MGT340 - Midterm Study Guide
MGT340 - Midterm Study Guide MGT 340 100
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Date Created: 10/20/15
Midterm Study Guide Chapter 1 1 The Asian economic block made up of Indonesia Malaysia the Philippines Singapore Brunei Thailand Cambodia Myanmar amp Vietnam is referred to as Association of Southeast Asian Nations 2 The following are characteristics of the BRIC economies except Demand for higher priced goods is expected to continue to be low in the future 3 Which of the following statements is false with regard to a mixed economv Businesses in this model are owned by the state to ensure that investments amp practices are done in the best interest of the nation despite 4 Agreements like NAFTA amp CAFTA Not only reduce barriers to trade but also require additional domestic legal amp business reforms in developing nations to protect property rights 5 Which of the following statements is true with regard to the economy of Poland Political instability amp risk large external debts a deteriorating infrastructure amp only modest education levels have led to continuing economic problems in Poland 6 Which country receives the most foreign direct investment FDI by US companies Great Britain 7 A is comparable to a monopoly in the sense that the organization in this case the government has explicit control over the price amp supply of a good or service Command Economy 8 The United States Canada amp Mexico make up the which in essence has removed all barriers to trade between these countries amp created a huge North American market North American Free Trade Agreement 9 The ultimate objective of the EU is to Eliminate all trade barriers among member countries 10 Which of the following statements is true of the economic system of North America The freemarketbased economy of this region allows for more freedom in decision making processes of private firms 11 Identify the statement that is false of globalization It is the process of a business crossing national amp cultural borders 12 The term used to indicate the amount invested in property plant amp equipment in another country is Foreign Direct Investment 13 A keiretsu is a government agency in South Korea True or False False 14 A freetrade agreement between the United States Canada amp Mexico that has removed most barriers to trade amp investment is North American Free Trade Agreement NAFTA 15 To qualify as a multinational corporation a firm must meet all of the following criteria except Sales of at least one million dollars per year 16 A factory located in a Mexican border town that imports materials amp equipment on a duty amp tariff free basis for assembly or manufacturing amp reexports is called a Maquiladora 17 The former communist countries that have become most visible in the international arena include Poland Hungary amp the Czech Republic 18 The global organization of countries that oversees rules amp regulations for international trade amp investment including agriculture intellectual property services competition amp subsidies is the World Trade Organization WT 0 19 The process by which companies undertake some activities at offshore locations instead of in their countries of origin is 0ffshoring International Management Page 1 20 The process of applying management concepts amp techniques in a multinational environment amp adapting management practices to different economic political amp cultural environments is International Management Chapter 2 l 10 ll 12 l3 14 15 l6 17 18 19 20 MNCs are unwilling to put up high investments unless they are assured of Operating control on their investment in telecommunications The T erritoriality principle holds that every nation has the right of jurisdiction within its legal territory Some observers have noted that technology already has eliminated much amp in the future will eliminate even more of the work now being done by Middle managers amp whitecollar staff The totalitarian form of government is to be seen in Vietnam Cuba amp North Korea Aristotle amp David Hume contributed to the principle of Individualism Under the all acts of other governments are considered to be valid by US courts even if such acts are inappropriate in the United States Act of State Doctrine Critics of the Foreign Corrupt Practices Act feared the loss of sales to foreign competitors especially in those countries where Bribery is an accepted means Japanese companies are aware that their dependency on the world market for many goods amp services is negatively impacted by resulting in local consumers paying the price Bureaucratization Which of the following are characteristics of fascism Anticommunism Identify from the following the correct statement on civil law It is derived from Roman law amp is found in nonsocialist countries law comes from the Marxist socialist system amp continues to in uence regulations in former communist countries especially those from the former Soviet Union as well as presentday China Vietnam North Korea amp Cuba Socialist International law includes the following types of jurisdiction principles Nationality territoriality amp protective US laws require equality in the workplace for all employees US citizens who take a job in Japan cannot sue their employer under the provisions of US law for failure to provide equal opportunity for them This is in line with the Principle of Sovereignty has placed pressure on MNCs to outsource production Mounting cost pressure amp profit expectations Communism as an economic system has failed due to the tendency of common goals to stunt Progression amp individual creativity Which country does not rank high on the easeofdoingbusiness indeX The Philippines Countries have the legal right to refuse admission of foreign citizens amp to impose special restrictions on the following except Spending The area of ebusiness that will most affect global customers is Eretailing amp financial services Political repression amp denial of rights amp civil liberties are dominant ideals of T otalitarianism One of the biggest impediments to attracting more foreign investment in Russia is Political corruption International Management Page 2 Chapter 10 1 risks stem from government policies that limit the transfer of capital payments production people amp technology in or out of a country Transfer 2 Over the past decade political risk has become A vital area for MN Cs to assess amp manage 3 Foreign ownership limitations pressure for local participation confiscation expropriation amp abrogation of property rights are examples of Ownershipcontrol risks 4 According to the text the following are all forms of terrorism except Political terrorism 5 The special nature of foreign direct investment is not related to Operations 6 All of the following are examples of integrative techniques except Doing as little local manufacturing as possible amp conducting all research amp development outside the country 7 Laws that require that nations hold a majority interest in the operation are known as Indigenization laws 8 The following is not an example of risk factors for an MNC except Complying with contractual terms of agreements 9 The following are internal factors which MNC39s may use to evaluate political risk except Regional instabilities 10 Which of the following is not a challenge of doing business in Russia Strong faith in government policies 11 Which of the following criteria involves maximum political risk Effectiveness of public administration 12 Expropriation is more likely to occur in NonWestern governments that are poor relatively unstable amp suspicious of foreign multinationals 13 Examples of proactive political strategies include all of the following except Downsizing amp transferring business elsewhere 14 The economies of China Russia India amp Vietnam present political risk for MNC39s Macro 15 The theory behind is quite simple The MNC works to maintain a stronger bargaining power position than that of the host country Relative bargaining power 16 China39s decision regarding restrictions on foreign exchange transactions is a political risk because it affects all MNC39s Macro 17 Some multinational corporations attempt to manage political risk through simultaneously analyzing a range of variables to derive an overall rating of the degree of political risk in a given jurisdiction This is referred to as a Qualification process 18 According to the 2009 Transparency International Corruption Perceptions Index which of the following is the least corrupt nation New Zealand 19 investments include the production of raw materials or intermediate goods that are to be processed into final products Vertical 20 Examples of protective amp defensive techniques include all of the following except Producing as much of the product locally as possible with the use of incountry suppliers amp subcontractors thus making it a quotdomesticquot product Chapter 5 1 In China the term guanxi means Good Connections International Management Page 3 2 Initially after the breakup of the Soviet Union the republics called themselves the Commonwealth of Independent States 3 The five criteria in the acronym HAIRL stands for Helicopter Analysis Imagination Reality amp Leadership 4 An MNC with an ethnocentric predisposition Takes back its pro ts to its home country 5 Which of the following countries prefer advertising that is factual amp rational Germany 6 In Great Britain Ireland amp the United States managers value their individualism amp are motivated by all the following opportunities except Pro tSharing Plans 7 The United States has what is called a LowContext Culture 8 All of the following are characteristics of lowcontext cultures except Insiders amp outsiders are easily distinguishable amp outsiders typically do not gain entrance to the inner group 9 In regard to the cultural dimension quotWhat is the conception of spacequot the dominant characteristic for American managers is Private 10 The process of exhibiting the same orientation toward different culture groups is referred to as Simpli cation 11 If a US manager acted the same way with a British manager as he she does with a Chinese manager the US manager will be exhibiting a behavioral process referred to as Simpli cation 12 A company with an predisposition allows the values amp interests to the parent company to guide the strategic decisions Ethnocentric 13 Which of the following selections accurately re ects labor relations in Germany Be prepared for high wages amp short work week expect high productivity from unionized workers 14 Research reveals that far from addressing regional differentiation issues many MNCs are committed to an which is a belief that one worldwide approach to doing business is the key to both efficiency amp effectiveness Globalization Imperative 15 In which of the following countries are spots viewed as cultural events amp reviewed as if they were literature or films France 16 Which of the following countries selections accurately re ects recruitment amp selection processes in Mexico Use of expatriates sparingly recruit home country nationals at U S colleges 17 Which of the following are behavioral practices that affect doing business in China The Chinese are proud of their economic accomplishments amp want to share these feelings with outsiders 18 Which of the following correctly matches a firm39s predisposition with its culture GeocentricGlobal 19 The word namaste means quot greetings to youquot in India 20 Four distinct predispositions which help determine the specific steps an MNC will follow are Ethnocentric Polycentric Regiocentric amp Geocentric Chapter 6 1 Which of the following sets of characteristics is typical of French negotiators Look for meeting of minds intellectual competence is very important amp a contract is viewed as a wellreasoned transaction 2 When individuals join a multinational corporation they bring their national culture which greatly affects all the following except Ethnicity 3 To ensure good communication in global teams managers should do all of the following except Avoid the use of International Management Page 4 10 11 12 13 14 15 16 17 18 19 20 email amp use only video conferencing or telephone communication to avoid misunderstandings Norms are re ected by things such as The amount of work to be done The benefits or advantages of culturally diverse groups include the following except Glassceiling protection Which of the following would be associated with the dimension of pragmatic conduct To put the demands amp expectations of the customers first Under an culture jobs are well defined employees know what they are supposed to do amp everything is coordinated from the top Eiffel Tower Organizational climate is re ected by The way participants interact with each other Global firms need Both an internal amp an external diversity focus A group is a group in which all members but one have the same background such as a group of Japanese retailers amp a British attorney Token culture is characterized by a strong emphasis on the hierarchy amp orientation to the person Family There are three aspects of organizational functions that seem to be especially important in determining an MNC39s organizational culture There are The general relationship between the employees amp their organization the hierarchical system of authority that defines the roles of managers amp subordinates amp the general views that employees hold about the MNC 39s purpose destiny goals amp their places in them When it works well the culture can catalyze amp multiply the energies of the personnel amp appeal to their deepest feelings amp aspirations Family Which of the following is not an advantage of virtual teams They force managers to rely on subjective data when assessing team members 39 work Multicultural teams are most effective when they face tasks requiring Innovativeness culture is characterized by a strong emphasis on equality in the workplace amp orientation to the task Guided Missile is a pattern of basic assumptions that are developed by a group as it learns to cope with problems of external adaptation amp internal integration amp that are taught to new members as the correct way to perceive think amp feel in relation to these problems Organizational Culture cultures often create environments where participants thrive in an intense emotional commitment to the nature of the work Incubator In the stage of group development attention may be directed more toward describing amp analyzing the problem or task that has been assigned Work Observed behavioral regularities are typified by the following except Customer Relations International Management Page 5 Chapter 1 Globalization and International Linkages I International Management A Involves 1 Applies management concepts and techniques in a multinational environment 2 Adapts management practices to different economic political and cultural environments B Multinational Corporation MNC 1 Operates in more than one country 2 Produces international sales 3 Includes a miX of nationalities within managers and owners C The World39s Top Nonfinancial MNC39s liable 1 1 Wrnrl d is Top Hium lii n a racial M HIGH FlairI Iredl by Foreign Aaseis EBET in rrrii llli ll l of dollars Eu ny H m F sreig m Total chrlrxeig r1 Terrell Hank Na m e Econ ram y 324 5513125 559 15 53 has 3955 a i E ene ral lE la ctr ire IL nited Statea 133309 953 3 86519 1HJ3 B E we 1 atone E mu ii In ILJ nited King do rn E r 2549 61331 1 er Royal Dutchr Netlierlanntle EllieII E mu p LI united ing do rn 196323 BEErim 239313 1 BE 31 E riti sl i Petr lmmm En mpa mi Fla IL nited King tie rn 1353133 23590 223316 2834355 539 EamonMobil LI united States IMEEE EILEJJEE 35511 EMILE E E Tamra Elli1quot Eorpozration 1 a pa n 153dl EEQEEE ME 31 E ERRED ii TutEl Fra nee 1113353161 llEi39l iafll l T312335 2336539 3 Eleni rieit D e F rame Fra nee 123591 ETdJElEI l d l SETQE Ell Ford Meter Company 1 united Statea 121353 WEE E Eil 915311 HidES ilEl E H rst E a rmany 1334 202111 51 gal int 1 El S nltrrrea LJN CIA World rrrrrasrrrrerrr Report EGGS Annex il39a bl e ALE II Globalization amp Internationalization A the process of social political economic cultural and technological integration among countries around the world 1 Hastened by a Offshoring the process by which companies undertake some activities at offshore locations instead of their countries of origin b Outsourcing the subcontracting or contracting out of activities to external organizations that had previously been performed by the firm B Pros amp Cons 1 Benefits of Globalization a Wealth b Jobs c Technology 1 Lower prices 2 Criticisms of Globalization a Offshoring of business service jobs to lowerwage countries b Growing trade deficits c Slow wage growth d Environmental and social impacts C Global amp Regional Integration 1 Global Agreements a World Trade Organization WTO the global organization of countries that oversees rules amp regulations for international trade and investment i Trade amp Investments include International Management Page 1 b a Agriculture b Intellectual Property c Services d Competition e Subsidies General Agreement on Tariffs and Trade GATT a freetrade agreement between the United States Canada amp Mexico that has removed most barriers to trade amp investment 2 Regional Agreements a C North American Free Trade Agreement NAFTA a freetrade agreement between the United States Canada amp Mexico that has removed most barriers to trade amp investment i Designed to promote commerce in the region ii Eliminated tariffs as well as importexport quotas iii Government procurement markets opened to companies in other 2 countries iv Increase in opportunity to make investments in each other39s country v Increase in ease of travel between countries vi Removal of restrictions on agriculture products auto parts amp energy goods US Central American Free Trade Agreement CAFTA is an expansion of NAFTA to six Central American nations Guatemala El Salvador Honduras Costa Rica Nicaragua amp the Dominican Republic i Same e ects from NAFTA ii Became CAFTA DR to include the Dominican Republic approved on July 2005 European Union EU a political amp economic community consisting of 27 member states i Trade barriers removed ii Unified currency Euro iii Customers can compare prices between countries between countries iv Businesses can conduct business in one uniform policy amp currency Association of Southeast Asian Nations ASEAN is an alliance promoting economic and political cooperation by fostering dialogue among its ten members Brunei Cambodia Indonesia Laos Malaysia Myanmar the Philippines Singapore Thailand and Vietnam i Active collaboration and mutual assistance on matters of common interest in the economic social cultural technical scientific and administrative fields ii Collaboration for greater utilization of agriculture amp industries iii Expansion of trade iv Improving transportation and communications facilities v Raising of the living standards of their peoples vi Maintain close and beneficial cooperation with existing international and regional organizations Free Trade Agreement of the Americas FTAA a proposed freetrade agreement among the 34 democratically governed countries of the Western Hemisphere III International Economic Power in the Global Economy A Shifting landscape due to 1 Economic integration 2 Economic potential of emerging markets a BRIC countries Brazil Russia India and China could be among the four most dominant economies by 2050 B The World39s Largest Economies 2005 2020 projected International Management Page 2 Thins 14 The 39W nrli s LiarEat Eanaimiina and man Prngj at d Mnawmd by EDP at Market El h g i t in millions if duiilarsj 213135 2132121 EDP Hank GilFl Flam United Stains 1245 23331 1 Japan 11511 55352 39 Germam 2331 Eil39iima 2225 United Kingdom 2213 France 2132 III HalfFr 1 1213 Eanadai 1122 22115 11 Spain 1113 1116 12 South Korea am 1 25121 9 tragil 1 11 1131311 13 in ia 1 59 12 31233 1 Maxim 13952 13 1451 14 Russia 14 11 E I i was a 131231 2 431313 5 n m Source Fer Foresight 3331 Economic fridu try and E39wr1arare Trmd Cowright it 21135 The Economist intelli gema Unit Reprinted with permission niTlim Economist inialliganne LinquotIii via uipwighr laaranea Gamer IV Trends in Trade amp International Investments A International Trade 1 In 2009 merchandise and commercial services exports declined B Foreign Direct Investment FDI investment in property plant or equipment in another country 1 Growing at healthy rate 2 Outpacing domestic growth in most countries 3 Declined in 2009 due to the global recession C World Merchandise Trade by Region 2009 Talism ill ell ma a I39H39Ii lrz zha l a Tra Ify Magmai air E l t d BEnatal gum llri blillnnn and pamnn tgnn Enrich u 7 7 7 7 7 7 7 lawmantime 7 7 7 7 7 7 7 7 V j g A Irll39rl inquot F r a v n I39quotI all lilil quot Hellman F1 I39m9n t 39 ir l Ghana WEIIlium Fin rcmmtn n Eihvnnl n 39 u E s E s 1amp5 E E i E 39 i 21E El n g E EVEI133 E 39 i wiziirlcl 1121613quot nil M 391 Pi 33 1 EJH n il l b 115 211 Nur lI n I111 ring I IEI E39 E 111 11 1 1 39l 7quot 1 El Fa 9395 Uniiliimtl SEMIJEH I EUET 4quot II 15 IE I aIFIiiiIIiIi 2quot ES 3quot 93931 EmmaIi 3 1 E H 35 2 11quot 533 11 3quot 9 1 M mi im Pfili a 3F 511 139 5391 Ed 11 1E5 112 5M1 E 39 llil39l Fill Eurrltrml lingBF an iiiL11 E 111 21 34 dam TILE EE EU 33951 EIFEuz rl li 153 1quot 11 23 2393 153 15 32 44 27quot Uilhn f ELIEL111 F IEI nFEr39IEIKFII AIIT391fII ill j l IR 1111 39 3121 H111 iquotIi SH 5quot E uirg m a lif 39 FI 391 1 2393 51141quot 1 1 H 1 EH Ellyn5311543 H Lininrh r ILEHEE 111 391391 ILTifi i H 12 G ni y 1121 1 1quotEI El 23 931 5 IE 13quot 1 1 Fran153 19515 31 HI 3 2391 551 2 1 1 39I 22 MQEI Jif l ir l i a a E 39I EI 1E 2392 414E 5 15 39IE 23 Uail mrll Kii39hEEIEli a39l 33931 2 E E4 4155 2 il EE39 2d IIIII 1115 2 EEG LEE 1 2 IE E BEE Earn 11H 11 Wism 39ili l39 iipuuviluguuuuriu 3 Eirntna IE39EIFEI 1113 1quot 239 4g 213 1 1 Jit J I 2 luiumiiald n nsmilai ll39lillli l 27111 iIii ii iii Zilll I39Hf I I Elli quotrll39ti l i 513 l39 rillIE 31 239 a 1quot 339ll ZIE i g 15 2quot 339 IF 1 Hung till nlquotrl rrUI yrs 1 55 F39rr39 i 115 11 am d39iagl ris I39IZEr EnsH1151 39139th in in IN 39339 E I Tan 3521 32111 11 51quot STE 15139 1 Inm39lllnll llm Jam 1 in run nus 1Hr 1n arta Hi 1 MiEF resill FriHE 9111 ed Iii I113 1 I13 1 33 il Equot 112 1 EFTF E39f1 139 MW hi 1 IEnr m ll39l39i dl il i nm Im 115 1 le39ln billI iJl anvii i1 2 L I39dil G 1 il Fl Li 3941quot 11115 IE 1 L 21 2 1 t hirsn 153112 1 Hi3 139 quot PIE 1 I JsiSJ39LE 1 1 2 1 11 Jlliiumi39l 39 l 1 H r 7 f Ella 13151 7quot 1 5391 51 Ind Did 1 1 E 21quot 1quot 23915 fifIIIF ll 3 13 21 15115 In uin hiihL il39lru1 arurminm 49 new EI I 1 in aquot nagem It 39 l 39I 1 9121 MIu lira39inrtnnualiu I111 E I39Zlmilili39lJ U39 vul39yu i 3939Hi1EET1il E 1915111 1quot 1 quot 139JI EZE I39lI39lquot lug fl 1I F I 26 MJF si aiz 5 539 1 Tquot al39 EH SIP3931 in lairHa 5139 E 9i 1 an Lat39L39Ehlm H 11quot 1 1 1J1 ill39l IEIF in 1 11 1 1 ELI gr H slym3 wrung n I3 mJIn 13m a n r 1 u 11 1nd 5I 1 m I r r r Lanna E V I iixEE inJul in Li T3111 391 iii rim inquot Eil 393 Vi ei i 39r fir2 9139s ii 451 PFH W Ni F39 are Huh rrurIr Earl Miser 1111 EH 2011 1 II14 ME 13941quot L 5143 erwnwi 3939K39ll l alli39liegllIn lquot1quotWFF minquot 153 anquot Fal E Fa VEIP1I iiquotn International Management Page 3 V Global Economic Systems A Market Economy when private enterprise reserves the right to own property amp monitor the production amp distribution of goods amp services while the state simply supports competition amp efficient practices 1 Least restriction on resources since they39re determined by demand 2 Customers have the right to disclose wants amp needs a Businesses are obligated to respond appropriately 3 Supply amp Demand a Balance sustains prices b Imbalance price uctuation B Command Economy the government has explicit control over the price amp supply of a good or service 1 Businesses are owned by the state a Ensures investment amp business practices are done at the best interest of the nation b This excludes what the people want or need 2 Ignores demographic information 3 The government provides security for firms to keep them from going bankrupt 4 Private ownership is prohibited 5 Improving customer service with innovative ideas isn39t a priority C Mixed Economy a combination of a market amp command economy 1 Allows private ownership 2 Flexibility of the law of demand 3 Government extends assistances to companies IF requested 4 Standard of Living all is taken care of by the government Minimum wage standards Social security Environmental protection Advancement of civil rights Elderly security f Health Insurance VI Economic Performance by Major World Region A Established Economies 1 North America a One of the four largest trading blocs in the world b Combined purchasing power of US Canada and Mexico approaches 12 trillion c Freemarketbased economy is attractive to private firms d Countries involved i United States a Foreign MNC s nd US a lucrative expansion market b Foreign firms welcomed as investors in US market c US firms hold market dominance in many European markets gaining market share in Asia ii Canada a US s largest trading partner b Most of the largest foreignowned Canadian companies are totally or heavily US owned c Legal and business environment in Canada is similar to that in US iii Mexico a Strongest Latin American economy b Very strong maquiladora industry c Trade with both Europe and Asia has increased d Now competitive with Asia for the US market 2 European Union a Ultimate objective i Eliminate all trade barriers among member countries ii Emergence of the EU as an operational economic union a A unified Europe could become the largest economic market in terms of purchasing power in the world iii Foreign MNCs trying to gain foothold in EU 9905 International Management Page 4 a Acquisitions alliances cooperative RampD efforts iv Economic linkages between the EU and newly emerging Central amp Eastern European countries a Challenge is to absorb former communist bloc countries V Financial crises in Greece amp Ireland putting pressure on the euro 3 Japan a Huge economic success in 1970s and 1980s b Ministry of International Trade and Industry MITI a governmental agency that identifies amp ranks national commercial pursuits amp guides the distribution of national resources to meet these goals c Keiretsus i Vertically integrated industries ii Holdings provide assistance needed in providing goods amp services to end users d Decade long recession in 1990s i More competition from emerging economies ii Poor management decisions e Remains a formidable competitor in the Pacific Rim North America amp Europe B Emerging Economies 1 Central and Eastern Europe a Russia i Dismantling of price controls amp privatization ii Membership in International Monetary Fund IMF helps raise GDP amp decrease in ation offsetting the hyperin ation created from the initial attempt at transitioning to a marketbased economy a Controls in ation iii Crime and political uncertainty b Czech Republic Hungary amp Poland i Privatization ii In ation iii Political uncertainty 2 China a Real economic growth of 12 in 2007 9 in 2008 amp 115 in 2009 i Savings glut in corporate sector ii Vast developmental needs iii Unemployment concerns b Attractive to investors despite political risk i Product pirating is a major problem ii Currency value iii Government policies favor domestic firms 3 Other Emerging Markets of Asia a South Korea i very large familyheld conglomerates ii Solid economy moderate growth amp in ation low unemployment b Hong Kong i Part of People s Republic of China ii Uncertainty about the role the Chinese government c Singapore i Success story ii Leader amp financial center for region d Taiwan i Progressed from laborintensive economy to one dominated by technologically sophisticated industries a Banking b Electricity Generation c Petroleum Refining d Computers e Thailand Malaysia amp Indonesia International Management Page 5 i Large population base ii Inexpensive labor iii Considerable natural resources iv Attractive to outside investors 4 India a Large population b Recent trend of locating software amp high valueadded services to this country boosting middle amp upperclass market for goods amp services c Attractive to US amp British investors i Well educated ii English speaking iii Technologically sophisticated workers C Developing Economies on the Verge 1 South America a Hampered by foreign debt amp severe in ation b But intercountry trade is increasing c Countries looking to do business with US 2 Countries involved a Brazil i Economy is now ourishing amp attracting investment from MNCs ii Privatization amp stable government b Chile i Uncertain future but helped by trade agreements 0 Argentina i Abundant natural resources ii Economic problems persist 3 Middle East and Central Asia a Large oil reserves b Highly unstable geopolitical and religious forces c Plagued by continuing economic problems 4 Africa Considerable natural resources African nations remain very poor amp undeveloped International trade is not a major sources of income Populace divided into 3000 tribes that speak 1000 languages amp dialects Major political instability Poverty starvation illiteracy corruption overcrowding among many social problems negatively affecting economic sector D World39s Most Competitive Nations as of 2010 thFDP PFfP Table 11 1 warnat Gompa tlua HE tI E 2ND un rtlr y Hank Singapore 1 Horny 1th Ll Sit Switzerland Australia Ea Ila113 Taiwan Norway Malaysia 11 3 I 39 5 SwedeI1 E 339 3 Eli Sourcequot World Competitive Scoreboard Emil International Management Page 6 International Management Page 7 Chapter 2 The Political Legal and Technological Environment 1 Ideolo ies A people should be free to pursue economic and political endeavors without constraint 1 Philosophers who stood by it a David Hume b Adam Smith c Aristotle 2 In business context similar to capitalism and connected to free market society a Private property more successful productive and progressive than communal property b Betterment of society related to level of freedom individuals have in pursuing economic oals B Views needs or goals of society as a whole as more important than individual desires 1 Philosophers who stood by it a Plato 2 Does not value individual as such 3 No rigid form of collectivism as societal goals differ greatly among cultures a Fascism nationalism authoritarianism militarism corporatism collectivism totalitarianism C a moderate form of collectivism in which there is government ownership of institutions and profit is not the ultimate goal 1 Philosophers who stood by it a Karl Marx b Friedrich Engels 0 Vladimir Ilyich Lenin 2 Practiced in a China b North Korea c Cuba 3 Democratic socialism is the more moderate form a Practiced by Great Britain s Labour Party France Spain and Greece 4 Communism is the extreme form of socialist thought 11 Political Environment A Ideologies underlie the actions of governments 1 Ideas that re ect beliefs and values in uence the behavior and culture of nations and political systems B Political systems can be evaluated along two dimensions 1 Rights of citizens based on a system of government ranges from democratic to totalitarian 2 Focus of political system on individualism vs collectivism C Democratic nations tend to emphasize individualism and totalitarian nations tend to emphasize collectivism 1 No pure form of government HI Political S stems A i system in which government is controlled by citizens either directly or through elections 1 European roots 2 A democratic society cannot exist without at least a twoparty system a Once elected a representative is held accountable to distribute the right to vote to the eo 1e which limits power of government B only one representative party which exhibits control over every facet of political and human life International Management Page 1 1 Power maintained by suppression of opposition a Dominant ideals include i Media censorship ii Political repression iii Denial of rights and civil liberties C Regional Examples 1 China a Emerging economic power b Government attempting to open up economy by i Speeding up conversion of state enterprises into corporations ii Making trade liberalization a top priority since joining WTO in 2001 iii Becoming a more open democratic society iv Developing a greater tolerance of individual freedoms v Worker retraining lowcost housing and other programs vi Seeking to unleash a more dynamic market economy 2 Europe a Privatization and economic liberalization reinforce EUwide political and economic integration i Political power is variable and complex ii Strong opposition to USled intervention in Iraq sometimes spill over into business relationships and dealings b Europe is a large interwoven region economically but contains vast cultural differences 3 The Middle East a Iran and Saudi Arabia laws and government based on Islamic principles b Business conduct in the Middle East is similar to Western in many ways i Worldwide fallout from war on terrorism have made the business environment risky and potentially dangerous 4 Russia a Neglect and confusing changes in economic policy b Infrastructure is weak and a political quagmire i a difficult situation c Corruption interferes with attraction of more foreign investment IV Legal amp Regulatory Environment A Confusion and challenge for the MNC due to many different laws and regulations in global business operations B MNCs must carefully evaluate legal framework in each market before doing business V Global Foundations of Law A Islamic Law 1 Derived from interpretation of the Qur an amp teachings of Prophet Muhammad 2 Found in Islamic countries a The Middle East b Central Asia B Socialist Law 1 Derives from the Marxist Socialist System 2 Requires most property to be owned by state or state enterprises 3 Continues to in uence regulations in former communist countries a Members of the Former Soviet Union b Peoples Republic of China c Vietnam d North Korea e Cuba C Common Law 1 Derives from English Law International Management Page 2 2 Foundation of legal system for a United States b Canada 0 England 1 Australia e New Zealand D Civil or Code Law 1 Derived from Roman Law 2 Found in nonIslamic and nonsocialist countries a France b Some Latin American countries c Louisiana VI Basic Principles of International Law A Sovereignty amp Sovereign Immunity 1 Principle of Sovereignty an international principle of law which holds that governments have the right to rule themselves as they see fit B International Jurisdiction 1 holds that every country has jurisdiction over its citizens no matter where the are located 2 holds that every nation has the right of jurisdiction within its legal territor 3 h holds that every country has jurisdiction over the behavior that adversely affects its national security even if that conduct occurred outside the country C Doctrine of Comity 1 Doctrine of Comity a jurisdictional principle of international law which holds that there must be mutual respect for the laws institutions and government of other countries in the matter of jurisdiction over their own citizens D Act of State Doctrine 1 Act of State Doctrine a jurisdictional principle of international law which holds that all acts of other governments are considered to be valid by US courts even if such acts are illegal or inappropriate under US law E Treatment amp Rights of Aliens 1 Treatment amp Rights of Aliens countries have the legal right to refuse admission of foreign citizens and to impose special restrictions on their conduct right of travel where they can stay and what business they may conduct 2 Nations can also deport aliens F Forum for Hearing amp Settling Disputes 1 Forum for Hearing amp Settling Disputes US courts can dismiss cases brought before them by foreigners 2 However they are bound to examine issues such as a Where the plaintiffs are located b Where the evidence must be gathered c Where property to be used in restitution is located VII Legal amp Regulatory Issues A Dominantly financial amp service regulations B Foreign Corrupt Practices Act states it is illegal to in uence foreign officials through 1 Personal Payment bribery to foreign o icials 2 Political Contribution type of contribution donation i e money service ideas etc made to some worthwhile government cause C Restrictive Bureaucratization 1 Prevents business growth and innovation D Privatization 1 The transfer of ownership property or business from the government to the private sector VIII Regulation of Trade amp Investment International Management Page 3 A Individual countries use legal and regulatory policies to affect the international management environment B Country is perceived to engage in unfair trade practices WTO and similar agreements 1 Government support subsidies 2 Require MNCs to accept local partners C Responses may be 1 Retaliatory tariffs 2 Restrictive trade regulations IX Technological Environment amp Global Shifts in Production A Technology Biotechnology Nanotechnology Satellites Automatic translation telephones Artificial intelligence and embedded learning technology Advancements in computer chip technology Supercomputers B Eb siness 1 Business to business B2B 2 Business to consumer B2C 3 Etailing 4 Financial services ecash C Telecommunications D Technology Outsourcing and Offshoring 1 Technology has reduced and eliminated middle management and White collar jobs 2 Global competition has forced some MNCs to outsource jobs to offshore productions 3 Emerging technology makes work more portable owewwr International Management Page 4 Chapter 10 Managing Political Risk Government Relations amp Alliances I The Nature amp Analysis of Political Risk A the unanticipated likelihood that a business s foreign analysis that reviews major political decisions likel to affect all enterprises in the country B analysis investment will be constrained by a host government s policy C directed toward government politics and actions that in uence selected sectors of the economy or specific foreign businesses in the country D Macro Risk 1 Freezing the movement of assets out of the host country 2 Placing limits on the remittance of profits or capital 3 Devaluing the currency 4 Refusing to abide by the contractual terms of agreements previously signed with MNC 5 6 Industrial piracy counterfeiters Political turmoil 7 Government corruption E Micro Risk 1 Some MNCs are treated differently than others 2 Industry regulation 3 Taxes on specific types of business activity 4 Restrictive local laws 5 Impact of WTO and EU regulations on American MNCs 6 Government policies that promote exports and discourage imports F Terrorism amp Its Overseas Expansion 1 the use of force or Violence against others to promote political or social Views 2 3 Types of Terrorism a Amateur b Religiously motivated c Classic 3 MNCs are very cautious when setting up operations in countries with high terrorism risk a MNCs must assess political risk install modern security compile crisis plans and prepare employees for possible situations G Analyzing Expropriation Risk 1 Expropriation the seizure of businesses by a host country with little if any compensation to owners 2 Indigenization Laws require nations to hold a majority interest in an operation II Managing Political Risk amp Government Relations A Comprehensive Framework can help companies manage their political risk B There are 3 basic categories of political risks 1 government policies that limit the transfer of capital payments production people and technology in and out of country a Tariffs on exports and imports b Restrictions on exports c Dividend remittance 1 Ca ital re atriation 2 2 government policies and procedures that directly constrain management and performance of local operations a Price controls b Financing restrictions C Export commitments 1 Taxes e Local sourcin re uirements 3 d government policies or actions that inhibit ownership or control of local operations a Foreignownership limitations International Management Page 1 Pressure for local participation Confiscation Expropriation Abrogation of proprietary rights C General Nature of Investment 1 a type of highrisk investment in which goods or services produced are not similar to those roduced at home 2 d the production of raw materials or intermediate goods that are to be processed into final roducts 3 i an MNC investment in foreign operations to produce the same goods or services as those produced at home D Special Nature of Investment 1 There are 3 sectors of economic activity agriculture forestry mineral exploration and extraction manufacturing transportation finance insurance and related industries 2 The special nature of foreign direct investment can be categorized as one of five types a Type I highestrisk venture type V is lowest 3 The risk factor is assigned based on sector technology and ownership Primary sector industries usually have highest risk factor Service sector industries have next highest Industrial sector industries have lowest Firms with technology that is not available to the government should the firm be taken over have lower risk than those with technology that is easily acquired e Wholly owned subsidiaries have higher risk than partially owned subsidiaries E Quantifying Political Risk 1 Some firms try to quantify political risk as part of their effort to manage it 2 Each variable is given a minimum or maximum score scores tallied for overall evaluation of risk 3 Factors typically quantified a Political amp Economic Environment b Domestic Economic Conditions c External Economic Conditions F Criteria for Quantifying Political Risk 0999 9 Fr International Management Page 2 Tabla iquothill Ei Ei l39t f Il39 tr nantl mg P ll l g il HIE Mnjx r airmen Emitarias Mil l uln Mmmhl mu PitIiEitI E i alli39llJ U nL39llll39lilli 1 ldbvilhl w u Il vlu prii iliim l agarHarm 31 161 HWW39Z39IH FHE W E Izmmlnmj ur Ei mmml sawmillcm w H 35 Th FEE5E3 15 5539 II39IEIIIIITE BF IquotJ m NIH DEFT THEI U Ll fal l l Eif rl lj D 1E 4 li EST Giiiirlli39 ll 31a Thilia lh f li i 5 Q n FE39IFEIIIJIZIEJIIW W TEE 39lilrlli p I35 39 TFlllm 39 l FlFCIi39iII39EIIET 41a 12 E l3ampi 39 TEEU EIKIZI39E EHI I ilJIElf 39ll ir 2 122 E Erm a 39 QT FUI PHQ rfll39 ll39Tl iir 39itmml 13 IE LQSEIFIZIF FEI39IEFEII IIEFI39EH IFJE39EII I ll lial i EIECamp 3 15 Drumammo FrF 39ljl 3955 53925 57quot II39FE D39IJIIIEIKCIJHI mll39 j39imm m Far Imama Iiimanna 2 IE 11 Engmzum39aln Ith Elllf i Haulaim FEM g jgquot 13 Flr IIIEIGEIQ39HE lf 39I l39 IUFIHI J I39 EIFI SEquot EliHF L3 393 quotITl lln l rtlnn I39llllrllll prxavlmm 3 gamma 1quot Ill 14 Ammanalll w a Immune5m muttj manic3a ten riai 39 ES 339 1L5 vn lmhl lty m high qualmp lnnrlll mum 1 3 15a FICJEE IIZFIHEV39F l llp flri amwlcwmem till quotInna 39i3quot39i fi5 239 3 TIE yadlmhl ity n1 Qn rgy ranriumgr 3 11 155 k F Ililr 7lquot 1 f r i l HCWIFEHFH1WHHI Dr t li ll is 3 39I39FjT i39i139Ell2 awi a 39i I39ll i mn39mrmini amm i 14 Eht u E fll39ml Egg H EGEFIC tli l39l i il399 l39 39TI39H 39 3 393 rgl ft39 ni 2391 Flnni39uiiri lImm ilml39 n Qtl an muralis 1 39IJIEI 33 Fl lgrln39iglimlm illinljpnjgaEaifl can futureigjin lg39TuaEaijni ng Ina The L giufllrJn39i i39WF a FranHelium in 55M mp m7 Ql i lg in panngrnhilpn E E4 LEEEICII FILTRPI IEEIIQFI T I39J l39 ri l l b Il39i lfl Pr Ll tii 35 5 2 5 FiPi39uizrl t ll l i ill l E l rm l i i t r f tr nn arn if H 35 FlEEVE iltlrfl39ill imagined 1th I mmm mammal I39ELIII39EIFIHI39EIf39 lm i q prgvinrla L1 weears 5 Ti 25 Dwmlgpm l m thigh Drumming m Faj pil39f i39l l it 21 393 2H brain tun Hawaiigm int t ir ugl i IE amt riftingr grigxrgjr Illripcr ia 3 14 EE Ill tEleTl 39 j 139unaimgiml E39ut m lll39i 393 E xna rm tmni limping5sz ri tha Qmnlmmgm QT inca i namingw mm In Hal1E wrl yrmiug imc FIEI111 E EliathliJ and H Eliferalmaw Giannini Hitsk Hetinguf a39iHil errralggrcImmr i39a39iim39raar imilal vwmw 25 Hui EL 1335 i n i l fil l Himquot l rf i 85135h G Techniques for Responding to Political Risk 1 3 Related Corporate Political Strategies a Relative Bargaining Power Analysis i The MNC works to maintain a bargaining power position stronger than that of host country b Integrative Protective amp Defensive Techniques i Integrative Techniques help overseas operations become part of a host country s infrastructure by a Developing good relations with host government and other local political groups b Producing as much of product locally as possible with use of incountry suppliers and subcontractors c Creating joint ventures and hiring local people to manage and run operation d Doing as much local RampD as possible e Developing effective labormanagement relations ii Protective amp Defensive Techniques discourage the host government from interfering in operations by a Doing as little local manufacturing as possible and conducting all research and development outside country b Limiting responsibility of local personnel and hiring only those who are vital to operation c Raising capital from local banks and the host government as well as outside sources d Diversifying production of the product among number of countries c Proactive Political Strategies i Lobbying campaign nancing advocacy and other political interventions are designed to shape and in uence political decisions prior to impact on rms by a Formal lobbying b Campaign financing c Seeking advocacy through the embassy and consulates of home country d Formal public relations and public affairs activities such as grassroots campaigning and advertising International Management Page 3 III Managing Alliance A The Alliance Challenge 1 Alliance and joint ventures can significantly improve the success of MNC entry and operation especially in emerging economies a Motivating Factors i Faster entry and payback ii Economies of scale and rationalization iii Complementary technologies and patents iv Coopting or blocking competition b Preparation for likely Eventual Termination of Alliance i Legal Issues a Conditions of termination b The disposition of assets and liabilities c Dispute resolution d Distributorship ownership e Protection of proprietary property i Sales territory rights g Obligations to customers ii Business Issues a Basic decision to eXit b Peoplerelated issues c Relations with the host government B The Role of Host Governments in Alliances 1 Having alliance or jointventure partners may be advantageous to MNC entry and expansion by a Using highly regulated industries such as banking telecommunications and health care b Coping with emerging markets environments characterized by arbitrary and unpredictable corruption c May be required by host government d Host government may be unwilling to permit alliance to terminate International Management Page 4 Chapter 5 Managing Across Cultures I The Strategy of Managing Across Cultures A 4 Distinct Strategic Predispositions 1 Ethnocentric a A nationalistic philosophy of management that allows the values and interests of the parent company guide strategic decisions 2 Polycentric a A philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates 3 Regiocentric a A philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis 4 Geocentric a A philosophy of management whereby the company tries to integrate a global systems approach to decision making B Meeting the Challenge 1 The Globalization Imperative a Belief that one worldwide approach to doing business is key to efficiency and effectiveness b Many factors facilitate the need to develop unique strategies for different cultures i Diversity of worldwide industry standards ii Continual demand by local customers for differentiated products iii Importance of being an insider as in case of customers who prefer to 39buy local iv Difficulty of managing global organizations v Need to allow subsidiaries to use own abilities and talents unconstrained by headquarters 2 In advertising a French i Avoid reasoning and logic ii Advertising is predominantly emotional dramatic symbolic iii Spots are viewed as cultural events art for sake of money and reviewed as if they are literature or films b British i Value laughter above all else ii Typical broad selfdeprecating British commercial amuses by mocking both advertiser and consumer c Germans i Want factual and rational advertising ii Typical German spot features standard family of two parents two children and grandmother 3 What MNC Should Do To Adjust Global Strategies for Local Markets a Stay abreast of local market conditions i Don39t assume all markets basically same b Know the strengths and weaknesses of MNC subsidiaries i Provide them assistance in addressing local demands 0 Give the subsidiary more autonomy i Let it respond to changes in local demand II CrossCultural Differences and Similarities A Parochialism and Simplification 1 Parochialism the tendency to view the world through one39s own eyes and International Management Page 1 perspectives 2 Simplification the process of exhibiting same orientation toward different cultural groups B Six Basic Cultural Variations Table 5 2 EII Ease Eul uml 1ilfariliii tl l riartat i nna Hange rnif U3 riatiEina Wiria in nine amm if Female rmed Ird an exaliilmlui elmngnarllilei Fl mixture of gems and E39m39ill Evil ithaingaabiaflailici l angea hleil What is the paraambit rula tiunei iip tr i nariirui wwiiir aaiir IE1 harmg ir wijh nature Subjugafian What it the premiums relational nip 1 Gather people Linseal il liararzhi i Collateral im i utivi Imeli39irirlllalimtquot What ii the ruinsimilar f human activity Barringi Brainlg and Imam Thing Buying What is the tempera Twila of human activity Emma 9 Pr aginr Paar What is this eurieelititrrrp of apnea Pii39tl39 l a39 Mixed Public HerEire Haifa3395 me dumi am LLE orientation Euuyre res apted iru n the wui k at Humane Hunks mud leu h lm and Fr l L Humbledz C Similarities Across Cultures 1 Not possible to do business same way in every global location 2 Procedures and strategies that work well at home can39t be adopted overseas without modifications 3 Some similarities have been found a Russia and US for example i Traditional management ii Communication iii Human resources iv Networking activities v OB Mod D Differences Across Cultures 1 Far more differences and similarities found in crosscultural research 2 Wages compensation pay equity maternity leave 3 Importance of criteria used in evaluation of employees E Cultural Clusters in the Pacific Rim EU and United States International Management Page 2 Table 5 3 cultural Elmai tar i1 the Paci c Firm EIJ i ml UFIHEIEI Stain Hawaii Lilim a ainw i t li individualism Magnulliniw Aw idaimn F aui l iu iim Hang lining Malaysia Philippimm Singapme i T J23 pan 139 E u ih Kama aiwan EU Limited States France Spain aquot 1 Elf Belgium 1 139 Faringail Greece i I 7 Eenimarlnc Nei heirl ind m 1 l Germany Great Eiritain Ireland United Staten LIA F A Partially Completed Matrix for International Human Resource Management yl39l rl l l mull11 H E39l ii I 39 tl l la Tran F1 I 39i ll rmgj n39uam hz rna LEI h lr Filllr tl il ii JEl lI I llt l il39lx NatE indicates hih our aiming indimma law car weak Ermine Based an research by Human and prnsarn39tad in Fidel13rd M Handmade and Friend Luth ans quotLLE Mu itiuuariitmais E mpematiu u E t raitegiea iuxr Lanai Managemem EFDE Eu E U IFI KUF HII implication Samplingarm and f 39 f Hawaiir March April 1 p 4 H pmducad wink psErrntniriaivzin Elf Sage F39Iuhlliizaiiiziins lil39iE via Copyright Clearance CantHr vi Prepay i39uzur Innn1 matQM Ei l jJFI39r mm perm Him In Mr to 51w Eritreamm Hummii u Franticstamp whim FurlHim i39 btall i EHIIJIIEIIIJ IEiliiIZIF from mrlsmu r FMUL i iifllz if E i r a u 39lle rdlrllrquot F irlimrili l39l amp LIEF magnumam a mnin lar Flameam Fifi laminar I39in39il naII 51 USE El lli l i 1 REEFi ul lllc Wli 39f iI i39TI EEi f lt lLJHJ nil UEE ll iuupzl llni39lhhl aTIul Edelglizl lQEH tlnrfrli1i Ii iiJIi EIE I Mills Hulih ml ir l39l ifil I iui39 s l 39l l le IGFIllrll rl I Luis unaiiiilr39illl Eriliu lln El lij Emmir li hl I 39I39i hi39iili lrai iii Eli h urn 51 Iriinini nnllirjll rp39 I LEGEl I v li m m i yam2i a l39r39iG L39I39IH EE39iIEIF 9 WildIi IE lTIEF i FIIL39I GII39QE l39il il 1an Iulilll l HiEII39EHI1EIEI1 55min i2u i1 II Hie infail QT Hairsaim miIgy l WLl ill l tl elm 1i39i39iii39lli 139 H EIEe Ihi lia il39if39lijr r aunt i nzlr I1riarIIIIEIIlIur39IIIu 3 UN bill Ingun l mIti lm E illii i mi Ema3515 ti In bur ternii FF Ear3m antiENE Hum ar slimming Fll F iil Ih Q i i m5 IlullEIITLE39lIl39 IIITMIr n llriiilnldr ls I New l 39 il li39ii ri39li Elihu mg aura ruewand I li lm ul1iuji FI JIII IJIF h i39l rialmoi IUSn39 39r39l39i iIEIFEi 39i39a39GEIFlE nHamI i 235quot wll1 unl a i Tram unlm 115 EHII39Ijl39IiJI E All 39 e iiin ilzi I nj xilmlcns a an promrad izr man wags all altar kin rm 6 EI ft I39ll31h pm rillg iljhgl39l w rriflI39I I ur n miimm W afhr f i Utl illeIarEiall ld changing Mw gll39i LIEUElf lglw i FFEIJEW 1 r39 l rtr quot Inn uinlcnlaatlcn at MIKEIf I Elan Iliumquot EHH II39l mis t flill l L39Ii I btlir IWWE ima39r lumzsrnaa rrlasms Elffi Egii 39 1 I llHjlIrliI Hartl lEjarljicarl 39539 Il it rlii r 13mm micall Mil g i Li a au mmmma iiiWHE I Ll il Ilrlllrlilr39lfll Il39s rnuL l munmachines Ei ueczuumm rIIIrquotn5rikaIr iilililljl l 393 El lfh WEI MilHTM 1 main Grumman I lJ Iillu39gI j WEITIEIEE annual i i l i39ii ihi Ea wunhailr39 Ful llcilia Han I mfgnaming 7Lrllil1ra 39I IIEIipl Lili iiJM mtormln m im quot mmiws laIrpruzrt iil39nililiaI39HEJIHlIa ling Ii l39lil jl laI l ll Japan anmain MGR H3543 El39 ll Ella um Frmm Fro1i lL Li ill1x i E Faull dis Mariam am litaha w Llama115 5 Dancing micg Fewmm nippraw tl i i IHHM Hmnn Herman5 quot iin39i39n i ggsfin39iiiaE39J39id39ml39tlu i39 il39 awn 2 39IEIEIE ogrimmed wlm pzrmissiarn o1 JcI m wmg Eu SlitNi int 111 Cultural Differences in Selected Countries and Regions A Doing Business in China 1 The Chinese place values and principles above money and expediency 2 Business meetings typically start With pleasantries such as tea and general conversation about the guest s trip to the country local accommodations and family International Management Page 3 The Chinese host Will give the appropriate indication for When a meeting is to begin and when the meeting is over Once the Chinese decide who and what is best they tend to stick with these decisions a Although slow in formulating a plan of action once they get started they make fairly good progress In negotiations reciprocity is important a If the Chinese give concessions they expect some in return Because negotiating can involve a loss of face it is common to find Chinese carrying out the whole process through intermediaries During negotiations it is important not to show excessive emotion of any kind a Anger or frustration is viewed as antisocial and unseemly Negotiations should be viewed with a longterm perspective a Those who will do best are the ones who realize they are investing in a longterm relationship B Doing Business in Russia 1 10 Build personal relationships with partners a When there are contract disputes there is little protection for the aggrieved party because of the time and effort needed to legally enforce the agreement Use local consultants a Because the rules of business have changed so much in recent years it pays to have a local Russian consultant working with the company Ethical behavior in the United States is not always the same as in Russia a For example it is traditional in Russia to give gifts to those with whom one wants to transact business Be patient a In order to get something done in Russia it often takes months of waiting Russians like exclusive arrangements and often negotiate with just one firm at a time Russians like to do business facetoface a So when they receive letters or faxes they often put them on their desk but do not respond to them Keep financial information personal a Russians wait until they know their partner well enough to feel comfortable before sharing financial data Research the company a In dealing effectively with Russian partners it is helpful to get information about this company its management hierarchy and how it typically does business Stress mutual gain a Win Win in negotiations also works well in Russia Clarify terminology International Management Page 4 ll 12 a The language of business is just getting transplanted in Russia b Doublecheck and make sure that the other party clearly understands the proposal knows what is expected and when and is agreeable to the deal Be careful about compromising or settling things too quickly because this is often seen as a sign of weakness Russians view contracts as binding only if they continue to be mutually beneficial so continually show them the benefits associated with sticking to the deal C Doing Business in India 1 2 It is important to be on time for meetings Personal questions should not be asked unless the other individual is a friend or close associate Titles are important so people who are doctors or professors should be addressed accordingly Public displays of affection are considered to be inappropriate so one should refrain from backslapping or touching others Beckoning is done with the palm turned down pointing often is done with the chin When eating or accepting things use the right hand because the left is considered to be unclean The namaste gesture can be used to greet people a It also is used to convey other messages including a signal that one has had enough food Bargaining for goods and services is common a This contrasts with Western traditions where bargaining might be considered rude or abrasive D Doing Business in France 1 When shaking hands with a French person use a quick shake with some pressure in the grip It is extremely important to be on time for meetings and social occasions a Being fashionably late is frowned on During a meal it is acceptable to engage in pleasant conversation a But personal questions and the subject of money are never brought up Great importance is placed on neatness and taste a Visiting businesspeople should try very hard to be cultured and sophisticated Tend to be suspicious of early friendliness a Dislike first names taking off jackets or disclosure of personal or family details In negotiations they try to nd out what all of the other side s aims and demands are at the beginning but they reveal their own hand only late in the negotiations Do not like being rushed into making a decision and they rarely make International Management Page 5 important decisions inside the meeting 8 Tend to be very precise and logical in their approach to things and will often not make concessions in negotiations unless their logic has been defeated E Doing Business in Brazil 1 Physical contact is an acceptable form of communication a Brazilians stand close to others when having a conversation and may touch the person s back arm or elbow as a greeting or sign of respect 2 Facetoface interaction is preferred a Avoid email or telephone calls b Meetings may start 10 to 30 minutes late c Greet with a pleasant demeanor and accept refreshments 3 Trust is not a given in Brazil so be sure to form a strong relationship before bringing up business issues a Close relationships are very important because Brazilians will do anything for friends 4 Appearance is very important a It re ects you and your company b Men should polish their shoes and wear conservative dark suits c Women should dress nicely but avoid being too conservative or formal d Think fashion 5 Patience is key a Many processes are long and drawn out including negotiations b Expressing frustration or impatience and attempting to speed up processes may lose the deal c Brazilians will be very loyal and committed once the agreement is reached 6 It is not acceptable to be illprepared Presentations should be informative and expressive a b Consistency is important 0 Be sure to state your case multiple times 9 Brazilians often bring multiple people to negotiations e Subsequent meetings may include members of higher management requiring a rehashing of information F Doing Business in Arab Countries 1 It is important never to display feelings of superiority because this makes the other party feel inferior a Let one s action speak for itself and do not brag or put on a show of self importance 2 One should not take credit for joint efforts a A great deal of what is accomplished is a result of group work and to indicate that one accomplished something alone is a mistake International Management Page 6 Much of What gets done is a result of going through administrative channels in the country a It often is difficult to sidestep a lot of this red tape and efforts to do so can be regarded as disrespect for legal and governmental institutions 4 Connections are extremely important in conducting business Patience is critical to the success of business transactions a This time consideration should be built into all negotiations Important decisions usually are made in person not by correspondence or telephone a This is why an MNC s manager s personal presence often is a prerequisite for success in the Arab world b The person at the top Will rely on personal impressions trust and rapport International Management Page 7 Chapter 6 Organizational Cultures amp Diversity 1 The Nature of Organizational Culture A Organizational Culture 1 Shared values amp beliefs enabling members to understand their roles and the norms of the organization including a Observed behavioral regularities typified by common language terminology rituals b Norms re ected by things such as the amount of work to do amp the degree of cooperation between management amp employees c Dominant values that the organization advocates amp expects participants to share i Low absenteeism high efficiency B Other values and beliefs 1 Philosophy set forth regarding how to treat employees amp customers 2 Rules dictating do s amp don ts of employee behavior pertaining to productivity intergroup cooperation amp customer relations 3 Organizational climate as re ected by the way participants interact with each other treat customers amp feel about how they are treated by senior level management H Interaction Between National amp Organizational Cultures A National cultural values of employees may significantly impact their organizational performance B Cultural values employees bring to the workplace are not easily changed by the organization HI Dimensions of Co orate Culture rang IE1 irn im ed Eur gr t iultur M i l Ae eltlee minute Tn ee neietent end gireeiee Tn MINE fer eeeureee end Tn Issue pien eeretTazu pure Lie ees dime and db eetivee l n enemier te dEtBilTiJ re ne and genieIL Get it right innwere endi prxegreree n fer it ll il l il l Jill Hereen Tn put the de mende ed the jet heftre the needs if Te nut th e needs e f 39ie iindieiidiueil heirre the neede e 39 the iindieid uel ne jean I l l tit39 39 l i f i a Flmfl l illall Tin ideslithe with and mpndrljd the Qip ti n Ed The Tn pursue the einn e and idere le ant men genie eeinnel empire ring mgenieetieanet preehiee rEnrntmuninatulun ue en Guarded TEE lii WMEITE end eneeerene e 11Lquot 6an TWP E i l Ti mender ewe L39EIWIFEI39I Hit239 Q r ll f l Hi lfj millw err Intemretinn ean enlinln e1 iinfermetlnn and nglnien Enntrgxl 39ili1gnl1t Lagen TEE i liii l iri 39p39 nun deer d iifl deriiliIE 39p ilii i lf39i s Tiii FEEElma dli39i 39lfld I ie l gf t f liili Iii l le end greeeduree at the eitu etien E nr iur t mrunntllnnnai Pragmatic Tea pm the enpertiee end e lenderrde ed the ermnleeriing Te mil the demende endl exeee39letiene ef wetemere nrgenize lien firei39L Tn dd wine we knew e rig I11 relt Te de whet negr eel Enema Adapted from e elude by the Diagnosing rgenize ienel Eu he re nr Strategic agp ieetign iDDCES aIi mug end renewed in lien Heeei clin Meneging Tuiturei l39 ereneee tteragree Fer CemnetJ39n39ee Advantage Werh rnghem England Addieen3939a eele 15 p EelE3 IV European Perceptions of the Cultural Dimensions of US Operations amp European Operations of the Same MNC International Management Page 1 letiei tiee uteme Jule F e reen Serperete Pmteeeiene iii TE ht Lease Conwentiunel Frag math I J I i i I l i i 3 331 BE 33 EliCl 35 E E3 3E IilEI ll nil239 Aet ivitee DlJlTDJLIIIE llcile F39e reen Earlenerem meeeeiennll 1 EB E11 eee leeertl Tie ht Leeera ue neemienezl Frag rnetie i l 3t 31 31239 ee 3E3 3 33 3939 El e1 4 EDUJ39DEf d plt veel ru n a etude Ie39f the Diegirieeing egenieen tienel E LJIEZLI re fer St rategit ppleeti eeeem geeLie Him rehertezcl fin Liee Hemeslim Hem5mm HillierSI f ereeeee ltrelemee fer el eetufmtitilm dvemae te W Fi Eif l ii jmd Eh ie reel ritiligmmt hgilnyla 1995 en MT 145 V European Management Characteristics liable IiiE Ewenearl manganeth Ehereeterie ee Ehereeteri eeie Wee tern Mertheen Eee ter ln Sewti eem mine ei ien limited lilingielesml Emileell kl ennetwl illitelyii Cerperete Iailizirrimereei elimiieietretiee Inztituetir iel Familial Management etztriibtimee Beheyier Experiential Freieeeieeel Develepmeetel E ewieiel Attitude Seneetien Tilt llgii iiit Inteitien Feeling Inetitutieneii medele Fenetiee Seleemenel nip Eentrel reduetiee Pereeeeeil E truetur e ll39reneeetien Iiliererelw Eyetem Metwerl Seeietel idee Eeeneimiee Free market Eirigiete Seeieli market Eevremueel Phileeeelw Pragme tiie Hetieeel Helietie i lumenietie E ulturel imagee Art Theatre reiii39teeture Mueie Eleme Eultule leegieEeeenl i eiliei li ermaniel iLetinl Seureef eleptee item Fleeelel lLeeeen end Fired Neuleeuert Euireeen Menagerieem Eyeteme MieErew H39iillj Lendenld il fEli e rind repented in Liee Fleeeleliin Managing uiturei i ereeeee Stretegfee fear Elemee tiee ie39eentege lWerIeinghem Engileesd EddieeeWeelew il ElEiEF pi MEL VI Organizational Cultures in MNCs A Shaped by numerous factors including cultural preferences of leaders amp employees B Some MNCs have subsidiaries that aside from logo amp reporting procedures wouldn t be easily recognizable as belonging to the same MNC C There are four critical steps to successfully integrate organizational cultures after international expansion Via mergersacquisitions International Management Page 2 The two groups establish the purpose goals amp focus of their merger Then mechanisms are developed to identify most important structures amp manager roles Next the groups determine who has authority over resources Finally the expectations of all involved participants are identified communication between departments amp individuals is facilitated D Organizational Cultures 99 F Equity Ful llmentoriented culture Projectoriented culture INCUBA Task Emphasis Person Emphasis FAMILY a LTOWER Roleoriented culture Poweroriented culture Hierarchy Source Adapted from FonsTrompenaars Riding the L39Vaves of Culture Understanding Dive51w m Globe Busmess Burr Ridge IL Irwin 1994 p 164 1 Family Culture a Strong emphasis on hierarchy amp orientation to persons i Power oriented headed by leader regarded as caring parent ii Management takes care of employees ensures they re treated well amp have continued employment iii Catalyze amp multiply energies of personnel or end up supporting leader who is ineffective amp drains energy amp loyalties 2 Eiffel Tower Culture a Strong emphasis on hierarchy amp orientation to task i Jobs well de ned coordination from top ii Culture narrow at top broad at base iii Relationships are specific amp status remains with the job iv Few offthej ob relationships between manager amp employee v Formal hierarchy is impersonal amp efficient 3 Guided Missile Culture a Strong emphasis on equality in workplace amp in task i Culture oriented to work ii Work undertaken by teams or project groups iii All team members equal iv Treat each other with respect v Egalitarian amp taskdriven organizational culture 4 Incubator Culture a Strong emphasis on equality and personal orientation i Organization as incubator for selfexpression amp selffulfillment ii Little formal structure iii Participants confirm criticize develop nd resources for or to help complete the development of an innovative product or service VII National Patterns of Corporate Culture International Management Page 3 Egalitaria a i enmazrk I wriitzerllanrd Mama ailSweden 5A I l aes a IL F I i reland 39 d Persian V MEHIEET m an Task New Eealaad elgilum hall s eHum sangr i ElIIrnaeee v i anewa Israel ail mgigaha Nigeria I Eiuaair1quot r39395quotriquot e quotlada Eeuth Kansas a I Hueranshieall See a ssrasaate free Fass39 rsm peas ans E nl Charles Hlampale Tarrier ma a the Wases af Sahara Hadersiana39mg Disremit Fa Elisha Sissiesas Enid eel Haw39ferk MeGrawHill 19933 a 131 VIII Managing Multiculturalism amp Diversity A Both domestically amp internationally organizations lead workforces with a variety of cultures consisting of largely diverse populations 1 Women amp Men 2 Young amp Old 3 Black White Latin Asian Arab Indian etc 4 Many others IX The Evolution of International Corporations Phase 1 Phase E Phase Phase 21 Dames e Internatie asl Multinafianal lalaall fi was rm s rm s rms X Locations of International CrossCultural Interaction International Management Page 4 Phase TI Phase Planet 3 Phase 1 Do meslliiit Infarnatio rial Multinational Global fi rme fl rrns rms firms XI Types of Multiculturalism A Domestic Multiculturalism 1 Multicultural amp diverse workforce operating in MNC home country B Grou Multiculturalism 1 employees of the same ethnicities ages genders etc 2 minor mixture of employees With different ethnicities ages genders etc 3 e ual mixture of employees from 2 groups of ethnicity age gender etc 4 equal mixture of employees from all groups of ethnicity age gender etc XII Potential Problems Associated With Diversity A When cultural diverse groups come together they often bring preconceived erroneous stereot pes With them B the assumption that one39s own opinions beliefs preferences values amp habits are normal amp others think the exact same way C communication that results from inaccurate perceptions faulty internal lters ersonal inte retations of information and social isolation D Hmay cause lack of cohesion resulting in unit s inability to take concerted action or be productive XIII Advantages of Diversity A Enhances creativity B Leads to better decisions C Generates more effectiveproductive results D Prevents groupthink E Can facilitate highly effective teams under right conditions XIV Building Multicultural Team Effectiveness Select team members for taskrelated abilities not solely based on ethnicity Team members must recognize amp be prepared to deal With their differences The team leader must help identifydefine the overall goal Mutual respect among members is critical Managers must give team positive feedback on process amp output FLUOPUP International Management Page 5 International Management Page 6
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