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Chapter Objectives
 Describe the six-step internationalization process and
distinguish between a 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.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter Objectives (cont’d)
 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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Joint Ventures and Strategic Partnerships
 Recommendations for Achieving Success
 Exercise patience: Select and build trust with a partner
that produces compatible but not direct competitive
products.
 “Race to learn”: Learn as fast and as much as possible
without giving away core technologies and secrets.
 Play by the book: Establish at the outset ground rules
about the rights and responsibilities of all parties.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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From Global Companies to
Transnational Companies
 Global Company
 A multinational venture centrally managed from one
country

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

Relies on a blend of global and local strategies
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Table 4.1: Corporate Giants Worldwide
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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 4.2: Competencies Needed to
Work Effectively Across Cultures
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Contrasting Attitudes Toward
International Operations
 Ethnocentric Attitude
 The view that assumes the home country’s personnel
and ways of doing things are best
 Polycentric Attitude
 The view that assumes local managers in host
countries know best how to run their own operations
 Geocentric Attitude
 A world-oriented view that draws upon the best talent
from around the world
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Table 4.3: Three Different Attitudes
Toward International Operations
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The Cultural Imperative
 Culture
 A population’s taken-for-granted assumptions, values,
beliefs, and symbols that foster patterned behavior
 Societal culture

Norms, values, attitudes, role expectations, taboos,
symbols, heroes, beliefs, morals, customs, and
rituals
 Are U.S. Corporations Turning the World into a Single
“Americanized” Culture?
 Cultural roots run deep, have profound effects on
behavior, and are not easily altered.
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Understanding Cultural Diversity
 High-Context Cultures
 Cultures in which nonverbal and situational messages
convey primary meaning

Status of an individual is of tantamount importance in
determining relationships.
 Low-Context Cultures
 Cultures in which words convey primary meaning


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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Other Sources of Cultural Diversity
 Individualistic cultures
 Cultures that emphasize individual rights, roles, and
achievements
 Collectivist cultures
 Cultures that emphasize duty and loyalty to collective
goals
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Other Sources of Cultural Diversity
(cont’d)
 Time
 Monochronic time: A perception of time as a straight
line broken into standard units

Timely arrivals and keeping appointments are considered
important.
 Polychronic time: A perception of time as flexible,
elastic, and multidimensional

Appointment schedules are considered approximations and
are not kept precisely.
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Other Sources of Cultural Diversity
(cont’d)
 Interpersonal space
 Some cultures prefer a close rather than wide distance
between conversing individuals.
 Language skills
 Language fluency opens insights into another culture.
 Religion
 Religion has many effects on personal and professional
activities in many cultures.
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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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Table 4.5: Countries Place Differing Emphasis
on Standard Management Practices
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Figure 4.1: GLOBE Leadership Matrix
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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
 Documentary programs familiarize the expatriate with
assignment destination.
 Culture assimilator exposes the expatriate to simulated
intercultural incidents and situations.
 Language instruction builds the expatriate’s
conversational skills in a foreign language.
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Cross-Cultural Training
(cont’d)
 Specific Training Techniques (cont’d)
 Sensitivity training provides experiential exercises to
teach expatriates to be aware of the impact of their
actions on others in another culture.
 Field experiences provide firsthand exposure to ethnic
subcultures that heightens expatriates’ cultural
awareness.
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Cross-Cultural Training
(cont’d)
 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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What About North American
Women on Foreign Assignments?
 Women are above-average in being successful in
foreign assignments.
 Strongest barriers to foreign assignments have been
self-disqualification and the prejudice of home
country managers.
 Culture is a bigger hurdle than gender: Women on
foreign assignments are seen as North Americans first,
then as women.
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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 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.
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Summary
 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.
 North American women fill a growing but still small
share of foreign positions.
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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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