1. Case 1 Fitzburg Tire Company
Management Across Culture
Participants:
Max Bierman, construction manager (first time working outside U.S.)
Leopodo Sanchez Garcia, chief engineer for Fitzburg in Mexico
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

2. Culture Characteristics
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

3. Values Values: Management success factors (values) include:
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
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.
Values can change over time and over geographic location

4. Cultural Dimensions (Hofstede, p8)
Power distance:
the extent to which less powerful members of institutions and organizations accept that power is distributed unequally
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)
Individualism:
the tendency of people to look after themselves and their immediate family only
Masculinity:
the degree to which the dominant values in society are success, money and things.
Moving to a culture near your own makes management transition easier (p17)

5. Cultural Dimension (Trompenaars)(p18)
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 (p22)

6. Globalization Vs. National Responsiveness (p35)
Integration comes from economies of scale
Differentiation comes from local needs
Most firms today belief that one worldwide approach to doing business is key to success
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
MNC success factors include a worldwide view of operations, support overseas activities, pay close attention to political changes and use local nationals whenever possible
National Responsiveness
(Differentiation)
Low
High 3 1
High
Globalization
Strategy
Mixed
Strategy
Globalization (Integration) 4 2
Low
National
Responsiveness
Strategy
Mixed
Strategy

7. Differences and Similarities
Parochialism: Simplification:
the tendency to view the the process of exhibiting the same world through one's own orientation toward different eyes and perspectives cultural groups
Contingency Approach:
the application of HRM (Human Resource Management) to meet the specific needs of local workers
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

8. Organizational Cultures in MNCs
Family:
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:
a strong emphasis on hierarchy and task clarification through the use of organizational structure; tasks are well defined and the organization tends to be tall at the top and wide at the bottom; things go "by the book"
Guided missile:
a strong emphasis on equality in the work place and orientation to task; usually in project groups, common in high-tech 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:
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 short-lived until the firm grows and develops need to org. structure
Equity
Incubator
Guided
Missile
Person Emphasis
Task Emphasis
Family
Eiffel
Tower
Hierarchy

9. Case 2 Comtec Corporation
Marketing Research & Information
Participants:
Dr. Danil Needham, Comtec Corporation president
Mr. Harry Otto, Comtec Corporation Vice President
Ms. Roberta Malcolm, Computer Consultant
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

10. Marketing Information System (MIS)
people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers
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

11. 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
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

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

13. Needs Maslow’s hierarchy of needs: Buyer decision process
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.
Buyer decision process
Five stages (can skip stages)
Evaluation of alternatives
Purchase decision
Need
recognition
Information search
Postpurchase behavior

14. Adoption of New Products
Five Stage Adoption Process:
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
Early adoptors
Early majority
Late majority
Inovators
Laggards
2.5%
13.5%
34%
34%
16%

15. Financial Statements Balance Sheet Liabilities (claims on assets)
Assets=Liabilities + Equity
Assets
Cash
Marketable securities
Accounts receivable
Inventories
Current Assets
Gross plant and equipment
Accumulated depreciation
Net plant and equipment
Total assets
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

16. Financial Analysis Ratios
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

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

18. Case 3 Hanover Public Systems (HPS)
Participants:
Howard Wolff: HPS president
Yang Hsiao-shih: previous Taiwan plant president (terminated)
James Fukuda: new Taiwan plant president (second generation Japanese-American)
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)

19. International Organizational Structure
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

20. Asian Vs Western Management
Some Basic Features of the Two Management Styles

21. Organizational Characteristics of MNCs
Specialization
U.S. plants tend to have more horizontal specialization while Japanese plants tend to have more vertical specialization
Centralization
Japanese firms tend to have higher centralization while U.S. firms have more delegation and involvement at lower levels
Characteristics
MNCs tend to keep the structures of the home-based headquarters even when established overseas for many years (p18)

22. Organizational Structure Design
Growth Stage
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
Organizational Configurations
There are 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.

23. Organizational Structure Designs
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
Manager
Manager
Manager

24. Organizational Structure Designs
Machine Bureaucracy Structure
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
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager

25. Organizational Structure Designs
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
Dir. Public Relations
Exec. Dir.
VP Marketing VP
R&D
Research
Strategy
Promotions
Electronic
Materials
Packaging

26. Organizational Structure Designs
Divisional Structure
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 gives economies of scale
Chief Executive Officer
Weaknesses: duplication of effort; conflict between divisions; resentment over lack of division freedom; coordination problems
Dir. Public Relations
Exec. Dir. VP
Asia VP
Europe VP
Personnel VP
Personnel
Marketing
Marketing
Production
Production
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager

27. Organizational Structure Designs
Adhocracy Structure
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
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager

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

29. Case 4 International Carpet Wholesalers
Participants:
James McHenry: buyer for International Carpet Wholesalers, New York, USA
Mr. Abdelhadi Hachad: managing director of SOMART
Ms. Paula Feldman: president of International Carpet Wholesalers
Situation:
McHenry has made a tentative agreement to purchase handmade rugs from Mr. Hachad
The deal called for Mr. Hachad to purchase raw wool from McHenry’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 McHenry has some reservations about the method used for producing the rugs

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

31. Communication Between Humans
Communication Process

32. ANALYZE FLOW Downward Flow Upward Flow Work Related Personal New ideas
Feedback

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

34. PRESENT STEPS
Feedback
Language/Culture Training

35. DEFINE

36. DEFINE

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

38. JAPAN Money Sexism & Racism Women Managers From business to government
Stock tips & buy backs
Unfair market practices
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
Women Managers
2.2% of management positions in companies 1,000 up employees

39. EUROPE French & German Managers Are Less Concerned With Ethics
“The price of doing business.”
Women Managers
France: about 8% women
Germany: 7.8% women

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

41. UNITED STATES Law to Stop Corruption Social Help
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
Social Help
Aid to other countries

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

43. Case 5 Assan Motors Participants: Situation:
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
Situation:
See Film Gung Ho

44. Managing Conflict Conflict Traditional View Interactionist View
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.
Traditional View
All conflict is BAD and must be resolved quickly
Interactionist View
An org. with no conflict is static and does not adapt
Conflict & Org. Effectiveness
Conflict-Survival Model
Conflict
Change
Adaptation
Survival