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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
10
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
4-22
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