SOCIAL AND CULTURAL FACTORS IN BUSINESS Week 2

The Command Economy Enterprises governed by the plan Enterprises governed by the plan Annual quotas broken down to Annual quotas broken down to Quarterly Quarterly Monthly Monthly Weekly Weekly

The Command Economy Each enterprise told what to produce with Each enterprise told what to produce with What materials What materials What labour What labour What finance What finance At what price At what price Where to be delivered Where to be delivered And at what price And at what price

Principal management skills Bureaucratic bargaining Bureaucratic bargaining Understating production capabilities Understating production capabilities Overstating requirements Overstating requirements

Hofstede Analysis – 4 Parameters POWER DISTANCE POWER DISTANCE Degree of inequality Degree of inequality INDIVIDUALISM INDIVIDUALISM Reinforcement of individual achievement Reinforcement of individual achievement MASCULINITY MASCULINITY Societys reinforcement of masculine work role model Societys reinforcement of masculine work role model UNCERTAINTY AVOIDANCE UNCERTAINTY AVOIDANCE Degree society reinforces uncertainty Degree society reinforces uncertainty

Copernicus project – East/West Divide France, Germany & UK have similar values France, Germany & UK have similar values Bulgaria, Poland & Czech Republic have similar values Bulgaria, Poland & Czech Republic have similar values Similarities group into East and West Similarities group into East and West EXCEPT Poland is similar to France EXCEPT Poland is similar to France

Comparative scores USA Great Britain GermanyJapanPortugal Power Distance Individualism Masculinity Uncertainty Avoidance

Graphical representation

Comparative scores - 2 RussiaBelarusUkraine Power Distance Individualism Masculinity Uncertainty Avoidance

Graphical representation

Factors to consider in cross- cultural development Cultural boundaries inhibit acceptance of western management techniques Cultural boundaries inhibit acceptance of western management techniques Cross-cultural adaptation process Cross-cultural adaptation process

Trans-national managerial leadership (TML) Cross-cultural insight Cross-cultural insight Relational tracking Relational tracking Relational skills Relational skills Long-run optimisational pathway Long-run optimisational pathway

Marketing as a managerial skill Marketing practices in less developed countries often prove to be much more efficient by serving the local markets, than marketing transplants from their developed counterparts Marketing practices in less developed countries often prove to be much more efficient by serving the local markets, than marketing transplants from their developed counterparts In transition economies: In transition economies: Many of the most successful entrepreneurs concentrate their efforts on how to beat the system, to find loopholes in legislation and not develop a strong sense of satisfying the customer. Many of the most successful entrepreneurs concentrate their efforts on how to beat the system, to find loopholes in legislation and not develop a strong sense of satisfying the customer.

Importance of marketing The whole notion of marketing is important because the transition toward a market-led company puts a strong emphasis on the pioneering role of marketing The whole notion of marketing is important because the transition toward a market-led company puts a strong emphasis on the pioneering role of marketing

The difficulty of transition Although probably no one had illusions about the changes in Eastern Europe, its length and complexity has probably been underestimated. Although probably no one had illusions about the changes in Eastern Europe, its length and complexity has probably been underestimated. To guide and support this process careful monitoring is needed. To guide and support this process careful monitoring is needed. This monitoring can include different measurements and descriptive research might also help to shape the perceptions and generate knowledge about transition This monitoring can include different measurements and descriptive research might also help to shape the perceptions and generate knowledge about transition

The role of marketing Marketers can play an important part in the transition process, by providing a better customer service what was experienced before. Marketers can play an important part in the transition process, by providing a better customer service what was experienced before. They can contribute to increase technical, and hopefully non-technical efficiency, leading to higher customer satisfaction They can contribute to increase technical, and hopefully non-technical efficiency, leading to higher customer satisfaction

The responsibility of marketing Marketers also carry social responsibility. Their practices, the delivered values and role models can shape people's expectations and choice Marketers also carry social responsibility. Their practices, the delivered values and role models can shape people's expectations and choice

Entrepreneurial Spirit ENTREPRENEURIAL SPIRIT OR UNDERSTANDING DRIVES BUSINESS PROGRESS IN TRANSITION ECONOMIES ENTREPRENEURIAL SPIRIT OR UNDERSTANDING DRIVES BUSINESS PROGRESS IN TRANSITION ECONOMIES

Human Resource Management (HRM) – The Russian Experience One of the key internal challenges faced by foreign firms in Russia has proved to be management of human resources One of the key internal challenges faced by foreign firms in Russia has proved to be management of human resources

HRM in Russia – main findings A key challenge is understanding what adjustments are needed A key challenge is understanding what adjustments are needed It is important to understand traditional human resource management practices in Russia prior to the end of Communism It is important to understand traditional human resource management practices in Russia prior to the end of Communism

HRM in Russia – main findings Viewed employees as a cost rather than as a resource Viewed employees as a cost rather than as a resource Little attention was paid to skill development Little attention was paid to skill development The labour market has also historically been inefficient... limited career progression... salary differentials were very small... jobs were created to ensure full employment... less attention was given to finding ways to motivate employees The labour market has also historically been inefficient... limited career progression... salary differentials were very small... jobs were created to ensure full employment... less attention was given to finding ways to motivate employees

HRM in Russia – main findings When the government was privatizing a firm, a key consideration was often job security When the government was privatizing a firm, a key consideration was often job security Firms encountered a problem with the acquired employees Firms encountered a problem with the acquired employees In order for firms to be able to survive competent employees are essential In order for firms to be able to survive competent employees are essential

HRM in Russia – main findings Being flexible and willing to adapt to the Russian environment has been found to be a key success factor for operating in Russia Being flexible and willing to adapt to the Russian environment has been found to be a key success factor for operating in Russia Most foreign firms operating in Russia felt that their HRM practices were more similar to their parent firm's HRM practices and other foreign firms operating in Russia than to HRM practices of local Russian firms Most foreign firms operating in Russia felt that their HRM practices were more similar to their parent firm's HRM practices and other foreign firms operating in Russia than to HRM practices of local Russian firms

HRM in Russia – main findings Foreign companies try to keep careful track of the Russians who are studying abroad as they are attractive candidates to recruit Foreign companies try to keep careful track of the Russians who are studying abroad as they are attractive candidates to recruit More than 50% of firms use headhunting firms More than 50% of firms use headhunting firms Personality and previous work experience are the two most important hiring criteria that companies mention Personality and previous work experience are the two most important hiring criteria that companies mention

HRM in Russia – main findings A company can teach or train any person to do some specific job, but if the attitude is wrong that person wouldn't be a good employee A company can teach or train any person to do some specific job, but if the attitude is wrong that person wouldn't be a good employee People who are highly trained even for simple jobs can be hired for a relatively low salary highly educated people are more adept at changing their mindset and working style... People who are highly trained even for simple jobs can be hired for a relatively low salary highly educated people are more adept at changing their mindset and working style...

HRM in Russia – main findings Interviews were the most important mechanism used in selecting new employees. Interviews were the most important mechanism used in selecting new employees. Some managers were sceptical of what insight test results could give since most of these tests were developed for the West there were problems with their applicability in Russia Some managers were sceptical of what insight test results could give since most of these tests were developed for the West there were problems with their applicability in Russia

HRM in Russia – main findings Training and competence development are key Training and competence development are key Before one undertakes training, it is important to identify what competencies are needed Before one undertakes training, it is important to identify what competencies are needed Having a good fixed salary is important to Russian employees Having a good fixed salary is important to Russian employees

HRM in Russia – main findings Firms with non-competitive salaries will have difficulty attracting, motivating, and retaining employees Firms with non-competitive salaries will have difficulty attracting, motivating, and retaining employees Bonuses were found to be a useful complement to straight salary... in motivating employees Bonuses were found to be a useful complement to straight salary... in motivating employees Managers found that with a bonus system in place they had to spend less time making sure employees were working hard Managers found that with a bonus system in place they had to spend less time making sure employees were working hard

HRM Study in Croatia - problems No future planning concerning the workforce No future planning concerning the workforce Surplus employees Surplus employees Lack of qualified experts and skilled shop- floor workers Lack of qualified experts and skilled shop- floor workers Lack of profitability so failure to attract good staff Lack of profitability so failure to attract good staff Reduced contacts with schools / universities Reduced contacts with schools / universities

HRM Study in Croatia - problems Potential employees usually interviewed and selected by one person Potential employees usually interviewed and selected by one person Minimal access to professional improvement Minimal access to professional improvement Limited promotion prospects Limited promotion prospects Low motivation. Main motivational factor is salary and this is generally low. Low motivation. Main motivational factor is salary and this is generally low. No methods of appraisal / evaluation No methods of appraisal / evaluation Autocratic management style hinders development of co-operation and teamwork Autocratic management style hinders development of co-operation and teamwork

Knowledge and Networks Existence of economic capital is vital for business development Existence of economic capital is vital for business development There are other forms of capital which can be converted into economic capital There are other forms of capital which can be converted into economic capital These are: These are: CULTURAL CAPITAL = access to educational facilities CULTURAL CAPITAL = access to educational facilities SOCIAL CAPITAL = network of relationships and support systems SOCIAL CAPITAL = network of relationships and support systems This is the only form of capital which is common to all societies irrespective of level of development This is the only form of capital which is common to all societies irrespective of level of development