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International Management

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Applying management concepts and techniques in a multinational environment. Adapting management practices to different economic, political, and cultural contexts

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Multinational Company (MNC)

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a firm having operations in more than one country, international sales, and a nationality mix among managers and owners.

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Globalization

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

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The World Trade Organization

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The global organization of countries that oversees rules and regulations for international trade and investment

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NAFTA

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a free trade agreement between the United States, Mexico, and Canada that has removed most barriers to trade and investment

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Off shoring

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Process by which companies undertake some activities at offshore locations instead of in their countries of origin.

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Outsourcing

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

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Benefits of Globalization

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Wealth, Jobs, Technology, Lower prices, Availability of goods

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Criticisms of Globalization

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Off-shoring of business service jobs to lower-wage countries. Growing trade deficits. Slow wage growth. Environmental and social impacts.

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Foreign Direct Investment

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Investment in property, plant, or equipment in another country

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Ethics

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Study of morality and standards of conduct.

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Kantian Philosophical Traditions

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Individuals (and organizations) have responsibilities based on a core set of moral principles that go beyond those of narrow self-interest.

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Aristolean Virtue Ethics

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Focus on core, individual behaviors and actions and how they express and form individual character. Decisions should consider impact on community

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Utilitarianism

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

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Eastern Philosophy

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Views the individual as part of, rather than separate from, nature.

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Corporate Social Responsibility

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Involves the actions of a firm to benefit society beyond requirements of the law and the direct interests of the firm

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Human Rights Challenges for MNCs

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Currently no universally adopted standards of what constitutes acceptable behavior

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Gender gap hiring

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refusal to hire women for more than low-level jobs

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Glass ceiling

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lack of promotion to management positions

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Sexual harassment

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hostile work environment

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Work Environment in China

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Works are not paid well. Child labor

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Environmental Kuznets Curve

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Environmental degradation increases as income per capita increases until a point where (at a now higher income) citizens focus on the impact on environment

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Integrative Social Contract Theory

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Allows latitude for nations to create concepts of fairness. Gives managers a framework to use when they face a gap between the moral and ethical values in the home country and in the host country

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Nongovernmental Organization

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Private, not-for-profit organization that seeks to serve society's interests by focusing on social, political, and economic issues such as poverty, social justice, education, health, and the environment.

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Principles of Global Compact

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Human Rights, Labor, Environment, Anticorruption

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Sustainability

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Development that meets future needs without harming the future

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Walmart's Sustainability Goals

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100% renewable energy, achieve zero waste, and green products and services.

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How will management styles change

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focus on future human needs and environment

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Corporate Governance

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The system by which business corporations are directed and controlled.

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Insider Systems

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concentrated ownership by families, holding partners, and banks.

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Outsider Systems

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Dispersed ownership of equity among a large number of outside investors

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Corruption

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Government corruption is a pervasive element in international business environment

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Foreign Corrupt Practices Act

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Makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions

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Culture

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Acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior.

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The shifting landscape in the global economy is due to

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Economic integration and rapid growth of emerging markets

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BRIC Countries

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(Brazil, Russia, India, and China) could be among the four most dominant economies by 2050

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Established Economies include

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North America, EU, Japan

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Canada's Economic Performance

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U.S.'s largest trading partner. Most of the largest foreign-owned Canadian companies are totally or heavily U.S.-owned.

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maquiladora

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factory, (Mexican border towns) that imports materials and equipment on a duty- and tariff free basis for assembly or manufacturing and re-export.

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Goal of EU

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Eliminate all trade barriers among member countries. A unified Europe could become the largest economic market in terms of purchasing power in the world

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Ministry of International Trade and Industry (MITI)

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A Japanese government agency that identifies and ranks national commercial pursuits and guides the distribution of national resources to meet these goals.

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Chaebols

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very large, family-held Korean conglomerates that have considerable political and economic power

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Learned Culture

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not inherited - acquired by learning and experience

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Shared Culture

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people as member of groups/society share culture - not specific to individuals

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Trans-generational Culture

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passed down from one generation to another

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Symbolic Culture

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use one thing to represent another

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Patterned Culture

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has structure and is integrated - a change in one part will bring change in another

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Adaptive Culture

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humans have the capacity change or adapt

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Centralized Decision Making

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Top managers make all important organizational decisions.

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Decentralized Decision Making

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Decisions are diffused throughout the enterprise, and middle- and lower-level managers actively participate in, and make, key decisions.

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Safety

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organizational decision makers are risk-averse and have great difficulty with conditions of uncertainty

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Risk

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risk taking is encouraged, and decision making under uncertainty is common.

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Individual Rewards

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personnel who do outstanding work are given individual rewards in the form of bonuses and commissions.

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Group Rewards

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cultural norms require group rewards, and individual rewards are frowned upon.

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Informal Procedures

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much is accomplished through informal means.

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Formal Procedures

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formal procedures are set forth and followed rigidly.

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High Organizational Loyalty

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people identify very strongly with their organization or employer.

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Low Organizational Loyalty

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people identify with their occupational group, such as engineer or mechanic.

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Short Term Horizons

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some cultures focus on short-range goals of profit and efficiency.

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Long Term Horizons

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cultures focus on long range goals such as market share and technological developments.

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Stability

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culture of some countries encourages stability and resistance to change.

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Innovation

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culture puts high value on innovation and change

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Core of Model of Culture

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The implicit, basic assumptions that guide people's behavior

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2nd tier in Model of Culture

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The norms and values that guide the society

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3rd tier in Model of Culture

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The explicit artifacts and the products of the society

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Values

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Basic convictions that people have about right and wrong; learned from culture

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Values of more successful managers

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pragmatic, dynamic, achievement-oriented, and active role in interaction with others

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Values of less successful managers

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static and passive values; relatively passive roles in interacting with others

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Personal value system

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elatively stable and do not change rapidly

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Power Distance

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The extent to which less powerful members accept that power is distributed unequally

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High power distance countries

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people blindly obey superiors; centralized, tall organizational structures (Mexico, South Korea, India)

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Low power distance countries

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flatter, decentralized organizational structures, smaller ratio of supervisor to employee (Austria, Finland, Ireland)

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Uncertainty Avoidance

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The extent to which people feel threatened by ambiguous situations; create beliefs/institutions to try to avoid such situations

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High uncertainty avoidance countries

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high need for security, strong belief in experts and their knowledge; structure organizational activities, more written rules, less managerial risk taking

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Low uncertainty avoidance countries

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people more willing to accept risks related to unknown, less structured organizational activities, fewer written rules, more managerial risk taking, higher labor turnover, more ambitious employees (Denmark and Great Britain)

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Individualism (Hofstede)

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The extent to which people look after themselves and immediate family only

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High individualism countries

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wealthier, Protestant work ethic, greater individual initiative, promotions based on market value (U.S., Canada, Sweden)

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Collectivism

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The tendency of people to belong to groups and to look after each other in exchange for loyalty

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High collectivism countries

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poorer, less support of Protestant work ethic, less individual initiative, promotions based on seniority (Indonesia, Pakistan)

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Masculinity

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A cultural characteristic in which the dominant social values are success, money, and things

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High masculine countries

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stress earnings, recognition, advancement, challenge, wealth; high job stress (Germanic countries)

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Femininity

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A cultural characteristic in which the dominant social values are caring for others and quality of life

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High feminine countries

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cooperation, friendly atmosphere, employment security, group decision making; low job stress (Norway)

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Time Orientation

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A cultural characteristic dealing with society's search for virtue

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Long-term oriented societies

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focus on the future, able to adapt traditions when conditions change, tend to save and invest, focus on achieving long-term results (Asian countries)

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Short-term oriented cultures

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focus on quick results, do not tend to save, service to others, belief in absolutes, value stability and leisure (U.S., UK, Spain)

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Indulgence

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trait related to relative happiness based on instant gratification

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Indulgent Societies

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perceived happiness, life in control, positive emotions, basic needs satisfied, believe their destiny is in their control (U.S., UK, Australia, Chile)

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Restraint

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a cultural characteristic based on regulating and controlling behavior according to social norms

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Restrained Societies

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less happiness, sense of helplessness, less likely to remember positive emotions, basic needs not always met - believes their destiny is not in their control (China, Egypt, Romania)

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Universalism

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belief that ideas/practices can be applied everywhere without modification.

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Trompenaars's Cultural Dimensions

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Universalism v Particularism. Individualism vs. Communitarianism. Neutral vs. Emotional. Specific vs. Diffuse. Achievement vs. Ascription

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High Universalism Countries

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formal rules, close adherence to business contracts (U.S., UK, Germany, Sweden, Australia)

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Particularism

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belief that circumstances dictate how ideas/practices apply

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High Particularism countries

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focus more on relationships and trust than formal rules. Legal contracts often modified, the way deals executed change as people get to know each other (China, Indonesia, Venezuela)

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Individualism (Trompenaars)

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people regard themselves as individuals

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Countries with High individualism (Trompenaars)

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stress personal and individual matters; assume great personal responsibility (U.S., UK, Argentina, Mexico, Thailand)

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Communitarianism

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people regard themselves as part of a group

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High Communitarianism (Trompenaars)

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committee decisions; joint responsibility (Malaysia, Korea)

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Neutral

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culture in which emotions are held in check - don't show feelings

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High Neutral countries

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people act stoically and maintain composure (Japan and UK)

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Emotional

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emotions are expressed openly and naturally

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High Emotional Cultures

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people smile a lot, talk loudly, greet each other with enthusiasm (Mexico, Netherlands, Switzerland)

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Specific (Trompenaars)

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large public space shared with others and small private space guarded closely

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High Specific Cultures

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people open and extroverted, strong separation of work and personal life (Austria, UK, U.S., Switzerland)

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Diffuse (Trompenaars)

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public and private spaces have similar size, public space guarded because entry into public space is also entry in private space

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Diffuse Cultures

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people indirect and introverted, work/private life closely linked (Venezuela, China, Spain)

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Achievement Culture

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people accorded status based on how well they perform functions. High status to high achievers (Austria, Switzerland, U.S., UK)

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Ascription Culture

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status based on who or what a person is. Status based on age, gender, social connections (Venezuela, China, Indonesia)

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Trompenaar's Time: Sequential

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only one activity at a time, appointments kept strictly, follow plans as laid out (U.S.)

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Trompenaar's Time: Synchronous

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multitask, appointments are approximate and easily changed, schedules subordinate to relationships (France, Mexico)

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Trompenaar's Time: Past/Present vs. Future

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Future more important (Italy, U.S., Germany). Past/Present more important (Venezuela, Indonesia, Spain). All 3 time periods equally important (France, Belgium).

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Trompenaar's Inner-Directed Environment

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people believe in controlling outcomes. Dominant (sometimes aggressive) attitude toward environment (U.S., Switzerland, Australia)

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Trompenaar's Outer-Directed Environment

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people believe in letting things take their course. "Go with the flow," flexible attitude, willingness to compromise and maintain harmony (China, many other Asian countries)

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Global Leadership and Organizational Behavior Effectiveness (GLOBE)

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Correspond generally with those of Hofstede and Trompenaars. Different from Hofstede in that many more researchers with varied perspectives were involved (vs. Hofstede working alone); studied many companies (vs. Hofstede studied one company)

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Ethnocentric Predisposition

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A nationalistic philosophy of management whereby the values and interests of the parent company guide strategic decisions

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Polycentric Predisposition

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A philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates.

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Regiocentric Predisposition

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A philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis.

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Geocentric Predisposition

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A philosophy of management whereby the company tries to integrate a global systems approach to decision making.

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The Globalization Imperative

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Belief that one worldwide approach to doing business is key to efficiency and effectiveness. However, efforts to address local needs

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German Advertising

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Want factual and rational advertising. Typical German spot features standard family of two parents, two children, and grandmother

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French Advertising

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Avoid reasoning or logic. Advertising is predominantly emotional, dramatic, symbolic. Spots are viewed as cultural events?art for sake of money? and reviewed as if they were literature or films

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British Advertising

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Value laughter above all else. Typical broad, self-deprecating. British commercial amuses by mocking both advertiser and consumer

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Parochialism

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the tendency to view the world through one's own eyes and perspectives Managers from advanced economies might believe that their state-of-the art knowledge can handle challenges in less developed countries

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Simplification

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the process of exhibiting the same orientation toward different cultural groups.

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Human Resources Management Differences across countries

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Wages, Compensation, Pay equity, Maternity leave

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Contingency Matrix for Int'l HRM

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Recruitment and Selection. Training. Compensation. Labor Relations. Job Design

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