IBE Midterm- University of iowa

The Role of the Global Manager

Convergence/Divergence

Case Study: McDonalds

What is culture?

-General: "Everything that people have, think, and do as members of society"

-Specific: "Shared mental programs that control individuals' response to their environment"

-comprehensive definition: Culture consists of systems of values, attitudes, beliefs, and behavioral meanings that are shared by members of a social group (society) and that are learned from previous generations

Why care about culture?

It forms values.

It creates attitudes.

It influences behavior.

And...culture shapes (and is shaped by) the political, legal and economic environment within which firms must operate.

Globalization:

the close integration of countries and peoples of the world

Globalization of markets:

merging of national

markets into one huge global marketplace

EX. Starbucks

Globalization of production:

the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production

EX: Ford Mustang

McDonalds- Case Study

Present in 119 countries across 6 inhabited continents

Secrets to success in US? Fast, Cheap, Convenient, No surprises, Powerful imagery

Case Study: McDonalds in France

Opened first French restaurant in 1979

France is 2nd most profitable market in the world for McDonalds

1200 restaurants in France, with growth rate of 30 restaurants/year over the past 5 years

Secrets to success? Local responsiveness

Preferences (e.g., "real" food, French palate)

Habits (e.g., low propensity to snack, meals last longer)

Rebranding

Robust corporate ecosystem

Convergence vs. Divergence

Convergence generally means coming together, while divergence generally means moving apart.

Drivers of Globalization

Growing economic interdependence among world's economies

(Impact on organizational boundaries)

Work environment complexity

More and different players on the global stage

Increased use of technology, particularly social media

Components of the External Environment

Cultural

(Particularly important to international management

Often implicit which makes it easy to overlook.)

Political

Economic

Legal

Important to note that these factors are not independent

The Political Environment- Political risk

Governmental actions or politically motivated events that could adversely affect the long-run profitability or value of a firm

Macropolitical risk event

Impacts all foreign firms doing business in a country or region (Ex. terrorism)

Micropolitical risk events

Impacts one or a few industries doing business in a country or region (Ex. product safety laws)

The Legal Environment

Factors that influence the legal environment:

Prevailing international laws

Role of contracts

Protection for proprietary property EX. Trademarks

Characteristics of culture

Shared

Learned

-Transmitted through interaction

-Tells what you should (and should not!) do

Systematic and organized

-System of values, beliefs, and behavioral meanings related to each other and to the environmental context

Levels Of Culture

artifacts, norms and values, basic assumptions

Sapir-Whorf Hypothesis (SWH):

In general, SWH argues that the language you speak influences your view of the world

Two versions:

-Strong: Linguistic determinism (controversial; not really supported)

-Weak: Linguistic relativism (generally supported)

Hofstede's Value Dimensions

Conducted large-scale study to examine differences in work-related attitudes

Found that national culture explained more of the differences in work-related values and attitudes than did position within the organization, profession, age or gender

-power distance

-uncertainty Avoidance

-individualism

-masculinity

-Pragmatism or Long-term/Short-term Orientation

Foundation for great deal of research in international management

Criticisms of Hofstede's Value Dimensions

Methodology

IBM employees not a representative sample

Culturally biased

Outdated

Methodological issues in cross-cultural research

Equivalence

Sampling

Data collection

Indulgent

-Perception of personal life control

-Freedom of speech is deemed important

-Higher importance placed on leisure

-In countries with educated populations, high birthrates

Restrained

-Perception that what happens to me is not my own doing

-Freedom of speech not a primary concern

-Less importance placed on leisure

-In countries with educated populations, lower birthrates

cultural intelligence (CQ)

is the capability to function and relate effectively in culturally diverse situations

CQ score

high: adapt and adjust thinking and behavior as needed

moderate: recognize cultural norms and begin to accommodate them

low:react to external stimuli

What is organizational culture?

Shared values and beliefs that enable members to understand their roles in and the norms of the organization

Criteria for ethical decision making

-Ethical decisions involve a conflict. Generally, between the needs of the part and the whole.

-What is considered "ethical" or "unethical" behavior is largely shaped by the culture in which it is embedded.

Categorical imperative

-Rule-based model of decision-making

-Relies on absolute rules and universal laws that must be followed, regardless of the situation

-Example? Salesperson refusing to be dishonest with customer because of religious beliefs ("Thou shalt not bear false witness...")

Legalism

-Ethical decisions are based on society's laws or policies

-Example? UI employee refusing gift of more than $3 because of state-wide gift laws for state employees

Cultural Relativism

-Ethical decisions are based on operating cultural norms, not on absolute truth

-Example? "When in Rome...do as the Romans do."

Enlightened self-interest

-After weighing costs/benefits, ethical decisions are those that result in most favorable outcomes for the decision maker

-Example? Padding expense report because DM needs money to pay bills

Utilitarianism

-Consequential model of decision-making

-After weighing costs/benefits, ethical decisions are those that result in most favorable outcomes for others

-Example? Letting highly compensated employees go to maximize shareholder wealth

Light-of-day

-After weighing costs/benefits, ethical decisions depend on the consequences if decision becomes public knowledge

-Example? Refusing to take a bribe out of concern that you might lose customers, if they found out.

Foreign Corrupt Practices Act (FCPA)

Purpose was to stop U.S.-based MNCs from engaging in corruption

Lockheed Martin

"Lockheed Martin's commitment to the highest standards of ethical conduct applies globally. Bribery, violations of export and import laws, and participation in illegal boycotts erode confidence in the marketplace, undermine democracy, distort economic and social development, and hurt everyone who depends on trust and transparency in the transaction of business."

Institute ethics training program purpose

-Develop employee awareness

-Achieve credibility with employees

-Teach employees a practical model of ethical decision making

Grounding

Culturally different individuals share less common information (catch phrase)

Verbal communication styles- Context

High-context cultures

-Implicit

-Much of message's meaning is implicit and words spoken convey only part of message

Low-context cultures

-Explicit

-Message primarily conveyed by words spoken

Kinesic behavior

body movements

-While actions may be universal, the meanings behind them may not be ------Examples: Nixon in Brazil, throwing shoes in Middle East Also

in this category, eye behavior (oculesics)

Proxemics

-proximity and space

-Examples: Office space, greetings, comfort with touching, personal space

-Links to high- vs. low- contact cultures

Paralanguage

how something is said (or not said) rather than the content -Examples: saying no, use of silence, rate of speech

Object language

How we communicate via material artifacts

-Examples: architecture, office furniture, clothing, cars, cosmetics

-Also in this category chromatics, using color to communicate

Trompenaars' value dimensions

social dominance

Behavior intended to elevate or maintain social status.

Three Levels of Culture

artifacts (outer layer)

values and beliefs (middle layer)

assumptions (core inner layer)