Chapter 12
THE DECISION MAKING AND
CONTROLLING
12-1
INTERNATIONAL
DECISION MAKING
British are highly decentralized
French tend to be centralized
Germans are fairly centralized
Swedes are also centralized
Japanese decide by consensus
12-2
FACTORS AFFECTING
DECISION MAKING
CENTRALIZATION




Large company
Homogeneous product
lines
Large capital investment
High degree of
technology
DECENTRALIZATION




Small company
Heterogeneous product
lines
Small capital investment
Moderate to low
degree of technology
12-3
TQM DECISIONS
Japanese use continuous
improvement of quality
Manufacturing
U.S. has greatly
improved the quality of
their cars
U.S. workers
value individual
recognition and
praise
Rewards
and
Recognition
Japanese prefer group
rewards
12-4
QUALITY
OLD MYTH
 Quality
is the responsibility of the people in the Quality
Control Department
 Training is costly
 It is human to make mistakes
 Quality improvements are made in small, continuous
steps
 Quality improvement takes time
 Haste makes waste
 Suppliers need to be price competitive
12-5
QUALITY
NEW TRUTH
 Quality
is everyone’s job
 Training does not cost, it saves
 Total customer satisfaction is a standard that should
be vigorously pursued
 In improving quality, both small and large
improvements are necessary
 Quality does not take time, it saves time
 Thoughtful speed improves quality
 Suppliers need to be quality competitive
12-6
TYPES OF CONTROL
Internal/External
Direct/Indirect
12-7
INTERNAL




dominating attitude bordering
on aggressiveness towards the
environment
focused on self, function, one’s
own group, and one’s own
organization
discomfort when the
environment seems “out of
control” or changeable
Win some, lose some
EXTERNAL




flexible attitude, willing to
compromise and keep the
peace
focused on others such as
customers, partners, and
colleagues
Comfort with waves, shifts,
and cycles, which are
regarded as “natural”
Win together, lose apart
12-8
Direct Controls
Involves face-to-face or personal
meetings to monitor operations
Ex.) Monthly management meetings
Ex.) Visits by top executives to overseas
affiliates or subsidiaries
Indirect Controls
Use reports and other written
forms of communication to control operations
Ex.) Monthly operating reports that are sent to the home office
Ex.) Balance sheet, income statement, cash budgets
12-9
CONTROL IN U.S. MNCs
Control in U.S. MNCs focuses more on the
quantifiable, objective aspects of a foreign
subsidiary
Requires more precise plans and budgets
Requires large central staffs and centralized
information processing capability
12-10
CONTROL IN EUROPEAN MNCs
Requires a high level of company-wide
understanding and agreement regarding
appropriate behavior
Requires more decentralization of operating
decisions
Requires more capable expatriate managers
who are willing to spend long periods of time
abroad
12-11
CONTROL TECHNIQUES
Financial Performance
Quality Performance
Personal
Performance
12-12
FINANCIAL
PERFORMANCE

Based on profit and return on investment

Profit = Total Revenues - Total Exp
Using Financial Performance alone when
controlling a subsidiary for effective
performance can be misleading
12-13
QUALITY
PERFORMANCE
Taguchi Method: Brainstorming and a few experiments
seek to quickly find the problem.
Production
problem
Brainstorming
session
Experimental
production runs
Employ
Taguchi
Confirm
results
12-14
PERSONAL
PERFORMANCE
1. Success attracts the best people--and the best people
sustain success
2. The top companies know precisely what they are looking
for
3. These firms see career development as an
investment, not a chore
4. Whenever possible, these companies promote from
within
5. Performance is rewarded
12-15