TERM PAPER
Course No. : SML 822
Mathew P Varghese Balvinder Singh Chabra Ranu Srivastava Kaushal Kishore Verma
Contents
Contents............................................................................................................................... 3 .............................................................................................................................................. 5 Three key phases of an international expansion project:......................................................6 Planning for expansion..........................................................................................................6 Cross-cultural competence in international business............................................................9 The Iceberg Model........................................................................................................ 11 Low vs. High Context....................................................................................................11 Tips for communicating with people from low-context cultures......................................12 Global advice on International Cultural Aspects & Training................................................15 Managers and National Culture...........................................................................................19 Cultural Values,Managerial Implications & Organization structure.....................................22 Employee Categorization & Prototype in Chinese Culture..................................................24 The Indian Context..............................................................................................................25 Management Styles in Various Cultures.............................................................................28 Learnings & implications.....................................................................................................30 References..........................................................................................................................31
Introduction
In August 2010, China overtook Japan as the second largest economy in the world, and it is closing the gap on the United States. The world is changing at a fast pace, driven by globalisation. Throughout the global financial crisis, agile organisations continued their quest to participate in and prosper from the tremendous growth in the emerging markets. The Globalization Index1 supports many market indicators that the trend towards ambitious international expansion will continue. This research depicts a global landscape where organisations execute their international expansion strategies at a rapid pace. This speed of expansion may indicate the strong desire by companies to be the first-to-market and/or the imperative to capitalise on new market developments. The survey was conducted in August 2009, with 520 senior executives worldwide. 38% of respondents indicated that they currently derive over half of their revenue from overseas operations. As indicated in the chart below, by 2012 more than half of the respondents expect this to be the case, with one in four respondents expecting to derive more than three quarters of their revenue from overseas.Only one in 50 executives surveyed believes containing their operations within their home country or earning less than 10% of their revenue from overseas markets by 2012, to be a viable option.
Is the location central to your regional markets, suppliers of goods and services? 9. Cultural compatibility Are there significant cultural differences that may impact the way you conduct your business? Are there likely to be language barriers? Entrepreneurial organisations through their very nature can achieve growth and develop a global footprint relatively quickly. However, it can take a long time to create a diverse workforce that reflects the variety of markets in which the organisation operates, and cultural customs can impact significantly on business practices in the chosen location. Without early attention to these issues, your management team may be left behind in terms of cultural awareness and diversity. This can generate a competitive disadvantage as the management team will be required to make rapid decisions, while at the same time ensuring that they have a clear understanding of the local customs and operating conditions. In this respect, the importance of language cannot be overstated, as it will underpin everything the business does in the target location. Effective communication (or the lack thereof) has the ability to make or break the business. It is a key foundation upon which the success of the business may be built. Your management team will need the language skills to communicate effectively with those who will interact with your business including government, regulators, financiers, suppliers, staff and customers. Even in countries where English is commonly spoken or is the language of business, regional nuances can be a source of misunderstanding and can lead to more serious problems. 10. Local workforce What is the availability, skill-set and cost structure of the local work force? When expanding into a global market, your human resources can mean the difference between success and failure. As your organisation grows off-shore, getting the right people in the right location can provide a vital competitive advantage. The quality of the local workforce may often be the deciding factor in determining whether to expand your business to that location and also in determining how successful such an expansion will be. When setting up a local workforce in your target location, there are numerous practical issues to consider. You will need to think about the education level and experience of your prospective workers and how much you will need to invest in training. You will need to determine the terms and conditions of employment and you may need to negotiate with individuals, labour unions or other bargaining agents. There may be local legislation or regulations concerning working hours, weekends and public holidays and there may also
be local customs or practices that will impact on the operation and activities of your workforce. In addition you will need to consider your global remuneration approach and whether short term and long term incentive programs will be offered to your overseas employees, as well as the tax and regulatory implications associated with this. 11. Global management team Who will negotiate with government, customers,suppliers and business partners? How should you manage risks such as bribery and corruption? Who will be responsible for the recruitment of staff? Do you have an international management team or do you need to build one? Commencing business operations in a new market can involve significant risks, and therefore it is important to have a strong management team that understands the challenges ahead. Having established the business in a new country, a variety of issues may present themselves such as: How to ensure that your business operations run smoothly? How much hands on involvement is required by your management team? How much time and resources will it consume setting up your operations? Will some members of your management team be required to spend a lot of personal time in the new location? 12. Global human resources considerations What benefits will you provide to expatriates and what are the tax consequences? Do your employees require security protection? Do you have a team that can deal with assignent management, immigration and tax compliance? Should these functions be outsourced? 13. Financing What are the cash flow needs of your business? What is your projected revenue growth? Are your financial models sound or overly optimistic? Do you need strong partners to finance your expansion? Have you considered Islamic finance as a source of funds? What is the debt equity mix of funding? What are the tax consequences? 14. Choosing the operating structure Are you looking for slow organic growth? Will you start out with a sales office or are you looking for a green field development? Are you looking to establish an immediate local presence? If so, will you set up a joint venture or will you acquire an existing local business? 15. Supply chain, transfer pricing and intellectual property Have you identified all possible supply chain efficiencies? Have you considered potential Australian tax issues as you move functions, intellectual property and risk offshore? Is your intellectual property and data protected?
16. Foreign exchange management and currency risk/controls Is the local currency stable or volatile? Is currency hedging available at a reasonable cost? Could currency restrictions inhibit or even prohibit the flow of international funds?
http://www.worldbiz.com/ice.html
https://www.aperianglobal.com
When George Bush gave Chinese Premier Li Peng a gift of cowboy boots embroidered with the American and Chinese flags, was it an appropriate gift? 1 Yes, a thoughtful sentiment and a keepsake appropriate to the occasion 2 No, a significant miss on the part of administration protocol experts 3 Yes, a good choice, if only he had known the Premiers correct shoe size Answer: 2. Unfortunately, in China, the soles of the feet are considered to be the lowliest part of the body and gifts of footwear, no less embossed with the nations respective flag, was a significant miss on the part of administration protocol experts In sending an email to a Japanese colleague with whom may wish to collaborate on a potential business deal, you would be most successful if you 1 Begin the email by addressing the individual warmly and openly, by his first name, immediately closing the cultural gap 2 Always use Mr. , Miss or Mrs. followed by the last name of the individual, followed by an embracing and forthright interaction 3 Use the last name, followed by the term sama to address your email, followed by clear text set forth with the utmost formality. Answer: 3. The risk of email is that it lacks certain social contextual cues such as body language, eye contact and intonation and can therefore create misunderstandings. There is also no way to see the demeanor or reaction of your counterpart and adjust your communication strategy to compensate for a misunderstanding once it is created. When in doubt, it is always safer to err on the side of greater formality and deference. The Japanese have become accustomed to making allowances for informal communication from other countries, but you will proceed with more credibility if you make a sincere effort to adapt to their customs. The use of the term san and, for those in a position of high authority, sama is honorific. Use the last name, followed by the honorific term, followed by extreme clarity and formality in the text, with as few assumptions for context as possible.
Be prepared to use a variety of approaches to establish credibility and persuade not just verbal persuasion, facts, and data. Other factors may carry even more weight in high-context cultures, for example, who you know, how well you listen, how willing you are to invest in a relationship and spend time socializing, even how you dress. Some General tips on how to be effective in intercultural interactions
Check your assumptions about the intentions behind other people's words or actions. Avoid making quick judgments. Consider alternative interpretations that are based on the other culture's attitudes, perceptions and values. Check your conclusions, either with the other person, or with a third party who is familiar with both cultures. Examine your own cultural assumptions and values and be aware that you may be making judgments that may fit situations in your own culture, but not in others. Be willing to carefully explain your intentions when it seems that others are misunderstanding them. Identify ways that you can adapt your behavior, communication style, etc., to make others more comfortable.
He needs, however, to resolve this issue as speedily as possible. What is the first thing Elliot should do at this point?
POTENTIAL ANSWERS: RESULT It may be advisable for Elliot to bring the two parties together and discuss the issue in a private conference with both of them present. This will allow them to speak freely in the presence of an authority figure. This is not the best first step for Elliot to take, though it might be helpful later on, after other action has been taken. Try another answer. RESULT It may be a good idea for Elliot to call in a neutral intermediary to discuss the issue with the two disputants. This intermediary should be someone without commitments to either sides tribe or social group. This is a possible answer and might help resolve the conflict. But it is not necessarily Elliots best first option. Try a better answer. RESULT At this point it would be best for Elliot to call aside each of the parties in turn and discuss the issue with them, letting each one give his story of the dispute. This is the best answer. Elliot can learn great deal by being a sympathetic listener to each side; he is also likely to learn something about the less apparent tensions in Angolan life between subgroups.
For each statement below, click the button that best expresses the extent to which you agree or disagree with the statement. Your responses should reflect YOUR OWN VIEWS when you are IN YOUR OWN CULTURE.
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When other team members express a set of priorities that are different from mine, I should compromise my own wishes and act in unison with them. I believe that seniority should be taken into account along with achievement when distributing awards, benefits, or recognition. I believe that the entire team should share the blame even if one individual is responsible for the team not meeting its goals. As a manager, I should be able to give advice to subordinates about their personal lives even if they do not ask for it. It would be appropriate for me to raise my voice if angered by the actions of a junior employee. When I am speaking with a junior employee, it is natural that I should control the conversation. If I am frustrated with a subordinate, I should not reveal my feelings to him/her. It often seems to me that the colleagues I work with understand things in general better than I do. I am very concerned about how my performance is evaluated compared with others in my group. When my work does not compare favorably to others I am reluctant to share this information with anyone else. If I have made a mistake or done something wrong, I let my subordinates know about it. I am uncomfortable when my manager follows the progress of my work very closely. I usually try to avoid disagreeing openly with other people. When communicating a message to a colleague that he/she may not want to hear, what I say may have one meaning on the surface and another meaning below the surface. When someone says something I try and figure out what they really mean.
Telegraphing clearly where one stands Commitment bordering on ideology More often directed toward self, section, department than entire enterprise If we see how a typical American manager saw his/her life/job in general we would use following values : Legitimacy of achievement and success ;belief in hard work; optimism; Puritanism; commitment to a scientific & rational orientation; impersonality in work settings; belief in equality of opportunity; acceptance of competition as fact of life, individualism. Perhaps no other country holds all these values as strongly as do American workers.
Two major factors affect managerial behavior in Britain: tradition as a dominant and positive social value, and an unchallenged class system. British society lalues tradition: the sense that behavioral codes that have worked well in the past should be preserved and that change should only be introduced when un avoidable. Although such attitudes seem to restrain development and innovation, ome advantages are apparent. First, to minimize experimentation is to limit the possibility of losses from inappropriate projects. The typical British manager waits for others to demonstrate the merits of a new venture. If a new system, such as a local area network, is introduced, such a step will be taken only in order to minimize potential losses from competitors, who might succeed in generating beneits from the use of such systems. Second, when implementing a new project, managers minimize risk by col laborating
with others, so that any associated losses are widely distributed. Third, unsuccessful managers admit their mistakes and pay the consequences, thereby allowing their successors to reap the benefits of successful policy changes. As a corollary, unionization among managers has not been a significant factor in compensation arrangements, although some 40 percent of managers are formally afiliated with such unions, paticularly in the public sector. These attitudes contrast with those prevailing in the United States, where managers face strong pressures from shareholders to take risks in their decision making, so as to maximize the possibility of short-term gains. Consequently, mistakes are not freely admitted. When the admission of failure is inevitable, U.S. managers evade sole responsibility, as far as is possible. Such behavior makes it dificult for the Board of Directors, or for shareholders, to identify errors at an early stage. In addition, it may be dificult to alter erroneous decisions when managers make obscure mistakes or relate their actions to external factors. To be sure, the conservative cast of typical British managers is one reason for the country's sluggish economic growth .Yet resistance to change .buttresses the class system, so that management becomes a status rather than a profession. Managers who were not born into the appropriate class face major obstacles when seeking promotion. At the same time, since management is a social class, there is limited emphasis on management education and training. Intuitive judgments based on experience and wisdom are preferred to scientiic assessment. Whereas management is considered a profession in the United States and university degrees are usually required for advancement, social class is the most common "pass" required of new entrants in Britain. Although this orientation is most evident within the public sector, it signiicantly inluences managerial career development within the private sector as well.
Cultural Values Managerial Behaviors Tibal and family loyalty Work group loyalty Paternal sociability Stable employment and a sense of A pleasant workplace Caeful selection of employees Nepotism Arabic language Business as an intellectual acivity Access to employees and peers Management by walking around Conversaion as receation Close and warm fiendships A person rather than task and money orientaion Theory Y management Avoidance of judgment Islam Sensitivity to Islamic virtues Observance of the Qur'an and Shaia Work as personal/spiritual growth Majlis Consultative management A full and fair heaing Adherence to norms Honor and shame Clear guidelines and conflict avoidance Positive reinforcement Training and defined job duties Private correction of mistakes Avoidance of competition An idealized self Centralized decision making Empathy and respect for the self-image of others Polychrome use of ime Right and left brain facility A bias for acion Patience and flexibility Independence Sensitivity to control,Interest in the individual Male domination Separation of sexes
Pareek (1988; 1997: 188-90) describes these twelve styles as follows: 1. Supportive (+NP): In this style, support is provided when needed. Managers with this style are supportive coaches. They encourage their subordinates, cheer them up, and provide the necessary conditions for their continuous improvement. They help them to help themselves. 2. Rescuing (NP): In this style, support is provided by almost imposing oneself on others. The belief is that the subordinate is not Capable of taking care of himself. This style inculcates dependencyproneness. 3. Normative (+CP): Managers with this style are interested in developing proper norms of behaviour for their subordinates and helping them to understand how some norms are more important than others. The manager is concerned with setting appropriate norms by involving his subordinates in evolving these norms, and also in deciding how such norms will be followed. 4. Prescriptive (CP): People with this style are critical of others' behaviour. They impose themselves and want others to do what they think is right or wrong. Managers with this style prescribe solutions rather than helping subordinates to work out alternative solutions to the problem. 5. Problem-solving (+A): In this style the concern of the person is to solve the problem by himself working and involving others in it. He does not see the problem as being merely conined to the tasks. For him the problems have various dimensions. 6. Task obsessive (A): The manager with this style is primarily concerned with tasks, and is so obsessed with the work to be done that he overlooks various other things. They are not concerned with feelings and, in fact, fail to recognize them, since they see them as not related to the task. They function like computers.
7. Innovative (+FC): People with this style are enthusiastic about new approaches, and take others along with them. They pay enough attention to mustering an idea so that it results in concrete action, and is internalized in a system. 8. Bohemian (+FC): Such a manager does not stay with one idea and is obsessed with new ideas all the time. He overwhelms his sub ordinates with new ideas. He is less concerned about the working of these new ideas, and is mainly concerned with the ideas them selves. He hardly allows an idea or a practice to stabilize. He goes from one idea to another. 9. Confronting/Assertive (+RC): In this style the person is concerned with the exploration of a problem. Perseverence is the main characteristic. Such managers confront the organization in order to get things done for their subordinates. Even when something is.to be explored with the person, the focus is always a particular issue or a problem and the person is not the target. 10. Aggressive (RC): A person with this style is likely to show his aggressiveness by in-ighting, making heavy demands, ighting or going back to issues and never allowing these to be settled. Managers with this style will help achieve results. Their aggressiveness, however, makes people ignore them and not take them seriously. 11. Resilient (+CC): This style is characterized by functional compliance. The person respectfully accepts others' ideas which appeal to him, and changes his approach when needed. 12. Sulking (CC): A manager with this style keeps negative feelings to himself, Finds it difficult to share them and avoids meeting people if he has not been able to fulil his part of the contract. Instead of confronting problems, a person with this style avoids them, feels bad about situations but does not express himself.
References
1 Management and Cultural Values , Indigenization of Organizations in asia Sage Publications ISBN 0-7619-9318-5 Henery S R Kao , Durganand Sinha , Bernhard Wilpert 2 Managers and National Culture , A Global Perspective Quorum Books Wesport Connecticut Edited by Rochard B Peterson 3 Indian Business Culture Viva Books Private Limited ISBN 81-7649-081-4 Rajiv Desai