MGT 4302 D

MGT 4302, International Management 1

Course Learning Outcomes for Unit V Upon completion of this unit, students should be able to:

1. Compare and contrast the impact of different political, legal, and economic systems on international management. 1.1 Explain how leadership decisions and actions are influenced by culture.

Required Unit Resources Chapter 8: Strategy Formulation and Implementation Chapter 9: Entry Strategies and Organizational Structures Unit Lesson Strategic management can be described as the process of deciding the mission of a company as well as its long-term objectives and then developing and executing a plan of action (Doh et al., 2024). It is discussed by executives and carried out by employees and managers. Thus, communicating the objectives in specific and concise language no matter what country or cultural communication patterns an organization may have is imperative. There are problems when strategy is not understood by everyone. Part of this strategy includes decision-making and problem solving. As each person makes decisions differently and solves problems differently, it is imperative to think about how decisions are made and how problems are solved at work in professional settings and not in personal settings. This differentiation is a big deal. Many people make decisions at work as they would in their personal life. Certainly, there are benefits to having a strategy beyond knowing if you are on track or off track to meet goals and objectives. The unfortunate part of strategies is that organizations often mistakenly create a strategy and then do not refer to it after they finalize it. This creates problems. Some do not use a method to formulate or implement their strategy. While a political strategy is more often created and implemented after legislation of the news media publicizes an issue with the company. Politicians get involved based on what they perceive as a threat to their state and the beliefs of those who are constituents, which may contain people outside of their state. In this case, we need to look at history to determine why we need to think about strategy in different formats regarding international business. After World War I, the United States was in a depression and had an isolationist view. As World War II started in Europe, even though many people had fled European countries that were at war, the United States stayed out of the war until Pearl Harbor was attacked December 7, 1941. We entered the war and had two fronts, one in Europe and one in the Pacific with Japan. After WWII, while much of Europe and Japan had been destroyed by bombs, the Marshall Plan was instituted to rebuild both areas. With this, Edward Deming was sent from AT&T laboratories to Japan to help with the rebuilding. As the war ended and the men came home from Europe, quality and management initiatives instituted by Gilbreth, Taylor, and Ford fell by the wayside. Shewhart proposed a process known as Statistical Process Control. This method was the basis for Deming’s method, which he introduced in Japan. Deming was born in Sioux City, Iowa. His Midwest upbringing and the early influence of his training as an electrical engineer instilled in him a process approach to problem solving. He was influenced by Walter A. Shewhart’s Statistical Process Control and his commitment to a process of continuous improvement has left a lasting impact on our view of how systems work. He is often referred to as the “father of the third wave of the Industrial Revolution” (W. Edwards Deming Institute, n.d., para. 2)

UNIT V STUDY GUIDE Strategy Formulation and Organizational Structure

MGT 4302, International Management 2

UNIT x STUDY GUIDE Title

Thus, Japan went from the worst manufacturer in the 1950s to the best manufacturer by the 1990s because they used a systematic approach to quality. The Total Quality Management (TQM) approach is part of the quality imperative that has become one of the methods used for strategy formulation and implementation. Yet, some companies that have implemented the strategy in the United States have gone bankrupt and blame the process of quality implementation as the reason. Critics, however, note that the strategy used to implement the quality standards is often defective and the training for employees inadequate. Other strategies for formulation and implementation include global, regional, and economic approaches. The main environmental factors affecting organizations and strategic planning include regulatory, social, industry/market, technological, economic, and political elements (Doh et al., 2024). Yet, all these require people to carry them out. To do that, detailed and specific training is imperative. This has become a major issue, as “just over 40 percent of Americans earn college a degree—a number which has not changed in decades—while other nations have been catching up” (Vindis, 2012, para. 3). Thus, the United States lacks individuals skilled in technology and other manufacturing areas, and either must import the talent from other countries or outsource the required work to another country with trained individuals. This situation, not being a secret, has led some countries like Ireland and India to train many workers in certain fields and make them available for work. Due to this, entrepreneurship has allowed people in various countries to improve the local, regional, and national education, training, and economics of the surrounding areas. The firms that have filled this gap in the United States are often known as born-global firms (Doh et al., 2024). Strategies to enter markets can depend on the firm’s specialty. The most commonly known structures are export/import, wholly owned subsidiaries, mergers/ acquisitions, alliances and joint ventures, licensing, and franchising. Kentucky Fried Chicken (YUM brands) was an early company that started with franchising in China. The main challenge with alliances and joint ventures, mergers and acquisitions, and licensing is the availability of quality materials in some countries as well as trained individuals who will follow the guidelines. Lumber Liquidators had this problem with their Chinese manufacturer of flooring. They had contracted with them to make specific wood flooring given the equipment and trained individuals. The guidelines noted that no formaldehyde could be used. Without the use of formaldehyde, the process takes longer. Yet, the Chinese partners did not want to wait, so they used the formaldehyde. It was only discovered after someone purchased flooring who was sensitive to formaldehyde and became quite ill. At first, Lumber Liquidators denied that it was their flooring, until others became ill, tests were done, and formaldehyde was found in the flooring. The Chinese managers were asked about the situation, and the situation was not well addressed. That firm no longer produces flooring for Lumber Liquidators, and Lumber Liquidators had to recall a great deal of flooring and refund individuals for flooring and doctors’ bills. Companies often have representatives that check on the guidelines and requirements in other countries, but this is not always successful, as the issue with Lumber Liquidators demonstrated. While there is an international court where cases like this can be tried, it is often quite difficult to adjudicate the situation quickly. Organizations often take on different structures based on how they choose to work in another country. These structures can be done by country with all work reporting to a chain of managers, or by division with each product and/or service line reporting to a manager in the host country. Thus, instead of one person being the head in a country, there would be several people, each with their own specialty. As companies have become more diverse and global, and their needs have become more specific, the global product division structure has become more common along with the global area division structure and global functional structure. As each of the structures requires different decision-making processes and leadership styles, companies must change how they work with employees. While autocratic systems worked at one time, diversity, training, education, and skill sets now require individuals who can use specific knowledge and training rather than just forging ahead with one plan. This requires then different communication styles and different strategies as well as business models. Throughout strategy, and implementation, business structure, employees and their skills and training must be taken into consideration. The way a strategy is implemented is based on what a company has access to as well as what a company needs now and, in the future, to continue developing skill sets to keep up with demand for products and services.

MGT 4302, International Management 3

UNIT x STUDY GUIDE Title

References Doh, J. P., Luthans, F., & Gaur, A. (2024). International management: Culture, strategy, and behavior (12th

ed.). McGraw-Hill. https://online.vitalsource.com/#/books/9781265812874 Vindis, M. (2012, July 30). The decline of American education. Lyndon B. Johnson School of Public Affairs.

http://www.utexas.edu/lbj/news/2012/decline-american-education The W. Edwards Deming Institute. (n.d.). Deming the man. https://deming.org/deming-the-man/ Suggested Unit Resources At the end of each chapter in your textbook, there is a feature titled “In the International Spotlight” that offers a profile of a distinct country. This is followed by the exercise “You Be the International Business Consultant” that presents a business challenge in that country and invites you to recommend a course of action. You are highly encouraged to review the following country profiles in this unit:

• “In the International Spotlight: Saudi Arabia,” p. 350 • “In the International Spotlight: United Arab Emirates,” p. 320

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. You are encouraged to explore the Films on Demand database in the CSU Online Library or YouTube content for further videos using the key terms from your textbook on pages 315 and 346.

MGT 4302, International Management 1

Course Learning Outcomes for Unit V Upon completion of this unit, students should be able to:

1. Compare and contrast the impact of different political, legal, and economic systems on international management. 1.1 Explain how leadership decisions and actions are influenced by culture.

Required Unit Resources Chapter 8: Strategy Formulation and Implementation Chapter 9: Entry Strategies and Organizational Structures Unit Lesson Strategic management can be described as the process of deciding the mission of a company as well as its long-term objectives and then developing and executing a plan of action (Doh et al., 2024). It is discussed by executives and carried out by employees and managers. Thus, communicating the objectives in specific and concise language no matter what country or cultural communication patterns an organization may have is imperative. There are problems when strategy is not understood by everyone. Part of this strategy includes decision-making and problem solving. As each person makes decisions differently and solves problems differently, it is imperative to think about how decisions are made and how problems are solved at work in professional settings and not in personal settings. This differentiation is a big deal. Many people make decisions at work as they would in their personal life. Certainly, there are benefits to having a strategy beyond knowing if you are on track or off track to meet goals and objectives. The unfortunate part of strategies is that organizations often mistakenly create a strategy and then do not refer to it after they finalize it. This creates problems. Some do not use a method to formulate or implement their strategy. While a political strategy is more often created and implemented after legislation of the news media publicizes an issue with the company. Politicians get involved based on what they perceive as a threat to their state and the beliefs of those who are constituents, which may contain people outside of their state. In this case, we need to look at history to determine why we need to think about strategy in different formats regarding international business. After World War I, the United States was in a depression and had an isolationist view. As World War II started in Europe, even though many people had fled European countries that were at war, the United States stayed out of the war until Pearl Harbor was attacked December 7, 1941. We entered the war and had two fronts, one in Europe and one in the Pacific with Japan. After WWII, while much of Europe and Japan had been destroyed by bombs, the Marshall Plan was instituted to rebuild both areas. With this, Edward Deming was sent from AT&T laboratories to Japan to help with the rebuilding. As the war ended and the men came home from Europe, quality and management initiatives instituted by Gilbreth, Taylor, and Ford fell by the wayside. Shewhart proposed a process known as Statistical Process Control. This method was the basis for Deming’s method, which he introduced in Japan. Deming was born in Sioux City, Iowa. His Midwest upbringing and the early influence of his training as an electrical engineer instilled in him a process approach to problem solving. He was influenced by Walter A. Shewhart’s Statistical Process Control and his commitment to a process of continuous improvement has left a lasting impact on our view of how systems work. He is often referred to as the “father of the third wave of the Industrial Revolution” (W. Edwards Deming Institute, n.d., para. 2)

UNIT V STUDY GUIDE Strategy Formulation and Organizational Structure

MGT 4302, International Management 2

UNIT x STUDY GUIDE Title

Thus, Japan went from the worst manufacturer in the 1950s to the best manufacturer by the 1990s because they used a systematic approach to quality. The Total Quality Management (TQM) approach is part of the quality imperative that has become one of the methods used for strategy formulation and implementation. Yet, some companies that have implemented the strategy in the United States have gone bankrupt and blame the process of quality implementation as the reason. Critics, however, note that the strategy used to implement the quality standards is often defective and the training for employees inadequate. Other strategies for formulation and implementation include global, regional, and economic approaches. The main environmental factors affecting organizations and strategic planning include regulatory, social, industry/market, technological, economic, and political elements (Doh et al., 2024). Yet, all these require people to carry them out. To do that, detailed and specific training is imperative. This has become a major issue, as “just over 40 percent of Americans earn college a degree—a number which has not changed in decades—while other nations have been catching up” (Vindis, 2012, para. 3). Thus, the United States lacks individuals skilled in technology and other manufacturing areas, and either must import the talent from other countries or outsource the required work to another country with trained individuals. This situation, not being a secret, has led some countries like Ireland and India to train many workers in certain fields and make them available for work. Due to this, entrepreneurship has allowed people in various countries to improve the local, regional, and national education, training, and economics of the surrounding areas. The firms that have filled this gap in the United States are often known as born-global firms (Doh et al., 2024). Strategies to enter markets can depend on the firm’s specialty. The most commonly known structures are export/import, wholly owned subsidiaries, mergers/ acquisitions, alliances and joint ventures, licensing, and franchising. Kentucky Fried Chicken (YUM brands) was an early company that started with franchising in China. The main challenge with alliances and joint ventures, mergers and acquisitions, and licensing is the availability of quality materials in some countries as well as trained individuals who will follow the guidelines. Lumber Liquidators had this problem with their Chinese manufacturer of flooring. They had contracted with them to make specific wood flooring given the equipment and trained individuals. The guidelines noted that no formaldehyde could be used. Without the use of formaldehyde, the process takes longer. Yet, the Chinese partners did not want to wait, so they used the formaldehyde. It was only discovered after someone purchased flooring who was sensitive to formaldehyde and became quite ill. At first, Lumber Liquidators denied that it was their flooring, until others became ill, tests were done, and formaldehyde was found in the flooring. The Chinese managers were asked about the situation, and the situation was not well addressed. That firm no longer produces flooring for Lumber Liquidators, and Lumber Liquidators had to recall a great deal of flooring and refund individuals for flooring and doctors’ bills. Companies often have representatives that check on the guidelines and requirements in other countries, but this is not always successful, as the issue with Lumber Liquidators demonstrated. While there is an international court where cases like this can be tried, it is often quite difficult to adjudicate the situation quickly. Organizations often take on different structures based on how they choose to work in another country. These structures can be done by country with all work reporting to a chain of managers, or by division with each product and/or service line reporting to a manager in the host country. Thus, instead of one person being the head in a country, there would be several people, each with their own specialty. As companies have become more diverse and global, and their needs have become more specific, the global product division structure has become more common along with the global area division structure and global functional structure. As each of the structures requires different decision-making processes and leadership styles, companies must change how they work with employees. While autocratic systems worked at one time, diversity, training, education, and skill sets now require individuals who can use specific knowledge and training rather than just forging ahead with one plan. This requires then different communication styles and different strategies as well as business models. Throughout strategy, and implementation, business structure, employees and their skills and training must be taken into consideration. The way a strategy is implemented is based on what a company has access to as well as what a company needs now and, in the future, to continue developing skill sets to keep up with demand for products and services.

MGT 4302, International Management 3

UNIT x STUDY GUIDE Title

References Doh, J. P., Luthans, F., & Gaur, A. (2024). International management: Culture, strategy, and behavior (12th

ed.). McGraw-Hill. https://online.vitalsource.com/#/books/9781265812874 Vindis, M. (2012, July 30). The decline of American education. Lyndon B. Johnson School of Public Affairs.

http://www.utexas.edu/lbj/news/2012/decline-american-education The W. Edwards Deming Institute. (n.d.). Deming the man. https://deming.org/deming-the-man/ Suggested Unit Resources At the end of each chapter in your textbook, there is a feature titled “In the International Spotlight” that offers a profile of a distinct country. This is followed by the exercise “You Be the International Business Consultant” that presents a business challenge in that country and invites you to recommend a course of action. You are highly encouraged to review the following country profiles in this unit:

• “In the International Spotlight: Saudi Arabia,” p. 350 • “In the International Spotlight: United Arab Emirates,” p. 320

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. You are encouraged to explore the Films on Demand database in the CSU Online Library or YouTube content for further videos using the key terms from your textbook on pages 315 and 346.