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Global business: bridging nations and cultures
Globalisation is a process by which people of the world are unified into a single society and function together. This process is a combination of economic, technological, sociocultural and political forces. Globalisation is often used to refer to economic integration.
Forms of International Involvements. 1)Trading, or Export-Import.2)Licensing - the right to use items recognased in law, such as patents, designs, works of art, trademarks, or other intangible assets. 3)Franchising is the system by which independent firms are authorised to use a common business system. 4)Cooperating, or Forming Strategic Alliances -Strategic alliances involve all types of cooperation between two or more partners for mutual benefit. 5)Investing.
Features of Multinational Enterprises.Multinational, an organisation should operate in at least six countries and have no less than 20% of its sales or assets in those countries. An MNE is an enterprise that has its headquarters in one place (the home country) but has operations in others (the host countries). This is a form of international business in that it is involved in both trade and investment across frontiers. Multinational managers will spend much of their time working overseas. They will have to deal with people who have a different language, customs, religion and business practices.
The following points summarise the reasons why firms become MNEs:Reduction of costs;Avoid reliance on home base;Take opportunities abroad;Improve competitiveness;Respond to creation or removal of trade barriers;Improve operations;Apply knowledge.
II) Clash of Interests.There are a number of legal and other problems faced by multinational organisations. For example, the interests of the host country in which the subsidiary is formed may conflict with those of the home country of the multinational. Multinationals are criticized by foreign governments for different reasons(legal,political, economic,cultural)
Cross-Cultural Management.Cross-cultural studies look for the similarities and differences between people in different cultures. Howard V. Perlmutter concludes that the striking difference among firms lay in the state of mind of the managers. Three states of mind can be identified: ethnocentric, polycentric and geocentric. 1) Ethnocentric or home-country MNE: Regarding one’s culture as superior to others is an ethnocentric attitude. Business follows home-country practices and uses the home language. 2) Polycentric firms incorporate the notion that host-country cultures are difficult for the outsider to understand and local people know best. The branch should be allowed as much local character as possible. The polycentric MNEs is a group of companies that have a high degree of operating autonomy. 3) Geocentric or world MNE is beginning to emerge. Its ultimate goal is a worldwide approach both in headquarters and in the subsidiaries. Collaboration is important, creating worldwide standards for the company products with local variations. Promotion of managers is done on merit, not nationality.
The Dutch scholar Geert Holstede applied a wide-ranging questionnaire to 116000 IBM employees in 70 countries. He then used statistical methods, especially factor analysis, to find patterns among the data.
Such methods led him to discover four such underlying factors, or cultural dimensions, later extended to five after studies from China were included. These factors are summarised and also show countries that score high or low on each scale.
Hofstede’s work is a touchstone for those investigating cultural differences; it marks a switch from the descriptive work to analytical methods based on surveys and statistics.
Powerdistance (How far is unequal distribution of power, and hence distance between people, accepted?)
- Low power distance(Austria, Israel, New Zealand, Ireland, Norway)
- High power distance(Malaysia, Panama, Ecuador, Arab countries, West Africa)
Uncertainly avoidance(How much do people feel threatened by ambiguity and seek to minimize or avoid it?)
- Weak uncertainly avoidance(Singapore, Jamaica, UK, Malaysia)
- Strong uncertainly avoidance(Greece, Portugal, Belgium, Japan)
Individualism (How far do people look after themselves and their immediate family only?)
- Individualist(Australia, USA, UK, Canada, Italy)
- Collectivist(Guatemala, Ecuador, Panama, Indonesia)
Masculinity (How far do “masculine” values dominate society?)
- Masculine(Japan, Austria, Mexico, Venezuela, Germany, UK)
- Feminine(Sweden, Norway, Costa Rica, Yugoslavia, Finland, Chile)
Long- term orientation (also called Confucian Dynamism)(Do people favour a pragmatic, future- oriented perspective?)
- Short- term(Australia, Canada, East Africa, Germany, UK, USA)
- Long- term(China, Japan, Taiwan).
Classifications of cultures
Interaction between different peoples involves methods of communication as well as the process of gathering information. This brings us to the question that several hundred national and regional cultures of the world can be roughly classified into three groups.
Task-oriented, highly organised planners (linear-active/data oriented): do one thing at a time, concentrate hard on that thing and do it within a scheduled timescale. These people think that in this way they are more efficient and get more done. A data-oriented culture is one that relies on research based on gathering solid information;
People-oriented, loquacious interrelators (multi-active/ dialogue-oriented):they are very flexible. They follow a multi-active time system, that is, they do many things at once, often in an unplanned order. Multi-active people think they get more done their way;
Introvert, respect-oriented listeners (reactive/ listening): they have large reserves of energy. They are economical in movement and effort and do not waste time reinventing the wheel. Reactive cultures as a rule listen carefully, establish understanding of the other’s intent, allow a period of silence in order to evaluate, query further, react in a constructive manner and try to attain perfection.
Trompenaars cluster analysis. Although countries vary widely, analysis can show that each is more similar to some and more distant from other. These cultures have different attitudes to the most important issues of management.
Status. The largely Protestant cultures on both sides of the North Atlantic are essentially individualist. In such cultures, status has to be achieved. In most Latin and Asian cultures, on the contrary, status is automatically accorded to the boss, who Is more likely to be in his fifties or sixties than in his trirties. This is particularly true in Japan , where companies traditionally have a policy of promotion by seniority.
Pay-for-performance principle. In northern cultures, the principle of pay-for-performance often successfully motivates sales people. The more you sell, the more you get paid. A Dutch researcher Fons Trompenaars gives the example that Singaporean and Indonesian managers objected that pay-for-performance caused salesman to pressure customers into buying products they didn’t really need, which was not only bad for long term business relations, but quite simply unfair and ethically wrong.
Matrix management. Another example of an American idea that doesn’t work well in Latin countries is Matrix management. You can’t have two bosses like you can’t have two fathers. French managers, for example, would rather see an organization die than tolerate a system in which a few subordinates have to report to two bosses.
Welfare and safety of staff. Many organizations espouse standard policies for issues such as the welfare and safety of staff. Scientists compared perceptions of safety at three plants of a United States MNE. They found that it was perceived differently in Argentina, France and The USA. In the last two countries, the individualist culture was reflected in the expectations for managers to take control.
Universalists versus Particularists. In distinguish people ‘s relationship with their boss and their colleagues and friends, Trompenaars distinguishes between universalists and particularists. The former believe that rules are extremely important; the latter believe that personal relationships and friendship should take precedence. Consequently, each group thinks that the other is corrupt. Universalists say that particularists “cannot be trusted because they will always help their friends”, while the second group says of the first “you cannot trust them; they would not even help a friend”. According to Trompenaars’ data, there are many more particularists in Latin and Asian countries than in Australia, the USA, Canada, or north-west Europe.
Human Resource Managment
Human resources are people. The phrase “appropriate human resources” refers to those individuals within the organization who make a valuable contribution to organizational goal attainment. Productivity in all organizations is determined by how human resources interact, and combine and use all other management system resources. Such factors as background, age job-related experience, and level of formal education all have some role in determining the degree of appropriateness of the individual to the organization. Although the process of providing appropriate human resources for the organization is involved and somewhat subjective, the following section attempts to furnish clear insights concerning how to increase the success of this process. Appropriate human resources must be provided for the organization as various positions become open. The process of providing them involves four main steps: 1. Recruitment; 2 Selection; 3 Training; 4. Performance appraisal.
Recruitment is the initial screening of the total supply of prospective human resources available to fill a position. The purpose of the recruitment is to narrow a large field of prospective employees down to a relatively small number of individuals from which one person can eventually be hired.
The sources of potential human resources: internal (the organization will try to find a prospective employee among the members of the organization to fill a position) and external sources (there are a number of sources of prospective human resources outside the organization): competitors this type has become a common practice. The main point is that a company takes some actions to lure human resources away from another company — competitors in fact; employment agencies these agencies are specialized in matching individuals seeking a position with the organizations in need for them. Employment agencies can be classified into two types: public and private. Public agencies are created to assist the public in the employment process and the private agencies – exist to make profit, as it is their private enterprise. They collect a fee, either from the person hired or the organization;certain publications the recruiter simply places an advertisement in a suitable publication. It is very important to take into consideration that a publication you’re going to put your advertisement in would be interested in filling the position for the readers; educational institutions. Recruiter go directly to educational institutions to interview students close to graduation as prospective human recourses. Headhunting. Headhunters are specialists, consulters who search for high level, often board-level executives, and try to persuade them to leave their jobs in order to go to work for another company. Executives may be persuaded to move from a company by promise of a ‘golden hello’: a large sum of money or some other financial enticement offered by the company they moved to.
Executive pay compensation. It can refer to two different things: what top-executives get for running a company and what they get on leaving a company. A compensation package for an executive leaving a company is also known as ‘golden good-bye’ / ‘golden hand-shaking’/ or ‘golden parachute’. A compensation for someone leaving a company may be referred to as a compensation payment, compensation payoff or compensation payout. These payments may form part of a severance package. Severance payment can be a subject of complex negotiations when an executive leaves or is ousted (forced to leave). When executives are ousted, people may talk about the company giving them ‘a golden boot’. That’s just the point.
It is highly important aspect of recruitment process – Knowing the Law. Modern legislation has a crucial impact on organizational recruitment practices. The Equal Employment Opportunity Commission (EEOC) was created to enforce the law to prohibit discrimination based on race, color, religion, sex or national origin. Discriminatory employment practices are comprised of recruitment, hiring, firing and other factors involved in employment. Speaking to the point, equal opportunity legislation protects the rights of a citizen to work and get a fair wage rate.
Knowing the Job. In order to be effective, recruiters must thoroughly understand the job they are trying to fill. A recruiter who did not have an understanding would find it extremely difficult to attract the right organization members. Job analysis is one procedure that can help recruiters gain this understanding. Job analysis determines which activities a job entails (влечь за собой) and the type of individual needed to perform the job. Job description is the term used to refer to these activities and Job specification is the term used to refer to the type of individual needed to perform the job.
Selection is the second step in providing appropriate human resources for an organization. Selection involves choosing an individual(s) to hire from all those who have been recruited.The selection process is represented in a number of stages prospective employees must pass in order to be hired. The first one might be: education and past performance in other jobs. Then they can be given intelligence or aptitude (ability/ quickness to learn) tests. And, finally, an interviewer can talk to them to evaluate their personality, examine their personal ambitions and even their physical appearance.
Training it is the process of developing qualities in employees that will ultimately enable them to be more productive and, as a result, to contribute more to organizational goal attainment. It’s significant to mention that training in organizations can focus on both: workers and managers. In that case, training programs can be classified into: management development programs and employees development programs.
Performance appraisal – is a judgement on how well a person is doing his/her work.Why do organizations carry out appraisals? First of all, appraisals assist (помогать) organizations to reward staff properly. It comes useful when it’s concerned with the bonuses and increasing the salary. The second reason is: they are needed when managers are transferring/promoting staff and appraisals provide them with up-to-date information related to individual’s performance, skills and career objectives. Furthermore, the necessity of appraisals is in giving the subordinate feedback on how he/she is performing. The manager can talk to the subordinate over the strengths and weaknesses of his/her performance and discuss how to work more efficiently. And, eventually, subordinates can also seek guidance from the manager who may help him to think more realistically about the goals are to be obtained. Besides, it gives the subordinate the opportunity to ask the manager for further training.
Forms of appraisal: ‘rating’. The subordinate’s evaluation is based on traits/qualities such as knowledge of the job, reliability, initiative, sense of responsibility, productivity and attendance that he/she demonstrates in his/her work. Management by Objectives. This kind of appraisal is concentrated mainly on a person’s performance and how well he/she is achieving his/her goals. The focus is on results, not personality traits. It is different from the previous one, because here both the manager and the subordinate agree on certain number of objectives, which should be achieved in a given period of time.The Critical Incident Method. It is the system when the manager keeps a file or a record of good and unsatisfactory examples (incidents) of a person’s work. An advantage of this system is that manager has to think about the subordinate’s work throughout the year
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