MANAGING ACROSS CULTURES

1
Introduction

• Managing Across Cultures
• Private business goal to stabilize profits.
  Success is
  influenced by
• Foreign sales
• Foreign resources
• Government business may or may not be
  profit-motivated (i.e. political motivations)
• Why Companies Engage in Management Across
  Cultures
• Expand sales
• Acquire resources
• Diversify sources of sales and supplies
• Minimize competitive risk

2

• Reasons for Recent International Business Growth
• Expansion of technology
• Business is becoming more global
• Transportation is quicker
• Communications enable control from afar
• Costs are more conducive for international
  operations
• Liberalization of cross-border movements
• Lower governmental barriers

3

• Development of supporting institutional
  arrangements
• Institutional arrangements
• Made by business and government
• Ease flow of goods
• Reduce risk
• Increase in global competition
• More companies are managing across cultures
  because
• New products quickly become global
• Companies can produce in different countries
• Domestic companies competitors, suppliers, and
  customers become international
• Competing more and more in knowledge-based
  industries

4
MODES OF INTERNATIONAL BUSINESS

• Merchandise Exports and Imports
• Countrys key international economic transaction
• Service Exports and Imports
• Earnings other than those derived from goods
• Examples travel, transportation, fees,
  royalties, dividends, and interest
• Very important for some countries
• May involve special IB operating modes

5

• Investments
• Direct investmentManaging whole organizations
• Key features of direct investment are
• Control
• Access to foreign markets
• Access to foreign resources
• Higher foreign sales than exporting (often)
• Partial ownership (sometimes)
• Portfolio investment
• Key components of portfolio investment are
• Noncontrol of foreign operation
• Financial benefit (for example, loans)

6
Prerequisites for International SuccessorHow
does a firm overcome its"Liability of
Foreignness"?

• Motivation
• Strategy
• Organization
• People

7
Motivations for Overseas Expansion
Traditional Market Seeking (Sales
Expansion) Resource Seeking
Diversification New' Knowledge/
Innovation Options for Strategic Moves/
Countermoves
Materials Cheap Labor Capital
8
The Connections
"International" "Multinational"
"Global" "Transnational Metanational
STRATEGY
ORGANIZATION
PEOPLE
9
Organization of the Course

• MACRO Cultural Embeddedness or The Many Faces
  of Culture We Encounter at Work
• And MESO Culture in Context or How Strategy /
  Organization / Culture Interconnect
• MICRO The People Factor or Culture in Practice
  (the Nitty Gritty of) Managing Across Cultures