The document provides an orientation for new country managers at The William Carter Company's subsidiary in Costa Rica. It includes an overview of Costa Rica's demographics, political environment, economy, and culture. It also analyzes the local operations and relationship with the multinational corporation headquarters using various frameworks. Recommendations are made to improve quality, become more customer-intimate, and better align the subsidiary with headquarters.

1. The William Carter Company Country Manager Orientation Republic of Costa Rica A presentation by “Team 3 Consultancy”

2. Welcome New Country Managers Part 1 Overview of the Republic of Costa Rica Local operations Part 2 Analysis of MNC and Costa Rican Subsidiary Guidance and Advice

3. Republic of Costa Rica Overview Demographics and Geography Political and Legal Environment Economic Environment Medical Concerns Culture

4. Demographics 3.8MM citizens Official language is Spanish Birth rate is 2.47 children per woman Death rate is 4.3/1,000 citizens Majority are of Catholic religion Literacy ratio is 95%

5. Political Environment Democratic System Two major parties Social Christian Unity Party (PUSC) National Liberation Party (PLN) Three branches of government Legislative Branch Judicial Branch Executive Branch Dr. Miguel Angel Rodriguez President May 1998 to May 2002

6. Stable and attractive to foreign investment GDP is growing 3% annually Inflation is currently 11% Economic Environment

7. Economic Environment Currency is the Costa Rican Colon (Colón)

8. Economic Environment Currency is being managed by Banco Central de Costa Rica Floating Peg Minimum wage reset every 6 mos.

9. Medical Concerns Risks while you’re there… Dengue Fever Diarrhea Malaria When you return… Continue taking your antimalarial drug for four weeks (chloroquine, Lariam®, doxycycline) or seven days (Malarone™) Antimalarial treatment before you leave

10. Culture Interpersonal Not as respectful of personal space as Americans However… Costa Ricans are more “American” than most Latin countries Provocative dress

11. Local Operations Slideshow

12. The William Carter Company Country Manager Orientation Analysis of MNC and Subsidiary Five Models for Analysis

13. Team 3 Analysis Toolkit

14. Value Chain MNC Procurement Costa Rica Manufacturing & Quality Merchandising Marketing & Promotion Fulfillment & Returns Customer Service Demand Planning Inventory Management Inventory Management

15. Porac’s Pods Top Management Organizational Structure Technology Environment Size Interdependence Goals/Strategies Effectiveness Criteria Routineness Information Control Strategies Formalization Life cycle and crises Uncertainty Resource Dependence Asset Specificity Opportunism Contract Complexity

16. Porac’s Pods ~ Top Management ~ Organizational control How does HQ view Costa Rica? Role of Country Manager Goals/Strategies Effectiveness Criteria Top Management

17. Organizational Control Relationship with Foreign Governmental Agencies External Reporting Transportation Shared Control Internal Management Reporting Product Planning Distribution Raw Material Sourcing MNC Control Staffing Daily Scheduling Subsidiary Control

18. HQ Orientation toward Subsidiaries Develop best people everywhere in the world for key positions worldwide Local nationals for key positions in the host country, not worldwide Home country nationals for key positions worldwide Perpetuation (recruiting, staffing, development) Truly international but identifying with national interests Nationality of host country Nationality of owner Identification Both ways and between subs. Sub heads – part of worldwide mgmt. team Little to and from HQ. Little between subs High volume to subs; orders, command, advice Communication; information flow International and local execs rewarded for both global and local objectives Wide variation; can be high or low; rewards for sub. performance High in HQ, low in subsidiaries Rewards and punishments; incentives Find standards which are universal and local Determined locally Home standards applied for persons and performance Evaluation and control Goal: collaboration between HQ and subs Relatively low in HQ High in HQ Authority; decision-making Increasingly complex and interdependent Varied and independent Complex at home, simple in subsidiaries Complexity of organization Geocentric Polycentric Ethnocentric Org. Design

19. Role of Country Manager Interact with country government to obtain and maintain favorable relationships with officials Seek to obtain and maintain economic incentives such as labor subsidies, tax exemption, and duty free imports Recruit appropriate staffing and develop local management potential Encourage English training and local interaction with related corporate staff

20. Porac’s Pods ~ Technology ~ Visibility to demand forecasting is limited Inventory management is shared between Costa Rica and MNC Routineness Interdependence Information Control Strategies Technology

21. Porac’s Pods ~ Environment ~ Dependence on supplies from MNC Only labor can be sourced locally Operational bottle-necks Labor must be paid whether in use or not Business strength of internal competition Quality Issues Free Trade Zones Uncertainty Resource Dependence Environment

22. Business Strength of Internal Competition Strong Medium Weak Low Medium High Business Strength Market Attractiveness General Electric Multifactor Portfolio Matrix Dominican Republic Asian Costa Rica Mexico

23. Free Trade Zone System Exemption of import taxes and surcharges on imports (raw materials and inputs) necessary for the production process and operation of the company Exemption of taxes on capital and assets, export taxes, local and excise taxes, and profit repatriation taxes Exemption of taxes on profits, according to location and years of operation No restrictions on capital repatriation

24. Quality Issues Lamentablemente…. este año nuestra Calidad empezo con el pie izquierdo; nuestra primera auditoria de E.E.U.U. fue de un 5.7% Esta auditoria nos dejo en un ultimo lugar, cosa que no nos conviene a nosotros ya que uno de los puntos importantes que determinan un cierre de planta es la Calidad. 1 Linares Mejico 1.2% 2 Carterco Costa Rica 1.8% 3 Montemorelos Mejico 2.8% 4 Barranca Costa Rica 5.7% Hagamos nuestro mayor esfuerzo para ser numero uno y no ultimos. Ronald Vega. La Calidad hoy. Unfortunately....this year our quality started off on the wrong foot; our first U.S. Audit resulted in a 5.7% seconds ratio. This audit put us in last place, a result that is not good since one of the important factors that determines a plant closing is its quality. 1 Linares Mexico 1.2% 2 Carterco Costa Rica 1.8% 3 Montemorelos Mexico 2.8% 4 Barranca Costa Rica 5.7% Let’s do our best to be number one and not last . Ronald Vega. Quality Today.

25. Porac’s Pods ~ Size ~ Two locations within Costa Rica Growth Share Matrix Formalization Life cycle and crises Size

26. Growth Share Matrix for Subsidiaries Boston Consulting Group’s Growth-Share Matrix Question Marks Stars Cash Cows Dogs 0.1x 0.5x 10x 1x 1.5x 2x 4x 0% 5% 10% 15% 20% Relative Market Share Relative Growth Rate Asian Contractors Costa Rica Dominican Republic Mexico

27. Porac’s Pods ~ Organizational Structure ~ Organization Chart Alignment of interests with HQ structure Organizational Structure Asset Specificity Opportunism Contract Complexity Top Management Technology Environment Size

28. Organizational Chart VP of Offshore Production Costa Rica Manager Mexico Manager Admin. Staff Prod. Staff Admin. Staff Prod. Staff Admin. Staff Prod. Staff Admin. Staff Prod. Staff Corporate Administration Accounting Engineering Human Resources

29. Discipline of Market Leaders Discipline of Market Leaders preaches that successful businesses must be excellent at one of the following three disciplines: Product Leadership -- selling the best widget on the market, such as Hewlett-Packard's laser printers. Operational Excellence -- having your processes under such great control that you offer your customers the best total cost, such as McDonalds. Customer Intimacy -- you solve all of your customers' problem in an area, so they give you their business. Amazon.com, when it knows what books you like, is being customer intimate. Operations The axes represent 50% effort The tick-marks represent 25% The sum of the 3 axes is 100% A balanced strategy will have 50% on any one axis and 25% each on the other two A company can only excel at any one of the three but at no time should ignore the other two Discipline of Market Leaders Michael Treacy, 1994 Technology Customer Customer Intimate Product Leadership Operational Excellence

30. Subsidiary Strategy Customer Operations Subsidiary Strategy Make the most of ongoing efforts in operational efficiency and become headquarters' top-of-mind first-choice for long run products Competition Other country-specific subsidiaries and Asian subcontractors Operational Excellence Technology Product Leadership Customer Intimate

31. Congruence Model Strategy Performance Corporate Structure fit Structure People Process Systems Key Tasks

32. Recommendations Become more Customer Intimate Keep operational efficiency as core, but focus on systems and communication with HQ to become preferred supplier for long-run items Align local organization structure with HQ Foster and facilitate communication of all subordinates with like peers in HQ

33. The William Carter Company Country Manager Orientation Q & A

34. Determinants of National Competitive Advantage Related & Supporting Industries Government Firm Strategy, Structure, Rivalry Demand Conditions Factor Conditions

35. * Cost Accounting