Lecture 2

Geo-Centric BusinessWhat is geocentricism?Geo-centricism is an outdated cosmology that

mistook the earth to be the centre of the universe.

The phrase ‘Geo-centric’ is used in business literature to represent global characteristic of business\

Geo-p0litics: Politics (exercise of power) in global scale for the control over strategic resources, labour and exclusive property rights.

The management neologism ‘geo-centric’ refers to management of geo-politics by corporate firms of global scale.

The term geo-politics refers to:Global world order changesIt is about future direction of international affairs

and the coming shape of the world political map.

19th century geo-politics French cartoon (Jewish banker Rothschild holding the

world)

Geo politics cartoon of early 20th century- British vs German

Geo-centric business, geo-politics seen from business perspective, is embedded in economic, political, and racial relations of power.

Geo-centric business though expansionist in nature do not share the shame of territorial expansion of nation-states.

Geo-politics was never independent of global business corporate firms

Of late the corporate firms have come out of the shell of national identities.

Currently the global corporate endeavors are presented as the triumph of free-trade.

‘Geo-centric’ staffing in HRM refers to recruiting people in key positions from all over the world irrespective of their national identities.

‘Geo-centric’ policy of management refers to having a business expansion policy across all cultures (eg. Cadburys ad. On the ‘holiness’ of ‘sweet’. Vicks vaporub presenting itself as ‘ayurvedic propriety medicine’

Geocentric finance is investing in different parts of the world and earn out of global disparity of currency, interest rates, asset values and economic growth.

Geo-centric perspective of law refers to either molding the entire world into a single law wherever it is appropriate (eg. Intellectual property laws).

Or, taking advantage of or promoting unique local laws (eg. Nuclear liability bill, Laws regarding water extraction, Pollution laws, insurance laws, labour laws)

Geo-centric business is distinguished from Ethno-centric, Euro-centric, Anglo-centric, US-centric business practices

Ethno (euro, anglo etc)-centric policies will be having uniform norms flowing from one cultural (ethnic) perspective of management on the others. The appropriate terminology for the management neologism ethno-centric is “mono-centric”

Note: in other fields of knowledge (anthropology, sociology, politics and cultural studies) ethno centric represents viewing things from ethnic perspective i.e., local perspective.

Polycentric management is contrasted with mono (ethno) centric.

Polycentric management practice allows local adaptation of mono-centric management strategies and practices.

By geo-centric, (unlike the phrase is used in other fields,) it is meant by some management ‘experts,’ the ‘tailor-made’ decentralized management practice appropriate for the geological locations of its operation.

Geo-centric, poly-centric or ethno-centric management practices are discussed in the context of acquisitions and mergers which requires cultural adaptations.

‘Virtues’ of ‘Geo-centric’ managementAdaptivenesstechnical competenceSelf confidenceCommitment to business expansion of the

firm

Means to avoid ‘Expatriate failure’Acquiring informationTrained to be culturally acceptableBeing trained in cultural etiquettes and

mannersPreparing ‘spouse’ and children to be

culturally aceptabledevelop a salary structure that equalizes

purchasing power across countries

Possible optionsStock optionsHighest paid and lowest paid should be in an

appropriate ratio (For eg. lowest paid should not have a salary less than 1/10th to 1/20th times of the highest paid).

Total compensation, forms of compensation, as well as the gap between top executives and hourly workers vary substantially across countries. Appropriate decision should be taken so that the local executives do not feel exploited.

CEO compensation pattern

Country specific labour relation policiesCountry specific labour rights organizationsAccommodating ILO perspectives in

international labour managementMaking use of cheap labour resourcesMaking use of market potentialsMaking use of pricing conventions

Appropriate intervention in local labour lawsMaking use of country specific labour union

dynamicsManaging appropriate gender

representations (it is believed greater share of women labourers reduces the strength of labour rights organizations)

Increasing contract labourers weakens labour rights organizations

Outsourcing weakens labour rights organizations

Use of ‘temporary labour’ weakens labour rights organizations

Having a pro-labour policy weakens labour rights organizations.

Linking labour decipline to career development weakens labour rights organizations.

Presentation of the organization as key to local development

The ideal business environment expected by international Business FirmsEducated & trained workforceIncreased global/local demand for the

product/servicesAbsence of alternative labour oppurtunities

(increased dependency on private firms)Absense of Government regulation Increased presence of government in protecting

the rights of the firmsRestricted consumer/ labour rightsNo preferential treatment to local firmsFriendly Media

Factors resisting internationalization of BusinessFlight of the capital (Economic argument) De-stabilization of local economy (nationalist

argument)Local firms contesting international

competitionProtectionism (local fordism)Preferential treatment to small scale sectors

(local economy argument)Resistance from environmentalist groups (coca

cola)Past lacuna of international firms in

compensating loss (Bhopal)Alleged/ actual large scale corruption (Enron)

Arguments from labour economy (both for and against)

Ideological opposition Vs Ideological supportPolitical opportunismAnger against special privileges given to

foreign investorsIn general there is more of an economic and

political climate for international business than against it.

Major Global CompaniesSoftwareMicrosoft (USA)Adobe (USA)Coral (USA)Redhat (USA)Infosys (India)

Computer hardwareHawlett-packard (US)Dell (US)IBM (US)Intel (USA)AMD (USA)

Seed CompaniesMonsanto (USA)

RetailWallmart (USA)Carrefour (France)Tesco (UK)

Oil & GasExxon Mobil (US)Royal Dutch shell(Netherland, UK)BP (UK)Saudi Aramco (Saudi)Chervon (US)Sinopec (China)ConocoPhillips (US)Total S.A (France)ENL (Italy)

AutomobileTayota (Japan)Honda (Japan)Hundai (S.Korea)Ford (USA)Volkswagen (Germany)General Motors (US)Daimler AG (Germany)BMW (Germany)TATA group (India)

ElectronicsSamsung (S.Korea)General Electric (USA)Hitachi (Japan)LG (S.Korea)Sony (Japan)Canon

FinanceING group (Amsterdam, North Holland,

Netherlands)Allianz (Germany)AXA (France)Fortis (Belgium)Bank of America (US)American International Group (AIG)Avira (UK)Deutsche Bank (Germany)Goldman Sachs (US)Morgan Stanley (US)Citigroup (US)HSBC (UK)Prudential (UK)

TeleCommunicationAT&T Inc.Nippon telegrapg and telephone (Japan)Nokia (Finland)Vodafone (UK)

Mining/Steel/IronArcelor Mittal (Luxembourg)

FoodNestle (Switzerland)HealthJohnson & Johnson

Points To PonderThere exists no Global democracy – but there

is global businessEven if there is a global democracy- would it

be effective?Declining power of the local persons- while

they are the labourers, source of intellectual property, and consumers!

What should be the nature of the science of ‘international business’?