Working in a MNC
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Working in a MNC
S.I. Lee
Hanyang University
April 7, 2005
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Key Factors to consider to be a successful
• Mindset is important differentiation
• Strategy, Structure, Control systems differ
• Multiple staffing policies
• Culture a key variable for success
• Religion plays important role
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Vertical Differentiation
• Centralization :
• Facilitates coordination.• Ensure decisions consistent with organization’s objectives.• Top-level managers have means to bring about organizational change.• Avoids duplication of activities.
• Decentralization :
• Overburdened top management.• Motivational research favors decentralization.• Permits greater flexibility.• Can result in better decisions.• Can increase control.
Concerned with where decisions are made.
No “right” answer - mix
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Global
Centralize
Strategy and Centralization
International
Centralize for core competencies
Decentralize forOperating decisions
Transnational
Both CentralizeAnd Decentralize
Multi-domestic
Decentralize
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Strategy, Structure and Control Systems
Structure and Controls
Multidomestic International Global Transnational
Centralization of operating decision
DecentralizedCore competency centralized Rest decentralized
Some centralizedMixed centralized and decentralized Informal matrix
Horizontal differentiation
Worldwide area structure
Worldwide product division
Worldwide product division
Informal matrix
Need for coordination
Low Moderate High Very high
Integrating mechanisms
None Few Many Very many
Performance Ambiguity
Low Moderate High Very high
Need for cultural controls
Low Moderate High Very high
International Strategy
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The International Structural Stages Model
Foreign Product Diversity
Foreign Sales as a Percentage of Total Sales
International Division
Alternate Paths
Of Development
Global Matrix
(“Grid”)
Worldwide
Product
Division
Area
Division
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A Global matrix Structure
Headquarters
ProductDivision A
ProductDivision B
ProductDivision C
Area 1 Area 2 Area 3
Manager hereBelongs toDivision BAnd area 2
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Matrix Structure
Attempts to meet needs of transnational strategy.
Doesn’t work as well as theory predicts.
Conflict and power struggles.
“Flexible” matrix Structures.
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Interdependence, Performance Ambiguity, and the Costs of Control for the Four International Business Strategies
StrategyInter-
Dependence
Performance
Ambiguity
Costs of
Control
Multi-domestic Low Low Low
International ModerateModerate Moderate
Global HighHigh High
Transnational Very highVery high Very high
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Types of Staffing Policy
EthnocentricEthnocentric PolycentricPolycentric GeocentricGeocentric
Key management positions filled by
parent-country nationals
Key management positions filled by
parent-country nationals
Host-country nationalsManage subsidiaries,
parent Company Nationals hold key
Headquarter positions
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World’s Religions
33%
18%16%
17%
6%4% 7% Christianity
Islam
Hinduism
Nonreligious
Buddhism
Primal-indigenous
Other
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Religion and Economic Implications
• Christianity– “Protestant Work Ehich” and “The Spirit of Capitalism”.
• Catholicism– Salvation in next life
• Islam– Favors market-based systems.
– No payment or receipt of interest.
• Hinduism– Asceticism may have an impact.
– Caste system plays a role. -> Promotion
– Spritrial growth & development
– Weak work ethic
• Buddhism– Little emphasis on entrepreneurial behavior.
• Confucianism– Loyalty, reciprocal obligations, and honesty in dealings.
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Language
• Allows people to communicate.• Structures the way the world is perceived.• Directs attention to certain features of the world rather than
others.• Helps define culture.• Creates separatist tendencies?
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Nonspoken Language
• Nonverbal cues:EyebrowsFingers/thumbsHand gesturesFeetPersonal spaceBody gestures
•Dining Etiquette
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Hofstede
• Study(IBM) is a general way to look at differences between cultures.
• 4 dimensions :– Power distance– Individualism versus collectivism.– Uncertainty avoidance.– Masculinity versus femininity.
• But :– Assumption of one-to-one relationship between culture and nation-
state.– Research may be culturally bound.– Respondents worked within a single company.– Work is beginning to look dated(1967-1973)
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Work Related Values for Selected Countries
Power Distance
Uncertainty Avoidance
Individualism Masculinity
Argentina 49 86 46 56
Brazil 69 76 38 49
France 68 86 71 43
India 77 40 48 56
Japan 54 92 46 95
Mexico 81 82 30 69
Netherlands 38 53 80 14
U.S.A 40 46 91 62
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Culture and Competitive Advantage
• The connection suggests :– Which countries are likely to be the most viable competitors.– Which countries in which to locate production facilities and
do business.– Need to develop cross-cultural literacy
• Regular rotation & transfer
– Beware of ethnocentric behavior
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Determinants of Culture
EconomicPhilosophy
Education
Language
Religion
Social Structure
Political Philosophy
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Social Structure
GroupTwo or more individuals
with a shared sense of identity
Individual
Mobile Managers
Group
Identity
NonmobileManagers
LifetimeEmployment
Lack of Entrepreneurship
Entrepreneurship
Western
Lack of Loyalty
Hard to Build teams
Eastern
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Successful Behaviors required in international conferences
• Participate
• Be decisive
• Aggressive
• Follow up
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Cultural Sensitivity
• Socialization is critical
• Eating habits
• Drinking habits – especially wine
• Get to know personal facts
• If not sure, watch!
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What MNC’s Look For in Korea
• Flexibility
• Smarts
• Attitude
• Functional expertise
• Leadership
• Communication
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Challenge for you
• What is your 5 and 10 year goal with regard to career?
• How will you get there?– Be specific
– Provide background
– Clearly articulate your rationale
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