What Is Culture ?

Culture as “ways of living” Culture is learned, not innate

deepa.chandirrasekar@gmail.com

MEXICO - Wards off hunger

INDIA - Wards off evil

Never underestimate the

importance of local knowledge

Dimensions of Culture

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Hofstedes culture Dimensions

Power Distance

• The degree of inequality that exists – and is accepted by the people with or without the power.

Characteristics of PD

High • Centralized • Large Gap in Compensation and authority

Low • Flatter Organisation• Supervisors and Employees are almost equal

Individualism

• Refers to the Strength of the ties people have to others within the community.

Characteristics of Individualism

High• Respect For Privacy

• An Enjoyment of Challenges, and an expectation of rewards for hardwork

Low• Emphasis on building skills and becoming masters of

something• Work for Intrinsic rewards

Masculinity Vs Femininity

• Refers how the society sticks with and values, traditional male and female roles

• A masculine culture emphasizes status derived from wages and positions.

• A Feminine culture emphasizes on human relations and quality of life.

Uncertainty Avoidance

• Relates to the degree of anxiety society members feel when in uncertain and unknown situations.

Characteristics Of Uncertainty Avoidance

High• Very formal Business conduct with lots of rules and

regulations• Need and expect structure• Difference are avoided

Low• Informal Business Attitude

• More concern with the long term strategy• Accepting of change and risk

Long term Orientation

• Refers to how much society values long standing – as opposed to short term – traditional values

Characteristics Of Long Term Orientation

High• Strong work ethic

• High value placed on education and training• Hesitant to introduce changes

Low • High Cretivity and mind set to introduce change

Culture & Management Styles in Selected Countries

Culture of Japan

Cultural Pattern Of Japan

• Japanese are a Homogeneous People• Reject Foreign Influences• Principles of Wa• Masculine Culture• Uncertainty avoidance

Largest country located in central Europe

GERMANY

Cultural Pattern Of Germany• Planning & Orderliness• Long term thinking• Low Power Distance• High Quality• High Technical Knowledge

World’s largest Communist Country

CHINA

Cultural Patterns of CHINA

• Investments in work organizations, both in human and monetary terms are regarded as long term.

• Four Cultural Characteristics• Persistence• Respect for relationship• Thrift• Sense of Shame

Culture of Mexico

Cultural Pattern Of Mexico

• Collectivism• Higher Power Distance• Higher uncertainty Avoidance• No Value for time• More Formalities• Importance towards family• Negotiation is a long process

Strategies for International Competition

Follows…

Strategies for International Competition

ByDeepaChandrasekar

deepa.chandirrasekar@gmail.com

The Roots of International Strategy

• The three states of mind or attitudes that are inferred from the managerial practices:• Ethnocentrism• Polycentrism• Geocentrism

Ethnocentrism

• Strategic decisions are made at headquarters;

• Limited subsidiary autonomy;

• Key positions in domestic and foreign operations are held by headquarters’ personnel;

• PCNs manage subsidiaries.

Ethnocentric Firm

Polycentrism

• Strategic decisions are made at headquarters;

• Limited subsidiary autonomy;

• Key positions in domestic and foreign operations are held by headquarters’ personnel;

• PCNs manage subsidiaries.

Polycentric Firm

Geocentric

• A global approach - worldwide integration;

• View that each part of the organization makes a unique contribution;

• Nationality is ignored in favor of ability:• Best person for the job;• Color of passport does

not matter when it comes to rewards, promotion and development.

Strategically Expanding Overseas

• Facilitators of international Expansion

Internationalization

Government & Political

Forces

Technological

Forces

Market

Forces

Competitive Forces

Facilitators

• Market Saturation• Political Reasons• Cheap Labor.• Availability of resources• Technological advancements• Economies of scale and scope• Competitive Pressure

Where to Expand Internationally

• Rating factors to evaluate where to expand• Political Risk• Cultural Distance• Geographic Distance• Economic Environment• Foreign Exchange Volatility• Market Size• Market Growth• Regulatory Environment

• Firms may then derive• Measure of country risk from these ratings• Measure of expected return

Strategic Planning For Foreign Market Entry

1. Identify the company’s objective in its Foreign Market Entry.

2. Preliminary Country Screening3. What are the Opportunities and Constraints in the

Target Market?4. What Capabilities, Resources, and Skills are needed to

succeed in the Foreign Market?5. Does the company have the Core Capabilities and

Resources to Score High on the key Success Factors? What are our Strengths and Weakness on the Key Success Factors?

6. Should the company Enter the target Market, and How?

7. Compare and Rank the Targeted Countries.

Identify the company’s objective in its Foreign Market Entry.

• Management should be clearly understand the objective for entering the foreign market

• The objective could be…

• Cheap Labor.• Availability of resources• Technological advancements• Economies of scale and scope• Competitive Pressure• Reduce the Risk

Managing Portfolio Of Country Subsidiaries

Two Approaches are

• Host Country Attractiveness Versus Competitive Strength Matrix

• International Risk Versus Return Portfolio

Host Country Attractiveness Versus Competitive Strength Matrix

Collaborative

Strategies

Growth Strategie

s

Defensive

Strategies

Cross-Subsidizat

ion Strategies

Firm-Level Competitive Strength in Each Host Country

HostCountry

Attractiveness

Low High

High

Low

International Risk Versus Return Portfolio

Negative to Low Medium High

High

Medium

Low

SelectivelyGrow

Harvest & DivestOr Licensing

Increase Resources

to Match Risk or International Joint Venture

Cross-Subsidize Grow Industry Leadership

Host Country risk

Expected Profits in each host country

Modern International Strategic Orientations

High

High

Low

Low Local Responsiveness Pressures

GlobalIntegration

& Coordination

Pressures

Global Orientation(Chemicals, Heavy Metals

Extractive Industries)

Transnational Orientation(Pharmaceuticals,

Telecommunications, Financial Services)

International Orientation(Cement, Fabric Mills)

Multi Domestic Orientation(Consumer

Nondurables)

Value Chain Configuration & Strategic Orientations Of Firms

ProcurementEg., components, machinery, advertising, services

SupportActivities

Firm InfrastructureEg., Financing , Planning, investor relations

Human Resources ManagementEg., recruiting, training, compensation system

Technology DevelopmentEg., Product design, testing, process design, material & market research

InboundLogistics

Eg. Incoming Material storage

Operations

Component Fabrication,

assemblyBranch

operation

Outbound LogisticsEg. Order

Processing, warehousing

Marketing & Sales

Eg., Sales force,

promotion

After Sales Service

Primary Activities

Primary activities

• Primary activities are purchasing raw materials , transporting to the factory , production , operations, marketing and sales.

• Ex : Inbound Logistics .,Incoming Material storage• Operations Component Fabrication, assembly,

Branch operation• Outbound LogisticsEg. Order Processing,

warehousing• Marketing & SalesEg., Sales force, promotion

Supporting Activities in value chain

• Firm activities which are required to enhance the efficiency and effectiveness of the primary activities are known as support activities.

• Examples• Firm Infrastructure• Eg., Financing , Planning, investor relations• Human Resources Management• Eg., recruiting, training, compensation system• Technology Development• Eg., Product design, testing, process design,

material & market research• Procurement Eg., components, machinery, advertising, services

Down Stream Activities

Activities which are closely associated with the customers Are known as down stream activities

Example: Advertisement in the newspaper , sales promotion , delivery,Supplying the products to the shops , retailers and wholesalers

Upstream Activities

Activities which are uncoupled from the customers are up stream activities .

Examples: purchasing the materials , Production , operations

Worldwide Dispersal & Reintegration

• The Functional Scope Of Value Chain Dispersal & Integration Strategies• The Dispersion of companies various activities and

functions of the value chain and their locations in different

parts of the world to take advantage of the national differences.• Factors

• Comparative advantage of the country• Efficiency gains from Economies of Scope and Scale• Opportunity to innovate and learn from diverse

culture• Competitive pressure from domestic and foreign

based companies• Benefits of flexibility and risk reduction

Reintegration of activities & Functions

• Levels of Integration

• Stand alone integration

• Simple Integration

• Complex Integration

Stand alone integration

Televisions

Simple Integration

• Uni-directional • Multi- Directional

Complex Integration

• Complex integration strategy are characterized by dispersal of the value chain into discrete functions – component production, assembly, finance, R & D, distribution and so on.

• Example- Production Chain Manufacture the Electric Fan might be• Purchasing @ France• Manufacturing of Frame @ Mexico• Manufacturing of Blades @ India• Manufacturing of Motor @ Germany• Assembling in Singapore• Marketing in North America

Firm Level Strategies For International Competitiveness

• Core Competency Leveraging

• Counter Attack• Glocalization

Core Competency Leveraging

• Strategy used by companies that are gaining prominence in a variety of businesses.

• Core Competence – distinctive ability to excel in a key area, upon which a company can build a variety of businesses and develop new generations.

• Core Products – Intermediate linkages between core competencies and end products

Core Competency of Honda Engines & power-train technology

• Core Product

• End Product

Core Competency - Canon Imaging

• Core Product • End Product

• Imaging

Core CompetencySemiconductors & Digital Display

Counter Attack

Japan companies “attacked “ U.S MarketLower Costs derived from the cheap labor

U.S Companies “counter attacked”Offshore assembly &manufacturing sites

in Asia to lower their production cost

Glocalization

Glocalization of Management

Glocalization of Foreign Affiliates

Glocalization of Exports

Glocalization of Prodcuts

Glocalization of Production

Glocalization of Management

Levi’s allows the local managers to make decisions about adapting products to suit locals

Glocalization of Foreign Affiliates

GEARING UP: Stefan Krause, CFO of BMW, in front of the car that is to be assembled at its proposed facility at Maraimalainagar

Glocalization of Exports

• Using foreign production plants as export bases to third party country market is yet another way to become a “local” company in a foreign country.

• Example :• Japanese have been exporting U.S Made Cars

to Japan and Europe• Opening plant in developing country and

exporting to other part of the world.

Glocalization of Prodcuts

• local favorites• McItaly burger in

Italy,• Maharaja Mac in

India,• The McLobster in

Canada• The Ebi Filit-O in

Japan.

Glocalization of Prodcuts

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