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International Management, 5th ed.

International Management, 5th ed. Part Three: International Strategic Management. Hodgetts and Luthans. International Management, 5th ed. Chapter Twelve. Decision Making and Controlling. Objectives of the Chapter. PROVIDE the comparative examples of decision making in different countries

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International Management, 5th ed.

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  1. International Management,5th ed. Part Three: International Strategic Management

  2. Hodgetts and Luthans International Management, 5th ed. Chapter Twelve Decision Making and Controlling

  3. Objectives of the Chapter • PROVIDE the comparative examples of decision making in different countries • PRESENT some of the major factors affecting the degree of decision-making authority given to overseas units • COMPARE and CONTRAST direct controls with indirect controls • DESCRIBE some of the major differences in the ways that MNCs control operations • DISCUSS some of the specific performance measures that are used to control international operations

  4. Decision-Making and Controlling Linkages • Decision Making • Process of choosing a course of action among alternatives • Controlling • Process of evaluating results in relation to plans or objectives and deciding what action, if any, to take • Decision making and controlling are both vital and often interlinked functions of international management

  5. Decision-Making Process • Comparative Examples • Codetermination • Legal system that requires workers and their managers to discuss major decisions • Ringisei • Japanese decision making by consensus • Tatemae • Japanese concept of “doing the right thing’ according to the norm • Honne • Japanese concept of “doing what one really wants to do”

  6. Factors Affecting Decision-Making Authority Volume-to- Unit Cost Company Size Product Diversification Technology Brand name, patents International Experience Capital Investment Competitive Environment Managerial Competence Interdependence Among Units Decision- Making Authority

  7. Decision-Making Issues • Total Quality Management (TQM) Decisions • TQM - Organizational strategy and the accompanying techniques that result in the delivery of high-quality products and/or services to customers • Has had a big impact in manufacturing • Empowerment • Process of giving individuals and teams the resources, information, and authority they need to develop ideas and effectively implement them • Entails rewards and recognition • Entails ongoing training that permits Kaizen • Japanese term for continuous improvement • International Standards Organization (ISO) 9000 • Certification to ensure quality products

  8. Decision-Making Issues (cont.) • International Joint Ventures • Formal arrangements with foreign partners who typically, although not always, are located in the country where the business will be conducted • Provides benefits to both parties • Large firms can gain a foothold in new countries • MNCs must decide how to attack the local competition in order to become a player in world markets

  9. The Controlling Process • Involves evaluating results in relation to plans or objectives and deciding what action to take • Controlling is vital to success in industries in which technology is changing rapidly • Challenge for MNCs is to control overseas operations to become an integrated, coordinated unit • Problems encountered • Objectives of overseas operations and corporation may conflict • Objectives of joint-venture partners and corporate management are not in accord • Amount of experience and planning competence vary • Philosophic disagreements about policies exist, many of which stem from cultural differences

  10. Thc Controlling Process (cont.) • Types of Control • Internal controls • Focus on the things that the company does best • External controls • Focus on what customers want and how to respond appropriately • Direct controls • Involve face-to-face or personal meetings for the purpose of monitoring operations • Indirect controls • Rely on reports and other written forms of communication to control operations

  11. Table 12-3 Key Differences Between Internal and External control Internal Control External Control Often dominating attitude bordering on aggressiveness towards the environment Conflict and resistance means that a person has convictions The focus is on self, function, one’s own group, and one’s own organization There is discomfort when the environ- ment seems ‘out of control’ or changeable Often flexible attitude, willing to compromise and keep the peace Harmony, responsiveness, and sensibility are encouraged The focus is on others such as customers, partners, and colleagues There is comfort with waves, shifts, and cycles, which are regarded as ‘natural’

  12. Thc Controlling Process (cont.) • Approaches to control are dictated by: • MNC’s philosophy of control • Economic environment in which overseas unit operates • Needs and desires of the managers who staff the unit • Control processes are structured to be as efficient and effective as possible • Major differences exist between controls used by MNCs in different countries • For example, Germans require detailed control and focus attention on all variances • For example, French use controls more for surveillance than for guiding operations

  13. Control Techniques • Financial Performance • Profit • Amount remaining after all expenses are deducted from total revenue • Differences in tax rates can be used to maximize overall MNC profits • May be affected by a devaluation or revaluation of local currency • Affected by labor costs • Return on investment (ROI) • Return measured by dividing profit by assets

  14. Control Techniques (cont.) • Quality Performance • Quality is a major focus of MNCs’ control processes • Quality control circle (QCC) • Group of workers who meet on a regular basis to discuss ways of improving the quality of work • Popularized by the Japanese who: • Keep the workplace clean and maintain equipment • Assign new workers to teams or pair them with supervisors • Share data on quality with operating employees • Create early warning systems to detect errors when they are made • Work closely with suppliers • Hold to the philosophy that”anything worth doing in the area of quality is worth overdoing”

  15. Figure 12-2 Solving a Problem: Taguchi Method vs. Traditional Method Traditional Method Production problem: Blemishes appear in paint on finished hood Perform experiment: Change on factor and hold the others constant in a produc- tion run involving 70 hoods Measure results: If problem is not solved, design experi- ment with another 70 hoods, varying differ- ent factors while holding others constant Repeat experiments: Each of the possible causes must be studied in separate production runs of 70 hoods until the culprit is found Taguichi Method Production problem: Blemishes appear in paint on finished hood Brainstoming session: Identify factors that could be responsible Employ Taguichi statistical sampling method: A handful of experiments are designed, in which many of the possi- ble causes are varied, based on statistical techniques Experimental production runs: Eight sets of five hoods each are produced, varying several of the possible causes at once Confirm results: The experiments are evaluated and a changed production run is made to confirm the findings

  16. Control Techniques (cont.) • Personnel Performance Evaluation • Periodic appraisal of performance is the most common • Effective performance is judged differently in various countries • For example, acknowledging effective and ineffective performance differs in the U.S. and Japan • For example, Japanese orient performance reviews toward groups whereas Americans focus on the activities of individuals • Assessment center • Evaluation tool used to identify individuals with potential to be selected or promoted to higher-level positions • Involve simulation exercises • Used around the world

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