Understanding Business Strategy

1. Understanding Business Strategy 1 Part 3: Strategy Chapter 8: Competing Across Borders

2. First Understand Globalization Besides information technology, the other major environmental context impacting organizational behavior is globalization. Today, well-known U.S.-based multinational corporations have more than half their assets overseas. With trends toward similar clothes, entertainment, material possessions, and recognition that English is the international business language, people around the world still think and behave in different ways. The starting point of how the globalization environment affects and is affected by organizational behavior is culture.

3. Looking Across Cultures Stereotypes vs. Archetypes Culture stories that stuck out?

4. What is Culture? Culture is a social construct “Culture makes the unnatural seem natural” Culture is man made & learned Culture = Problem solving “culture is the way a group of people solves problems and reconciles dilemmas.” - Dr. Fons Trompenaars Culture is not static

5. What is Culture?

6. Exercise- 10 minutes Take a piece of paper and a pen/pencil and draw “culture”.

7. Layers of Culture Outer Layer: Explicit Products Observable reality Symbols of deeper layers Middle Layer: Norms & Values Core: assumptions about existence Problem-solving in relation to environment Burka I value modesty My body belongs to my husband

8. Dilemmas in Defining Culture Understanding own culture: “THE FISH IS THE LAST TO KNOW IT IS IN WATER.” (Proverb) Hard to see own culture Trying to understand cultures does not give us license to stereotype: Culture is a normal distribution We tend to recognize elements of other cultures that are different than our own, and use our values to determine if good or bad.

9. How do Global Managers use these frameworks? Can never fully understand another culture. Use the framework to: Understand own cultural “baggage” Integrate and Reconcile Best Practices for international business interactions: “A truly intercultural person is one who is comfortable being uncomfortable.”

10. The Impact of Culture onInternational Organizational Behavior How do Cultures Vary? How People See Themselves People’s Relationship to Their World Individualism versus Collectivism The Time Dimension Public and Private Space

11. The Impact of Culture onInternational Organizational Behavior Hofstede’s Cultural Dimensions Individualism/Collectivism Power Distance Uncertainty Avoidance Masculinity/Feminity

12. The Impact of Culture onInternational Organizational Behavior Trompenaars’s Cultural Dimensions Universalism versus Particularism Individualism versus Collectivism Neutral versus Affective Specific versus Diffuse Achievement versus Ascription

13. Universalist What you know Equality Rules and procedures Business oriented Black and white Who you know Favoritism Flexibility People oriented Gray

14. Self Perceptions Bureaucracy isefficient Start on time Predictability Straight to point Bureaucracy isinefficient Late is acceptable Unpredictability Socialization Chris speaksChris speaks

15. Too straight forward Does not careabout people Inflexible Chris speaksChris speaks

16. “We” vs. “I”

17. Group Dynamics

18. Negotiating

19. Characteristics of Specific Cultures

20. Characteristics of Diffuse Cultures Indirect, Evasive, tactful and ambiguous Highly situational Life is a whole Losing face

21. The Impact of Culture onInternational Organizational Behavior

22. The Impact of Culture onInternational Organizational Behavior

23. The Impact of Culture onInternational Organizational Behavior

24. Expatriate Home based employee sent to a foreign assignment for an extended period of time. Challenges in turnover Personal Adjustment Perceived Equity with host and home countries Family Adjustment Cultural understanding and training contributes to successful assignment.

25. Caution Are countries synonymous with cultures? Why are they studied that way? What the limitations Sub-cultures (all American’s are alike right?) What are we really trying to get at? Variance- “can geography predict culture?”

26. Liability of foreignness Does this still apply? Would we say there are basic assumptions about business that transcend culture?

27. Chapter 8: Competing Across Borders The increase in globalization is based on historical events Tariffs and quotas on imported goods after World War I Foreign direct investment after World War II GATT WTO NAFTA vs. EU The Internet BRIC 27

28. Chapter 8: Competing Across Borders As a result of these events managers must develop global mind-sets…what is this? The costs and risks of doing business outside a firm’s domestic market can be significant – the liability of foreignness Practices Laws Relationships Business Customs 28

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30. Motives for International Strategies Use of current resources and access to new resources Seeking to expand or develop new markets Competitive rivalry Leveraging core competencies and learning Less cost of Land Labor Capital Shipping routes/distribution efficiencies 30

31. Modes of International Market Entry Exporting- sell over there Licensing- Give intellectual property to sell (and make and sell) over there Franchising- McDonalds Contract manufacturing- contract to build Turnkey projects Foreign direct investment Buying in China in the 1990s China buying elsewhere now EADS and Toyota building in the U.S. More risky- remember the liability of foreignness and resentment. 31

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33. Factors Affecting Selection: Where should you go? Firm-specific resources advantages If you do something that must be taught typically you will acquire or do a joint venture Country-specific or location advantages E.g., Singapore (shipping route), Khartoum (maturing of government), Vietnam (enforceable laws) Internal coordination or administrative advantages If there is great risk with others building and selling (e.g., Toyota losing quality reputation), better to do it yourself. 33

34. Remember: How the Great Fall? 34