Cultural/legal/political environments

1
Section Topics

1. Cultural/legal/political environments
2. Economic/financial environments

Part 4, Section B
2
Orientation and Controls
Ethnocentric Home-country-oriented with
home-country controls
Geocentric World-oriented with strong
interdependence between home and host countries
Polycentric Host-country-oriented with local
controls
Regiocentric Host-country-oriented with
regional and third-country controls
Reference Howard V. Perlmutter.
Part 4, Section B, Topic 1
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Influences and Pressures

• Political environment
• Ownership risk
• Operational risk
• Transfer risk
• Terrorism

• Technological environment
• Varied resources
• Varied capabilities
• Information explosion
• Privacy/security issues

• Legal and regulatory
• environment
• Legal systems
• Trade restrictions
• Accounting standards
• International auditing concerns

• Economic environment
• Currency exchange rates
• Business restrictions
• Investment restrictions
• Privatization

Part 4, Section B, Topic 1
4
Discussion Question

• What are techniques for anticipating and
  balancing these pressures and influences?

• Possible answers
• Global strategy
• Risk assessments
• Country risk profiles
• Accounting for local technical issues such as
  transportation, language barriers, etc.

Part 4, Section B, Topic 1
5
Global Mindset
Leadership and management
Cultural intelligence
Cultural dimensions
Cross-cultural communication
Employee development
Developing cultural awareness and a global
perspective
Part 4, Section B, Topic 1
6
Cultural Dimensions
Dimensions (Low to High)
Power
Individualism
Masculinity
Uncertainty avoidance
Long-term orientation
Reference Hofstede Cultural Dimensions.
Part 4, Section B, Topic 1
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Cross-Cultural Communication

• Assumptions and attitudes
• Body language
• Use of space
• Time
• Language (high- and low-context)

• Authority
• Country profiles

Part 4, Section B, Topic 1
8
Discussion Question
You are sent to conduct internal audit interviews
at the organizations foreign location. How might
you interpret the following interviewee responses?

1. A limp handshake and no eye contact
2. Interviewee backs off when you move physically
   closer
3. Long periods of silence in interviews and group
   meetings

• Possible answers
• These may be normal greetings in the culture.
• In some cultures people like to keep physical
  space distance.
• Silence may be natural and expected in
  conversations.

Part 4, Section B, Topic 1
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Managing Complexities

• Develop a clear global strategy.
• Foster a global mindset.
• Operate as both a centralized and decentralized
  organization.
• Sponsor a flexible business structure for
  adaptability.
• Disperse knowledge widely.
• Train international managers well.
• Hire employees with diverse backgrounds.

Part 4, Section B, Topic 1
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Managing Complexities (continued)

• Break down language barriers.
• Maximize technology for production and service
  efficiencies.
• Use cultural informants for understanding,
  negotiation, and coalition building.
• Continue to forecast and assess risks.
• Develop crisis management plans and exit
  strategies.
• Foster creativity and innovation.

Part 4, Section B, Topic 1
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Effective Multicultural Teams

• Legitimize differences build trust.
• Agree upon values and expectations.
• Agree on team leadership style.
• Encourage participation, recognizing status/
• authority perceptions.

• Select the best communication modes.
• Produce the appropriate outcomes.

Part 4, Section B, Topic 1
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Discussion Question
Match the orientation to the characteristics.
Strategic Orientation Characteristics
1. International 2. Global 3. Multilocal 4. Multinational A. Centralized and decentralized high integration and coordination B. Home-country headquarters and value chain with headquarters C. Local products and standards differentiation D. Standardization, economies of scale, value chains anywhere
Answers 1 B 2 D 3 C 4 A
Part 4, Section B, Topic 2
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Global Marketplace Entry Checklist
Has the organization met the necessary
requirements to enter the global marketplace?
Global strategy readiness
Organizational culture readiness
Global expansion readiness
Part 4, Section B, Topic 2
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Managing Training and Development in
International Organizations

• Disperse training in home and host countries.
• Use the Web for distance and 24/7 course access.
• Use translators and produce materials in the
  related foreign languages.
• Assess knowledge and performance gaps to
  determine training needs.
• Offer strong orientation programs and acclimation
  to the related cultures.

• Sponsor expatriate assignments for managers.
• Use a variety of learning approaches, such as
  field experiences, coaching and mentoring, and
  multicultural team participation.

Part 4, Section B, Topic 2
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• Reinforcing Activity 4-2
• Part 4, Section B, Topics 1 and 2
• Global Business Environments

Part 4, Section B, Topics 1 and 2
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End of Section B

• Questions?

Part 4, Section B