IBC 261 International Management Dr. Balbir B. Bhasin

2. What is Management? “Management is a form of work that involves coordinating an organization’s resources - human and capital - to accomplish organizational goals.”

3. Levels of Management 1. Top management 2. Middle management 3. Supervisory management

4. Functions of Management Planning Organizing Staffing Leading Controlling

5. Roles of a Manager Interpersonal - leader, figurehead, liaison Informational - monitor, disseminate, represent Decisional - allocate resources, negotiate, problem solving

6. Management Skills Conceptual skills - decision making, planning, organizing Human relations skills - understand people, motivating, collaborating Technical skills - able to get a particular job done

7. What is International Management? “Process of developing strategies, designing and operating systems, and working with people around the world to ensure sustained competitive advantage”

8. What is International Business? “Profit related activities conducted around national boundaries, ever changing”.

9. Major Trends Globalism History of World Trade Regional Trading Blocks Privatization Information Technology Workforce Diversity Small Business Going International Multi National Companies

10. Challenges of International Management Contingency Model depends on: people, tasks, environment Effects on: Planning, Organizing, Staffing, leading and Controlling The Future: Transnational corporations (stateless), Interdependence, Conflicts, Complex environment.

11. Major Changes Around the World Decline of Communism/Socialism OPEC/Iran Revolution International Conflicts - Afghanistan, Africa, Bosnia, Iraq, Kosovo End of Apartheid Opening of China/Peace in Middle East? New Trading Blocs - EU, NAFTA, ASEAN

12. Political Risk Nationalization/Appropriation Discrimination Repatriation of funds Loss of Technology & Intellectual Property Interference in decision making Dishonesty & Corruption

13. Economic Risk Changes to monetary or fiscal policy (affects production costs) Modify foreign investment policy (affects repatriation of funds) Exchange rate volatility (depreciation of currency affects profitability) Solutions: Assess credit worthiness of country!

14. Regulatory Environment Local laws and implementation (courts) Adherence to international laws & treaties Foreign nationals need to adhere to local laws Common Law - English - 26 countries Civil Law - Codes - 70 countries Islamic Law

15. Technological Environment Protecting your technology - patents, trademarks, trade-names, copyright Use of technology through: Joint ventures, franchisees, licensees, employees

16. Issues Facing Business Today Poverty Damage to environment Lack of equal opportunity Obligation to consumers Employee safety and welfare

17. Guidelines for Social Responsibility Human rights - do not use child or forced labor Provide a safe working environment Respect workers right to unionize No more than 48 hour work week Fair wages to meet needs

18. Global Interdependency -Guidelines for MNCs Do not cause intentional harm Respect human rights Do not violate local culture Pay taxes dutifully Obey local laws

19. What are the variables affecting the management function? National variables - economic system, legal system, political system Socio-cultural variables - religion, education, language Cultural variables - values, norms, beliefs Attitudes - work, time, individualism, materialism Response - motivation, productivity, ethics, commitment

20. US Values & Possible Alternatives Beliefs - control vs destiny Change - action vs accept Attitude - practical vs dreams aspirations Approach/work ethic - hard work vs luck Promises - keep vs perhaps Time - depends on priorities Obligation -company or family Employment - short term vs lifelong Meritocracy - best person vs other considerations

21. Hofstede’s Value Dimensions Power distance - extent to which subordinates accept authority Uncertainty avoidance - threatened by ambiguous situations, prefer formal structure, feel safe and secure Individualism vs collectivism Masculinity - assertiveness, materialism Femininity - concern for society, others

22. Trompenaar’s Findings Obligation - universalism, pluralism Emotional in relationship - neutral, affective Involvement in relationship - specific, diffuse Legitimization of power and status -based on achievement and competency or based on position, age or education

23. The Communication Process “Process of sharing meaning by transmitting messages - words and behavior” Critical factor in cross cultural management Need for effective communication to: give information, share ideas, give orders, and to motivate Interpersonal issues: leadership, motivation, group interaction, negotiation

24. Barriers to Effective Communications Semantics - different words have different meaning to different people: fix, fag, shag Jargon - technical terms Acronyms and Abbreviations - culture, military Perception - interpreting information, distortion Emotions - breakdown in communication

25. Cultural Variables Stereotyping - assuming that all have same attributes Language - literal or poor understanding Kinesic behavior - posture, gesture, facial expression, eye contact Oculesics - behavior of the eye during communication Proxemics - effect of proximity and space Paralanguage - how something is said Time – mono-chronic or poly-chronic Context - in which the communication takes place

26. How to Manage Communication Effectively Develop cultural sensitivity - be aware of self and the other! Careful encoding - use proper words, gestures Selective transmission - use proper medium Careful decoding of feedback - careful interpretation of message Seek feedback - ask, verify, follow-up

27. Decision Making The process of choosing from among various alternatives Part of a manager’s daily routine Programmed decisions - easy, require minimum time, structured, standard Un-programmed decisions - deliberate, time consuming, no precedent, unstructured

28. Stages of Decision Making Define the problem Gather and analyze relevant data Consider alternative solutions Decide on the preferred/best solution Implement the decision

29. Influence of Culture in Decision Making Objective approach vs. subjective approach (rational vs. emotional) Risk tolerance of decision makers Locus of control Value systems - utilitarianism vs. moral idealism Autocratic vs. Participative decision making

30. Negotiations “a process between two or more parties aimed at reaching a mutually acceptable agreement” Goal - to bring about a win-win situation where all parties benefit Process: preparation, relationship building, exchange of task related information, persuasion, concession and agreement.

31. Variables in the Negotiation Process Competitive process or problem solving approach How negotiators are selected - best qualified? How are persuasive arguments presented? Rational or emotional? Motivations? Personal, family, company, country? Ability to take risk Decision making process - individual or collective Trust - handshake or legal document?

32. Strategy Formulation What is Strategy? “The way to achieve long term objectives”

33. Reasons for Going International Reactive (defensive) – international competition, trade barriers, regulations and restrictions at home, customer demands. Proactive (aggressive) – economies of scale, international market opportunities, cost savings, access to resources.

34. Methods of Doing Business Abroad Exporting Licensing Franchising Contract Manufacturing Turnkey Operations Management Contracts Joint Ventures Fully Owned Subsidiaries

35. Steps in Formulating Strategy Define mission and objectives Environmental analysis Internal Analysis Competitive analysis International strategic alternatives Implement strategy Evaluate and improve

36. Strategic Alliances “partnership between 2 or more firms which decide they can better pursue their mutual goals by combining their resources”

37. Strategic Alliances:Motivation and Benefits Overcome protectionist legislation Share risks - example R & D Gain access to specific markets Reduce political risk while entering new markets Gain entry into new industry

38. Types of Alliances Joint ventures Equity strategic alliances Non-equity strategic alliances

39. Strategy Implementation International joint ventures - “in which at least one parent is headquartered outside the venture’s country of operations” Implementation using MBO - plan, coordinate, structure, staff, control Managing performance -through control mechanisms, government influences, cultural influences.

40. Organization Structure Variables to Consider Must fit strategy Environmental conditions Size of the organization Appropriate technology Societal culture

41. Possible Structures Domestic structure plus export department Domestic structure plus foreign subsidiary Integrated global structures: Global function structure Global geographic structure Global product structure

42. Globalization Trend Treat the world as one market by using a standardized approach to products and markets Global product standardization Be global - act local (GLOCAL)

43. Changing Structures- When is Change Needed? Change in size - growth Change in key individuals - promotion, change in direction Failure - mergers Morale problem Change in external environment - conflicts Duplication of effort Breakdown in communication

44. Coordinating Systems Reporting for Global Operations Monitoring systems Direct coordinating mechanisms - personal visits to check performance Indirect coordinating mechanisms - financial statements, reports are compared with budgets.

45. Staffing and Training “Securing and developing people to perform jobs created by the organizing function” Goal is “to obtain the best people available for the organization and to develop the skills and abilities of these people”

46. IHRM - A Vital Component Difficult to control geographically dispersed operations Need for local decision making independent of home office Suitability of managers from alternative sources

47. Staffing Alternatives Ethnocentric staffing - fill staff positions from HQ Polycentric staffing - local managers, host country nationals Global staffing - recruiting the best within and outside the country (transpatriates) Regio-centric staffing - from the region

48. Expatriate Success Factors Job factors Cultural empathy and flexibility Motivational state Family situation Language skills

49. Types of Training Area studies - history, geography, politics, economy Language training Sensitivity training Field experiences )host family, immersion) In-country training

50. Global HR Management Goals Maximize long term retention of international managers so that company can develop a top management team with global experience Understand, value and promote role of women and minorities in order to maximize underutilized resources, and Work effectively within local labor laws

51. How to Achieve This? Preparation Adaptation Repatriation - reverse cultural shock Transition - mentor program

52. Labor Relations “workplace relationship between managers and workers” Need to work within local labor laws - they vary around the world Considerations: labor performance and well being role and impact of unions HR policies - recruitment, training, compensation

53. Labor Systems Convergence - reduction in disparities between countries Divergence - increase in disparities

54. Motivating and Leading Leadership - “ability to influence people to willingly follow one’s guidance or adhere to one’s decisions” Motivation - “directing behavior towards a goal” or “getting people to perform their jobs efficiently and effectively”

55. Why do people work? Economic necessity Achievement Honor Social contacts Maslow’s “Hierarchy of Needs” Theory Herzberg’s “Intrinsic & Extrinsic” Theory McGregor’s “Theory X and Theory Y”

56. Research in 8 Countries Provides needed income Is interesting and satisfying Provides contact with others Facilitates a way to serve society Keeps one occupied Gives status and prestige

57. Leadership “ability to inspire and influence the thinking, attitude and behavior of people” Multicultural leaders have 2 variables: - - attributes of the person - attributes of the job Contingency leadership - depends on task, employees, leader, culture, time frame. Autocratic vs. democratic Participative vs. directive Task oriented vs. relations oriented

58. Managing Workforce Diversity(Managing International Management Teams) reduce turnovers and absenteeism facilitate recruitment of scarce labor increase sales to minority markets promote team creativity and innovation improve problem solving enhance organizational flexibility

59. Domestic Diversity Women Hispanics Blacks Asians Eastern Europeans Africans, Islanders Age, gender, religion, social background

60. International Management Teams Objective - “how to develop and empower intercultural groups and task forces at all levels of an organization to achieve set goals. Synergy advantages: different perspectives, share experiences, share technology Disadvantages: language problems, different management styles, complex decision making process

61. Evaluating Performance of Team Do members work towards a common purpose? Has the team developed a common language or procedure? Does the team accentuate the positive; build on what works? Does the team attempt to spell things out within the limits of cultural differences? Does the team have fun? Morale?

62. Managing Diversity Program Broad definition of workforce diversity Attain support and commitment from managers Avoid stereotyping groups of employees Ensure best person gets promotion Train and educate workers on cultural differences

63. Stages of Group Development Forming - getting to know each other Storming - structure common approach to issues Norming - acceptance of roles, structure and approach Performing - getting the task done Acculturation - “transfer of culture from one ethnic group to another.” adaptation to new environment

64. 4 Modes of Acculturation Assimilation - adaptation to dominant culture Separation - unable to adapt; retain separate identity Deculturation - transition; neither here nor there, Pluralism - integration (2 way understanding), accommodate expectations

65. -End- Dr. Balbir B. Bhasin Ph.D., M.I.M. Assistant Professor of International Business Eckerd College 4200 54th Avenue South St. Petersburg, Florida 33711 Tel: (727) 864-8452 Email: bhasinbs@eckerd.edu