39867195 International Business Management2

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Lecture 2



Geo-Centric Business What is geocentricism?

Geo-centricism is an outdated cosmology that mistookthe earth to be the centre of the universe.

The phrase ‘Geo-centric’ is used in business literatureto represent global characteristic of business\



Geo-p0litics: Politics (exercise of power) in global scalefor the control over strategic resources, labour andexclusive property rights.

The management neologism ‘geo-centric’ refers tomanagement of geo-politics by corporate firms of global scale.

The term geo-politics refers to: Global world order changes

It is about future direction of international affairs andthe coming shape of the world political map.



19th century geo-politics French cartoon

(Jewish banker Rothschild holding theworld)



Geo politics cartoon of early 20th

century- British vs German



Geo-centric business, geo-politics seen from businessperspective, is embedded in economic, political, and

racial relations of power.

Geo-centric business though expansionist in nature donot share the shame of territorial expansion of nation-states.

Geo-politics was never independent of global businesscorporate firms

Of late the corporate firms have come out of the shell

of national identities. Currently the global corporate endeavors are presented

as the triumph of free-trade.



‘Geo-centric’ staffing in HRM refers to recruitingpeople in key positions from all over the worldirrespective of their national identities.

‘Geo-centric’ policy of management refers to having abusiness expansion policy across all cultures (eg.Cadburys ad. On the ‘holiness’ of ‘sweet’. Vicks vaporub presenting itself as ‘ayurvedic propriety

medicine’ Geocentric finance is investing in different parts of the

world and earn out of global disparity of currency,interest rates, asset values and economic growth.



Geo-centric perspective of law refers to either moldingthe entire world into a single law wherever it isappropriate (eg. Intellectual property laws).

Or, taking advantage of or promoting unique locallaws (eg. Nuclear liability bill, Laws regarding waterextraction, Pollution laws, insurance laws, labour laws)



Geo-centric business is distinguished from Ethno-centric, Euro-centric, Anglo-centric, US-centricbusiness practices

Ethno (euro, anglo etc)-centric policies will be having

uniform norms flowing from one cultural (ethnic)perspective of management on the others. Theappropriate terminology for the managementneologism ethno-centric is “mono-centric”

Note: in other fields of knowledge (anthropology,sociology, politics and cultural studies) ethno centricrepresents viewing things from ethnic perspective i.e.,local perspective.



Polycentric management is contrasted with mono(ethno) centric.

Polycentric management practice allows localadaptation of mono-centric management strategies

and practices. By geo-centric, (unlike the phrase is used in other

fields,) it is meant by some management ‘experts,’ the‘tailor-made’ decentralized management practice

appropriate for the geological locations of itsoperation.



Geo-centric, poly-centric or ethno-centricmanagement practices are discussed in the context of acquisitions and mergers which requires culturaladaptations.



‘Virtues’ of ‘Geo-centric’

management Adaptiveness

technical competence

Self confidence Commitment to business expansion of the firm



Means to avoid ‘Expatriate failure’ Acquiring information

Trained to be culturally acceptable

Being trained in cultural etiquettes and manners Preparing ‘spouse’ and children to be culturally

aceptable

develop a salary structure that equalizes purchasing

power across countries



Possible options Stock options

Highest paid and lowest paid should be in an

appropriate ratio (For eg. lowest paid should not have asalary less than 1/10th to 1/20th times of the highestpaid).

Total compensation, forms of compensation, as well as

the gap between top executives and hourly workers vary substantially across countries. Appropriatedecision should be taken so that the local executivesdo not feel exploited.



CEO compensation pattern



Country specific labour relation policies

Country specific labour rights organizations

Accommodating ILO perspectives in internationallabour management

Making use of cheap labour resources

Making use of market potentials

Making use of pricing conventions



Appropriate intervention in local labour laws

Making use of country specific labour uniondynamics

Managing appropriate gender representations (it is

believed greater share of women labourers reducesthe strength of labour rights organizations)

Increasing contract labourers weakens labour

rights organizations Outsourcing weakens labour rights organizations



Use of ‘temporary labour’ weakens labour rightsorganizations

Having a pro-labour policy weakens labour rightsorganizations.

Linking labour decipline to career development weakens labour rights organizations.

Presentation of the organization as key to localdevelopment



The ideal business environment expected by

international Business Firms

Educated & trained workforce

Increased global/local demand for the product/services

Absence of alternative labour oppurtunities (increased

dependency on private firms) Absense of Government regulation

Increased presence of government in protecting therights of the firms

Restricted consumer/ labour rights

No preferential treatment to local firms

Friendly Media



internationalization of Business Flight of the capital (Economic argument)

De-stabilization of local economy (nationalistargument)

Local firms contesting international competition

Protectionism (local fordism) Preferential treatment to small scale sectors (local

economy argument)

Resistance from environmentalist groups (coca cola)

Past lacuna of international firms in compensatingloss (Bhopal)

Alleged/ actual large scale corruption (Enron)



Arguments from labour economy (both for andagainst)

Ideological opposition Vs Ideological support

Political opportunism

Anger against special privileges given to foreigninvestors

In general there is more of an economic and politicalclimate for international business than against it.



Major Global CompaniesSoftware

Microsoft (USA)

Adobe (USA) Coral (USA)

Redhat (USA)

Infosys (India)



Computer hardware

Hawlett-packard (US)

Dell (US) IBM (US)

Intel (USA)

AMD (USA)



Seed Companies

Monsanto (USA)



Retail

Wallmart (USA)

Carrefour (France) Tesco (UK)



Oil & Gas

Exxon Mobil (US)

Royal Dutch shell(Netherland, UK)

BP (UK)

Saudi Aramco (Saudi)

Chervon (US) Sinopec (China)

ConocoPhillips (US)

Total S.A (France)

ENL (Italy)



Automobile

Tayota (Japan) Honda (Japan)

Hundai (S.Korea)

Ford (USA)

Volkswagen (Germany)

General Motors (US)

Daimler AG (Germany)

BMW (Germany) TATA group (India)



Electronics

Samsung (S.Korea)

General Electric (USA)

Hitachi (Japan)

LG (S.Korea)

Sony (Japan)

Canon



Finance

ING group (Amsterdam, North Holland, Netherlands)

Allianz (Germany) AXA (France)

Fortis (Belgium)

Bank of America (US)

American International Group (AIG)

Avira (UK)

Deutsche Bank (Germany)

Goldman Sachs (US) Morgan Stanley (US)

Citigroup (US)

HSBC (UK)

Prudential (UK)



TeleCommunication

AT&T Inc.

Nippon telegrapg and telephone (Japan) Nokia (Finland)

Vodafone (UK)



Mining/Steel/Iron

Arcelor Mittal (Luxembourg)



Food

Nestle (Switzerland)

Health Johnson & Johnson



Points To Ponder There exists no Global democracy – but there is global

business

Even if there is a global democracy- would it beeffective?

Declining power of the local persons- while they arethe labourers, source of intellectual property, and

consumers! What should be the nature of the science of

‘international business’?

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