developing a relationship of trust after identifying the best partner

Licensing

• Agreement that allows one party to use an industrial property right in exchange for payment to the owning party

• Used when: – A product is in the mature stage of the product life

cycle with strong competition and declining profit

– Foreign countries require newly entering firms to make a substantial direct investment

– Licensor is a small firm lacking financial and managerial resources

Licensing (continued)

• Likely licensors - Companies spending large amounts on R&D

• Likely licensees - Companies spending little on R&D

Franchising

• One party (the franchisor) permits another (the franchisee) to operate an enterprise using its trademark, logo, product line, and methods of operation in return for a fee

– Franchisor gets a new stream of income

– Franchisee gets a time-proven concept and products or services that can be quickly brought to market

Figure 9.1 - Organizational Expectations of Internationalization

Initial Division Structure

• Subsidiary

– Common organizational arrangement for operations that require an on-site presence from the start

• On-site manufacturing operations

– Set up because of the pressure by the local governments when overseas sales increase

– Help reduce transportation costs

Initial Division Structure (continued)

• Export arrangement

– Common first choice among manufacturing firms, especially those with technologically advanced products

– Allows firms to reduce the risk and size of investment in establishing significant international operations while testing the size of international markets

Figure 9.2 - Use of Subsidiaries during the Early Stage of Internationalization

International Division Structure

• Structural arrangement that handles all international operations out of a division

• Adopted by firms that are in developmental stages of international business operations

• Advantages

– Ensures that the international focus receives top management's attention

– Allows companies to develop a unified approach to international operations

International Division Structure (continued)

• Disadvantages

– Separates the domestic and international managers

– Makes difficult for the home office to think and act strategically and to allocate resources on a global basis

– Most R&D efforts are domestically oriented

• Ideas for new products or processes in the international market often are given low priority

Figure 9.3 - International Division Structure

Global Structural Arrangements

• Focuses on greater expansion and integration among international operations

• Types

– Global product division

– Global area division

– Global functional division

Types of Global Structural Arrangements

• Structure under which domestic divisions are given worldwide responsibility for product groups

Global product division

• Structure under which global operations are organized on a geographic basis rather than a product basis

Global area division

• Structure that organizes worldwide operations primarily based on function and secondarily on product

Global functional division

Figure 9.4 - Global Product Division Structure

Global Product Division: Advantages and Disadvantages

• Advantages

– Operates as profit centers

– Provides a direct line of communication between customer and organization • Enables R&D to work on

development of products to serve the customer needs

– Permits managers to gain expertise in technical and marketing aspects of products

• Disadvantages

– Need for duplicating facilities and staff within each division

– Pursuit of currently attractive geographic prospects and neglect of others with better long- term potential

– Loss of time in tapping local rather than international markets

Figure 9.5 - Global Area Division Structure

Global Area Division: Advantages and Disadvantages

• Advantages

– Managers are responsible for all business operations in a designated geographic area • Allows managers to make

decisions to accommodate environmental changes

– Enables reduction of cost per unit and helps offer a competitive price

• Disadvantages

– Difficult to reconcile a product emphasis with a geographic orientation

– New R&D efforts are often ignored because divisions are selling goods that are in the maturity stage

Figure 9.6 - Global Functional Structure

Global Functional Division: Advantages and Disadvantages

• Advantages

– Emphasis on functional expertise

– Tight centralized control

– Relatively lean managerial staff

• Disadvantages

– Coordination of manufacturing and marketing is difficult

– Managing multiple product lines can be challenging as production and marketing are separated into different departments

– Only the CEO can be held accountable for the profits

Mixed Organization Structures

• Combination of global product, area, or functional arrangement

• Advantage

– Allow the organization to create the specific type of design that best meets its needs

• Disadvantage

– Coordinating the personnel and getting everyone to work toward common goals becomes difficult with an increased complexity of matrix design

Figure 9.7 - Multinational Matrix Structure

Transnational Network Structures

• Combine elements of function, product, and geographic designs, while relying on network arrangements to link worldwide subsidiaries

• Help MNCs make use of global economies of scale while also being responsive to local customer demands

• Have nodes at their centers

– Nodes - Units charged with coordinating product, functional, and geographic details

Transnational Network Structures (continued)

• Different product line units and geographic area units have different structures

• Basic structural framework consists of:

– Dispersed subunits

– Specialized operations

– Interdependent relationships

• Complex and continually changing and are difficult to draw in the form of an organization chart

Table 9.3 - Control Mechanisms Used in Select Multinational Organization Structures

Nontraditional Organizational Arrangements

• Mergers and acquisitions

– Involve a substantial financial risk because of the high sales price

• Keiretsus

• Joint ventures

– Developed to help partners address and meld their different values, management styles, action orientation, and organization preferences

• Strategic alliances

Nontraditional Organizational Arrangements (continued)

• Joint ventures and strategic alliances:

– Provide MNCs with the opportunity to access a wide variety of competencies

– Reduce own costs while ensuring that they have a reliable provider

Electronic Network Organization

• Electronic freelancers

– Individuals who work on a project for a company, usually via the Internet, and move on to other employment when the assignment is done

• Delivers outsourcing functions online

• Different version of the matrix design

– People are temporary, contingent employees, but never see each other, and communicate exclusively in an electronic environment

Organizing for Product Integration

• Cross-functional approach can lead to product teams that are autonomous, thus failing to integrate overall efforts with an organization

• Emerging trend - Toyota's organizational mechanisms

– Mutual adjustment

• Ensures that employees remain dedicated to their primary functional area

– Use of direct, technically skilled supervisors

Organizing for Product Integration (continued)

– Use of integrated leadership

– Providing in-house training and restricting job rotation within only one function

– Creation of standard milestones by the project leader and the use of simple forms and procedures

– Maintenance of design standards by people who are doing the work

• Standards are continually changed to meet new demands

Formalization

• Use of defined structures and systems in decision making, communicating, and controlling

• Types - Objective and subjective

• Firms can achieve competitive advantage by:

– Developing internal networks of international subsidiaries in major national or regional markets

– Forging external networks of strategic alliances with firms around the world

Specialization

• Assigning of individuals to specific, well- defined tasks

• Horizontal specialization: Individuals are given a particular function to perform and tend to stay within the confines of this area

• Vertical specialization: Individuals are collectively responsible for performance as work is assigned to groups or departments

– Results in greater job routinization

Centralization

• Important decisions are made by the top management

• Decentralization: Involves pushing decision making down the line and getting the lower- level personnel involved

– Can help promote creativity, entrepreneurial effort, and personal responsibility

Be the International Management Consultant

• If you worked as a consultant for the NFL, would you recommend to the league commissioner that the number of annual games played in Mexico be increased?

– What about starting a new franchise in Mexico City?

– What aspects of the country would be causes for concern?

Be the International Management Consultant (continued)

– Does Mexico’s history of state regulation over telecommunications and energy affect your decision for growth through television?

– What other concerns might you have?

Review and Discuss

1. One of the most common entry strategies for MNCs is the joint venture

– Why are so many companies opting for this strategy?

– Would a fully owned subsidiary be a better choice?

Review and Discuss (continued 1)

2. A small manufacturing firm believes that there is a market in Europe for handheld tools that are carefully crafted for local markets and decides to manufacture these tools

– What type of organization structure would be of most value to this firm in its initial efforts to go international?

Review and Discuss (continued 2)

– If the company finds a major market for its products in Europe and decides to expand into Asia, would you recommend any change in its organization structure?

• If yes, what would you suggest?

• If no, why not?

– If the company finds after three years of international effort that it is selling 50 percent of its output overseas, what type of organizational structure would you suggest for the future?

Review and Discuss (continued 3)

3. In what way do the concepts of formalization, specialization, and centralization have an impact on MNC organization structures?

– In your answer, use a well-known firm such as IBM or Ford to illustrate the practical expressions of these three characteristics

Presentations/Luthans_10e_PPT_Ch10.pdf

Chapter 10

Managing Political Risk, Government Relations, and Alliances

Learning Objectives

• Examine how MNCs evaluate political risk

• Present some common methods used for managing and reducing political risk

• Discuss strategies to mitigate political risk and develop productive relations with governments

• Describe challenges to and strategies for effectively managing alliances

Russian Roulette: Risks and Political Uncertainty

• Political uncertainty has long been a part of doing business in Russia

• Russia's unpredictable foreign policy actions have indirectly resulted in financial difficulties for MNCs

Russian Roulette: Risks and Political Uncertainty (continued)

• Many foreign companies have found themselves incurring huge losses due to lost business and frozen assets

• Internal rule-changing by the Russian government poses the potential to lead to major losses and frustration

Political Risk

• Unanticipated likelihood that a business’s foreign investment will be constrained by a host government’s policies

• Evaluation of the inherent risk of doing business in emerging economies involves:

– Policy and control mechanisms

– Awareness of the historical treatment of MNCs within certain nations

Macro and Micro Analysis of Political Risk

• Macro political risk analysis

– Reviews major political decisions that are likely to affect all enterprises in the country

• Micro political risk analysis

– Directed toward government policies and actions that influence selected sectors of the economy or specific foreign businesses in the country

Overseas Expansion

• MNCs need to be wary of the combative political environment that may exist

• MNCs must:

– Assess political risk

– Install modern security

– Compile crisis plans

– Prepare employees for possible situations

Expropriation

• Seizure of businesses by a host country with little, if any, compensation to owners

• Greatest risk - Extractive, agricultural, infrastructural industries

• Tend to occur in non-Western countries that are poor, unstable, and suspicious of foreign multinationals

Expropriation (continued)

• Strategies to minimize the chances of expropriation

– Bringing in local partners

– Limiting the use of high technology so that if the firm is expropriated, the country cannot duplicate the technology

– Acquiring an affiliate that depends on the parent company for key areas of the operation

Comprehensive Framework

• Identifies the various risks and then assigns a quantitative risk or rating factor to them

• Should consider all political risks and identify those that are most important

– Categories of political risks

• Transfer risks

• Operational risks

• Ownership-control risks

Figure 10.1 - Three-Dimensional Framework for Assessing Political Risk

Transfer Risk

• Government policies that limit the transfer of capital, payments, production, people, and technology in and out of country

– Tariffs on exports and imports

– Restrictions on exports

– Dividend remittance

– Capital repatriation

Operational Risks

• Government policies and procedures that directly constrain the management and performance of local operations

– Price controls

– Financing restrictions

– Export commitments

– Taxes

– Local sourcing requirements

Ownership-Control Risks

• Government policies or actions that inhibit ownership or control of local operations

– Foreign-ownership limitations

– Pressure for local participation

– Confiscation

– Expropriation

– Abrogation of proprietary rights

Nature of Investment

• Conglomerate investment

– Type of high-risk investment in which goods or services produced are not similar to those produced at home

• Vertical investments

– Production of raw materials or intermediate goods that are to be processed into final products

– Run the risk of being taken over by the government

Nature of Investment (continued)

• Horizontal investments

– MNC investment in foreign operations to produce the same goods or services as those produced at home

– Not likely to be takeover targets

Special Nature of Foreign Direct Investment (FDI)

• Relates to the sector of economic activity, technological sophistication, and pattern of ownership

– Sectors of economic activity

• Primary sector - Agriculture, forestry, mineral exploration and extraction

• Industrial sector - Manufacturing operations

• Service sector - Transportation, finance, insurance, and related industries

Special Nature of Foreign Direct Investment (FDI) (continued)

• Can be categorized as one of five types

– Type I - Highest-risk venture

– Type V - Lowest-risk venture

• Risk factor is assigned based on sector, technology, and ownership

– Primary sector industries have highest risk factor, service sector industries have next highest, and industrial sector industries have lowest

Special Nature of Foreign Direct Investment (FDI) (continued)

– Firms with technology that is not available to the government have lower risk than those with technology that is easily acquired if taken over

– Wholly owned subsidiaries have higher risk than partially owned subsidiaries

Managing Political Risk

• Some firms attempt to manage political risk through a quantification process

– Factors that are quantified reflect:

• Political and economic environment

• Domestic economic conditions

• External economic conditions

– Each factor is given a minimum or maximum score, and the scores are tallied to provide an overall evaluation of the risk

Techniques for Responding to Political Risk

• Relative bargaining power analysis

• Integrative, protective, and defensive techniques

• Proactive political strategies

Relative Bargaining Power Analysis

• MNC works to maintain a bargaining power position stronger than that of host country

• Gaining bargaining power depends on:

– Host country’s perception of the MNC’s size

– Experience

– Legitimacy

Integrative Techniques

• Help overseas operations become part of host country’s infrastructure

– Developing good relations with host government and other local political groups

– Producing as much of the product locally as possible with use of in-country suppliers and subcontractors

Integrative Techniques (continued)

– Creating joint ventures and hiring local people to manage and run operations

– Doing as much local research and development as possible

– Developing effective labor-management relations

Protective and Defensive Techniques

• Discourage the host government from interfering in operations

– Doing as little local manufacturing as possible and conducting all research and development outside the country

– Limiting responsibility of local personnel and hiring only those who are vital to operations

Protective and Defensive Techniques (continued)

– Raising capital from local banks, host government, and outside sources

– Diversifying production of the product among a number of countries

Proactive Political Strategies

• Leveraging bilateral, regional, and international trade and investment agreements

• Drawing on bilateral and multilateral financial support

• Using project finance structures to separate project exposure from overall firm risk

Specific Proactive Political Strategies

• Formal lobbying

• Campaign financing

• Seeking advocacy through the embassy and consulates of home country

• Formal public relations and public affairs activities

– Such as grassroots campaigning and advertising

Managing Alliances

• Partners may be:

– Current or former state-owned enterprises

– Controlled or influenced by government agencies

• Alliance and joint ventures can significantly improve the success of MNC entry and operation

• Managing the relationships inherent in alliances can be challenging

Alliance

• Arena where both value-claiming and value- creating activities take place

– Value-claiming - Competitive, distributive negotiation

– Value-creating - Collaborative, integrative negotiation

Alliance (continued)

• Motivating factors to enter into alliances

– Faster entry and payback

– Economies of scale and rationalization

– Complementary technologies and patents

– Co-opting or blocking competition

• Challenge - Managing operations with partners from different national cultures

– Cultural differences may create uncertainties and misunderstandings in the relationship

Successful Management of Alliances

• Depends on situational conditions, management instruments, and performance criteria

• Success factors

– Partner selection, cooperation agreement, management structure, acculturation process, and knowledge management

• Important aspect - Preparation for the likely eventual termination of the alliance

Legal Issues Critical to Termination of Alliance

• Conditions of termination

• Disposition of assets and liabilities

• Dispute resolution

• Distributorship arrangements

• Protection of proprietary information and property

• Rights over sales territories and obligations to customers

Business Issues Critical to Termination of Alliance

Basic decision to exit

People-related issues

Relations with the host

government

Role of Host Governments in Alliances

• Host governments

– Are active in mandating that investors take on partners

– Require investors to share ownership of their subsidiaries with local partners

– Play a substantial role in the terms of formation and dissolution of alliances

Role of Host Governments in Alliances (continued)

• Having alliance or joint-venture partners may be advantageous to MNC entry and expansion

– Seen in highly regulated industries such as banking, telecommunications, and health care

Be the Management Consultant

• As an international management consultant, what advice would you give to a foreign company looking to move operations into Brazil?

Be the Management Consultant (continued)

• Do you think Brazil still holds the potential for future growth?

– As an investor, do you think that the "buy low" mindset applies to Brazil?

• If not, what changes would you like to see before making any investment in the country?

Review and Discuss

1. What types of political risk would a company entering Russia and France face?

– Identify and describe three

– How are these risks similar? How are they different?

Review and Discuss (continued 1)

2. Most firms attempt to quantify their political risk, although without specific weights

– Why is this approach so popular?

– Would the companies be better off assigning weights to each of the risks being assumed?

• Defend your answer

Review and Discuss (continued 2)

3. How has terrorism impacted foreign interest in Iran and Saudi Arabia, considering the vast oil reserves that are there?

– How have terrorist attacks affected political relationships between countries such as the United States and Russia?

Review and Discuss (continued 3)

4. If a high-tech firm wanted to set up operations in Iran, what steps might it take to ensure that the subsidiary would not be expropriated?

– Identify and describe three strategies that would be particularly helpful

– How might proactive political strategies help protect firms from future changes in the political environment?

Review and Discuss (continued 4)

5. What are some of the challenges associated with managing alliances? How do host governments affect these?

Presentations/Luthans_10e_PPT_Ch11.pdf

Chapter 11

Management Decision and Control

Learning Objectives

• Provide comparative examples of decision making in different countries

• Present some of the major factors affecting the degree of decision-making authority given to overseas units

• Compare and contrast direct controls with indirect controls

Learning Objectives (continued)

• Describe some of the major differences in the ways that MNCs control operations

• Discuss some of the specific performance measures that are used to control international operations

Global Online Retail: Amazon versus Alibaba

• Competitive strategies

– Alibaba is a conglomerate, whereas Amazon specializes in business-to-consumer sales

– Alibaba acts as a facilitator for third-party sellers, whereas Amazon acts as a direct merchant itself

• Geographic positioning of both companies affects their potential future growths

Managerial Decision-Making Processes

• Involves choosing a course of action among alternatives

• Often linear but looping back is common

• Degree of managerial involvement depends on the:

– Structure of the subsidiaries

– Locus of decision making

• Can be centralized or decentralized

Figure 11.1 - Decision-Making Process

Table 11.1 - Factors That Influence Centralization or Decentralization of Decision Making in Subsidiary Operations

Cultural Differences in Decision Making

• How managers view time in the decision- making process

– French managers tend to spend ample time on searching for and evaluating alternatives

– Danish managers want to act first and take advantage of opportunities

Cultural Differences in Decision Making (continued 1)

• Germans and Scandinavian countries both have codetermination

– Codetermination: Legal system that requires workers and their managers to discuss major decisions

– Germans tend to be fairly centralized, autocratic, and hierarchical

– Swedes focus more on quality of work life and the importance of the individual in the organization

Cultural Differences in Decision Making (continued 2)

• Japanese are different from Europeans though they employ a long-term focus

– Use the following decision-making processes:

• Ringisei: Decision making by consensus

• Tatemae: Doing the right thing according to the norm

• Honne: What one really wants to do

Research Findings on Decision Making

• Swedish teams – Higher team orientation, flatter organizational

hierarchies, and open-minded and informal work attitudes

– Transparent and less formal decision making

• German teams – Willing to accept a changed or unpopular decision

and have clearer responsibilities for the individual

– Faster in decision making as it is largely dominated by the decision authority of an expert in the field

Total Quality Management (TQM)

• Organizational strategy and accompanying techniques that result in the delivery of high- quality products or services to customers

• Critical to achieve world-class competitiveness

• Has a big impact in the manufacturing area

– Employs concurrent engineering or interfunctional teams to develop new products

• Used by MNCs to tailor their output to customer needs

Total Quality Management Techniques

• Employee empowerment

– Empowerment: Gives individuals and teams the resources, information, and authority needed to develop ideas and effectively implement them

• Rewards and recognition

– Merit pay, discretionary bonuses, pay-for-skills and knowledge plans, plaques, and public recognition

Total Quality Management Techniques (continued)

• Ongoing training

– Takes a wide variety of forms

• Ranges from statistical quality control to team meetings designed to generate ideas for streamlining operations and eliminating waste

– Objective is to apply kaizen, which is a Japanese term for continuous improvement

Decisions to Attack the Competition

• Examples

– Ford Motor Company’s decision to challenge other automakers and to be a major player in developing markets, such as Asia and Africa

– Audi company's decision to target younger professionals in established markets

– BMW company's decision to focus on providing more options and personalization for consumers

– Mercedes company's decision to go for a lowest- cost strategy

ISO 9000 Certification

• Indirectly related to TQM

– To ensure quality products and services

• Examines design, process control, purchasing, service, inspection and testing, and training

• Necessary prerequisite to doing business in the EU

• Screening criterion for getting business in the U.S. and around the globe

Decision Making and Controlling

• Interlinked functions

• Controlling

– Process of evaluating results in relation to plans or objectives and deciding what action, if any, to take

– Types of control

• Internal and external control

• Direct and indirect controls

Figure 11.2 - Models of PC Manufacturing - Traditional Model

Figure 11.2 - Models of PC Manufacturing - Direct Sales Model

Figure 11.2 - Models of PC Manufacturing - Hybrid Model

Control Problems

• Conflict between the objectives of the overseas operation and the MNC

• Disagreement in the objectives of joint venture partners and corporate management

• Variance in the degree of experience and competence in planning among managers

• Basic philosophic disagreements in the objectives and polices of international operations due to cultural differences

Internal and external control

• Internal control - Focuses on the things that an MNC does best

• External control - Ensures that there is a market for the goods and services that it is offering

– By finding out what the customers want and be prepared to respond appropriately

Table 11.3 - Impact of Internal- and External- Oriented Cultures on the Control Process

Direct and Indirect controls

• Direct controls - Use face-to-face or personal meetings for monitoring operations

– Example - Top executives visit overseas affiliates to learn of problems and challenges

• Indirect controls - Use reports and other written forms of communication to control operations

– Example - Monthly operating reports

Financial Statements Required from Subsidiaries for Indirect Controls

• Statements prepared to meet the national accounting standards and procedures prescribed by the host country

• Statements prepared to comply with the accounting principles and standards required by the home country

• Statements prepared to meet the financial consolidation requirements of the home country

Approaches to Control

• Major differences among countries

– Great Britain

• Financial records were sophisticated and heavily emphasized

• Top management tended to focus on major problem areas and not involve in specific matters of control

• Control was used for general guidance than for surveillance

• Operating units had a large amount of marketing autonomy

Approaches to Control (continued)

– Germany

• Managers employed very detailed control and focused attention on all variances

• Managers placed heavy control on production and stressed operational efficiency

– France

• Managers employed control systems closer to that of Germans than to the British

• Control was used more for surveillance than guidance and was centrally administered

• Less systematic and sophisticated system

Approaches to Control: U.S. Firms versus European Firms

• U.S. firms

– Measure quantifiable, objective aspects

– Need precise plans and budgets in generating standards for comparison

• European firms

– Measure qualitative aspects

– Need high levels of knowledge about appropriate behavior in supporting the goals of the firms

Approaches to Control: U.S. Firms versus European Firms (continued)

– Need large central staffs and centralized information-processing capability

– Require less decentralization of operating decision making

– Favor long vertical spans between parent and subsidiary firms

– Need capable expatriate managers willing to spend time abroad

– Require more decentralization of operating decision making

– Favor short vertical spans between parent and subsidiary firms

Performance Measures for Control: Financial Performance

• Measured by profit and loss and return on investment

– Profit is an important part of ROI calculation

• Amount of profit is directly related to how well or poorly a unit is judged to perform

– Can be affected by fluctuations in currency value

• If a country devalues its currency, subsidiary export sales will increase

• If a country revalues its currency, export sales will decline

Performance Measures for Control: Quality Performance

• Quality control (QC) - Major function of production and operations management – Achieved through quality circles

• Quality control circle (QCC): Group of workers who meet on a regular basis to discuss ways of improving the quality of work

• Example – Reasons why Japanese goods are of high quality

• Minimal worker error, effective use QCCs, use of early warning systems, use of training overkill, and use of cutting edge technology

Performance Measures for Control: Personnel Performance

• Common approach is the periodic appraisal of work performance

• Variations are found across countries in:

– Methods used in evaluations

– How the control actually is conducted

– How rewards and monitoring of performance are handled

Performance Measures for Control: Personnel Performance (continued)

• Assessment centers: Identifies individuals with the potential to be selected for or promoted to higher-level positions

– Involve the following simulation exercises:

• In-basket exercises that require managerial attention

• Committee exercises that require candidates to work as a team in making decisions

• Business decision exercises that make participants compete in the same market

• Preparation of business plans and letter-writing exercises

World’s Most Admired Firms

• Common themes based on the analysis from the consultants at the Hay Group

– Top managers take their mission statements seriously and expect everyone else to do the same

– Success attracts the best people, and the best people sustain success

– Top companies know precisely what they are looking for

– Firms see career development as an investment, not a chore

World’s Most Admired Firms (continued)

– Whenever possible, these companies promote from within

– Performance is rewarded

– Firms are genuinely interested in what their employees think, and they measure work satisfaction often and thoroughly

Be the International Management

Consultant

• If you were a foreign investor, would you want to invest in a consumer electronics company in Japan?

– Does the fact that the company has had past problems requiring government intervention affect your initial decision?

– How does it impact your decision that you would be competing with a government-backed company during the bid process?

Review and Discuss

1. A British computer firm is acquiring a smaller competitor located in Frankfurt

– What are two likely differences in the way these two firms carry out the decision-making process?

• How could these differences create a problem for the acquiring firm? – Give an example in each case

Review and Discuss (continued 1)

2. Which cultures are more likely to focus on external controls?

– Which cultures would consider direct controls more important than indirect controls?

3. How would you explain a company’s decision to use centralized decision-making process and decentralized control process, considering the two are so interconnected?

– Provide an industry example of where this may occur

Review and Discuss (continued 2)

4. How are U.S. multinationals trying to introduce total quality management into their operations? Give two examples

5. Would a U.S. MNC doing business in Germany find it easier to introduce TQM concepts into German operations, or would there be more receptivity to them back in the United States? Why? – What if the U.S. multinational were introducing

these ideas into a Japanese subsidiary?

Review and Discuss (continued 3)

6. In what ways could an accelerated decision- making process harm a company?

– Using Figure 11–1, which stage(s) do you think would be most in danger of being overlooked?

7. A company does a personnel performance evaluation by reviewing the financial decisions the management has made, specifically focusing on ROI

– How is this approach beneficial to the company?

Review and Discuss (continued 4)

– Which aspects could the company be neglecting?

– Which cultures are most likely to employ this method?

– Which cultures would avoid this tactic?

Presentations/Luthans_10e_PPT_Ch12.pdf

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 12

Motivation across Cultures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

• Define motivation, and explain it as a psychological process

• Examine the hierarchy-of-needs, two-factor, and achievement motivation theories, and assess their value to international human resource management

• Discuss how an understanding of employee satisfaction can be useful in human resource management throughout the world

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives (continued)

• Examine the value of process theories in motivating employees worldwide

• Understand the importance of job design, work centrality, and rewards in motivating employees in an international context

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Motivating Employees in a Multicultural Context

• Motivating and rewarding diverse workforces is a significant challenge to organizations

• Employee preferences are correlated with culture

• Managers must be aware that a reward in one culture may be viewed differently in another culture

• Managers focus on extrinsic rewards and ignore intrinsic rewards

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Figure 12.1 - Basic Motivation Process

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Determinants of Motivation

• Intrinsic

– Individual experiences fulfillment through carrying out an activity and helping others

• Extrinsic

– External environment and result of the activity in the form of competition and compensation or incentive plans are of great importance

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Universalist Assumption

• Motivation process is universal

– Culture influences the specific content and goals pursued

– Specific needs and goals can be different between two cultures

• Move toward free-market economies and emergence of new opportunities will change the ways in which individuals are motivated

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Assumption of Content and Process

• Content theories

– Explain work motivation in terms of what arouses, energizes, or initiates employee behavior

– Subject of most research in the field

• Process theories

– Explain work motivation by how employee behavior is initiated, redirected, and halted

– More sophisticated and focused on individual behavior in specific setting

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Hierarchy-of-Needs Theory

• Known as Maslow’s theory

• Five basic needs constitute a need hierarchy

– Physiological: Basic physical needs for water, food, clothing, and shelter

– Safety: Desires for security, stability, and absence of pain

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Hierarchy-of-Needs Theory (continued)

– Social: Desires to interact and affiliate with others and the need to feel wanted by others

– Esteem: Needs for power and status

– Self-actualization: Desire to reach one’s full potential

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Assumptions Made by Maslow’s Theory

• Lower-level needs must be satisfied before higher-level needs become motivators

• Need that is satisfied no longer motivates

• More ways to satisfy higher-level needs than to satisfy lower-level needs

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

International Findings on Maslow’s Theory

• Haire group's study indicated that all needs are important to respondents across cultures

– Upper-level needs were of particular importance to international managers

– Respondents reported that autonomy and self- actualization were the most important and least- satisfied needs

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

International Findings on Maslow’s Theory (continued)

• Some researchers suggested modification of Maslow’s Western-oriented hierarchy

– Nevis's collectivist need hierarchy

• Belonging (social)

• Physiological

• Safety

• Self-actualization (in service of society)

• Hofstede reported a link between job types and levels and the need hierarchy

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Two-Factor Theory of Motivation

• Formulated by Frederick Herzberg and his colleagues

• Identifies two sets of factors that influence job satisfaction

– Motivators: Job-content factors that ensure satisfaction

• Achievement, recognition, responsibility, advancement, and the work itself

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Two-Factor Theory of Motivation (continued)

– Hygiene factors: Job-context variables that lead to dissatisfaction when they are not taken care of

• Salary, interpersonal relations, technical supervision, working conditions, and company policies and administration

• Criticisms

– Classification of money as a hygiene factor and not as a motivator

– Findings support a theory of job satisfaction and not a total theory of motivation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Two-Factor Theory of Motivation: International Findings

• Research holds the overall theory to be true

• Cross-cultural studies show that motivators tend to be of more importance to job satisfaction than are hygiene factors

• Results indicate that job content is more important than job context

• Motivation-hygiene theory must be applied on a country-by-country or a regional basis

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Achievement Motivation Theory

• Holds that individuals can have a need to get ahead, attain success, and reach objectives

• States that need for achievement is learned

• Relies solely on the Thematic Apperception Test (TAT) to measure individual achievement

• Does not explain the need for achievement in cultures in which individual accomplishment is neither valued nor rewarded

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

High Achievers

• Like situations in which they take personal responsibility for finding solutions to problems

• Tend to be moderate risk takers rather than high or low risk takers

• Want concrete feedback on performance

• Tend to be loners and not team players

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Achievement Motivation Theory: International Findings

• Theory must be modified to meet specific needs of local culture

– Culture of many countries does not support high achievement

– Anglo cultures and those rewarding entrepreneurial effort support achievement motivation, and their human resources should be managed accordingly

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Select Process Theories

Equity theory

Goal-setting theory

Expectancy theory

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Equity Theory

• Focuses on how motivation is affected by people’s perception of how fairly they are being treated

– Job performance is positive when people perceive they are treated equitably

– Job performance is negative when people believe they are not treated fairly and are dissatisfied

• Supported in the West but has mixed results internationally

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Equity Theory: International Findings

• In Israeli kibbutz production unit, everyone is treated the same but managers reported lower satisfaction levels than workers

• Employees in Asia and the Middle East readily accept inequitable treatment in order to preserve group harmony

• In Japan and Korea, men and women receive different pay for doing same work

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Goal-Setting Theory

• Focuses on how individuals set goals and respond to them and overall impact of this process on motivation

• Specific areas given attention

– Level of participation in goal setting

– Goal difficulty

– Goal specificity

– Importance of objective

– Timely feedback to progress toward goals

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Goal-Setting Theory (continued)

• Has been continually refined and developed

• Research shows that employees perform well if they are assigned specific and challenging goals that they have had a hand in setting

– Most studies have been conducted in the U.S.

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Goal-Setting Theory: International Findings

• In the U.S., employee participation in goal setting is motivational

• U.K. and Norwegian workers prefer to have their union representatives work with management in determining work goals

• Value of goal-setting theory may well be determined by culture

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Expectancy Theory

• Postulates that motivation is influenced by a person’s belief that:

– Effort will lead to performance

– Performance will lead to specific outcomes

– Outcomes will be of value to the individual

• Predicts that high performance followed by high rewards will lead to high satisfaction

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Expectancy Theory: International Findings

• Theory seems culture-bound

– May have less value in societies where people believe that much of what happens is beyond their control

– Able to explain worker motivation in cultures where there is a strong internal locus of control

• Managers must be aware of limitations in their efforts to apply the theory to motivate human resources

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Job Design

• Job’s content, the methods that are used on the job, and the way the job relates to other jobs in the organization

• Quality of work life (QWL) - Directly related to culture of the country

• Challenge for MNCs - Adjusting job design to meet the needs of the host country’s culture

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Sociotechnical Designs

• Job designs that blend personnel and technology

• Objective - Integrate new technology into the workplace so that workers accept and use it to increase overall productivity

– Employee resistance is common as new technology requires people to learn new methods

• Must be a result of job to be done and cultural values that support a particular approach

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Work Centrality

• Importance of work in an individual’s life relative to other areas of interest

• Provides vital insights into how to motivate human resources in different cultures

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Work Centrality (continued)

• Levels

– Highest - Japan

– Moderately high - Israel

– Average - U.S. and Belgium

– Moderately low - Netherlands and Germany

– Low - Britain

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Value of Work

• Culture, gender, industry, and organizational characteristics:

– Influence the degree and type of work centrality within a country

– Interact with national cultural characteristics

• Growing interest exists in the impact of overwork on employees

– Overwork or job burnout is now recognized as a real social problem

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Job Satisfaction

• Motivation approaches used in one culture may have limited value in another

• Assumption - Satisfaction is highest at the upper levels of organizations

• Job attitudes toward quality of work life is related to motivation

• Work is important in every society, but the extent of importance varies

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Reward Systems

• Used to motivate personnel

• Financial - Salary raises, bonuses, and stock options

• Nonfinancial - Feedback and recognition

• Differ from one country to another

– Differences are a result of competitive environment or of government legislation

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Financial Incentive Systems

• Individual incentive-based pay systems

– Workers are paid directly for their output

• Organizational incentive-based pay systems

– Employees earn individual bonuses based on how well the organization achieves certain goals

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Incentives and Culture

• Compensation is based on group membership or group effort in many cultures

– Systems are designed to stress equality

• Type of rewards that are used is not culture- bound

• Cultures

– Can affect the overall cost of an incentive system

– Influence the effectiveness of various rewards

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Be the Management Consultant

• As an international management consultant, how do you view this partnership for Indosat Ooredoo with IBM?

– How does this partnership help IBM?

– If you were a consultant for an unrelated company, does this deal increase your interest in expanding into Indonesia?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss

1. Do people throughout the world have needs similar to those described in Maslow’s need hierarchy?

– What does your answer reveal about using universal assumptions regarding motivation?

2. Is Herzberg’s two-factor theory universally applicable to human resource management, or is its value limited to Anglo countries?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 1)

3. What are the dominant characteristics of high achievers?

– Using Figure 12–7 as your point of reference, determine which countries likely will have the greatest percentage of high achievers

• Why is this so? Of what value is your answer to the study of international management?

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 2)

4. A U.S. manufacturer is planning to open a plant in Sweden

– What should this firm know about the quality of work life in Sweden that would have a direct effect on job design in the plant?

• Give an example

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 3)

5. What does a U.S. firm setting up operations in Japan need to know about work centrality in that country?

– How would this information be of value to the multinational?

– Conversely, what would a Japanese firm need to know about work centrality in the United States? Explain

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Review and Discuss (continued 4)

6. In managing operations in Europe, which process theory―equity, goal-setting, or expectancy―would be of most value to an American manager? Why?

7. What do international managers need to know about the use of reward incentives to motivate personnel? What role does culture play in this process?

Presentations/Luthans_10e_PPT_Ch13.pdf

Chapter 13

Leadership across Cultures

Learning Objectives

• Describe the basic philosophic foundation and styles of managerial leadership

• Examine the attitudes of European managers toward leadership practices

• Compare and contrast leadership styles in Japan with those in the United States

Learning Objectives (continued)

• Review leadership approaches in China, the Middle East, and developing countries

• Examine recent research and findings regarding leadership across cultures

• Discuss the relationship of culture clusters and leader behavior on effective leadership practices, including increasing calls for more responsible global leadership

Effective Global Leadership

• Essential competency of leading MNCs

• Helps companies enter and operate in new markets

• Achieved through the use of structured programs that:

– Are designed to develop skills and capabilities

– Help the firms become more culturally sensitive, adaptable, and able to effectively manage in challenging global environments

Leadership

• Process of influencing people to direct their efforts toward the achievement of some particular goal or goals

• Leaders and managers should:

– Develop skills in effective communication, planning, organizing, and problem solving

– Exhibit the ability to focus on the future while maintaining current organizational trends

Table 13.1 - Perceived Differences: Managers versus Leaders

International Leadership

• Areas that help compare the foundations

– Philosophical grounding of how leaders view their subordinates

• Theory X, theory Y, and theory Z

– Leadership approaches as reflected by autocratic- participative behaviors of leaders

• Authoritarian, paternalistic, and participative

Philosophical Assumptions of Theory X Managers

• Workers do not like to work and will avoid it whenever possible

• Workers have little ambition, try to avoid responsibility, and like to be directed

• Primary need of employees is job security

• Use of coercion, control, and threats of punishment is necessary

Philosophical Assumptions of Theory Y Managers

• Expenditure of physical and mental effort at work is as natural to people as resting or playing

• People will exercise self-direction and self- control if committed to the goals

• Under proper conditions, the average human being learns not only to accept but to seek responsibility

Philosophical Assumptions of Theory Y Managers (continued)

• Commitment to objectives relies on the rewards associated with their achievement

• Capacity to exercise a relatively high degree of imagination, ingenuity, and creativity is widely distributed throughout the population

• Intellectual potential of the average human being is only partially tapped under conditions of modern industrial life

Philosophical Assumptions of Theory Z Managers

• People are motivated by a strong sense of commitment to be part of a greater whole

• Employees seek out responsibility and look for opportunities to advance in an organization

• Employees who learn different aspects of the business will be in a better position to contribute to the broader goals of the organization

Philosophical Assumptions of Theory Z Managers (continued)

• Organization will engender in employees strong bonds of loyalty, making the organization more productive and successful

– By making commitments to employees’ security through lifetime or long-term employment

Types of Leadership

• Use of work-centered behavior designed to ensure task accomplishment

Authoritarian leadership

• Use of work-centered behavior coupled with a protective employee-centered concern

Paternalistic leadership

• Use of both work- or task-centered and people-centered approaches to leading subordinates

Participative leadership

Figure 13.1 - Leader-Subordinate Interactions

Figure 13.2 - The Managerial Grid

Areas Relevant to Leadership

• Help identify the attitudes toward leadership practices across countries by investigating:

– Capacity for leadership and initiative

– Sharing information and objectives

– Participation

– Internal control

Role of Level, Size, and Age on European Managers' Attitudes toward Leadership

• Higher-level managers tend to express more democratic values than lower-level managers in some countries

• Company size tends to influence the degree of participative-autocratic attitudes

• Younger managers are more likely to have democratic values in terms of:

– Leadership and initiative

– Sharing information and objectives

Japanese Leadership Approaches

• Paternalistic

• Have greater belief in the capacity of subordinates for leadership and initiative

• People express attitudes toward the use of participation to a greater degree than others

• Above average in sharing information and objectives and using internal control

• Place a strong emphasis on ambiguous goals

Japanese Leadership Approaches (continued)

• Benefits

– Leader maintains stronger control of the followers

– Manager ensures that the personnel are prepared to deal with any situation and all its ramifications

– Leader maintains order and provides guidance

• Drawback

– Subordinates spend a lot of time overpreparing their assignments

Table 13.4 - Japanese versus U.S. Leaderships Styles

Variety Amplification and Variety Reduction

• Variety amplification: Creation of uncertainty and the analysis of many alternatives regarding future action

– Used by Japanese managers

• Variety reduction: Limiting of uncertainty and the focusing of action on a limited number of alternatives

– Used by U.S. managers

Findings of Research on Emerging Leaders in China

• Show that the new generation group:

– Scored significantly higher on individualism than the current and older generation groups

– Scored significantly lower on collectivism and Confucianism than the other two groups

• Show that leadership is culturally influenced

– Greater exposure to Western societal influences may result in leadership styles similar to those of Western managers

Table 13.5 - Differences between Middle Eastern and Western Management

Leadership Approaches in India

• Focus should be on individuals and maintaining awareness of the tasks that need to be completed

• Indians and the Anglo-Americans are:

– Similar in attitudes toward capacity for leadership and initiative, participation, and internal control

– Different in sharing information and objectives

• Show that participative leadership may be common and effective in developing countries

Leadership Approaches in Latin America

• Transitional nature of managers within the region increases as globalization increases

– Mexico - Combination of authoritarian and participative behaviors

– Chile, Argentina, and Bolivia - Authoritarian

– Peru - Style is closer to those in the U.S. than previously assumed

• Participative styles may gain importance as countries become economically advanced

Transformational, Transactional, and Charismatic Leadership

• Transformational leaders: Motivate followers to accept new goals and new ways of doing things

• Transactional leaders: Exchange rewards for effort and performance

• Charismatic leaders: Inspire and motivate employees through charismatic traits and abilities

Findings and Insights about Leadership

• Research has discovered that:

– Much more universalism in leadership is present than believed previously

– Most effective managers are transformational leaders and are characterized by four interrelated factors (4 I’s)

4 I’s

• Idealized influence

• Inspirational motivation

• Intellectual stimulation

• Individualized consideration

Qualities for Successful Leaders

• Ability to cooperate

• Independence

• Leadership ability

• Ability to take initiatives

• Aim and result orientation

• Creativity

• Ability to motivate and inspire others

• Business orientation

• Age

• Extrovert personality

Qualities for Successful Leaders (continued)

• Customer ability

• Analytic Ability

• Ability to communicate

• High level of energy

• Responsibility

• Enthusiasm and involvement

• Organization skills

• Team builder

• Self-motivated

• Flexibility

• Precision

• Dynamic personality

Leader Behavior, Leader Effectiveness, and Leading Teams

• Culture is vital in explaining how leaders act in order to be effective:

– In affective cultures, such as the United States, leaders tend to exhibit their emotions

– In neutral cultures, such as Japan and China, leaders tend not to show their emotions

Cross-Cultural Leadership: Insights from the GLOBE Study

• Leadership behavior can be categorized into:

– Charismatic/value-based: Captures the ability of leaders to inspire, motivate, and encourage high performance outcomes from others based on a foundation of core values

– Team-oriented: Emphasizes effective team building and implementation of a common goal among team members

– Participative: Involves others in decisions and decision implementation

Cross-Cultural Leadership: Insights from the GLOBE Study (continued)

– Humane-oriented: Comprises supportive and considerate leadership

– Autonomous: Independent and individualistic leadership behaviors

– Self-protective: Ensures safety and security of the individual and group through status-enhancement and face-saving

Relationship between Cultural Values and Leadership Attributes

• GLOBE researchers concluded the following:

– Collectivism I values (Sweden and other Nordic and Scandinavian countries) were likely to view Participative and Self-Protective leadership behaviors favorably

– In-Group Collectivism II values (Philippines and other East Asian countries) were positively related to Charismatic/Value-Based leadership and Team- Oriented leadership

Relationship between Cultural Values and Leadership Attributes (continued 1) – Gender Egalitarian values (Hungary, Russia, and

Poland) were positively associated with Participative and Charismatic/Value-based leader attributes

– Performance Orientation values (Switzerland, Singapore, and Hong Kong) were positively associated with Participative and Charismatic/Value-Based leader attributes

Relationship between Cultural Values and Leadership Attributes (continued 2) – Future Orientation values (Singapore) were

positively associated with Self-Protective and Humane-Oriented leader attributes

– Societal Uncertainty Avoidance values (Germany, Denmark, and China) were positively associated with Team-Oriented, Humane-Oriented, and Self- Protective leader attributes

– Societal Humane Orientation values (Zambia, the Philippines, and Ireland) were positively associated with Participative leader attributes

Relationship between Cultural Values and Leadership Attributes (continued 3) – Societal Assertiveness values (the United States,

Germany, and Austria) were positively associated with Humane-Oriented leader attributes

– Societal Power Distance values (Morocco, Nigeria, and Argentina) were positively correlated with Self-Protective and Humane-Oriented leader attributes

Positive Organizational Scholarship (POS)

• Focuses on positive outcomes, processes, and attributes of organizations and their members

• Consists of three subunits:

– Enablers - Capabilities, processes, and structure of the environment

– Motivations - Unselfish, altruistic, or as having the ability to contribute without self-regard

– Outcomes or effects - Vitality, meaningfulness, exhilaration, and high-quality relationships

Authentic Leadership

• Authentic leaders possess an all- encompassing package of traits, styles, behaviors, and credits

• Authentic leaders: – Do not fake their actions

– Are driven from internal forces, not external rewards

– Are unique and guide based on personal beliefs, not others’ orders

– Act based on individual passion and values

Authentic Leadership (continued)

• Authentic leaders must possess several interrelated qualities

– Positive psychological aspects

– Positive morals to guide them through processes

How are Authentic Leaders different from Traditional Leaders?

• Authentic leadership focuses primarily on the internal aspects of the leader

• Transformational leadership focuses on motivating others, which is a secondary concern with authentic leadership

Ethical and Responsible Leadership

• Ethical principles provide the philosophical basis for responsible business practices

– Leadership defines the mechanism through which these principles become actionable

• Responsible global leadership encompasses:

– Values-based leadership

– Ethical decision making

– Quality stakeholder relationships

Ethical and Responsible Leadership (continued)

• Responsible global leadership must be based on:

– Core values and credos that reflect principled business and leadership practices and high levels of ethical and moral behavior

– Set of shared ideals that advance organizational and societal well-being

Servant Leadership

• Gives priority to needs of colleagues and those they serve

• Qualities required

– Listening, empathy, healing, awareness, persuasion, conceptualization, foresight, stewardship, growth, and building community

Entrepreneurial Leadership and Mindset

• Reasons for high failure rate for international new ventures

– Lack of capital and absence of clear goals and objectives

– Failure in accurate assessment of market demand and competition

• International entrepreneurial leaders must possess cultural sensitivity, international vision, and global mindset

Be the International Management Consultant

• As a management consultant, what opportunities do you see for Cisco in Germany?

• What are some potential benefits that companies, like Cisco, can gain by partnering with public sector entities and foreign governments of developed nations as opposed to ones in emerging nations?

Review and Discuss

1. What cultures would be the most likely to perceive differences between managerial and leadership duties?

– What cultures would view them as the same?

– Use evidence to support your answer

2. Using the results of the classic Haire and associates study as a basis for your answer, compare and contrast managers’ attitudes toward leadership practices in Nordic- European and Latin-European countries

Review and Discuss (continued 1)

3. Is there any relationship between company size and European managers’ attitude toward participative leadership styles?

4. Using the GLOBE study results and other supporting data, determine what Japanese managers believe about their subordinates

– How are these beliefs similar to those of U.S. and European managers?

– How are these beliefs different?

Review and Discuss (continued 2)

5. A U.S. firm is going to be opening a subsidiary in Japan within the next six months

– What type of leadership style does research show to be most effective for leading high- achieving Japanese? Low-achieving Japanese?

– How are these results likely to affect the way that U.S. expatriates should lead their Japanese employees?

Review and Discuss (continued 3)

6. What do U.S. managers need to know about leading in the international arena?

– Identify and describe three important guidelines that can be of practical value

7. Is effective leadership behavior universal, or does it vary from culture to culture? Explain

8. What is authentic leadership?

– What is ethically responsible leadership?

Presentations/Luthans_10e_PPT_Ch14.pdf

Chapter 14

Human Resource Selection and Development across Cultures

Learning Objectives

• Identify the three basic sources that MNCs can tap when filling management vacancies in overseas operations in addition to options of subcontracting and outsourcing

• Describe the selection criteria and procedures used by organizations and individual managers when making final decisions

Learning Objectives (continued 1)

• Discuss the reasons why people return from overseas assignments, and present some of the strategies used to ensure a smooth transition back into the home-market operation

• Describe the training process, the most common reasons for training, and the types of training that often are provided

Learning Objectives (continued 2)

• Explain how cultural assimilators work and why they are so highly regarded

Challenge of Talent Retention in India

• MNCs mistakenly use the same methods to try to retain employees in India as in the home country

• Key to high retention - Employee engagement

– HR practices to keep employees engaged

• Performance management

• Professional development

• Manager support

• Organizational commitment to a larger social purpose

Importance of International Human Resources

• Human resource management is key to an efficient and productive workplace

• Understanding how employees feel they are being treated is important

– Retention and commitment to the organization is achieved by focusing on employees and tailoring human resource management to the individual

Importance of International Human Resources (continued)

• Success of firms depends on attracting the most qualified employees and matching them to the jobs for which they are best suited

• Sending employees overseas can be expensive

– Investment in recruiting and training is required

• Nature of the human resources process is changing as a result of ongoing pressures for reduced costs and increased efficiencies

Sources for Human Resources

• Home-country nationals

• Host-country nationals

• Third-country nationals

• Inpatriates

• Other potential sources

– Subcontracting

– Offshore outsourcing

Home-Country Nationals

• Managers who are citizens of the country where the MNC is headquartered

– Called headquarters nationals or expatriates

• Reasons to use home-country nationals

– Start up operations

– Provide technical expertise

– Develop promising managers

– Facilitate coordination and control

Host-Country Nationals

• Local managers hired by the MNC

• Reasons to use host-country nationals

– Countries expect the MNC to hire local talent

– Cut cost of transferring and maintaining home- country personnel

Third-Country Nationals (TCNs)

• Managers who are citizens of countries other than the country in which:

– MNC is headquartered

– Managers are assigned to work by the MNC

• Advantages of using TCNs

– Salary and benefit package is less than that of a home-country national

– Good working knowledge of the region or familiarity with the local language

Third-Country Nationals (TCNs) (continued)

– Achieve corporate objectives is more effective than with expatriates or local nationals

– Substitute for expatriates and offer new perspectives to viewpoints of local nationals and headquarters personnel during rapid expansion

– Possible to demonstrate a global or transnational image and bring unique cross-cultural skills to the relationship in joint ventures

Inpatriates

• Individuals from a host country or third country who are assigned to work in the home country

• Called inpats

• Help MNCs develop their global core competencies

– Global managers or transnational managers are now emerging

Offshore Outsourcing

• Presents significant opportunities for cost savings, lower overhead, and access to qualified personnel

• Politically controversial - Union groups, politicians, and NGOs have challenged MNCs’ right to engage in labor arbitrage

• Can create quality control problems

• Tool for managing and deploying international human resources

Selection Criteria for International Assignments

• General criteria

• Adaptability to cultural change

• Physical and emotional health

• Age, experience, and education

• Language training

• Motivation for a foreign assignment

• Spouse and family adaptability

• Leadership ability

Expat Assignments

• Objective - To fill a managerial or technical gap

• Employee benefits - Faster promotions, higher pay, stronger performance ratings, and more mobility within the company

• Rejected due to family and spouse's career concerns

• Extremely expensive and return on investment is difficult to quantify

International Human Resource Selection Procedures

• Tests and interviews

• Adjustment model

– Anticipatory adjustments - Carried out before the expat leaves for the assignment

– In-country adjustments - Takes place once the expatriate is on site

Factors Influencing Anticipatory and In- Country Adjustments

• Anticipatory adjustments

– Pre-departure training

– Previous experience the expat may have had with the assigned country

• In-country adjustments

– Ability to maintain a positive outlook

– The job itself

– Organizational culture and how easily the expat can adjust to it

– Nonwork matters

– Ability to develop effective socialization tactics

Compensation

• Base salary - Amount of money that an expatriate receives in the home country

• Benefits - One-third of compensation for regular employees

• Allowances - Expensive feature that covers a variety of expenses

– Cost-of-living, relocation, housing, education, and hardship allowances

Compensation (continued)

• Incentives - Ongoing premiums are replaced with a one-time, lump-sum premium

• Tax equalization - Any taxes that exceed what would have been imposed in the home country are paid by the MNC

Approaches to Tailor the Compensation Package

• Balance-sheet approach: Ensures the expat does not lose money by taking the assignment

• Negotiation approach - Involves working out a special, ad hoc arrangement that is acceptable to both the company and the expat

• Localization: Pays the expat a salary comparable to that of local nationals

Approaches to Tailor the Compensation Package (continued)

• Lump-sum method: Gives expats a predetermined amount of money and lets them decide how to spend it

• Cafeteria approach: Gives expats a series of options and lets them decide how to spend the available funds

• Regional system: Sets a compensation system for all expats who are assigned to a particular region

Individual and Host-Country Viewpoints

• Candidate motivations

– Greater demand for their talents abroad than at home

– Individual achievement and advancement

– Security and good working conditions

– Earning and fringe benefits

• Host-country desires

– Preference for a managerial style similar to that of their own country

Repatriation

• Return to one’s home country from an overseas assignment

• Reasons for returning

– Agreed-on tour of duty is over

– Family concerns

• Difficulty faced by spouses in acclimating to a new culture

• Desire to educate children in a home-country school

– Company restructuring

Repatriation: Readjustment Problems

Demotion of permanent position

Lack of opportunities to put foreign experience to work

Lack of communication about what would happen after return

Loss of salary and fringe benefits

Difficulty in adjusting to lower standard of living

Absence of cultural lifestyles

Less significance on international experiences

Transition Strategies

• Help smooth the adjustment from an overseas to a stateside assignment

• Repatriation agreements: Firm:

– Agrees with the individual the duration of overseas posting

– Promises to give the individual, on return, a job that is mutually acceptable

• Some firms rent or maintain expatriates’ homes until they return

Transition Strategies (continued 1)

• Arranging an event to welcome and recognize the employee and family

• Establishing support to facilitate family reintegration

• Offering repatriation counseling or workshops to ease the adjustment

• Assisting the spouse with job counseling, résumé writing, and interviewing techniques

Transition Strategies (continued 2)

• Providing educational counseling for the children

• Providing the employee with a thorough debriefing by a facilitator

• Offering international outplacement to the employee and reentry counseling

• Arranging a postassignment interview with the expatriate and spouse

Training in International Management

• Helps ensure that employees' full potential is tapped in overseas assignments

• Aids in understanding the customs, cultures, and work habits of the local culture

• Simplest training - Placing a cultural integrator in each foreign operation

• Topics in cultural training - Social and business etiquette, customs, economics, history, and politics

Philosophies That Influence Training Programs

• Ethnocentric MNC

– Stresses nationalism and puts home-office people in charge of key international management positions

• Polycentric MNC

– Places local nationals in key positions and allows these managers to appoint and develop their own people

Philosophies That Influence Training Programs (continued)

• Regiocentric MNC

– Relies on local managers from a particular geographic region to handle operations in and around that area

• Geocentric MNC

– Seeks to integrate diverse regions of the world through a global approach to decision making

Reasons for Training

• Organizational reasons

– Help overcome ethnocentrism

• Ethnocentrism: Belief that one’s way of doing things is superior to that of others

– Improve the flow of communication

– Increase overall efficiency and profitability

Reasons for Training (continued)

• Personal reasons

– Improve overseas managers' ability to interact effectively with local people and their personnel

– Develop foreign language skills

– Deal with arrogance, overruling of decisions, and criticism

– Improve overall management style

Types of Training Programs

• Small firms rely on standard training programs

– Example - Quantitative analysis

• Tailor-made training programs

– Employed by larger firms

– Created for the specific needs of the participants

– Designed to provide a new set of skills for a new culture

Cultural Assimilators

• Expose members of one culture to some of the concepts, attitudes, role perceptions, customs, and values of another culture

• Include critical incidents and alternative responses that are validated for their effectiveness

• Expensive but can be applied to nearly all cultures

Positive Organizational Behavior (POB)

• Study and application of positively oriented human resource strengths and psychological capacities

– Can be measured, developed, and effectively managed for performance improvement in today’s workplace

Positive Organizational Behavior (POB) (continued)

• Positivity in workplace has been linked to employee satisfaction

– Positive individual traits, internal and external states, and systems promote positive behavior

• Results in positive organizational citizenship behavior (OCB)

Future Trends

• Localization of expatriates

• Integration of talent management and international assignment mobility

• Emergence of cross-border commuters

– Employees who regularly move back and forth between countries

• Rise and growth of emerging markets

Be the Management Consultant

• Given the Russian government’s history of interfering with private business, would you make as large an investment in Russia as BP has done?

– What are the pros and cons of this investment?

– Does the fact that BP’s investment is suffering from Ukraine-related sanctions affect your decision to invest in the country in any sense?

Review and Discuss

1. A New York-based MNC is in the process of staffing a subsidiary in New Delhi, India

– Why would it consider using expatriate managers, local managers, or third-country managers in the unit?

Review and Discuss (continued 1)

2. What selection criteria are most important in choosing people for an overseas assignment?

– Identify and describe the four that you judge to be of most universal importance, and defend your choice

3. What are the major common elements in an expat’s compensation package?

– Besides base pay, which would be most important to you? Why?

Review and Discuss (continued 2)

4. Why are individuals motivated to accept international assignments?

– Which of these motivations would you rank as positive reasons?

– Which would you regard as negative reasons?

5. Why do expatriates return early?

– What can MNCs do to prevent this from happening?

– Identify and discuss three steps they can take

Review and Discuss (continued 3)

6. What kinds of problems do expatriates face when returning home?

– Identify and describe four of the most important

– What can MNCs do to deal with these repatriation problems effectively?

Review and Discuss (continued 4)

7. How do the following types of MNCs differ: ethnocentric, polycentric, regiocentric, and geocentric?

– Which type is most likely to provide international management training to its people?

– Which is least likely to provide international management training to its people?

Review and Discuss (continued 5)

8. IBM is planning on sending three managers to its Zurich office, two to Madrid, and two to Tokyo, and none of these individuals has any international experience

– Would you expect the company to use a standard training program or a tailor-made program for each group?

Review and Discuss (continued 6)

9. Zygen Inc., a medium-sized manufacturing firm, is planning to enter into a joint venture in China

– Would training be of any value to those managers who will be part of this venture?

• If so, what types of training would you recommend?

Review and Discuss (continued 7)

10.Hofstadt & Hoerr, a German-based insurance firm, is planning on expanding out of the EU and opening offices in Chicago and Buenos Aires

– How would a cultural assimilator be of value in training the MNC's expatriates?

• Is the assimilator a valid training tool?

Review and Discuss (continued 8)

11.Ford is in the process of training managers for overseas assignments

– Would a global leadership program be a useful approach?

• Why or why not?

Review and Discuss (continued 9)

12.Microsoft is weighing setting up a new R&D facility in India to develop new software applications

– Should it staff it with Microsoft employees or Indian employees? Or should it subcontract with an Indian firm?

• Explain your answer and some of the potential challenges in implementing it

Rubrics/ESA Final Project Grading Scale Rubric.doc

MGT411

ESA Final Project

Grading Scale Rubric

Country________________

I. General Characteristics (10 % of written grade)

II. Economic Conditions (25 % of written grade)

III. Organizational Topics and Human Resource Management Analysis (25% of written grade)

IV. Governmental (15% of written grade)

V. Personal (15 % of written grade)

IV. Conclusion (10 % of written grade)

Rubrics/MGT411 Presentation Rubric .pdf

MGT411 Presentation Rubric

Exceptional Good Fair Poor

5 4 3 2

Organization of the

presentation. Included an

introduction, a body and a

conclusion.

Ideas are well organized

from introduction to

conclusion

Sequence of ideas are

moderately organized

Organization of ideas

need work

Ideas are presented

randomly in no order

Content. All key points were covered

to present a clear picture of the

topic. Information was clear, specific

and consistent with the topic.

Key points are presented

clearly, and content is

clear, specific and

consistent with the

subject

Key points are presented

moderately clearly, and

content is somewhat

clear, specific and

consistent with the

subject

Key points are less than

clearly presented, and

content is not specific and

consistent with the

subject

Key points are vague; and

content is not clear,

specific, or consistent

with the subject

Clarity. The presentation used clear,

concise words. Any unfamiliar terms

were defined and explained.

Clarity is evident in the

presentation, including

definition of unfamiliar

words

Clarity is moderately

evident in the

presentation, including

definition of unfamiliar

words

Clarity is somewhat

evident in the

presentation, including

definition of unfamiliar

words

Clarity is not evident in

the presentation,

including definition of

unfamiliar words

Effective use of visual aids.

Effectively incorporated

into the presentation

The presentation used

some visuals to convey

the message

Use of visuals or

multimedia was weak

The presentation failed to

make use of visuals

Ability to defend and support the

ideas.

The ideas are

appropriately defended

and supported

The ideas are moderately

defended and supported

The ideas are less than

adequately defended and

supported

The ideas are not

defended and supported