Understanding Business Strategy

1. Understanding Business Strategy 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? Heaven is where… The police are British, The cooks are French, The mechanics are German, The lovers are Italian and it’s all organized by the Swiss Hell is where… The police are German, The cooks are British, The mechanics are French, The lovers are Swiss and it’s all organized by the Italians

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 (Continued)

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

13. Universalist Characteristics of… • What you know • Equality • Rules and procedures • Business oriented • Black and white • Who you know • Favoritism • Flexibility • People oriented • Gray Particularist

14. Self Perceptions • Bureaucracy isefficient • Start on time • Predictability • Straight to point • Bureaucracy isinefficient • Late is acceptable • Unpredictability • Socialization Universalist Particularist

15. Perceptions of . . . • Too straight forward • Does not careabout people • Inflexible Universalist Particularist • Vague • Does not care about business or rules • Corrupt

16. “We” vs. “I” • Collectivism • More frequent use of “We” • Extensive interpersonal connection with coworkers • Vacations in organized groups, or with extended family • Individualism • More frequent use of “I” • Limited interpersonal connection with coworkers • Vacations taken in pairs, even alone VS.

17. Group Dynamics • Individualism • Achieve alone • Punishment can enhance productivity • Decision-Making stems from Individual • Looking out for self-interest before what is best for the group • Collectivism • Achieve in • groups • Punishment can impede productivity • Decision-making stems from Groups • Productivity comes from harmonization or cooperation VS.

18. Characteristics of Specific Cultures • Get Straight to the Point • No Overlapping between Private and Business • Transparent Procedure • Frustration PRIVATE PUBLIC

19. Characteristics of Diffuse Cultures • Indirect, Evasive, tactful and ambiguous • Highly situational • Life is a whole • Losing face PRIVATE PUBLIC

20. The Impact of Culture onInternational Organizational Behavior (Continued)

21. The Impact of Culture onInternational Organizational Behavior (Continued)

22. The Impact of Culture onInternational Organizational Behavior (Continued)

23. 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.

24. 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?”

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

26. 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. 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

29. 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. 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.

32. 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. Remember: How the Great Fall?