Chapter 4

Report
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Chapter Objectives
 Describe the six-step internationalization process and distinguish between a
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global company and a transnational company.
Identify at least four of the nine cross-cultural competencies of global
managers, and contrast ethnocentric, polycentric, and geocentric attitudes
toward foreign operations.
Explain from a cross-cultural perspective the difference between high-context
and low-context cultures, and identify at least four of the GLOBE cultural
dimensions.
Discuss Hofstede’s conclusion about the applicability of American
management theories in foreign cultures, and explain what comparative
management researchers have learned about management styles.
Summarize the leadership lessons from the GLOBE Project.
Identify the four leading reasons why U.S. expatriates fail to complete their
assignments, and discuss the nature and importance of cross-cultural training
in international management.
Summarize the situation of North American women on foreign assignments.
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Global Organizations for a Global Economy
 International Management
 The pursuit of organizational objectives in
international and cross-cultural settings
 The Internationalization Process
 There are many ways to do business across borders. At
one extreme, a company may merely buy goods from a
foreign source, or, at the other, it may actually buy the
foreign company itself.
 Companies may skip steps when pursuing foreign
markets, so the following sequence should not be
viewed as a lock step sequence.
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The Internationalization Process
 Stage 1: Licensing
 Authorizing companies in foreign countries to produce
and/or market a given product within a specified
territory in return for a fee
 Stage 2: Exporting
 Goods produced in one country are sold to customers
in foreign countries.
 Stage 3: Local warehousing and selling
 Goods produced in one country are shipped to the
parent company’s storage and marketing facilities
located in overseas countries.
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The Internationalization Process
(cont’d)
 Stage 4: Local Assembly and Packaging
 Components, rather than finished products, are
shipped to company-owned foreign facilities for final
assembly and sales.
 Stage 5: Joint Ventures (also Strategic Alliances or
Strategic Partnerships)
 A company in one country pools its resources with
another foreign company or companies to create and
market products and jointly share profits and losses.
 Stage 6: Direct Foreign Investment
 The production and marketing of products through a
wholly owned subsidiary in a foreign country
 Involves cross-border mergers
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From Global Companies to
Transnational Companies
 Global Company
 A multinational venture centrally managed from one
country
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Has global strategies for product design, financing,
purchasing, manufacturing, and marketing
 Transnational Company
 A global network of productive units with a
decentralized authority structure and no distinct
national identity
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Relies on a blend of global and local strategies
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Needed: Global Managers with Cultural
Intelligence and Cross-Cultural Competencies
 Cultural Intelligence (CQ)
 The ability of an outsider to read individual behavior,
group dynamics, and situations in a foreign culture
 Three Components of Cultural Intelligence:
 Knowledge of culture
 The practice of mindfulness
 Development of cross-cultural skills
 CQ involves:
 Impression management
 Emotional intelligence
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Table 4.3: Three Different Attitudes
Toward International Operations
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Understanding Cultural Diversity
 High-Context Cultures
 Cultures in which nonverbal and situational messages
convey primary meaning
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Status of an individual is of tantamount importance in
determining relationships.
 Low-Context Cultures
 Cultures in which words convey primary meaning
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Nonverbal messages are secondary to spoken words.
The terms of the deal are more important than building a
business relationship.
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Table 4.4: GLOBE Project
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Comparative Management Insights
 Comparative Management
 The study of how organizational behavior and
management practices differ across cultures
 Made-in-America Management Theories Require
Translation
 Gert Hofstede’s research led him to recommend that
American management theories be adapted rather
than imposed on other local cultures.
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Management Styles Vary Across
Countries and Cultures
 Managers were interviewed and rated on a list of 18
standard management practices
 Three broad areas:
 Monitoring
 Targets
 Incentives
 Findings:
 Countries with strong overall management practices are not all alike
 Countries have their own characteristic ways of implementing good
management practices
 Managers working internationally need to use their cultural
intelligence to detect local management preferences
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Lessons in Leadership
from the GLOBE Project
 Leadership Styles
 Charismatic/value-based*
 Team-oriented*
 Participative
 Humane-oriented
 Self-protective
 International managers need a full repertoire of
leadership styles that they can use flexibly in a
culturally diverse world.
*Greatest cross-cultural applicability
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Staffing Foreign Positions
 American expatriates have a higher-than-average
failure rate
 Why Do U.S. Expatriates Fail?
 Job performance
 Job offers from other companies
 Factors related to culture shock: Negative feelings
triggered by an expectations-reality mismatch
 Homesickness
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Cross-Cultural Training
 Cross-Cultural Training
A guided experience that helps people live and work in foreign cultures
 Specific Training Techniques
 Is One Technique Better Than Another?
 A combination of documentary and interpersonal training is the best
combination for expatriates.
 An Integrated Expatriate Staffing System
 Provide orientation for both expatriate and family.
 Have family sponsors or assigned mentors available at the foreign
assignment.
 Repatriation is an importance part of the entire foreign assignment
experience.
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Relying on Local Management
 Advantages of Using Foreign Nationals
 They know the language and culture.
 They do not require huge location expenses.
 Host governments favor more local control.
 Disadvantage
 Local managers may not be attuned to home-office
goals and procedures.
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Summary
 The growing global economy makes the study of international management
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more important than ever.
Cultural intelligence (CQ) is an outsider’s ability to “read” a foreign culture as
well as the locals do.
The forms and meanings of communications are different in high and low
context cultures.
Comparative management provides insights into how organizational behavior
and management practices differ across cultures.
In the GLOBE study, the charismatic/value-based and team-oriented
leadership styles were found to be widely applicable. The self-protective
leadership style was not acceptable in any culture.
Culture shock is a normal part of expatriate life.
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Terms to Understand
 International management
 Low-context cultures
 Global company
 Individualistic cultures
 Transnational company
 Collectivist cultures
 Cultural intelligence (CQ)
 Monochronic time
 Ethnocentric attitude
 Polychronic time
 Polycentric attitude
 Comparative management
 Geocentric attitude
 Culture shock
 Culture
 Cross-cultural training
 High-context cultures
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