- -,..! -, ; - ;.-,.;. : '.> SIXTH EDITION International M Managing Across Borders and Culture^: ;i Text arid Cases Helen Deresky. :.1 -c Professor Emerita, State University of New York-Platisburgh'.- '. v : " "*" Upper Saddle River, New Jersey 07458 '/'"'
Contents PREFACE xiv PARTI THE GLOBAL MANAGER'S ENVIRONMENT 1 Chapter 1 Assessing the Environment: Political, Economic, Legal, Technological 1 Opening Profile: India Becoming a Crucial Cog in the Machine at I.B.M 1 The Global Business Environment 4 Globalism 4 Management Focus: Small Company, Global Approach 7 Regional Trading Blocs 8 Other Regions in the World 10 Comparative Management in Focus: Opening Economy Revitalizes India 12 Information Technology 14 The Globalization of Human Capital 14 The Global Manager's Role 15 The Political and Economic Environment 15 Political Risk 16 Political Risk Assessment 17 Managing Political Risk 18 Managing Terrorism Risk 19 Economic Risk 20 The Legal Environment 21, Contract Law 22. Other Regulatory Issues 22 The Technological Environment 23 Global e-business 24 Conclusion 26 Summary of Key Points 27 Discussion Questions 27 Application Exercises 28 Experiential Exercise 28 Internet Resources 28 Case Study: Under Pressure, Dubai Company Drops Port Deal 29 Chapter 2 Managing Interdependence: Social Responsibility and Ethics 31 Opening Profile: In Enron Case, a Verdict on an Era 31 The Social Responsibility of MNCs 34 CSR: Global Consensus or Regional Variation? 35 MNC Responsibility Toward Human Rights 36 Codes of Conduct 37 Comparative Management in Focus: Doing Business in China The Human Rights Challenge 38 Ethics in Global Management 39 Bribery 45 Making the Right Decision 47 Management Focus: CEO Speaks Out: Ethics Abroad Business Fundamentals, Value Judgments 48 Managing Interdependence 50 Foreign Subsidiaries in the United States 50 Managing Subsidiary-Host-Country Interdependence 51 Managing Environmental Interdependence 53 Conclusion 55 Summary of Key Points 55 Discussion Questions 56 Application Exercises 56 Experiential Exercise 56 Internet Resources 56 Case Study: Nike's CSR Challenge 57 COMPREHENSIVE CASES 59 Case 1 Coca-Cola's Business Practices: Facing the Heat in a Few Countries (Global) 59 Case 2 Google in China: The Big Disconnect (China) 71 Case 3 Allure Cruise Line Challenges of Strategic Growth and Organizational Effectiveness: Part 1 (Global) 80 PART II THE CULTURAL CONTEXT OF GLOBAL MANAGEMENT 87 Chapter 3 Understanding the Role of Culture 87 Opening Profile: Adjusting Business to Saudi Arabian Culture 87 Culture and Its Effects on Organizations 91 Societal Culture 91 Organizational Culture 92 Cultural Variables 95 Subcultures 95 Influences on National Culture 95 Management Focus: China Issues New Restrictions Aimed at Protecting Its Culture 97 Cultural Value Dimensions 98 Project GLOBE Cultural Dimensions 98 Cultural Clusters 100 Hofstede's Value Dimensions 100 Trompenaars's Value Dimensions 103 Critical Operational Value Differences 105 The Internet and Culture 107 IX
y 'x^> Contents Developing Cultural Profiles 109 Comparative Management in Focus: Profiles in Culture Japan, Germany, and South Korea 110 Culture and Management Styles Around the World 116 Saudi Arabia 116 Chinese Small Family Businesses 117 Conclusion 118 Summary of Key Points 119 Discussion Questions 119 Application Exercises 119 Experiential Exercises 120 Internet Resources 120 Case Study: Moto: Coming to America from Japan 121 Chapter 4 Communicating Across Cultures 124 Opening Profile: On Keeping Your Foot Safely Out of Your Mouth 124 The Communication Process 127 Cultural Noise in the Communication Process 128 The Culture-Communication Link 129 Trust in Communication 129 The GLOBE Project 129 Cultural Variables in the Communication Process 130 Context 135 Management Focus: Oriental Poker Face: Eastern Deception or Western Inscrutability? 136 Comparative Management in Focus: Communicating with Arabs 137 Communication Channels 139 Information Technology: Going Global and Acting Local 141 Managing Cross-cultural Communication 142 Developing Cultural Sensitivity 142 Careful Encoding 143 Selective Transmission 143 Careful Decoding of Feedback 143 Follow-up Actions 144 Conclusion 145 Summary of Key Points 145 Discussion Questions 146 Application Exercises 146 Experiential Exercise 146 Case Study: Elizabeth Visits GPC's French Subsidiary 148 Chapter 5 Cross-cultural Negotiation and Decision Making 150 Opening Profile: Art of the Deal Meets the China Syndrome 150 Negotiation 153 The Negotiation Process 154 Stage One: Preparation 154 Stage Two: Relationship Building 156 Stage Three: Exchanging Task-Related Information 156 Stage Four: Persuasion 157 Stage Five: Conce sions and Agreement 158 Understanding Negotiation Styles 158 Successful Negotiators Around the World 160 Managing Negotiation 162 Management Focus: A Middle East Equity Giant with a Small Global Footprint 163 Using the Web to Support Negotiations 166 Managing Conflict Resolution 166 Comparative Management in Focus: Negotiating with the Chinese 167 Decision Making 171 The Influence of Culture on Decision Making 172 Approaches to Decision Making 173 Comparative Management in Focus: Decision Making in Japanese Companies 174 Conclusion 176 Summary of Key Points 176 Discussion Questions 177 Experiential Exercises 177 Internet Resources 178 Case Study: Negotiations between Alcatel of France and Lucent of the U.S. Finally Result in a Deal in 2006 179 COMPREHENSIVE CASES 181 Case 4 Nora-Sakari: A Proposed JV in Malaysia (Finland and Malaysia). 181 Case 5 Allure Cruise Line Challenges of Strategic Growth and Organizational Effectiveness: Part 2 (Global) 191 Case 6 Guanxi in Jeopardy 196 PART III FORMULATING AND IMPLEMENTING STRATEGY FOR INTERNATIONAL AND GLOBAL OPERATIONS 203 Chapter 6 Formulating Strategy 203 Opening Profile: Wal-Mart Finds that its Formula Doesn't Fit Every Culture 203 Reasons for Going International 209 Reactive Reasons 209 Proactive Reasons 210 Management Focus: Mexico's Cemex:A Global Company in 2007. 211 Strategic Formulation Process 212 Steps in Developing International and Global Strategies 213 Mission and Objectives 214 Environmental Assessment 2l4 Sources of Environmental Information 217 Internal Analysis 217 Competitive Analysis 217 Strategic Decision-Making Models 219 Global and International Strategic Alternatives 219 Approaches to World Markets 219 Global Integrative Strategies 222 Using E-Business for Global Expansion 223 E-global or E-local 224 Entry Strategy Alternatives 225 Strategic Choice 230 Comparative Management in Focus: Strategic Planning for the EU Market 231
\ s Contents \xt> Timing Entry and Scheduling Expansions 236 The Influence of Culture on Strategic Choice 237 Conclusion 237 Summary of Key Points 237 Discussion Questions 238 Application Exercises 238 Experiential Exercise 238 Internet Resources 238 Case Study: There's Detroit and There's Trnava: The Strategic Attraction of Eastern Europe 239 Chapter 7 Global Alliances and Strategy Implementation 241 Opening Profile: Spanish Companies Flex their Acquisition Muscles 241 Strategic Alliances 243 Joint Ventures 243 Equity Strategic Alliances 244 Non-equity Strategic Alliances 244 Global Strategic Alliances 244 Global and Cross-Border Alliances: Motivations and Benefits 244 Challenges in Implementing Global Alliances 246 Guidelines for Successful Alliances 247 Comparative Management in Focus: Joint Ventures in the Russian Federation 248 Strategic Implementation 250 Implementing a Global Sourcing Strategy 251 Managing Performance in International Joint Ventures 252 Knowledge Management in IJVs 253 Government Influences on Strategic Implementation 254 Cultural Influences on Strategic Implementation 255 Management Focus: Mittal's Marriage to Arcelor Breaks the Marwari Rules 257 E-commerce Impact on Strategy Implementation 258 Conclusion 259 Summary of Key Points 259 Discussion Questions 259 Application Exercises 260 Experiential Exercise 260 Internet Resources 261 Questions 261 Case Study: Lenovo's Global Expansion 262 Chapter 8 Organization Structure and Control Systems 264 Opening Profile: Changing Organizational Structures of Emerging Market Companies 264 Organizational Structure 265 Evolution and Change in MNC Organizational Structures 266 Integrated Global Structures 267 Organizing for Globalization 270 Organizing to "Be Global, Act Local" 270 Comparative Management in Focus: The Overseas Chinese Global Network 271 Management Focus: Procter & Gamble's Think Globally-Act Locally Structure. 273 Emergent Structural Forms 275 Interorganizational Networks 276 The Global E-Corporation Network Structure 275 The Transnational Corporation (TNC) Network Structure 276 Choice of Organizational Form 278 Organizational Change and Design Variables 279 Control Systems for Global Operations 281 Monitoring Systems 281 Direct Coordinating Mechanisms 282 Indirect Coordinating Mechanisms 283 Managing Effective Monitoring Systems 283 The Appropriateness of Monitoring and Reporting Systems 283 The Role of Information Systems 284 Evaluation Variables across Countries 285 Conclusion 285 Summary of Key Points 285 Discussion Questions 286 Application Exercises 286 Experiential Exercise 286 Internet Resources 286 Case Study: Asea Brown Boveri (ABB), Sweden, 2007: What Went Wrong? 287 COMPREHENSIVE CASES 291 Case 7 Case 8 Case 9 Case 10 Case 11 Dell's Problems in China 291 Starbucks' International Operations 2006 (Global) 302 Note on the Global Auto Industry in 2007 310 Renault-Nissan: The Paradoxical Alliance (France/Japan) 311 DaimlerChrysler AG: A Decade of Global Strategic Challenges Leads to Divorce in 2007 (Germany/U.S) 323 Case 12 Allure Cruise Line Challenges of Strategic Growth and Organizational Effectiveness: Part 3 (Global) 337 PART IV GLOBAL HUMAN RESOURCES MANAGEMENT 339 Chapter 9 Staffing, Training, and Compensation for Global Operations 339 Opening Profile: Training: The "Toyota Way" Is Translated for a New Generation of Foreign Managers 339 Staffing for Global Operations 343 Managing Expatriates 347 Expatriate Selection 347 Expatriate Performance Management 348 Expatriate Training and Development 350 Cross-cultural Training 351 Training Techniques 353 Management Focus: Citibank Gives Advice on Career Planning 354 Compensating Expatriates 356 Training and Compensating Host-Country Nationals 358 Training HCNs 358
< xli > Contents Management Focus: Success! Starbucks' Java Style Helps Recruit, Train, and Retain Local Managers in Beijing 359 Compensating HCNs 360 Comparative Management in Focus: IHRM Practices in Australia, Canada, China, Indonesia, Japan, Latin America, Mexico, South Korea, Taiwan, and the United States 361 Conclusion 363 Summary of Key Points 364 Discussion Questions 364 Application Exercises 364 Experiential Exercise 364 Internet Resources 364 Case Study: Fred Bailey in Japan: An Innocent Abroad 365 Chapter 10 Developing a Global Management Cadre 368 Opening Profile: Foreign from the Start 368 Expatriate Career Management 369 Preparation, Adaptation, and Repatriation 370 The Role of the Expatriate Spouse 371 Expatriate Retention 371 The Role of Repatriation.in Developing a Global Management Cadre 373 Global Management Teams 374 "Virtual" Transnational Teams 375 Managing Transnational Teams 376 The Role of Women in International Management 381 Management Focus: Japan's Neglected Resource Female Workers 381 Working within Local Labor Relations Systems 383 Organized Labor Around the World 384 Management Focus: China Drafts Law to Empower Unions and End Labor Abuse 386 Convergence versus Divergence in Labor Systems 387 The NAFTA and Labor Relations in Mexico 388 Comparative Management in Focus: Labor Relations in Germany 390 Conclusion 392 Summary of Key Points 392 Discussion Questions 392 Application Exercise 392 Experiential Exercise 392 Internet Resources 392 Case Study: Avon in Global Markets in 2007: Managing and Developing a Global Workforce 393 Chapter 11 Motivating and Leading 398 Opening Profile: Fujitsu Uses Pay Cuts as a Motivational Tool 398 Motivating 399 Cross-Cultural Research on Motivation 399 The Meaning of Work 400 The Needs Hierarchy in the International Context 402 The Intrinsic-Extrinsic Dichotomy in the International Context 405 Comparative Management in Focus: Motivation in Mexico 406 Reward Systems 410 Leading 411 The Global Leader's Role and Environment 411 The E-business Effect on Leadership 412 Management Focus: Leadership in a Digital World 413 Cross-Cultural Research on Leadership 414 Contingency Leadership: The Culture Variable 414 The GLOBE Project 414 Comparative Management in Focus: Leadership in the EU 421 Conclusion 423 Summary of Key Points 423 Discussion Questions 423 Application Exercises 424 Experiential Exercises 424 Internet Resources 424 Case Study: Sir Richard Branson: Global Leader in 2007 Planes, Trains, Resorts, and Space Travel 425 COMPREHENSIVE CASES 429 Case 13 Infosys' Global Delivery Model (India) 429 Case 14 A First-Time Expatriate's Experience in a Joint Venture in China 438 Case 15 Allure Cruise Line Challenges of Strategic Growth and Organizational Effectiveness: Part 4 (Global) 448 INTEGRATIVE SECTION 453 Integrative Term Project 453 Integrative Case: Wal-Mart: Managing Globalization in 2007 454 GLOSSARY 465 ENDNOTES 470 NAME AND SUBJECT INDEX 486