Copyright © 2014 Pearson Education 3. Organization and cultural environment FM : FM : Anis Gunawan,...

Copyright © 2014 Pearson Education

3. Organization and cultural environment

FM : FM : Anis Gunawan, MBA,MM,SPAnisg @pmbs.ac.id

International Business: Strategy, Management, and the New Realities

1. Foundation concepts of International business

2. The environment of International Business

3.Strategy and opportunityassessment

4. Entering and operating inInternational Markets.

5. Functional Area excellence

International business

3. Organization and cultural environment

1.FOUR MAJOR PARTICIPANTS IN INTERNATIONAL BUSINESS

1. Focal firm – initiator of an international business transaction; e.g., MNEs and SMEs.

2. Distribution channel intermediary – a specialist firm that provides distribution, logistics, and marketing services in the international value chain

3. Facilitator – a firm that provides special expertise in banking, the law, customs clearance, market research, or other

4. Governments – active in international business as suppliers, buyers, and regulators.


MotorolaJackwell

ChinaGovernment

The Multinational Enterprise (MNE)

1. A large organization with a network of production plants, marketing subsidiaries, and regional headquarters, in numerous countries.E.g., Ford, Sony, Unilever, Citibank, McDonald’s, Amazon.

2. Historically the most important type of focal firm

3. In China, Russia, and other countries that emphasize socialism, some MNEs are state owned.


Largest MNEs in the Fortune Global 500


business school PRASETIYA MULYA

Asia

I.International company

1.Coordinated federations(Many asset,resources,

Responsibilities andDecisions still decentralized)

But controlled from headquarters

2.Administrative control(Formal management planning

And control systems allow tighterHQ sub linkage

3.International mentality(Management regards Overseas operations asAppendages to a centralDomestic corporation)

Barlett,C and Ghoshal s (1989)

China

Africa

Indo

HW

business school PRASETIYA MULYA II.Multinational company

1.Decentralized federation(Many key assets,

responsibilities and decisions decentralized)

2.Personal control(Informal HQ sub

relationships overlaid with simple financial

controls)

3.Multinational mentality(Management regards overseas operation as

a port folio of independent business)


London

JKT

Bangkok

Pfizer

Viagra

business school PRASETIYA MULYA III.Global company

1.Centralized hub( Most strategic assets,

resources, responsibilities and decisions centralized)

2.Operational control( Tight central control of decisions, resources and information)3.Global mentality

(Management treatsOverseas operations asDelivery pipelines to aUnified global market)Barlett,C and Ghoshal s (1989)

USA

Jpn

Manila

Beijing

Mc D

business school PRASETIYA MULYA

IV.Transnational company


1.Distributed,SpecializedResources andcapabilities

2.Large flows ofComponents,products,Resources,peopleAnd informationAmong independent units3.Complex process of

Co-ordination and co-operationIn an environment of shared Decision making

USA

Tokyo

London

Afrika

Brasil

Ikea

Singapore

JKT

1.

2.

3.

4.

5.

6.

7.

Key ConceptsII. Culture

• Culture: The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.

• Cross-cultural risk: A situation or eventwhere a cultural miscommunication puts some human value at stake. It arises in environments characterized by unfamiliar languages and unique value systems, beliefs, and behaviors


Holywood

The Four Risks of International Business


CargilHugo chaves

Essentials for Understanding Culture


Managerial Orientations

1. Ethnocentric orientation: Using our own culture as the standard for judging other cultures

2. Polycentric orientation: A mindset in which the manager develops a greater affinity for the country in which he or she works than for the home country.

3. Geocentric orientation: A global mindset in which the manager is able to understand a business or market without regard to national boundaries.

Managers should strive for a geocentric orientation


2.Culture Is…

1. Not right or wrong – It is relative. There is no cultural absolute. Different nationalities simply perceive the world differently.

2. Not about individual behavior – It is about groups. It is a collective phenomenon of shared values and meanings.

3. Not inherited – It derives from the social environment. We are not born with a shared set of values and beliefs; we acquire them as we grow up.


Culture is Learned

• Socialization: The process of learning the rules and behavioral patterns appropriate to one's society.

• Acculturation: The process of adjusting and adapting to a culture other than one's own; commonly experienced by expatriate workers.

• Culture is like an iceberg – above the surface, certain characteristics are visible; below the surface is a massive base of assumptions, attitudes, and values that strongly influence decision-making, relationships, and other dimensions of business.


1. Geography. Different levels – the world, the nation, the region, cities -- elicit unique cultural perspectives.

2. Ethnicity. For example, people of African, Indian, and Latino heritage tend to perceive reality differently.

3. Gender. Men and women often experience the world differently.4. Age. Seniors, baby boomers, teenagers, and children perceive

their worlds differently.5. Language. Language both reflects, and is reflected by, cultural

differences.6. Occupation. Perspectives differ among blue collar workers,

professionals, or artists.

Culture is linked with particular groups based on various factors, including:

Copyright © 2014 Pearson EducationBus.Culture

In Japan and some other Asian cultures:

1. Regular group meetings build harmony and team spirit2. Morning group calisthenics are common in Japan3. Collective training and evaluation4. Employees look to mentors for guidance. Mentors are

expected to closely support subordinates.5. Close attention to product quality and to courtesy in customer

interactions (e.g., in Japan, taxi drivers and McDonald’s workers wear white gloves)

6. Developing and maintaining lifetime relations with customers is the norm in many industries.


MC D

Culture affects many managerial tasks, including:

1. Developing products and services

2. Preparing advertising and promotional materials

3. Preparing for overseas trade fairs and exhibitions

4. Screening and selecting foreign distributors

5. Communicating and interacting with foreign partners

6. Negotiating and structuring ventures

7. Interacting with current and potential customers from abroad


Cross-Cultural Encounters are Common at Home


Human resource practices vary across cultures:

1. Developing products and services

2. Organizational structure (centralized versus decentralized; bureaucratic versus entrepreneurial)

3. Teamwork (MNEs require intercultural cooperation)4. Pay for performance versus merit5. Length of employment (temporary or lifetime)6. Union-management relationships

7. Attitude toward ambiguity (e.g., at times, employees

receive vague or contradictory instructions)


CorruptionIn Seamen

Cultural Differences in Entrepreneurship

It is said that when someone starts a new business…

● in Hong Kong, the whole family works ceaselessly to make it a success;

● in the United States, friends put up their money for the entrepreneur;

● in Turkey, friends will ask the entrepreneur to hire their sons and nephews;

● in India, the administrative system will impose monumental red tape


India

Deal vs. Relationship Orientation

• In deal-oriented cultures, managers focus on the task at hand, are impersonal, typically use contracts, and want to just “get down to business.” Examples: Australia, Northern Europe, and North America.

• In relationship-oriented cultures, managers value affiliations with people, rapport, and getting to know the other party in business interactions. Relationships are more important than individual deals; trust is much valued in business agreements. Examples: China, Japan, Latin American countries. It took nine years for Volkswagen to negotiate a car factory in China.


Quanxi

1. Refers to social connections and relationships based on mutual benefits.

2. Emphasizes a reciprocal exchange of favors as well as mutual obligations.

3. Rooted in ancient Confucian philosophy, which values social hierarchy and reciprocity.

4. Engenders trust, thereby serving as a form ofinsurance in a potentially risky business environment.


Confucius

Perceptions of Time

1. Time dictates expectations about planning, scheduling, profit streams, and what constitutes tardiness in arriving for work and meetings.

2. Monochronic -- A rigid orientation to time in which the individual is focused on schedules, punctuality, time as a resource, time is linear, “time is money”. For example, people in the U.S. are hurried and impatient.

3. Polychronic -- A flexible, non-linear orientation to time in which the individual takes a long-term perspective; time is elastic, long delays are tolerated before taking action. Punctuality is relatively unimportant. Relationships are valued. Examples: Africa, Latin America, Asia.


Role of Religion in Islamic Societies

• Islam is the basis for government, legal, and social systems. As Muslims view God’s will as the source of all outcomes, they are relatively fatalistic and reactive.

• Islam’s holy book, the Qur’an, prohibits drinking alcohol, gambling, usury, and ‘immodest’ exposure. The prohibitions affect firms dealing in various goods.

Examples •Nokia launched a mobile phone that shows Muslims the direction towards Mecca, Islam’s holiest site. •Heineken rolled out the non--alcoholic malt drink Fayrouz.


Blunders in International AdvertisingFirm and Location Intended Slogan Literal Translation

Parker Pen in Latin America

“Use Parker Pen, avoid embarrassment”

“Use Parker Pen, avoid pregnancy!”

Pepsi in Germany “Come Alive with Pepsi” “Come out of the grave with Pepsi”

Pepsi in China “Come Alive with Pepsi” “Pepsi brings your ancestors back from the dead”

Fisher Body in Belgium (car exteriors)

“Body by Fisher” “Corpse by Fisher”

Salem cigarettes in Japan

“Salem-feeling Free” “Smoking Salem makes your mind feel free and empty”Copyright © 2014 Pearson Education

PP

RClassic

Culture: Converging or Diversifying?

• Cultural homogeneity and heterogeneity are not mutually exclusive; they generally occur together.

• But cultural flows are diverse – just as McDonald’s is popular in Japan, so too is Vietnamese food in the United States and Japanese sushi in Europe.

• While globalization will eclipse some past ways of life, the process can also ‘liberate’ people by providing new ideas and challenging conformity and nationalism.


Foreign Market Entry Strategies of Focal Firms

1. Foreign direct investment (FDI): The transfer of assets to another country or the acquisition of assets in that country.

2. International collaborative venture: Partners pool their resources and share the costs and risks of a new venture.

3. Exporting: Sale of products or services to customers located abroad from a base in the home country or a third country.


Entry Strategies of Focal Firms (cont’d)

4.Importing or Sourcing: Focal firms procure numerous parts, components, and services from suppliers around the world.

5.Licensing: Granting the right to a foreign partner to use certain intellectual property in exchange for royalties.

6.Franchising: Granting the right to a foreign partner to use an entire business system in exchange for fees and royalties.


Online Intermediaries

1. ‘Disintermediation’ – bypassing traditional intermediaries – is made possible by the Internet.

2. Examples include Amazon, Dell, eBay

3. Traditional retailers such as Tesco and Wal-Mart have also established an online presence.

4. One negative outcome is that unscrupulous marketers prey on unsuspecting customers with fake products (e.g., pharmaceuticals).


Amazon

Facilitators

• Assist the focal firm with specialized services required in international transactions.

• Examples include logistics service providers (e.g., DHL,UPS, FedEx), banks, international trade lawyers, freight forwarders, customs brokers, consultants, advertising agencies, market researchers, insurance companies, tax accountants


UPS

Date post:	04-Jan-2016
Category:	Documents
Upload:	claire-scott
View:	215 times
Download:	0 times

Copyright © 2014 Pearson Education 3. Organization and cultural environment FM : FM : Anis Gunawan,...

Documents