Managing Across Cultures
Strategic orientations of global companies
The globalization imperative vs. pressures for
regional and national responsiveness
Chapter Outline (2)
Doing business around the world
Ethnocentric Strategic Orientation
The values and interests of the parent company guide
Ethnocentric Strategic Orientation (2)
Mission is profitability.
Top down decision making – major decisions are made at
Global strategy, determined at headquarters.
Global product (based on needs of home country)
Home country managers hold key positions everywhere.
Profits from subsidiaries are repatriated (go back) to
Headquarters makes decisions about budgets, profit targets,
and capital investment for the subsidiaries.
Polycentric Strategic Orientation
Strategic decisions are tailored to suit the cultures
of the countries where the company operates.
Polycentric Strategic Orientation (2)
Mission is public acceptance (legitimacy)
Subsidiaries set their own strategic objectives.
Subsidiaries use national responsiveness strategies
(based on local needs).
Products are based on host country needs.
Most profits are retained by the subsidiary.
Subsidiary makes decisions about its budget and capital
Local citizens are trained for key positions.
Regioncentric Strategic Orientation
The firm tries to balance its own interests
with the interests of its subsidiaries on a
Regioncentric Strategic Orientation (2)
Mission is profitability and public acceptance.
Strategy is based on regional integration and national
Strategic objectives are negotiated between regional
headquarters and subsidiaries.
Regional product, often with local adaptations
Most profits are retained in the region.
Capital investment decisions are made on a regional basis.
Managers are trained for key positions anywhere in the region.
Geocentric Strategic Orientation
The company uses a global approach to
Geocentric Strategic Orientation (2)
Mission is profitability and public acceptance.
Strategy is global integration and national
Strategic objectives are negotiated among
subsidiaries, regions, and headquarters.
Global product, with local variations
Geocentric Strategic Orientation (3)
Headquarters redistributes profits among subsidiaries
to meet capital investment and budget needs.
The best managers are developed for key positions
anywhere in the world.
Combines best features of geocentric and polycentric
Requires more coordination and communication than
The "globalization imperative" is a belief that
one worldwide approach to doing business is
the key to both efficiency and effectiveness.
In response to pressures for national and regional
responsiveness, a growing number of firms have
switched to regioncentric or geocentric strategies.
Pressures for National and Regional
Different product standards
Different customer needs and tastes
Businesses or consumers prefer locally made
Managing details in a global organization is difficult
Subsidiaries know local market needs and
management practices better than headquarters.
Employees in subsidiaries seek promotion
Technical competence is the primary criterion for
doing business in China *
Time is the major cultural difference between many
Western countries and China – Chinese are patient
negotiators and may take advantage of American
impatience or time constraints.
Guanxi :Good connections that result in lower costs,
increased business, and better business
Doing Business in China
Be a good listener
Realize that China is a collective society
Understand that the Chinese are less animated than
Westerners. China is a neutral culture
Early negotiations are likely to focus on general
principles. The Chinese will be reluctant to change
Older Chinese may place values and principles
above money and expediency. They value the good
of their country or group.
Doing Business in China (2)
Allow Chinese host to signal the beginning of a
Understand that Chinese are slow to decide on a
course of action, but stick to the decision once made
Chinese negotiators expect concessions but do not
always make a concession in return.
Do not display emotions during negotiations
Take a long-term perspective toward business
Doing Business in China (3)
Doing Business in Russia
Build personal relationships with partners
Use local consultants
Be careful to uphold your own business
ethics and the policies of your company
Deal with just one firm at a time
Do not share your company's financial
Doing Business in Russia (2)
Research the company and the business environment
Stress mutual gain
Clarify business terminology
Be careful about compromising or settling things
quickly – most concessions should be made at the
Russians believe that contracts are binding only if
they are mutually beneficial. Continue to stress the
benefits of the deal to them.
Do not get into a dispute with the government.
Doing Business in India
Many business people speak English.
When dealing with people from India, one
Be on time for meetings
Avoid asking personal questions
Use formal titles when addressing others
Avoid public displays of affection
Doing Business in France
Social class and status are more important in
France than in the United States
In contrast to Americans, the French are:
More tolerant of different points of view
More inclined to determine a person’s
trustworthiness on the basis of personal
characteristics rather than accomplishments
Doing Business in France (2)
In contrast to Americans, the French are: (2)
More inclined to have highly centralized
organizations with rigid structures
Top-level managers are more autocratic and less
likely to be questioned.
Less moved to industriousness and more
concerned with the quality of life
Doing Business in France (3)
Typical behavior of French negotiators
They try to find out about the other company’s
objectives at the beginning of negotiations
They don’t reveal their own objectives until the last
stages of negotiations
Do not like to be rushed into making a decision
Usually will not make a decision during a meeting
with another company
Usually will not make concessions unless you give
them a logical reason for doing so
Doing Business in Poland
Design products for Poland and use a Polish
Do your homework. Poles are often shrewd
Be prepared to provide data. People are not
impressed by "sales talk".
Be prepared to make a long-term commitment.
Take time to build relationships and gain trust.
Be willing to "give something back" to the community.
Doing Business in Poland (2)
Don't be afraid to ask questions about things that you
It's okay to ask sensitive questions, but be polite.
If a question is important, keep asking until you get
an answer. You may have to ask the question
Local governments have a large role in business
regulation. Some areas are more conducive to
business than others.
Doing Business in Poland (3)
When dealing with older Poles, use professional titles
(example: engineer), and do not call people by their
first names until you are invited to do so.
Business entertainment is less elaborate than in the
U. S. Entertainment should be reciprocated.
Be patient. Establishing a business will take longer
than it would in the U. S.
Many of these points would also apply in the Czech
Republic and Slovakia.