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Chapter 06 - International Management
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who keep them in business. There is a need to become socially responsive to meet the needs of stake-
holders that are an inherent part of the Japanese culture.4
4 Kunii, Irene, “Stand up and Fight,” Business Week, September 11, 2000, p 54-55.
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1. Why is the world economy becoming more integrated? What are the implications of this inte-
gration for international managers?
The global economy has become more integrated than ever before. Half a century of emphasis on free
trade by major industrial countries such as the United States, Great Britain, and Germany has resulted
in a gradual lowering of barriers to the free flow of goods, services, and capital among nation states.
2. Imagine you were the CEO of a major company. What approach to global competition would
you choose for your firm: international, multinational, global, or transnational? Why?
The approach selected would depend, at least conceptually, on the nature of the company, its goals
and objectives, its strengths and weaknesses, etc. Each of the approaches has advantages and disad-
vantages, and the CEO would need to determine which model was most consistent with the compa-
ny’s needs.
DISCUSSION QUESTIONS
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3. Why have franchises been so popular as a method of international expansion in the fast-food
industry? Contrast this with high tech manufacturing where joint ventures and partnerships
have been more popular. What accounts for the differences across industries?
The key to fast food industry is visibility and that means locations. The franchiser has to be able to
promote the product using mass media and this requires as many locations as possible offering identi-
cal products. Franchising is the optimal approach because it allows for rapid expansion in terms of the
4. What are the pros and cons of using expatriates, host-country nationals, and third-country na-
tions to run overseas operations? If you were expanding your business, what approach would
you use?
There are advantages and disadvantages of each option. Expatriates generally have the advantage of
being familiar with the parent company and how it functions. They have well-established contacts
with top management and are familiar with their approach to business. They are, in effect, an exten-
sion of top management. On the negative side, using expatriates is an expensive approach. They tend
to be paid higher salaries and often have families, which also need to be moved and housed overseas.
Which would you use? Students probably will conclude that the decision will depend on the circum-
stances (what critical problems the company faces and how rapidly it wants to move ahead) and its
Chapter 06 - International Management
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5. If you had entered into a joint venture with a foreign company, but knew that women were not
treated fairly in the culture, would you consider sending a female expatriate to handle the
startup? Why or why not?
This is one of those circumstances where one is “damned if one does and damned if one doesn’t.”
Some students may argue that if the female expatriate has the appropriate skills and experience for the
6. What are the biggest cultural obstacles that we must overcome if we are to work effectively in
Mexico? Are there different obstacles in France? Japan?
People in different countries have very different shared values and beliefs. As Geert Hofstede indi-
cated, some societies value the quantity of life (accomplishments, money, etc.) far more than the qual-
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6.1 Global Integration - Local Responsiveness Worksheet
Objective
To understand how companies compete in the global marketplace.
Instructions
An effective way to learn how companies respond to the competing pressures to be globally integrated
Part I: Global Model
_____________________________________________________________________________________
Part II: Transnational Model
Name of company using a transnational organizational model: _________________________
Part III: International Model
Name of company using an international organizational model: ________________________
Part IV: Multinational Model
Name of company using a multinational organizational model: _________________________
URL of website/article describing the company’s multinational strategy:______________
EXPERIENTIAL EXERCISES
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Source: Adapted from R.R. McGrath Jr., Exercises in Management Fundamentals, 1st, p. 177. Copyright
1985.
6.2 Cross-Cultural Anthropologist
Assume you are a cross-cultural anthropologist. In this role, please visit multiple public places that are
frequented by one or more ethnic or cultural groups. Observe four to five behaviors that strike you as
Learning Objectives:
1. To help students interpret in a more culturally neutral manner non-verbal communication.
Steps:
1. Visit multiple public places where you can observe the behaviors of one or more ethnic or cultur-
2. Bring a notebook or mobile device and:
a. On the left side of the page, make a column entitled: “Observation/description”
i. In this section, describe what you saw. Any behavior that strikes you as different,
frustrating, funny, confusing, is appropriate. Stick to the facts when describing
3. Type and hand-in your anthropologist’s analysis. This should include:
a. Your name, date, and the name of each public place you visited.
of notebook).
Source: Adapted from L.R. Kohls and J.M., Knight, Cross-cultural journal in Developing Intercultural Awareness:
A Cross-cultural Training Handbook (Yarmouth, Maine: Intercultural Press, 1994), p. 67.
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A Global Launch for Net-Work Docs
Case Summary:
Net-Work Docs is a start-up company founded to help business clients create and manage their doc-
uments electronically. Its founders, Nina Jones and Matt Smith, are planning to launch Net-Work
Chapter Topics Related to the Case:
• Discuss the impact of globalization on a company such as Net-Work Docs
Case Discussion Questions:
QUESTIONS
1. What are some possible advantages of Net-Work Docs serving a global market?
Suggested Response:
The obvious advantage is a larger pool of potential customers. In addition, Net-Work Docs may find
2. How are the founders balancing pressures for global integration and local responsiveness? Is their
global strategy likely to succeed? Why or why not?
Suggested Response:
The founders seem to hope they can succeed by offering businesses worldwide a service designed for
CONCLUDING CASE
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languages.
3. What skills of a global manager could help Net-Work Docs succeed?
Suggested Response:
Relevant skills of a global manager include integrity, insightfulness, commitment, risk taking, and
Chapter 06 - International Management
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Example 6.1 – Global Environment: In June, 2007, the “Fast Company” magazine did a cover
story on “China’s New Creative Class: How a Dynamic, Business-Savvy Generation is Poised to
Redefine Product Design, Architecture, Fashion, and Entertainment.” Profiled inside were nine
young Chinese people, all of whom are at the heart of China’s creative revolution - the founder of
Example 6.2 – Global economy consequences: Naresh Goyal, the founder and chairman of Jet
Airways, is ready for his airline to take off. Jet Airways is the largest private airline in India. To-
Example 6.3 - Global strategy systems: To compete in the global marketplace, GE uses a mul-
tinational system that consists of independent company subsidiaries in other countries and pro-
Example 6.4 – Difference between franchising and licensing: Students often want to know
more about the differences between franchising a business and licensing a business (or a business
Common Name
• Franchise: A franchisee's business is identified by the franchisor's trademark.
5 Chen, Aric. “The Next Cultural Revolution.” Fast Company, June, 2007, Vol. 116, pp. 65-75.
6 The Economist. “Taking Flight.” Sept. 8, 2007, pg. 70.
7 O’Connell, P. “GE’s Indian adventure.” Business Week, August 22, 2005. Online at
EXAMPLES
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• Business Opportunity: The licensee may not be identified by the company's
trademark.
Support
• Franchise: A franchisee receives training, marketing and other support on a
Standards
• Franchise: A franchisee typically offers products and services on an exclu-
Fees
• Franchise: Franchisees typically pay a continuing royalty based on the gross
sales of their business.
Example 6.5 – Joint ventures: CNH Case New Holland is a manufacturer and supplier of agri-
cultural equipment. Owned by Fiat, the Italian automobile manufacturer, CNH is a conglomerate
Example 6.6 – Cultural differences: High costs and difficulties associated with expatriation, to-
gether with the impact of cultural differences are leading some companies to develop local man-
agers in the countries in which they operate. To accomplish this, Enrique Tarelli, Outplace-
Example 6.7 – Multidimensional perspective: When Texas Pacific Group, a private-equity firm
was looking for a new manager to help oversee venture deals, they went global - to Vivek Paul,
Example 6.8 – Working with foreign nationals: Straddlers. Navigators. Learners. These are
the terms the employees at Grupo Gallegos, an advertising agency in Long Beach, CA, use to de-
scribe different sorts of Hispanics in the U.S. Who are they? The Learners are foreign born, and
Chapter 06 - International Management
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they speak Spanish primarily. On average, they have 3 children, and 65% of them rent their
homes. The Straddlers immigrated to the U.S. at a young age. Most of them are in blue collar or
12 Gorney, Cynthia. “How Do You Say ‘Got Milk” en Español?” The New York Times, Sept. 23, 2007,
Chapter 06 - International Management
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Please see the following additional materials in Connect.
• Ch 6 Walmart
Mass Mart is a well-known company in Africa that Walmart has decided to acquire. The compa-
ny has a strong management team and represents an emerging market. Walmart’s strategy in Af-
rica is to pursue growth city by city rather than country by country. This strategy is beneficial for
allowing Walmart to understand the market. Walmart believes the markets they are currently ex-
ploring, including Africa, represent great opportunities for growth.
What are some advantages of entering a foreign market via an acquisition?
Do you see any drawbacks to Walmart’s recent decision to acquire the Mass Mart chain in South
Africa?
Some critics think Walmart’s growth in Africa will damage Africa’s home-grown businesses.
Cultural Differences: Let’s Break a Deal
I. Introduction
The internationalization of companies has created the need to become more aware of cultural dif-
ferences in order to successfully conduct business. This scenario depicts a situation where indi-
II. Learning Objectives
1. To assess students’ understanding of different cultural values and their impact on business rela-
III. Scenario Description:
CHAPTER VIDEO
SUPPLEMENTAL FEATURES
MANAGER’S HOT SEAT (MHS)
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Overview: Michael Sokolow has just been tasked with handling international clients. He needs
to close a deal with Norio Tokunaka from PopWear that has already been thoroughly worked out
with Sokolow’s predecessor, Roger Small. Michael is unaware of the need to establish a relation-
ship with Norio before he discusses business. Norio becomes disenchanted and refuses to sign the
deal.
Profile:
• Michael Sokolow is the Director of Foreign Sales at Mustang Jeans. After working at
References: The references included in the DVD are:
• National Cultural Values (PPT 8-3)
Back History: Michael Sokolow has been a sales manager at Mustang Jeans for two years. He
Tokunaka has been with PopWear for his entire career. He has been working with American
companies for many years, importing a variety of products. Most of these American companies
are alliances that were formed by Tokunaka’s superiors, many years before. All of Tokunaka’s
Scene Set-up: Norio arrives at Michael’s office after arriving from Japan.
Scene Location: Michael’s office at Mustang Jeans corporate headquarters
The Meeting - Summary: Michael spends less than a minute building rapport with Norio. He
Chapter 06 - International Management
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rupted by his assistant notifying him of his next appointment. He apologizes to Norio about the
short amount of time that he has to spend with him. Norio says he’ll just leave and come back
later in the week.
3 Days Later – Norio comes back and Michael apologizes for the prior meeting. When asked to
Afterthoughts – Summary: Michael notes his frustration with the interaction. He acknowledges
that he should have waited for Norio to start talking about the deal first. He understands that the
Dossier: The specific artifacts included in the DVD are:
IV. Discussion Questions:
The References and related Discussion Questions may be found in PowerPoint slides 8-1 to 8-11.
1. How did the differences between Japan’s and the United States’ national cultural values affect the
interaction between Norio and Michael? Use the information on PPT 8-3 and 8-4 to support your
answer.
Long-term orientation differences seemed to have a major impact. While Norio is likely to value
2. Hofstede’s research on national cultural values has practical implications for business people.
Assume you are Michael and you have to conduct a similar meeting with another client from
Russia. How will you modify your behavior to effectively conduct business with this individual?
Use the information on PPT 8-3 and 8-4 to support your answer.
1. What is Michael’s strategy?
A. Find problem
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2. How was this [initial] meeting?
A. Successful
Learning Objective #2: To analyze and evaluate a cross-cultural business meeting.
1. What information should Michael have possessed before his meeting with Norio?
Michael should have been better prepared by Roger as to what to expect from Norio. He needed
2. Why is Norio acting somewhat evasive with his responses?
Even though the deal was almost done, Norio was expecting to now build a relationship with Mi-
3. What is Norio hinting [when he mentions Roger likes sushi]?
A. Misses Roger
3. What could Michael have done better in the second meeting to continue the business relationship?
Learn more about the cultural differences at play. He also could have tried to contact Norio earli-
4. Norio is indicating [when he says he’s been meeting with other people]:
A. There’s competition
Chapter 06 - International Management
5. Michael’s concern [that they are having a communication problem] is:
A. Accurate
4. Both individuals in this scenario were acting in alignment with their cultural norms and values.
Who should have the primary responsibility for changing their interaction style? When is it “too
much”, as Michael suggests in the Afterthoughts, and necessary to refuse to change one’s busi-
ness style?
stronger, etc.
Learning Objective #3: To explore aspects of self-awareness using Johari’s Window as a model.
1. Apply the concepts of the Johari Window to this scenario (see PPT 8-10 and 8-11). How do these
concepts help explain what happened in this scenario?
As relationships progress, more information about oneself becomes known to others and to one-
6. Michael should [when Norio says “I’m sure we’ll have a good relationship in the fu-
ture”]:
A. Be angry
There is no Self-Assessment for this chapter.
SELF-ASSESSMENT
