MANAGEMENT DECISION AND CONTROL

Katie, Nate, Sarah

“The Race to Build Really Cheap Cars”

The abundance of low cost engineers in India and China makes them the best places to produce

Market for small, cheap cars is growing Cheap cars are becoming popular in the

established market Will be hard to be profitable,

but automakers do not want to be shut out of opportunity for growth

http://www.youtube.com/watch?v=RqqzvSBQPL8

Managerial Decision Making

Method of choosing your course of action among all other options

Relevant for international managers as globalization increases

Decision-Making

Process

1. Problem Perception

2. Problem Identification

3. Problem Formulation

4. Search for Alternatives

5. Evaluation of Alternatives

6. Choice of Alternatives

7. Start of Operation

8. Implementation

9. Control

Factors Affecting Decision Making Authority

Efficiency Large companies centralize authority to ensure this Domestic situations: When competition increases,

management will decentralize authority and give it to local managers

International situations: Managers want to standardize decisions to reduce cost and maintain profit

Efficiency is important as diversification increases Decentralization occurs when local managers

understand the cultural differences

Factors

Protection of Goods and Services MNCs usually

centralize operations when dealing with sophisticated technology, brand names, or patent rights

Factors

Centralized Decisions Finance Research and

development Strategic planning

decisions New products

being sold

Decentralized Decisions Planning and

budgeting systems Performance

evaluation Assigning

managers Coordinating

committees

Cultural Differences

Many international operations use similar decision making norms, despite cultural differences

French v. Danish French do not value time like the Danes do

Codetermination A legal system that requires workers and

managers to discuss major decisions Germany and Sweden

Japanese Decision Making

Ringisei Decision making by consensus

Time consuming Tatemae

“Doing the right thing” Honne

What a person really wants to do

Britain v. Germany

British firm uses control as a guide, while German firm uses it as surveillance Example: British managers more likely to

let local managers make specific decisions British firm is also more likely to be

individualistic, so decisions would be made based on personal success, not for the sake of the group Example: promotions made based on work,

not seniority

Total Quality Management Decisions

Total Quality Management (TQM): strategy and techniques that result in delivery of high-quality products or services to customers Big impact in manufacturing Customer-driven TQM approach

Tailor their output to customers needs Require same approach from their own

suppliers

Total Quality Management Decisions

Empowerment: process of giving individuals and teams the resources, information, and authority they need to develop ideas and effectively implement them Ex. GE cuts the time

they needed in half to change production of its dishwashers in response to market demand

Total Quality Management Decisions

Rewards and Recognition Bonuses, plaques,

public recognition, etc.

Changes for each country, US – individual recognition, Japan – group recognition

Total Quality Management Decisions

Ongoing training Objective is to apply kaizen (Japanese term

for continuous improvement) ISO 9000: International Standards

Organization Certification group Examination of design, process control,

purchasing, servicing, etc. to ensure quality products and services

Used as a screening criteria for new contracts in global business

Attacking the Competition

Ex. – GM closing U.S. factories and building new plants abroad Located closer to

the final customer Offered a better

quality car than was already being offered in these markets

U.S. use of TQM

U.S. multinationals are inserting TQM into areas of business like auto manufacturing

IBM implemented the use of customers when they developed a new computer system http://

www-03.ibm.com/ibm/history/exhibits/rochester/rochester_4010.html

U.S. use of TQM

For a U.S. multinational, it would be easier to introduce TQM concepts like rewards into Germany because the Germans would be receptive (medium level of individualism)

It would be more difficult to do the same in Japan because of the cultural differences (individualism v. collectivism)

Controlling Process

The main concern is, how companies attempt to control their overseas operations to become integrated, coordinated units.

Problems Objectives of the companies conflict Degrees of experience and competence

vary Cultural differences

Types of Control

Internal and External Control Internal – MNC’s

will focus on what they do best

External – MNC’s need to find out what the customers want and test our their market

Types of Control

Direct Control Involve the use of face-to-face or personal

meetings to monitor operations Visits by executives to overseas affiliates Whom to send overseas to run the unit Organizational structure of overseas

operations

Types of Control

Indirect Control Involve the use of reports and other written

forms of communication to control operations

Use of monthly operating reports that are sent to the home office

Particularly important in international management because of the great expense associated with direct methods

Approaches to Control

Differences British controls

Financial reports were heavily emphasized Focused on major problems rather than details Control was used for general guidance Operating units had large amounts of

marketing autonomy U.S. firms tend to rely more

heavily on reports and other performance related data

Control

Which cultures focus on external control? Japan is more external U.S. is internal

Which cultures consider direct controls to be more important than indirect? Germany, France

Evaluating Approaches to Control Is one control approach any better than

the other? The answer is that each seems to work best

for its respective group

Financial Performance

Financial performance evaluation of a foreign subsidiary or affiliate usually is based on profit and ROI. Profit: The amount remaining after all

expenses are deducted from total revenues.

Return on Investment: Profit divided by Investments.

Quality Performance

Quality Control Circle (QCC) A group of workers who meet on a regular

basis to discuss ways of improving the quality of their work.

Personnel Performance

What makes MNCs successful? Seven common themes

1. Top managers take their mission statements seriously and expect everyone else to do the same.

2. Success attracts the best people—and the best people sustain success.

3. The top companies know precisely what they are looking for

Personnel Performance

4. These firms see career development as an investment, not a chore.

5. Whenever possible, these companies promote from within.

6. Performance is rewarded. 7. The firms are genuinely interested in

what their employees think, and they measure work satisfaction often and throroughly.