global, comparative and quality management

Steps to the success by BANKING FELLOWS

Submitted to:

MD. ABU BAKKAR SIDDIK

Assistant Professor

University of Chittagong

NOVEMBER 1, 2018
Group: BANKING FELLOWS
group:
BANKING FELLOWS
Member’S name & ID no.
Name ID No.

MD. ARIF UDDIN KHAN 17306130

NUSRAT JAHAN NISHA 17306012

TASNIM ANOWAR SAMIRA 17306077

JANNATUL MAWA SAJIN 17306078

MD. IMTIAZ UDDIN 17306085

NUSHERA TARANNUM 17306104

MT. MIMI KHATUN 17306113

IRIN SARKAR RUBY 17306140

NUZHAT TABASSUM SINTHIYA 17306141

 Contents

International management and multinational management

Country alliances and economic blocs
International management cultural and country differences
Porter's competitive advantage of nations
Gaining a global competitive advantage through quality management
The International Management
The International Management (abbreviated IM ) deals with the managing of the special features
of cross-border (international) business activity. In a functional perspective, it simply refers to the
leadership of international companies . It covers all problem areas and design fields resulting from
cross-border business activity.

Duties of International Management

The need for conscious international management results from the heterogeneity of the environments that are relevant
for the entrepreneurial decision makers. This is reflected in an increased leadership complexity, whose integrative
handling is to be described as a core task of international management. The main task is the co-ordinative, judicious
integration of the socio-economic data of all regions processed by the International Company. Here it has large
intersections with the intercultural management and the strategic management .

Object of International Management

The object of International Management is the International Company . This is defined by technical characteristics as an
economically active company across national borders on a regular and non-negligible basis (strategic importance). This
understanding includes both larger and smaller companies. In addition, it differs essentially from the concept of the
" Multinational Enterprise " (MNU), which - by definition - [1]foreign direct investment (FDI). Multinational companies are
therefore a subset of the international companies (INU). The concept of the International Company is broader in that
companies that operate without foreign direct investment on the basis of international cooperation agreements such
as licensing and franchising or purely on the basis of extensive export activities are internationally active.

Multinational management
Multinational management involves the transplantation of domestic management
skills (usually often assumed to be superior) to foreign countries and building
production bases there in order to increase market penetration, sales and profits.
Superior skills in production management and the management of organizations
are required to achieve competitive power in the host countries and the world
market. Becoming a multinational is different from entering into exporting,
licensing, plant engineering or the opening of sales branches of a company, in that
they do not involve the construction of production facilities. In short-

• Formulation of strategies and management systems to take advantage of

international opportunities and respond to international threats
The Nature of The Multinational Company
• Any company that engages in business functions beyond its domestic borders
• Includes both large and small companies

The Globalizing Economy

• Globalization: The worldwide trend of the economies of the world becoming
borderless and interlinked.

The Benefits of Globalization

• Resulting in lower prices in many countries as multinationals are becoming more
efficient.
• Benefiting many emerging markets such as India and China as these countries
enjoy greater availability of jobs and better access to technology.
• Major reason why many new companies from Mexico, Brazil, China, India, and
South Korea are the new dominant global competitors.

Negatives of Globalization
• Not all economies of the world are benefiting equally or participating equally in
the process.
• Terrorism, wars, and a worldwide economic stagnation have limited or reversed
some aspects of globalization.
• Producing negative effects such as scarcity of natural resources, environmental
pollution, negative social impacts, and increased interdependence of the world’s
economies.
• Widening the gap between rich and poor countries
The Globalizing Economy: 7 Key Trends
• Disintegrating borders
• Growing cross-border trade and investment
• The rise of global products and global customers
• The internet and information technology
• Privatizations
• New competitors in the world market
• The rise of global standards of quality and production

Types of Risks
• Economic risk: considers all factors of a nation’s economic climate that may
affect a foreign investor.
• Political risk: anything a government might do or not do that might adversely
affect a company.
• The recent increases in oil prices have the potential to slow down global trade
• Natural disasters
• International terrorism

Multinational Management: A Strategic Approach

• Considers how managers formulate and implement strategies to compete
successfully in the global economy.
• Strategies are the maneuvers or activities used to increase and sustain
organizational performance.
• Multinational strategies must include maneuvers that deal with operating in more
than one country and culture.
Economic/Trading blocs
A regional trading bloc is a group of countries within a geographical region that protect themselves from imports
from non-members. Trading blocs are a form of economic integration, and increasingly shape the pattern of world
trade.

In economics, trading/economic blocs are a formal agreement between two or more regional countries that
remove trade barriers between the countries in the agreement while keeping trade barriers for other countries.
There are several types of trading bloc:

Preferential Trade Area

Preferential Trade Areas (PTAs) exist when countries within a geographical region agree to reduce or eliminate
tariff barriers on selected goods imported from other members of the area. This is often the first small step
towards the creation of a trading bloc.

Free Trade Area

Free Trade Areas (FTAs) are created when two or more countries in a region agree to reduce or eliminate barriers
to trade on all goods coming from other members.

Customs Union
A customs union involves the removal of tariff barriers between members, plus the acceptance of a common
(unified) external tariff against non-members. This means that members may negotiate as a single bloc with 3 rd
parties, such as with other trading blocs, or with the WTO.

Common Market/Single Market

A ‘common market’ is the first significant step towards full economic integration, and occurs when member
countries trade freely in all economic resources – not just tangible goods. This means that all barriers to trade in
goods, services, capital, and labour are removed. In addition, as well as removing tariffs, non-tariff barriers are
also reduced and eliminated. For a common market to be successful there must also be a significant level of
harmonization of micro-economic policies, and common rules regarding monopoly power and other anti-
competitive practices. There may also be common policies affecting key industries:

Example: Common Agricultural Policy (CAP) and Common Fisheries Policy (CFP) of the European Single Market
(ESM).
 The main advantages for members of trading blocs

Free trade within the bloc

Knowing that they have free access to each other's markets, members are encouraged to specialize. This means
that, at the regional level, there is a wider application of the principle of comparative advantage.

Market access and trade creation

Easier access to each other’s markets means that trade between members is likely to increase. Trade creation
exists when free trade enables high cost domestic producers to be replaced by lower cost, and more efficient
imports. Because low cost imports lead to lower priced imports, there is a 'consumption effect', with increased
demand resulting from lower prices

Economies of scale
Producers can benefit from the application of scale economies, which will lead to lower costs and lower prices for
consumers.

Jobs
Jobs may be created as a consequence of increased trade between member economies.

Protection

Firms inside the bloc are protected from cheaper imports from outside.

Example: Protection of the EU shoe industry from cheap imports from China and Vietnam.
The main disadvantages of trading blocs
Loss of benefits
The benefits of free trade between countries in different blocs is lost.

Distortion of trade
Trading blocs are likely to distort world trade, and reduce the beneficial effects of specialization and the
exploitation of comparative advantage.

Inefficiencies and trade diversion

Inefficient producers within the bloc can be protected from more efficient ones outside the bloc. Trade diversion
arises when trade is diverted away from efficient producers who are based outside the trading area.

Example: Inefficient European farmers may be protected from low-cost imports from developing countries.

Retaliation
The development of one regional trading bloc is likely to stimulate the development of others. This can lead to
trade disputes.

Example: The EU and USA have a long history of trade disputes, including the dispute over US steel tariffs, which
were declared illegal by the WTO in 2005. In addition, there are the so-called beef wars with the US applying
£60m tariffs on EU beef in response to the EU’s ban on US beef treated with hormones; and complaints to the
WTO of each other’s generous agricultural support.

As a result, during the 1970s many former UK colonies formed their own trading blocs in reaction to the UK
joining the European common market
Alliance:
An alliance is a relationship among people, groups, or states that have joined together for mutual benefit or to
achieve some common purpose, whether or not explicit agreement has been worked out among them. Members
of an alliance are called allies.

Types of Alliance:

Political Alliance:
A political alliance , also referred to as a political coalition , political bloc , is an agreement for cooperation
between different political parties on common political agenda, often for purposes of contesting an election to
mutually benefit by collectively clearing election thresholds , or otherwise benefiting from characteristics of the
voting system or for government formation after elections .

Military Alliance:
A military alliance is an international agreement concerning national security, when the contracting parties agree
to mutual protection and support in case of a crisis that has not been identified in advance.

Economic Alliance:
Economic alliance is commonly known as Economic union. An economic union is a type of trade bloc which is
composed of a common market with a customs union. The participant countries have both common policies on
product regulation, freedom of movement of goods, services and the factors of production (capital and labour)
and a common external trade policy.

Examples of economic alliance include:

 The African Union,

 Andean Community
 Arab Maghreb Union
 Association of Caribbean States,
 Association of South East Asian Nations,
 Caribbean Community,
 Commonwealth of Independent States,
 East African Community,
 European Union, and
 Pacific Community.
The Pros and Cons of Economic alliance:
There are potential costs and benefits of economic integration. The advantages of economic integration fall into
three categories.
 Trade benefits,
 Employment
 Political cooperation.
More specifically, economic integration typically leads to a reduction in the cost of trade, improved availability of
and a wider selection of goods and services, and efficiency gains that lead to greater purchasing power.
Employment opportunities tend to improve because trade liberalization leads to market expansion, technology
sharing and cross-border investment flows. Political cooperation among countries can improve because
of stronger economic ties, which can help resolve conflicts peacefully and lead to greater stability.

Despite the benefits, economic integration has costs. The disadvantages include trade diversion and the erosion of
national sovereignty. For example, trade unions can divert trade away from non-members, even if it is
economically detrimental for them to do so

International management : cultural and country differences

One of the key challenges of doing business internationally is the considerable differences in culture around the
world Subtle but profound things that shape differences in values and behavior in societies Cultural differences
can be seen in a wide variety of everyday things.

Understanding culture is fundamental to understanding many of the differences in business around the

world. Single country business vs. businesses in multiple countries

Culture Defined:
Culture is the acquired, collective knowledge of a group that people use to interpret experience and actions.This
knowledge influences values, attitudes, and behaviors of those people.Culture is not genetically-based; it is
learned by people and encouraged by societies and governments.

Cultural Differences
Because different cultures exist in the world, an understanding of the impact of culture on behavior is critical to
the study of international management

Cultural differences affect a wide range of issues:

Create a great deal of misunderstanding and strife for manager and damage an organization’s reputation in a
foreign country for years

How is Culture Transmitted?

Culture is transmitted through its people both formally and informally.Informal transmission occurs every day as
individuals interact with each other, watch television, or read books.Formal transmission occurs through efforts to
socialize as an individual, such as in schools and government.

Culture’s Impact :
Culture can impact all aspects of the management of a firm including, but not limited to, strategy, hiring,
pay/promotion, organization, evaluating performance, technology transfer, managerial ideology, and even
business-government relations.

Communication:

Is one of the most critical factors in the success of a business.Culture has an impact on how communication takes
place in an organization, what is communicated, and the manner in which information is communicated.

 High-context and low-context cultures exist.

1. Culture’s Impact Communication :

 In high-context cultures, the context in which what is spoken plays a major role in communication and the
behavior of individuals. Include those countries in East Asia, India, and Africa.
 In low-context cultures, the information is very straightforward, and the context has less impact on how
such information is likely to be spoken and interpreted. Include most cultures if the developed west, such
as the United States, the UK, and Europe.

Individuals interpret communication on the basis of one’s own cultural norms.

2. Culture’s Impact Problems in dealing with culture

Parochialism is a belief that the only way to do something is the way it’s done in one’s own culture.

 The ethnocentric view holds that an individual or a firm believe that their own way of doing things is the
best, and will not seek to adapt to local cultural practices.
  The polycentric view holds that multinational enterprises should treat each international subsidiary as a
separate national entity.

3. Sociology Framework – dimensions of value orientation :

 Context orientation :Low context cultures emphasize communication via spoken or written words.
Ex: United States, Canada, Germany
High context cultures rely on nonverbal and Situational cues as well as on spoken or written
words. Ex: Thailand, Malaysia

Time Orientation
different cultures place different emphasis on history and tradition. Example : Americans is less oriented toward
history and tradition compared to Asia or the Middle East. Punctuality Implications on business.

 Space Orientation
In the U.S people value 'Personal space ',
Many latin and Asian cultures expect much less personal space.

Whether space is viewed as a public good Or private good.

Analyzing Culture Psychological framework :

Created by organizational psychologist Geert Hosted.

Hofstede identified Five dimensions: power distance, individualism-collectivism, uncertainty avoidance, and
masculinity–femininity (sometimes called production orientation), Long term / short term orientation.

Power distance
Extent to which less-powerful members of institutions and organizations accept the unequal distribution of power
and submit to authority.

 Organizations in low power-distance countries are generally decentralized and have flatter organizational
structures.
 Organizations in high power-distance countries tend to be more centralized and have tall organizational
structures.

Individualism–collectivism
 High-individualistic societies consist of loosely linked individuals who view themselves as largely
independent of groups that make their own choices.
  Collectivism is the tendency of people to associate with groups, where group members look after each
other in exchange for group loyalty.

In general, wealthy countries tend to have higher individualism scores while poorer countries tend to have higher
collectivism scores.

Uncertainty avoidance
Society's tolerance for Uncertainty and ambiguity.

 Countries with high uncertainty avoidance cultures have a high degree of structure in organizational
activities, more written rules, less risk taking by managers, lower labor turnover, and less ambitious
employees. Ex: Greece, France Japan.
 Low uncertainty avoidance societies have less structure in organizational activities, fewer written rules,
more risk taking by managers, higher labor turnover, and more ambitious employees. Ex: Singapore, India,
USA

Masculine–feminine
The distribution of roles between genders and the more dominant role in a given society.

 Countries with a fairly high masculinity index place great importance on earnings, recognition,
advancement, challenge, and production.
 Countries with a low masculinity index tend to place great importance on cooperation, a friendly
atmosphere, and employment security.

Long term / short term orientation

How much Society values long lasting and sustainable as opposed to short term traditions,values and goals.

Porter's competitive advantage of nations

According to Porters National prosperity is created, not inherited. Porter's argue that the elements of factor
conditions are more important in determining country's competitive advantage than inherited natural factors. A
nation's competitiveness depends on the ability of its industry to innovate & upgrade companies gain advantage
against the world best companies because of pressure & challenge. Differences in national value, culture,
economic structure & institution all contribute to competitive success. Undoubtedly, nation succeeds in particular
industries because of their most look-forwarding, dynamic & challenging approach.

Gaining a global competitive advantage through Quality Management :

Competitive advantage denotes a firm’s ability to achieve market superiority over its
competitors.

Quality management
A quality management system (QMS) is formalized system that documents processes, procedures &
responsibilities for achieving quality policies and objectives.

Quality management ensures that an organization, product or service is consistent.

A QMS helps coordinate & direct an organization’s activities to meet customer and regulatory requirements and
improve its effectiveness & efficiency on a continuous basis.

How to acquire competitive advantage

There are some areas that provide solid opportunities to build - up the much desired competitive advantage :

 through integration process

 Through research & development activities
 Through alliances
 Through mergers
 Through core – competency

TQM dimensions for competitive advantage

 customer focus
 leadership
 Teams of people
 process management
 security /system approach to management
 -continous improvement
 Reliability
 supplier 's management

How can the management of quality contribute to competitive

advantage?
The question asks how the management of quality can contribute to competitive advantage. Of course, having a
product or service superior in quality to one’s competition is likely to drive increased sales and the ability to
charge higher prices. The question asks about the management of quality, however. By this, we mean the
approaches employed to specifically measure what aspects constitute quality and to manage processes so as to
reliably replicate those product or service metrics.

The primary concept applicable to this is TQM or Total Quality Management. As a methodology, this achieved
definition and general acceptance in the 1950’s. It is based on the ideas that:

 Quality is measurable by means of defining what features are desired in a product or service and defining
metrics for those features.
 Quality is reproducible; the inputs and processes which produce quality can be defined and controlled.
 Quality is a result of the combined action of the entire firm and the business ecosystem in which it
operates, most importantly its supply chain, so managing it must take this ecosystem into account.

That being said, effective management of quality provides a firm with advantage over its competitors in two
ways. First, it makes its product features reliable, so that the firm’s customers know exactly what to expect from
each purchase. Second, it defines exactly the causes of specific quality outcomes, so that sources of inconsistency
may be identified and eliminated, and so that improvements to quality can be made.

Types of Competitive Advantage:

 Cost
 Product
 Niche
 & Sustainable Advantages