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Managing across culture
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Managing across culture

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  • 1. Managing Across Cultures Chapter 5 www.StudsPlanet.com
  • 2. Chapter Outline  Strategic orientations of global companies  Ethnocentric orientation  Polycentric orientation  Regioncentric orientation  Geocentric orientation  The globalization imperative vs. pressures for regional and national responsiveness www.StudsPlanet.com
  • 3. Chapter Outline (2)  Doing business around the world  China  Russia  India  France  Poland www.StudsPlanet.com
  • 4. Ethnocentric Strategic Orientation  The values and interests of the parent company guide strategic decisions www.StudsPlanet.com
  • 5. Ethnocentric Strategic Orientation (2)  Mission is profitability.  Top down decision making – major decisions are made at headquarters  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 corporate headquarters  Headquarters makes decisions about budgets, profit targets, and capital investment for the subsidiaries. www.StudsPlanet.com
  • 6. Polycentric Strategic Orientation  Strategic decisions are tailored to suit the cultures of the countries where the company operates. www.StudsPlanet.com
  • 7. 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 investment.  Local citizens are trained for key positions. www.StudsPlanet.com
  • 8. Regioncentric Strategic Orientation  The firm tries to balance its own interests with the interests of its subsidiaries on a regional basis. www.StudsPlanet.com
  • 9. Regioncentric Strategic Orientation (2)  Mission is profitability and public acceptance.  Strategy is based on regional integration and national responsiveness.  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. www.StudsPlanet.com
  • 10. Geocentric Strategic Orientation  The company uses a global approach to decision making. www.StudsPlanet.com
  • 11. Geocentric Strategic Orientation (2)  Mission is profitability and public acceptance.  Strategy is global integration and national responsiveness.  Strategic objectives are negotiated among subsidiaries, regions, and headquarters.  Global product, with local variations www.StudsPlanet.com
  • 12. 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 strategies.  Requires more coordination and communication than other strategies. www.StudsPlanet.com
  • 13. Globalization Imperative  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. www.StudsPlanet.com
  • 14. Pressures for National and Regional Responsiveness  Different product standards  Different customer needs and tastes  Businesses or consumers prefer locally made products  Managing details in a global organization is difficult and complex.  Subsidiaries know local market needs and management practices better than headquarters.  Employees in subsidiaries seek promotion opportunities. www.StudsPlanet.com
  • 15.  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 opportunities. Doing Business in China www.StudsPlanet.com
  • 16.  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 those later.  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) www.StudsPlanet.com
  • 17.  Allow Chinese host to signal the beginning of a meeting  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 opportunities. Doing Business in China (3) www.StudsPlanet.com
  • 18. 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  Be patient  Stress exclusivity  Deal with just one firm at a time  Do not share your company's financial information www.StudsPlanet.com
  • 19. 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 end.  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. www.StudsPlanet.com
  • 20. Doing Business in India  Many business people speak English.  When dealing with people from India, one should  Be on time for meetings  Avoid asking personal questions  Use formal titles when addressing others  Avoid public displays of affection www.StudsPlanet.com
  • 21. 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 www.StudsPlanet.com
  • 22. 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 www.StudsPlanet.com
  • 23. 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 www.StudsPlanet.com
  • 24. Doing Business in Poland  Design products for Poland and use a Polish advertising agency.  Do your homework. Poles are often shrewd negotiators.  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. www.StudsPlanet.com
  • 25. Doing Business in Poland (2)  Don't be afraid to ask questions about things that you don't understand.  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 differently.  Local governments have a large role in business regulation. Some areas are more conducive to business than others. www.StudsPlanet.com
  • 26. 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. www.StudsPlanet.com