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Indian Register of Shipping : Going Global to Greece
 

Indian Register of Shipping : Going Global to Greece

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Abstract – Indian Register of Shipping (IRS) (Fig. 1) is an internationally recognized independent ship classification society, founded in India in 1975. It is an associate member of the ...

Abstract – Indian Register of Shipping (IRS) (Fig. 1) is an internationally recognized independent ship classification society, founded in India in 1975. It is an associate member of the International Association of Classification Societies (IACS). IRS is a non-profit making organization. It has a Committee of Management with representatives from the Ministry and from each industry segment that uses its services. Today IRS provides professionally competent, completely independent and highly efficient third party technical inspection and certification services for all types of ships, marine craft and structures. IRS has 15 offices located all over India. It has overseas offices at China, Sri Lanka, Dubai, Singapore. Recently, in April 2009 it has opened an international office in Greece. In this report, the pros and cons of opening the office in Greece is analyzed from international management point of view by collecting data by interviewing a few senior officers of IRS (full interview is given in Appendix). Strategy behind opening office in Greece, strength and weakness of IRS, possible risk, communication and cultural aspects are analyzed chapter wise by using Porter’s Diamond model, Porter’s five force analysis and Hofstede’s Cultural Value Dimensions. At the end, conclusions are drawn in analyzing all aspects.

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    Indian Register of Shipping : Going Global to Greece Indian Register of Shipping : Going Global to Greece Document Transcript

    • Indian Register of Shipping Going Global to Greece By Asokendu Samanta (SMSID 104118, SID RB09035) [Course: International Management; Faculty: Prof. Manoj Thomas]Post Graduate Certificate in Business Management (PGCBM 15) Centre: Powai, Mumbai February 28, 2010
    • Indian Register of Shipping: Going Global to Greece 1 Indian Register of Shipping Going Global to Greece [Course: International Management, Faculty: Prof. Manoj Thomas] Asokendu Samanta SMSID 104118, SID RB09035, PGCBM 15, XLRI, Center- Powai, Mumbai, Email: asokendu@hotmail.com, February 28, 2010Abstract – Indian Register of Shipping (IRS) (Fig. 1) is an internationally recognized independent shipclassification society, founded in India in 1975. It is an associate member of the International Associationof Classification Societies (IACS). IRS is a non-profit making organization. It has a Committee ofManagement with representatives from the Ministry and from each industry segment that uses itsservices. Today IRS provides professionally competent, completely independent and highly efficient thirdparty technical inspection and certification services for all types of ships, marine craft and structures. IRShas 15 offices located all over India. It has overseas offices at China, Sri Lanka, Dubai, Singapore.Recently, in April 2009 it has opened an international office in Greece. In this report, the pros and cons ofopening the office in Greece is analyzed from international management point of view by collecting databy interviewing a few senior officers of IRS (full interview is given in Appendix). Strategy behindopening office in Greece, strength and weakness of IRS, possible risk, communication and culturalaspects are analyzed chapter wise by using Porter’s Diamond model, Porter’s five force analysis andHofstede’s Cultural Value Dimensions. At the end, conclusions are drawn in analyzing all aspects.Key Words: Communication, Ethnocentrism, Expatriates. Expropriation, High-context culture,Parochialism, Risk, Strategy, SWOT analysis Fig. 1 Indian Register of Shipping (IRS) Head Office in Mumbai Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 2ContentsAbstract 1Contents 2-3Chapter 1 Profile of the Company 4-8 1.1 Introduction 4 1.2 Function of IRS 4 1.3 Policies of IRS 7 1.4 Organizational Structure 7 1.5 Culture of IRS 8Chapter 2 Going Global and Strategy 9-16 2.1 Establishing International Offices 9 2.2 Why, Where, When and How to Enter? 10 2.2.1 Why to enter in the international market? 10 2.2.2 Where to enter in the international market? 11 2.2.3 When to enter in the international market? 11 2.2.4 How to enter in the international market? 11 2.3 Strategy: Porter’s Five Force Analysis 11 2.4 Strategy behind Opening a New Office in Greece 12 2.4.1 Greek Ship Owners 12 2.4.2 Recognition by European Union 13 2.4.3 Expanding the Business in Europe 13 2.4.4 Strategic Coalition with Foreign Society 13 2.4.5 Strategic Location 13 Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 3 2.4.6 Cost Effective and Time Saving 14 2.5 SWOT Analysis of IRS 14 2.6 Strategy: Porter’s Diamond Model 15Chapter 3 Communication and Culture 17-26 3.1 Introduction 17 3.2 Cultural Value Dimensions 20 3.2.1 Hofstede’s Cultural Value Dimensions 21 3.2.2 Drawbacks of the Hofstede’s Model 24 3.3 Communication and Noise 25Chapter 4 Global Human Resource Management 27-32 4.1 Introduction 27 4.2 Existing Structure of HR Department at IRS 28 4.3 Ethnocentric Approach and Expatriate Managers in IRS 29 4.3.1 Training to Expatriate Managers in IRS 29 4.3.2 Facility to Expatriate Managers in IRS 30 4.4 Motivating People Across the Boundary 30 4.4.1 Steps Taken by IRS to Motivate Expatriate Managers 32Chapter 5 Conclusions 33-34 5.1 Summary 33References 35Abbreviation 35Appendix 36-38 Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 4 Chapter ONE PROFILE OF THE COMPANY1.1 Introduction I ndian Register of Shipping (IRS) is an internationally recognized independent ship classification society, founded in India in 1975. Within a short span of time (sixteen years), it has become an associate member of the International Association of Classification Societies (IACS). IACS is a major international body of classification societies and admission in IACS isgranted only to the best and signifies high standards, excellent reputation and professional competence.IRS is a company limited by guarantee and not having share capital (Table 1.1). It has its registered officeat Mumbai and other branch offices at major metros / port cities (Bangalore, Bhopal, Chennai, Delhi,Goa, Hyderabad, Kandla, Kochi, Kolkata, Mumbai, Portblair, Pune, Trichy, Vadodara, Visakhapatnam).Its foreign offices are located at China, Colombo, Dubai and Singapore. Recently it has opened an officein Greece.1.2 Function of IRSIRS provides professionally competent, completely independent and highly efficient third party technicalinspection and certification services for all types of marine crafts (Fig. 1.1) and structures. These serviceshave also been expanded to cover a range of offshore and industrial projects. The services are thusdesigned to meet the applicable international requirements and thereby help achieve high levels of qualityand reliability, while maintaining project schedules and integrity. Further, they are proven to be cost- Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 5effective and meet timelines efficiently. Worldwide, similar types of services are provided by AmericanBureau of Shipping (ABS) of United States of America, Llyod’s Register (LR) of United Kingdom, DetNorske Veritas (DNV) of Norway, Bureau Veritas (BV) of France, Nippon Kaiji Kyokai (NK) of Japan,Germanischer Lloyd (GL) of Germany and by a few other classification societies (Table 1.2). Fig. 1.1 Marine craft, classification of these is the main job of Indian Register of Shipping (IRS) Table 1.1 A few facts of Indian Register of Shipping (IRS) Company Name of the Company Indian Register of Shipping Type Public Limited Company Service Provided Classification of marine crafts (Third party inspection) Registered office Mumbai, India Founded 1975 Total revenue 81.38 crore (Rs.) Website http://www.irclass.orgTo maintain its sea worthiness a ship needs to undergo constant monitoring. There are many internationalregulations also. The duty of these classification societies is to check the sea worthiness of the ships fromvarious aspects (Structural, machinery, environmental etc). Having checked the condition of the shipphysically by a surveyor, the reports are sent to head office. If the reports satisfy the rules laid down bythe classification society, the society subsequently issues the certificates; otherwise society may ask theship-owner to take the appropriate action (replace the faulty machinery, change the damaged componentof the ship etc) to get the certificates. These certificates have certain validity (say six month or one year).Once the date of the certificate is expired, ship owner needs to renew the certificate. So a surveyors needto check the ship again. These cycles go on during the entire life span of a vessel. Generally life span of asea going vessel is 25 years. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 6For this purpose, apart from its head office in Mumbai, IRS has a lot of branch offices (called SurveyStation / Outport) situated at various parts of India and abroad. These survey stations are mainly situatedin port area where surveyors have easy access to ships for investigation purpose. Table 1.2 Ship Classification Societies (IACS members and associate members) United States of ABS American Bureau of Shipping America BV Bureau Veritas France CCS China Classification Society China DNV Det Norske Veritas Norway GL Germanischer Lloyd Germany IRS Indian Register of Shipping India KR Korean Register Korea LR Lloyd’s Register United Kingdom NK Nippon Kaiji Kyokai Japan Registro Italiano Navale RINA Italy (The Italian Shipping Register) Russian Maritime Register of RS Russian Federation Shipping Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 71.3 Policies of IRSMissionTo enable our stakeholders manage their risks and quality Needs better by continually improving thereliability of Systems, processes and products.VisionTo be the first choice of all existing & potential customers For classification and certification services andtechnical Solutions, globally.Values• Integrity• Innovation & creativity• Excellence in all pursuits• Professional development of employees• Respect for business associatesBusiness policyTo realise our mission & vision by providing all our services:• Based on appropriate research and development• In a cost effective manner• With ethical and transparent business practices,• Guided by an effective quality management system• Through qualified personnel, appropriate tools and work environmentQuality policy:To pursue service excellence with commitment to:• Professional integrity• Meeting the applicable rules & requirements• An effective quality management system• Continually improve operational effectiveness by regularly monitoring the realization of the qualityobjectives• Meeting the needs of the customers & other stake holders, as appropriate1.4 Organizational StructureIRS has the following organizational structure (Fig. 1.2). Each department has a Head. Further thesedepartments are subdivided to Groups, which are headed by a group leader. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 8 Fig. 1.2 Organizational structure of Indian Register of Shipping (IRS)1.5 Culture of IRSIRS being a public limited company, and mainly operating in India with majority of the staffs beingIndian, culture of IRS is also Indian. More than 90% staff is Hindu in religion. A few Christian andMuslims are also employed. In the foreign offices of IRS a few foreign nationals are also employed (i.e.,in China, Chinese staff, in Greece, Greek staffs are also part of IRS). Conclusive Remarks IRS is a public limited company having office in various cities in India and a few offices in foreign soils (Dubai, Singapore, China, Srilanka). Recently (April, 2009) it has opened an office in Greece. The culture of IRS is mainly Indian. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 9 Chapter TWO GOING GLOBAL AND STRATEGY2.1 Establishing International Offices S o far IRS had been doing its business based in India only. As such most of the surveys of the ships are done in India. If it is required to get the survey done in a foreign soil (i.e. sometimes ship needs some emergency services), its surveyors have to go to that particular places. However, based on the requirements it started its international offices slowly in variouscountries recently as sending surveyors abroad is very costly when it is a continuous affair. As such, IRShas opened office in Dubai, Colombo, Singapore, China and recently in Greece. Though number of staffsin those international offices is not huge, in fact in many cases these are only one or two; opening anoffice in foreign country requires lot of activities. Some of the activities are mentioned below. • Analysis (Justification of the requirement) • Approval from the Members of the Board • Feasibility study • Understanding the rules and regulation of the foreign country • Formulation of strategy • Human resource activities (Recruiting, transferring, training, motivating etc) Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 102.2 Why, Where, When and How to Enter?2.2.1 Why to enter in the international market?Ship classification is a specialized business and needs proper infrastructure and specialized human skillsto carry out the job which can be achieved over a long period. This business also needs Government’sapproval. IRS is in the business for the last 35 years and has certain experience. Utilizing theseadvantages, IRS wants to expand its business. There are lots of opportunities in foreign soil too.Pros: IRS has the opportunity in expanding its business in international level and increase its revenue.Cons: IRS has to compete with big societies like ABS, LR, DNV who are in the market for more thancenturies.2.2.2 Where to enter in the international market?IRS has decided to open its office in Greece (Fig. 2.1). It has already office in foreign soils (Singapore,Dubai, Colombo, China). Majority of the ship owner in the world is Greek (Fig. 2.1). Opening an officein Greece will give IRS an advantage to serve these vast amounts of customers easily.Pros: Majority of ship owners are Greeks. As such Greece is a potential market for ship classificationbusiness.Cons: Greece is a European country. As such getting permission in various aspects of business is not easyfor an Indian company. Attitude of European customers to get its ships classed by an Indian company willalso be tested. Fig. 2.1 Location of Piraeus, Greece where IRS has opened its office Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 112.2.3 When to enter in the international market?Though shipping business is growing every year, ship classification is dominated by a few foreignsocieties in international soil. Big names like ABS, DNV, LR, GL are already in operation in Greece formany years. IRS has opened its office in Greece in April 2009. IRS will neither become first mover, norwill it become second mover in Greece in the ship classification business. In fact it will become latemover. However IRS can penetrate in to the Greek market by offering its low cost service.Pros: Though IRS is late in opening its office in Greece, it can penetrate in to the market by offering lowcost service which many of the Greek ship owners are looking for.Cons: Big societies (ABS, DNV, LR, BV, GL etc) are already in operation for many years in Greece. Assuch IRS will be late mover.2.2.4 How to enter in the international market?IRS has decided to go ahead alone in establishing its office in Greece. However, foreign society (CyprusRegister of Shipping) has given its office building in Greece to IRS for establishing its business. Thoughit is neither a joint venture, nor a proper alliance with Cyprus Register of Shipping, the gesture of CyprusRegister of Shipping will be helpful for IRS.Pros: Risk will be mitigated as IRS does not have to invest huge money in renting/buying office buildingin Greece.Cons: As there is no alliance or joint venture, understanding local market and generating a market base inGreece will be more difficult for IRS. Many of the business activities may be affected due to inability tounderstand local culture and local language.2.3 Strategy: Porter’s Five Force AnalysisPorter’s five competitive forces that shape the strategy are shown in Fig. 2.2. Fig. 2.2 The five forces that shape industry competition [Ref. 2] Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 12i) Threat of new entrantsAs the ship classification industry is specialized, there are limited companies in this segment. Due to thegovernment policy (one country can have only one ship classification society), only ten societies (ABS,BV, CCS, DNV, GL, KR, LR, NK, RINA and RS) are the members of IACS and only one society (IRS)is the associate member of IACS. IACS is the main body of the classification societies in the world. Assuch threat of new entrants is minimum.ii) Bargaining power of buyers (Customers)Bargaining power of customer is predominant in this ship classification business. If a ship owner is notsatisfied with the service of a society, he can switch over to a new society. IRS has to be very careful inoffering its service, particularly majority of the ship owners are European in Greece.iii) Bargaining power of suppliersThis may not be so much critical in ship classification business as classification society is not offering anyend product, rather it issues certificates.iv) Threat of substitute products or servicesThis is quite immense in this business. As a few number of reputed classification societies are operatingin Greece, IRS has to offer its best service to stay in the competition.v) Rivalry among existing competitorsThough rivalry exists between societies, this is not so intense. In fact all societies maintain some ethics.For example, if a ship is classed with some society, other societies do not interfere. If an employee of asociety (Let’s say society A) applies for job in some other society (Let’s say society B), generally societyB, asks society A, whether it is alright if they recruit that employee.2.4 Strategy behind Opening a New Office in Greece2.4.1 Greek Ship OwnersMajority of the ship owner in the world is Greek (Fig. 2.3). Opening an office will give IRS an advantageto serve these vast amounts of customers easily.Greek ship-owners today possess the worlds largest merchant fleet —3,065 ships totaling almost 25million tons [Ref. 3]. As a group, they are the biggest spenders in the worlds shipyards. More than 200vessels, including 43 supertankers, are on order or being built for Greek owners. The Greeks set up shopwherever they can do business, in London, Manhattan, Lausanne or Beirut. They fly the most convenientflag —Liberian, Panamanian, Cypriot—but they remain Greek wherever they go. Their enterprise hasbeen a major force in lifting the postwar economies of shipbuilding nations. In British shipyards alone,the Greeks now account for 25% of all orders. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 13 Fig. 2.3 Percentage of fleet owned by Greeks [Source: http://www.skyscrapercity.com/showthread.php?t=541070]2.4.2 Recognition by European UnionIRS wanted to get the recognition from European Union to expand its business in Europe. As Greece is aEuropean country, its capital Athens is well connected to other European cities, having office in Greecewill help IRS in getting that recognition.2.4.3 Expanding the Business in EuropeIRS wants to expand its business in Europe and wants to open an office in London. As London is the headoffice of IMO (International Maritime Organization) and IACS (International Association ofClassification Societies), prior experience in operating in European territory will be advantageous.2.4.4 Strategic Coalition with Foreign SocietyIRS will be using the existing office building of Cyprus Register of Shipping in Piraeus, Greece for itsoperation. IRS is getting benefited as they do not have to bear the cost of renting/buying office building. Itwill also reduce the risk as IRS will be list affected in case of expropriation (Seizure of assets by localGovernment with small compensation).2.4.5 Strategic LocationPiraeus (Fig. 2.1) is near to Athens, the capital of Greece, which is well connected to any European cities. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 142.4.6 Cost Effective and Time SavingIn order to survey ships owned by Greek owner, either ships could be surveyed in other parts of the worldwhere IRS has office, or IRS surveyor has to go to Greece. Both options are costly and time consuming.Operating from Greece, IRS will be reducing time in offering service as well as cost. This will effectivelyincrease customer satisfaction.2.5 SOWT Analysis of IRSExhibit 2.1 shows the strength, weakness, opportunity and threats in opening an office in Greece. Exhibit 2.1 SWOT Analysis in opening an office in Greece Strength Weakness 1. IRS has prior experience in operating in 1. IRS does not have experience in operating international soil. in European country. 2. Human Resource of IRS is not so costly 2. Work culture and communication in Greek compared to European country. As such IRS are new to IRS. can offer cost effective service. 3. As the head office (Mumbai) is far away, 3. Establishment cost will be less as IRS will issuing certificate will take some time which be using the office building of Cyprus ship owner may not like. Register of Shipping in Greece. As such risk of being asset encroached is low. Opportunity Threats 1. Fleet owned by Greeks is the largest in the 1. Others reputed classification societies world, as such there are lot of opportunity in (DNV, BV, ABS, GL, NK etc) which are business. operating in Greeks for years have a very strong hold. 2. If the venture is successful, IRS would like to open office in London, where most of the 2. European ship owners will be averse in shipping related activities are going on. getting their ship classed by an Indian company. 3. The successful operation in European country, Greece may help IRS in getting the 3. European Union may not allow an Indian full membership in IACS which IRS is firm to grow in European country. looking for. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 152.6 Strategy: Porter’s Diamond ModelPorter’s diamond model [Ref. 14] (Fig. 2.4) is an economical model developed by Michael Porter in hisbook ‘The Competitive Advantage of Nations’, where he published his theory of why particular industriesbecome competitive in particular locations. As many of the points of this model is already discussed inthe previous sections, a brief discussion is given below. Fig. 2.4 Porter’s diamond model [Source: http://en.wikipedia.org/wiki/Diamond_model]Factor conditions: location wise Piraeus, Greece is suitable as many ships are getting surveyed at thatlocation. As IRS will be using the existing office building of Cyprus Register of Shipping in Piraeus,Greece for its operation, IRS is getting benefited as they do not have to bear the cost of renting/buyingoffice building. It will also reduce the risk as IRS will be list affected in case of expropriation (Seizure ofassets by local Government with small compensation). However language may be an obstacle as Greek isthe only official language in Greece. IRS needs to give proper training to make their managers competentand suitable in Greek cultural environment. Attitude of European customers to get its ships classed by anIndian company will also be tested.Demand condition: Majority of the ship owner in the world is Greek (Fig. 2.3). Opening an office willgive IRS an advantage to serve these vast amounts of customers easily. However as the big societies(ABS, DNV, LR, BV, GL etc) are already in operation for many years in Greece, IRS has to offer its bestservice to stay in the competition.Related and supporting industries: As the ship classification industry is specialized, there are limitedcompanies in this segment. Due to the government policy (one country can have only one shipclassification society), only ten societies (ABS, BV, CCS, DNV, GL, KR, LR, NK, RINA and RS) are themembers of IACS and only one society (IRS) is the associate member of IACS. IACS is the main body ofthe classification societies in the world. As such threat of new entrants is minimum. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 16Firm strategy, structure and rivalry: IRS wanted to get the recognition from European Union toexpand its business in Europe. As Greece is a European country, its capital Athens is well connected toother European cities, having office in Greece will help IRS in getting that recognition. Though rivalryexists between societies, this is not so intense. In fact all societies maintain some ethics. For example, if aship is classed with some society, other societies do not interfere. If an employee of a society (Let’s saysociety A) applies for job in some other society (Let’s say society B), generally society B, asks society A,whether it is alright if they recruit that employee.Government: IRS needs to maintain Government (Greece) policy. Such as, any communication (PublicNotice/ Quotation etc) has to be made in both the languages (English/Greek).Chance: India is one of the countries, which is least affected during the down turn of global economiccrisis. Business of IRS is also not greatly affected during that time. IRS needs to take this opportunity inexpanding its business in foreign soil. In doing so successfully in European country, they also have agreater opportunity in getting the full membership of IACS, the highest body of ship classification. Conclusive Remarks Market Penetration: Though IRS is late in opening its office in Greece, it can penetrate in to the market by offering low cost service which many of the Greek ship owners are looking for. Customer Satisfaction: As majority of the ship owners are Greek, IRS will be able to serve them quickly if it has an office in Greece. This will definitely increase customer satisfaction which IRS can not ignore. Coalition and Risk Mitigation: IRS will be using the existing office building of Cyprus Register of Shipping in Piraeus, Greece for its operation. It will reduce the risk as IRS will be list affected in case of expropriation (Seizure of assets by local Government with small compensation). Attitude of European Union: Greece is a European country, attitude of European customers to get its ships classed by an Indian company will also be tested. Late Mover: Big societies (ABS, DNV, LR, BV, GL etc) are already in operation for many years in Greece. As such IRS will be late mover. Threat of Substitute Services: This is quite immense in this business. As a few number of reputed classification societies are operating in Greece, IRS has to offer its best service to stay in the competition. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 17 Chapter THREE CULTURE AND COMMUNICATION3.1 Introduction T he culture of a society comprises the shared values, understandings, assumptions and goals that are learned from earlier generations, imposed by present members of a society and passed on to succeeding generations. It is clear that cultural variables – shared beliefs, values and attitudes – can greatly affect organizational processes. Some argue that the effects ofculture are more evident at the individual level of personal behavior than at the organizational level as aresult of convergence. Convergence describes the phenomenon of the shifting of individual managementstyles to become more similar to one another. A manager assigned to a foreign subsidiary, must expect tofind large and small differences in the behavior of individuals and groups within that organization.Being a European country, culture of Greece is similar to the other European countries. However, locallanguage is mainly Greek, which may have a great impact in expanding business in Greece by anMultinational company and is discussed in the later part of this chapter. Following description will givean idea about Greece and its culture, politics, language etc. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 18GeographyGreece is a peninsular and a mountainous country situated in southeast Europe on the Mediterranean Sea,with a total area of 130,800 km2. The country is surrounded by the sea. The Greek islands represent onefifth of the countrys surface. Greece has about 1400 Greek islands, of which only 169 are inhabited. Themajority of the islands are scattered in the Aegean Sea between the Greek and Turkish coasts. Thecountry has a population of about 11 million (2000), with 4 millions living in Athens, the countryscapital.PoliticsThe conventional names of the country are Hellas or Hellenic Republic. The democratic Greek system isworking like a parliamentary republic with the President of the Hellenic Republic as the Head of theState. The actual head of the government is the Prime Minister. It is the manager’s job to understand thepolitical system and how it affects organizational processes to negotiate positions within that system andto manage effectively the mutual concerns of the host country and guest country.Greek CultureGreece is a country of a great interests and diverse cultures [Ref. 5], influenced by its location, at thejunction between the East and the West and by the many occupations endured by the Greek peoplethroughout history. In general, the Greeks are particularly proud of their culture (Fig. 3.1) and speak oftheir country with an intense passion, feeling that their Greek culture is a definition of their national andethnic belonging. Traditions, religion, music, language, food and wines are the major composites of theGreece culture and constitute the base for those who wish to visit the country. Fig. 3.1 The architecture and purpose of the Parthenon, Acropolis in Athens epitomizes many facets of Greek culture, both ancient and modern. [Source: http://en.wikipedia.org/wiki/Culture_of_Greece] Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 19Greek EconomyEconomy has a powerful influence on organizational process as sourcing, distribution, incentives andrepatriation of capital. At this time of radically changing political systems, it appears that the drasticdifferences between capitalist and socialist systems will have less effect on multinational corporations(MNC) than in the past.Greece is a developed country, with a high standard of living and "very high" Human DevelopmentIndex, ranking 25th in the world in 2007 and 22nd on The Economists 2005 worldwide quality-of-lifeindex [Ref. 10]. According to Eurostat data, GDP per inhabitant in purchasing power standards (PPS)stood at 95 per cent of the EU average in 2008. Greeces main industries are tourism, shipping, industrialproducts, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum.Greeces GDP growth (Fig. 3.2) has also, as an average, since the early 1990s been higher than the EUaverage.However, the Greek economy also faces significant problems, including rising unemployment levels, aninefficient government bureaucracy and widespread corruption. In 2009, Greece had the EUs secondlowest Index of Economic Freedom (after Poland), ranking 81st in the world. The country suffers fromhigh levels of political and economic corruption and low global competitiveness relative to its EUpartners. Although remaining above the euro area average, economic growth turned negative in 2009 forthe first time since 1993 Fig. 3.2 GDP Growth of Greece compared to the Eurozone between 1996 and 2006 [Source: http://en.wikipedia.org/wiki/Economy_of_Greece]LanguageGreek is the official language of the Hellenic Republic and has a total of 15 million speakers worldwide;it is an Indo-European language. The history of the language spans 3000 years. Greek has had enormousimpact on other languages both directly on the Romance languages, and indirectly through its influence Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 20on the emerging Latin language during the early days of Rome. Signs of this influence, and its manydevelopments, can be seen throughout the family of Western European languages. Though Greek is theonly official language of the country, a large part of the population, mostly the people working in tourismand the younger generations, currently use English at a good level and sometimes other popular Europeanlanguages.Greece Traditions & CustomsTraditions in Greece and Greek Islands are either of a religious character or coming from paganism.Furthermore, most of the traditions and festivals still followed and celebrated today are religious. Manypanygiria are organized in the country, which are actually religious celebrations of saints followed bytraditional music and dance in the square of the village. Many Greeks are very superstitious people andbelieve a lot in religion as well as in supernatural or paranormal phenomenon. This impresses manyvisitors who travel in Greece. For example, some people believe it is bad luck to see a black car, it is 7years bad luck to break a glass or mirror, while others knock their fingers against wood if they have a badthought.Greece ReligionThe spiritual belief of a society is often so powerful that they transcend other cultural aspects. The Greekpopulation is composed of a 97% of Christian Orthodox. The rest of the population is Muslim, RomanCatholic and Jewish. Greece (and the Greek Islands) and Russia are the only countries to have such agreat proportion of people that belong to the Orthodox Church. The Orthodox Church forms the thirdlargest branch of Christianity after the Roman Catholics and the Protestants.3.2 Cultural Value DimensionsAs a first step toward cultural sensitivity, international managers should understand their own cultures.This awareness helps to guard against adopting either a Parochial or an Ethnocentric attitude.Parochialism occurs, for example, when a Frenchman expects those from or in another country toautomatically fall into patterns of behavior common in France. Ethnocentrism describes the attitude ofthose who operate from the assumptions that their way of doing things are best no matter where or underwhat conditions they are applied. Good managers treat people as individuals and they consciously avoidany form of stereotyping.Cultural value dimensions can be analyzed by three ways.i) Project GLOBE cultural dimensionsii) Hofstede’s value dimensionsiii) Trompenaars’s value dimensionsIn project GLOBE (Global Leadership and Organizational Behavior Effectiveness), Assertiveness,Future Orientation, Performance Orientation and Humane Orientation are discussed. Geert Hofstedehas analyzed cultural value dimension from the aspects of Power Distance Index, UncertaintyAvoidance Index, Individualism, Masculinity. Later, Long-Term Orientation is added in the analysis. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 21Fons Trompenaars also researched value dimensions and his research work was spread over a ten yearperiod, with 15000 managers from 28 countries, representing 47 national cultures. He main discussed onuniversalism versus particularism, neutral versus affective and achievement versus ascription. In thepresent report, only Hofstede’s cultural value dimensions are discussed from the cultural context ofGreece.3.2.1 Hofstede’s Cultural Value DimensionsNational cultures can be described according to the analysis of Geert Hofstede [Ref. 6]. These ideas werefirst based on a large research project into national culture differences across subsidiaries of amultinational corporation (IBM) in 64 countries. These studies identified and validated four independentdimensions of national culture differences, with a fifth dimension added later. • Power Distance Index (PDI) • Uncertainty Avoidance Index (UAI) • Individualism (IDV) • Masculinity (MAS) • Long-Term Orientation (LTO)The ranks of various countries in Hofstede’s Cultural Value Dimensions are shown in Table 3.1 and 3.2.A comparison between Greece and India is shown in Fig. 3.7.Power Distance Index (PDI): PDI (Fig. 3.3) focuses on the degree of equality, or inequality, betweenpeople in the countrys society. A High Power Distance ranking indicates that inequalities of power andwealth have been allowed to grow within the society. These societies are more likely to follow a castesystem that does not allow significant upward mobility of its citizens. A Low Power Distance rankingindicates the society de-emphasizes the differences between citizens power and wealth. In these societiesequality and opportunity for everyone is stressed. PDI for Greece is 60 whereas for India it is 77. Fig. 3.3 Hofstede’s Power Distance index [Ref. 6] Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 22Uncertainty Avoidance Index (UAI): It (Fig. 3.4) focuses on the level of tolerance for uncertainty andambiguity within the society - i.e. unstructured situations. A High Uncertainty Avoidance rankingindicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-orientedsociety that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. ALow Uncertainty Avoidance ranking indicates the country has less concern about ambiguity anduncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change, and takes more and greater risks. A significant difference betweenUAI value of Greece (112) and India (40) is observed. Fig. 3.4 Hofstede’s Uncertainty Avoidance index [Ref. 6]Individualism (IDV): Individualism (Fig. 3.5) focuses on the degree the society reinforces individual orcollective, achievement and interpersonal relationships. A High Individualism ranking (USA, Australia,UK, Table 3.1) indicates that individuality and individual rights are paramount within the society.Individuals in these societies may tend to form a larger number of looser relationships. A LowIndividualism ranking (Panama, Ecuador, Guatemala, Table 3.1) typifies societies of a more collectivistnature with close ties between individuals. These cultures reinforce extended families and collectiveswhere everyone takes responsibility for fellow members of their group. These values are nearly same bothfor Greece and India. However, a bit high value of India (48) over Greece (35)in Individualismindicates that Indians like to be Individualistic. Fig. 3.5 Hofstede’s Individuality index [Ref. 6] Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 23Masculinity (MAS): It (Fig. 3.6) focuses on the degree the society reinforces, or does not reinforce, thetraditional masculine work role model of male achievement, control, and power. A High Masculinityranking (Japan, Hungary, Austria, Table 4.1) indicates the country experiences a high degree of genderdifferentiation. In these cultures, males dominate a significant portion of the society and power structure,with females being controlled by male domination. A Low Masculinity ranking (Netherlands, Norway,Sweden, Table 3.4) indicates the country has a low level of differentiation and discrimination betweengenders. In these cultures, females are treated equally to males in all aspects of the society. The MASindex is similar for Greece and India. As such, similarity of culture from this aspect may be observed. Fig. 3.6 Hofstede’s Masculinity index [Ref. 6] Table 3.1 Hofstede’s high and low value dimension [Arranged by authors collecting data from Ref. 6] Power Distance Uncertainty Individualism Masculinity Avoidance High Malaysia (104) Greece (112) United States (91) Japan (95) Guatemala (95) Portugal (104) Australia (90) Hungary (88) Panama (95) Guatemala (101) United Kingdom (89) Austria (79) Philippines (94) Uruguay (100) Netherlands (80) Venezuela (73) Mexico (81) Belgium (94) New Zealand (79) Italy (70) Low Ireland (28) Hong Kong (29) Colombia (13) Costa Rica (21) New Zealand (22) Sweden (29) Venezuela (12) Denmark (16) Denmark (18) Denmark (23) Panama (11) Netherlands (14) Israel (13) Jamaica (13) Ecuador (8) Norway (8) Austria (11) Singapore (8) Guatemala (6) Sweden (5) Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 24 Table 3.2 Hofstede’s value dimensions for major countries [Arranged by authors collecting data from Ref. 6] Power Uncertainty Individualism Masculinity Distance Avoidance Australia 36 51 90 61 Brazil 69 76 38 49 China 80 40 20 66 Greece 60 112 35 57 India 77 40 48 56 Japan 54 92 46 95 Nigeria 77 54 20 46 Norway 31 50 69 8 Singapore 74 8 20 48 South Africa 49 49 65 63 United Arab Emirates 80 68 38 52 United Kingdom 35 35 89 66 United States 40 46 91 62 Fig. 3.7 Hofstede’s Cultural Dimensions for Greece and India3.2.2 Drawbacks of the Hofstede’s ModelThe Hofstede Model of Cultural Dimensions can be of great use when it comes to analyzing a country’sculture. There are however a few drawbacks.1) The averages of a country do not relate to individuals of that country: Even though this model hasproven to be quite often correct when applied to the general population, one must be aware that not allindividuals or even regions with subcultures fit into the mould. It is to be used as a guide to understandingthe difference in culture between countries, not as law set in stone. As always, there are exceptions to therule. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 252) Accuracy of the Data: The data has been collected through questionnaires, which have their ownlimitations. Not only that, but in some cultures the context of the question asked is as important as itscontent. Especially in group-oriented cultures, individuals might tend to answer questions as if they wereaddressed to the group he/she belongs to. While on the other hand in the United States, which is anindividualistic culture, the answers will most likely be answered and perceived through the eyes of thatindividual.3) Is the data up to date?: How much does the culture of a country change over time, either by internalor external influences?3.3 Communication and NoiseCommunication is a critical factor in the cross cultural management issues, particularly those of aninterpersonal nature, involving motivation, leadership, group interactions and negotiation. Culture isconveyed and perpetuated through communication in one form or another. Culture and communicationare so intricately intertwined that they are essentially synonymous [Helen, 2006].The term communication describes the process of sharing meaning by transmitting messages throughmedia such as words, behavior or material artifacts. Managers communicate to coordinate activities, todisseminate information to motivate people and to negotiate future plans. It is of vital importance, then fora receiver to interpret the meaning of a particular communication in the way the sender intended.Unfortunately the communication process involves stages during which meaning can be distorted.Anything that serves to undermine the communication of the intended meaning is typically referred to asNoise (Fig. 3.8). Attribution is the process in which people look for an explanation of another person’sbehavior.Cultural variables in the communication process depend on many factors, Attitudes, Socialorganization, Thought patterns, Roles, languages, Non verbal communications and Context. Nonverbal communication again can be categorized into i) Kinesic behavior, ii) Proxemics, iii) Paralanguageand iv) Object language. Fig. 3.8 Communication process Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 26A major differentiating factor that is a primary cause of noise in the communication process is that ofcontext. The context in which the communication takes place affects the meaning and interpretation of theinteraction. Cultures are known to be high context culture or low context culture. In high contextcultures (Asia, Middle East, Africa and Mediterranean), feelings and thoughts are not explicitlyexpressed, instead one has to read between the lines and interpret meaning from one’s generalunderstanding. In low context culture (Germany, Switzerland, Scandinavia and North America)communications are more explicit. Feelings and thoughts are expressed in words and information is morereadily available. Conclusive Remarks The Power Distance index of Greece and India are 60 and 77 respectively (Fig. 3.7). As the index value is more for India, it indicates that inequalities of power and wealth have been allowed more to grow within Indian society. A significant difference between UAI value of Greece (112) and India (40) is also observed. It indicates that Greeks are less tolerant that Indian. Individualism values are nearly same both for Greece and India. However, a bit high value of India (48) over Greece (35) indicates that Indians like to be Individualistic. An international manager needs to consider these aspects. It is observed that culture of both Indian and Greeks are high context (Ref. 9). This similarity will be helpful to an international manager to understand the meaning of the conversation. However, as the languages of both the countries are different (in Greece, only official language is Greek and in India, official language is mostly English), it is expected that a good amount of noise may exist. Thus a manager should be very careful in understanding the meaning of the communication and should not assume that others use the same reasoning processes. In fact during interview with the manager of the Greece office of IRS, it is understood that they are facing a huge challenge due to this language barrier. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 27 Chapter FOUR GLOBAL HUMAN RESOURCE MANAGEMENT4.1 Introduction A vital component of implementing global strategy is international human resource management (IHRM). IHRM is increasingly being recognized as a major determinant of success or failure in international business [Helen, 2006]. Alternate philosophies of managerial staffing abroad are known as the ethnocentric, polycentric, region-centric andglobal approaches. Firms using an ethnocentric staffing approach fill key managerial positions withpeople from headquarters – that is, parent country nationals (PCNs). Among the advantages of thisapproach, PCNs are familiar with company goals, products, technology, policies and procedures – andthey know how to get things accomplished through headquarters. This policy is likely to be used where acompany notes the inadequacy of local managerial skills and determines a high need to maintain closecommunication and coordination with headquarter. With a polycentric staffing approach, localmanagers – host country nationals (HCNs) are hired to fill key positions in their own country. In theglobal staffing approach, the best managers are recruited from within or outside of the company,regardless of nationality (i.e. third country nationals, TCNs). In a region-centric staffing approach,recruiting is done on a regional basis. Most MNC use a greater proportion of PCNs (also calledexpatriates) in top management positions, staffing middle and lower management positions withincreasing proportions of HCNs (inpatriates) as one moves down the organizational hierarchy. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 284.2 Existing Structure of HR Department at IRSStructure of Human Resource department of IRS and its responsibility are shown in Fig. 4.1. The numberof employees and number of HR personnel working in IRS are shown in Table 4.1. CS= Chief Surveyor, DH= Divisional Head Fig. 4.1 Structure of HR Department Table 4.1: HR Department of Indian Register of Shipping (IRS) Company Inception of HR department 2004 Total employee 350 (Approx) Number of HR person 4Having discussed with the HR manager of IRS, it is understood that HR department of IRS has thefollowing roles.Recruitment and Selection Process: The objective of the process is to recruit appropriately qualifiedpersonnel for required positions in short period of time. Emphasis is given on optimum manpowerutilization and focusing on lean organization structure, to obtain higher rate of productivity whilemaintaining high standards and accountability. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 29Induction and Orientation Process: Induction is a process of receiving and welcoming new entrant,when he/she joins a company, giving him/her the basic information that he/she needs to settle downcheerfully and start work. Induction and Orientation aims to smoothen the adjustments at the preliminarystages when everything is likely to be strange and unfamiliar.Probation and Confirmation Process: The purpose of probation is to evaluate the employee’s suitabilityfor the position and job for which he/she has been appointed.Transfer Process: Depending on the company’s business requirements and with a view to create careerdevelopment opportunities, company may transfer its employees to other geographical locations withinIndia or abroad.Performance Management System Process: The objective of the processes is to create accountabilityand performance based culture in the organization. It is an objective for evaluation of employees keepingin mind overall business objectives.Exit Process: This process is framed with a view to provide guidelines to employee who is leaving theservices of the company either by Retirement, Resignation or Termination.4.3 Ethnocentric Approach and Expatriate Managers in IRSDiscussing with HR manager of IRS, it is observed that IRS mainly follow ethnocentric approach instaffing to fulfill managerial cadre position. In its office in Dubai, Colombo, Singapore, China allmanagerial positions are filled by parent country nationals (PCNs) or expatriates. It is also observed thatin Greece office of IRS also, the manager is an Indian. IRS selects this position from the manager’sdomestic track record and his ability to do challenging jobs.4.3.1 Training to Expatriate Managers in IRSIn order to make the expatriates managers efficient, IRS needs to provide sufficient training so that theycan adapt to local culture and working environment. These training includeCross cultural training – to improve interaction with host country individuals.Culture shock training – to ease adjustment to the new environment.Sub-cultural shock training – this may occur due to difference in cultures in different parts of the samecountry.It is understood that IRS provide following techniquesArea studies: IRS arranges to provide information about geography, economy etc of the foreign countrywhere the manager is likely to be posted. Some times the manager is sent to the foreign country inadvance to understand its culture and policy.Language training: Language training is needed to understand the foreign country’s local language.However, this is not so rigorously followed in IRS. One of the reasons is the paucity of time in givingsufficient language training to the managers as managers are always busy. As a result, it is understood Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 30that the manager in Greece is facing problem in many due to his inability to understand Greek which isthe only official language in Greece.These trainings are given mainly at export stages. As such the degree of rigor is Low to Moderate.4.3.2 Facility to Expatriate Managers in IRSIRS provides following facilities in compensating expatriation.Salary: salaries of the expatriate managers are decided based on local buying power.Allowances: IRS provides relocation expenses, housing allowances, car allowance, petrol allowance andfood allowance in order to cope with the foreign environment.Children education benefit: IRS provides monetary allowance in admitting the kids in schools.Benefits: Health insurance of the managers and their families are covered by IRS.4.4 Motivating People Across the BoundaryMotivation at work place is an issue of vital concern since it is well established that a motivatedworkforce will achieve much better results than an unmotivated one. There are many and variedtechniques used to motivate staffs at work place. The goal of using motivation techniques is usually toincrease productivity but a highly motivated workforce also often equates to other improvements such asreduced absenteeism and turnover, increased innovation, employee satisfaction, and an enhancedcorporate image. Many theories are evolved on motivation in the last centuries. Out of which, Maslow’shierarchy of needs theory is well known.Maslow’s hierarchy of needs theory consists of five needs (Fig. 4.2) – physiological, safety, social,esteem and self actualization – in which, as each need is substantially satisfied, the next need becomesdominant. Though Maslow’s needs theory has received wide recognition, particularly among practicingmanagers, unfortunately research does not validate the theory. Maslow provided no empiricalsubstantiation and several studies that sought to validate the theory found no support for it (Hall andNougaim, 1968; Rauschenberger et al. 1980). Clayton Alderfer attempted to rework Maslow’s needhierarchy to align it more closely with empirical research. His revised need hierarchy is labeled ERGtheory that posits three groups of core needs: existence, relatedness and growth. Psychologist FrederickHerzberg proposed the two factor theory also known as motivation-hygiene theory. This theory relatesintrinsic factors to job satisfaction and associates extrinsic factors with dissatisfaction. A relationshipbetween these three theories are shown in Fig. 4.3. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 31 Fig. 4.2 An interpretation of Maslows hierarchy of needs, represented as a pyramid [Source: wikipedia.org] Fig. 4.3 The relationship between Alderfer’s ERG needs, Maslow’s hierchy and Herzberg’s two factor theory (Luthans, 1998) Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 324.4.1 Steps Taken by IRS to Motivate Expatriate ManagersFollowing steps are taken by IRS to motivate its managers.Performance based appraisal: Annual appraisals are determined based on the performance of themanagers. As a result if a manager does well in his job, he has a chance to be promoted quickly to thenext hierarchy and has a chance to get higher increment.Giving Honor on Annual day: IRS celebrates its Annual day at the end of the every year. If a managerdoes good job, IRS management honors the particular manager in front of all IRS employees and theirfamily members which is quite motivating. Conclusive Remarks RS mainly follow ethnocentric approach in staffing to fulfill managerial cadre position. In its office in Dubai, Colombo, Singapore, China, Greece all managerial positions are filled by parent country nationals (PCNs) or expatriates. IRS selects this position from the manager’s domestic track record and his ability to do challenging jobs. IRS provides various training in order to make the expatriates managers efficient whose degree of rigor is Low to Moderate. However, language training needs to be strengthen in order to avoid difficulties, which the manager of IRS in Greece office is facing presently. In motivating managers, IRS has taken various steps, Performance based appraisal, Giving Honor on Annual day etc. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 33 Chapter FIVE CONCLUSIONS5.1 Summary D ecision of IRS in opening a new office in Greece is analyzed from international management point of view. It is observed that though IRS has a few advantageous, it has some disadvantageous also. These points are discussed in various chapters. The biggest advantage is that IRS has an opportunity in penetrating in the market of ship classificationin Greece, which has most number of ship owners. However, it is also observed that IRS needs tostrengthen its training department and arrange more training for expatriate managers to make them moreefficient. The important points are discussed below.i) Increased Customer Satisfaction: As majority of the ship owners are Greek, IRS will be able to serve them quickly if it has an office in Greece. This will definitely increase customer satisfaction which IRS can not ignore.ii) Mitigation of Risk: IRS will be using the existing office building of Cyprus Register of Shipping in Piraeus, Greece for its operation. IRS is getting benefit as they do not have to bear the cost of renting/buying office building. It will also reduce the risk as IRS will be list affected in case of expropriation (Seizure of assets by local Government with small compensation).iii) Market Penetration: Though IRS is late in opening its office in Greece, it can penetrate in to the market by offering low cost service which many of the Greek ship owners are looking for. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 34iv) European Union: Greece is a European country. As such getting permission in various aspects of business is not easy for an Indian company. Attitude of European customers to get its ships classed by an Indian company will also be tested.v) Late Mover: Big societies (ABS, DNV, LR, BV, GL etc) are already in operation for many years in Greece. As such IRS will be late mover.vi) Threat of Substitute Services: This is quite immense in this business. As a few number of reputed classification societies are operating in Greece, IRS has to offer its best service to stay in the competition.vii) Hofstede’s Cultural Value Dimensions: A significant difference between Uncertainty Avoidance Index (UAI) value of Greece (112) and India (40) is observed. It indicates that Greeks are less tolerant than Indian, which managers needs take care.viii) High Context Culture: It is observed that culture of both Indian and Greeks are high context. This similarity will be helpful to an international manager to understand the meaning of the conversation.ix) Ethnocentric Approach: IRS mainly follow ethnocentric approach in staffing to fulfill managerial cadre position. In its office in Dubai, Colombo, Singapore, China, Greece all managerial positions are filled by parent country nationals (PCNs) or expatriates. Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 35References[1] http://www.irclass.org[2] Porter, M.E., ‘How competitive forces shape strategy’, Harvard business Review, March/April 1979.[3] http://www.skyscrapercity.com/showthread.php?t=541070[4] http://www.time.com/time/magazine/article/0,9171,901268,00.html[5] http://www.greeka.com/greece-culture.htm[6] http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/[7] http://www.cyborlink.com/besite/hofstede.htm[8] Helen Deresky, ‘International Management, Managing Across Borders and Cultures’, 5th Edition, Pearson Education, Delhi, 2006.[9] http://en.wikipedia.org/wiki/High_context_culture[10] http://en.wikipedia.org/wiki/Economy_of_Greece[11] Class Note on International Management, by Prof. Manoj Thomas, PGCBM 15, XLRI, Jamshedpur, 2009-10[12] Hall D.T. and Nougaim K.E. (1968) An examination of Maslow’s need hierarchy in an organizational setting’, Organizational Behavior and Human Performance, February, pp. 12-35.[13] Rauschenberger J, Schmitt N. and Hunter J.E. (1980). ‘A test of the need hierarchy concept by a Markov model of change in need strength’, Administrative Science Quarterly, December, pp. 654- 670.[14] http://en.wikipedia.org/wiki/Diamond_modelAbbreviationGLOBE Global Leadership and Organizational Behavior EffectivenessHCN Host Country NationalsIHRM International Human Resource ManagementMNC Multi-National CorporationsPCN Parent Country NationalsSWOT Strength, Weakness, Opportunity, Threat Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 36 Appendix Interview with Manager (in Greece) of Indian Register of Shipping[This information on setting up office in Greece by Indian Register of Shipping (IRS) is collected throughtelephonic interview with the Manager (Greece) of Indian Register of Shipping on 16 February 2010.Subsequently, information is also collected through face to face interview of a few senior officers of IRS,at head office of IRS, Powai, Mumbai]A. Introductory Information1. Name of the Organization: Indian Register of Shipping2. Year of Inception: 19753. Ownership of the Organization (Please tick the appropriate):i) Public Sector ii) Private Sectoriii) Joint Venture (public & private) iv) Joint venture (private & private)v) Public Limited Company4. Locations of Business: i) Single location ii) Multi location5. Nature of Business (tick the appropriate): i) Automobiles x) IT ii) Banking xi) ITES iii) Cement xii) Petrochemicals iv) Chemicals & Fertilizers xiii) Power v) Electronics & Telecommunications xiv) Processing vi) Engineering xv) Retail vii) Pharmaceutical xvi) Textiles viii) FMCG xvii) Classification/ Third Party Inspection ix) Hospitality xviii) Others (Pesticides)6. Main Services:i) Surveying Ships and Issuing Certificate based on Survey to the Ship Owners Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 37B. Opening a New Office in International Soil1. What is the location of new office of IRS? Piraeus, Greece2. When is the operation started? April, 20093. How many staffs are there in Greece now?Presently only two. However the number may be increased depending on the business growth.4. What are the strategies behind in opening a new office in Greece?a) Greek Ship Owner: Majority of the ship owner in the world is Greek. Opening an office will giveIRS advantage to serve these vast amounts of customers easily.b) Recognition by European: As Greece is a European country, having office in Greece will helpIRS in getting that recognition from European Union.c) Expanding the Business in Europe: Experience in Greece will help in opening office in strategiclocation like London, which is the head office of IMO (International Maritime Organization) andIACS (International Association of Classification Societies).d) Strategic Location: Piraeus is a place where lots of ships are available for survey.e) Benefit: Cyprus Register of Shipping has given their office building in Piraeus, Greece, to IRSfor operation. IRS is getting benefit as they do not have to bear the cost of renting office building.f) Proper Connection: Athens is well connected to other parts of Europe.g) Cost Effective and Time Saving : In order to survey ships owned by Greek owner, either sipcould be surveyed in other parts of the world where IRS has office, or IRS surveyor has to go toGreece. Both options is costly and time consuming. Operating from Greece, IRS will be reducingtime in offering service as well as cost. This will effectively make more customer satisfaction.C. Regulatory Requirements1. Are there any regulatory requirements to be followed from the local government?a) Communication: Any communication (Public Notice/ Quotation etc) has to be made in both thelanguages (English/Greek). Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai
    • Indian Register of Shipping: Going Global to Greece 38D. Difficulties1. What are the difficulties IRS may face during its operation in the new office in Greece?a) Communication Problem: As the local language is Greek and Indian employees do not knowGeek, they are facing problem in communicating for any official work as well as non official work.b) Environment: Local environment is not similar to the environment of many of Indian majorcities. In winter temperature is -200C to -150C. The End Asokendu Samanta (SID RB09035, SMS ID 104118), PGCBM 15, XLRI, Center: Powai, Mumbai