Cover Slide

Managing across Cultures Chapter 5 Managing across Cultures

Learning Objectives Examine the strategic dispositions that characterize responses to different cultures Discuss cross-cultural differences and similarities Review cultural differences in select countries and regions, and note some of the important strategic guidelines for doing business in each

Strategic Predispositions Firm allows values and interests of the parent company to guide strategic decisions Ethnocentric Company makes strategic decisions tailored to suit the cultures of the countries where the MNC operates Polycentric Firm blends its own interests with those of its subsidiaries on a regional basis Regiocentric Company integrates a global systems approach to decision making Geocentric

Table 5.1 - Orientation of an MNC under Different Profiles

Globalization Imperative Belief that one worldwide approach to doing business is key to efficiency and effectiveness Effective multinational companies (MNCs) should make efforts to address local needs Regional strategies can be used effectively to capture and maintain worldwide market niches

Need for Unique Strategies for Different Cultures Diversity of worldwide industry standards Continual demand by local customers for differentiated and locally-sourced products Difficulty of managing global organizations Local units should be allowed to use their own abilities and talents unconstrained by headquarters

Delivery of Marketing Message Nationality Nature of advertising Germans Factual and rational Spots feature a standard family of two parents, two children, and grandmother French Avoidance of reasoning or logic Emotional, dramatic, and symbolic Spots are viewed as cultural events and reviewed as if they were literature or films British Laughter is valued Typical broad, self-deprecating commercial mocks both the advertiser and consumer

Challenges Faced by MNCs Staying abreast of local market conditions and not assuming that all markets are same Knowing the strengths and weaknesses of its subsidiaries and assisting them in addressing local demands Giving more autonomy to the subsidiary

Barriers to Cross-Cultural Management Tendency to view the world through one’s own eyes and perspectives Parochialism Process of exhibiting the same orientation toward different cultural groups Simplification

Table 5.2 - Six Basic Cultural Variations

Cross-Cultural Similarities Russia and U.S. Traditional management, communication, human resources, and networking activities Organizational behavior modification interventions

Cross-Cultural Similarities (continued) Korea and U.S. Organizational commitment relates to employees' position in the hierarchy, tenure in their current position, and age Commitment increases with positive perceptions of organizational climate

Cross-Cultural Differences Examples Human resource management differences Mexico Concept of an hourly wage plays a minor role Austria and Brazil Employees with one year of service are automatically given 30 days of paid vacation Some jurisdictions in Canada Legislated pay equity between male- and female-intensive jobs Japan Compensation levels are determined by age, length of service, and educational background United Kingdom Employees are allowed up to 40 weeks of maternity leave, and employers must provide a government-mandated amount of pay for 18 of those weeks Majority of large Swedish companies Head of human resources is on the board of directors

Approaches for Formulating Effective Compensation Strategies in Different Clusters Examples Strategies Pacific Rim countries Incentive plans should be group-based Japan, Hong Kong, Malaysia, the Philippines, and Singapore High salaries should be paid to senior-level managers Italy and Belgium Higher salaries should be paid to local senior-level managers Portugal and Greece Profit-sharing plans are effective Denmark, the Netherlands, and Germany Personal-incentive plans are useful Great Britain, Ireland, and the United States Compensation plans should provide opportunity for earnings, recognition, advancement, and challenge

GLOBE Project Provides an extensive breakdown of: How managers behave How different cultures can affect the perspectives of managers

Business in China Primary criterion - Technical competence Value is placed on punctuality, patience, guanxi networking, and reciprocity Guanxi: Good connections

Business in Russia Building personal relationships with partners is important Working with local consultants can be valuable Gift-giving is considered ethical when engaging in business transactions

Business in India India has become a desirable market because of unsaturated consumer markets with cheap labor and production locations Bureaucratic restrictions have been lifted to attract foreign investment and raise economic growth rate

Business in France Social interactions are affected by class stereotypes French organizations tend to be highly centralized and have rigid structures Management is autocratic in nature

Business in Brazil Brazilian businesspeople tend to have a relaxed work ethic Face-to-face interaction is preferred Patience is key when managing business

Business in Arab Countries Arab businesspeople: Follow a fatalistic approach to time Tend to attach a great deal of importance to status and rank Business-related discussions may not occur until the third or fourth meeting

Review and Discuss Define the four basic predispositions MNCs have toward their international operations If a locally based manufacturing firm with sales of $350 million decided to enter the EU market by setting up operations in France, which orientation would be the most effective: ethnocentric, polycentric, regiocentric, or geocentric? Why? Explain your choice

Review and Discuss (continued 1) In what ways are parochialism and simplification barriers to effective cross-cultural management? Give an example for each case

Review and Discuss (continued 2) Many MNCs would like to do business overseas in the same way that they do business domestically Do research findings show that any approaches that work well in the U.S. also work well in other cultures? If so, identify and describe two