Case 1 Fitzburg Tire Company n n Management

Case 1 Fitzburg Tire Company n n Management Across Culture Participants: • Max Bierman, construction manager (first time working outside U. S. ) • Leopodo Sanchez Garcia, chief engineer for Fitzburg in Mexico n Situation: • • • Fitzburg Tire Co. is building a plant in Cuernavaca, Mexico Construction three months behind schedule Costs over budget Last three weeks must be redone Max Bierman has strong views on specific reasons for the problems Leopodo Sanchez Garcia has no clear reasons for the problems and does not think the problem is serious

Culture Characteristics n n n Learned: culture is learned and experienced Shared: culture is not specific to single individuals Transgenerational: culture is cumulative, passed down Symbolic: culture is based on using one thing to represent another thing Patterned: culture has an interdependent structure Adaptive: culture matches human ability to adapt

Values n Values: • basic convictions that people have regarding what is right and wrong, good and bad, important or unimportant • Different cultures have different values • Some values are similar across cultures n Management success factors (values) include: • pragmatic, dynamic, achievement-oriented, active role in interaction with other individuals who are instrumental to achieving the manager's organizational goals. n Values can change over time and over geographic location

Cultural Dimensions (Hofstede, p 8) n Power distance: • the extent to which less powerful members of institutions and organizations accept that power is distributed unequally n Uncertainty avoidance: • the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these (need for security) n Individualism: • the tendency of people to look after themselves and their immediate family only n Masculinity: • the degree to which the dominant values in society are success, money and things. n Moving to a culture near your own makes management transition easier (p 17)

Cultural Dimension (Trompenaars)(p 18) n n n Universalism Vs. Particularism Individualism Vs. collectivism: one rule applied everywhere/special case Neutral Vs. affective: emotions held back/showing feelings Specific Vs. diffuse: public and private space treated differently/public and private space are nearly the same and guarded (entry to public space is also entry to private space) Achievement Vs. ascription: status is based on performance of function/status based on who or what a person is Time: sequential Vs. synchronous (p 22)

Globalization Vs. National Responsiveness (p 35) • Integration comes from economies of scale • Differentiation comes from local needs – MNC success factors include a worldwide view of operations, support overseas activities, pay close attention to political changes and use local nationals whenever possible High 3 1 Low • This attitude is wrong; reasons include: • diversity of worldwide standards • local customers' demand for differentiated products • importance of being an insider (buy local) • difficulty of managing global organizations where local office have different wants and needs • local offices are closest to the customers and know how to maximize for their specific situations Low Globalization (Integration) – Most firms today belief that one worldwide approach to doing business is key to success National Responsiveness (Differentiation) Globalization Strategy Mixed Strategy 4 2 Mixed Strategy National Responsiveness Strategy

n Parochialism: Differences and Similarities Simplification: • the tendency to view the process of exhibiting the same world through one's own orientation toward different eyes and perspectives cultural groups n Contingency Approach: • the application of HRM (Human Resource Management) to meet the specific needs of local workers n Example of Differences and Similarities • Japan – Relationships are long-lasting and have deep personal involvement – Communication often implicit, interpretation taught from an early age – People in authority are personally responsible for subordinates' actions with high level of loyalty on both sides – Agreements tend to be spoken not written – Insiders and outsiders easy to distinguish and outsiders do not get into inner group • American – – – Relationships between people are short and deep, personal involvement is not valued as important Communication is explicit, being taught from young age to say what they mean Authority is diffused through a bureaucratic system, with responsibility hard to pin down Agreements are written Insiders and outsiders are hard to distinguish and outsiders may gain entrance to the inner group

n Family: • n a strong emphasis on equality in the work place and orientation to task; usually in project groups, common in hightech firms; individual expertise is most important with little hierarchy as everyone is equal, thus making the group very flexible and easy to adapt, but it is also hard to control Incubator: • Equity Incubator a strong emphasis on hierarchy and task clarification through the use of organizational structure; tasks are well defined and Person the organization tends to be tall at the top and wide at the Emphasis bottom; things go "by the book" Guided missile: • n strong emphasis on hierarchy and orientation to the person; the leader is a father figure who looks after employees; people, including real family members, may be chosen for a job even though less qualified than others; in return the person is expected to give full loyalty and support to the mentor Eiffel tower: • n Organizational Cultures in MNCs a strong emphasis on equality and personal orientation; the role of the organization is to bring out individuals' self development; this culture tend to have no goal, but is instead working on the edge of new discoveries, thus there is no clear goal and the need for creativity, expertise and flexibility eliminate any organizational structure, however this is shortlived until the firm grows and develops need to org. structure Guided Missile Task Emphasis Family Eiffel Tower Hierarchy

Case 2 Comtec Corporation n n Marketing Research & Information Participants: • Dr. Danil Needham, Comtec Corporation president • Mr. Harry Otto, Comtec Corporation Vice President • Ms. Roberta Malcolm, Computer Consultant n Situation: • Comtec manufactures computers for scientific measurements and calculations using a proprietary operating system • Sales in both domestic and international markets • Profits low and financial crisis looming • Ms. Malcolm hired to advise on direction • Consultant's recommendation runs counter to VP of sales marketing's strategy

Marketing Information System (MIS) n MIS: • people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers n Developing Information Can Come From: • Internal Records – gathered from sources within the company • Marketing Intelligence – everyday information about developments in the marketing environments that helps prepare and adjust marketing plans (can be found for free and purchased) • Marketing Research – information used to identify and define marketing opportunities and problems; make, improve and evaluate marketing actions; monitor marketing performance and improve understanding

Process of Marketing Research • Marketing research four steps: – 1) define the problem and objectives, 2) develop the research plan, 3) implement the research plan, 4) interpret and report the findings • Managers best understand the decisions • Researcher best understands how to obtain the information • Defining the problem and objective is the hardest step and can lead the whole process in the wrong direction from the start (as in the New Coke case) • Problems and objectives can be translated into specific information needs n Primary data can be gathered by observation, survey or experiment • Focus groups: small group of consumers who are observed to find their thoughts and feelings • CATI: Computer Assisted Telephone Interviewing • Consumer buyer behavior

Consumer Buying Behavior n n Consumer market: individuals and households who buy goods and services for personal consumption Consumer behavior model: Product Price Marketing & other stinuli Buyer’s black box Economic Technology Political Culture Buyer’s characteristics & decision process Place Promotion n Buyer’s responses Product choice Brand choice Dealer choice Purchase time Purchase amount Factors influencing consumer behavior: Culture Subculture Social class Social Personal Reference groups Age/lifecycle stage Occupation Economics Lifestyle Personality & self-concept Family Roles & status Psychological Motivation Perception Learning Beliefs & attitudes Buyer

n Needs Maslow’s hierarchy of needs: • A person tries to satisfy the most important need first; when satisfied, it will stop being a motivator and the person will try to satisfy the next most important need. n Buyer decision process • Five stages (can skip stages) Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Adoption of New Products n Five Stage Adoption Process: • • • n Awareness: knows of product but has no information Interest: seeks more information Evaluation: considers to try product Trial: tries new product on small scale Adoption: decides to make full & regular use of product Innovation Adoption Time • Different groups of consumers when adopting innovative products Time Inovators Early adoptors Early majority Late majority Laggards 2. 5% 13. 5% 34% 16%

n Balance Sheet • Assets=Liabilities + Equity n Financial Statements Assets • • Cash Marketable securities Accounts receivable Inventories – Current Assets • Gross plant and equipment – Accumulated depreciation • Net plant and equipment • Total assets n Liabilities (claims on assets) • • Accounts payable Notes payable Accrued wages Other accruals – Current liabilities • • Deferred taxes Long-term debt Preferred stock Stockholders’ equity – Common stock (Par value) – Paid-in capital – Retained earnings • Total Stockholders’ equity • Total liabilities and equity

Financial Analysis Ratios n Financial Policy Measures • Leverage Ratios – – – Total assets/book value of equity Interest-bearing debt (IBD)/total capital IBD/total capital, market Earnings before interest and taxes (EBIT)/interest expense EBIT+lease expense/fixed charges IBD/funds from operations • Liquidity Ratios – Current assets/current liabilities (or current ratio) – Current Assets - inventories/current liabilities (or quick ratio) – (Increase in retained earnings + depreciation)/investment

Financial Analysis Ratios 2 n Performance Measures • Profitability ratios – – – n Operating Efficiency Measures • Asset & investment management Net operating income (NOI)/sales – Cost of goods sold/inventories NOI/total assets – Average collection period NOI/total capital – Sales/fixed assets Net income (NI)/sales – Sales/total capital NI/equity or (ROE) – Sales/total assets Changes in NOI/change in total • Cost management capital – Gross profit/sales (or gross margin) – Change in NI/Change in equity – Marketing & administrative • Growth ratios expenses/sales – Sales – Labor costs/sales – NOI – Employee growth rate – Net income – Research & development expense (R&D)/sales – Earnings per share – Dividends per share

n Participants: Case 3 Hanover Public Systems (HPS) • Howard Wolff: HPS president • Yang Hsiao-shih: previous Taiwan plant president (terminated) • James Fukuda: new Taiwan plant president (second generation Japanese-American) n Situation: • HPS owns eight wholly-owned subsidiaries including one in Taiwan • Taiwan subsidiary losing money and requires cash infusions • President, Yang Hsiao-shih fired and replaced by Fukuda who has experience in reorganizing the Oakland plant • Before arriving in Taiwan, Fukuda took actions: dispose of some assets and inventory • After arriving, Fududa shut down heating and cooling manufacture resulting in layoff of 18 workers and 12 reassignments; new management system • Plant vice president (Hu) & plant superintendent resigned (Lee)

International Organizational Structure n Subsidiaries in Early Stages of Internationalization • A subsidiary is opened because an on-site presence is required from the start Chief Executive Officer Production Marketing Finance Personnel France Japan Australia Taiwan Production Marketing Finance Personnel

Asian Vs Western Management n Some Basic Features of the Two Management Styles

Organizational Characteristics of MNCs n Specialization • U. S. plants tend to have more horizontal specialization while Japanese plants tend to have more vertical specialization n Centralization • Japanese firms tend to have higher centralization while U. S. firms have more delegation and involvement at lower levels n Characteristics • MNCs tend to keep the structures of the home-based headquarters even when established overseas for many years (p 18)

n Growth Stage Organizational Structure Design • Org. structure changes over the growth of the firm • Young firms tend to be centered around one or few people who are the founders or entrepreneurs • As staffing and product lines grow, more formal structures are required to maintain efficiency • Reorganization (or re-engineering) is required when market conditions change and the firm must change n Organizational Configurations • There at least 243 distinctly different org. structure types • Five common elements in every org. structure: – Operating core-employees who perform the basic work related to production of products and services – Strategic apex- top-level managers who are responsible for overall org. – Middle line-managers who connect the operating core to the strategic apex – Technolstructure--analysts who have the responsibility for affecting certain forms of standardization in the organization – Support staff-people who provide indirect support services for the org.

Organizational Structure Designs n Simple Structure • Strengths: simplicity; fast and flexible; low cost; goals are clear • Weaknesses: limited application (only can be used in small size organizations); too much power with single person Owner Manager

n Machine Bureaucracy Structure Organizational Structure Designs • Strengths: standardization; high efficiency; economies of scale; employees in peer groups so easier management; experienced management not required due to high level of standard rules • Weaknesses: each unit is independent and so does not know what other units are doing; org. goals not well known; unknown or new situations cannot be handled Chief Executive Officer Dir. Public Relations Exec. Dir. VP Finance VP Personnel VP Marketing VP Manufacturing Manager Manager Manager Manager

Organizational Structure Designs n Professional Bureaucracy Structure • Combines standardization with decentralization requiring top management to give up power in order to give professional high skill employees more effectiveness. Used in schools, hospitals and firms requiring highly trained employees. • Strengths: Combines standardization with decentralization requiring top management to give up power in order to give professional high skill employees more effectiveness. • Weaknesses: same as for professional bureaucracy; highly trained employees may have professional directions and restraints that do not match firm’s goals Chief Executive Officer Research Exec. Dir. Public Relations VP Marketing VP R&D Strategy Promotions Electronic Materials Packaging

n Divisional Structure • Organizational Structure Designs A set of autonomous units, each usually a machine bureaucracy, coordinated by a central headquarters (a business in a business). This structure gives more power to division managers. • Strengths: more focus and responsibility given to each division; gives top management more freedom from day-to-day operations; any division can be cut without hurting other divisions; being part of a larger structure Chief gives economies of scale • Weaknesses: duplication of effort; conflict between divisions; resentment over lack of division freedom; coordination problems Executive Officer Dir. Public Relations Exec. Dir. VP Asia VP Europe VP Personnel Production Marketing Manager Manager Manager

n Adhocracy Structure • Organizational Structure Designs Staffed mostly by professionals with high levels of experience. Supervision needs are small and behaviors are internalized and management has chosen employees based on well established professional criteria. Unlike the professional bureaucracy, the adhocracy does not make rules for new problems, but each and every problem has a unique solution so standardization and formalization is not needed. Power flows to anyone with expertise, regardless of the position. • Strengths: ability to respond quickly; adaptivity; creativity; collaboration; can handle complex, highly technical tasks • Weaknesses: conflict easy to arise due to blurred lines of authority; no economies of scale; inefficient; not long lasting Chief Executive Officer Dir. Public Relations Exec. Dir. VP Operations VP Marketing VP R&D Manager Manager Manager

Organizational Structure Change n Model for Managing Organizational Change Determinants Feedback Forces initializing change Change agent Org. Initiator What is to be changed? Intervention strategies Structure? Technology? Org. process? Change process Implementation tactics Unfreeze-Move-Refreeze Intervention Participation Persuasion Edict Implementation Change Results Org. effectiveness

n Participants: Case 4 International Carpet Wholesalers • James Mc. Henry: buyer for International Carpet Wholesalers, New York, USA • Mr. Abdelhadi Hachad: managing director of SOMART • Ms. Paula Feldman: president of International Carpet Wholesalers n Situation: • Mc. Henry has made a tentative agreement to purchase handmade rugs from Mr. Hachad • The deal called for Mr. Hachad to purchase raw wool from Mc. Henry’s firm (this importation usually requires a heavy import tax, however, if the wool is used only for making rugs for export the tax is canceled) • Both sides seemed to get mutual benefit from the agreement • The problem is that Mc. Henry has some reservations about the method used for producing the rugs

DEFINE & REVIEW n External • Outside of company’s control • Not influenced by company n Internal • Inside company n Explicit Communication • Very clear (“This must be done by the 30 th. ”) n Implicit Communication • Not very clear (“This should be done soon. ”) n Message Interpretation • Idea understood in wrong way (“Everyone did a good job. ” VS “You did a good job. ”)

Communication Between Humans n Communication Process

ANALYZE FLOW n Downward Flow • Work Related • Personal n Upward Flow • New ideas • Feedback

EXAMINE PROBLEMS n Language • English is international language? n Perception • We see things in a different way n Culture • We do things in a different way n Body language • Give the wrong idea – – – Use of hands Face/head movement Clothing Distance Time

PRESENT STEPS n n Feedback Language/Culture Training

DEFINE

DEFINE

BUSINESS ETHICS n n Law tells us what we should NOT do Ethics tell us what we SHOULD do

JAPAN n Money • From business to government • Stock tips & buy backs • Unfair market practices n Sexism & Racism • Women in Japan are now fighting back against sexism • Women working for Japanese MNCs in the U. S. are also fighting sexism • Japanese MNCs in U. S. avoid hiring black workers n Women Managers • 2. 2% of management positions in companies 1, 000 up employees

EUROPE n French & German Managers Are Less Concerned With Ethics • “The price of doing business. ” n Women Managers • France: about 8% women • Germany: 7. 8% women

CHINA n n MNCs in China Get Low Wages but at What Social Price? Intellectual Property Problems • Products are copied or sold out the backdoor n Business People in China May Like Better Laws to Stop These Problems

UNITED STATES n Law to Stop Corruption • FCPA (FOREIGN CORRUPT PRACTICES ACT) • Payments for contracts may be normal practice in some countries • Some business people like FCPA because it makes the situation more clear n Social Help • Aid to other countries

CASE STUDY n Internaltional Carpet Wholesalers (U. S. ) • Mr. James Mc. Henry (buyer) n SOMARTA (Morocco) • Mr. Abdelhadi Hachad (Managing Director) n n n -----------------Purchase Handmade Rugs 10 -12 Year Old Girls Working ------------------What Would You Do?

n Participants: Case 5 Assan Motors • Mr. Korihito: president of American manufacturing division of Assan Motors • Mr. Satomoto: president of Assan Motors, based in Tokyo • Hunt Stevenson: previously foreman in auto manufacturing factory when owned by U. S. firm, now appointed employee liaison for Assan Motors in the U. S. factory n Situation: • See Film Gung Ho

n Managing Conflict • Normally, we think of conflict as hindering the achievement of the organization’s goals, but another view of conflict is that it improves effectiveness by stimulating change and improving the decision-making process. n Conflict & Org. Effectiveness Traditional View • All conflict is BAD and must be resolved quickly n Interactionist View • An org. with no conflict is static and does not adapt Conflict-Survival Model Conflict Change Adaptation Survival