Global Comparative and quality Management

Chapter 3

Global Comparative and quality Management

Introduction; International Management International Management focuses on the operation of

international firm s in the host countries

Combinations of external and internal conditions influence managers’ selection of international operating forms

Whether a country produces in its home country or abroad is a convenient way to begin describing operating forms

The purpose and Nature of International Business

Global Comparative and quality Management

Forms of international business

Exporation

Goods & Services

Parent Country Host Country

Global Comparative and quality Management

Licensing agreement

Primarily Technical Know-how

Parent Country Host Country

Forms of international business

Global Comparative and quality Management

Management contracts

Managerial and technical Know-how

Parent Country Host Country

Forms of international businessGlobal Comparative and quality Management

Joint ventures & strategic alliances

Managerial and technical Know-how

Parent Country Host Country

Material, services and personnelMaterial, services and personnel

Forms of international businessGlobal Comparative and quality Management

Subsidiaries

Capital Know-how

Parent Country Host Country

Forms of international businessGlobal Comparative and quality Management

9

Collaborative Forms Joint venture:

Two or more companies share ownership of an FDI

Consortium:

When two or more organizations participate, this is what the resulting joint venture is sometimes called

Equity alliances:

Involves a company’s equity position in the company with which it has a collaborative arrangement

The purpose of equity ownership is to solidify a collaborating contract

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Collaborative FormsLicensing:

A company grants rights to intangible property to another company ; cross-licensing

Franchising: A specialized form of licensing in which the franchiser not

only sells an independent franchisee the use of a trademark but also assists on a continuous basis in the operation of the business

Management contracts: Arrangements whereby, for a fee, one company provides

personnel for another company

Turnkey operations: Involve a contract for construction of operating facilities

that are transferred for a fee to the owner when they are ready to commence operations

Multinational corporations

A multinational corporation is an entity headquartered in one country that does business in one or more foreign countries.

Many MNCs progress through the following stages:

1. Exports products to foreign countries.

2. Establishes sales organizations abroad.

3. Licenses use of patents and technology to foreign firms that make and sell the MNCs products.

4. Establishes foreign manufacturing facilities, but control remains at the home office.

MNC’s: Have their HQ in one country but operate in many countries

From Ethnocentric to Geocentric orientation;

The style of the foreign operation is based on that of the parent company.

Multinational corporations

MNC’s: Have their HQ in one country but operate in many countries

Polycentric orientation;

The foreign subsidiaries are given a great deal of managerial freedom

Multinational corporations

MNC’s: Have their HQ in one country but operate in many countries

Regiocentric orientation;

The foreign operation are staffed on regional basis

Multinational corporations

MNC’s: Have their HQ in one country but operate in many countries

Geocentric orientation;

The entire organization is viewed as an interdependent system operation in many countries

Multinational corporations

Advantages & Challenges of MNC’s Cheaper labor costs

Transportation costs

Lack of domestic capacity

Cheaper foreign production

Can require additional investment

Need to alter products and services

Loss of certain economies from large-scale production

Trade restrictions

Every country continues to place some barriers on the import of products and services from abroad

Country-of-origin effects

Some customers prefer to purchase locally made goods for nationalistic reasons

Advantages & Challenges of MNC’s

International Management; cultural and country

Individualism– The degree to which people prefer to act as individuals

rather than a member of groups

Collectivism– A tight social framework in which people expect others in

groups of which they are a part to look after them and protect them

4-19

Behaviors In Different Culture

Hofstede’s Framework: Masculinity

Masculinity– The extent to which the society values work roles of

achievement, power, and control, and where assertiveness and materialism are also valued (lady truck Driver)

Femininity– The extent to which there is little differentiation between

roles for men and women

4-20

Hofstede’s Framework: Uncertainty Avoidance

The extent to which a society feels threatened by uncertain and ambiguous situations and tries to avoid them

4-21

High Uncertainty Avoidance: Society does not like ambiguous

situations and tries to avoid them.

Low Uncertainty Avoidance: Society does not mind ambiguous

situations and embraces them. Leave application Aug. 2014

Long-term Orientation– A national culture attribute that emphasizes the

future, thrift, and persistenceShort-term Orientation

– A national culture attribute that emphasizes the present and the here and now

Hofstede’s Framework: Time Orientation

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Porters Competitive Advantage

Porter’s Diamond

Structure & Rivalry of Firms

Related andSupport Industry

FactorConditions

DemandConditions

Adapted From: Porter, M.E., (1990), The Competitive Advantage of Nations, Free Press, Cited in de Wit, B & Meyer, R, (1998), “Strategy Process, Content Context, an International Perspective” 2nd Ed, West.p, pp 775.

Porter Contends that a nation's characteristics have a major impact on its firms performance. Government

Chance

Home Diamond(Porter, M.E. 1990)

Firm StrategyStructure, & Rivalry

• Do management & organisational structures in nation match industry needs?

• Does industry attract outstanding talent?• Do investors goals meet industry needs?• Are there capable domestic rivals?

Factor conditions:• Does the nation have advanced

factors of production?• Are there advanced factor creating

mechanisms? E.g. 1st rate Universityresearch, Top grade Universities.

• Are selective factor conditions indicators of foreign circumstances?

Demand conditions:• Are the nations buyers sophisticated &

demanding?• Does the nation have unusual needs?• Do home \customer needs emulate those

elsewhere?• Does the nation have sophisticated

distribution channels

Demand conditions:• Does the nation have world-class supply

industries• Are there strong related industries

Adapted From: Porter, M.E., (1990), The Competitive Advantage of Nations, Free Press, Cited in de Wit, B & Meyer, R, (1998), “Strategy Process, Content Context, an International Perspective” 2nd Ed, West.p, pp 775.

The ‘diamond’

To reach ‘true prosperity’ and the innovation driven stage all 4 corners of the ‘diamond’ must be in place in the ‘home base’ country.– FACTOR CONDITIONS

• specialized factors, skilled labour– DEMAND CONDITIONS

• the most sophisticated consumers– RELATED AND SUPPORTING INDUSTRIES

• ‘clusters’ of suppliers, consultants, users– FIRM STRATEGIES AND STRUCTURES

• intense rivalry amongst domestic firms

Gaining a Global Competitive Advantage through Quality Management

1. TQM

2. Malcolm Baldrige National Quality Award

3. European Model for TQM

28

What is quality? Dictionary has many definitions: “Essential characteristic,”

“Superior,” etc.

Some definitions that are accepted in various organizations: “Quality is customer satisfaction,”

“Quality is Fitness for Use.”

What is TQM?

A comprehensive, organization-wide effort to improve the quality of products and services, applicable to all organizations.

Gaining a Global Competitive Advantage through Quality Management

Malcolm Baldrige National Quality Award

30

• Managing Performance The EFQM-Model

– The European Foundation for Quality Management model focuses on;• Customer Satisfaction• People Satisfaction (employee)• Impact on society are achieved through leadership• This derives the policy and strategy, people management,

resources and processes that lead to excellence in business results

European Model for TQM

Overview of the EFQM Excellence Model

Key Performance

Results

Society Results

People Results

Customer Results

Leadership Processes

Partner-ships &

Resources

People

Policy &Strategy

Enabler Results

Innovation and Learning

European Model for TQM