Global Insights - Exam 3

MNC try to address...

the cultural similarities and differences in their varied markets

examples of strategy for managing across cultures

Renault - French car company that wanted to expand

Strategic Alliances

collaborative agreement between 2 or more independent companies

to get involved with the US market, what did Renault do

leveraged a partnership with Nissan to being efficiency to its operations

to expand their company further what is Renault do

targeted developing international markets that provide the most potential for future growth

- i.e. India Indonesia, Brazil

Strategic Predisposition

most MNC have a cultural strategic predisposition towards doing things a particular way

4 types of predisposition

1. ethnocentric

2. regiocentric

3. polycentric

4. geocentric

ethnocentric

limited local adaptation

- home country focused

example of ethnocentric

US clothing company opens store in Japan with the EXACT same products/ store layout/ advertising/ management style as the US

regioncentric

regional standardization

region focused

example of regioncentric

- 1 strategy for North America

- 1 strategy for Europe

- 1 strategy for Asia-Pacific

geocentric

best talent and ideas sourced worldwide

global focused: high local adaptation

example of geocentric

engineers from multiple different countries collaborate on one vehicle development project

or

company has its CEO in Germany/ R&D in South Korea/ Manufacturing in Mexico/ Marketing Brazil

polycentric

high local adaptation

host country focused

example of polycentric

if you have a new MNC in Germany, they are looking to hire people from Germany (host country)

successful MNCs tend to use a mix of...

STRATEGIC PREDISPOSITIONS based on the demand of the current environment

both scholars/ practitioners assume...

universality of management

many MNC are commited to...

globalization imperative

globalization imperative

a belief that one worldwide approach to doing business is the key to both efficiency/ effectiveness

MNC need to continue to address...

LOCAL NEEDS

- continual demand for local customers for differentiated products

- customers prefer to buy local

managerial decision-making

process of choosing a course of action from among ALTERNATIVES

centralized vs decentralized

centralized: decisions are made by the TOP level

decentralized: decision making authority is distributed to LOWER level managers

prescriptive vs descriptive

how a decision SHOULD be made (prescriptive) vs how a decision is ACTUALLY made (descriptive)

Rational decisions making

falls under the PERSCRIPTIVE side of managerial decision making

- how decision SHOULD be made

- the goal: make BEST choice

6 steps for decision makers

1. problem perception

2. problem identification

3. problem formulation

4. search for alternatives

5. evaluation of alternatives

6. choice of alternative

complete rationality is almost impossible

limited...

1. info available

2. cognitive capability

3. time available to make a decision

*managers usually strive to make GOOD ENOUGH decisions

heuristic decision making

- cognitive SHORTCUTS

- speed up decision making BUT can result in bias

- not optimal/ perfect BUT often sufficient for reaching an immediate goal

- managers are often unaware of their use of heuristics

4 general heuristics

1. Availability

2. Representatives

3. Confirmation

4. Affect

Availibility Heuristic

people make judgements based on how easily relevant info comes to mind

Representativeness Heuristic

relies on how closely someone/ something resembles a typical example/ stereotype

Confirmation Heuristic

relies on info that confirms existing beliefs/ expectations

Affect Heuristic

relies on feelings/ emotions when making judgements/ decisions

what can be difficult about cultural similarities and differences

it can be challenging to RECOGNIZE and EFFECTIVELY MANAGE

parochialism

tendency to view the world through one's own eyes and perspectives

example of parochialism

managers only caring about local practices - ignoring global standards

simplification

process of exhibiting the same orientation toward different groups

example of simplification

leadership course designed in the US is delivered in countries in Asia/ Europe/ Africa

Shell Oil HAIRL system example

different countries follow the same standards

H-helicopter

A-analysis

I-imagination

R-reality

L-leadership

equity

individualistic culture > collectivistic culture

equality

individualistic culture < collectivistic culture

need

individualistic culture < collectivistic culture

seniority

individualistic culture < collectivistic culture

contigency approach

situations change - different styles become appropriate

- effective managers understand the culture in which they do business

- need to understand the local environment b/c common assumptions may not be valid

negotiation

process of bargaining with one/ more parties to arrive at a solution that is ACCEPTABLE TO ALL

- situation where you need to reach a JOINT DECISION/ BUT the 2 you have DIFFERENT PREFERENCES

before starting a negotiation...

need to determine what to do if you FAIL to meet an agreement

for negotiation, you must determine...

back up plan - Best Alternative to a Negotiated Agreement (BATNA)

you should decline any negotiation agreement that...

provides LESS than your BATNA

BATNA determines...

reservation point

reservation point

least favorable outcome a negotiation is willing to accept before walking away from the current negotiation

- the LOWEST you will go before not even considering the negotiation

people may accept a deal worse than their BATNA to preserve...

1. long-term cooperation

2. ongoing business relationships

3. reputation

4. internal harmony

according to cross-culture negotiation research, this tends to be more apparent in...

COLLECTIVISM than INDVIDUALIST culture

2 types of negotiation

1. distributive

2. integrative

distributive negotiation

- both sides are trying to get the best deal, but a GAIN for 1 side and a LOSS for the other side

- win- lose negotiation

- zero-sum game

- based on short-term interaction

- info plays an important role

distributive negotiation example

only using the juice from the orange

integrative negotiation

- both sides work towards maximizing benefits for both sides/ distributing those benefits

- win-win negotiation

- non-zero game

- long term interaction

- most useful when dealing with business negotiation

integrative negotiation example

using both the zest and juice from the orange

negotiation outcomes are affected not only by...

our OWN decisions, but affected by the DECSIONS OF OTHERS

many negotiators are unable to create value bc they typically view negotiations as distributions of resurces from a...

FIX PIE - perception of negotiation as WIN LOSE

fixed pie

- win-lose perception

negotiation is related to

conflict management

conflict situations in international management are often caused by...

- diff cultural values/ norms

- diff decision making styles

- linguistic diffculties

- diff communication styles

some cultures prefer confrontation, while other...

more subtle bargaining

culture has an effect on negotiators'...

initial offers/ concession patterns

it can take time to...

build trust beginning negotiation

before beginning any negotiation, negotiators should review...

the style of the other parties/ formulate tactics

- using a negotiation team is recommended

east asian

high trust - tight culture

- competency

- reliance on rep

- test for competence

north america/ europe

high trust - loose culture

- openness

- assumption of trustworthiness

test for openness at the table

middles eastern/ south asian cultures

low trust - tight culture

- time spend socializing before negotiating

- assess for respect

latin america

low trust - loose culture

- time spent socializing before negotiation

- assess for common values

cultural differences in assessing trust in negotiating partners (2)

1. low trust vs high trust

2. tight culture vs loose culture

tight culture

strong social rules/ expectations

loose culture

greater flexibility/ individual freedom

high trust

trust given more easily

low trust

trust must be earned first

example of availability heuristic

1. after seeing many news articles about plane crashed, she believed that plans were dangerous, even though statistically they are very safe

2. your friend hears that you got a high paying accounting job, and believes that accounting jobs are easy to get

example of representativeness heuristic

1. person who wears glass is smart

2. someone who is tall plays basketball

example of confirmation heuristic

1. sports fan believes that their team has the best players and only focuses on the games that they win

2. mangers thinks employee is lazy and notices all their mistakes, ignores all of their accomplishments

example of affect heuristic

1. a person buy a product because they love the brand when there are cheaper options

2. person donates money to a charity after seeing an emotional commercial

what is HRM?

Human Management Resources

- policies/ practices/ systems that help an employer recruit/ train/ manage employee

how is a company successful in HRM

skillful people practices

main concept/ criteria for HRM

employees are RESOURCES to employers

human capital

an organization's employees described in terms of their...

- skills

- experience

- judgement

- intelligence

- relationships

What give organizations and advantage

resources

4 types of resources that give and organization an advantage

1. valuable

2. rare

3. imperfectly imitable (cannot be imitated - Coke recipe)

4. non-substitutable (only have Pepsi vs Coke)

3 areas where it is CHALLENGING for MNC's to be skillful in HRM

1. selection

2. training

3. development

Expatriate (expat)

person who lives outside their native country

negative to expats

expensive

- 3 year assignments =$ 1 million

- high failure rate = 40%

expatriates vs impatriates

expatriate = go OUT from headquarters

impatriate = come into headquarters

adjustment problems can be reduced through careful...

1. selection

2. training

3 major sources of HR

1. home country nationals

2. host country nationals

3. 3rd country national

Home Country Nationals

- managers who citizens of the country where MNC is headquartered

- these managers are = EXPATS

*MNC have trended away from using home-country nationals

Host Country Nationals

- local managers who are hired by the MNC

- hire local talent/ avoid the cost of transferring/ maintain expats in host country

- many MNC use host-county manager at the middle - and lower lvl ranks

*Sony is a good example

3rd country nationals

- managers who are citizens of countries other than the MNC's home country/ host country

* ANYWHERE ELSE

- inpatriate

Inpatriate

an employee from foreign subsidiary who transferred to work in the home country for the company's headquarters

factors affecting expats success

1. individual factors

2. job and organizational factors

3. contextual factors

individual factors

- demographics (age, gender, education)

- foreign lang ability

- previous experiences

- motivation for foreign assignment

individual factors - several individual characteristics related to expats:

1. family situation - trailing spouse

2. adaptability

3. job knowledge

4. relational ability

5. openness to other culture

rather than traits, we should strive for

skills/ cultural intelligence

5 big personality (OCEAN)

1. open

2. conscientious

3. extroverted

4. agreeable

5. neurotic

job and organizational fatcors

- expat trainings (overcome ethnocentrism)

- standardized vs tailor made

- help expat's language skills (should be able to speak the local language