Case 1 Fitzburg Tire Company

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

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

Values Values:

• 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

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)

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)

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

Low

Hig

hL

ow

GlobalizationStrategy

National Responsiveness(Differentiation)

1 3

2 4

High

Glo

bal

izat

ion

(In

tegr

atio

n)

MixedStrategy

MixedStrategy

NationalResponsiveness

Strategy

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

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

GuidedMissile

Hierarchy

PersonEmphasis

TaskEmphasis

Incubator

EiffelTower

Family

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

Marketing Information System (MIS) 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

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

Consumer Buying Behavior Consumer market: individuals and households who buy

goods and services for personal consumption Consumer behavior model:

Factors influencing consumer behavior:

Marketing &other stinuli

Buyer’sblack box

Buyer’sresponses

EconomicTechnology

PoliticalCulture

Buyer’scharacteristics

& decision process

Product choiceBrand choiceDealer choicePurchase time

Purchase amount

ProductPrice

PlacePromotion

Psychological

MotivationPerceptionLearningBeliefs & attitudes

Culture Social Personal

Culture

Subculture

Social class

Referencegroups

Family

Roles & status

Age/lifecyclestage

OccupationEconomics

LifestylePersonality & self-concept

Buyer

Needs Maslow’s hierarchy of needs:• 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)

Se lf-a c tua liza tio n

Este e m ne e d s

Se lf-d e ve lo p m e nta nd re a liza tio n

Se lf-e ste e m , re c o g nitio n,sta tus

Se nse o f b e lo ng ing ,lo ve

Se c urity, p ro te c tio n

Hung e r, thirst

So c ia l ne e d s

Sa fe ty ne e d s

Physio lo g ic a l ne e d s

Purchasedecision

Needrecognition

Informationsearch

Evaluationof

alternatives

Postpurchasebehavior

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

Latemajority

Inovators Earlyadoptors

Earlymajority

2.5%

Laggards

16%34%34%13.5%

Time

Financial Statements Balance Sheet

• 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

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

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

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)

International Organizational Structure Subsidiaries in Early Stages of Internationalization

• A subsidiary is opened because an on-site presence is required from the start

PersonnelProduction Marketing Finance

ChiefExecutive

Officer

TaiwanFrance Japan Australia

PersonnelProduction Marketing Finance

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

Ba sic Va lue s

M a na g e m e nt StyleO rg a niza tio n

Asian

Asian

AsianAsian

W esterns

W esterns

W esternsW esterns

Ind ivid ua lLe g a lC o n fro n ta tio nAna lytic

Sho rt Te rmC o ntro lC o nflic tO ne Pro d uc t/Se rvic e fo c use d

Ra tio na lityStruc tu re dD ire c tiveDo in t

Fo rm a lFra g m e nte dHie ra rc h ia lC o m p e titive

G ro upTrustC o m p ro m iseFlu id

Lo ng te rmHum a n Re so urc eC o lla b o ra tiveC usto m e rfo c use d

Re la tio nsh ip sFle xib leAd a p tiveUnd e rsta nd ing

In fo rm a lG e ne ra listIn te g ra te dC o -o p e ra tive

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)

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.

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

ManagerManager Manager Manager

Owner

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

Dir. PublicRelationsExec. Dir.

ChiefExecutive

Officer

VPManufacturing

VPFinance

VPPersonnel

VPMarketing





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


ChiefExecutive

Officer

VPR&D

VPMarketing

Research Strategy Promotions PackagingElectronic Materials

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


ChiefExecutive

Officer

VPAsia

VPEurope

Production

Manager

Manager

Marketing

Manager

Manager

VPPersonnel

Manager

Manager

Production

Manager

Manager

Marketing

Manager

Manager

VPPersonnel

Manager

Manager

•Weaknesses: duplication of effort; conflict between divisions; resentment over lack of division freedom; coordination problems

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


ChiefExecutive

Officer

VPR & D

VPOperations

VPMarketing

ManagerManager Manager




Organizational Structure Change Model for Managing Organizational Change

Change

What is tobe changed?

Change process

Org.effectiveness

Forcesinitializingchange

Changeagent

Unfreeze-Move-Refreeze

Structure?Technology?

Org. process?Implementation tactics

InterventionParticipationPersuasion

Edict

FeedbackDeterminants

Org. Initiator

Interventionstrategies

Implementation

Results

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

DEFINE & REVIEW External

• 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.”)

Communication Between Humans Communication Process

ANALYZE FLOW Downward Flow

• Work Related• Personal

Upward Flow• New ideas• Feedback

EXAMINE PROBLEMS 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

PRESENT STEPS Feedback Language/Culture Training

DEFINE

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

JAPAN Money

• 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

EUROPE French & German Managers Are Less Concerned With

Ethics• “The price of doing business.”

Women Managers• France: about 8% women• Germany: 7.8% women

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

UNITED STATES Law to Stop Corruption

• 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

CASE STUDY Internaltional Carpet

Wholesalers (U.S.)• Mr. James McHenry (buyer)

SOMARTA (Morocco)• Mr. Abdelhadi Hachad (Managing

Director)

----------------------------------- Purchase Handmade Rugs 10-12 Year Old Girls Working ------------------------------------ What Would You Do?

Case 5 Assan Motors Participants:• 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

Managing Conflict Conflict• 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

SurvivalConflict Change Adaptation

Conflict-Survival Model

Hig hs

Hig hsLo w Level of conflictorga

niza

tion

al e

ffect

iven

ess

Ap a the ticSta g na ntN o nre sp o nsiveLa c k id e a s

Via b leSe lf-c ritic a lInno va tive

D isrup tiveC ha o ticUnc o o p e ra tive

Conflict & Org. Effectiveness

Case 1 Fitzburg Tire Company

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