Managing Globally

1. Managing Globally Ernest Gundling November 2, 2006

2. What is Your Company’s Global Business Model? Global: Fully integrated network that combines global sourcing & scale, local product adaptation, and rapid exchange of data and ideas Multinational: Relatively autonomous local operations that leverage corporate assets International: Domestic model replicated abroad; strong control from headquarters Leveraging Core Competencies Domestic Focus: Additional profit & economies of scale through selling the same products or services abroad

3. Business Objectives/ Growth Markets • Where is the revenue coming from? • Ratio of domestic vs. non-domestic revenue; there is a big difference between 60/40 and 40/60 • What was the ratio 10 years ago? What will be the ratio 10 years from now? • Where are we making money? • Relative profitability of different regions • Where is the potential for future growth? • Comparative growth rates in different markets

4. The Manager’s Role: Common Tasks Plan & Budget Evaluate Performance Staff or Recruit Solve Problems Assign Tasks Provide Training & Guidance Allocate Resources Coordinate & Track Progress

5. Global Management:What’s the Difference? • Geography • Time Zones • Language • Historical Context • Institutions • Educational, Legal, Political, Religious • Cultural Values • Common Business Practices The issues are similar but the gaps are wider!

6. Global Organizations:Strategic Challenges • Home market assumptions do not fit new environments • Distinctive products or services have different levels of appeal in global markets • Different institutional frameworks create unfamiliar political, regulatory, and labor environments • People in some countries don’t like “us” very much • Local capabilities and infrastructure are inadequate to implement strategy • Organizational support systems cannot be duplicated in every market • Local agendas run counter to headquarters goals and directives

7. Example #1: Transnational Account Teams • Business Driver: Customers are increasingly transnational, with headquarters and the core R&D in one country, manufacturing in another, sources of supply in several locations, and end users who need servicing worldwide. • Key Challenges: The traditional country-based organizational structure impedes transnational teamwork because Transnational Account Team members have a matrix reporting structure, with strong local country managers. • OB Implications: Why is this an organizational behavior issue and what would you do about it?

8. Example #2:Cross-Border M&A • Business Driver: You belong to a successful Asian company with very ambitious targets for growth in global markets. These targets appear to require M&A in order to accelerate growth. There are several Silicon Valley-based firms that have technologies and technical talent you believe could be leveraged globally through your established channels. • Key Challenges: The last acquisition you made was a disaster, ultimately resulting in the loss of every single employee. • OB Implications: Why is this an organizational behavior issue and what would you do about it?

9. Example #3: Moving Manufacturing to China • Business Drivers: You are a Midwest manufacturing firm that now earns more than 60% of its revenues in overseas markets. Although you still have a strong position in most of your key markets, many of your best customers are moving their assembly operations to China, and you are also under severe cost pressure from foreign competitors. • Key Challenges: You have decided to move a large segment of your manufacturing base into China through a wholly owned foreign subsidiary operation. Although the operations there are still only a few years old, you have very ambitious growth plans in order to both serve the Chinese domestic market and to source product for global customers, both in China and elsewhere. You are bringing on and training large numbers of Chinese employees to accomplish this task, but find that your operations are also plagued by high turnover rates. • OB Implications: Why is this an organizational behavior issue and what would you do about it?

10. Example #4:IT Globalization • Business Drivers: Your company is now in a “growth market”; there is increasing pressure to innovate in order to meet internal customer needs; business units are asking for new products and services • Key Challenges: A headquarters-centric organization, with limited pieces implemented abroad, cannot adequately meet these needs from a cost or customer service standpoint; IT employees must now collaborate more effectively across numerous global work sites (Hyderabad, Hong Kong, Manila, Moscow); people who have been “implementers” in the past will now have to contribute at a new level in a global network. IT has strong pockets of global expertise, but needs to be able to disseminate this expertise across the entire organization in order to increase efficiency and effectiveness. • OB Implications: Why is this an organizational behavior issue and what would you do about it?

11. Dimensions of National Culture Hierarchical Formal Task Nonverbal Future Indirect Universal Group Individual Situational Direct Past Verbal Relationship Informal Egalitarian

12. Customer/vendor relations Work patterns and office layout Ideal images of leader and subordinate Spans of control Concepts of career path Extent of specialization Negotiation and meeting styles After-work socialization Views of gender-appropriate behaviors Standards of ethical behavior Planning methods and time horizons Employee benefits Responses to change Ways of handling problems or disagreements THE IMPACT OF CULTURE IN THE WORKPLACE Culture Influences:

13. GlobeSmart Country Profiles

14. Global Mindset / Global Skills LEADERSHIP Managing Change Innovating Transferring Knowledge Strategic Planning Organizational Negotiating Selling Training & Development Building Global Teamwork Group Evaluating People Obtaining Information Giving & Receiving Feedback Establishing Credibility Interpersonal RELATIONSHIP BUILDING

15. Ernest. Gundling, Ph.D.President, Aperian Global Dr. Gundling is a co-founder of Aperian Global, a company with offices in North America, Europe, and Asia that assists clients in achieving their globalization objectives. He currently acts as a senior Asia specialist and President of the company's operations. Dr. Gundling is also a Lecturer at the Haas School of Business at the University of California, Berkeley. His research and consulting work focus on the areas of innovation, change management, and leadership development in global enterprises. Dr. Gundling holds a Ph.D. from the University of Chicago. He wrote his dissertation on Japanese management training programs; his field research was funded initially by a U.S. Department of Education Fulbright Fellowship. He also received a Master's degree from the University of Chicago, and a B.A. from Stanford University. Dr. Gundling has been involved with Japanese language, culture, and business for over twenty years, including more than five years' residence in Japan; he has also worked and traveled extensively elsewhere in Asia, and lived for extended periods in Germany and Mexico. He formerly worked as the Director of Consulting and Organization Development at Clarke Consulting Group, and is the author of numerous publications, including The 3M Way to Innovation: Balancing People and Profit, and Working GlobeSmart: 12 People Skills for Doing Business Across Borders. A partial list of clients that Dr. Gundling has served includes AT&T, Canon Information Systems, Cisco, Ford, Fujitsu, Hewlett-Packard, Hitachi, Honda, Intuit, KLA-Tencor, Kodak, Levi Strauss, Lucent Technologies, Mazda, Morgan Stanley, Motorola, Pitney Bowes, Rockwell Automation, and 3M.