Case 1 Fitzburg Tire Company

1. Case 1 Fitzburg Tire Company • Management Across Culture • Participants: • Max Bierman, construction manager (first time working outside U.S.) • Leopodo Sanchez Garcia, chief engineer for Fitzburg in Mexico • Situation: • Fitzburg Tire Co. is building a plant in Cuernavaca, Mexico • Construction three months behind schedule • Costs over budget • Last three weeks must be redone • Max Bierman has strong views on specific reasons for the problems • Leopodo Sanchez Garcia has no clear reasons for the problems and does not think the problem is serious

2. Culture Characteristics • Learned: culture is learned and experienced • Shared: culture is not specific to single individuals • Transgenerational: culture is cumulative, passed down • Symbolic: culture is based on using one thing to represent another thing • Patterned: culture has an interdependent structure • Adaptive: culture matches human ability to adapt

3. Values • Values: • basic convictions that people have regarding what is right and wrong, good and bad, important or unimportant • Different cultures have different values • Some values are similar across cultures • Management success factors (values) include: • pragmatic, dynamic, achievement-oriented, active role in interaction with other individuals who are instrumental to achieving the manager's organizational goals. • Values can change over time and over geographic location

4. Cultural Dimensions (Hofstede, p8) • Power distance: • the extent to which less powerful members of institutions and organizations accept that power is distributed unequally • Uncertainty avoidance: • the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these (need for security) • Individualism: • the tendency of people to look after themselves and their immediate family only • Masculinity: • the degree to which the dominant values in society are success, money and things. • Moving to a culture near your own makes management transition easier (p17)

5. Cultural Dimension (Trompenaars)(p18) • Universalism Vs. Particularism • Individualism Vs. collectivism: one rule applied everywhere/special case • Neutral Vs. affective: emotions held back/showing feelings • Specific Vs. diffuse: public and private space treated differently/public and private space are nearly the same and guarded (entry to public space is also entry to private space) • Achievement Vs. ascription: status is based on performance of function/status based on who or what a person is • Time: sequential Vs. synchronous (p22)

6. Globalization Vs. National Responsiveness (p35) • Integration comes from economies of scale • Differentiation comes from local needs • Most firms today belief that one worldwide approach to doing business is key to success • This attitude is wrong; reasons include: • diversity of worldwide standards • local customers' demand for differentiated products • importance of being an insider (buy local) • difficulty of managing global organizations where local office have different wants and needs • local offices are closest to the customers and know how to maximize for their specific situations • MNC success factors include a worldwide view of operations, support overseas activities, pay close attention to political changes and use local nationals whenever possible National Responsiveness (Differentiation) Low High 3 1 High Globalization Strategy Mixed Strategy Globalization (Integration) 4 2 Low National Responsiveness Strategy Mixed Strategy

7. Differences and Similarities • Parochialism: Simplification: • the tendency to view the the process of exhibiting the same world through one's own orientation toward different eyes and perspectives cultural groups • Contingency Approach: • the application of HRM (Human Resource Management) to meet the specific needs of local workers • Example of Differences and Similarities • Japan • Relationships are long-lasting and have deep personal involvement • Communication often implicit, interpretation taught from an early age • People in authority are personally responsible for subordinates' actions with high level of loyalty on both sides • Agreements tend to be spoken not written • Insiders and outsiders easy to distinguish and outsiders do not get into inner group • American • Relationships between people are short and deep, personal involvement is not valued as important • Communication is explicit, being taught from young age to say what they mean • Authority is diffused through a bureaucratic system, with responsibility hard to pin down • Agreements are written • Insiders and outsiders are hard to distinguish and outsiders may gain entrance to the inner group

8. Organizational Cultures in MNCs • Family: • strong emphasis on hierarchy and orientation to the person; the leader is a father figure who looks after employees; people, including real family members, may be chosen for a job even though less qualified than others; in return the person is expected to give full loyalty and support to the mentor • Eiffel tower: • a strong emphasis on hierarchy and task clarification through the use of organizational structure; tasks are well defined and the organization tends to be tall at the top and wide at the bottom; things go "by the book" • Guided missile: • a strong emphasis on equality in the work place and orientation to task; usually in project groups, common in high-tech firms; individual expertise is most important with little hierarchy as everyone is equal, thus making the group very flexible and easy to adapt, but it is also hard to control • Incubator: • a strong emphasis on equality and personal orientation; the role of the organization is to bring out individuals' self development; this culture tend to have no goal, but is instead working on the edge of new discoveries, thus there is no clear goal and the need for creativity, expertise and flexibility eliminate any organizational structure, however this is short-lived until the firm grows and develops need to org. structure Equity Incubator Guided Missile PersonEmphasis TaskEmphasis Family Eiffel Tower Hierarchy

9. Case 2 Comtec Corporation • Marketing Research & Information • Participants: • Dr. Danil Needham, Comtec Corporation president • Mr. Harry Otto, Comtec Corporation Vice President • Ms. Roberta Malcolm, Computer Consultant • Situation: • Comtec manufactures computers for scientific measurements and calculations using a proprietary operating system • Sales in both domestic and international markets • Profits low and financial crisis looming • Ms. Malcolm hired to advise on direction • Consultant's recommendation runs counter to VP of sales marketing's strategy

10. Marketing Information System (MIS) • MIS: • people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers • Developing Information Can Come From: • Internal Records • gathered from sources within the company • Marketing Intelligence • everyday information about developments in the marketing environments that helps prepare and adjust marketing plans (can be found for free and purchased) • Marketing Research • information used to identify and define marketing opportunities and problems; make, improve and evaluate marketing actions; monitor marketing performance and improve understanding

11. Process of Marketing Research • Marketing research four steps: • 1) define the problem and objectives, 2) develop the research plan, 3) implement the research plan, 4) interpret and report the findings • Managers best understand the decisions • Researcher best understands how to obtain the information • Defining the problem and objective is the hardest step and can lead the whole process in the wrong direction from the start (as in the New Coke case) • Problems and objectives can be translated into specific information needs • Primary data can be gathered by observation, survey or experiment • Focus groups: small group of consumers who are observed to find their thoughts and feelings • CATI: Computer Assisted Telephone Interviewing • Consumer buyer behavior

12. Consumer Buying Behavior • Consumer market: individuals and households who buy goods and services for personal consumption • Consumer behavior model: • Factors influencing consumer behavior: Buyer’s responses Marketing & other stinuli Buyer’s black box ProductPrice PlacePromotion Product choiceBrand choiceDealer choicePurchase timePurchase amount EconomicTechnologyPoliticalCulture Buyer’scharacteristics& decision process Culture Social Personal Psychological Buyer Referencegroups Family Roles & status Culture Subculture Social class Age/lifecyclestage Occupation EconomicsLifestylePersonality & self-concept Motivation Perception Learning Beliefs & attitudes

13. Needs • Maslow’s hierarchy of needs: • A person tries to satisfy the most important need first; when satisfied, it will stop being a motivator and the person will try to satisfy the next most important need. • Buyer decision process • Five stages (can skip stages) Evaluationof alternatives Purchasedecision Need recognition Informationsearch Postpurchasebehavior

14. Adoption of New Products • Five Stage Adoption Process: • Awareness: knows of product but has no information • Interest: seeks more information • Evaluation: considers to try product • Trial: tries new product on small scale • Adoption: decides to make full & regular use of product • Innovation Adoption Time • Different groups of consumers when adopting innovative products Time Earlyadoptors Earlymajority Latemajority Inovators Laggards 2.5% 13.5% 34% 34% 16%

15. Financial Statements • Liabilities (claims on assets) • Accounts payable • Notes payable • Accrued wages • Other accruals • Current liabilities • Deferred taxes • Long-term debt • Preferred stock • Stockholders’ equity • Common stock (Par value) • Paid-in capital • Retained earnings • Total Stockholders’ equity • Total liabilities and equity • Balance Sheet • Assets=Liabilities + Equity • Assets • Cash • Marketable securities • Accounts receivable • Inventories • Current Assets • Gross plant and equipment • Accumulated depreciation • Net plant and equipment • Total assets

16. Financial Analysis Ratios • Financial Policy Measures • Leverage Ratios • Total assets/book value of equity • Interest-bearing debt (IBD)/total capital • IBD/total capital, market • Earnings before interest and taxes (EBIT)/interest expense • EBIT+lease expense/fixed charges • IBD/funds from operations • Liquidity Ratios • Current assets/current liabilities (or current ratio) • Current Assets - inventories/current liabilities (or quick ratio) • (Increase in retained earnings + depreciation)/investment

17. Financial Analysis Ratios 2 • Performance Measures • Profitability ratios • Net operating income (NOI)/sales • NOI/total assets • NOI/total capital • Net income (NI)/sales • NI/equity or (ROE) • Changes in NOI/change in total capital • Change in NI/Change in equity • Growth ratios • Sales • NOI • Net income • Earnings per share • Dividends per share • Operating Efficiency Measures • Asset & investment management • Cost of goods sold/inventories • Average collection period • Sales/fixed assets • Sales/total capital • Sales/total assets • Cost management • Gross profit/sales (or gross margin) • Marketing & administrative expenses/sales • Labor costs/sales • Employee growth rate • Research & development expense (R&D)/sales

18. Case 3 Hanover Public Systems (HPS) • Participants: • Howard Wolff: HPS president • Yang Hsiao-shih: previous Taiwan plant president (terminated) • James Fukuda: new Taiwan plant president (second generation Japanese-American) • Situation: • HPS owns eight wholly-owned subsidiaries including one in Taiwan • Taiwan subsidiary losing money and requires cash infusions • President, Yang Hsiao-shih fired and replaced by Fukuda who has experience in reorganizing the Oakland plant • Before arriving in Taiwan, Fukuda took actions: dispose of some assets and inventory • After arriving, Fududa shut down heating and cooling manufacture resulting in layoff of 18 workers and 12 reassignments; new management system • Plant vice president (Hu) & plant superintendent resigned (Lee)

19. International Organizational Structure • Subsidiaries in Early Stages of Internationalization • A subsidiary is opened because an on-site presence is required from the start ChiefExecutiveOfficer Production Marketing Finance Personnel France Japan Australia Taiwan Production Marketing Finance Personnel

20. Asian Vs Western Management • Some Basic Features of the Two Management Styles

21. Organizational Characteristics of MNCs • Specialization • U.S. plants tend to have more horizontal specialization while Japanese plants tend to have more vertical specialization • Centralization • Japanese firms tend to have higher centralization while U.S. firms have more delegation and involvement at lower levels • Characteristics • MNCs tend to keep the structures of the home-based headquarters even when established overseas for many years (p18)

22. Organizational Structure Design • Growth Stage • Org. structure changes over the growth of the firm • Young firms tend to be centered around one or few people who are the founders or entrepreneurs • As staffing and product lines grow, more formal structures are required to maintain efficiency • Reorganization (or re-engineering) is required when market conditions change and the firm must change • Organizational Configurations • There are at least 243 distinctly different org. structure types • Five common elements in every org. structure: • Operating core-employees who perform the basic work related to production of products and services • Strategic apex- top-level managers who are responsible for overall org. • Middle line-managers who connect the operating core to the strategic apex • Technolstructure--analysts who have the responsibility for affecting certain forms of standardization in the organization • Support staff-people who provide indirect support services for the org.

23. Organizational Structure Designs • Simple Structure • Strengths: simplicity; fast and flexible; low cost; goals are clear • Weaknesses: limited application (only can be used in small size organizations); too much power with single person Owner Manager Manager Manager Manager

24. Organizational Structure Designs ChiefExecutiveOfficer • Machine Bureaucracy Structure • Strengths: standardization; high efficiency; economies of scale; employees in peer groups so easier management; experienced management not required due to high level of standard rules • Weaknesses: each unit is independent and so does not know what other units are doing; org. goals not well known; unknown or new situations cannot be handled Dir. PublicRelations Exec. Dir. VPFinance VP Personnel VP Marketing VP Manufacturing Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager

25. Organizational Structure Designs • Professional Bureaucracy Structure • Combines standardization with decentralization requiring top management to give up power in order to give professional high skill employees more effectiveness. Used in schools, hospitals and firms requiring highly trained employees. • Strengths: Combines standardization with decentralization requiring top management to give up power in order to give professional high skill employees more effectiveness. • Weaknesses: same as for professional bureaucracy; highly trained employees may have professional directions and restraints that do not match firm’s goals ChiefExecutiveOfficer Dir. PublicRelations Exec. Dir. VPMarketing VP R&D Research Strategy Promotions Electronic Materials Packaging

26. Organizational Structure Designs • Divisional Structure • A set of autonomous units, each usually a machine bureaucracy, coordinated by a central headquarters (a business in a business). This structure gives more power to division managers. • Strengths: more focus and responsibility given to each division; gives top management more freedom from day-to-day operations; any division can be cut without hurting other divisions; being part of a larger structure gives economies of scale ChiefExecutiveOfficer • Weaknesses: duplication of effort; conflict between divisions; resentment over lack of division freedom; coordination problems Dir. PublicRelations Exec. Dir. VP Asia VP Europe VP Personnel VP Personnel Marketing Marketing Production Production Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager

27. Organizational Structure Designs ChiefExecutiveOfficer • Adhocracy Structure • Staffed mostly by professionals with high levels of experience. Supervision needs are small and behaviors are internalized and management has chosen employees based on well established professional criteria. Unlike the professional bureaucracy, the adhocracy does not make rules for new problems, but each and every problem has a unique solution so standardization and formalization is not needed. Power flows to anyone with expertise, regardless of the position. • Strengths: ability to respond quickly; adaptivity; creativity; collaboration; can handle complex, highly technical tasks • Weaknesses: conflict easy to arise due to blurred lines of authority; no economies of scale; inefficient; not long lasting Dir. PublicRelations Exec. Dir. VP Operations VP Marketing VP R & D Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager Manager

28. Organizational Structure Change • Model for Managing Organizational Change Forcesinitializingchange Determinants Feedback Changeagent Org. Initiator What is tobe changed? Interventionstrategies Structure?Technology?Org. process? Implementation tactics Change process Implementation InterventionParticipationPersuasionEdict Unfreeze-Move-Refreeze Change Results Org.effectiveness

29. Case 4 International Carpet Wholesalers • Participants: • James McHenry: buyer for International Carpet Wholesalers, New York, USA • Mr. Abdelhadi Hachad: managing director of SOMART • Ms. Paula Feldman: president of International Carpet Wholesalers • Situation: • McHenry has made a tentative agreement to purchase handmade rugs from Mr. Hachad • The deal called for Mr. Hachad to purchase raw wool from McHenry’s firm (this importation usually requires a heavy import tax, however, if the wool is used only for making rugs for export the tax is canceled) • Both sides seemed to get mutual benefit from the agreement • The problem is that McHenry has some reservations about the method used for producing the rugs

30. DEFINE & REVIEW • External • Outside of company’s control • Not influenced by company • Internal • Inside company • Explicit Communication • Very clear (“This must be done by the 30th.”) • Implicit Communication • Not very clear (“This should be done soon.”) • Message Interpretation • Idea understood in wrong way (“Everyone did a good job.” VS “You did a good job.”)

31. Communication Between Humans • Communication Process

32. ANALYZE FLOW • Downward Flow • Work Related • Personal • Upward Flow • New ideas • Feedback

33. EXAMINE PROBLEMS • Language • English is international language? • Perception • We see things in a different way • Culture • We do things in a different way • Body language • Give the wrong idea • Use of hands • Face/head movement • Clothing • Distance • Time

34. PRESENT STEPS • Feedback • Language/Culture Training

35. DEFINE

36. DEFINE

37. BUSINESS ETHICS • Law tells us what we should NOT do • Ethics tell us what we SHOULD do

38. JAPAN • Money • From business to government • Stock tips & buy backs • Unfair market practices • Sexism & Racism • Women in Japan are now fighting back against sexism • Women working for Japanese MNCs in the U.S. are also fighting sexism • Japanese MNCs in U.S. avoid hiring black workers • Women Managers • 2.2% of management positions in companies 1,000 up employees

39. EUROPE • French & German Managers Are Less Concerned With Ethics • “The price of doing business.” • Women Managers • France: about 8% women • Germany: 7.8% women

40. CHINA • MNCs in China Get Low Wages but at What Social Price? • Intellectual Property Problems • Products are copied or sold out the backdoor • Business People in China May Like Better Laws to Stop These Problems

41. UNITED STATES • Law to Stop Corruption • FCPA (FOREIGN CORRUPT PRACTICES ACT) • Payments for contracts may be normal practice in some countries • Some business people like FCPA because it makes the situation more clear • Social Help • Aid to other countries

42. CASE STUDY • Internaltional Carpet Wholesalers (U.S.) • Mr. James McHenry (buyer) • SOMARTA (Morocco) • Mr. Abdelhadi Hachad (Managing Director) • ----------------------------------- • Purchase Handmade Rugs • 10-12 Year Old Girls Working • ------------------------------------ • What Would You Do?

43. Case 5 Assan Motors • Participants: • Mr. Korihito: president of American manufacturing division of Assan Motors • Mr. Satomoto: president of Assan Motors, based in Tokyo • Hunt Stevenson: previously foreman in auto manufacturing factory when owned by U.S. firm, now appointed employee liaison for Assan Motors in the U.S. factory • Situation: • See Film Gung Ho

44. Managing Conflict • Conflict • Normally, we think of conflict as hindering the achievement of the organization’s goals, but another view of conflict is that it improves effectiveness by stimulating change and improving the decision-making process. • Traditional View • All conflict is BAD and must be resolved quickly • Interactionist View • An org. with no conflict is static and does not adapt Conflict & Org. Effectiveness Conflict-Survival Model Conflict Change Adaptation Survival