12-1© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Chapter 12

International management

12-2© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Lecture outline• Nature of international management• Assessing the international environment• Gauging international strategic issues• Organising international business• Managing diversity: Adapting to cultural

differences• Handling social responsibility and ethical

issues

12-3© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Nature of international management

• International businessProfit-related activities conducted across national boundaries.

• International managementProcess of planning, leading, organising and controlling in organisations engaged in international business.

12-4© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Nature of international management

Organisations engaging in international management vary in size and the extent that their business activities across national boundaries.

MULTINATIONAL CORPORATION (MNC)

12-5© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Nature of international management

Orientations towards international management– Ethnocentric– Polycentric– Regiocentric – Geocentric

12-6© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Nature of international management

Ethnocentric(home-country)

orientation

Ethnocentric(home-country)

orientation

Geocentric(world)

orientation

Geocentric(world)

orientation

Regiocentric(regional)

orientation

Regiocentric(regional)

orientation

Polycentric (host-country)

orientation

Polycentric (host-country)

orientation

12-7© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Environmental elements– Economic– Legal-political– Sociocultural– Technological

12-8© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Economic element:• Developed countries

Group of countries that is characterised by High level of economic and industrial development

• Less developed countries (LDCs)Low economic or industrial development

• Newly industrialised countriesEmerging LDCs—major exporters of manufactured goods.

• Balance of trade• Exchange rate

12-9© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Economicelement

Less developedcountries (LDCs)

Developed countries

Newly industrialisedcountries (NICs)

Infrastructure

Balance of payments

Balance oftrade

Exchangerate

12-10© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Legal-political element:

• Political risk• Expropriation• Indigenisation laws• Tariffs• Import quotas• Administrative protections

12-11© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Legal-politicalelement

Expropriation

Political risk

Indigenisationlaws

TariffsAdministrativeprotections

Importquotas

12-12© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Sociocultural element:• Attitudes, values, norms, beliefs• Behaviours• Demographic trends

12-13© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Hofstede’s national cultural dimensions

• Power distance• Uncertainty avoidance• Individualism-collectivism• Achievement-nurturing orientation• Long-term, short-term orientation

12-14© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Assessing the international environment

Technological element:

• Technological transfer

Transmission of technology from those who possess it to those who do not.

12-15© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Competitive advantage of nations

Concept that environmental elements within a nation can foster innovation in certain industries, thereby increasing prospects for the success of home-based companies operating internationally.(Michael E. Porter, 1990)

12-16© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Competitive advantage of nations

Diamond of national advantage:

• Factor conditions• Demand conditions• Related and supporting industries• Firm strategy, structure & rivalry

12-17© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Competitive advantage of nationsFirm strategy,structure and

rivalry

Related andsupportingindustries

Factorconditions

Demand conditions

12-18© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Gauging strategic issues

• Methods of international entry– Exporting – Licensing – Strategic alliances – Wholly-owned subsidiaries

• Multinational corporation strategies– World-wide integration– National responsiveness– Regional responsiveness– Multifocal emphasis

12-19© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Gauging strategic issues

Methods ofinternational

entry

Exporting

Licensing

Strategicalliance

Wholly-owned

subsidiary

Multinationalcorporationstrategies

Globalisation

Nationalresponsiveness

Regionalresponsiveness

Multifocalemphasis

12-20© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Organising international business

• World-wide functional divisions• World-wide product divisions• International divisions• Geographic regions• Global matrix• Networked structure

12-21© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Adapting to cultural differences

Managing international human resources:• Assignment policies• Recruitment• Selection and training• Repatriation• Adjusting leadership styles

12-22© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Adapting to cultural differences

Managinginternational

humanresources

Assignment policies

Repatriation

Selection & training

Recruitment

Adjustingleadership

styles

12-23© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Social responsibility and ethical issues

• International social responsibilityBenefit versus harm of MNC’s in LDC’s

• Ethical issue of ‘questionable payments’Business payments raising significant ethical questions of right or wrong either in the host country or in other nations

12-24© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Social responsibility and ethical issues

political payments

bribes

extortion

sales commissions

Questionable paymentissues

expeditingpayments

Internationalsocial

responsibility

12-25© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Lecture summary• Nature of international management

Orientations: ethnocentric, polycentric, geocentric, egocentric

• Assessing the international environment– Environmental elements– Competitive advantage of nations

• Gauging strategic issues– Methods of international entry: exporting,

licensing, strategic alliances, wholly owned subsidiaries

– Multinational strategies: world-wide integration, national or regional responsiveness, multifocal.

12-26© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat

Lecture summary• Organising international business

Divisions: functional, product, international,

geographic, global matrix, network structure

• Adapting to cultural differences– International human resource management– Adjusting leadership styles in different national

cultures

• Social responsibility and ethical issues– International social responsibility - value conflicts– Questionable payments