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Case 1 Fitzburg Tire Company
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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
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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)
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Individualism:
• the tendency of people to look after themselves and their
immediate family only
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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)
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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
– MNC success factors include a worldwide
view of operations, support overseas
activities, pay close attention to political
changes and use local nationals whenever
possible
High
High
3
1
Low
• 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
Low
Globalization (Integration)
– Most firms today belief that one worldwide
approach to doing business is key to
success
National Responsiveness
(Differentiation)
Globalization
Strategy
Mixed
Strategy
4
2
Mixed
Strategy
National
Responsiveness
Strategy

Parochialism:
• the tendency to view the
world through one's own
eyes and perspectives

Differences and Similarities
Simplification:
the process of exhibiting the same
orientation toward different
cultural groups
Contingency Approach:
• the application of HRM (Human Resource Management) to meet
the specific needs of local workers
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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
–
–
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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
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Family:
•
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a strong emphasis on equality in the work place and
orientation to task; usually in project groups, common in hightech 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:
•
Equity
Incubator
Guided
Missile
a strong emphasis on hierarchy and task clarification through
the use of organizational structure; tasks are well defined and
Person
the organization tends to be tall at the top and wide at the
Emphasis
bottom; things go "by the book"
Guided missile:
•
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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:
•
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Organizational Cultures in MNCs
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 shortlived until the firm grows and develops need to org. structure
Task
Emphasis
Family
Eiffel
Tower
Hierarchy
Case 2 Comtec Corporation
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
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
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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
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Consumer market: individuals and households who buy
goods and services for personal consumption
Consumer behavior model:
Product
Price
Marketing &
other stinuli
Buyer’s
black box
Economic
Technology
Political
Culture
Buyer’s
characteristics
& decision process
Place
Promotion

Buyer’s
responses
Product choice
Brand choice
Dealer choice
Purchase time
Purchase amount
Factors influencing consumer behavior:
Culture
Culture
Subculture
Social class
Social
Personal
Reference
groups
Age/lifecycle
stage
Occupation
Economics
Lifestyle
Personality &
self-concept
Family
Roles & status
Psychological
Motivation
Perception
Learning
Beliefs &
attitudes
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.
Selfactualization
Esteem needs
Self-development
and realization
Self-esteem, rec ognition,
status
Social needs
Sense of belonging,
love
Security, protection
Safety needs
Hunger, thirst
Physiological needs
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Buyer decision process
• Five stages (can skip stages)
Need
recognition
Information
search
Evaluation
of
alternatives
Purchase
decision
Postpurchase
behavior
Adoption of New Products
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Five Stage Adoption Process:
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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
Time
Inovators
Early
adoptors
Early
majority
Late
majority
Laggards
2.5%
13.5%
34%
34%
16%
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Balance Sheet
• Assets=Liabilities + Equity
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Financial Statements
Assets
•
•
•
•
Cash
Marketable securities
Accounts receivable
Inventories
– Current Assets
• Gross plant and equipment
– Accumulated depreciation
• Net plant and equipment
• Total assets
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Liabilities (claims on assets)
•
•
•
•
Accounts payable
Notes payable
Accrued wages
Other accruals
– Current liabilities
•
•
•
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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
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Financial Policy Measures
• Leverage Ratios
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–
–
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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
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Performance Measures
• Profitability ratios
–
–
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Operating Efficiency Measures
• Asset & investment management
Net operating income (NOI)/sales – Cost of goods sold/inventories
NOI/total assets
– Average collection period
NOI/total capital
– Sales/fixed assets
Net income (NI)/sales
– Sales/total capital
NI/equity or (ROE)
– Sales/total assets
Changes in NOI/change in total • Cost management
capital
– Gross profit/sales (or gross margin)
– Change in NI/Change in equity
– Marketing & administrative
• Growth ratios
expenses/sales
– Sales
– Labor costs/sales
– NOI
– Employee growth rate
– Net income
– Research & development expense
(R&D)/sales
– Earnings per share
– Dividends per share

Participants:
Case 3 Hanover Public Systems (HPS)
• Howard Wolff: HPS president
• Yang Hsiao-shih: previous Taiwan plant president (terminated)
• James Fukuda: new Taiwan plant president (second generation Japanese-American)
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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
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Subsidiaries in Early Stages of Internationalization
• A subsidiary is opened because an on-site presence is required
from the start
Chief
Executive
Officer
Production
Marketing
Finance
Personnel
France
Japan
Australia
Taiwan
Production
Marketing
Finance
Personnel
Asian Vs Western Management

Some Basic Features of the Two Management Styles
Basic Values
Westerns
Organization
Westerns
Form al
Fragmented
Hierarc hial
Com petitive
Individual
Legal
Confrontation
Analytic
Asian
Group
Trust
Com promise
Fluid
Asian
Informal
Generalist
Integrated
Co-operative
Westerns
Short Term
Control
Asian
Conflict
One Produc t/
Service
Long term
focused
Hum an Resource
Collaborative
Custom er
focused
Management Style
Westerns
Rationality
Struc tured
Direc tive
Doint
Asian
Relationships
Flexible
Adaptive
Understanding
Organizational Characteristics of MNCs
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Specialization
• U.S. plants tend to have more horizontal specialization while
Japanese plants tend to have more vertical specialization
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Centralization
• Japanese firms tend to have higher centralization while U.S. firms
have more delegation and involvement at lower levels
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Characteristics
• MNCs tend to keep the structures of the home-based headquarters
even when established overseas for many years (p18)
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Growth Stage
Organizational Structure Design
• 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
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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
Owner
Manager
Manager
Manager
Manager
Organizational Structure Designs
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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
Chief
Executive
Officer
Dir. Public
Relations
Exec. Dir.
VP
Finance
VP
Personnel
VP
Marketing
VP
Manufacturing
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Organizational Structure Designs
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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
Chief
Executive
Officer
Research
Exec. Dir.
Dir. Public
Relations
VP
Marketing
VP
R&D
Strategy
Promotions
Electronic
Materials
Packaging
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Divisional Structure
•
Organizational Structure Designs
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
Chief
gives economies of scale
•Weaknesses: duplication
of effort; conflict between
divisions; resentment over
lack of division freedom;
coordination problems
Executive
Officer
Dir. Public
Relations
Exec. Dir.
VP
Asia
VP
Europe
VP
Personnel
Production
Marketing
VP
Personnel
Production
Marketing
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager

Adhocracy Structure
•
Organizational Structure Designs
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
Chief
Executive
Officer
Dir. Public
Relations
Exec. Dir.
VP
Operations
VP
Marketing
VP
R&D
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Organizational Structure Change

Model for Managing Organizational Change
Determinants
Feedback
Forces
initializing
change
Change
agent
Org. Initiator
What is to
be changed?
Intervention
strategies
Structure?
Technology?
Org. process?
Change process
Implementation tactics
Unfreeze-Move-Refreeze
Intervention
Participation
Persuasion
Edict
Implementation
Change
Results
Org.
effectiveness

Participants:Case
4 International Carpet Wholesalers
• 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
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?

Participants:
Case 5 Assan Motors
• 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
Conflict & Org. Effectiveness
Apathetic
Stagnant
Nonresponsive
Lack ideas
Low
Level of conflict
Conflict-Survival Model
Conflict
Change
Adaptation
Viable
Self-critical
Innovative
Disruptive
Chaotic
Uncooperative
Highs
organizational effectiveness

Survival
Highs