˘ˇhtaibi.free.fr/docs/MI Dauphine 2004.pdfSource: Adapted from Peter J. Dowling, Denice E. Welch,...

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International Management : Asia Perspectives

I. Some basic Principles of International Management

II. Asia Space : A Structure around Various Poles

III. Two Examples of Asia Countries : between Liberal Capitalism and Dogmatic Communism

International Management : Asia Perspectives

I. Some basic Principles of International Management

- Increasing Importance of International Management Understanding

- Types of Organizations- Expatriation : Success or Failure- Global Environment

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Increasing Importance of International Management

Understanding

16-1

International Mergers and Acquisitions

InternationalManagement

ForeignResources

Global Competition

Market Access Opportunities

SOURCE: Jagdish N. Sheth and Abdolreza S. Eshghi, Global Human Resources Perspectives (Cincinnati: South-Western, 1989), vii.

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Types of Organizations

- International Corporation Domestic firm that uses its existing capabilities to move into overseas markets

- Multinational Corporation (MNC) Firm with independent business units operating in multiple countries

- Global Corporation Firm that has integrated worldwide operations through a centralized home office

- Transnational Corporation Firm that attempts to balance local responsiveness and global scale via a

network of specialized operating units

Types of Organizations

16-2

GLOBAL

Views the world as a single market; operations are controlled centrally from the corporate office.

TRANSNATIONAL

Specialized facilities permit local responsiveness; complex coordination mechanisms provide global integration.

High

GLOBAL

EFFICIENCY INTERNATIONAL

Uses existing capabilioties to expand into foreign markets.Low

MULTINATIONAL

Several subsidiaries operating as stand-alone business units in multiple countries

Low High

Source: Adapted from Peter J. Dowling, Denice E. Welch, and Randall S. Schuler, International Dimensions of Human Resource Management, 3e (South-Western, 1999).

LOCAL RESPONSIVENESS

Case : Leclerc• Case: Independant under a single Flag?

– Creation in 1949. Today : 560 points of sale, 73 000 employees

– Network of independant entrepreneurs in the retaillingbusiness in France

– Economies of scale concerning different corefunctions: strategy, advertizing, purchasing

– Importance of strong common values: new supermarket owners chosen by the other members, competitive price, participations of employees to Leclerc profits (25%)

Air France / KLM Alliance

• Case: What would be the next step after the agreement on an effective takeover of the Dutch flag carrier by Air France?

– Deal => Europe’s biggest Airline– Turnover of 19.2 bn Euros– Workforce of about 106,000 – 226 destinations worldwide– Multi-hub system based on Schiphol and

Roissy

Johnson & Johnson

• Case: How to be “Big” and “Small” at the same time?

– Created in 1886 in the USA– Sanitary products, pharmaceutical, medical devices and

diagnostics.– 190 subsidiaries in 54 countries, selling in 175 countries– Major management principle: decentralization– Local Top Management in each subsidiary– Important information flow and tight control by the US

headquarters

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– Global : Creation of a World R&D Center, Vitapole, inaugurated at the end of 2002 in France, with 1000 employeesand 600 researchers, « push strategy »

– Local : Danone Institutes (40% of the R&D, « pull »)– Main focus: to improve offer to consumers (food concept +

marketing)– Axes : product quality, food security, environment

protection,…– R& D to improve past and future– Communication across the world and various hierarchical links

to develop ideas.

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Human Resource Management Issues

Compensation and Benefits

Training and Development

Productivity

Staffing

Labor Relations

- Host Country : Country in which an international corporation operates

- Expatriates, or Home-Country Nationals :Employees from the home country who are sent on international assignment

- Host-Country Nationals : Natives of the host country

- Third-Country Nationals : Natives of a country other than the home country or the host country

- Guest Workers : Foreign workers invited in to perform needed labor

Advantages of Different Sources for Overseas Managers

HOST COUNTRY

• Less Cost • Preference of

host-country government

• Knowledge of environment

• Language facility

HOME COUNTRY

• Talent available

within company • Greater control • Company

experience • Mobility • Experience

provided to corporate executives

THIRD COUNTRY

• Broad

experience • International

outlook • Multilingualism

Time

Em

phas

is in

Sta

ffin

g

ExpatriatesExpatriates

Host CountryNationals

Host CountryNationals

Changes in International Staffing Over Time

International Staffing

Recruitment

Selection

Training and Development

Key IssuesKey Issues

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A B

C D

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� A B C DEducation (*)

Social Status (*)

Revenues (*)

Job: writer, consultant, lawyer, cleaning staff

Nationality: French, American, Mexican, Turkish

Hobbies:Photo, Surf, Food, Poker

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Technicalcompetence

Professionalexperience

Interpersonalskills

Internationalexperience

Familyflexibility

Countryexperience

Languageskills

Expatriate Selection Criteria

Augmented SkillsExperience

Decision-makingResourcefulness

AdaptabilityCultural sensitivity

Team buildingMaturity

Augmented SkillsExperience

Decision-makingResourcefulness

AdaptabilityCultural sensitivity

Team buildingMaturity

Core SkillsExperienceDecision-makingResourcefulnessAdaptabilityCultural sensitivityTeam buildingMaturity

Core SkillsExperienceDecision-makingResourcefulnessAdaptabilityCultural sensitivityTeam buildingMaturity

Skills of Expatriate Managers

REDUCING EXPATRIATE FAILURES

• Selecting the right expatriate– Do an extremely sophisticated job of selecting the people– Find out why the candidate wants the foreign assignment– Select only top-notch, proven people– Familiarize the expatriate and his/her family with the country– An administrative branch to is supporting your international staff

• Assessing expatriates’ effectiveness potential– Expatriate managers must listen well, – Expatriate managers must be patient– Expatriate managers must have respect for the locals

Skills of Expatriate Managers

- Core Skills : Skills considered critical in an employee’s success abroad

- Augmented Skills : Skills helpful in facilitating the efforts of expatriate managers

- Failure Rate : Percentage of expatriates who do not perform satisfactorily

International Managers

- Global Manager : Manager equipped to run a global business

- Transnational Teams : Teams composed of members of multiple nationalities working on projects that span multiple countries

- Repatriation : Process of employee transition home from an international assignment

Global ManagersManage

Decentralized Operations

Aware of Global Issues

Interpersonal Competence

Sensitive to Diversity Issues

Seize Strategic Opportunities

Skilled in Building

Communities

Content of Training Programs

Language Training

Cultural Training

Personal and Family Life

Career Development and

Mentoring

Key Elements Needed to Prepare

Employees to Work Overseas

Key Elements Needed to Prepare

Employees to Work Overseas

International Performance Appraisals

Host-Country Evaluations

Augmenting Job Duties

Organizational Learning

Individual Learning

Home-Country Evaluations

Providing Feedback

Key IssuesKey Issues

Performance Evaluation

Home-CountryEvaluation

Host-CountryEvaluation

GLOBALPERSPECTIVE

LOCALPERSPECTIVE

Why Do Expatriates Fail?

• Family adjustment• Lifestyle issues• Work adjustment• Bad selection• Poor performance• Other opportunities arise• Business reasons• Repatriation issues

REDUCING EXPATRIATE FAILURES

• Selecting the right expatriate– Do an extremely sophisticated job of selecting the people– Find out why the candidate wants the foreign assignment– Select only top-notch, proven people– Familiarize the expatriate and his/her family with the country– An administrative branch to is supporting your international staff

• Assessing expatriates’ effectiveness potential– Expatriate managers must listen well, – Expatriate managers must be patient– Expatriate managers must have respect for the locals

Communication:A Chinese and a French

Words Perception

French: How long will it take you to finish the report

French: I asked him to participate

Chinese: I don’t know.How long shouldit take?

French: You are in the best positionto analyze time requirements.

Chinese: Ten days.

French: Take 15.Is it agreed? You will do it in 15 days?

Chinese: His behavior makes no sense. He is the boss. Why doesn’t he tell me?French: He refused to take responsibility.

Chinese: I asked him for an order.

French: I press him to take responsibility for his actions.

Chinese: Nonsense-I’d better give him an answer

French: He lacks the ability to estimatehis time; this estimate is totally inadequate.

French: I offer a contract.

Chinese: These are my orders.

BUSINESS CUSTOMS IN CHINA, JAPAN, AND SOUTH KOREA

• Guanxi: it refers to the special relationship two people have with each other.

• Wa: it necessitates that members of a group, be it a work team, a company, or a nation, cooperate with and trust each other.

• Inhwa: it stresses harmony; linking of people who are unequal in rank, prestige, and power; loyalty to hierarchical rankings; superior being concerned for the well-being of subordinates.

• Cross-Cultural Generalizations: A Caveat– While the culture influences the mode of doing business in a country, the

introduction of new technology changes culture.– Generalized information about nations serves mainly as a stereotype, and

stereotypes are useful mainly as starting points for analysis.

• Cross-Cultural Adaptation: A Caveat

CULTURE DEFINED

Culture comprises an entire set of social norms and responses that condition people’s behavior; it is acquired and inculcated, a set of rules and behavior patterns that an individual learns but does not inherit at birth.

Culture Environment of International Management

- Organizational Culture

- Cultural Environment : Language, religion, values, attitudes, education, social organization, technology, politics, and laws of a country

- Culture Shock : Perceptual stress experienced by people who settle overseas

Case : Lafarge

• Problem: How to recruit employees with Organizational Culture?

– Powerful International Firm– HR = Most important Asset for Lafarge– Key values: innovation, challenge, new perspectives – Necessary permanent Added-Value– Strong interpersonal relationships– Importance of Union Dialogue

Culture Environment of International Management

Observable level: ceremonies, stories, slogans, behaviors, dress, physical settings

Underlying values,

assumptions, beliefs, attitudes,

feelings

Source : Daft, 2001, p.315

Definition of Culture

SOURCES OF CULTURAL LEARNING

• The Family– Nuclear or Joint Family

• Educational Institutions – Focus on structured or conceptual ideas

• Major Religions– Christianity– Islam– Hinduism– Buddhism– Religions and International Management Process

Culture Environment of International Management

THE IMPACT OF CULTURE

• International Planning: – Master of Destiny or Predetermination?

• International Organizing:– Importance of Enterprise or Personal Relationships

• International Staffing:– Merit or Family?

• International Co-ordinating:– Shared Decision Making versus Centralized Decision Making– Issues with Local Leadership Styles and Communicational Styles

• International Controlling:– Based on Data versus Emotions and Judgment

HOFSTEDE’S MODEL: FIVE CULTURAL DIMENSIONS

1 Power Distance: Low score on this dimension suggests that inequality in the society will be minimized.

2 Uncertainty Avoidance: Low score in this dimension suggests that the uncertainty inherent in life is more easily accepted.

3 Individualism Dimension: High scores indicates a person’s identity is based at the individual level and a low score (collectivist) indicates a person’s identity is based at the social level.

HOFSTEDE’S MODEL: FIVE CULTURAL DIMENSIONS (continued)

4 The Masculine Dimension: High score indicates that the “ideal” in the society is “Independence” where as a low score (Feminine) indicates the “ideal” in the society is “Interdependence” or co-operation.

5 Confucian Dynamism: High score on this dimension reflects Traditional Chinese value system. Basic tenet is that unequal relationships between people create stability in society.

Cultural Differences

Adhocracy (UK, North Europe)

Family (ArabCountries, Africa, Asia)

Weak

ImpersonalBureaucracy(Germany, Central Europe)

HierarchicalBureaucracy(France, Italy, Spain)

Strong

WeakStrongUncertaintyAvoidance

Power Distance

Power Distance

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Organizations Existin a Global Environment

• The environment is made up of those things outside of the organization’s boundaries.

• Organizations are affected by events at the local, regional, national, and global levels.

• The specific parts of the environment that affect a given organization are called its task environment.

Eight KeyEnvironmental Sectors

• Industry• Cultural• Legal/Political• Economic• Technology• Human Resources• Physical Resources• Consumer/Clients

Air France

• Case: Describe the Organization’s Environment of Air France.

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(a) Competitors, industry size andcompetitiveness, related issues

(b) Suppliers, manufacturers, realestate, services

(c) Labor market, employment agencies,universities, trainingschools, employeesin other companies,unionization

(d) Stock markets,banks, savings andloans, privateinvestors

(e) Customers, clients,potential users of productsand services

(f) Techniques of production, science,computers, information technology

(g) Recession, unemployment rate,inflation rate, rate of investment,

economics, growth(h) City, state, federal laws

and regulations, taxes,services, court system,

political processes(i) Age, values, beliefs,

education, religion,work ethic, consumer

and greenmovements

(j) Competition fromand acquisition by

foreign firms,entry into overseas

markets, foreign customs, regulations,

exchange rates

An Organization’s Environment

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The Nature of the General Organizational Environment

• The environment contains both opportunities and threats.

• Managers must monitor their organization’s environment.

• Environments are becoming increasing complex.• They are experiencing change and turbulence.• Environments differ with respect to munificence

DOMESTIC ENVIRONMENT

• Domestic Political Climate– Government may attach tariffs (taxes) or place quotas (number or limits)

on certain imports.

• Domestic Competitive Climate– Domestic competitors may be developing strategies

• to penetrate foreign markets • to manufacture their products in a foreign country where labor is cheaper.

• Domestic Economic Climate– Boom or Recession ?– Potential by Foreign Firms to exploit the domestic economy

• Domestic Legal System and Government Policies– For security and for political reasons, governments sometimes prohibit

the export of certain technologies.

THE INTERNATIONAL ENVIRONMENT

• Focus on countries and country blocks… – e.g., NAFTA, EU

• International Institutions – e.g., IMF, WTO, …etc.

• International Agreements– e.g., OPEC

INDIVIDUAL NATION’S ENVIRONMENT

• Cultural Environment• Economic Environment• Industrial Development and Technological Needs.• Legal and political systems

– Rules of competition– Labor laws and enforcement– Foreign investment policy– Product policy– Foreign exchange policy

INDIVIDUAL NATION’S ENVIRONMENT (continued)

• Competition– Cartels– Bribery– Government ownership of business– Economic conditions– Managerial orientation (short vs long)

• Trade Barriers• Tariffs and Quotas• Monetary Barriers• Non-Tariff Protection• Impact of Exchange Rate Fluctuations• Industrial Relations and Labor Unions

Managing The EnvironmentManagers should formulate strategies so as to

maximize the organization’s fit with the environment.

Knowing the environment

Adapting to the environment

Changing the environment

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�Diminution of the classical photo business (photo grand public) but still 70% of the sales figures

�Growth of the Image activities�Development of knowledge on new «businesses» :

- medical imagery,- numeric technology.

� Strategy for the future : information business?�Knowledge Management => increase of partnerships

to enter new market segments

La Poste

• Case: Describe the Organization’s Domain of “La Poste”.

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Renault

• Case: Renault built its growth strategy on unstable emerging markets. Is it risky ?

– Strong European Base– 4/5 of the world population without a car– Markets with important growth potential– Investments in Brazil for South America, Korea

for Asia, Roumania for East Europe,…

Renault

– Multiplication of alliances with Volvo, Fiat, General Motors, Matra

– Example: Renault / Peugeot Alliance created in 1966, « Française de Mécanique Co. » for thedesign and the production of 500 000 car engines

• Case: How to deal with the high uncertainty of international environments, investment growth, and related risk increase?

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International Management : Asia Perspectives

II. Asia Space : A structure around various polesII.1 Asia between Unity and Diversity

II.1.1 Factors of UnityII.1.2 Factors of Diversity

II.2 Various Asia Blocks II.2.1 India : a Regional PowerII.2.2 Central AsiaII.2.3 ASEANII.2.4 China and its NetworksII.2.5 Japan as an Economic Power

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International Management : Asia Perspectives

III. Two Examples of Asia Countries : between Liberal Capitalism and Dogmatic Communism

III.1 Singapore : An Ambitious Tiger - Geography- History- Political Structure- Economy- Populations, Values, Habits- Contacts and Negociation

International Management : Asia Perspectives

III. Two Examples of Asia Countries : between Liberal Capitalism and Dogmatic Communism

III.2 Vietnam : A Future Power or a “Tiger on Bicycle” - Geography- History- Political Structure- Economy- Populations, Values, Habits- Contacts and Negociation

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