Global and Comparative

Management
 International Management

• Operation of international firms in host countries.

• It is concerned with managerial issues related to

the flow of people, goods and money, with the
ultimate aim being to manage better in situations
that involve crossing national boundaries.
 Environmental Factors
• The environmental factors that affect
domestic firms usually are more critical for
international firms.
Hofstede’s Cultural Dimensions
• Before entering a foreign country, a business
first has to understand the country’s culture.
• Hofstede has given a framework to
understand a country’s cultural orientation on
the basis of five dimensions.
• Companies can evaluate how they can utilise
the foreign country’s cultural orientation to
enhance the outcomes of carrying out
business with the latter.
 Hofstede’s cultural Dimensions
• Power Distance – High in Asian cultures, Latin Ameria, low
in the USA.
• Individualistic or Collective - people, in individualistic
societies, are expected to care for themselves and their
immediate families only; while in collectivist cultures,
people view themselves as members of larger groups,
including extended family members, and are expected to
take responsibility in caring for each other.
• Masculinity or Feminity – examine the dominant value of a
culture and determine where these values lie on a
continuous spectrum in which masculinity is associated
with assertiveness, acquisition of money and things versus
feelings, relationships and quality of life.
• Uncertainty Avoidance – The extent to which
people of a culture feel threatened by
ambiguity or unexpected situation and have
institutions that try to avoid these.
• Long term or short term orientation – how
the society has to maintain some links with its
own past while dealing with the challenges of
the present and future. India is long term
oriented.
 Unifying Effects
• Unifying effects - Unifying influences occur when
the parent company provides and shares
technical and managerial know-how, thus
assisting the local company in the development
of human and material resources. Moreover,
both partners may find it advantageous to be
integrated into a global organizational structure.
Whatever the interaction, organizational policies
must provide for equity and result in benefits for
both the parent firm and the local company.
 Potential for Conflicts
• Many factors can cause conflicts between the parent firm
and the host country. Nationalistic self-interest may
overshadow the benefits obtained through cooperation.
Similarly, sociocultural differences can lead to a breakdown
in communication and subsequent misunderstandings.
Also, a large multinational firm may have such
overpowering economic effects on a small host country
that the latter feels overwhelmed. Some international
corporations have been charged with making excessive
profits, hiring the best local people away from local firms,
and operating contrary to social customs. International
corporations must develop social and diplomatic skills in
their managers to prevent such conflicts and to resolve
those that unavoidably occur.
• “Xiaomi is an Indian company” - Rest of World
• Chinese mobile phone maker Xiaomi evaded
Rs 653 crore in customs duty: DRI | Business
Standard News (business-standard.com)
• Global brands in India face mutiny as they
bypass traditional distributors | Business
Standard News (business-standard.com)
Transactions between Parent and Host
Country
• Transfer of
– Goods

– Services

– Technology

– Managerial knowledge

– capital
Multinational Corporations (MNCs)
• Have head quarters in one country but
operations in many countries
• Advantages:
– Business opportunities
– Raise money
– Establish production facilities
– Access to Natural resources and materials
– Worldwide labor pool
• Challenges
– Increasing Nationalism

– Developing Countries are acquiring skills

– Countries have become more aware

– Difficulty in maintaining good relationship

 International Business and Managerial
Functions

• Source: Essentials of Management – An International and Leadership perspective by Harold Koontz

International Business and Managerial
Functions - Continued
• Planning
– Assessment of opportunities and threat in the
external environment
– Internal strengths and weakness
– Cultural orientation toward time
– Economic instability
• Organising
– Geographic areas
– Product line - Localization
– Mixed organisational designs
• Staffing
– Nationals of parent Country
– Nationals of home Country
– Third Country Nationals
• Leading
– Understanding of employees and their cultural
environment
– Communication lines
• Controlling
– Different currencies and ratios
– Accounting procedures
 Ethnocentric Approach
• Orienting the foreign operations based on that
of the parent company
– Example – Whenever Japanese firms, tie up with
foreign companies, they bring in the Japanese
model of manufacturing (Lean, Kaizen, 5 S) – this
they make sure by having more of Japanese
nationals in the top management – Have a look at
the top management team of Maruti Suzuki.
 Polycentric Approach
• Nationals from the home country are
recruited managerial positions.
– Example – Walmart, XiaoMi
 Regiocentric Approach
• Nationals from the countries where the
company has its operations are recruited for
managerial positions
 Geocentric Approach
• Where the most suitable managers are
recruited irrespective of their nationality
 Comparative Management

• Defined as the study and analysis of

management in different environments and
the reasons that enterprises show different
results in various countries.
Management Styles in a few countries
• France: Le Plan and the Cadre
• Authority and Codetermination
• Korean Management (Chaebols)
• Japanese Management
• The Rise of India
 Quality Management
• Quality - a strategic weapon in global marketplace
• The quality management Guru’s – Deming and Juran
• American B-school professors who revolutionised Japan
• For Deming, quality meant providing customer-satisfying
products and services at a low cost. It also meant a
commitment to continual innovation and improvement that
the Japanese call kaizen.
• For Juran, a key element in the definition of quality is a
product’s “fitness for use.”
• Finally, Crosby explains quality from an engineering
perspective as the conformance to precise standards and
requirements. His motto is “Do it right the first time [and]
achieve zero defects