Chapter 4 (Lecture Outline Presentation) International Management and Cross Cultural Competence

Chapter 4(Lecture Outline Presentation)

International Management and

Cross Cultural Competence

Copyright © Houghton Mifflin Company. All rights reserved. Lecture Outline Presentation, 4–2

Chapter Objectives

1. Describe the six-step internationalization process and explain how to make an international joint venture a success.

2. Distinguish between a global company and a transnational company.

3. Contrast ethnocentric, polycentric, and geocentric attitudes toward foreign operations.

4. Explain from a cross-cultural perspective the difference between individualistic and collectivist cultures.


Chapter Objectives (cont’d)

5. Discuss what Geer Hofstede’s research has to say about the applicability of American management theories in foreign cultures.

6. Identify important comparative management lessons learned from William Ouchi’s Theory Z research and international studies of work goals and leadership styles.

7. Discuss the nature and importance of cross-cultural training in international management.

8. Summarize the position of women on foreign assignments.


International Competition

• Forces Shrinking Globe• Air travel

• Modern information technology

• Corporate Globalism

• International Management• The pursuit of organizational objectives in

international and intercultural settings.


Global Organizations for a Global Economy

• The Internationalization Process• Stage I: Licensing

• Authorizing companies in foreign countries to produce and/or market a given product within a specified territory in return for a fee.

• Stage 2: Exporting

• Goods produced in one country are sold to customers in foreign countries.

• Stage 3: Local warehousing and selling

• Goods produced in one country are shipped to the parent company’s storage and marketing facilities located in overseas countries.


Global Organizations for a Global Economy (cont’d)

• The Internationalization Process (cont’d)• Stage 4: Local Assembly and Packaging

• Components, rather than finished products, are shipped to company-owned foreign facilities for final assembly and sales.

• Stage 5: Joint Ventures (also Strategic Alliances or Partnerships)

• A company in one country pools its resources with another foreign company or companies to create and market products and jointly share profits and losses.


Global Organizations for a Global Economy (cont’d)

• The Internationalization Process (cont’d)• Stage 6: Direct Foreign Investment

• The production and marketing of products through a wholly owned subsidiary in a foreign country.


Joint Ventures and Strategic Partnerships

• Recommendations for Achieving Success1. Exercise patience: select and build trust with a

partner that produces compatible but not direct competitive products.

2. “Race to Learn”: learn as fast and as much as possible without giving away core technologies and secrets.

3. Play by the book: Establish ground rules about the rights and responsibilities of all parties at the outset.


From Global Companies to Transnational Companies

• Global Company• A multinational venture centrally managed from one

country.

• Has global strategies for product design, financing, purchasing, manufacturing, and marketing.

• Transnational Company• A global network of productive units with a

decentralized authority structure and no distinct national identity.

• Relies on a blend of global and local strategies.


Toward Greater Global Awareness and Cross-Cultural Competence

• Travelers:• Engage in short-term visits

to foreign countries.

• Have limited knowledge of local history, culture, and customs.

• Have limited local language skills.

• Don’t attempt to adapt to the local environment.

• Settlers• Take assignments lasting

up to five years.

• Have in-depth insights into the host country’s history, customs, and culture.

• Speak the local language well or fluently.

• Are culturally-trained to “go native.”


Contrasting Attitudes Toward International Operations

• Ethnocentric Attitude• The view that assumes the home country’s personnel

and ways of doing things are best.

• Polycentric Attitude• The view that assumes local managers in host

countries know best how to run their own operations.

• Geocentric• A world-oriented view that draws upon the best talent

from around the world.


The Cultural Imperative

• Culture• A population’s taken-for-granted assumptions, values,

beliefs, and symbols that foster patterned behavior.

• Cultural Profile of American Managers• Positive: Informal, creative, open-minded

• Negative: Educationally and professionally narrow


The Cultural Imperative (cont’d)

• High-Context Cultures• Cultures in which nonverbal and situational messages

convey primary meaning.

• Status of an individual is of tantamount importance in determining relationships.

• Low-Context Cultures• Cultures in which words convey primary meaning.

• Nonverbal messages are secondary to spoken words.

• The terms of the deal are more important building a business relationship.



• Other Sources of Cultural Diversity• Individualistic cultures

• Cultures that emphasize individual rights, roles, and achievements.

• Collectivist cultures

• Cultures that emphasize duty and loyalty to collective goals.



• Other Sources of Cultural Diversity (cont’d)• Time

• Monochronic time: a perception of time as a straight line broken into standard units.• Timely arrivals and keeping appointments is considered

important.

• Polychronic time: a perception of time as flexible, elastic, and multidimensional.• Appointment schedules are considered approximations

and are not kept precisely.



• Other Sources of Cultural Diversity (cont’d)• Interpersonal space

• Some cultures prefer a close rather than wide distance between conversing individuals.

• Language skills

• Language fluency opens insights into another culture.

• Religion

• Religion has many effects on personal and professional activities in many cultures.


Comparative Management Insights

• Comparative Management• The study of how organizational behavior and

management practices differ across cultures.

• Applying American Management Theories Abroad• Gert Hofstede’s cultural dimensions

• Power distance

• Uncertainty avoidance

• Individualism-collectivism

• Masculinity-femininity


Ouchi’s Theory Z: The Marriage of American and Japanese Management

• Theory Z Organizations• Organizations that successfully combine the traits of

typical American and Japanese companies.

• Successful geocentric managers are not prisoners of their own culture.

Japanese-like qualities– Long-term employment– Slower promotions– Cross-functional career paths– Emphasis on self-control– Participative decision making– Concern for employees

American qualities– Emphasis on individual

responsibility


A Cross-Cultural Study of Work Goals

• Findings’ implications• Managers need to adapt the motivation programs to

local preferences.

• An international contingency approach to motivation is called for.


An International Contingency Model of Leadership

• Model’s Assumptions/Guidelines• Leadership must be adapted to the local culture.

• Participative leadership is the most applicable style where workers trust their leader.

• Directive leadership is considered the least appropriate style of leadership.


Staffing Foreign Positions

• Why Is the U.S. Expatriate Failure Rate So High?• Sink-or-swim approach taken by companies in not

preparing managers for foreign assignments.

• Family and personal adjustment problems that arose after arriving in the foreign assignment.


Cross-Cultural Training

• Cross-Cultural Training• A guided experience that helps people live and work

in foreign cultures.

• Specific Training Techniques• Documentary programs to familiarize expatriate with

assignment destination.

• Culture assimilator exposed expatriate to simulated intercultural incident and situations.

• Language instruction builds the expatriate’s conversational skills in a foreign language.


Cross-Cultural Training (cont’d)

• Specific Training Techniques (cont’d)• Sensitivity training provides experiential exercises

to teach expatriates to be aware of the impact of their actions on others in another culture.

• Field experiences provide firsthand exposure to ethnic subcultures that heightens expatriates’ cultural awareness.


Cross-Cultural Training (cont’d)

• Conclusions• A combination of documentary and interpersonal

training is the best combination for expatriates.

• Provide orientation for both expatriate and family.

• Have family sponsors or assigned mentors available at the foreign assignment.

• Repatriation is an importance part of the entire foreign assignment experience.


What About North American Women

on Foreign Assignments?

• Women are above-average in being successful in foreign assignments.

• Strongest barriers to foreign assignments has been self-disqualification and the prejudice of home country managers.

• Culture is a bigger hurdle than gender: women on foreign assignments are seen as North Americans first, then women.


Relying on Local Management

• Advantages of Using Foreign Nationals• They know the language and culture.

• They do not require huge location expenses.

• Host governments favor more local control.

• Disadvantage• Local managers may not be attuned to home-office

goals and procedures.

Documents

Chapter 4 (Lecture Outline Presentation) International Management and Cross Cultural Competence