1. By: Kevin Ferrone Bob Cardarelli Linda Carter
Globalization
Expansion of Balk Inc.
By:
Kevin Ferrone
Bob Cardarelli
Linda Carter
Kevin, Bob and myself are a team of OD professionals that chose “Globalization” as our presentation topic. Balk Inc. is a hypothetical company that we plan consult in their expansion into foreign markets.

2. Globalization Sound Business Strategy Foreign Competition
United States needs to respond
Expansion into foreign markets
Larger market share
Increased Technology
Advances in Communication
What is globalization? Globalization is the expansion of companies into foreign markets. In the past two decades there has been an enormous growth in Multinational companies doing business abroad. The expansion into foreign markets requires a systematic, calculated, and targeted approach. We, as OD professionals, need to see ourselves as strategic partners within our organization in global expansions.

3. Kotter’s – 8 Step Change Model
Expansion
Kotter’s – 8 Step Change Model
1 Create Urgency
2 Form a Powerful Coalition
3 Create a Vision for Change 4
Communicate the Vision 5
Remove Obstacles
6 Create short-term wins
7 Build on the Change 8
Incorporate into Corporate Culture
We have decided to use Kotter’s 8-step change model to provide a framework for us to manage the expansion of our company, Balk Inc., into the 3 different foreign markets of China, Germany & Israel.

4. Cultural Values
Hofstede Model for Comparison of Different Cultural Values
Dimension Lo
High
Power distance (PDI)
Equality & opportunity are stressed.
Caste system – inequality of power.
Individualism (IDV)
Responsible for fellow members or extended family.
Individual rights are paramount.
Masculine (MAS)
Females treated equal in all respects.
Males dominate the power structure.
Uncertainty avoidance (UAI)
Tolerates variety of opinions. Accepts change. Takes risk.
Laws & rules reduce the uncertainty.
Long-term orientation (LTO)
Change is more rapid since traditions do not impede.
Respect for tradition and long term rewards.
The Hofstede Model is what our team has decided to use as a back drop to compare the cultures of the countries we have chosen for expansion.

5. Examination of 4 different cultures
Four Cultures
Examination of 4 different cultures
United States, China, Germany & Israel
For our the rest of the presentation we will examine the four cultures of the United States, China, Germany & Israel. Take it away, Bob, for Balk Inc.

6. Expanding Leadership Development
Balk Inc.
Expanding Leadership Development
In this section of our presentation, we’ll introduce our hypothetical company, which we’ve named BALK, Incorporated.

7. Balk Inc. The BALK Program
Prepares high potentials for leadership positions in a corporate setting
Immersive Learning approach
Blended online and onsite program
At the heart of Balk’s business is The BALK Program, which is an accelerated, rigorous, business leadership development program targeting high-potential employees, or elite students currently enrolled in MBA programs at prestigious universities.
Our leadership development program is the first to deliver a uniquely immersive blended learning experience, deploying engaging, and powerful, content in both online and onsite learning environments.

8. Balk Inc. Mission, Vision, Values Mission Vision Values
Supply the business sector with “ready now” leaders
Vision
Bridge the gap between education and employment
Prepare learners stand out and excel in the workplace.
Values
“Recognized as the premier source of leadership development”
Our mission is to satisfy the demand for new leaders by leveraging the expertise of top executives and highly-regarded professors from elite business schools.
Our vision is to bridge the gap between education and practical employment experience. Learners emerge from our program with the confidence and skills essential to pursue opportunities as future leaders for the organizations they represent.
And finally, our values articulate our commitment to customers, quality, honesty, and integrity. Only by adhering to these values can we reach our goal to become recognized as the premier source of leadership development.

9. Risks and Benefits of Global Expansion
Balk Inc.
Risks and Benefits of Global Expansion
Opportunities
Revenue growth and business investments
Capitalize on globalization trend
Threats
Competition from local institutions
Changes in political climate
Next, let’s examine the assumptions we’ve made about the risks and benefits of global expansion.
We believe growth in emerging markets abroad and the shifting workforce demographics in the US will provide the impetus for revenue growth and future business development.
Our ability to expand operations outside of the US permits us to capitalize on the ongoing movement towards globalization.
Some of the challenges we expect to encounter include competition from local educational institutions who will compete with us for clients and for recruiting local business leaders and educators.
And, changes in the political climate either domestically or abroad can have a negative impact on business operations or profitability.
TRANSITION
Now, I’ll turn it over to Kevin, so we can move on to a discussion about the global markets where we seek opportunity, starting with China.

10. China
BALK, CHINA

11. China Overview Challenges for a U.S. company in China
Cultural
Operational
Leadership Intervention
First I’ll go over some challenges facing US companies in China. I’ve identified two areas that present the most significant challenges. Those are cultural and operational. Then I’ll mention a few points about or leadership intervention strategy that may need special attention in China.

12. China Cultural Challenges Giving Opinions
These east v. west cultural difference diagrams are often used, and can be found all over the Internet. I pulled out a few that are particularly meaningful to US companies expanding to China. The blue represents the USA and the red represents China.
One major cultural difference is how opinions are given, which is what this diagram illustrates. In the US were taught for a very young age to speaks our minds. In China, people tend to avoid saying things directly. US managers will need to be prepared and trained to deal with this.

13. China
Party
In the USA social gatherings tend to focus on one-on-one conversations. This demonstrates how Chinese are considerably more communal with social activities.

14. China
The Boss
The status of a boss in a team or organization is another big difference. In China the boss is often the sole decision-maker.

15. China Handing Problems
In the US the general preference is to deal with problems head on. In China, it’s common to avoid problems.
This can be counter-intuitive to Hofstedes graph you see on the right showing Chinese uncertainty avoidance being very low compared to Americans. The Chinese problem avoidance, illustrated in the diagram, has to do with direct confrontation of an issue, and not the ability to handle uncertainty or risk, which is what Hofstede’s index shows. This direct confrontation avoidance is a major issue for US companies in China, because problems between the US and Chinese sides often don’t surface until it’s too late. You need another strategy for getting your Chinese partners and employees to let you know exactly what they think and need. You can’t just ask directly, or expect that the contract clarifies this.

16. China Culture – So What? Contracts Team Management
Signed contract is start of the negotiation
Trust is more important than signed agreements
Difference in conflict management lead to expectation discrepancies
Team Management
Clarify Roles
Offer multiple (less formal) avenues for feedback
Company culture and mission
They will look different!
So what do these cultural differences mean to our organization? I’ve identified 3 applications. The first is contracts. I tend to say that in China, signing a contract is the start of the negotiations, not the end. This concept is sometimes hard for US managers to overcome. Trust is often more important than a contract.
Cultural differences will also affect how a team is managed. A clear hierarchy and clarified roles can be beneficial in China
Finally, one very important thing for the US home office to understand and embrace is that the company culture and mission will not look the same in China. You can’t take what works in the US, pick it up and move it abroad.

17. China Operational Issues The Internet
Blocked websites & slow access to servers outside China
Asynchronous communication using the cloud is difficult
Marketing and Distribution Channels
Zhongjie (middle man)
Understand hierarchy
B2C is difficult and slow unless you have big $$$
The Government
Setting up can be long and unclear (prepare extra time and $)
“Rule by law” not “Rule of Law”
Now I’ll talk about operational issues. There are several significant operational challenges for US companies doing business in China. I’ve highlighted three here. The Internet, with blocked websites, and slow connectivity is often a problem. Alternative forms of communication with the home office may need to be created.
Marketing and distribution channels may need to be re-thought. The use of a middle man in conducting transitions is pervasive in China. Also, there may only be one decision-maker in an organization. Identifying and creating a personal relationship with this person can often be more important than any sales campaign.
The government also poses operational challenges. Logistical processes for foreign companies to do anything are always long and complicated. Allotting more time and money to do everything is necessary. It’s also important to remember that the legal system in China is rule by law, not of rule of law like in the USA. Which means anything you do can be defined as legal or illegal.

18. Kotter’s – 8 Step Change Model
China
Kotter’s – 8 Step Change Model
1 Create Urgency
2 Form a Powerful Coalition
3 Create a Vision for Change 4
Communicate the Vision 5
Remove Obstacles
6 Create short-term wins
7 Build on the Change 8
Incorporate into Corporate Culture
With our change strategy we’ll be employing Kotter’s change model. I’ve highlighted two stages that the China team will need to pay attention to. The remove obstacles stage is the most likely stage when leadership for China will be hired. One thing I will mention about the leadership team, is that it must consist of both American and Chinese members who are all bi-lingual. The cultural and logistical challenges are vast, and communication is the #1 obstacle. Having two or more people who understand both sides well are needed to form the communication bridge.
Short term wins is also very important. Not only for head office to see successes, but also for Chinese staff. Unemployment is high in China and job stability is important (especially in a small new office).
These are two steps in the process I see as being particularly important for Balk in China.

19. Germany
BALK, GERMANY
In this section, we’ll discuss our plans for expanding operations to Germany.

20. Germany Overview: Germany Challenges for a U.S. company in Germany
Cultural Considerations
Labor Laws
As you can see from the diagram, according to Hofstede’s model, Germans and Americans share many cultural characteristics, which makes Germany a suitable business partner from a cultural perspective. Moreover, Germany represents Europe's largest economy and second most populous nation, thereby making it a desirable target for business operations. In this section, we’ll take a closer look at how this relationship might work in practice.

21. Culture Considerations
Germany
Culture Considerations
Hofstede 5D Model
Score
Power Distance 25
Individualism 67
Masculinity/Femininity 66
Uncertainty avoidance 65
Long term orientation 31
Low Power Distance
Highly Individualistic
Masculine
Uncertainty Avoidant
Short-term Orientation
Let’s begin by using Hofstede’s model as a guide for looking at the German culture.
Germany is among the lower power distant countries in the world, which means they are likely to reject an uneven distribution of power.
German society is highly individualistic. There is a strong belief in the ideal of self-actualization, independence, and self-reliance.
Germans favor a masculine approach where performance is highly-valued and self-esteem is derived from performing one’s tasks.
Uncertainly avoidance is high among Germans. In contrast to the US, Germans are uneasy with uncertainty or ambiguity. Each employee expects to have a stable, well-defined, role -- and deviation from that role is a source of discomfort.
Germans have a short-term orientation. Similar to their US counterparts, Germans expect that their actions will produce immediate results.

22. Cultural Considerations in Practice
Germany
Cultural Considerations in Practice
Challenge to authority, expertise
Direct, honest, communication
Detailed planning and direction
Although many similarities exist between Germans and Americans, cultural issues may arise under certain circumstances. Due in part to low power distance and uncertainty avoidance, leaders may be challenged if their expertise in the domain is not clearly demonstrated. In this scenario, support from one or more subject matter experts may be necessary to offset any resistance brought about from this skepticism.
Germans can be “brutally honest” and direct when communicating with others. People from other cultures may feel insulted or even intimidated by this style of communication. This is most problematic with asynchronous communication methods, such as . It may be necessary to encourage our German counterparts to engage with others synchronously via teleconference or videoconference -- so that any misunderstanding can be addressed in real time.
Germans prefer to analyze problems in great depth and prefer clear, and detailed, directions. Generally, Germans are uncomfortable with acting on “feelings” or “hunches” in a business setting. In this scenario, it may be necessary to defer action or introduce preliminary plans with an understanding that the plans are subject to change as more information becomes available.

23. Germany Labor Laws No employment “at will” Regulated work week
Time out of office
Parental leave
Mass layoffs require government approval
In contrast to the US, the labor laws in Germany strongly favor the employee.
For example, in Germany the employment contract between employer and employee is expected to be unlimited.
The German work week is normally shorter and less flexible. German law mandates a five-day work week with an average of 35 to 40 hours maximum per week. Working on Sundays or public holidays is generally prohibited.
Germany also permits generous out-of-office rules. Full-time German employees benefit from a minimum for four-weeks of vacation per year, and five or six is more the norm for more experienced workers.
In addition, employees are permitted full salary payments for at least six weeks of sick leave per year.
A mass layoff (such as a large percentage of employees terminated during a one-month period) is prohibited without prior approval by the government's employment office.

24. Germany Labor Laws in Practice
Performance issues are unresolved, tolerated
Resources unavailable during “off hours”
Resources out of office for long durations
In summary, German labor laws introduce some challenges unfamiliar to American employers. For example, the “employment for life” contract in Germany can be an obstacle for dealing effectively with performance issues. Companies often have little recourse but to tolerate underperformance. Moreover, incompetent employees are typically reassigned rather than terminated.
Some flexibility in working hours is the norm in a global work environment that spans several time zones. However, strict adherence to German labor laws often forces others to modify their workday to accommodate any time zone differences.
Due to leniency of German labor laws for time out-of-office, project schedules can be adversely impacted when key resources are absent for a long duration.
TRANSITION
Now, I’ll turn it over to Linda, so we can move on to a discussion about another global market where we seek opportunity, in this case, Israel.

25. ISRAEL
BALK, ISRAEL
In this section, we’ll discuss our plans for expanding operations in Israel. A known fact is that every Israeli that graduates high school, male or female, must serve in the army for 2 years.

26. Israel Israeli culture Living in a culture of haste
Light train in Jerusalem
Very westernized
Living in an environment of uncertainty and possible future threat, creates a “culture of haste” in which Israelis rush to achieve tangible outcomes, taking “shortcuts” and improvising to generate quick results. They have a tendency to come across with the aggressiveness of what we tend to see in New Yorkers. Part of their expression is the pride they have in their country and it really shows.

27. Israel Israeli culture The Knesset Democratic Society
The Jewish state is 65 years old
Hebrew is the national language but English is the spoken business language.

28. Jerusalem & Tel-Aviv A combination of the old & the new
Israel
Jerusalem & Tel-Aviv A combination of the old & the new
R &D hotbed and technological cradle. Cities that surround Tel-Aviv are considered the 2nd Silicon valley, including small clusters around the cities of Ra'anana, Petah Tikva, Herzliya, Netanya, the academic city of Rehovot and its neighbour Rishon Le Zion

29. Highly educated Society
Israel
Einstein at the Hebrew University
Highly educated Society
Workforce:
77% have secondary education
(2nd) in world
24% have academic degrees
(3rd) in world
12% have advanced degrees
Highest per capita of engineers (135/10K)
Highly educated society. Education is highly valued.
77% of Israel’s workforce has secondary education (2nd in the world). 24% of Israel’s workforce has academic degrees (3rd in the world). 12% of Israel’s workforce has advanced degrees. Israel has the highest per capita concentration of engineers in the world (135 per 10,000). Israel is the 3rd largest patents per capita producing country (2.04 per 10,000). Israel is the 1st largest producer of published scientific papers per capita (109 per 10,000). 359 Israeli companies were acquired for an aggregate $31.1 Billion since Israeli companies raised $15.9 Billion in Initial Public Offerings since 1995.
Israel ranks third in the amount of NASDAQ listed companies after the US and Canada.

30. Family & Extended Family are celebrated
Israel
Family & Extended Family are celebrated

31. Israel Culture Low Power Distance Individualistic Masculine
National Cultural Dimensions
Score
Power Distance - PDI 13
Individualism - IDV 54
Masculinity - MAS 47
Uncertainty avoidance - UAI 81
Long term orientation - LTD -
Low Power Distance
Individualistic
Masculine
Uncertainty Avoidance
Long-term Orientation
Let’s begin by using Hofstede’s model as a guide for looking at Israeli culture.
Israelis are is among the lower power distant countries in the world (which means they are likely to reject an uneven distribution of power) believe in independency, equal rights, accessible superiors and that management facilitates and empowers. Power is decentralized and managers count on the experience of their team members. It is said that every Israeli thinks they are a manager.
Israeli society is blend of individualistic and collectivistic cultures (54). There are small families with a focus on the parent-children relationship, and at the same time extended families. There is a strong belief in the ideal of self-actualization. Communication is direct and expressive. No beating around the bush.
With a score of 47 Israel is neither a clear masculine nor feminine society. Performance is highly valued. Yet there tends to be the “Jewish mother” syndrome that provides a nurturing spirit. Managers are expected to be decisive and assertive. 
Uncertainly avoidance is high among Israelis, with a score of 81. Israelis are often very expressive. Talking with their hands and vocal agressiveness. There is an emotional need for rules (even if the rules never seem to work), time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, security is an important element in individual motivation.
There was no score on Long-term Orientation.

32. Hofstede’s 5D Model Comparison
Conclusion
Hofstede’s 5D Model Comparison
Here we have compiled Hofstede’s indices for the countries where Balk will be expanding. This chart really gets at the core of what we’re talking about. In different countries it’s not just team structure and management that must look different, its also career planning, goal setting, and even company mission that must look different. A true understanding of these differences, as well as their applications, among the management team is imperative for Balk to be successful in an international setting.

33. Kotter’s – 8 Step Change Model
Conclusion
Kotter’s – 8 Step Change Model
1 Create Urgency
2 Form a Powerful Coalition
3 Create a Vision for Change 4
Communicate the Vision 5
Remove Obstacles
6 Create short-term wins
7 Build on the Change 8
Incorporate into Corporate Culture
One major challenge our presentation illustrates is in communicating the strategy across boarders and cultures. I wish I could take this communication step in Kotter’s model and stretch it out over the entire process because, communicating why we’re doing what we’re doing, is a stress point at every step of the change, and continues after the change is implemented. To be successful, we must be able to effectively stimulate a change in a person’s viewpoint, which is a very difficult task in most cases. If Balk can effectively communicate across boarders, we’re half way there.

34. Questions and Answers…
Q & A
Questions and Answers…