1. 1 PowerPoint slides by R. Dennis Middlemist, Professor of Management, Colorado State University

2. 2 Decision and Control Linkages Decision Making The process of choosing a course of action among alternatives. Controlling The process of evaluating results in relation to plans or objectives and deciding what action, if any, to take. Management Decision and Control The choice of a course of action among alternatives and the evaluation of results of those choices in relation to plans or objectives.

3. 3 Decision-Making Process and Challenges Do decision-making philosophies and practices differ from country to country? Comparative Examples of Decision Making Some countries tend to use more centralized decision making than others Most British organizations are highly decentralized French managers graduated from the Grand Écoles and lack confidence in their middle managers so decision making tends to be centralized

4. 4 Decision-Making Process and Challenges Codetermination A legal system that requires workers and their managers to discuss major decisions German MNCs tend to be fairly centralized, autocratic, and hierarchical managers focus more on productivity and quality of goods and services than on managing subordinates Decision making in Sweden is decentralized and participative Focus more on quality of work life and the importance of the individual in the organization Comparative Examples of Decision Making

5. 5 Decision-Making Process and Challenges Ringisei A Japanese term that means “decision making by consensus.” Japanese consensus decision making can be very time- consuming In practice most Japanese managers know how to respond to “suggestions” from the top and to act accordingly, saving a much time Tatemae A Japanese term that means “doing the right thing” according to the norm. Honne A Japanese term that means “what one really wants to do.” Comparative Examples of Decision Making

6. 6 Decision-Making Process and Challenges MNCs based in the United States Use fairly centralized decision making in managing their overseas units Ensure that all units are operating according to the overall strategic plan Thus providing necessary control for developing a worldwide strategy Most evidence indicates the overall decision-making approaches used around the world favors centralization Comparative Examples of Decision Making

7. 7 Centralization and Decentralization of Decision Making in Subsidiary Operations Adapted from Table 11–1: Factors That Influence Centralization or Decentralization of Decision Making in Subsidiary Operations

8. 8 Decision-Making Process and Challenges An organizational strategy and the accompanying techniques that result in the delivery of high-quality products or services to customers TQM is critical to achieve world-class competitiveness Manufacturing is a primary area U.S. automakers have greatly improved the quality of their cars in recent years The Japanese have continuously improved quality and thus still have the lead Total Quality Management Decisions (TQM)

9. 9 Decision-Making Process and Challenges Many successful TQM techniques applied to manufacturing MNCs use TQM techniques Tailor output to customer needs Require their suppliers use same approach Concurrent engineering/interfunctional teams Designers, engineers, production specialists, and customers work together to develop new products Empowerment Total Quality Management Decisions (TQM)

10. 10 Decision-Making Process and Challenges Rewards and Recognition Pay and benefit increases, merit pay, and discretionary bonuses Pay-for-skills and knowledge plans Plaques, and public recognition Success of rewards and recognition varies by country U.S. workers may value individual recognition Japanese do not like to be singled out for personal praise Total Quality Management Decisions (TQM) Many successful TQM techniques applied to manufacturing

11. 11 The Emergence of New Beliefs Regarding Quality Adapted from Table 11–2: The Emergence of New Beliefs Regarding Quality

12. 12 The Controlling Process Methods by which MNCs control overseas operations Most combine direct and indirect controls Some prefer heavily quantifiable methods – others more qualitative approaches Some prefer decentralized approaches – others greater centralization

13. 13 The Controlling Process Three common performance measures used to control subsidiaries are in the areas of finance, quality, and personnel Financial performance is typically measured by profit and return on investment Quality performance is often controlled through quality circles Personnel performance is typically judged through performance evaluation techniques

14. 14 Models of PC Manufacturing McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Adapted from Figure 11–1: Models of PC Manufacturing Manufacturer orders PC parts based on sales forecasts PC parts are warehoused until needed by the manufacturer Manufacturer builds PCs & stores them in their warehouse PCs are ordered by distributors & shipped to their warehouse PC orders received from retailers are shipped to them by distributors Customer buy PC from retailer & receives assistance setting PC up Traditional Model

15. 15 Models of PC Manufacturing McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Adapted from Figure 11–1: Models of PC Manufacturing Manufacturer orders a small number of PC parts from its suppliers Business & individual customers place orders by phone or over the internet Manufacturer builds PCs to customer’s exact specifications Manufacturer ships PCs directly to customer Direct-Sales Model

16. 16 Models of PC Manufacturing McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Adapted from Figure 11–1: Models of PC Manufacturing Manufacturer builds shells – a case, power supply, floppy disc, basic circuitry Shells are shipped to distributors & components suppliers establish parts inventory with or near distributor Customer orders PC through retailer or direct from manufacturer – order is forwarded to distributor Distributor gathers parts to assemble PC to customer’s specifications Distributor ships PC direct to customer on dealers behalf – dealer provides setup & additional services for separate fee Hybrid Model

17. 17 The Controlling Process MNCs experience many control problems Objectives of the overseas operation and the may corporation conflict Objectives of joint-venture partners and corporate management may not be in accord Degrees of experience and competence in planning vary widely among managers running the various overseas units Basic philosophic disagreements about objectives and policies of international operations may exist

18. 18 The Controlling Process MNC will focus on the things that it does best Management wants to ensure there is a market for the goods and services it offers First the company needs to find out what the customers want and be prepared to respond appropriately This requires an external control focus Internal and external perspectives of control – one is often given more attention than the other. Types of Control Internal and External Control

19. 19 The Impact of Internal and External-Oriented Cultures on the Control Process Adapted from Table 11–3: The Impact of Internal and External-Oriented Cultures on the Control Process

20. 20 The Controlling Process The use of face-to-face or personal meetings for the purpose of monitoring operations International Telephone and Telegraph (ITT) holds monthly management meetings at its New York headquarters Meetings are run by the CEO of the company Reports are submitted by each ITT unit manager throughout the world Problems are discussed, goals set, evaluations made, and actions taken to help the unit to improve its effectiveness Types of Control Direct Controls

21. 21 The Controlling Process Other examples Top executives visit overseas affiliates or subsidiaries to learn firsthand the problems and challenges facing the unit and to offer assistance By determining who to send overseas to run the unit, MNCs can directly control how the operation will be run Designing a structure that makes the unit highly responsive to home-office requests and communications ensures MNCs that all overseas operations are run in accord with central management’s desires Types of Control Direct Controls

22. 22 The Controlling Process The use of face-to-face or personal meetings for the purpose of monitoring operations International Telephone and Telegraph (ITT) holds monthly management meetings at its New York headquarters Meetings are run by the CEO of the company Reports are submitted by each ITT unit manager throughout the world Problems are discussed, goals set, evaluations made, and actions taken to help the unit to improve its effectiveness Types of Control Indirect Controls

23. 23 The Controlling Process The use of reports and other written forms of communication to control operations at subsidiaries Financial statements Statements prepared to meet the national accounting standards and procedures prescribed by the host country Statements prepared to comply with the accounting principles and standards required by the home country Statements prepared to meet the financial consolidation requirements of the home country Types of Control Indirect Controls