August archive

AGREEMENT/LICENSE FORM INDEX

August 27, 2007 0 comments

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AGREEMENT/LICENSE PRE-PRODUCTION

PRODUCTION

POSTPRODUCTION

  • Clip license
  • Still license
  • Novelization agreement
  • Synch/Master Use license
  • Music Supervisor agreement
  • Composer agreement
  • Soundtrack agreement
  • Lab access letter
  • Cassette loan agreement
  • Print loan agreement

FOREIGN DISTRIBUTION

  • AFMA form
  • Output agreement

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Categories: Business Entrepreneurship Legal Agreements

LEGAL PRODUCTION CHECKLIST

August 27, 2007 0 comments

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FORMATION OF PRODUCTION ENTITY

  • Form corporate entity with Sec. of State
  • Become signatory to WGA/DGA/SAG/Teamsters agreements
  • Trademark search for co.

CHAIN OF TITLE

  • Obtain copyright & title reports
  • MPAA title registration

LITERARY PROPERTY

  • Option/Purchase agreement
  • Register Short Form Option/Purchase with Copyright Office
  • Register story synopsis with WGA and Copyright Office if original story Writers agreement
  • Register Short Form Assignment with Copyright Office Obtain publisher waiver/privacy release Register screenplay with WGA and Copyright Office if work -made-for-hire

PRODUCTION AGREEMENTS

  • Producers agreement
  • Directors agreement
  • Actors agreements (weekly & daily players, including stunts;
  • Personal release form for street extras (must be non-SAG(have no lines)
  • Crew deal memos
  • Obtain deForest report
  • Location agreement
  • Poster/property licenses

INSURANCE

  • Obtain production & negative insurance Obtain workers compensation insurance
  • Obtain completion bond

POSTPRODUCTION

  • Submit screen and paid ad credits to WGA/DGA
  • Obtain E&O insurance
  • Obtain MPAA rating
  • Lab access letter
  • Prepare music cue sheets
  • Prepare continuity script
  • Clip license
  • Novelization agreement
  • Merchandising (toys, comic books, clothes, etc.)
  • Register film with Copyright Office

MUSIC

  • Music Supervisor agreement
  • Composer agreement
  • Synch/Master Use Licenses
  • Soundtrack agreement Obtain music publisher or

Publish music yourself + form dba of production co. + domestic (join ASCAP or BMI) + foreign (sub-license out)

Posted by lisa
Categories: Business Entrepreneurship Legal Agreements

Learning from Others

August 12, 2007 0 comments

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Transfer of ideas and models in the field of management, and other collective and individual human activities across borders is of course not new and in fact has a long history. In ancient times, great empires learned from one another as well as from those peoples that they conquered. In more recent times, colonial powers took their administrative skills and procedures to their colonies. The Indian civil service is well known to have been modeled after that of the UK during British rule: even now, some five decades after independence, strong traces of British systems are still discernible in Indian Bureaucracy.

Although never a colony, Iran has had for centuries close cultural and commercial ties with France. When, early in the twentieth century, the Iranians wanted to modernize their institutions, they imported ideas from France, especially in such areas as education, the civil service and the legal system.

The early part of the twentieth century saw the adoption of Scientific Management techniques in Europe. Since the early 1980s, Japanese management techniques have been adopted in the USA and the UK in an attempt to emulate the success of Japanese firms. More recently, the economic transition of ECE and FSU countries and the development of the Chinese economy has brought with them a search for management expertise mostly centered on the West.

In the context of the almost continuous evolution of management thought in the West, there exists an interesting perception on the part of some commentators and by many managers in ECE countries that the transition from the command to the market economy will be effected in the short-term. Whilst some organizations will necessarily adopt new methods quickly, it may be naive to think that some fifty years of business context will be replaced in the short-term. Although this fifty year period is only part of a cultural time-frame of much greater antiquity, it has had a major effect on management thinking and behavior in the relevant countries.

A question which has for a long time been a center of debate amongst academics, and a focus of interest amongst managers is 'to what extent are management practices transferable from one country to another'?

From a purely culturaist point of view, organizations and management styles are, as Crozier expresses it 'cultural solutions to social problems'. In which case, an Iranian organization has nothing to learn from an American company, because the two countries are poles apart culturally. A proponent of the universalist approach would argue that business is business wherever you go. Managers have to deal with customers, competitors, unions, creditors and so on, regardless of where they are located.

The reality - what managers actually do - is much too complicated to fit into any one of the above models or indeed any black and white prescriptions. Some practices can be transferred almost without any change from one country to another. Some must be modified to become workable in another setting. Some are deeply culture-specific and may be very difficult to transfer. Some practices are part of a coherent strategy, a 'package' and cannot therefore be transferred successfully in isolation and without the rest of the package going with them as well (Tayeb ).

For example, teamwork has become very fashionable and many managers especially in the West attempt to emulate the Japanese companies in this respect. Team-work is congruent with a collectivist culture and may not necessarily find fertile ground in individualistic countries, or at least not as successfully as in Japan.

This cultural argument aside, team-work is only one aspect of a whole set of Japanese management styles and practices. The package contains some other 'supporting' items such as collective decision-making, job rotation and flexible working arrangements, long-term employment, mutual emotional dependence between employee and employer, seniority-based promotion, team appraisal and reward policies. These other factors all contribute to the presence of team-work in Japanese companies.

To be effective in Western, or any other non-Japanese culture, the idea of the work team should be transferred with at least some of its 'sibling' techniques, outlined above. For example, there is an inherent mutually exclusive dichotomy of thinking in setting up work-teams and asking people to co-operate with one another as team members, and yet reward people on the basis of individual performance, thus encouraging competition among team members. Another example can be cited: one cannot expect employees to consider themselves as members of a 'big, happy family', with a high degree of commitment to their workplace, if, when economic downturns come or there is a fall-off in demand, the company lays off workers and other junior employees or reduce their pay, and leave jobs, salaries and bonuses of senior managers and directors intact.

Similar arguments can be made for other management practices such as Quality Circles, TQM, JIT, plant-based unionization, seniority wage settlement and ringi decision-making, some of which have been attempted by Western companies with mixed results (see for instance Oliver and Davies ; Oliver and Wilkinson ; Tayeb ; Shadur et al. ). In the same vein, Huo argues against the transplanting of American HRM practices into Chinese organizations.

Kindlarski , in considering whether Poland should adopt European, American or Japanese models of Total Quality Management argues the need for a specific Polish approach to quality and how to implement quality programs. This view is supported by Thorpe and Pavlica in their comparative study of British and Czech managers, which indicates that, when adopting any foreign knowledge, managers make sense of new management techniques in terms of their own country culture as 'every country creates its own preferred way of defining and practicing management' (Thorpe and Pavlica p213). In addition, they may have to assess the implications for the organization as well as deciding how to manage the change effectively.

These issues are particularly important in transition and other developing economies where many competing demands are made on management time and resources. There is a need, therefore, to evaluate issues such as implementation timescales, costs, possible resistance to change and the strategic relevance of new techniques being considered by organizations.

The ability gain new expertise through business partnerships should not be ignored (Harrigan ; Kogut ). Technology transfer has been a significant factor in the strategic use of joint ventures by organizations in developing economies. As Pucik argues, the sharing of information and know-how within a common strategic purpose may provide greater opportunities for learning than if a firm retains an individual market presence. Although involvement in joint ventures is still associated with significant risks, firms in developing economies have benefited by an injection of new technology and market expertise in dealing with the pressures and changes brought about by a market economy orientation.

Posted by lisa
Categories: International Management Culture

Teaching Management Practices

August 11, 2007 0 comments

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The societal context of management practices plays a significant role in the character of such practices. The learning content and style of teaching of such practices should also reflect their wider context.

Nations differ from one another in their needs, aspirations and objectives. Educational establishments reflect these and can respond effectively only if they tailor their practices accordingly. What, however, one observes in many business schools around the world, especially in the developing countries, is a separation of those schools from their wider context.

For many decades, the United States used to be, and still is to some extent, a model for 'best practice', now Japan is increasingly viewed as a role model. Teaching style and content, exemplified in MBA and similar courses, seem to impart universal management technique packages based on Western models, theories and practice, while the learning needs of managers and students of management are far from being universal.

The point is particularly relevant to developing countries, many of whom, attempting to upgrade their organizational systems and improve their performance in the international market, import various management practices and educational techniques from the more advanced industrialized nations, without due regard to their own socio-cultural and technological characteristics. If these imported practices are not modified and adapted to local conditions, the transfer process will almost certainly fail (Hofstede ). There is also a possibility that the adoption of Western management systems may have an adverse affect on national characteristics such as the effect of 'rational' models on entrepreneurial spirit. Business Development - Sub-Saharan Africa and Srinivas Two studies support the argument that institutional and management development are critical in the context of developing national economies, Bazemore and Thai in their work on the countries of Sub-Saharan Africa and Srinivas on business development in the Third World generally. They warn, however, that problems have been experienced, because of an over-reliance of training methods, poor quality training and a failure to integrate training in the development process. In developing countries, therefore, it is important to assess the type and content of training needed in the context of what is to be achieved nationally. Governments play a crucial role in linking economic development with industrial development. (Bazemore and Thai ; Srinivas ).

Management Education

The methods and the context in which management education is provided is vitally important. For instance, learning styles, just like management styles, are affected by cultural factors. The learning experience in American business schools is very different from learning in a Polish or a Chinese University where educational methods are much more formal. Another consideration is the delivery format of the educational package, apart from MBA courses a good deal of management training is provided through various undergraduate programs, short courses and in-company training schemes.

Identification of who should be trained is perhaps another issue and consideration given to the importance of 'training the trainers' - in this way a multiplier effect is gained. Finally, there is often a lack of local textbooks, importing foreign textbooks also tends to transfer western models and methodologies without incorporating local considerations. This factor may also place a language barrier on the assimilation of new knowledge which may only be overcome in the medium- to long-term.

The contrast between India and the United Kingdom

The contrast between a developing country like India and a developed country like the United Kingdom exemplifies these issues. India is trying to catch up with the industrialization process and become a major player in the international business community. However, it must overcome certain inherent obstacles and problems, such as a colonial legacy which has slowed down its industrialization; massive poverty, a high illiteracy rate, communal tension, a poor physical infrastructure and culturally-rooted resistance to change (Tayeb ).

As a consequence, the government has adopted a protectionist economic policy to encourage the restructuring of the economy and to protect disadvantaged sections of the population, amongst other strategies. Although there has been a measure of liberalization of trade in recent years, then economy is far from being an 'open-door' one. In a climate such as this, where market forces are subservient to social priorities in determining strategies and actions, managers grapple with different needs and challenges from those of an advanced economy like the UK.

By contrast, the UK pursues a liberal open-door economic policy, enjoys a modern physical infrastructure, an educated and skilled workforce and a fully developed industrial base. Here the internal market is competitive, keeping managers constantly on their toes. Research and Development, marketing, advanced technology and business priorities generally are their main pre-occupation, for which they need a different set of tools from their Indian counterparts.

If Indian and British business schools and other institutions of higher education are to cater for the real needs of their respective managers and would-be managers, their curricula should be vastly different from one another. Comparative empirical studies in these two and many other countries are required to determine to what extent differences of approach actually exist in educational establishments around the world.

Developing Nations

It is also important for developing nations, in parallel with learning from abroad, to build on their own resources and develop computable indigenous management teaching practices. The transfer of such practices should not replace but in fact compliment local ones that are a culmination of the context of that particular society. As Marsden points out, current development efforts focus on building institutional capacity through the encouragement of local self-reliance. For developing nations, the West - or Japan for that matter - is not the only source of valuable innovation and creativity. 'Local', 'traditional' or 'folk' knowledge is no longer the irrelevant vestige of 'backward' people who have not yet made the transition to modernity. Rather, it is the vital well-spring and resource bank from which alternative futures might be built.

Jankovitz suggests the interesting and important metaphors of 'selling' and 'new product development' in transferring management expertise. 'Selling' infers a finished product whereas new product development carries with it the need to assess the market requirement and potential use of the product before it is designed, if necessary developing it further as market needs change. This approach also infers that the producer-customer interface is dynamic - managers should not be expected accept new learning passively but to interact with it.

The management context of many developing economies, particularly those of ECE and the FSU will continue to change, requiring the modification of management learning as organizations in these countries become more sophisticated in dealing with the market economy within their own national and industrial environment.

Conclusion

National culture is inextricably linked to management processes and practices, and also to management education. The provision of knowledge, the expectations of its recipients and implementation of new techniques all have significant cultural dimensions. Therefore, the transfer of management knowledge must somehow make a transition across cultures, if such knowledge is to be put into effective practice. The provision of management knowledge should include assessment of the needs of the recipient, as part of the training program design. Learning and adapting new knowledge to local needs takes time - this is often underestimated by providers and recipients alike.

Western Institutions working with universities and business schools abroad have a responsibility to help such institutions develop materials in a way which will be more suitable to their students. This is not to say that local institutions should not be agents of change themselves, but there is a real danger that foreign institutions will develop management course provision which is unsuitable for the needs of their country's managers.

As organizations expand nationally and internationally, the competitive environment has become increasingly challenging and it is probably unsurprising that management should assess techniques used successfully by other organizations both within the industry and on a wider front. Now that Universities operate across borders more frequently, the provision of management education in foreign countries, as well as domestically, may make fresh challenges to the curricula of Business Schools and other institutions.

There may be a danger, though, that the transfer of management knowledge from the West to other countries is perceived as a one-way process. Involvement in management and organizational development in other countries may well provide additional insights for those who provide relevant know-how to these nations.

In the words of Stenton

'..it is not enough to see the relationship between the central and western parts of our continent as a one-way transfer of educational and managerial know-how, with western institutions in the role of consultants bringing 'revealed truth'. Western respect for difference and acknowledgment of diversity will be enriched via successful co-operation with Central Europe'

Businesses and institutions need to become attuned to cultural issues in management development and the application of management techniques. Unfortunately, the transfer of management knowledge between countries still brings with it a litany of failure as well as potential for success. This hit-and-miss approach to the transfer of management knowledge seems to prevail into the twenty-first century.

Posted by lisa
Categories: International Management Culture

International HR and Leadership - Web Presentations

August 10, 2007 0 comments

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"Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

"A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

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Categories: Web Presentations Int HR Management

National Culture and the Transfer of Management Techniques Across Borders

August 9, 2007 0 comments

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Although the cultural relativity of management practices has attracted a great deal of comparatively recent attention by academics and practitioners, the teaching and learning of such practices, in terms of both content and style, are still viewed by many as a culture-free universal matter.

National Culture and Organizations

The last three decades or so have seen a lively debate on the role of national culture in the shape and operation of business organizations. Some commentators have emphasized the universality and similarities between organizations (Kerr et al ; Cole ; Hickson et al ; Form ; Negandhi).

Others have emphasized the uniqueness of organizations, given their cultural contexts (e.g. Meyer and Rowan ; Hofstede ; Lincoln et al ; Laurent ).

However, as Tayeb argues, the two sides of the debate are not mutually exclusive; rather they complement one another. That is, certain aspects of organizations are more likely to be universal [such as shop-floor layout, hierarchal structure and the division of functions], whereas other areas are more culture specific [such as human resource management, management styles and control procedures]

What is certain is that organizations and their employees do not live in a vacuum, separated from their societal surroundings. To begin with, national culture as a set of values, attitudes and behaviors includes also those which are relevant to work and organization. These are carried into the workplace as part of the employees' cultural baggage. Work-related values and attitudes [such as power distance, tolerance for ambiguity, honesty, the pursuance of group or individual goals, work ethic and entrepreneurial spirit] have been argued to be part of the cultural identity of a nation.

Moreover, society at large has certain expectations from its organizations and exerts influences on them, through various formal and informal means. Political, social, and economic institutions and factors, such as economic structure, trade unions, social stratification, educational systems and pressure groups, can all exert their own influences in turn on the organization.

As Amado et al point out:

'[The] genius would seem to reside in the aptitude for integrating cultural reality into management modes, rather than ignoring it or establishing it into one-sided, imperious determinism and then sitting back passively to suffer the consequences. If the way such organization functions can be seen actually to "work", it is also because they are in step with the cultural reality on which they are based, which they can even be said to reflect. In other words, there really does exist a sort of cultural resonance between the organizations "micro" context and the "macro" context of society, this resonance helps in understanding the equilibrium of an organizational system, as strange as it may seem at first glance'.

Japanese and American Companies

Societal context can also influence the means by which managers may perform their tasks and implement organizational strategies and policies. A comparison between Japanese companies from a collectivist culture, with those originating in an individualist one, say that of the United States, shows that the 'whats' may be universal and similar but the 'hows' are different and the differences appear to be culture-specific (Tayeb ).

The similarities between American and Japanese companies are primarily because the countries are fundamentally capitalist entities. They ultimately pursue profit maximization. The approaches are different but the objectives are the same. In the American firms, the managers may go for short-term profits to satisfy their shareholders and to satisfy the performance criteria set for them by their bosses. Their Japanese counterparts might choose to achieve profits via long-term growth strategies and market dominance. Both must tackle issues such as economic recession, labor costs, competition and the like. A Japanese company might choose, in response to economic down-turns, to reduce labor costs by cutting the managers' pay; its American counterpart might respond to similar conditions by laying off a significant number of manual workers and some white-collar workers, with a paltry 1 percent pay cut for the executives (The Economist . The roots of these different approaches can be traced to their respective socio-cultural backgrounds (Tung ; Briggs ; Tayeb ).

The Japanese employees' and employers' behaviors may be related to their collectivism, the inclusion of the workplace in their in-group, their sense of duty and indebtedness to one another as members of a group and their value for face-saving. Since suffering a humiliating loss of face in World War II, their determination to succeed economically in the world has intensified group cohesion among members of society, with the feeling of being all part of one big family.

By contrast, Americans belong to a very individualistic nation, where people pursue mainly their own interests and those of their immediate family - the in-group definitely does not include the workplace. The primary commitment and loyalty of individuals do not therefore lie with the company or any other larger groupings of which they may be a member.

These characteristics seem to be reflected in the culture of business organizations. The Japanese company typically considers its employees as an asset rather than a liability; it invests in their development, has a long term view of their relationships, and hires employees (especially the skilled core work-force) on a long-term basis, training them through rotation in various functional departments in order to enhance their flexibility. Employees, in return, display a high degree of commitment and loyalty to their work organization.

The American company and its employees typically have a short-term perspective. Employees join their work organization as a step on their career development ladder, leaving the company when better prospects beckon elsewhere. The company, on its part, hires and fires the employees at will, recruiting them to fill specified slots - flexibility is not an objective.

At a more operational level, two studies are of particular relevance to the 'what' and 'how' argument, the first by Tayeb and the other by Misumi .

Indian and English work-related attitudes

Tayeb, in a cross-cultural comparative study of Indian and English work-related attitudes and values and organizational structures, suggested that, although in modern industrial societies business organizations tend to develop similar structural configurations in response to similar task-environments, the means by which they achieve these configurations differ depending on the particular socio-cultural characteristics of the society in which they operate and from which the bulk of their employees come.

She found that matched-pair Indian and English organizations were similar in such universal dimensions as specialization and centralization but differed considerably on the amount of consultation or delegation of authority which took place within them. English managers consulted their subordinates more widely before decision-taking and delegated authority further down the hierarchy than did their Indian counterparts. Additionally, English employees communicated with each other to a far greater extent than did the Indian employees.

The differences between the two samples were consistent with the cultural differences between Indian and English people as a whole (Tayeb ). Later studies, such as those conducted by Lincoln and Kalleberg and Smith et al arrived at similar conclusions.

Leadership Style

Misumi's theory of leadership style is based on the argument that behavior must be understood in terms of genotypes and phenotypes,

the core intention of an action and the manner in which that intention is expressed in a particular cultural context.

In other words, there may well be certain underlying universal structures in the behavior of managers which are 'genotypic' or inherent in the superior-subordinate relationships. But these genotypic structures will be expressed in a variable manner, which is affected by numerous factors in the specific environment of a particular manager.

For instance, a Japanese manager might show his concern for an employee by taking an interest in his private life, such as arranging his marriage for him or helping him to solve personal problems, whereas American or British managers show the same concern by providing their employees with appropriate equipment so that they can perform their job properly (Smith et al ; Tayeb ).

East and Central Europea and the former USSR

In transition economies, such as those of East and Central Europe (ECE) and in the former Soviet Union (FSU), it is particularly difficult to study such patterns of work-place interaction, as the work environment is changing rapidly and with it the attitudes and behavior of managers and other employees alike.

What should not be underestimated, though, is the strength of the pre-1990 culture in former command economies. It can be argued that the old elites still have significant power in society, particularly in government and privatized companies. What may be suggested, however, is that the same conditions prevail, the structures and layout of facilities being basically similar to equivalent industries abroad but the local cultural differences having a marked effect on the workplace and management decision-making.

Just as the rest of Europe is a mosaic of management styles (Stenton ), so are the ECE and FSU regions. It would therefore be quite erroneous to consider these cultures as an amorphous whole. For example, power distance in Poland is high but not as high as in France (Yancouzas and Boukis ). The Russian Federation has a larger power distance than both these countries, whereas in the Czech Republic the power distance dimension is similar to the comparatively low UK value.

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Categories: International Management International Negotiations

Socio-Cultural and Political Ecomony Implications

August 9, 2007 0 comments

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National culture and other institutions of the country in which an IJV is situated play a significant part in the actual form that the organization and management style of the joint venture will take. In other words, the host country forms the immediate external environment of the IJV with which it has to interact and to whose pressures and expectations it has to respond. Companies undertaking expansion through IJVs need to understand the significant elements of local country culture, especially in terms of initial negotiations and partner selection.

As far as human resource management is concerned, the IJV’s policies and practices are generally decided by its senior managers, with or without consultation with their employees. But these policies are adopted and implemented having regards to the national context within which the company operates. The political ideology of the government of the day (and the political regime as a whole), the economic conditions of the country (e.g. level of unemployment), the power of trade unions (or lack of it), and the socio-cultural characteristics of employees and managers (and the general public), are examples of a host country’s influences on an IJV’s HRM policies. Moreover, the host country's membership of global and regional pacts and agreements can also have a significant bearing on the organization's HRM strategies. The Social Chapter of the Maastricht Treaty of European Union is an example of this kind.

Major institutions which serve as the channels of influence on an IJV generally fall within six broad categories: legal system, political culture, industrial relation culture, level of economic advancement, membership of global and regional agreements, and the national culture as a whole.

In most countries influences of these institutions on a company’s human resource management are incorporated in the rules and regulations governing employee-management relations, some more explicitly than others. These rules and regulations can either be related to the employees' individual rights, such as equal opportunity, job security, wage levels, work schedules, work injuries and post-employment economic security. Or they can be related to the employees' collective rights, such as unionization, bargaining, the resolution of contract disputes, and participative decision making.

In some countries, there are further rules and regulations which apply specifically to foreign companies operating within their territories, over and above those which apply to all firms. For instance, foreign firms may be required to include local people in their top management teams, and to build or contribute to the construction of local amenities such as houses, hospitals, schools and similar facilities for their employees.

Because of these influences it is argued that the initial decisions taken by the partners in an IJV as to the location of the company would have significant implications for its subsequent management style and indeed its success and survival.

The figure below summarizes the relationship between an IJV and its host country.

Host country influences on an IJV’s human resource management

Legal System HRM Political culture
National International firm's Industrial Relations
Culture HR Management, Culture
Level of policies and Global and regional
economic practices agreements
advancement    

The Collapse of the USSR

The break up of the former USSR into independent republics illustrates another case of some potentially significant implications of macro-level factors for human resource management at the miro-level.

In Kazakhistan, for instance, under the USSR culture, women could and did achieve high positions in business. Now that the country is independent, its old predominantly patriarchal culture, which lay dormant under the Soviet rule, is enjoying a revival, replacing the 'Russian Communist' culture. As a result, the perception of the role of women in the society and at workplace is changing. In the short-term at least it is unlikely that women will have the same opportunities as they had before (Pollard, 1994). Furthermore, the reviving Kazakh culture places a great emphasis on age and seniority and prescribes 'proper' junior-senior relationships, stemming from its nomadic traditions (Rywkin, 1982). This could have repercussions for organizational hierarchy, authority structure, and promotion and compensation policies, among others.

In Conclusion,international joint ventures face additional challenges over and above those experienced by their single-culture owned counterparts because of their culturally mixed ownership. The tensions and dynamics caused by the mixed parentage manifest themselves at the negotiation stage for all types of cross-border alliances, but are specifically acute for human resource management in joint ventures. Management styles have their roots in different cultural assumptions of partners in a joint venture.

It was also pointed out that major cultural values and attitudes, such as attitude to power, tolerance of ambiguity, individualism, collectivism, and interpersonal trust, are relevant to HRM in IJVs.

The location of an IJV can also exert influences on its internal organization and management style through for example rules and regulations governing employment relations.

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Categories: International Management Culture International Joint Ventures Int HR Management

Organizational culture and joint ventures

August 9, 2007 0 comments

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In addition to national cultural differences, differences in corporate cultures of the partners involved also play a part in the joint venture's human resource management. Corporate cultures embody ways of doing things, such as power structures and control systems, management and leadership styles, and attitudes to investment and risks. Variations in organizational cultures across the parent companies and within the venture might constitute a major impediment to effective implementation and subsequent operations.

British and German partners

The partnership between GEC and Siemens, for instance, has been reported to be marked by contrasts between British firm's decentralized and short-term approach and the centralized longer-term style of the German partner (Financial Times, 3 July 1990).

British and Italian parent companies

One of the international joint ventures among Faulkner's (1995) sample referred to earlier provides an interesting example here. This joint venture, EVC, was set up by its British and Italian parent companies, ICI and Enichem. EVC faced two very strong cultures. ICI have a strong internal culture based on teamwork and debate, whilst Enichem are much more functionally driven. The production director at Enichem for example gets on with production, and is somewhat loath to express opinion related to other areas. In ICI, the concept of Board Member is more broadly interpreted. These different cultures could not fuse easily in EVC, and the chief executive officer had some trouble over clashing cultures as a result.

The issue of organizational culture is also relevant in the context of the formation of an IJV. If the company is created by the partners as a greenfield site, the cultural clash and tension thus ensued might be comparatively less than when the venture is formed by a partial take-over of an existing firm by an outside partner. In this latter case, there are old habits and ways of doing things which might not be appropriate for the new entity and which might prove difficult to unlearn. An example of this was a company studied by Tayeb (1994). Hurricane (pseudonym), a Japanese multinational, had been attracted to ‘favourable’ investment opportunities in south west of Britain.

Japanese multinational looks toward investment opportunities in Britain

Hurricane had chosen this part of the country as the site for its operation primarily because of its high unemployment rate and because it was designated as a development zone, and therefore there were financial incentives for the company to have an operation there. The company first became involved in an existing British-owned electronics firm as partners in a joint venture, because the firm was in financial crisis and welcomed the infusion of capital from their new partners. However, the Japanese partners later met with resistance from the local managers to the technical, managerial and structural reforms which they attempted to implement.

The Japanese managers wanted to produce quality products, with minimum costs, but they had some difficulties in getting the employees to realize the merits of new methods of quality control, e.g. built-in control in the production process, and cost saving practices, such as getting their raw materials in time to go to the production line, (the so-called just-in-time process), thereby eliminating the need for expensive warehouses.

The 'old' company managers and employees were worried about the uncertainties and confusion which could be caused by the change over, and therefore resisted the introduction of new ideas and a new management style. For instance, the unions' resistance to some of the proposed changes rested on fears that the changes might reduce their power or challenge their traditional territorial claims over various jobs and skills. Also, as in some other British firms, a culture of 'them and us' was prevalent within the company which had created a division between the management and employees. This was regarded by the 'new' management team as a serious obstacle to the successful implementation of their proposed policies.

After a few months of negotiations, the Japanese partners proposed either to buy out all the shares or to pull out completely. The former option was accepted by the British managers, and the company became wholly owned by Hurricane Corporation. The Japanese now had the freedom to tackle the situation largely their own way and fundamental changes were soon under way (Tayeb, 1994).

Scottish company sets up an IJV in China

The problem of old habits carried over to the new venture is a concern of the Scottish company which is in the process of setting up an IJV in China. Chinese workers have lived and worked within a Communist structure, which has been proven to be flawed in terms of efficiency.

A standard joke going around among the Scottish Managers is ‘How many Chinamen does it take to change a light bulb?’ As one of the negotiators recalled the actual experience he had, the answer is four.

“We needed a light bulb changing in the house and we had four people coming to change it, one to go up the ladder to put it in, one to hand the bulb up to him, one to hold the ladder and one to supervise, you know. So, they do employ everybody but not everybody is all that productive”.

The challenge facing the company as the managers see it is not to change the cultural attitudes and values of their Chinese workforce, but to help them unlearn unproductive working practices, and replace them with those which are more conducive to greater efficiency.

In addition, what the company is aiming for is to recruit young employees who are basically more adaptable, and who have not been subject to traditional working practices. They will then train these employees to work the Scottish partner way. The belief is that the Chinese would not have any problem with this approach, because they need to be competitive in the world market, so they will be keen to learn the way their foreign partners do things and maybe within 20 or 30 years they will be doing it even better.

German-Czech IJVs

In their analysis of two German-Czech IJVs, Pollard et al (1996) argued that both organizational and professional cultures could affect the operation of a joint venture company. In one case, the transfer of technology from a parent company was successful only because that parent was allowed to dominate the specification and implementation of new systems. Co-operation between the firms would not have worked because of a skills disparity between German and Czech staff.

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Categories: International Management International Negotiations International Joint Ventures Int HR Management

Human resource management in International Joint Ventures

August 9, 2007 0 comments

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Beyond the negotiation and setting up stages, another aspect of an organization for which sensitivity to national culture is of utmost importance is the management of human resources. At this stage, national cultures become increasingly relevant to international joint ventures, because of their joint management involvement. International joint ventures bring together two or more sets of employees whose national culture gives them fundamentally different views on what constitutes a desirable management style or appropriate organizational hierarchy (Norburn and Schoenberg, 1994).

As Schuler et al (1993) point out, "[National culture is important because of its] impact upon acceptable, legitimate and feasible practices and behaviors... Acceptable in terms of "can we pay workers different rates, and thereby differentiate them, according to performance"; legitimate in terms of "are there any legal statutes prohibiting us from not paying workers overtime for work on Saturday and Sunday"; feasible in terms of "while the society is hierarchical, authoritarian and paternalistic, can we empower the workforce to make workplace decisions in order to facilitate our quality strategy? "

Various comparative studies have demonstrated that certain cultural attitudes and values have significant implications for organizations and the ways in which they are managed (see for instance, McClelland, 1961, Crozier, 1964; Hofstede, 1980, Hofstede and Bond, 1984, Tayeb, 1988, Hall and Hall, 1990; Meek and Song, 1993). These values and attitudes include individualism, collectivism, attitudes to power and authority, achievement motivation, attitudes to conflict and harmony, tolerance of ambiguity and uncertainty, interpersonal trust, and many more.

The Table below, illustrates some examples of the ways in which organizations could be influenced by work-related cultural traits.

Culture-specific aspects of organization

Organization Examples of the Examples of relevant
Dimensions relevant underlying process cultural traits
Centralization Power Relationship Attitudes to power and authority; Trust and confidence in others; Respect for other people's views
Specialization Clear-cut job Ability to cope with
and specifications, uncertainty; Attitude
Formalization job territory to privacy and autonomy
Formalization Control and Attitude to control
and discipline and discipline
Standardization    
Direction of Information Attitude to
Communication sharing information
sharing;   Respect for other people's views
Span of control Power relationship Attitude to power and authority

From: Tayeb, 1996

In an IJV if employees coming from partners’ country of origins have differing levels and degrees of the work-related attitudes and values listed in column 3, there is bound to be tension caused by their implications for columns 2 and 1. Schoenberg et al.'s (1995) research findings demonstrate the kind of complexities involved.

Anglo-French joint ventures

Schoenberg and his colleagues studied four major Anglo-French joint ventures from the chemicals and engineering sectors which formed between 1986 and 1989. The researchers sought to establish the major organizational difficulties and opportunities the partners experienced during the formation and management of the partnership, and the management practices that could overcome and make most of these differences.

They compared the two nations on two of Hofstede's (1980) dimensions, power distance and uncertainty avoidance. They argued that the former would determine the views of each nationality on such issues as the preferred degree of centralization and the appropriate levels for decision making whilst the latter would guide the preferences for the number of levels within the organization and the rigidity of the organizational systems.

In Hofstede's study the French scored higher on both power distance and uncertainty avoidance than did the British. These differences of scores, Schoenberg et al. argued, was reflected in the management styles of the managers in the joint ventures studied.

The natural French management style was widely perceived as being more autocratic, with decision-making authority clearly concentrated at top management levels. In contrast, British executives were accustomed to leave more discretion to middle management levels, with strategic information more widely shared. The two national management styles failed to allocate decision-making discretion at the same organizational level.

British managers would assume that the purpose of a meeting was to arrive at a consensus view and then act upon that view. To French managers the purpose of a meeting was simply to clarify the arguments they would later put forward to their bosses for consideration.

Remuneration system and status of employees were another point of difference. For the French, hierarchical position and payment were dependent upon the educational qualifications of the incumbent.

For the British they were both based on the content of the job itself. These two different approaches to remuneration had caused some serious problems.

Following the French approach would mean that for similar jobs in the French parent company significant differences existed between the salary of an ingenieur and a technicien. In comparison, remuneration in the British partner tended to be based more exclusively upon the job actually done.

In the two of the alliances where technical problems had to be solved by bi-national teams, the underlying scientific approaches could be seen to diverge. The French favored the use of precise theoretical calculations to make sure in advance that a system would work, and would enjoy engineering sophisticated and very general solutions. The British were satisfied with a simpler system that proved empirically to work.

Japanese joint-ventures in China

This kind of cultural clash is a manifestation of the extent to which we all take our home-grown assumptions for granted and expect others to know them and to behave accordingly. Japanese joint-ventures in China are an interesting case in point.

Yager et al. (1994), in their study of foreign joint ventures in China, found that Japanese managers were almost baffled by Chinese workers' display of a lack of pride in and identity with their employer organizations. An examination of some of Chinese cultural characteristics shows that the underlying values of Chinese workers' attitudes to their workplace are quite different from those of their Japanese counterparts.

Culturally, China represents a "high-context" (Hall, 1959) culture, in which meanings often derive from relationships, authority and context. In China conceptions of self, morality, time, causality and probability may differ significantly from conceptions in many other countries (Redding, 1990). Indeed, the persistence of personalized loyalty (i.e. loyalty to a particular individual) in Chinese culture may impede development of organizational loyalty (Castaldi and Soerjanto, 1988). As a consequence, a sense of personal contribution to organisational objectives, so evident for example in the Japanese model of business operation, is not present in Chinese organizations (Yager et al. (1994).

In contrast, Japanese managers come from a culture where, among other things, employees are known for their high degree of commitment to their workplace, and for including it in their in-group. Consequently, the Japanese managers who had taken such sentiments and attitudes for granted found their absence in Chinese work environment puzzling.

There are also other aspects of Chinese culture which might cause some difficulties for joint ventures operating in China.

Traditionally, Chinese personal networking has been important, if not essential, to success, using extended family and other developed relationships and connections to gain cooperation and to get things done. The success of Chinese networking skill in building the effectiveness of small businesses, their interpersonal relationships, loyalties, and a system of mutual support do not seem to carry over to larger organizations, including joint ventures with foreigners. This had implications for discipline. Industrial discipline, a concept implying not only that workers follow a regimen in their jobs, but also the will of supervisors to exercise sanctions in controlling worker behavior, was non existent among Chinese workers. A sense of responsibility to the employer organization, consistency in work performance and follow-through also seemed to be unusual. There was a pervasive need to build identity to the enterprise. Although some joint venture managers reported initial resentment among workers for strict discipline and enforcement of work rules, companies that had adopted clear, enforceable expectations coupled with production bonuses and visible rewards seemed to be more successful (Yager et a., 1994).

An awareness of cultural differences between partners and respect for these could of course help ease complexities and tensions which might arise in an IJV, and thereby increase the chances of the joint venture’s success. But this may be easier said than done. Faulkner’s (1995) study provides a revealing example.

Faulkner found that mutual trust, sensitivity to company culture, and sensitivity to national culture were among the top five attitudes which have a strong association with alliance success. Nine out of ten joint ventures surveyed claimed to have positive attitudes on both or all sides towards national and corporate cultural differences. However, the situation was not always totally trouble-free.

British and Japanese JV

For example, in ICI Pharma, a joint venture of British and Japanese parentage, relationship seems to have met with culture problems. There seems to be, at least on the ICI side, a fundamental difficulty in moving mentally out of the strong ICI culture, into a sensitive understanding of partners from other cultures. The ICI Pharma joint venture has been in existence since 1972, yet ICI can still say: "One of the things that still holds us back in Japan is our lack of understanding of Japanese culture. Relationships are very important in Japan, and we are much less certain about what might spoil a relationship than we would be with a European or US company"

In another joint venture, the Courtaulds/Nippon Paint joint venture, attitude problems also seem to have placed a brake on the development of the relationship. The venture started off well because the people setting it up were sensitive to their cultural differences: "... then there were people changes, and the older people who knew Nippon very well retired, and the younger people came in and didn't understand the Japanese culture, and way of doing things"

The inherent difficulties are involved in adopting and maintaining positive cooperative attitudes in international strategic alliances.

This internal conflict only emphasizes the apparent importance of the attitude question in sustaining a positive alliance relationship (Faulkner, 1995).

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Categories: International Management Culture International Negotiations International Joint Ventures Int HR Management

Negotiations in International Joint Ventures

August 9, 2007 0 comments

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Language

One of the major issues concerning negotiations with trade partners from other cultures is language. Although it is not always necessary to know the partners' mother tongue, various research studies have shown that a correlation exists between successful company performance in winning new business in foreign markets, and the ability of the company to conduct its business in the language of the customer.

Competence in foreign languages is most needed by those involved in export, marketing, sales, technical work, arranging a joint venture deal and any other activities aimed at establishing and facilitating trades between companies and institutions concerned.

It is of course possible, and that is precisely what many business people do, to hire an interpreter. But the knowledge of a partner's language or the use of an interpreter is not enough to create shared understanding between people from different cultural backgrounds. Language represents and expresses the culture, the value systems behind it. Not knowing this underlying culture can cause problems.

As Jankowicz (1994) points out, some people tend to underestimate the difficulties involved in the creation of shared understanding and scarcely recognize the issue of cultural differences.

Polish and French Managers

Jankowicz makes a further pertinent point, in the context of the problems involved in teaching Western management theories and practices to Polish managers. Using terminology taken from French literary criticism he makes a distinction between langue (language as translated) and parole (language as experienced in a given culture).

If this distinction is not recognised by partners involved in multicultural dealings, misunderstanding is bound to happen.

Pollard (1994) suggests that language was a significant factor in negotiations between UK and Kazakh managers where misunderstandings of words were traced to differences their contextual interpretation.

Japanese and British Managers

A business anecdote concerning a Japanese and a British manager who conduct a deal in English language illustrates this point. While the British manager goes through the contract clause by clause, setting out his conditions, the Japanese manager keeps saying 'yes'. By the time the British manager has reached the end of the text and conditions, he thinks he has clinched the deal, only to be told by his Japanese counterpart that he now has got to go back to his headquarters to discuss the matter with his boss. What the British manager understood by 'yes' was agreement with the clauses; what the Japanese manager meant by 'yes' was 'yes, I hear you, carry on, tell me more'.

There are of course other aspects of culture which manifest themselves in a negotiation situation.

As Hagen (1988) points out, foreign partners not only speak languages other than one's own, but also have a tendency, for cultural reasons, to think in different ways and have different priorities in the way in which they do business.

For example, some people prefer to conduct their business meetings with foreigners, initially at least, in a formal manner, and would be offended to be addressed by their first name; some might believe that the use of an informal style and first name would signal to the partners that they are trusted. Two partners from these different cultural backgrounds could easily misunderstand each other if they engaged in negotiations without a prior knowledge of one another's assumptions and values.

Take another example of cultural differences among business negotiators. In some cultures, people involved in business deals, would like to build up personal relationships first and establish the trustworthiness of their trade counterparts before going on to engage in business contracts and activities with them.

Kazakh and British Managers

This factor was particularly important in both Kazakhstan IJVs, the UK-based organizations both reported that significant amounts of time had to be devoted to building up relationships with local management and officials before any venture-related negotiations could take place.

Alternatively, in other cultures, business negotiators would prefer to get down to the nitty-gritty of the deals and contracts straightaway, relying heavily on the legal rights and obligations clauses included therein to safeguard their interests, which reflects business negotiation practice in the USA.

American and European managers

Altany (1989), comparing American business people with their European counterparts, points out that Americans often feel that the European practice of meticulously cultivating personal relationships with business associates slows the expedient conduct of business.

They argue that time is money, and the Europeans waste time. But to the Europeans in general, trust and long-term commitment - not legal contracts and short-term gains - are the heart and soul of a solid business relationship. And the European approach, slower though it is, usually leads to longer and stronger business alliances. The development of these long-term alliances can bring rich rewards for European business partners.

The concept of high-context and low-context is of relevance here. A feature of the high-context, personal style of doing business is that people spend time with clients and partners, become friends and in the process produce reciprocal feeling of obligation. Here there is a greater distinction between insiders and outsiders, between 'us' and 'them' than is found in low-context business cultures.

Relaxing with business clients during lunch and after work is crucial to building the close rapport that is absolutely necessary if one is to do business in a high context business culture; whereas this is not as common or necessary in low-context business (Hall, 1977; 1989; Hall and Hall, 1990).

The manner in which information exchange and communication are structured in negotiations and other business encounters can also reflect the high and low contexting. For example, high-context people, such as the Japanese, are rather slow getting to the point and do not expect to have to be very specific even when they do. They talk around the point. They think that intelligent human beings should be able to discover the point of a discourse from the context, which they are careful to provide. In contrast, the low-context people are fast getting to the point, tend to over-inform and are much more direct in delivering their message. (Hall, 1977; 1989).

American and German

Meyer's (1993) analysis of a group of American and German managers who were engaged in a joint project illustrates the difficulties and challenges that multicultural teams experience at the formative stages of their negotiations and cooperation.

Meyer’s study demonstrates that the Germans and Americans have divergent expectations about appropriate behaviors on at least three levels:

  • the process of relationship and trust-building,
  • the process of communication,
  • and the management of meetings.

The German process of relationship-building is slow, drawn-out and interspersed with frequent 'tests' of the actual level of trust achieved. In contrast, the Americans, even if previously unfamiliar, begin a new relationship in a personable and friendly manner as each party is eager to invest the new relation with an up-front measure of good-will.

As regards communications, American negotiators perceive the German style as directness, even blunt, whereas the Germans complain about the chattiness and superficiality of their American counterparts and their tendency to engage in non-committal 'small talk'. This may reflect the ways in which verbal communication is viewed by the parties involved.

For the Germans, conversation is a channel for exchange of information and the distinction of right from wrong, true from false (Dahrendorf, 1967).

For the American the culturally defined purpose of conversation is more to cultivate social bounds between speakers.

In meetings, the Germans tend to follow a predetermined agenda rather rigidly, but the Americans view the agenda as a loose set of guidelines which can be deviated from freely as and if necessary.

American and Chinese

In a case study of an American multinational company, which is in the process of setting up a joint venture in China, Tayeb (1996b) observed further manifestations of cultural implications for negotiations.

For example, even though the negotiating team includes two members of Chinese origins who are fluent Mandarin speakers, there are still causes for frustration and tension. The negotiations are progressing at a very slow pace, a pace determined by the Chinese partners.

When the team first went to China, the expatriates from the parent company already posted there warned the team of what they might expect in this regard: As one of the team members pointed out, ‘The Chinese will move at the speed they want to move at, they probably don't have all that much in the way of concern for schedule. Time isn't of the essence, it's more the quality of the discussion or the quality of the exchange. And the faster that we try to go then the more it would cost us to do it. We would have to give up more and more and more until we're probably losing money on the deal’.

The partners started in March 1995 on negotiations in Beijing and months later they have still a long way to go.

Typically, when negotiators reach a certain position, the Chinese partners say they must now go back to the ministries that support them, and they will come back and say that, for instance, the deal was unacceptable, and the whole process starts all over again. Or they may change team members on their side because, for example, the government ministries do not feel they are doing as good a job as they might be. This means that the Scottish negotiators have to get their side of argument over to these new people.

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Categories: International Management Culture International Negotiations International Joint Ventures

International joint Ventures and National Cultures

August 9, 2007 0 comments

The extent to which other nations’ cultures might influence any firm with overseas interests depends on the degree of its internationalization and on the aspects of its activities (Tayeb, 1996a).

Internationalization

Internationalization process could entail various stages and forms from simple export or import through to franchising, licensing, turnkey projects, to establishment of joint ventures and wholly-owned subsidiaries. The extent to which a company decides to internationalize depends, among other things, on the size and nature of their domestic market, their production capacity and capability, and the financial and other resources like the expansion into foreign markets requires.

The relevance of other peoples' cultures become greater for a firm as it spreads its activities and products beyond its national boundaries to reach foreigners with different value systems and tastes. The farther internationalization goes, the more company's involvement with foreigners will be, and the more sophisticated the device would have be to respond to their demands and expectations.

Major aspects of organization

There are three broad areas of activities in which virtually all companies engage:

  • those concerned with the strategic and planning aspects of their business;
  • those related to their internal organization (notably human resource management);
  • and those concern the interface (e.g. marketing and negotiation) between internal and external aspects of their activities.

The extent to which national culture influences organizations' activities, even in the case of fully globalized ones, depends on the types of activities performed.

For international joint ventures this relevance of culture is most pronounced at the initial stages of negotiations between the would-be alliance partners, and then later at the core values and strategic policies that they would develop jointly and the processes leading to their agreements on their characteristics. These stages of cross-border cooperation require sensitivity to the cultural backgrounds of the negotiators and of the employees who later staff the venture. Cultural insensitivity here is a prescription of failure (Konieczny, 1994).

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Categories: International Management Culture International Joint Ventures

National Culture and International Joint Ventures

August 9, 2007 0 comments

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Background

International strategic alliances have been growing in importance in recent years as a choice vehicle for companies to expand their product, geographic or customer reach (Contractor and Lorange, 1988; Gugler, 1992). Between 1990 and 1995 the number of domestic and cross-border alliances grew by more than 25 percent annually (Bleeke and Ernst, 1995).

As the term ‘strategic alliance’ implies, companies involved in a strategic alliance join together in an exercise of shared strategies and vision, usually in order to be able to handle their environment and markets more effectively, but not shared financial and managerial activities. The companies may own certain proportion of each other's shares, but they do not become a jointly owned entity and do not lose their independence. They may even exchange senior executives on a reciprocal short-term 'visit' basis, and develop common career management learning and development policies, but they do not merge their employees.

Joint ventures move a few steps further than strategic alliances, to shared assets and ownership, pooled skills and knowledge, mixed employees, and joint management. Joint ventures have become a popular mechanism both nationally and internationally and their numbers have grown dramatically since the 1980s (Geringer and Woodcock, 1989; Harrington, 1988; Hergent and Morris, 1988).

International joint ventures, formed by organizations in two or more countries, have become a widespread form of cross-border business cooperation. They offer unique benefits of cross-culturally meshing each organization's complementary skills, assure or speed market access trans-nationally, leap-frog the host nation's technological gaps, and strategically respond to the increasingly intense national and global competition (Killing, 1982; Beamish et al., 1994).

International joint ventures have proliferated because individual companies recognize that expansion into new markets can be resource-intensive and risky. Traditional models of acquisition and merger are less attractive, especially if the venture is product- market- or time-dependent. Companies may meet significant resistance to opening new markets in foreign countries, as governments strive to protect local firms (Datta, 1988).

Many governments, notably those in the former socialist countries of east and central Europe and a vast majority of the so-called developing countries around the world, may require a stake in international joint ventures or insist that local companies have a significant holding of the new company equity.

Joint ventures, and indeed other forms of strategic alliances, have had a mixed record. As Bleeke and Ernst (1995) point out, the term alliance can be deceptive. In many cases, an alliance really means an eventual transfer of ownership. The median life span for alliance is only about seven years, and nearly 80 percent of joint ventures - one of the most common alliance structures, ultimately end in a sale by one of the partners.

Many reasons such as strategic misfit, pre-occupation with short-termism, and incompatible organizational and human resource management policies have been offered by researchers as the causes of the relatively high failure rate of alliances (see for instance, Niederkofler, 1991; Harrigan, 1986; Harrington, 1988). International joint ventures also appear to be particularly susceptible to failure on the management and other behavioral fronts caused arguably by higher potential for cultural misunderstandings.

As Faulkner (1995) puts it, long term success, whilst obviously reliant upon the economic benefits, is also particularly strongly dependent upon the attitudes of the partners towards each other, how they manage the joint enterprise, and on the degree to which the partners adopt a positive learning philosophy, thus enabling the alliance to evolve, all of which are influenced by the cultural characteristics of the partners involved. Indeed, many of the problems and misunderstandings in international alliances and joint ventures have their roots in the cultural differences existing at both national and organizational levels.

Examples of the effect of cultural differences on international joint venture performance have been documented by Peterson and Shimada (1978) and Simiar (1980). They found that cultural differences frequently led to failure on the part of parent company managers to 'understand' one another. The resultant breakdown of communications generally had significant negative consequences, sometimes leading to collapse of the venture.

The implications of national culture for international joint ventures (IJVs) are most likely to be influenced by the national cultures of the partners and the socio-cultural and political economy of the country in which the IJVs are located as well as the relevance of other closely related factors such as organizational culture and the creation of the ventures.

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Categories: International Management Culture International Joint Ventures

International Business Management

August 7, 2007 0 comments

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"1. An introduction to International Management <http://lisaconsulting.com/presentation/intmanaement/>"_ and its importance. The role of international managers.

"2. The International Business Environment <http://lisaconsulting.com/presentation/intbuzenvi/>"_ Developments in international trade. The importance of the Triad. Developments in the international business environment including the importance of economic groups such as the EU, NAFTA, ASEAN and others. Political, legal and technological issues in international business. The complexity of the international business environment, relations with host governments. The competitive advantage of nations. International competitiveness and its impact on international management.

"3. Culture and International Management <http://lisaconsulting.com/culture4/>"_ Cultural issues and the international firm, cultural diversity, convergence and divergence. Models for analyzing cultural differences. Cultural issues in the workplace and the diversity of management styles, a critical analysis of the work of Hofstede and others.

"4. International Business Ethics and Corporate Social Responsibility <http://lisaconsulting.com/presentation/ethics/>"_ Ethical behavior in MNEs, tensions in international management. MNEs and corporate social responsibility. Current debates.

Unit 5. International strategy

International corporate and business level strategy. International entry strategies.

"6. International Collaborative Strategies <http://lisaconsulting.com/presentation/jointventures/>"_

International collaborative strategies, strategic alliances and joint ventures. Managing International Joint Ventures

"7. Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

and "A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

"8. Managing in Multinationals <http://lisaconsulting.com//presentation/managingmne/>"_

Managing multinational and transnational firms. International organizational structures and their evolution. Managing innovation in MNCs/TNCs. Planning, organizing and controlling international businesses, the importance of synergy in international operations.

  1. International Staff Deployment

"Expatriate Compensation <http://lisaconsulting.com/presentation/expatriatecompensation/>"_

"Expatriate Deployment <http://lisaconsulting.com/presentation/workingabroad/>"_

Problems of expatriate deployment. Culture shock and expatriate failure. Training for expatriate deployment. A critical analysis of the work of Mendenhall and others. Developing international managers.

  1. The Future of International Management

Contemporary debates in international business development, developments in selected areas, the EU, NAFTA, etc. The internationalization of small businesses.

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Categories: International Management Culture Web Presentations Working Abroad Int HR Management

Practical Application - Working Abroad

August 5, 2007 0 comments

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As you learned the nature and content of culture and cultural differences, you can assess the impact of culture on important business processes; areas of business where cultural differences are a major consideration, in negotiations, leadership, working in collaboration with other firms and working abroad.

So you are now in a position to work knowledgeably and critically with cultural issues and their application.

Culture-based thinking and its application in organizations is a very complex area and no one has all the answers to cross-cultural problems.

It is more important to appreciate the basis and impact of cultural differences than to concentrate on artefacts.

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Categories: Working Abroad Int HR Management

Training Prior to Deployment

August 5, 2007 0 comments

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Researchers tend to classify the training process into three categories: low, medium and high rigor.

The choice depends on the capability of the company, the role being undertaken and the relative cultural distance.

For which expatriate situations and why would you choose (a) Low rigor training (b) High rigor training?

TRAINING RIGOR

The extent of effort by trainees and trainers required to prepare the trainees for expatriate positions

HIGH RIGOR TRAINING

  • Lasts over a month
  • Experiential learning
  • Extensive language training
  • Often includes interactions with host country nationals

Techniques: Field trips to host country, meetings with managers experienced in host country, meetings with host country nationals, intensive language training.

Objectives: Develop comfort with host country national culture, business culture, and social institutions.

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Categories: International Management Working Abroad Int HR Management

Why Expatriate Managers

August 5, 2007 0 comments

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Overview

Firms send staff to work abroad for several reasons. For many years it was the practice to send out headquarters staff in order to ensure that subsidiaries were managed in the way that HQ wished, a very ethnocentric position to take. It may be that management expertise or technical skills are not available locally or the organization may wish to develop international expertise in their staff.

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Categories: International Management Working Abroad Int HR Management

Repatriation

August 5, 2007 0 comments

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THE REPATRIATION PROBLEM

  • Difficult for many organizations
  • "Reverse culture shock"
  • Expatriates must relearn own national and organizational culture
  • Includes whole family

STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE:

  • A strategic purpose for repatriation
  • A team to aid the expatriate
  • Home country information sources
  • Training and preparation for the return
  • Support for expatriate and family

The repatriation process is of great importance. If the former expatriate is to be integrated back into the company and for the company to benefit from that person’s experience abroad.

Putting yourself in this position of returning to your home culture after a two-year absence, note down the things that might have changed most, such as personal relationships.

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Categories: International Management Culture Working Abroad Int HR Management

HR Management Factors and Expatriate Policies

August 5, 2007 0 comments

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Staffing Policies

Ethnocentric: parent country nationals + when: lack of qualified host nationals

why:

  • maintain corporate culture
  • need to transfer core competencies
  • examples: Proctor and Gamble

Polycentric approach: host managers manage host subsidiaries

  • less expensive
  • fewer cultural clashes
  • example: Unilever, but hard moving to transnational form

Geocentric: merit system regardless of nationality: problems--national laws; cost

Quite often, the firm's strategic and cultural orientation will determine whether HCN, PCN or TCN is used. Ethnocentric firms tend to use HCNs, whereas Polycentric firms (who use local talent) are happy to deal with the cultural differences involved. Geocentric firms may use a mixture of HCNs, PCNs, etc., depending on individual merit.

The Role of HR Management

Selection issues + who + career progression

Preparation +familiarization and orientation + training + inclusion of family members

Adaptation + help with local regulations + mentoring

Repatriation + information on return position + making use of expats. experience

EXPATRIATE POLICY COMPARISON

POLICY ISSUE TEXAS INSTRUMENTS-1 MOTOROLA (2) COLGATE-PALMOLIVE
DEFINITION OF Spouse, unmarried Spouse and not available
DEPENDENTS children under 21 or working full time on an undergraduate degree. unmarried children through age 22 leaving with employer at home  
SELECTION Manager’s request Typically to fill a critical need A few are for development goals Unavailable Purpose: develop upper level managers who have international expertise
COMPENSATION Compensation based Home country Headquarters
BASE LOCATION on home country approach - base pay calculated at their home country rate (plus associated assignment allowances). approach approach - all U.S. expats paid based on N.Y Headquarters salaries with allowances calculated based on N.Y. as the home location
HOUSING Expat is paid a housing/utilities differential work country rate less home country amount of current rent or mortgage/utilities time of assignment Hypothetical housing deduction based on salary level and family status All housing + utilities paid in work country Housing differential paid using NY housing norm
RELOCATION One month base pay Flat amounts Lump sum equal
ALLOWANCE when departing and repatriating paid for departure and return $2600-single $3500-married to 10% of base salary - up to $10,000
TEMPORARY 2 weeks in home Eligibility Eligibility
LIVING location prior to departure 2 weeks in work location upon arrival; expenses paid begins 1 year after start of assignment. May request lump sum payment. after 7 months on assignment and in 12 months intervals thereafter.
HOME LEAVE Accrues at 12 month intervals, beginning with the first anniversary from assignment start date. Can establish destinations and use for multiple trips. Expat budget to go to alternate destinations and use for multiple trips. Expat can take home leave 12 months prior to actual accrual and for 12 months following the accrual Eligibility begins 1 year after start of assignment. May request lump sum payments Eligibility after 7 months on assignment and in 12 months intervals thereafter.
DUAL CAREER/ Compensate for the Unavailable Career search
SPOUSAL INCOME lost goods/services that the spouses income contributes to the families goods and services spending. Offset home country housing and utilities costs by spouses percentage of contribution to the total family income.   reimbursement of $7,500 or tuition reimbursement overseas
  1. Texas Instruments Policy #02-06-04 “International Cross-Regional Assignments” (1996)
  2. Motorola International Personal Policy Manual (1992)
  3. Colgate-Palmolive Case.

SURVEY/RESEARCH ON EXPATRIATE PROGRAMS

1997 Worldwide Survey of International Assignment Policies and Practices by:

Organization Resources Counselors, Inc.

(ORC) Global Relocation Trends 1995 Survey Report

Sponsored by:

Windham International and the National Foreign Trade Council (NFTC)

1996 Survey of Expatriate Tax and Compensation Policies by: Price Waterhouse LLP

“Best Practices” 1996-1997 International Assignee Research Study by: Berlitz International Inc., and PHH Relocation in cooperation with SHRM’s Institute for International Human Resources

Books:

The Management of Expatriates

Chris Brewster

Global Assignments: Successfully Expatriating and Repatriating International Managers

  1. Stewart Black, Hal B. Gregersen, and Mark E. Mendenhall

Developing the Global Organization: Strategies for Human Resource Professionals Moran, Harris, and Stripp

Posted by lisa
Categories: International Management Working Abroad Int HR Management Legal Agreements

Cross-cultural Adjustment Stages

August 5, 2007 0 comments

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  • Honeymoon
  • Culture Shock
  • Adjustment
  • Mastery

Mendenhall and his co-workers have evolved a model for the process of cross-cultural adjustment in foreign deployment, based on their research into American managers. They portray the process as successive stages of honeymoon, culture shock, adjustment and mastery.

The honeymoon period lasts for a few weeks and, like being on holiday, everything is novel. After that period, realization sets in that one is going to have to deal in detailed ways with another culture, that friends have been left behind and new associations must be built up and so on. For many, this is the 'make or break' period. After a few months, the adjustment period begins and it is only after about 18 months that one has begun to master local differences.

The above time-scale has enormous implications for those on two-year assignments. Essentially, the greater part of this time is spent in getting used to local conditions. This timescale may be diminishing as people become more internationally aware but it is still a significant factor for the use of HCNs.

Mastery may be something of a misnomer, since no one really masters another culture, especially on deployment. But it can be seen as a relative term, the expatriate having become familiar with the local culture and able to deal with such things as local laws and procedures, as well as the development of strong workplace associations.

Mendenhall and Oddou (1991) International Adjustment

Degree of adjustment depends on:

  • Self-orientation
  • Organizational Culture
  • Non-work issues
  • Job issues
  • other issues - how difficult an assignment (Hofstede distance?)

This sums up the attributes of a successful international manager and the role of technical expertise.

Note that organizational culture is important, as the management context of the subsidiary may be quite different to that of headquarters and the role that the expatriate is expected to play is different to the job at home base.

Posted by lisa
Categories: International Management Working Abroad Int HR Management

A Process Model of Expatriate Deployment

August 5, 2007 0 comments

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Researchers have investigated the process of expatriate deployment in some depth over the years, yet it seems that important elements of the process are neglected by some companies.

Below is one process model - there are many but this is a reasonable representation of a complex set of activities.

  • Selection and recruitment
  • Pre-departure preparation
  • Adaptation
  • Repatriation
  • Rotation

The first stage is selection and possibly recruitment of the international staff. Some researchers have argued that selection on technical expertise alone is not enough - the person selected must be able to work in a novel environment and still perform the tasks required. Therefore, in addition to expertise, personal capabilities such as flexibility, self-reliance, resourcefulness and an ability to build relationships with other people might be sought.

Pre-departure preparation is seen as desirable and for most people the specter of being sent on deployment at short notice with inadequate preparation has largely disappeared. There is much discussion about what pre-departure preparation is actually necessary.

The most complex part of the process is adaptation and adjustment. This is the process of settling down in a foreign country and developing a life in this new environment. This poses some fundamental challenges.

Most often the next two stages receive very little attention by companies. Having been abroad for two years or so, a person may now have lost his or her local social connections at home, as well as those with work colleagues. Reverse acculturation is sometimes quite a challenge to people, especially if they have spent lengthy periods abroad. Of course, companies will often wish to incorporate the staff member back into the home organization and perhaps use the foreign expertise (although quite often this does not in fact happen) and therefore some career planning may be necessary. And, of course, if that person is to be replaced by another working abroad, the whole process of rotation must be planned for to deliver a smooth handover of responsibilities.

Posted by lisa
Categories: International Management Working Abroad

Managing Overseas Activities

August 5, 2007 0 comments

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  • Parent Country Nationals (PCNs)
  • Host Country Nationals (HCNs)
  • Third Country Nationals (PCNs)

In theory, there are three classes of managing overseas activities: Parent Country Nationals (PCNs), Host Country Nationals (HCNs) and Third Country Nationals (TCNs).

'Parent Country Nationals' refers to the deployment of Headquarters staff abroad, i.e. a U.S. firm sends an American to manage its activities in Russia, a British firm sends a Briton to lead a team in Indonesia, etc. There is thus a very close cultural affinity between the staff member and the home base.

Increasingly, firms are employing nationals of the countries in which they are operating, i.e. an American firm engages a Russian to work in its Russian subsidiary, and a French firm engages an Italian to run its subsidiary in Italy. This is the case of Host Country Nationals, where such people have a close cultural affinity with the subsidiary but not with headquarters. Some firms find this a difficult situation to manage and prefer the use of PCNs.

There is an expanding corpus of managers and others who specialize in operating internationally. These are Third Country Nationals, such as a Dutchman working for a British firm in Germany or a Norwegian working for a Finnish firm in China, and so on. These TCNs have cultural affinity neither with HQ nor the subsidiary; however, they do bring desirable expertise to the company. One problem for management here is that the TCNs tend to be loyal only to their individual careers, rather that to individual firms.

Posted by lisa
Categories: International Management Culture Working Abroad

Expatriate Failure

August 5, 2007 0 comments

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Early recall of manager - company and employee effects

  • Many failures can be traced to poor company practices and lack of preparation
  • US failure rates estimated between 25 - 40%.
  • European data - 10% France, 3% Sweden, about 10% overall
  • Japanese data - about 5%

Typical Causes of Failure (US Companies)

  • Inability of spouse to adjust
  • Manager's inability to adjust
  • Other family problems
  • Manager's personal or emotional maturity
  • Inability to cope with larger overseas responsibility

Failure is defined in many ways but generally in terms of early recall of staff. This failure has serious consequences for both staff and employer.

Think and write down the possible effects of expatriate failure on both parties.

In fact, the effect on employers is easier to understand at first hand: there may be damage to the firm's standing in the market or damage may have occurred to working relationships within the organization or with supplier and customers Furthermore, expatriate deployment is an expensive exercise and, presumably, another member of staff will have to take over at short notice, adding further to the costs.

A little consideration will identify the problems of failure faced by the member of staff. Failure is always demotivating, at best, and could result in that person leaving the company's employ. However, the failure may not be the fault of the individual concerned - it might have been due to lack of preparation or even poor selection, both of which are the firm's responsibility. Alternatively, it might be due to problems with others and not the expatriate individual, for example. The data shows that U.S. failure rates are well above those of European or Japanese firms and it is interesting to speculate why this is so. The following two slides show the most common sources of failure in U.S. and Japanese firms. They are inherently different, U.S. failures tending to emanate from non-work situations and the Japanese from pressures encountered in the work situation.

Posted by lisa
Categories: International Management Culture Working Abroad

Expatriate Success

August 5, 2007 0 comments

PAYING FOR THE EXPATRIATE MANAGER

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Base Salary: + $150,000+

London + $300,000+

Tokyo + $250,000+

Hong Kong + $240,000+

Shanghai + $210,000+

Paris + $190,000

MOTIVATIONS TO USE EXPATS

  • Managers acquire international skills
  • Coordinate and control operations dispersed activities
  • Communication of local needs/strategic information to headquarters

KEY EXPATRIATE SUCCESS FACTORS

  • Professional/technical competence
  • Relational abilities
  • Motivation
  • Family situation
  • Language skills
  • Willingness to accept position

What makes for expatriate success? It is not technical competence alone which is involved - personal and family situations are important contributory factors. Some commentators suggest that language skills are an important element but this is disputed, considering different expatriate communities and the help of local staff in dealing with language difficulties. Certainly, motivation and a desire to succeed are important but so is proper selection and preparation, not only for the staff member perhaps but also for other family members.

Success does depend on external factors in addition to personal attributes. The length of the assignment, the cultural distance to be crossed and the amount of interaction required are all factors germane to success. A long assignment for some may have serious family repercussions, for instance. Moving between two English-speaking cultures is easier than, say, between England and Russia. Working in mainland China is a challenge for everyone, including citizens of Hong Kong and Taiwan, but Europeans would find the difficulties more extreme. Working on computer systems is less demanding in cultural terms than selling or marketing where a good deal of interaction with local people may be required.

The effect of the complexity and the responsibility of the role abroad are relevant. The job may be the same but the responsibilities and interactions different, in which case the manager will face additional complexities, compared to the job at the home base. If the job is essentially the same, complexity is reduced and so is the possibility of failure.

Take a moment and reflect on these causes of success and failure, relating them to your own experience of foreign cultures. Which, if any of these factors would be particularly relevant to yourself?

Posted by lisa
Categories: International Management Working Abroad Int HR Management

Women Expatriates

August 5, 2007 0 comments

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INTERNATIONAL ASSIGNMENTS FOR WOMEN TWO IMPORTANT "MYTHS"

  • Myth 1: women do not wish to take international assignments
  • Myth 2: women will fail in international assignments because of the foreign culture's prejudices against local women

SUCCESSFUL WOMEN EXPATRIATES

  • Foreign not female
  • Emphasize nationality not gender
  • The woman's advantage
  • Strong in relational skills
  • A wider range of interaction options

Many firms refuse to send women to undertake expatriate roles because it is believed that they will face considerable difficulties abroad, especially in male-dominated societies. This myth has been attacked by researchers who found that, in fact, females tend to be more flexible and able to build communications networks effectively, overcoming some of the problems of cultural adjustment more easily than many males.

Also it seems that even in very male-dominated societies, women can still function effectively because, being foreign, they can be treated differently from indigenous females. So it seems that the perception of women as unsuitable for overseas deployment is a mis-match between capabilities and opportunities. Sufficient to say that it is the technical and other capabilities that makes for a successful deployment, not the sex of the manager.

Some recent research has shown that international companies tend to favour males for overseas assignments, pointing to the difficulties faced by females, especially in certain societies. Japan, Korea and Saudi Arabia, especially, are particularly difficult for women. Yet female managers have held successful assignments in difficult conditions and perhaps the problems of female overseas assignments have become stereotypes, rather than reflecting reality.

Gesteland (2000) tells the story of a Danish woman who was employed by a Singaporean company who, learning that Japan, Korea and Saudi Arabia were particularly difficult for women, asked to be placed on assignment in all three countries. Not only was her assignment successful but she exceeded previous sales figures and was even offered a job by one of the companies she visited.

It also seems that, in countries such as Japan, local women rarely obtain senior positions but foreign women, being different, may have high levels of responsibility. Therefore, Japanese males approaching a foreign female manager may well treat her very differently to a Japanese woman. That said, Japanese males still find it difficult to deal with females and a colleague tells the story that, when a Japanese company visited her department to negotiate prices for various components, they assumed that this lady was attending the discussions to take notes! In fact, she is a senior procurement manager and an important member of the negotiating group! Even when she was introduced, the Japanese team found it difficult to address her directly.

Posted by lisa
Categories: International Management Working Abroad Int HR Management

Working Abroad

August 3, 2007 0 comments

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This aspect of organizational life has concerned researchers and managers alike for many years, because it is generally recognized that sending a manager to work for the company abroad is a challenging experience, where failure could be costly for both parties. In the case of the employee, failure might be a significant demotivator and may cause him or her to leave the company, with an attendant loss of resources for the firm and might even cause the employee to rethink their future career path, even though the fault was not entirely of his or her own making. From the firm’s point of view, failure is not only expense but it might also damage its market position and affect customer relationships. Consequently, many firms now provide mechanisms for the preparation and support of the manager posted abroad, to help the manager perform to the bet of his or her ability as soon as possible after arrival.

Full details of the research do not concern us here but some important points can be made, illustrating typical problems that might be encountered and suggested steps taken to alleviate some of the pressures of working abroad.

Modern business careers increasingly involve some time working abroad, as firms increase their international activities. For many, progress in their career is dependent on international experience and there are an increasing number of people who specialize in international management, undertaking assignments for various firms during their careers.

Many students, for that matter, are undertaking study abroad, either for a semester or for a whole year. Both these activities necessarily involve people experiencing cultural differences, even in similar cultures such as the U.S.A. and Canada, Sweden and Denmark, etc. Living in a foreign country on a day-to-day basis for a significant length of time means dealing with another culture beyond the artefact level and, for many, this has a major effect on their lives. We explore what we call expatriate experience, particularly in a business context.

We are concerned here primarily with medium- and long-term deployment abroad, short business trips and short-term business projects being excepted, as they do not have the same impact on people's lives. We look at some of the fundamental reasons for working abroad, the cultural impact on the people concerned, suitable preparation for foreign deployment and factors connected with repatriation.

Posted by lisa
Categories: International Management Culture Working Abroad Int HR Management

Culture and Leadership

August 2, 2007 0 comments

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Management style is an important factor in cross-cultural management studies, both in terms of national and organizational culture. It is obvious that, in a rapidly internationalizing world, managers are having to lead a variety of people situated or originating in different countries. Cultural differences in leadership processes and styles have only recently attracted research attention, perhaps because of the increasing pace of globalisation but also because it has become evident that the process of managing a British worker may not be applicable in leading a group of Chinese workers. As countries of origin begin to blur, the issue of leadership effectiveness in different cultural settings is becoming an important topic of analysis. Leaders throughout the world are faced with linking employees from diverse cultural backgrounds where the workforce is multicultural. The trait, personal-behavioral and situational explanations of leadership paid little attention to multicultural differences, stereotypes, biases, language differences and a host of other factors. Putti et al (1998) contend that, while some countries accept a participative leadership style, in other countries (high power distance ones particularly) authoritarian styles are more acceptable.

Lately, this rather neglected area of international management research has been addressed on one of the biggest cross-cultural studies since the work of Hofstede in the 1980s. Named ‘The Globe Project’ a group of researchers from a wide range of countries have been brought together to investigate cultural differences in leadership. The Globe Project website contains a wealth of information and a number of working papers are available free of charge in a range of formats.

Consider the role of leadership in managerial behavior and note down some aspects of leadership that might be subject to cross-cultural differences. For example, some people would perceive a good leader as being a champion for the department or section.

Posted by lisa
Categories: International Management Culture

Transfer of Knowledge Across Borders

August 2, 2007 0 comments

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For many joint ventures, and for many firms, one major difficulty is the transfer of knowledge between different cultures. Educational systems differ around the world; this factor has an effect on the design of training schemes for all levels of staff.

One example can be given: The former COMECON countries have been striving to make the transition to a market economy. For many years, management effort was devoted to achieving production quotas set by the center. Now, company managers need to carve out their own futures and, of course, require new expertise to do this. However, one must not make the mistake of thinking that what is relevant to managers in western Europe is as relevant in Poland or Hungary, because of the legacy of the communist years. Therefore, the transfer of knowledge across borders requires more than technical expertise - it also needs a cultural dimension.

What has to be considered the major cultural impediments to business-related learning across borders?

Posted by lisa
Categories: International Management Culture Working Abroad

Culture and Joint Ventures or Strategic Alliances

August 2, 2007 0 comments

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It was mentioned earlier that negotiations were not only about sales and supplies but also about firms working together to achieve mutual benefits. We now move to this subject to consider the cultural implications for firms working together in joint ventures.

Briefly, there are three main areas of cultural impact.

That is, the negotiations concerning the setting up of the venture, a strategic partnership between two or more independent firms.

The second area is in the management of the venture once it is implemented; managing in a joint venture is very different from a conventional firm, in that one may have to influence perhaps, rather than command. A clash of management styles is therefore bound to happen and it depends on the expertise of managers to overcome this clash and evolve ways of working together.

The third area is in staffing the venture and inter-staff relationships.

Posted by lisa
Categories: International Management Culture International Negotiations

'Chile: A Latin experience in patience'

August 2, 2007 0 comments

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Hector Raos McLachlin is a Canadian citizen from Vancouver. He is also part Chilean, a heritage that traces through his grandmother, who married a mining engineer shortly after World War II. Hector's mother was born in Chile before the family moved to Canada and as a young man Hector came to be known by the name Raos, after his maternal family name. He grew up hearing intriguing stories about the mountains and streams of his grandmother's home in the wine country some distance from Santiago. Raos majored in commerce while at college and as a young adult he worked in a trade office where he learned about international transactions, including much about Latin American trade. He had been brought up to understand Spanish, although he was not well schooled in the finer points of Latin culture. Nevertheless, lifelong preparations set the stage for Raos to take the entrepreneurial plunge in 1996, when Canadian customs regulations changed to favour the import of foreign wines.

Financed by a legacy from his grandfather, Raos went to Santiago to establish a Co-operative venture with a winery offering wholesale capabilities and government backing to expand export trade. To Raos's surprise, the Chilean wineries made excellent products and he hoped that government subsidies and tax breaks on export quotas would help him to build a thriving trade through Vancouver connections.

On his first visit to Chile, Raos met with two members of the Allende family, who owned the winery in which he was interested. During a four-day visit, he examined the fields, toured several of the family's facilities and studied their warehousing system and retail outlet in Santiago. The Allendes were very cordial hosts but they adopted unexpectedly formal attitudes. Dressed exquisitely in European suits, an elder family member and his 20-ish son seemed to follow an agenda of meetings and site visits, coupled with long lunches and dinners that began near midnight and lasted well into the early morning hours. After their initial meeting, Raos quickly shopped for an up-market suit and several expensive shirts, clothing that he had not brought with him. He matched the Allende protocol in appearance and demeanour - a smart move in retrospect, since these occasions included introductions to bankers, government officials and merchant friends of the family, as well as several cousins, uncles and in-laws.

In each instance, casual conversations stretched over long periods, almost always covering the same ground. His acquaintances wanted to hear about his grandparents, where his mother had been born, what relatives they had in Chile now and what his family did in Vancouver. The questions were so patterned that Raos became weary of answering them.

Throughout the visit, little was said about why Raos had come to Chile. The Allendes knew of his proposal for a cooperative venture through correspondence prior to the trip but, whenever he tried to speak of business, the elder Allende would change the topic through a somewhat boisterous anecdote or story. In one conversation with a banker, for example, he broke into a long explanation of how the family had fought through a drought that had almost devastated their vineyards. In another instance, he explained an ordeal of finding a supplier of wine bottles. During dinner with a government trade counsellor, Raos was left to chat with the official's wife while the Chileans debated changes in politics. Raos was tempted to butt into these stories, feeling irritated by what he perceived as self-centred boasting by the elder Allende. Even as Raos was escorted to his flight home, the elder Allende made an odd remark that Raos, being "paled by the lack of sun in Canada," should "return to the warmth of Chile."

Several months later, Raos visited again. In the interim, he had corresponded in detail through the younger Allende about an agreement either to import wine to Canada as a broker or to make an equity investment in a separate export company that would wholesale the Chilean wine in Vancouver. Raos wanted to create an equity joint venture and his correspondence was weighted toward persuading the Allende family to agree with his plan. However, when he arrived in Santiago to pursue the negotiations, he was met by the younger Allende and an uncle who seemed to convey very guarded messages about any business venture. Talks dealt more specifically with business prospects than those during the first visit but Raos was left with the feeling that the family was quite happy with its current business, without the complications of exporting wine to Canada.

General details about price points and margins were discussed, questions about shipping wine and whether it would "travel well" were brought up and various issues such as bottling, case-quantity storage and currency differentials were raised. But legal issues and contract terms were not discussed. The Allende uncle often told boastful anecdotes, much as the elder Allende patron had done, but he was a gracious host and agreed to visit Vancouver in the spring of 1997. The younger Allende promised to discuss Raos's questions more carefully with his father and then to get back to Raos on the finer points of doing business.

Several months passed and Raos eventually sent a detailed proposal to the Allendes, with an offer of a direct equity stake in an export company. He outlined price points and projected sales and summarized a very thorough market report on potential customers. He put the offer in terms that he felt deserved a clear response - either acceptance or a counter offer - that would move the negotiations toward a conclusion. Instead, he was met with silence. The Allende family made absolutely no reply other than a brief fax to acknowledge receipt of his proposal. The uncle did not come to Vancouver and Raos's telephone calls seemed to be ignored.

Angered by the silence, Raos made an unannounced trip to Santiago in June 1997. He arrived in casual dress wearing no tie and, although tidy, he looked ready for a back-yard barbecue rather than an important business meeting. The elder Allende, dressed as though for the theatre at 10:00 A.M., greeted Raos with some reserve. He said that they would meet for lunch at Raos's hotel about 1:00 P.M. Raos went to the hotel and took a seat on the patio at the appointed time with a cool beer and waited. An hour passed and no one showed up for the meeting. At 2:40, the barman brought a message that his party would be coming soon. By 3:30, Raos was ready to leave. In fact, he was almost anxious to leave, to return to Vancouver and just forget the whole thing. He went back to his room and mentally wrote off the whole deal.

Shortly before 7:00 P.M., the younger Allende arrived with a driver. He apologized for a difficult day and the missed appointments, then invited Raos to pack his clothes and come out to his house to stay. He explained that his father would talk with him soon at home. Raos reluctantly allowed the driver to help pack him out of the hotel. On the way to the Allende home, Raos was told that the family had a surprise for him . . . someone to meet. When they arrived, Raos was escorted by the driver to a very nice upstairs room in a large villa and invited to refresh himself and come downstairs. The Allendes would be on the veranda, and he could come as he was or in even more casual attire.

Raos rinsed his face and hands, ran his fingers through his hair and wished that he had had a haircut before leaving Vancouver. When he reached the veranda, he was surprised to discover the entire family gathered amidst an impressive spread of snacks and catered foods, chilled wines and beer, and with two musicians who broke out in a lively tune on their guitars when Raos arrived. The elder Allende immediately extended a hand in greeting and clasped his other hand over Raos's in a strong and unexpected gesture. He was dressed in perfectly creased casual slacks, his greying hair carefully combed, yet he sported a colourful shirt that was purposely opened to reveal, in macho style, a golden chain and cross.

"We celebrate a new member of our family today, Raos," Allende said. "You will be our adopted son and you will sell our wines, and make everyone very proud. Our grape will be the toast of Vancouver, and you and my other sons will make their mothers very happy." This grandiose announcement left Raos unable to speak. Before he could gather himself even to think straight, the elder Allende continued. "And this, Raos, is my personal surprise for you." He made a sweeping gesture with his arm and introduced a lovely lady, probably in her 70s, who stood up from a small straight chair. She nodded her head with a slight smile of greeting. "This is your grandmother's youngest sister whom we fortunately found living peacefully in a beautiful valley near your home."

Raos was still unable to respond with composure but he greeted the lady somewhat awkwardly and they exchanged a sincere-but-reserved hug. After refreshments, several more songs and somewhat difficult chats with his newfound relative, Raos spoke with the younger Allende. "I don't understand," he said. "I was ready to go home, and no one even bothered to meet me or to discuss our proposals. . . . what's going on?". "My father was waiting to see the real Hector Raos," Allende answered. "He liked you from the first day, as we all did, but we could not see what was inside you. You were behind your new clothes and too quick with your answers. We are not like that and it was my father's decision to see what you were really like."

"And what of my great-aunt?" Raos asked.

"My father wanted to know your bloodline," Allende said. "So much can be said through one's relatives but father also wondered why your people had not stayed close to one another."

"That's a good question," Raos said. "I knew, vaguely, that grandma had two sisters and perhaps a brother but we never spoke much about them."

"Oh, we understand," Allende said. "Your grandmother's sister is very proud of her Canadian relatives but we are simple people. You have other relatives who are on the boats, fishing from a village. The lady here, she lives in a valley and she even has old letters from your grandmother but she does not read or write very well. Father brought her here with a friend's help who owns a plane. That's why we were not at the hotel. My father, he is very impressed that you dare to come to his offices and speak your thoughts. He said 'We will work with this man' and that was it."

Posted by lisa
Categories: International Management Culture International Negotiations

Some Examples of Mapping Negotiation

August 2, 2007 0 comments

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Power distance

According to Hofstede, cultures which accept and expect that power is distributed unequally (with greater power distance index) will be more likely to have decision-making concentrated at senior levels, all important decisions having to be finalized and agreed by the group leader. The consequences for international negotiators are that negotiators from larger power distance cultures may need to seek approval from the supervisor more frequently and for more issues, leading to a protracted negotiation process. For example, Indonesian managers (who have a very high power distance index in Hofstede’s scoring) take about six times longer than comparable American managers to reach a decision (Gesteland 2000). This situation calls for a degree of patience from those negotiating with Indonesian managers.

Individualism/Collectivism

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Individuals play different roles in different societies. In some groups, the individual is seen as an important entity (such as in UK groups) who may be given negotiating authority and discretion. In contrast, Japanese managers negotiate as a group and are more concerned with achieving overall success than with any individual measure of effort or success.

In collectivist societies, relationships play a critical role in negotiations, which take a long time to rebuild if anything goes wrong. This can be contrasted with individualistic societies, where negotiators are more interchangeable and often rely on competences rather than relationships.

The consequences are that negotiators from collectivist cultures will strongly depend on cultivating and sustaining long-term relationships, whereas negotiators from individualistic cultures are more likely to swap negotiators whenever short-term criteria seem appropriate. For example, Indonesians expect the first negotiation meeting to be taken up with general conversation and socializing before actual business negotiations begin (Gesteland 2000).

Masculinity/Femininity

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The cultures perceive as masculine such qualities as assertiveness, the acquisition of money and ‘things’ and not necessarily caring for others’ quality of life or people. This dimension influences negotiating by increasing the competitiveness when negotiators from masculine cultures meet negotiators from feminine cultures, who are more likely to show empathy for the other party and to seek compromises.

Uncertainly avoidance

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This fourth dimension indicates how comfortable managers are in unstructured situations such as rapid change and novelty, as opposed to structured situations which are stable, secure and more absolute.

Negotiators from uncertainly avoidance cultures are uncomfortable with ambiguous situations and are more likely to seek stable rules and procedures when they negotiate. In contrast, the risk seeker is more likely to adapt to quickly-changing situations and will be less comfortable when the rules of negotiation are ambiguous or shifting. The Chinese negotiator may regard the final written agreement as less important than the strength of the relationship with the other company and they may expect to renegotiate the contract if circumstances change. Russians tend to see the agreement as simply another stage of an ongoing process, whereas for Americans the agreement is the end of the process.

From Hofstede’s work, the impact of cultural issues on negotiator behavior is clear, although not exhaustive. However, if the negotiating counterpart originates in a very different culture, the mixture becomes complex to manage. No cultural research fully describes all negotiation settings and experience is as important as knowledge of the procedures and practices.

You might like to take the dimensions in Trompenaars’ work and apply them to the negotiation process.

Note down the implications of each of the dimensions for the negotiation process and the implications for managers.

Posted by lisa
Categories: International Management Culture International Negotiations

Reaching Agreement

August 2, 2007 0 comments

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  • Formal agreements
  • Informal agreements
  • Agreement not to agree
  • Agreement to continue

The next stage may seem to be simple but agreements come in many forms and for some countries (Russia for example) the agreement is not the end of the process. Some negotiators make the mistake of immediately calling in their lawyers to handle the agreement, while the other party is still outlining the agreement. This early engagement of the law can be misconstrued as a lack of trust in the negotiators. Informal agreements can be as effective as formal ones and some companies still operate in this way, building long-term relationships into the bargain. If it is to be a formal agreement, the country in which the agreement is legal should be agreed, as should any financial arrangements. As a hedge against currency fluctuations, many firms will only use certain hard currencies, although this makes difficulties for developing countries that usually have a problem with currency reserves.

There are two further possibilities. Firstly an agreement not to agree is a valid outcome and in many instances is right and proper. If the companies are not going to get along, better it is found out now, rather than later when significant investments have been made. Secondly, an agreement to continue signifies that common ground may be found but it will take more time. Unless there are pressing deadlines, arrangements for further meetings can be made.

I mentioned Russia earlier in the context of agreements. For the Russians, an agreement is only another stage in the negotiation process; for example, if anything materially affecting the agreement changes, then the agreement cannot stand and must be re-negotiated. This view is at variance with that of the Americans, wherein the agreement is the end of the process.

To reach a mutually acceptable agreement therefore some concessions by both sides are usually necessary to achieve an agreement. Japanese negotiators tend to make all concessions at the end of the negotiating process and expect that these will lead immediately to the conclusion of the agreement. They believe that at this stage they should have understood the other side’s position and how it relates to their own, so that they are in a position to decide what concessions are necessary to reach the final agreement.

American negotiators, on the other hand, tend to make concessions throughout the negotiating process and to evaluate their progress towards agreement on a continual basis. They are put off when other parties do not seem to be willing to offer concessions early in negotiations and may interpret this to mean that their side needs to offer more concessions.

Negotiations can lead to conflict and here management expertise is very much tested.

Managing Conflict

  • Conflict - good or bad
  • treatment of conflict
  • approaches to managing conflict
  • resolving disputes

Although many nationalities will do their best to avoid conflict, this sometimes happens in negotiations and needs careful management. It is usually necessary to take the heat out of the situation by taking another route through the negotiations or by backtracking to a previous point of agreement and starting again. Conflict can focus the minds of negotiators but must be balanced by good sense.

All negotiations involve tactics and these must be used carefully if the discussions are not to be threatened.

The use of threats, for example, can not only compromise the discussions but make reconciliation difficult. Concessions must be managed carefully or the original requirements of the negotiations may not be met. Consider the process from two standpoints, that of winners and losers and that of win-win situations. The latter is the more popular outcome in contemporary negotiation practice.

Implications for the Manager

  • Preparation

check aspects of the other country and the other culture

  • Team

make-up consultations, authority for both sides

  • Where and when to negotiate
  • Preparing a strategy

priorities, importance, other party’s needs, concessions, development of trust, structure for negotiations

The above brief contrast of negotiating processes indicates that negotiations can easily break down because of lack of understanding of the cultural aspects. In the first and third stage, conflict can easily happen because of misunderstandings. The Americans may feel that the Japanese are wasting time in building unnecessary relationship and silence by the Japanese may also be misinterpreted. However, different timings in the stages will also cause a similar effect. For example, in stage two, the Japanese tend to know and understand others before disclosing information, whereas the Americans might disclose information at this stage.

Now review the negotiation process and note the progression from planning to agreement.

Assess each stage in the context of your knowledge of culture and assess the impact (if any) of cultural differences.

Posted by lisa
Categories: International Management International Negotiations

Persuasion

August 1, 2007 0 comments

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Tactics

  • clouding the issue by asking detailed questions
  • searching for direct answers
  • threats and promises
  • avoiding concessions
  • use of emotional behavior
  • the power of silence
  • getting beyond ‘yes’

For many, this is the core of the process and some make the mistake of treating this stage as the complete process, where as we have seen that there is much more to the negotiation process. There are a number of different tactics, which we need not go into details about here, save to say that the use of emotional behavior and of silence can both be very effective and also, if badly managed, may lead to a breakdown of negotiations. We bring our knowledge culture to bear again (remember Trompenaars dimension of neutral versus emotion?) Some people are very voluble, often raising their voices, not in anger but to emphasize a point. The British seldom show any emotion in negotiations, often misleading the Italians who may consider them unenthusiastic about a potential deal. The use of silence can also be very effective; it has been known for silence to push a negotiating team to making concessions they would not otherwise have made, in the mistake that the other party was not interested in their proposals. The Chinese and Japanese use this tool very well. Getting beyond 'yes' is again important: what does yes mean, that I am in agreement or that I understand?

This stage of negotiations focuses on efforts to modify the views of other parties to sway them from their current way of thinking. The Japanese negotiator believes that little persuasion should be necessary if the parties have taken the time to understand each other thoroughly. They will also react negatively to open disagreement and aggression. The Japanese tend to listen to persuasive arguments and respond with silence, which means that they will consider the argument presented.

However, American negotiators spend a lot of time and effort on persuasion. They are often aggressive in their attempts to persuade and use tactics such as threats to break off negotiations. Americans are uncomfortable with silence and interpret it to mean that that their arguments have not been understood or the other party is not willing to agree.

Posted by lisa
Categories: International Management International Negotiations

Negotiation Process

August 1, 2007 0 comments

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We now come to the short slide presentation and commentary on the negotiation process (negotiations - web presentation) determining the areas where there is likely to be a cultural effect.

Then we look at some country-specific themes, such as making deals and appointments, before going on to a general discussion on doing business in other countries. Finally, we will discuss other sources of information, bringing in issues from the theories of culture discussed above. Further reading will reveal some of the important implications for managers and students are encouraged to access various websites relevant to the discussion.

Overview

the stages contributing to successful negotiations: planning and preparation, building relationships, exchanging information, persuasion and reaching agreement. We will look at each of these in turn.

A Framework for Successful Negotiations

  • Planning and preparation
  • Relationship building
  • Exchanging task-related information
  • Persuasion
  • Reaching agreement

Planning

Some background Issues

Background and Circumstances + Company and country profiles, management styles. Negotiation Issues + what must be achieved, what would we hope to or would like to achieve, timing and location Participants + use of third parties Processes + dress code, location, ‘getting to know you’ + women’s roles

Here we are involved with background information-gathering about the negotiation. An obvious component is a view of what is to be achieved; yet many managers still begin negotiating without a clear vision of the desired outcome. There are other factors, however. We need some background information concerning the other parties, what country they come from; their company and potential styles of negotiation. If third parties such as intermediaries are to be involved, their role must be thought out. Finally, some of the artefacts require consideration, such as dress codes, gender issues, the location of the negotiation and what efforts are to be made to build interactions and personal relationships.

The location can be surprisingly important. As in politics, some companies favor a neutral ground, instead of using the other party's premises or their own. Dress codes can be important, as can the involvement of female managers, especially if the other party originates in a paternalistic society.

Here is an interesting story how a manager of a team negotiating the supply of electronic components from Japan. The Japanese firm sent a team of representatives to Scotland to complete negotiations on price and other supply considerations. On their arrival, the lady concerned went to meet the party in the firm's reception area. She greeted them and escorted the team to the room where negotiations were to take place, organized refreshments and introduced her colleagues. She then began to make conversation with each of the delegates, but particularly with the leader of the group. The group were very surprised that she remained in the company, as the conversation was turning to business matters. Their surprise was complete when they found that she was, in fact, the most senior in status of the Scottish team; she said to me later that they had obvious difficulty in negotiating with a female, even though they were all experienced negotiators!

Relationship Building

  • personal introductions
  • building trust
  • socializing
  • importance of patience
  • seniority, age, authority and rank issues
  • business cards and gifts

Other cultural issues include the age and rank of negotiators, remember that in some societies age is seen as equivalent to seniority in the role whereas, increasingly, senior managers may be quite young (as in the USA). Authority is important, many nations expecting negotiators to be able to take action and without referring their decision for the sanction of senior managers.

Finally, we come to two important aspects: business cards and gifts. The giving and receiving of business cards is a ritual with its own rules. For example, always give a Japanese your card holding it in your two hands, not one, as this symbolizes the importance of the process. Cards should also be received in two hands AND READ IMMEDIATELY, not put straight into a pocket. You will see many Chinese and Japanese leave your card on the table, so that they can refer back to it - this is a practice that might be taken up with advantage by others! Gifts are often a bone of contention but a small gift to the head of the negotiation team may well be appreciated.

Exchanging Information

  • formal presentations and position statements
  • ‘putting cards on the table’ (distributive) versus seeking others’ point of view (integrative)
  • selecting important data for the negotiations and information about expectations

The cultural issues here are language and the process of communication, both verbal and non-verbal. Obviously, if there is a language problem, it would pay to engage the services of an interpreter (your own if possible). It is best to keep the information specific and to reduce non-verbal behavior to a minimum so as to avoid misinterpretation. This can happen with verbal communication too - I have experience of situations where one negotiating team were saying 'yes' and the opposition thought that they were agreeing with them, whereas in reality what they were saying was ‘yes - we understand’, not necessarily with agreement. So it is important in this exchange of information stage to pause and ensure that the parties share an understanding of the information that has been shared.

Posted by lisa
Categories: International Management International Negotiations

International Business Management - Web Presentations

August 1, 2007 0 comments

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"Expatriate Compensation <http://lisaconsulting.com/presentation/expatriatecompensation/>"_

"Expatriate Deployment <http://lisaconsulting.com/presentation/workingabroad/>"_

"Cultural Issues in International Management <http://lisaconsulting.com/culture4/>"_

"International Negotiations <http://lisaconsulting.com/presentation/negotiations/>"_

"International Joint Ventures: Strategy and Operation <http://lisaconsulting.com/presentation/jointventures/>"_

"Business Ethics and Corporate Social Responsibility <http://lisaconsulting.com/presentation/ethics/>"_

"The International Business Environment <http://lisaconsulting.com/presentation/intbuzenvi/>"_

"Managing in MNEs <http://lisaconsulting.com//presentation/managingmne/>"_

"Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

"A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

Posted by lisa
Categories: International Management Culture International Negotiations Web Presentations Working Abroad

Building Your Personal Development Portfolio - Web Presentations

August 1, 2007 0 comments

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"Presentation Guidelines <http://lisaconsulting.com/selfpromotion/>"_

"OPPORTUNITIES AND NETWORKING <http://lisaconsulting.com/networkopportunities/>"_

"Action Planning, Matching & Decision-Making <http://lisaconsulting.com/actionplanning/>"_

"Development Focus <http://lisaconsulting.com/devfocus/>"_

"Understanding Principles of Good Organization <http://lisaconsulting.com/organizing/>"_

"Teamworking <http://lisaconsulting.com/teamwork/>"_

Posted by lisa
Categories: Building Your Personal Development Portfolio Web Presentations