International Management : Asia Perspectives I.

Some basic Principles of International Management II. Asia Space : A Structure around Various Poles III. Two Examples of Asia Countries : between Liberal Capitalism and Dogmatic Communism

International Management : Asia Perspectives I.

Some basic Principles of International Management

- Increasing Importance of International Management Understanding - Types of Organizations - Expatriation : Success or Failure - Global Environment

Increasing Importance of International Management Understanding

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International Mergers and Acquisitions

Foreign Resources

International Management

Global Competition

Market Access Opportunities SOURCE: Jagdish N. Sheth and Abdolreza S. Eshghi, Global Human Resources Perspectives (Cincinnati: South-Western, 1989), vii.

Types of Organizations - International Corporation Domestic firm that uses its existing capabilities to move into overseas markets - Multinational Corporation (MNC) Firm with independent business units operating in multiple countries - Global Corporation Firm that has integrated worldwide operations through a centralized home office - Transnational Corporation Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units

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Types of Organizations GLOBAL High

Views the world as a single market; operations are controlled centrally from the corporate office.

GLOBAL EFFICIENCY

INTERNATIONAL

Low

Uses existing capabilioties to expand into foreign markets.

Low

TRANSNATIONAL Specialized facilities permit local responsiveness; complex coordination mechanisms provide global integration. MULTINATIONAL Several subsidiaries operating as stand-alone business units in multiple countries

LOCAL RESPONSIVENESS

High

Source: Adapted from Peter J. Dowling, Denice E. Welch, and Randall S. Schuler, International Dimensions of Human Resource Management, 3e (South-Western, 1999).

Case : Leclerc • Case: Independant under a single Flag? – Creation in 1949. Today : 560 points of sale, 73 000 employees – Network of independant entrepreneurs in the retailling business in France – Economies of scale concerning different core functions: strategy, advertizing, purchasing – Importance of strong common values: new supermarket owners chosen by the other members, competitive price, participations of employees to Leclerc profits (25%)

Air France / KLM Alliance • Case: What would be the next step after the agreement on an effective takeover of the Dutch flag carrier by Air France? – – – – –

Deal => Europe’s biggest Airline Turnover of 19.2 bn Euros Workforce of about 106,000 226 destinations worldwide Multi-hub system based on Schiphol and Roissy

Johnson & Johnson • Case: How to be “Big” and “Small” at the same time? – Created in 1886 in the USA – Sanitary products, pharmaceutical, medical devices and diagnostics. – 190 subsidiaries in 54 countries, selling in 175 countries – Major management principle: decentralization – Local Top Management in each subsidiary – Important information flow and tight control by the US headquarters

– Global : Creation of a World R&D Center, Vitapole, inaugurated at the end of 2002 in France, with 1000 employees and 600 researchers, « push strategy » – Local : Danone Institutes (40% of the R&D, « pull ») – Main focus: to improve offer to consumers (food concept + marketing) – Axes : product quality, food security, environment protection,… – R& D to improve past and future – Communication across the world and various hierarchical links to develop ideas.

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Human Resource Management Issues Staffing

Training and Development

Productivity

Labor Relations

Compensation and Benefits

- Host Country : Country in which an international corporation operates - Expatriates, or Home-Country Nationals : Employees from the home country who are sent on international assignment - Host-Country Nationals : Natives of the host country - Third-Country Nationals : Natives of a country other than the home country or the host country - Guest Workers : Foreign workers invited in to perform needed labor

Advantages of Different Sources for Overseas Managers HOST COUNTRY • Less Cost • Preference of host-country government • Knowledge of environment • Language facility

HOME COUNTRY

THIRD COUNTRY

• Talent available • Broad within company experience • Greater control • International outlook • Company • Multilingualism experience • Mobility • Experience provided to corporate executives

Changes in International Staffing Over Time Emphasis in Staffing

Host HostCountry Country Nationals Nationals

Expatriates Expatriates

Time

International Staffing Recruitment

Key Key Issues Issues

Selection

Training and Development

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B

C

D

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Education (*) Social Status (*) Revenues (*) Job: writer, consultant, lawyer, cleaning staff Nationality: French, American, Mexican, Turkish Hobbies:Photo, Surf, Food, Poker

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C

D

Expatriate Selection Criteria International experience Interpersonal Professional skills experience Technical competence Country experience

Family flexibility Language skills

Skills of Expatriate Managers

Core CoreSkills Skills

Experience Experience Decision-making Decision-making Resourcefulness Resourcefulness Adaptability Adaptability Cultural Culturalsensitivity sensitivity Team building Team building Maturity Maturity

Augmented AugmentedSkills Skills Experience Experience Decision-making Decision-making Resourcefulness Resourcefulness Adaptability Adaptability Cultural Culturalsensitivity sensitivity Team Teambuilding building Maturity Maturity

REDUCING EXPATRIATE FAILURES • Selecting the right expatriate – – – – –

Do an extremely sophisticated job of selecting the people Find out why the candidate wants the foreign assignment Select only top-notch, proven people Familiarize the expatriate and his/her family with the country An administrative branch to is supporting your international staff

• Assessing expatriates’ effectiveness potential – Expatriate managers must listen well, – Expatriate managers must be patient – Expatriate managers must have respect for the locals

Skills of Expatriate Managers - Core Skills : Skills considered critical in an employee’s success abroad - Augmented Skills : Skills helpful in facilitating the efforts of expatriate managers - Failure Rate : Percentage of expatriates who do not perform satisfactorily

International Managers - Global Manager : Manager equipped to run a global business - Transnational Teams : Teams composed of members of multiple nationalities working on projects that span multiple countries - Repatriation : Process of employee transition home from an international assignment

Global Managers Seize Strategic Opportunities

Manage Decentralized Operations Aware of Global Issues Sensitive to Diversity Issues

Skilled in Building Communities

Interpersonal Competence

Content of Training Programs Language Training

Key Key Elements Elements Needed Needed to to Prepare Prepare Employees Employees to to Work Work Overseas Overseas

Cultural Training Career Development and Mentoring Personal and Family Life

International Performance Appraisals Host-Country Evaluations Augmenting Job Duties

Home-Country Evaluations

Key Key Issues Issues

Individual Learning

Organizational Learning

Providing Feedback

Performance Evaluation Home-Country Evaluation Host-Country Evaluation GLOBAL PERSPECTIVE

LOCAL PERSPECTIVE

Why Do Expatriates Fail?

• Family adjustment • Lifestyle issues • Work adjustment • Bad selection • Poor performance • Other opportunities arise • Business reasons • Repatriation issues

REDUCING EXPATRIATE FAILURES • Selecting the right expatriate – – – – –

Do an extremely sophisticated job of selecting the people Find out why the candidate wants the foreign assignment Select only top-notch, proven people Familiarize the expatriate and his/her family with the country An administrative branch to is supporting your international staff

• Assessing expatriates’ effectiveness potential – Expatriate managers must listen well, – Expatriate managers must be patient – Expatriate managers must have respect for the locals

Communication:A Chinese and a French Words French: How long will it take you to finish the report Chinese: I don’t know.How long should it take? French: You are in the best position to analyze time requirements.

Perception French: I asked him to participate Chinese: His behavior makes no sense. He is the boss. Why doesn’t he tell me? French: He refused to take responsibility. Chinese: I asked him for an order. French: I press him to take responsibility for his actions.

Chinese: Ten days.

Chinese: Nonsense-I’d better give him an answer

French: Take 15.Is it agreed? You will do it in 15 days?

French: He lacks the ability to estimate his time; this estimate is totally inadequate. French: I offer a contract. Chinese: These are my orders.

BUSINESS CUSTOMS IN CHINA, JAPAN, AND SOUTH KOREA • Guanxi: it refers to the special relationship two people have with each other. • Wa: it necessitates that members of a group, be it a work team, a company, or a nation, cooperate with and trust each other.

• Inhwa: it stresses harmony; linking of people who are unequal in rank, prestige, and power; loyalty to hierarchical rankings; superior being concerned for the well-being of subordinates.

• Cross-Cultural Generalizations: A Caveat – While the culture influences the mode of doing business in a country, the introduction of new technology changes culture. – Generalized information about nations serves mainly as a stereotype, and stereotypes are useful mainly as starting points for analysis.

• Cross-Cultural Adaptation: A Caveat

CULTURE DEFINED

Culture comprises an entire set of social norms and responses that condition people’s behavior; it is acquired and inculcated, a set of rules and behavior patterns that an individual learns but does not inherit at birth.

Culture Environment of International Management - Organizational Culture - Cultural Environment : Language, religion, values, attitudes, education, social organization, technology, politics, and laws of a country - Culture Shock : Perceptual stress experienced by people who settle overseas

Case : Lafarge • Problem: How to recruit employees with Organizational Culture? – – – – – –

Powerful International Firm HR = Most important Asset for Lafarge Key values: innovation, challenge, new perspectives Necessary permanent Added-Value Strong interpersonal relationships Importance of Union Dialogue

Culture Environment of International Management Observable level: ceremonies, Definition of stories, slogans, behaviors, dress, physical settings Culture Underlying values, assumptions, beliefs, attitudes, feelings

Source : Daft, 2001, p.315

SOURCES OF CULTURAL LEARNING • The Family – Nuclear or Joint Family

• Educational Institutions – Focus on structured or conceptual ideas

• Major Religions – – – – –

Christianity Islam Hinduism Buddhism Religions and International Management Process

Culture Environment of International Management

THE IMPACT OF CULTURE • International Planning: – Master of Destiny or Predetermination?

• International Organizing: – Importance of Enterprise or Personal Relationships • International Staffing: – Merit or Family? • International Co-ordinating: – Shared Decision Making versus Centralized Decision Making – Issues with Local Leadership Styles and Communicational Styles

• International Controlling: – Based on Data versus Emotions and Judgment

HOFSTEDE’S MODEL: FIVE CULTURAL DIMENSIONS 1 Power Distance: Low score on this dimension suggests that inequality in the society will be minimized. 2 Uncertainty Avoidance: Low score in this dimension suggests that the uncertainty inherent in life is more easily accepted. 3 Individualism Dimension: High scores indicates a person’s identity is based at the individual level and a low score (collectivist) indicates a person’s identity is based at the social level.

HOFSTEDE’S MODEL: FIVE CULTURAL DIMENSIONS (continued) 4 The Masculine Dimension: High score indicates that the “ideal” in the society is “Independence” where as a low score (Feminine) indicates the “ideal” in the society is “Interdependence” or co-operation. 5 Confucian Dynamism: High score on this dimension reflects Traditional Chinese value system. Basic tenet is that unequal relationships between people create stability in society.

Cultural Differences

Uncertainty Avoidance Strong

Weak

Power Distance Strong

Power Distance Weak

Hierarchical Bureaucracy (France, Italy, Spain)

Impersonal Bureaucracy (Germany, Central Europe)

Family (Arab Countries, Africa, Asia)

Adhocracy (UK, North Europe)

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Organizations Exist in a Global Environment • The environment is made up of those things outside of the organization’s boundaries. • Organizations are affected by events at the local, regional, national, and global levels. • The specific parts of the environment that affect a given organization are called its task environment.

Eight Key Environmental Sectors • • • • • • • •

Industry Cultural Legal/Political Economic Technology Human Resources Physical Resources Consumer/Clients

Air France • Case: Describe the Organization’s Environment of Air France. % & ' ()* + , #& * " + + + . % /+ +" & ,+ /& 0 , * ' " 1' + , & + 2 + * .3

An Organization’s Environment (a) Competitors, industry size and competitiveness, related issues (b) Suppliers, manufacturers, real estate, services (c) Labor market, " + +& & "+ employment agencies, universities, training schools, employees 1 in other companies, unionization "+ (d) Stock markets, banks, savings and # loans, private /+ + investors "+ (e) Customers, clients, potential users of products and services (f) Techniques of production, science, computers, information technology

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(g) Recession, unemployment rate, inflation rate, rate of investment, economics, growth (h) City, state, federal laws and regulations, taxes, services, court system, , ) political processes "+ (i) Age, values, beliefs, education, religion, + work ethic, consumer & , &+ and green "+ movements (j) Competition from and acquisition by 5 + , &+ foreign firms, "+ entry into overseas markets, foreign customs, regulations, exchange rates

The Nature of the General Organizational Environment • • • • •

The environment contains both opportunities and threats. Managers must monitor their organization’s environment. Environments are becoming increasing complex. They are experiencing change and turbulence. Environments differ with respect to munificence

DOMESTIC ENVIRONMENT • Domestic Political Climate – Government may attach tariffs (taxes) or place quotas (number or limits) on certain imports.

• Domestic Competitive Climate – Domestic competitors may be developing strategies • to penetrate foreign markets • to manufacture their products in a foreign country where labor is cheaper.

• Domestic Economic Climate – Boom or Recession ? – Potential by Foreign Firms to exploit the domestic economy

• Domestic Legal System and Government Policies – For security and for political reasons, governments sometimes prohibit the export of certain technologies.

THE INTERNATIONAL ENVIRONMENT • Focus on countries and country blocks… – e.g., NAFTA, EU

• International Institutions – e.g., IMF, WTO, …etc.

• International Agreements – e.g., OPEC

INDIVIDUAL NATION’S ENVIRONMENT • • • •

Cultural Environment Economic Environment Industrial Development and Technological Needs. Legal and political systems – – – – –

Rules of competition Labor laws and enforcement Foreign investment policy Product policy Foreign exchange policy

INDIVIDUAL NATION’S ENVIRONMENT (continued) • Competition – – – – –

• • • • • •

Cartels Bribery Government ownership of business Economic conditions Managerial orientation (short vs long)

Trade Barriers Tariffs and Quotas Monetary Barriers Non-Tariff Protection Impact of Exchange Rate Fluctuations Industrial Relations and Labor Unions

Managing The Environment Managers should formulate strategies so as to maximize the organization’s fit with the environment. Knowing the environment Adapting to the environment Changing the environment

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Diminution of the classical photo business (photo grand public) but still 70% of the sales figures Growth of the Image activities Development of knowledge on new «businesses» : - medical imagery, - numeric technology. Strategy for the future : information business? Knowledge Management => increase of partnerships to enter new market segments

La Poste • Case: Describe the Organization’s Domain of “La Poste”. "

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