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12-1© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Chapter 12
International management
12-2© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Lecture outline• Nature of international management• Assessing the international environment• Gauging international strategic issues• Organising international business• Managing diversity: Adapting to cultural
differences• Handling social responsibility and ethical
issues
12-3© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Nature of international management
• International businessProfit-related activities conducted across national boundaries.
• International managementProcess of planning, leading, organising and controlling in organisations engaged in international business.
12-4© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Nature of international management
Organisations engaging in international management vary in size and the extent that their business activities across national boundaries.
MULTINATIONAL CORPORATION (MNC)
12-5© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Nature of international management
Orientations towards international management– Ethnocentric– Polycentric– Regiocentric – Geocentric
12-6© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Nature of international management
Ethnocentric(home-country)
orientation
Ethnocentric(home-country)
orientation
Geocentric(world)
orientation
Geocentric(world)
orientation
Regiocentric(regional)
orientation
Regiocentric(regional)
orientation
Polycentric (host-country)
orientation
Polycentric (host-country)
orientation
12-7© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Environmental elements– Economic– Legal-political– Sociocultural– Technological
12-8© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Economic element:• Developed countries
Group of countries that is characterised by High level of economic and industrial development
• Less developed countries (LDCs)Low economic or industrial development
• Newly industrialised countriesEmerging LDCs—major exporters of manufactured goods.
• Balance of trade• Exchange rate
12-9© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Economicelement
Less developedcountries (LDCs)
Developed countries
Newly industrialisedcountries (NICs)
Infrastructure
Balance of payments
Balance oftrade
Exchangerate
12-10© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Legal-political element:
• Political risk• Expropriation• Indigenisation laws• Tariffs• Import quotas• Administrative protections
12-11© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Legal-politicalelement
Expropriation
Political risk
Indigenisationlaws
TariffsAdministrativeprotections
Importquotas
12-12© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Sociocultural element:• Attitudes, values, norms, beliefs• Behaviours• Demographic trends
12-13© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Hofstede’s national cultural dimensions
• Power distance• Uncertainty avoidance• Individualism-collectivism• Achievement-nurturing orientation• Long-term, short-term orientation
12-14© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing the international environment
Technological element:
• Technological transfer
Transmission of technology from those who possess it to those who do not.
12-15© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Competitive advantage of nations
Concept that environmental elements within a nation can foster innovation in certain industries, thereby increasing prospects for the success of home-based companies operating internationally.(Michael E. Porter, 1990)
12-16© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Competitive advantage of nations
Diamond of national advantage:
• Factor conditions• Demand conditions• Related and supporting industries• Firm strategy, structure & rivalry
12-17© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Competitive advantage of nationsFirm strategy,structure and
rivalry
Related andsupportingindustries
Factorconditions
Demand conditions
12-18© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Gauging strategic issues
• Methods of international entry– Exporting – Licensing – Strategic alliances – Wholly-owned subsidiaries
• Multinational corporation strategies– World-wide integration– National responsiveness– Regional responsiveness– Multifocal emphasis
12-19© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Gauging strategic issues
Methods ofinternational
entry
Exporting
Licensing
Strategicalliance
Wholly-owned
subsidiary
Multinationalcorporationstrategies
Globalisation
Nationalresponsiveness
Regionalresponsiveness
Multifocalemphasis
12-20© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Organising international business
• World-wide functional divisions• World-wide product divisions• International divisions• Geographic regions• Global matrix• Networked structure
12-21© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Adapting to cultural differences
Managing international human resources:• Assignment policies• Recruitment• Selection and training• Repatriation• Adjusting leadership styles
12-22© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Adapting to cultural differences
Managinginternational
humanresources
Assignment policies
Repatriation
Selection & training
Recruitment
Adjustingleadership
styles
12-23© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Social responsibility and ethical issues
• International social responsibilityBenefit versus harm of MNC’s in LDC’s
• Ethical issue of ‘questionable payments’Business payments raising significant ethical questions of right or wrong either in the host country or in other nations
12-24© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Social responsibility and ethical issues
political payments
bribes
extortion
sales commissions
Questionable paymentissues
expeditingpayments
Internationalsocial
responsibility
12-25© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Lecture summary• Nature of international management
Orientations: ethnocentric, polycentric, geocentric, egocentric
• Assessing the international environment– Environmental elements– Competitive advantage of nations
• Gauging strategic issues– Methods of international entry: exporting,
licensing, strategic alliances, wholly owned subsidiaries
– Multinational strategies: world-wide integration, national or regional responsiveness, multifocal.
12-26© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Lecture summary• Organising international business
Divisions: functional, product, international,
geographic, global matrix, network structure
• Adapting to cultural differences– International human resource management– Adjusting leadership styles in different national
cultures
• Social responsibility and ethical issues– International social responsibility - value conflicts– Questionable payments