Business Finance - Operations Management Assignment 2
LadyMe 
Chap4.pdf
PLANNING AND STRATEGIC MANAGEMENT • CHAPTER 4
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LEARNING OBJECTIVES
• 4-1 Summarize the basic steps in any planning process. • 4-2 Describe how to integrate strategic planning with
tactical and operational planning. • 4-3 Identify elements of the external environment and
internal resources of the firm to analyze before formulating a strategy.
• 4-4 Define core capabilities and explain how they provide the foundation for business strategy.
• 4-5 Summarize the types of choices available for corporate strategy.
• 4-6 Discuss how companies can achieve competitive advantage through business strategy.
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EXHIBIT 4.1 DECISION- MAKING STAGES AND FORMAL PLANNING STEPS
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THE BASIC PLANNING PROCESS
• Step 1. Situational Analysis • Step 2. Alternative Goals and Plans • Step 3. Goal and Plan Evaluation • Step 4. Goal and Plan Selection • Step 5. Implementation
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STEP 1: SITUATIONAL ANALYSIS
• A process planners use to gather, interpret, and summarize all information relevant to the planning issue under consideration.
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STEP 2: ALTERNATIVE GOALS AND PLANS
• Goal – A target or end that
management desires to reach.
• Plans – The actions or means
managers intend to use to achieve organizational goals.
– Contingency plans are “what if” plans.
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STEP 3: GOAL AND PLAN EVALUATION
• Managers evaluate the advantages, disadvantages, and potential effects of each goal and plan.
• Managers prioritize those goals and eliminate some of them.
• Managers must consider carefully the implications of alternative plans for meeting high priority goals.
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STEP 4: GOAL AND PLAN SELECTION
• Managers will select the option that is most appropriate and feasible.
• The evaluation process helps identify the priorities and trade-offs among the goals and plans.
• Planning scenarios are generated.
• Panera Bread officially opened the fifth “Panera Cares Community Cafe”
in Boston.
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STEP 5: IMPLEMENTATION
• Managers and employees must understand the plan and have the resources and motivation to implement it.
• Successful implementation requires a plan to be linked to other systems in the organization (for example, budget and reward systems).
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STEP 6: MONITOR AND CONTROL
• Managers must: – Continually monitor the actual performance of their work units against the unit’s
goals and plans. – Develop control systems to measure that performance and allow them to take
corrective action.
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SOCIAL ENTREPRENEURSHIP NOVO NORDISK MONITORS PROGRESS WITH
ITS TRIPLE BOTTOM LINE
• Novo Nordisk, follows a TBL strategy meaning decisions are based on the belief that “a healthy economy, environment, and society are fundamental to long-term business success.”
• To ensure that the TBL philosophy would stick, Novo Nordisk took the uncommon step of incorporating it into their company bylaws.
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STRATEGIC PLANNING
• Strategic planning • Set of procedures for making
decisions about the organization’s long-term goals and strategies.
• Strategic goals • Major targets or end results
that relate to the long-term survival, value, and growth of the organization.
• Strategy • A pattern of actions and
resource allocations designed to achieve the organization’s goals.
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EXHIBIT 4.2 EFFECTIVE STRATEGIES ANSWER FIVE QUESTIONS
1. Where will we be active? 2. How will we get there (e.g., by increasing sales or acquiring another company)? 3. How will we win in the market (e.g., by keeping prices low or offering the best service)? 4. How fast will we move and in what sequence will we make changes? 5. How will we obtain financial returns (low costs or premium prices)?
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EXHIBIT 4.3 HIERARCHY OF GOALS AND PLANS
Managerial Level Level of Detail Time Horizon
Strategic Top Low Long (3-7 years)
Tactical Middle Medium Medium (1-2 years)
Operational Frontline High Short (<1 year)
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TACTICAL AND OPERATIONAL PLANNING
• Tactical planning • Set of procedures for
translating broad strategic plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing.
• Operational planning • The process of identifying
the specific procedures and processes required at lower levels of the organization.
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EXHIBIT 4.4 THE STRATEGY MAP: CREATING VALUE BY ALIGNING GOALS
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EXHIBIT 4.5 THE STRATEGIC MANAGEMENT PROCESS
A process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies.
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STEP 1: ESTABLISHING MISSION, VISION,
AND GOALS • Mission
– An organization’s basic purpose and scope of operations.
• Strategic vision – The long-term direction and strategic intent of a company. – Provides a perspective on where the organization is headed and what it can
become.
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STEP 2: ANALYZING EXTERNAL OPPORTUNITIES AND THREATS • Stakeholders
– Groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies.
• Some view renewable resources as a threat; others as an opportunity.
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COMPONENTS OF AN ENVIRONMENTAL ANALYSIS
Industry and market analysis Competitor analysis
Political and regulatory analysis Social analysis
Human resources analysis Macroeconomic analysis Technological analysis
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STEP 3: ANALYZING INTERNAL STRENGTHS
AND WEAKNESSES • Internal resource analysis
• Financial analysis. • Marketing audit. • Operations analysis. • Other internal resource analysis. • Human resources assessment.
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RESOURCES AND CORE CAPABILITIES
• Resources • Inputs to a system that can enhance performance. – Tangible assets: real estate, raw materials. – Intangible assets: reputation, culture, patents.
• Core capability • Unique skill and/or knowledge an organization possesses that
gives it an edge over competitors.
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BENCHMARKING
• Benchmarking – Process of assessing
how well one company’s basic functions and skills compare with those of an another.
• Goals of benchmarking: – Understand the “best practices”
of other firms. – Undertake actions to achieve both
better performance and lower costs.
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EXHIBIT 4.8 RESOURCES AND CORE CAPABILITY
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STEP 4: SWOT ANALYSIS AND STRATEGY FORMULATION • SWOT Analysis
• A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.
– Strengths and weaknesses refer to internal sources. – Opportunities and threats arise in the macroenvironment and
competitive environment.
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EXHIBIT 4.9 SAMPLE SWOT ANALYSIS: NEXT DAY FLYERS
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CORPORATE STRATEGY
• Corporate strategy – Organization uses to operate single business
and compete in a single industry. – Concentration. – Vertical integration. – Concentric diversification. – Conglomerate diversification.
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EXHIBIT 4.10 SUMMARY OF CORPORATE STRATEGIES
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CORPORATE STRATEGY
• BCG matrix used to analyze corporate strategy. • Question marks: high-growth, weak-competitive-
position. • Stars: high-growth, strong-competitive-position. • Cash cows: low-growth, strong-competitive-position. • Dogs: low-growth, weak-competitive-position.
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EXHIBIT 4.11 MAPPING GE’S BUSINESS UNITS AND PRODUCT LINES TO THE BCG MATRIX
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BUSINESS STRATEGY • Low-cost strategy
• A strategy an organization uses to build competitive advantage by being efficient and offering a standard no-frills product.
• Differentiation strategy • A strategy an organization uses
to build competitive advantage by being unique in its industry or market segment along one or more dimensions.
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FUNCTIONAL STRATEGY • Implemented by each functional area of the
organization to support the business strategy. • The typical functional areas include:
• Production. • Human resources. • Marketing and sales. • Research and development. • Finance. • Distribution.
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STEP 5: STRATEGY IMPLEMENTATION
1. Define strategic tasks. 2. Assess organization capabilities. 3. Develop an implementation agenda. 4. Implement.
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STEP 6: STRATEGIC CONTROL
• Strategic control system • A system designed to support managers in evaluating the
organization’s progress regarding its strategy and, when discrepancies exist, taking corrective action.
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THE SIX BARRIERS TO STRATEGY IMPLEMENTATION
Top-down or laissez-faire senior management style Unclear strategy and conflicting priorities An ineffective senior management team Poor vertical communication Poor coordination across functions, businesses, or borders Inadequate down-the-line leadership skills and development
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Ethics, Corporate Responsibility, and Sustainability CHAPTER 5
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LEARNING OBJECTIVES
• 5-1 Describe how different ethical perspectives guide decision making.
• 5-2 Explain how companies influence their ethics environment.
• 5-3 Outline a process for making ethical decisions. • 5-4 Summarize the important issues surrounding corporate
social responsibility. • 5-5 Discuss reasons for businesses’ growing interest in the
natural environment. • 5-6 Identify actions managers can take to manage with the
environment in mind.
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IT’S A BIG ISSUE
• Ethics are the system of rules that governs the ordering of values.
• It’s often the rank-and-file employees who suffer most. • The right thing to do is not always evident or easy.
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IT’S A PERSONAL ISSUE
Most people have unconscious biases that favor themselves and their own group. Managers often:
• Hire people who are like them. • Think they are immune to conflicts of interest. • Take more credit than they deserve. • Blame others when they deserve the blame.
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EXHIBIT 5.1 POSSIBLE OUTCOMES OF LYING AND TELLING THE TRUTH
Reason for the Lie Results of Lying Results of Telling the Truth
Negotiation • Short-term gain and economically positive. • Harms long-term relationship. • Must rationalize to oneself.
• Supports high-quality, long-term relationship. • Develops reputation of integrity. • Models behavior to others.
Conflicting expectations
• Easier to lie than to address the underlying conflict. • Does not solve underlying problem. • Liar must rationalize the lie to preserve positive self-concept.
• Emotionally more difficult than lying. • May correct underlying problem. • Develops one’s reputation as an honest person.
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EXHIBIT 5.1 POSSIBLE OUTCOMES OF LYING AND TELLING THE TRUTH
Reason for the Lie Results of Lying Results of Telling the Truth
To keep a confidence (that may require at least a lie of omission)
• Maintains relationship with the party for whom confidence is kept. • May project deceitfulness to the deceived party.
• Violates a trust to the confiding party. • Makes one appear deceitful to all parties in the long run.
To report your own performance (within an organization)
• Might advance oneself or one’s cause. • Develops dishonest reputation over time.
• Creates a reputation of honesty and integrity. • Performance report may not always be positive.
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ETHICS
• Ethical issue – Situation, problem, or opportunity in which an
individual must choose among several actions that must be evaluated as morally right or wrong.
• Business ethics – Moral principles and standards that guide behavior
in the world of business.
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ETHICAL SYSTEMS
• Moral philosophy – Principles, rules, and values people use in deciding what is
right or wrong. • Universalism
– The ethical system stating that all people should uphold certain values that society needs to function.
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EXHIBIT 5.2 EXAMPLES OF DECISIONS MADE UNDER DIFFERENT ETHICAL
SYSTEMS
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CAUX PRINCIPLES
• Caux Principles • A regenerative, collaborative
economic system that contrasts with the linear economy described earlier by minimizing input, waste, emissions, and energy leakage.
• Kyosei • Living and working
together for the common good, allowing cooperation to coexist with healthy and fair competition.
• Human dignity • Concerns the value of
each person as an end, not a means to the fulfillment of others’ purposes.
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EGOISM AND UTILITARIANISM
• Employees sometimes feel that “borrowing” a few office supplies from
their company helps compensate for any
perceived unfairness in pay or other benefits.
• Egoism • An ethical system defining
acceptable behavior as that which maximizes consequences for the individual.
• Utilitarianism – An ethical system stating that
the greatest good for the greatest number should be the overriding concern.
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RELATIVISM AND VIRTUE ETHICS
• Relativism – Philosophy that bases ethical behavior on the
opinions and behaviors of relevant other people. • Virtue ethics
– Perspective that what is moral comes from what a mature person with “good” moral character would deem right.
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KOHLBERG
• Kohlberg’s model of cognitive moral development • Classifies people into categories based on their level
of moral judgment. • Proposes three stages of development: 1. Preconventional. 2. Conventional. 3. Principled.
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THE ETHICS ENVIRONMENT
• Sarbanes-Oxley Act – An act passed into law by Congress in 2002 to
establish strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence.
– Law requires companies to have more independent board directors to adhere strictly to accounting rules, and to have senior managers personally sign off on financial results.
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EXHIBIT 5.3 SOME ETHICAL ISSUES IN BUSINESS
• CEO pay – What is a fair level of pay for a top executive?
• Climate – What is a company’s responsibility for its impact on the
climate? • Globalization
– When a company operates in countries with lower costs, what are its obligations, if any, to the workers in those countries?
• Health – Are employers ethically obliged to provide this benefit?
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EXHIBIT 5.3 SOME ETHICAL ISSUES IN BUSINESS
• Online privacy – What obligations do employers have in protecting the privacy
of employee information and information about customers? • Social media
– What ethical obligations do employees have in commenting about their employer on social media? What ethical obligations do employers have concerning their employees’ privacy on social media?
• Wages – What should employers do to promote a sense that their
compensation is fair?
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ETHICAL CLIMATE AND LEADERSHIP
• Ethical climate
• In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong.
• Ethical leader
• One who is both a moral person and a moral manager influencing others to behave ethically.
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EXHIBIT 5.4 DANGER SIGNS OF UNETHICAL BEHAVIOR IN YOUR ORGANIZATION1. Excessive emphasis on short-term revenues over longer-term
considerations. 2. Failure to establish a written code of ethics. 3. A desire for simple, quick-fix solutions to ethical problems. 4. An unwillingness to take an ethical stand that imposes financial
costs. 5. Consideration of ethics solely as a legal issue or a public relations
tool. 6. Lack of clear procedures for handling ethical problems. 7. Responding to the demands of shareholders at the expense of other
constituencies.
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ETHICS CODES
• Ways to make an ethics code effective: 1. Involve those who have to live with it in writing the statement. 2. Focus on real-life situations that employees can relate to. 3. Keep it short and simple, so it’s easy to understand and
remember. 4. Write about values and shared beliefs that people can really
believe in. 5. Set the tone at the top.
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ETHICS PROGRAMS
• Compliance-based ethics programs
• Company mechanisms typically designed by corporate counsel to prevent, detect, and punish legal violations.
• Integrity-based ethics programs
• Company mechanisms designed to instill in people a personal responsibility for ethical behavior.
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ETHICAL DECISION MAKING
• Ethical decisions require:
• Moral awareness: • Realizing the issue has ethical implications.
• Moral judgment • Knowing what actions are morally defensible.
• Moral character • Strength and persistence to act in accordance with your ethics
despite challenges.
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EXHIBIT 5.6 A PROCESS FOR ETHICAL DECISION MAKING
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COURAGE
• Takes courage to take actions consistent with your ethics when others don’t want you to.
• Plays a role in moral awareness involved in identifying an act as unethical.
• Necessary when only ethical course of action is whistleblowing.
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CORPORATE SOCIAL RESPONSIBILITY
• Stewardship • Contributing to the long-term welfare of others.
• Corporate social responsibility (CSR) • Obligation toward society assumed by business.
• Triple bottom line • Economic, social, and environmental performance.
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CORPORATE SOCIAL RESPONSIBILITY
• Economic responsibilities • Produce goods and services that society wants at a
price that perpetuates the business and satisfies its obligations to investors.
• Legal responsibilities • Obey local, state, federal, and relevant international
laws.
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CORPORATE SOCIAL RESPONSIBILITY
• Ethical responsibilities • Meeting other social expectations, not written as law.
• Philanthropic responsibilities • Additional behaviors and activities that society finds desirable
and that the values of the business support. • Transcendent education
– Has five higher goals that balance self-interest with responsibility to others:
• Empathy, generativity, mutuality, civil aspiration, intolerance of inhumanity.
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EXHIBIT 5.7 PYRAMID OF GLOBAL CORPORATE SOCIAL RESPONSIBILITY AND PERFORMANCE
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CONTRASTING VIEWS
• Two basic and contrasting views describe principles that guide managerial responsibility.
• Managers act as agents for shareholders and, as such, are obligated to maximize the present value of the firm.
• Managers should be motivated by principled moral reasoning.
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RECONCILIATION
• The U.S. Department of Agriculture and Coca-Cola North America are partnering to restore and protect damaged watersheds
in national forests.
• Profit maximization and corporate social responsibility used to be regarded as antagonistic, but the two views can converge.
• Recent attention has also been centered on the possible competitive advantage of socially responsible actions.
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SOCIAL ENTREPRENEURSHIP A COLLEGE BUILT BY AND FOR THE POOR
• India’s Barefoot College is an educational organization working in nearly 96 of the world’s least developed countries. Its mission is to improve rural lives and communities through learning-by- doing training.
• In what ways do you think Barefoot College’s mission and goals demonstrate a utilitarian philosophy of ethics?
• Which of Barefoot College’s guiding principles have you observed in environments in which you have worked or volunteered?
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A RISK SOCIETY
• By-products of wealth generation: • Industrial pollution risk. • Environmental risk. • Technological risk.
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SUSTAINABLE GROWTH • Sustainable growth
• Economic growth and development that meet present needs without harming the needs of future generations.
• Sustainability is fully compatible with the natural ecosystems that generate and preserve life.
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LIFE-CYCLE ANALYSIS (LCA)
• Timberland pays particular attention to life- cycle analysis,
– A process of analyzing all inputs and outputs, through the entire “cradle-to-grave” life of a product, to determine total environmental impact.
– Environmental reporting in the form of carbon footprints.
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ENVIRONMENTAL AGENDAS FOR THE FUTURE
• Collaborative efforts will be essential—companies working together rather than against one another.
• Circular economy. – A regenerative, collaborative economic system that
contrasts with the linear economy described earlier by minimizing input, waste, emissions, and energy leakage.
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MANAGEMENT IN ACTION IBM TAKES RESPONSIBILITY
• Launched Science of Social Good Initiative based on “applied science and technology can solve the world’s toughest problems, accelerating the rate and pace of solutions through the scientific method.”
• IBM has reduced greenhouse gas emissions by 43 percent in the past 15 years, exceeding its target of 35 percent by 2020.
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INTERNATIONAL MANAGEMENT • CHAPTER 6
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LEARNING OBJECTIVES
6-1 Discuss what integration of the global economy means for companies and their managers.
• 6-2 Describe how the world economy is becoming more integrated than ever before.
• 6-3 Define the strategies organizations use to compete in the global marketplace.
• 6-4 Compare the various entry modes organizations use to enter overseas markets.
• 6-5 Explain how companies can staff overseas operations. • 6-6 Summarize the skills and knowledge managers need to manage
globally. • 6-7 Identify ways in which cultural differences between countries
influence management.
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MANAGING IN TODAY'S (GLOBAL) ECONOMY
• The world’s economic output grew and the volume of exports grew much faster.
• Foreign direct investment (FDI) plays an ever-increasing role in the global economy.
• Imports penetrate more deeply into the world’s largest economies.
• Growth of world trade, FDI, and imports means companies around the globe find their home markets are under attack from foreign competitors.
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EXHIBIT 6.1 TOP 10 GLOBAL FIRMS
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OUTSOURCING AND JOBS
• Outsourcing – Contracting with an
outside provider to produce one or more of an organization’s goods or services.
• Offshoring – Moving work to other
countries.
• Inshoring
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FACTORS TO CONSIDER FOR OFFSHORING
• Managers should not start out with the assumption that it will be cheaper for them to offshore.
– What competitive advantage do the products offer? – Is the business in its early stages of life? – Can production savings be achieved locally? – Can the entire supply chain be improved?
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THE GEOGRAPHY OF BUSINESS
• The global economy is more integrated than ever before.
• The global economy is dominated by countries in three regions: North America, western Europe, and Asia.
• Other developing countries and regions represent important
areas for economic growth.
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EXHIBIT 6.2 KEY ASPECTS OF THE GLOBAL ENVIRONMENT
Economic environment Foreign investment; growth of developing nations; rising wages in developing nations
Technological environment Internet, artificial intelligence, augmented reality, and cloud computing
Legal/regulatory environment Free trade agreements; anticorruption laws
Demographics Aging population in developed nations; growing population worldwide, especially in the developing world
Social issues Cultural differences; bribery concerns
Natural environment Intensifying demand for resources, including oil, water, and food; growing desire for sustainable products and operations; increasingly endangered species; climate change
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WESTERN EUROPE
• With 28 members, the EU has population of more than 513 million and a GDP of US$17.3 trillion.
• Brexit is creating uncertainty regarding the future strength of the EU.
• The EU presents a regulatory challenge to certain companies from the United States.
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ASIA: CHINA AND INDIA
• China is world’s largest consumer of basic raw materials and the largest exporter of goods into the United States.
• Greatest impact as an exporter. • Competitive edge in manufacturing.
• India is still developing and has the second largest population in the world.
• Provides online support for many companies.
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THE AMERICAS
• North American Free Trade Agreement (NAFTA)
• An economic pact between the United States, Canada, and Mexico.
• Currently under renegotiation: USMCA.
• Other agreements between the U.S. and Central and South America:
– CAFTA-DR. – Mercosur.
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AFRICA AND THE MIDDLE EAST
• Middle East • Supplies by far the most
oil to the world’s buyers. • Saudi Arabia is the
United States’ main supplier of oil from that region.
• The United States' dependence on foreign oil has decreased due to increased domestic production.
• Africa
• Africa has long been seen only as a place of dire poverty and many unstable political situations.
• Progress and growth in the middle class have provided opportunities for businesses.
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SOCIAL ENTREPRENEURSHIP STUDENT SOCIAL ENTREPRENEURS
COMPETE FOR $1 MILLION • The Hult Prize Foundation is a student business
competition and start-up accelerator that awards $1 million to social entrepreneurs from universities around the world.
• Of the four recent award-winning start-ups mentioned in the case, which do you find the most likely to succeed?
• Why do you think the competition has a global focus?
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EXHIBIT 6.3 CROSS-NATIONAL ORGANIZATIONAL MODELS
• SOURCES: Bartlett, C. A. and Ghoshal, S., Managing across Borders: The Transnational Solution. Boston, MA: Harvard Business School Press, 1991; Harzing, A. W., “An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies,” Journal of International Business Studies 31, no. 1 (2000), pp. 101–20.
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GLOBAL STRATEGY
• Pressures for Global Integration • Products that serve universal needs require little adaptation. • Competitive pressures to reduce costs may cause managers to
integrate manufacturing globally. • Competitors that engage in global strategic coordination create
pressure to integrate globally.
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GLOBAL STRATEGY
• Pressures for Local Responsiveness • Customer tastes and preferences differ significantly. • Differences in traditional practices among countries. • Economic and political demands of the host-country
government.
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CHOOSING A GLOBAL STRATEGY
• The International Model • An organizational model that is composed of a company’s
overseas subsidiaries and characterized by greater control by the parent company over local product and marketing strategies than is the case in the multinational model.
• The Multinational Model • An organizational model that consists of the subsidiaries in each
country in which a company does business and provides a great deal of discretion to those subsidiaries to respond to local conditions.
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CHOOSING A GLOBAL STRATEGY • The Global Model
• An organizational model consisting of a company’s overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations; typically adopted by organizations that base their global competitive strategy on cost considerations.
• The Transnational Model • An organizational model characterized by centralizing certain
functions in locations that best achieve cost economies; basing other functions in the company’s national subsidiaries to facilitate greater local responsiveness; and fostering communication among subsidiaries to permit transfer of technological expertise and skills.
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EXHIBIT 6.4 COMPARISON OF ENTRY MODES
blank Advantages Disadvantages
Exporting • Scale economies • Consistent with pure global
strategy
• No low-cost sites • High transportation costs • Tariff barriers
Licensing • Lower development costs • Lower political risk
• Loss of control over technology
Franchising • Lower development costs • Lower political risk
• Loss of control over quality
Joint Venture • Access to local knowledge • Shared costs and risk may
be the only option
• Loss of control over technology and conflict between partners
Wholly Owned Subsidiary
• Maintains control over technology
• Maintains control over operations
• High cost • High risk
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LICENSING / FRANCHISING
• International licensing • An arrangement by which a
licensee in another country buys the rights to manufacture a company’s product in its own country for a negotiated fee (typically, royalty payments on the number of units sold).
• Franchising • Company sells limited
rights to use its brand name to franchisees in return for a lump-sum payment and a share of the franchisee’s profits.
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JOINT VENTURES AND SUBSIDIARIES
Joint venture benefits • Local partner knowledge of
the host country. • Sharing of risks with the
local partner.
• Wholly owned subsidiary benefits
• Reduces the risk of losing control over the technology.
• Gives a company tight control over operations in other countries.
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WORKING OVERSEAS
• Expatriates – Parent-company
nationals who are sent to work at a foreign subsidiary.
• Host-country nationals – Natives of the country
where an overseas subsidiary is located.
• Third-country nationals – Natives of a country other
than the home or the host country of an overseas subsidiary.
• Inpatriates – Foreign nationals brought
in to work at the parent company.
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SKILLS OF THE GLOBAL MANAGER
• It is estimated that 15 percent of all employee transfers are to international locations.
• Failure rate is higher for Americans.
• Two-thirds of failures may be due to family issues.
• Both the expatriate and the spouse require:
• Flexibility. • Emotional stability. • Empathy for the culture. • Communication skills. • Resourcefulness. • Initiative. • Diplomatic skills. • Coping strategies.
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EXHIBIT 6.6 IDENTIFYING INTERNATIONAL EXECUTIVES
End-State Dimensions Survey Items 1. Sensitivity to cultural differences. When working with people from other cultures, works hard
to understand their perspective.
2. Business knowledge. Has a solid understanding of the company’s products and services.
3. Courage to take a stand. Is willing to take a stand on issues.
4. Brings out the best in people. Has a special talent for dealing with people.
5. Acts with integrity. Can be depended on to tell the truth regardless of circumstances.
6. Is insightful. Is good at identifying the most important part of a complex problem.
7. Is committed to success. Clearly demonstrates commitment to seeing the organization succeed.
8. Takes risks. Takes personal as well as business risks.
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EXHIBIT 6.6 IDENTIFYING INTERNATIONAL EXECUTIVES
Learning-Oriented Dimensions Survey Items 1. Uses feedback. Has changed as a result of feedback.
2. Is culturally adventurous. Enjoys the challenge of working in countries other than his or her own.
3. Seeks opportunities to learn. Takes advantage of opportunities to do new things.
4. Is open to criticism. Does not appear brittle—as if criticism might cause him or her to break.
5. Seeks feedback. Pursues feedback even when others are reluctant to give it.
6. Is flexible. Doesn’t get so invested in things that he or she cannot change when something doesn’t work.
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EXHIBIT 6.7 HOW TO PREVENT FAILED GLOBAL ASSIGNMENTS
• Structure assignments clearly: Develop clear reporting relationships and job responsibilities.
• Create clear job objectives. • Develop performance measurements based on objectives. • Use effective, validated selection and screening criteria (both personal and
technical attributes). • Prepare expatriates and families for assignments (briefings, training,
support). • Create a vehicle for ongoing communication with expatriates. • Anticipate repatriation to facilitate reentry when they come back home. • Consider developing a mentor program that will help monitor and intervene
in case of trouble.
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UNDERSTANDING CULTURAL ISSUES
• Ethnocentrism • The tendency to judge others by the standards of one’s group or
culture, which are seen as superior. • Culture shock
• The disorientation and stress associated with being in a foreign environment.
• In this era, when people from all over the globe are collaborating
on business
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HOFSTEDE’S CULTURAL DIMENSIONS
• Power distance – The extent to which a society accepts the fact that power in organizations is
distributed unequally.
• Uncertainty avoidance – The extent to which people in a society feel threatened by uncertain and
ambiguous situations.
• Individualism/collectivism – The extent to which people act on their own or as a part of a group.
• Masculinity/femininity – The extent to which a society values quantity of life over quality of life.
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HELPING EMPLOYEES ADJUST
• Whether working in a foreign country or returning to your native country after working in another, good managers should help their employees with differences in . . .
• Meetings. • Work schedules. • Email. • Fast-trackers. • Feedback.
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ETHICAL ISSUES IN INTERNATIONAL MANAGEMENT
• Actions that are right or wrong in one culture may be acceptable in another.
• Global operations must be active in identifying, establishing, and enforcing ethical standards.
• Five core values of all people: • Compassion. • Fairness. • Honesty. • Responsibility. • Respect for others.
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MANAGEMENT IN ACTION CONTROLLING ALIBABA’S PROBLEM WITH
COUNTERFEITS • Counterfeit goods have long plagued Alibaba’s retail platforms. • In 2018 Alibaba’s Taobao site was (again) placed on a U.S.
government watch list of “notorious markets”. • What is Alibaba’s ethical responsibility for controlling the sale of
counterfeit goods on its websites? • What cultural issues can you identify in this example?
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