Friday, April 30, 2010
Blog 10
There was no assigned chapter to this blog, so I thought I would write a little about the whole class. After studying abroad in Beijing and Shanghai in China, I thought an international career was for me. After taking this course, I now know that an international career is for me. The strategical management that is required in all parts of expatriation is something that interests me. I think this whole course gave me a big insight of what an international career would entail. Although we have only seen the tip of the iceberg, this course has provided me with an interest to learn more about working abroad. I actually have been attempting to prepare myself with qualities that employers would see fit for this type of career. After viewing the tranisitionsabroad.com website for one of our assignments, I found myself later on in the semester revisiting the site to gain more information on how to obtain an international job. I found that being bilingual or more is an important characteristic to pursuing this industry. I researched the website and found numerous links that are very beneficial. One of the websites I found can teach you other languages for free (busuu.com). This website acts like a Facebook, in which the users can communicate with each other in their native languages in attempt to learn the other's. For example, if I wanted to learn Spanish I would chat with someone that is fluent in the language and they would be interested in learning English. It is a great website because it benefits all users. These websites also have many other games and other programs the user can use to learn the desired language. In conclusion, this course has really provided me with an idea of what an international career might be like. There are some parts I am a little weary of such as the longevity of the time spent abroad, but most parts I am very enthusiastic about. I am glad I enrolled in this course and hope to use it to further my international career!
Headquarters–Foreign Subsidiary Control Relationships
This chapter of the text discusses (1)centralized and decentralized control HSRs; (2) the factors that affect the decision of centralized or decentralized relationships; (3) centralization, formalization, and normative integration relationships; (4) the cultural and situational factors that influence the use of the three relationships; (5) how a balanced relationship is accomplished.
In order to maintain proper control systems, it is crucial to have an appropriate organizational structure. HSRs are in charge of making the decision as to whether a centralized or decentralized structure is appropriate. In a centralized system, most of the important decisions come from the top or at headquarters. These decisions are relative to the local matters at hand. In a decentralized system, managers at the subsidiary are given the autonomy to make most of the important decisions relative to local matters.
The There are advantages and disadvantages of both. The book talks about how a manager in France may have difficulty determining appropriate benefits for workers out of Rio de Janerio, Brazil. Another example is that foreign markets are rapidly changing, and local managers will do a better job of making decisions due to their proximity to the local markets. These examples can apply to many different situations in which a manager needs to make a decision. Also, in these examples it is evident that a decentralized structure would be advantageous. On the other hand, when decision making is decentralized, judgements made by local managers may sometimes have negative consequences for other subsidiaries and may not be in the firm's best interest. An example would be giving the Rio de Janeiro workers generous benefits that may anger other subsidiaries that find their benefits unfair. This would be a disadvantage of a decentralized structure.
With these examples, it is clear that choosing the appropriate structure may not be that easy at all. Headquarters managers are now forced to decide which structure is most efficient. Should they let local managers make decisions, or should the headquarters managers take control. As this is a problem, there are ways to combat this. When headquarters adopts a decentralized or centralized structure, it does not always adhere to it rigidly. Things like environmental changes can lead headquarters to change from a decentralized structure to a centralized one in order to preserve progress. This also shows local managers and workers that headquarters does have a presence. Another form of structure is split control, which is a mix of the two headquarters' structures.
In order to choose the most effective structure, top management uses the following determinants: Industry, type of subsidiary, function, range of subsidiaries, number and size of subsidiaries in market, ownership structure, date of acquisition, headquarters' interest and expertise, distance, environment, corporate goals, ownership, headquarters' confidence in subsidiaries and management, success of subsidiary, intersubsidiary transactions, importance of foreign market, foreign laws, and individuals. All of these aspects are vital to address before implementing either a centralized or decentralized structure. Without addressing these determinants, failure is a major possibility.
There are three basic HSR's: centralization, formalization, and normative integration. Centralization concerns the role of formal authority and hierarchical mechanisms in the company's decision-making process. The formalization relationship represents decision making through bureaucratic mechanisms such as formal systems, established rules, and prescribed procedures. Normative integration relies neither on direct headquarters involvement nor on impersonal rules but on socialization of managers into a set of shared goals, values, and beliefs that then shape their perspectives and behavior. There are two schemes to identify factors to help determine the right HSR. The two schemes are the national culture scheme and the situational scheme.
The national scheme relies heavily on cross-cultural researcher Geert Hofstede's four national cultural dimensions. These dimensions include power distance, individualism, uncertainty avoidance, and masculinity. There also was a fifth one added later by Hofstede, Confucianism. These all help to indicate whether HSR with subsidiaries located in these cultures lean toward low or high centralization. The situational scheme does not depend on generalizations like the national scheme. The situational scheme is compiled up of many different aspects including: subsidiary's local context, size of organization, organizations under crisis conditions, management's preference, and government involvement.
Some things that go into engineering organizational structures are information technology and communication costs. The text discusses that technologies such as the Internet and video conferencing are reducing costs for communicating. There now is a preferred way to make decisions involving three stages. In the first stage with communication costs low, the best way to make decisions is via independent decentralized decision makers. As costs fall, it becomes more feasible in many decision-making situations to bring information from remote areas to the hub, where centralized decision makers can have a broad perspective of the whole organization, therefore making better decisions. As costs continue to fall, decentralized managers make the decisions.
All in all, there are pros and cons to all structures. One important part of deciding is for international managers to consider both schemes. With proper balance and nurturing success is possible.
In order to maintain proper control systems, it is crucial to have an appropriate organizational structure. HSRs are in charge of making the decision as to whether a centralized or decentralized structure is appropriate. In a centralized system, most of the important decisions come from the top or at headquarters. These decisions are relative to the local matters at hand. In a decentralized system, managers at the subsidiary are given the autonomy to make most of the important decisions relative to local matters.
The There are advantages and disadvantages of both. The book talks about how a manager in France may have difficulty determining appropriate benefits for workers out of Rio de Janerio, Brazil. Another example is that foreign markets are rapidly changing, and local managers will do a better job of making decisions due to their proximity to the local markets. These examples can apply to many different situations in which a manager needs to make a decision. Also, in these examples it is evident that a decentralized structure would be advantageous. On the other hand, when decision making is decentralized, judgements made by local managers may sometimes have negative consequences for other subsidiaries and may not be in the firm's best interest. An example would be giving the Rio de Janeiro workers generous benefits that may anger other subsidiaries that find their benefits unfair. This would be a disadvantage of a decentralized structure.
With these examples, it is clear that choosing the appropriate structure may not be that easy at all. Headquarters managers are now forced to decide which structure is most efficient. Should they let local managers make decisions, or should the headquarters managers take control. As this is a problem, there are ways to combat this. When headquarters adopts a decentralized or centralized structure, it does not always adhere to it rigidly. Things like environmental changes can lead headquarters to change from a decentralized structure to a centralized one in order to preserve progress. This also shows local managers and workers that headquarters does have a presence. Another form of structure is split control, which is a mix of the two headquarters' structures.
In order to choose the most effective structure, top management uses the following determinants: Industry, type of subsidiary, function, range of subsidiaries, number and size of subsidiaries in market, ownership structure, date of acquisition, headquarters' interest and expertise, distance, environment, corporate goals, ownership, headquarters' confidence in subsidiaries and management, success of subsidiary, intersubsidiary transactions, importance of foreign market, foreign laws, and individuals. All of these aspects are vital to address before implementing either a centralized or decentralized structure. Without addressing these determinants, failure is a major possibility.
There are three basic HSR's: centralization, formalization, and normative integration. Centralization concerns the role of formal authority and hierarchical mechanisms in the company's decision-making process. The formalization relationship represents decision making through bureaucratic mechanisms such as formal systems, established rules, and prescribed procedures. Normative integration relies neither on direct headquarters involvement nor on impersonal rules but on socialization of managers into a set of shared goals, values, and beliefs that then shape their perspectives and behavior. There are two schemes to identify factors to help determine the right HSR. The two schemes are the national culture scheme and the situational scheme.
The national scheme relies heavily on cross-cultural researcher Geert Hofstede's four national cultural dimensions. These dimensions include power distance, individualism, uncertainty avoidance, and masculinity. There also was a fifth one added later by Hofstede, Confucianism. These all help to indicate whether HSR with subsidiaries located in these cultures lean toward low or high centralization. The situational scheme does not depend on generalizations like the national scheme. The situational scheme is compiled up of many different aspects including: subsidiary's local context, size of organization, organizations under crisis conditions, management's preference, and government involvement.
Some things that go into engineering organizational structures are information technology and communication costs. The text discusses that technologies such as the Internet and video conferencing are reducing costs for communicating. There now is a preferred way to make decisions involving three stages. In the first stage with communication costs low, the best way to make decisions is via independent decentralized decision makers. As costs fall, it becomes more feasible in many decision-making situations to bring information from remote areas to the hub, where centralized decision makers can have a broad perspective of the whole organization, therefore making better decisions. As costs continue to fall, decentralized managers make the decisions.
All in all, there are pros and cons to all structures. One important part of deciding is for international managers to consider both schemes. With proper balance and nurturing success is possible.
Cross-Cultural Decision Making
Every aspect of management comes along with some form of decision making. When it comes to cross-cultural decision making, a lot of difficult obstacles must be addressed. A decision in one culture is often ineffective in another. Different situations call for different decision making styles. Two types of decision making processes for organizations either apply a programmed or nonprogrammed process.
The programmed decision making process is the most commonly used style. This entails making decisions based on precedent, custom, policies and procedures, and training and development. This style reduces risk and stress for decision makers because a basis for a decision can be pretested for efficiency. A disadvantage is that when an organization's environment changes, the programmed bases for decision making become obsolete.
With nonprogrammed decision making, this entails analyzing current data and information, obtained through a systematic investigation of the current environment, for the purpose of identifying and solving a problem.
In Western cultures, there are steps to the rational decision process. These steps include: (1)through investigation, define the problem, (2) identify a minimum criteria on which to base the decision, (3) identify multiple viable choices, (4) quantitatively evaluate each viable choice on the basis of each criterion, (5) select the optimum choice, (6) implement the choice.
The validity of the nonprogrammed decision making as a prescription for decision-making behavior (DMB). is effected by culture. Culture varies from country to country, thus a decision making model must fit that culture. People in different cultures will have different expectations in regards to state of affairs, for specific social processes, interpretation of environmental cues, and responses. The book goes into detail of how something in one country maybe rational, but irrational in another. Some examples of how contrasting views affect the decision making process are problem recognition, criteria, information gathering, and choice and implementation.
There are 2 basic types of DMB's, authoritative and participative. Authoritative decision making involves one person deciding as to what should be done and informing their subordinates. The decision makers may consult their subordinates, however, before finalizing them. Participative decision making involves asking the subordinates what should be done and how so. Both styles have pros and cons. The authoritative approach has the advantage that decisions can be made quickly but the subordinates may feel demoralized due to their lack of input. Participative approaches have the advantage that subordinates are much more likely to be satisfied and their performance will benefit. The disadvantage is that sometimes the participative approach is time consuming as the decision process is slowed. The approach that should be used relies heavily on the culture.
Decision makers that are not bound to one specific approach are presented with the problem's to which DMB is applicable to the given situation. There are two contingency DMB frameworks that facilitate the process for cross-cultural managers to decide which DMB will work. The first framework is called the country-related cultural factors framework and the second is the universal factors models. The country-related cultural factors framework uses the four dimensions of power distance, uncertainty avoidance, individualism, and masculinity. The universal factors model posits that DMB is influenced not as much by broad cultural factors as by varying situational factors. Some of these situational factors include subordinates' work environment, individuals' motivation, individuals' maturity level, and managerial level and functions.
There are some problems, however, with this framework. One of the problems is reconciling the conflicting demands of a situation. Another problem is defining the level of all individuals' motivation. Some upper-level managers are not going to want to delegate authority to lower levels, and some lower level managers are not going to want that authority. Just like every system and model, this one has its issues. There are many different aspects that go into deciding which framework is correct.
The programmed decision making process is the most commonly used style. This entails making decisions based on precedent, custom, policies and procedures, and training and development. This style reduces risk and stress for decision makers because a basis for a decision can be pretested for efficiency. A disadvantage is that when an organization's environment changes, the programmed bases for decision making become obsolete.
With nonprogrammed decision making, this entails analyzing current data and information, obtained through a systematic investigation of the current environment, for the purpose of identifying and solving a problem.
In Western cultures, there are steps to the rational decision process. These steps include: (1)through investigation, define the problem, (2) identify a minimum criteria on which to base the decision, (3) identify multiple viable choices, (4) quantitatively evaluate each viable choice on the basis of each criterion, (5) select the optimum choice, (6) implement the choice.
The validity of the nonprogrammed decision making as a prescription for decision-making behavior (DMB). is effected by culture. Culture varies from country to country, thus a decision making model must fit that culture. People in different cultures will have different expectations in regards to state of affairs, for specific social processes, interpretation of environmental cues, and responses. The book goes into detail of how something in one country maybe rational, but irrational in another. Some examples of how contrasting views affect the decision making process are problem recognition, criteria, information gathering, and choice and implementation.
There are 2 basic types of DMB's, authoritative and participative. Authoritative decision making involves one person deciding as to what should be done and informing their subordinates. The decision makers may consult their subordinates, however, before finalizing them. Participative decision making involves asking the subordinates what should be done and how so. Both styles have pros and cons. The authoritative approach has the advantage that decisions can be made quickly but the subordinates may feel demoralized due to their lack of input. Participative approaches have the advantage that subordinates are much more likely to be satisfied and their performance will benefit. The disadvantage is that sometimes the participative approach is time consuming as the decision process is slowed. The approach that should be used relies heavily on the culture.
Decision makers that are not bound to one specific approach are presented with the problem's to which DMB is applicable to the given situation. There are two contingency DMB frameworks that facilitate the process for cross-cultural managers to decide which DMB will work. The first framework is called the country-related cultural factors framework and the second is the universal factors models. The country-related cultural factors framework uses the four dimensions of power distance, uncertainty avoidance, individualism, and masculinity. The universal factors model posits that DMB is influenced not as much by broad cultural factors as by varying situational factors. Some of these situational factors include subordinates' work environment, individuals' motivation, individuals' maturity level, and managerial level and functions.
There are some problems, however, with this framework. One of the problems is reconciling the conflicting demands of a situation. Another problem is defining the level of all individuals' motivation. Some upper-level managers are not going to want to delegate authority to lower levels, and some lower level managers are not going to want that authority. Just like every system and model, this one has its issues. There are many different aspects that go into deciding which framework is correct.
Tuesday, April 13, 2010
Cross-Cultural Business Practices and Negotiations
Clearly there is a major impact of culture on business practices. There a various approaches to conducting business pertaining to culture. At an international level there is much more complexity than there is in the home markets. Factors effecting cross-cultural business include, time, thought patterns, personal space, material possessions, family roles and relationships. When dealing with time, some countries view this as an asset. America is a prime example with our famous expression, "time is money." This does not hold true for all countries however, such as Guatemala. These South American countries have a much greater appreciation of time, and may spend business meetings discussing things like nature and family. Time also applies to the decision making process which can take longer than normal. It is important to realize that each culture has a different perspective of time, and that one must appreciate that cultural difference when conducting business.
Thought patterns become an obstacle when conducting business. Some cultures have a circular thought process, meaning that since individuals can see what has happened in the past, their past is ahead of them, and since they cannot see into the future, the future is behind them. This ideology supports that change is bad. Therefore, decision makers may not be able to see the opportunities that lie ahead. Again referring to Geert Hofstede's cultural dimensions, individuals of different cultures will put higher or lower values on material possessions. The book describes the American notion of "money talks" is far from true in many cultures. On the subject of value, there are many cultures that put family matters before work matters. This strongly disagrees with the American way where family matters take the back seat to work. These relationships, as well as the deep friendships, provide some sort of social insurance.
Other cultural factors that can affect business are competitiveness and social behaviors. Individuality is sometimes highly valued in some countries, like America. This social Darwinism type style of living is stress in Americans as we grow. When conducting business internationally, it is definitely a possibility to offend European cultures with our aggressive manner in pursuit of business transactions. These cultures prefer business relationships that have a more relaxed atmosphere. In regards to social behaviors, cultures vary on habits such as eating, the types of food given, gift giving, and greetings from culture to culture. Somethings that Americans may find rude here, like belching, are considered completely acceptable in other cultures. When it comes to gift giving, some cultures will find this offensive if a gift is given and in others will not. Some cultures actually expect gifts.
As discussed business customs vary from country to country, due to culture. As discussed in earlier blogs there is a way to conduct business between high and low context cultures. Those in high context cultures have several steps before talking business. The first step is getting to know the person you will be doing business with. This may mean many meetings and conversations of irrelevant topics you want to pursue. Also be sure to never mention price and suppress the urge to do so. The topic of price will come much further down the road. When meeting with low context cultures, they are going to be of some intellect, and expect the same from you. These low context cultures want to meet with a person that is somebody. Also, there is strong heritage within these nations so be sure not to offend. Lastly, as Americans we shout whatever is on our minds. In these countries, they will find this a characteristic of impatience and egocentricity.
It is important to be sensitive to cross-cultural generalizations, as not all of them apply to everyone. For instance, in America the ideology that time is money may apply to many, but not to all. This applies to all cultures in that knowing the background is important, but may not be true for everyone. These generalizations maybe outdated due to the common practice of culture borrowing from nation to nation. Trying to fit in with these cultures may prove to be problematic, or successful. Research has found that those who attempt to adapt to the culture have shown to be favorable to the native. However, over doing it may result in a more negative relationship.
As discussed there are obstacles to overcome to successfully conduct business. Typically these obstacles include learning the local language and culture, and becoming well prepared for negotiations. If these are not options, then employ an effective language translator and/or a cultural translator. There is no need to completely learn a whole culture, and is actually impossible. However, one should learn enough about the local culture as to not feel uncomfortable before or after conducting business. The book gives an example of how Japanese business men have used their knowledge that Americans have a low tolerance for silence to their advantage.
All in all there is a lot that goes into a strategic plan for international negotiations. Preparation for face to face negotiations, where these should take place, settlement range, and more are all parts to successfully conduct business transactions. Even with a proper plan created by human resources, there is still going to be a chance of failure. Preparation and research are vital for success.
Thought patterns become an obstacle when conducting business. Some cultures have a circular thought process, meaning that since individuals can see what has happened in the past, their past is ahead of them, and since they cannot see into the future, the future is behind them. This ideology supports that change is bad. Therefore, decision makers may not be able to see the opportunities that lie ahead. Again referring to Geert Hofstede's cultural dimensions, individuals of different cultures will put higher or lower values on material possessions. The book describes the American notion of "money talks" is far from true in many cultures. On the subject of value, there are many cultures that put family matters before work matters. This strongly disagrees with the American way where family matters take the back seat to work. These relationships, as well as the deep friendships, provide some sort of social insurance.
Other cultural factors that can affect business are competitiveness and social behaviors. Individuality is sometimes highly valued in some countries, like America. This social Darwinism type style of living is stress in Americans as we grow. When conducting business internationally, it is definitely a possibility to offend European cultures with our aggressive manner in pursuit of business transactions. These cultures prefer business relationships that have a more relaxed atmosphere. In regards to social behaviors, cultures vary on habits such as eating, the types of food given, gift giving, and greetings from culture to culture. Somethings that Americans may find rude here, like belching, are considered completely acceptable in other cultures. When it comes to gift giving, some cultures will find this offensive if a gift is given and in others will not. Some cultures actually expect gifts.
As discussed business customs vary from country to country, due to culture. As discussed in earlier blogs there is a way to conduct business between high and low context cultures. Those in high context cultures have several steps before talking business. The first step is getting to know the person you will be doing business with. This may mean many meetings and conversations of irrelevant topics you want to pursue. Also be sure to never mention price and suppress the urge to do so. The topic of price will come much further down the road. When meeting with low context cultures, they are going to be of some intellect, and expect the same from you. These low context cultures want to meet with a person that is somebody. Also, there is strong heritage within these nations so be sure not to offend. Lastly, as Americans we shout whatever is on our minds. In these countries, they will find this a characteristic of impatience and egocentricity.
It is important to be sensitive to cross-cultural generalizations, as not all of them apply to everyone. For instance, in America the ideology that time is money may apply to many, but not to all. This applies to all cultures in that knowing the background is important, but may not be true for everyone. These generalizations maybe outdated due to the common practice of culture borrowing from nation to nation. Trying to fit in with these cultures may prove to be problematic, or successful. Research has found that those who attempt to adapt to the culture have shown to be favorable to the native. However, over doing it may result in a more negative relationship.
As discussed there are obstacles to overcome to successfully conduct business. Typically these obstacles include learning the local language and culture, and becoming well prepared for negotiations. If these are not options, then employ an effective language translator and/or a cultural translator. There is no need to completely learn a whole culture, and is actually impossible. However, one should learn enough about the local culture as to not feel uncomfortable before or after conducting business. The book gives an example of how Japanese business men have used their knowledge that Americans have a low tolerance for silence to their advantage.
All in all there is a lot that goes into a strategic plan for international negotiations. Preparation for face to face negotiations, where these should take place, settlement range, and more are all parts to successfully conduct business transactions. Even with a proper plan created by human resources, there is still going to be a chance of failure. Preparation and research are vital for success.
Cross-Cultural Communication
Chapter 9 is important in order to convey the right messages between cultures. The meanings of words, text, and nonverbal communications vary greatly from culture to culture. The process to properly convey the right message involves the 6 steps of idea, encoding, channel, receiving, decoding, and action. The idea communicated requires encoding, in which the appropriate words and symbols are identified to do so. Channeling involves of exactly what channel is used to get this message across (i.e. written verbal or non verbal). Receiving and decoding occurs on the receivers end on the basis of understanding or misunderstanding the intended message.
Obviously this process is very important for success when conducting business internationally. Two questions should always be asked when communicating messages: In light of the culture, is the objective realistic? In light of the culture, is the time frame realistic. When we talk about realistic objectives, one must refer to Geert Hofstede's cultural dimensions. By utilizing these indexes along with properly understanding how they apply from country to country, success is possible. With a realistic time frame, (this is similar to the impatient American business man) some cultures have a more relaxed perspective to deadlines. Sometimes conducting business cross-culturally can take a significantly longer amount of time. America is unlike this and businesses have strict deadlines we must follow.
The encoding stage involves many processes. This step requires determining and organizing the words, expressions, and nonverbal signals needed to communicate the message effectively. Chapter 9 talks about how using unique idioms, slang, similes, metaphors, and jargon can be a struggle to communicate. Many language have these and when trying to express them, translation becomes a big issue. Another important component to the encoding stage deals with expressions and nonverbal communication. The book talks about how some expressions we use in America, such as affection, can be perceived as highly offensive in another country. Another example is how in America and China a thumbs up gesture carries the meaning of "good" while in Australia is taken as a crude gesture. Also important is the role of formality and informality. This contains aspects such as whether to address someone by their first or last name. Understanding these subtle differences before expatriation is important.
A great way to combat the language miscommunication is by using dual-translations approach. This approach has a translator in the home country interpret and convert the message into the foreign language, and before the message is communicated, having another translator in the foreign country interpret and convert the message back in the home country's language. This strategy minimizes ambiguity of the messages intended. However, this strategy requires the selection of the proper translator. Several factors help define the effective translator: characteristics of the message itself, characteristics of the language involved, interpreter's relationship with the client, context, interpreter's skills, characteristics of the parties, and cultural norms and values. Clearly identifying the best translator for the job is not so easy.
The next step is identifying the right transmission channel stage. Deciding on the right channel can be difficult as to whether or not to choose written or verbal. Today written messages can be transmitted via mail, computer, fax, and e-mail. Oral messages can be transmitted via meetings, telephone, cell phone, and video conferencing. The biggest deciding factor when choosing the right channel is the cultural norms. Some cultures prefer written messages, while some prefer spoken. Individuals in high-context cultures, which value trust, tend to prefer spoken communication, while low-context cultures prefer written to ensure efficiency. When dealing with written communication, it is important to format and adhere to the country's norms. An example is the standard letter-size paper.
Another important concept of transmission is body language. The encompasses things like how much eye contact to use or whether to use any at all. In Asia, eye contact between subordinates and superiors can be perceived as a sign of disrespect. Western cultures would consider not using eye contact as disrespect. Body language also involves physical distance and touching, hand movements, pointing, and facial expressions.
The last stage of receiving and decoding is subject to social values and cultural variables not necessarily present to the sender. The book describes the importance of being understanding of others' cultures. If an American feels that their personal bubble has been breached when doing business in South America, but realizes that this is part of their culture; then business can be conducted effectively. A model has been developed to help with all of the steps described above. Professor Linda Beamer had facilitated developing cross-cultural communication competence in 5 steps: acknowledgement of diversity, organizing information according to stereotypes, posing questions to stereotypes, analyzing communication episodes, and generating "other culture" messages. By utilizing this strategy and executing the steps described above properly, business can be conducted successfully.
Obviously this process is very important for success when conducting business internationally. Two questions should always be asked when communicating messages: In light of the culture, is the objective realistic? In light of the culture, is the time frame realistic. When we talk about realistic objectives, one must refer to Geert Hofstede's cultural dimensions. By utilizing these indexes along with properly understanding how they apply from country to country, success is possible. With a realistic time frame, (this is similar to the impatient American business man) some cultures have a more relaxed perspective to deadlines. Sometimes conducting business cross-culturally can take a significantly longer amount of time. America is unlike this and businesses have strict deadlines we must follow.
The encoding stage involves many processes. This step requires determining and organizing the words, expressions, and nonverbal signals needed to communicate the message effectively. Chapter 9 talks about how using unique idioms, slang, similes, metaphors, and jargon can be a struggle to communicate. Many language have these and when trying to express them, translation becomes a big issue. Another important component to the encoding stage deals with expressions and nonverbal communication. The book talks about how some expressions we use in America, such as affection, can be perceived as highly offensive in another country. Another example is how in America and China a thumbs up gesture carries the meaning of "good" while in Australia is taken as a crude gesture. Also important is the role of formality and informality. This contains aspects such as whether to address someone by their first or last name. Understanding these subtle differences before expatriation is important.
A great way to combat the language miscommunication is by using dual-translations approach. This approach has a translator in the home country interpret and convert the message into the foreign language, and before the message is communicated, having another translator in the foreign country interpret and convert the message back in the home country's language. This strategy minimizes ambiguity of the messages intended. However, this strategy requires the selection of the proper translator. Several factors help define the effective translator: characteristics of the message itself, characteristics of the language involved, interpreter's relationship with the client, context, interpreter's skills, characteristics of the parties, and cultural norms and values. Clearly identifying the best translator for the job is not so easy.
The next step is identifying the right transmission channel stage. Deciding on the right channel can be difficult as to whether or not to choose written or verbal. Today written messages can be transmitted via mail, computer, fax, and e-mail. Oral messages can be transmitted via meetings, telephone, cell phone, and video conferencing. The biggest deciding factor when choosing the right channel is the cultural norms. Some cultures prefer written messages, while some prefer spoken. Individuals in high-context cultures, which value trust, tend to prefer spoken communication, while low-context cultures prefer written to ensure efficiency. When dealing with written communication, it is important to format and adhere to the country's norms. An example is the standard letter-size paper.
Another important concept of transmission is body language. The encompasses things like how much eye contact to use or whether to use any at all. In Asia, eye contact between subordinates and superiors can be perceived as a sign of disrespect. Western cultures would consider not using eye contact as disrespect. Body language also involves physical distance and touching, hand movements, pointing, and facial expressions.
The last stage of receiving and decoding is subject to social values and cultural variables not necessarily present to the sender. The book describes the importance of being understanding of others' cultures. If an American feels that their personal bubble has been breached when doing business in South America, but realizes that this is part of their culture; then business can be conducted effectively. A model has been developed to help with all of the steps described above. Professor Linda Beamer had facilitated developing cross-cultural communication competence in 5 steps: acknowledgement of diversity, organizing information according to stereotypes, posing questions to stereotypes, analyzing communication episodes, and generating "other culture" messages. By utilizing this strategy and executing the steps described above properly, business can be conducted successfully.
Wednesday, March 24, 2010
Effective International Human Resource Management
International HRM consists of interplay among three dimensions: the broad function, Country categories and types of employees. Factors differentiating international from domestic HRM are additional activities such as, developing a global mindset in the organization, international taxation, exchange rates, relocation and orientation, providing international administrative services, foreign government relations, and providing foreign language and cultural training. The book stresses the training of not only verbal language training, but training of non-verbal communication. This is similar to the case study when the American manager felt uncomfortable with how the minister was touching his shoulder when speaking. In Latin America, the personal bubble is much smaller than that of the U.S. This is a prime example, of how HRM did not properly prepare the manager for the business culture of their country.
As previous chapter have discussed, HRM plays a very large role when selecting expatriates and can be the ultimate reason of failure or success. One important function of HRM is designing programs for more than on national group of employees, resulting in a need to take a more global view. Also HRM needs to take a much bigger involvement in expatriates’ lives compared to domestic workers. Expatriates need to be informed of things such as exchange rates, cost of living, and so on. The book goes on to talk about other parts of preparation such as international terrorism. Expatriates need proper training with the goal of the expatriate not returning home due to the fear of the expatriate being kidnapped for ransom and/or robbed. Other external influences include the types of government, state of country’s economy, and general accepted business practices in host countries all that all need to be addressed by HRM.
There are different MNC’s expatriation practices that vary from country to country. For instance, in Japan the duration of foreign assignments is significantly longer than that of the U.S. (4.67 years). Japan actually has a very low incidence rate of expatriate failure maybe due to their HRM functions and the support system of the corporate headquarters. European expatriates have an extensive international perspective as is, making them perfect candidates for expatriation. There are several implications that can be taken from European and Japanese expatriate practices, such as the need for U.S. expatriation to include training in cross-cultural sensitivity. Since U.S. citizens learn mostly about American culture and mainly English, this is crucial for success.
HRM has the job of selecting and training the right person for expatriation. There needs to be an extensive, sophisticated selection process. This may include analyses of family situations, lifestyles, and financial situations. If these aspects of an expatriate’s life are in turmoil, adapting overseas will be difficult resulting in possible failure. Finding out why the expatriate wants the foreign assignment is also key. The next steps cover selecting only top-notch people, familiarizing the expatriate to the country they are going to, and setting up a supportive administration solely to assist expatriates. Successful attributes are as followed:
Tolerance for ambiguity *behavioral flexibility*nonjudgmental*cultural empathy*interpersonal skills*
Belief in the mission*interest in foreign experience*stable lifestyle*nonverbal communication skills
It is becoming a growing trend that corporations are tracking and developing young managers to have a global perspective. Companies are now seeing this trait of high importance to remain globally competitive in the future. Another source for recruiting is the managers that are currently on a foreign assignment. There are several steps to evaluate the expatriate’s eligibility. Other types of recruiting come from external sources and educational institutions that deal with international travel/business.
Expatriate preparation programs will cover the corporation’s international environment, pre-expatriation, cultural briefing, assignment briefing, relocation requirements, language training, expatriation, and repatriation. Effective compensation for these expatriates can determine the success or failure of the foreign assignment. It is important to be sure that the compensation package contains benefits, a motivational salary, and more.
As previous chapter have discussed, HRM plays a very large role when selecting expatriates and can be the ultimate reason of failure or success. One important function of HRM is designing programs for more than on national group of employees, resulting in a need to take a more global view. Also HRM needs to take a much bigger involvement in expatriates’ lives compared to domestic workers. Expatriates need to be informed of things such as exchange rates, cost of living, and so on. The book goes on to talk about other parts of preparation such as international terrorism. Expatriates need proper training with the goal of the expatriate not returning home due to the fear of the expatriate being kidnapped for ransom and/or robbed. Other external influences include the types of government, state of country’s economy, and general accepted business practices in host countries all that all need to be addressed by HRM.
There are different MNC’s expatriation practices that vary from country to country. For instance, in Japan the duration of foreign assignments is significantly longer than that of the U.S. (4.67 years). Japan actually has a very low incidence rate of expatriate failure maybe due to their HRM functions and the support system of the corporate headquarters. European expatriates have an extensive international perspective as is, making them perfect candidates for expatriation. There are several implications that can be taken from European and Japanese expatriate practices, such as the need for U.S. expatriation to include training in cross-cultural sensitivity. Since U.S. citizens learn mostly about American culture and mainly English, this is crucial for success.
HRM has the job of selecting and training the right person for expatriation. There needs to be an extensive, sophisticated selection process. This may include analyses of family situations, lifestyles, and financial situations. If these aspects of an expatriate’s life are in turmoil, adapting overseas will be difficult resulting in possible failure. Finding out why the expatriate wants the foreign assignment is also key. The next steps cover selecting only top-notch people, familiarizing the expatriate to the country they are going to, and setting up a supportive administration solely to assist expatriates. Successful attributes are as followed:
Tolerance for ambiguity *behavioral flexibility*nonjudgmental*cultural empathy*interpersonal skills*
Belief in the mission*interest in foreign experience*stable lifestyle*nonverbal communication skills
It is becoming a growing trend that corporations are tracking and developing young managers to have a global perspective. Companies are now seeing this trait of high importance to remain globally competitive in the future. Another source for recruiting is the managers that are currently on a foreign assignment. There are several steps to evaluate the expatriate’s eligibility. Other types of recruiting come from external sources and educational institutions that deal with international travel/business.
Expatriate preparation programs will cover the corporation’s international environment, pre-expatriation, cultural briefing, assignment briefing, relocation requirements, language training, expatriation, and repatriation. Effective compensation for these expatriates can determine the success or failure of the foreign assignment. It is important to be sure that the compensation package contains benefits, a motivational salary, and more.
Monday, March 15, 2010
International Managerial Staffing
International businesses use three types of executives to staff their foreign subsidiaries: home-country nationals (expatriates), host country nationals (locals), and third-country nationals. Using expatriates is costly for MNC's but expatriates are capable of moving from country to country and perform effectively. There are several advantages and disadvantages pertaining to which type of staffing is used.
The advantages of using expatriates are as follows: knowledge of the corporation's culture and management techniques, loyally to the corporation, influence at headquarters, easier to access the expatriates qualifications for the assignment, and maintaining the "foreign image." These advantages can and should be considered when choosing the correct staffing. However, there are disadvantages to using expatriates such as the expensive orientation programs that teach of the foreign country's culture. Smaller to medium sized businesses have difficulty providing the finances required for maximized success of their expatriates. These programs are very costly. The other disadvantages of staffing expatriates include the unfamiliarity of the foreign environment (laws, political processes, etc..), verbal and non-verbal communication problems, the inability to adapt to the foreign culture, not finding the best person for the job, and the expensive incentives to employ these highly qualified expatriates.
Using host-country locals is one of the alternative types of staffing for MNCs. The advantages of using host-country locals include: familiarity with the local environment, early productivity, knowing the local business subtleties, high level of "goodwill", and is usually less expensive than using expatriates. The disadvantages consist of: loyalty to their country rather than the company, the difficulty of finding the right person for the job, misunderstanding of the company's corporate culture, communication problems with home office, possible ulterior motives, weakness on dealing with government officials, and the expensive training and development programs.
The last staffing alternative is using third-country personnel or an expatriate from a different country. The advantages include additional source of personal, less costly, greater adaptability, and sometimes the better relationship of the third-country personnel to the host country. The disadvantages are potential weak relationships between third-country expatriate and host country, ulterior motives, and locals' preference of appointing their own citizens to managerial positions.
Selecting the appropriate staffing strategy relies heavily on country and company characteristics, staffing outlook, and percieved needs. Company characteristics can include ownership of foreign subsidiaries, technological sophistication, organizational structure, styles of management, and more. Country characteristics range from political stability to geographical location. These characteristics dictate what strategy should be used. Even after researching these characteristics there is room for failure. Many expatriates fail due to things such as culture shock. Culture shock can handicap communication with those native to the country resulting in possible failure in conducting business. After studying in China I can easily see the application of culture shock for new expatriates and the alienation that may come of it. There are numerous ways that an expatriate can fail. Another example is the appointment of women to managerial positions. Some countries still reject the idea of women in management, which is something that should always be considered when choosing a strategy.
All in all, there are many different aspects of staffing the right people that need to be addressed before implementation. As international managers, it is crucial to do just this to maximize the success of the MNC.
The advantages of using expatriates are as follows: knowledge of the corporation's culture and management techniques, loyally to the corporation, influence at headquarters, easier to access the expatriates qualifications for the assignment, and maintaining the "foreign image." These advantages can and should be considered when choosing the correct staffing. However, there are disadvantages to using expatriates such as the expensive orientation programs that teach of the foreign country's culture. Smaller to medium sized businesses have difficulty providing the finances required for maximized success of their expatriates. These programs are very costly. The other disadvantages of staffing expatriates include the unfamiliarity of the foreign environment (laws, political processes, etc..), verbal and non-verbal communication problems, the inability to adapt to the foreign culture, not finding the best person for the job, and the expensive incentives to employ these highly qualified expatriates.
Using host-country locals is one of the alternative types of staffing for MNCs. The advantages of using host-country locals include: familiarity with the local environment, early productivity, knowing the local business subtleties, high level of "goodwill", and is usually less expensive than using expatriates. The disadvantages consist of: loyalty to their country rather than the company, the difficulty of finding the right person for the job, misunderstanding of the company's corporate culture, communication problems with home office, possible ulterior motives, weakness on dealing with government officials, and the expensive training and development programs.
The last staffing alternative is using third-country personnel or an expatriate from a different country. The advantages include additional source of personal, less costly, greater adaptability, and sometimes the better relationship of the third-country personnel to the host country. The disadvantages are potential weak relationships between third-country expatriate and host country, ulterior motives, and locals' preference of appointing their own citizens to managerial positions.
Selecting the appropriate staffing strategy relies heavily on country and company characteristics, staffing outlook, and percieved needs. Company characteristics can include ownership of foreign subsidiaries, technological sophistication, organizational structure, styles of management, and more. Country characteristics range from political stability to geographical location. These characteristics dictate what strategy should be used. Even after researching these characteristics there is room for failure. Many expatriates fail due to things such as culture shock. Culture shock can handicap communication with those native to the country resulting in possible failure in conducting business. After studying in China I can easily see the application of culture shock for new expatriates and the alienation that may come of it. There are numerous ways that an expatriate can fail. Another example is the appointment of women to managerial positions. Some countries still reject the idea of women in management, which is something that should always be considered when choosing a strategy.
All in all, there are many different aspects of staffing the right people that need to be addressed before implementation. As international managers, it is crucial to do just this to maximize the success of the MNC.
Friday, March 12, 2010
International Strategies
One major component to entering a new market as an international business, is to be sure the product and/or service matches the needs of the market. Things that can affect the failure or success of a newly introduced product can range from cultural traits, values, habits, and norms. There is a lot of research needed to put into these concepts to ensure that the product/service is appropriate for that foreign market. The book uses an example of how Americans prefer moist creamy dessert cakes, which differs from England which prefer dry cakes that can be eaten with tea.
There are four basic questions that international strategists should seek to answer:
Who in the foreign market uses the product?
What are the values of the people in the foreign market?
What are the signals that indicate change in the market?
How can the firm increase market share.
One can see the importance of these questions. There are several ways to tackle these questions. When using product strategy there are five types using different alternations of standardized/customized messages and products. By combining these strategies with the 3 fundamental alternatives successful implementation of a product is possible. This is similar to how MTV entered China, adhering to the cultural differences and traditions to become one of the most successful transnational media corporations.
On the subject of service, there are three broad service categories: people-processing services, possession-processing services, and information-based services. These three strategies facilitate balancing standardization with local customization. Similar to product strategies, these are crucial to the success of international businesses.
All in all, international managers have several strategies that will differ from nation to nation. Carefully analyzing and implementing the right strategy is key for success. The four "P's" of marketing also come into play when approaching entering a foreign market. For manufacturing, different approaches consist of licensing, franchising, management contracts, joint ventures, contractual alliances, and wholly owned subsidiaries. Each approach has a different level of risk pertaining to investment, which must be considered upon penetrating foreign markets. International expansion can prove to be highly profitable or detrimental to the business.
There are four basic questions that international strategists should seek to answer:
Who in the foreign market uses the product?
What are the values of the people in the foreign market?
What are the signals that indicate change in the market?
How can the firm increase market share.
One can see the importance of these questions. There are several ways to tackle these questions. When using product strategy there are five types using different alternations of standardized/customized messages and products. By combining these strategies with the 3 fundamental alternatives successful implementation of a product is possible. This is similar to how MTV entered China, adhering to the cultural differences and traditions to become one of the most successful transnational media corporations.
On the subject of service, there are three broad service categories: people-processing services, possession-processing services, and information-based services. These three strategies facilitate balancing standardization with local customization. Similar to product strategies, these are crucial to the success of international businesses.
All in all, international managers have several strategies that will differ from nation to nation. Carefully analyzing and implementing the right strategy is key for success. The four "P's" of marketing also come into play when approaching entering a foreign market. For manufacturing, different approaches consist of licensing, franchising, management contracts, joint ventures, contractual alliances, and wholly owned subsidiaries. Each approach has a different level of risk pertaining to investment, which must be considered upon penetrating foreign markets. International expansion can prove to be highly profitable or detrimental to the business.
Friday, February 12, 2010
The Global Environment
The beginning of chapter 3 discusses the impacts of tariffs, place quotas, and embargos in domestic environments. Companies that need products from countries that have imposed embargo acts will find a way to obtain them. The real issue becomes not actually getting these products, but the increased costs to over come. The book discusses an example that if a U.S. company needed a product from Cuba, the company would have Cuba trade the products to another country such as Canada, which has no embargo imposed and get the product through that channel. This "middleman" results in higher costs. This example stresses the fact that international managers need to be well aware of nations' tariff and quota practices, as well as embargos.
There are different aspects to consider when exporting, importing, outsourcing, etc... Managers need to knowledgeable of the domestic competitive climate as well as the domestic economic climate. These two are crucial for international managers to make big decisions. A manager wouldn't want to be beat by a competitor with a similar strategy on penetrating the same international market. Also being aware of the domestic economic climate could be vital for a struggling company to survive in a weak domestic economy.
An important part of the chapter talks about the formation of the European Union. The EU is made up of 27 European nations and is taking a similar idea that of the U.S. The book states how citizens will describe themselves as "European" rather than German when traveling internationally . Similar to the U.S., one would describe themselves as "American" instead of a "Californian." The EU poses a threat to external companies in regards to protectionism and preferential treatment. It also poses a threat to external companies as potentially not being in contact with the standard-setting body of the EU. This may cause violations of the EU product and safety standards.
NAFTA (North American Free Trade Agreement) - This agreement began in January of 1994 including the countries of Canada, Mexico, and the U.S. This was originally formed to combat the EU, but its mission is quite different from the EU. The NAFTA is still in the early stages of a union and not as cooperative as the EU, but has been successful to reduce tariffs, remove the restrictions of certain products imported/exported, and increase investment opportunities.
One of the more important topics reviewed in chapter 3 is the awareness of cultural differences. Businesses need to adapt to the cultures of new markets they are attempting to enter. An example used in the book was KFC's attempt to enter Brazil. Since the company lacked to recognize the cultural differences between the U.S. and Brazil, their approach failed miserably. This topic is such an important part for a business to succeed in any other country. Culture also affects the way business is conducted.
Competition is viewed very differently from country to country. Some countries consider competition to be a wasteful practice. Japan, for instance, views competition as a wasteful practice, as its main goal is to gain the largest market share while keeping all of their citizens employed. This is very different from the U.S. when competition is wired into our psyches at a very young age. The book touches on topics such as cartels and government owned enterprises in regards to competition. Tariffs and quotas also play a big role in global competition.
There are different aspects to consider when exporting, importing, outsourcing, etc... Managers need to knowledgeable of the domestic competitive climate as well as the domestic economic climate. These two are crucial for international managers to make big decisions. A manager wouldn't want to be beat by a competitor with a similar strategy on penetrating the same international market. Also being aware of the domestic economic climate could be vital for a struggling company to survive in a weak domestic economy.
An important part of the chapter talks about the formation of the European Union. The EU is made up of 27 European nations and is taking a similar idea that of the U.S. The book states how citizens will describe themselves as "European" rather than German when traveling internationally . Similar to the U.S., one would describe themselves as "American" instead of a "Californian." The EU poses a threat to external companies in regards to protectionism and preferential treatment. It also poses a threat to external companies as potentially not being in contact with the standard-setting body of the EU. This may cause violations of the EU product and safety standards.
NAFTA (North American Free Trade Agreement) - This agreement began in January of 1994 including the countries of Canada, Mexico, and the U.S. This was originally formed to combat the EU, but its mission is quite different from the EU. The NAFTA is still in the early stages of a union and not as cooperative as the EU, but has been successful to reduce tariffs, remove the restrictions of certain products imported/exported, and increase investment opportunities.
One of the more important topics reviewed in chapter 3 is the awareness of cultural differences. Businesses need to adapt to the cultures of new markets they are attempting to enter. An example used in the book was KFC's attempt to enter Brazil. Since the company lacked to recognize the cultural differences between the U.S. and Brazil, their approach failed miserably. This topic is such an important part for a business to succeed in any other country. Culture also affects the way business is conducted.
Competition is viewed very differently from country to country. Some countries consider competition to be a wasteful practice. Japan, for instance, views competition as a wasteful practice, as its main goal is to gain the largest market share while keeping all of their citizens employed. This is very different from the U.S. when competition is wired into our psyches at a very young age. The book touches on topics such as cartels and government owned enterprises in regards to competition. Tariffs and quotas also play a big role in global competition.
Monday, February 8, 2010
Cross National Ethics and Social Responsibility
Chapter 2 goes into detail about the meaning of ethics and how they differ from country to country. What maybe acceptable here in the U.S. may not be applicable to the rest of the world. It also gets into the idea that a concept such as bribery could be legal in one country, but socially unaccepted. This can lead to informal punishment such as poor publicity, boycotts, and other detrimental things to a company.
The book further dissects the subject of bribery with the different forms. A Whitemail bribe is a payment made to an official that must do or omit doing something in violation of their lawful duty. A lubrication bribe is a payment to facilitate, expedite, or speed up routine government approvals or other actions or other actions to which the firm would be legally titled. Lastly, extortion is the opposite of a Whitemail bribe as the official is seeking payment from an individual or corporation.
There are several ways to avoid violating a host country's laws. Some tips the book offer are continuously learning about the cultures and/or hiring a local journalist to do a comprehensive local media search. It is very crucial to understand the repercussions of violating the laws and ethics when conducting business in another country.
The FCPA (Foreign Corrupt Practices Act) became law in 1977. The act had 2 main purposes which was to establish a worldwide code of conduct for any kind of payment by U.S. businesses to foreign government officials, political parties, and political candidates. The second purpose was to require appropriate accounting controls for full disclosure of firms transactions.
Though the FCPA constrains some businesses' competitiveness, these businesses have found a way around violating the FCPA such as making donations to build new hospitals or schools. By making donations, and not making payments to "private individuals"; these businesses are no longer violating the FCPA and actually are helping a community. This is a great alternative to bribery and enhances their corporate giving initiatives.
An important part of chapter 2 is the cross-national social responsibilty concept. This is a "notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract." This concept guides corporations to not only treat themselves fairly, but to cover the community, employees, and customers.
Terms
Cultural Relativism is an idea that no culture's ethics are any better than any other's.
Universalism is an idea of a rigid global yardstick by which to measure all moral issues.
The book further dissects the subject of bribery with the different forms. A Whitemail bribe is a payment made to an official that must do or omit doing something in violation of their lawful duty. A lubrication bribe is a payment to facilitate, expedite, or speed up routine government approvals or other actions or other actions to which the firm would be legally titled. Lastly, extortion is the opposite of a Whitemail bribe as the official is seeking payment from an individual or corporation.
There are several ways to avoid violating a host country's laws. Some tips the book offer are continuously learning about the cultures and/or hiring a local journalist to do a comprehensive local media search. It is very crucial to understand the repercussions of violating the laws and ethics when conducting business in another country.
The FCPA (Foreign Corrupt Practices Act) became law in 1977. The act had 2 main purposes which was to establish a worldwide code of conduct for any kind of payment by U.S. businesses to foreign government officials, political parties, and political candidates. The second purpose was to require appropriate accounting controls for full disclosure of firms transactions.
Though the FCPA constrains some businesses' competitiveness, these businesses have found a way around violating the FCPA such as making donations to build new hospitals or schools. By making donations, and not making payments to "private individuals"; these businesses are no longer violating the FCPA and actually are helping a community. This is a great alternative to bribery and enhances their corporate giving initiatives.
An important part of chapter 2 is the cross-national social responsibilty concept. This is a "notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract." This concept guides corporations to not only treat themselves fairly, but to cover the community, employees, and customers.
Terms
Cultural Relativism is an idea that no culture's ethics are any better than any other's.
Universalism is an idea of a rigid global yardstick by which to measure all moral issues.
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