Managing Across CulturesChapter OutlineChapter Outline (2)Ethnocentric Strategic OrientationEthnocentric Strategic Orientation (2)Polycentric Strategic OrientationPolycentric Strategic Orientation (2)Regioncentric Strategic OrientationRegioncentric Strategic Orientation (2)Geocentric Strategic OrientationGeocentric Strategic Orientation (2)Geocentric Strategic Orientation (3)Globalization ImperativePressures for National and Regional ResponsivenessDoing Business in ChinaDoing Business in China (2)Doing Business in China (3)Doing Business in RussiaDoing Business in Russia (2)Doing Business in IndiaDoing Business in FranceDoing Business in France (2)Doing Business in France (3)Doing Business in PolandDoing Business in Poland (2)Doing Business in Poland (3)Managing Across CulturesChapter 5Chapter OutlineStrategic orientations of global companiesEthnocentric orientationPolycentric orientationRegioncentric orientationGeocentric orientationThe globalization imperative vs. pressures for regional and national responsivenessChapter Outline (2)Doing business around the worldChinaRussiaIndiaFrancePolandEthnocentric Strategic OrientationThe values and interests of the parent company guide strategic decisionsEthnocentric Strategic Orientation (2)Mission is profitability.Top down decision making – major decisions are made at headquartersGlobal strategy, determined at headquarters.Global product (based on needs of home country)Home country managers hold key positions everywhere. Profits from subsidiaries are repatriated (go back) to corporate headquartersHeadquarters makes decisions about budgets, profit targets, and capital investment for the subsidiaries.Polycentric Strategic OrientationStrategic decisions are tailored to suit the cultures of the countries where the company operates.Polycentric Strategic Orientation (2)Mission is public acceptance (legitimacy)Subsidiaries set their own strategic objectives.Subsidiaries use national responsiveness strategies (based on local needs).Products are based on host country needs.Most profits are retained by the subsidiary.Subsidiary makes decisions about its budget and capital investment.Local citizens are trained for key positions.Regioncentric Strategic OrientationThe firm tries to balance its own interests with the interests of its subsidiaries on a regional basis.Regioncentric Strategic Orientation (2)Mission is profitability and public acceptance.Strategy is based on regional integration and national responsiveness.Strategic objectives are negotiated between regional headquarters and subsidiaries.Regional product, often with local adaptationsMost profits are retained in the region.Capital investment decisions are made on a regional basis.Managers are trained for key positions anywhere in the region.Geocentric Strategic OrientationThe company uses a global approach to decision making.Geocentric Strategic Orientation (2)Mission is profitability and public acceptance.Strategy is global integration and national responsiveness.Strategic objectives are negotiated among subsidiaries, regions, and headquarters.Global product, with local variationsGeocentric Strategic Orientation (3)Headquarters redistributes profits among subsidiaries to meet capital investment and budget needs.The best managers are developed for key positions anywhere in the world.Combines best features of geocentric and polycentric strategies.Requires more coordination and communication than other strategies.Globalization ImperativeThe "globalization imperative" is a belief that one worldwide approach to doing business is the key to both efficiency and effectiveness.In response to pressures for national and regional responsiveness, a growing number of firms have switched to regioncentric or geocentric strategies.Pressures for National and Regional ResponsivenessDifferent product standardsDifferent customer needs and tastesBusinesses or consumers prefer locally made productsManaging details in a global organization is difficult and complex.Subsidiaries know local market needs and management practices better than headquarters.Employees in subsidiaries seek promotion opportunities.Technical competence is the primary criterion for doing business in China *Time is the major cultural difference between many Western countries and China – Chinese are patient negotiators and may take advantage of American impatience or time constraints.Guanxi :Good connections that result in lower costs, increased business, and better business opportunities.Doing Business in ChinaBe a good listenerRealize that China is a collective societyUnderstand that the Chinese are less animated than Westerners. China is a neutral cultureEarly negotiations are likely to focus on general principles. The Chinese will be reluctant to change those later.Older Chinese may place values and principles above money and expediency. They value the good of their country or group.Doing Business in China (2)Allow Chinese host to signal the beginning of a meetingUnderstand that Chinese are slow to decide on a course of action, but stick to the decision once madeChinese negotiators expect concessions but do not always make a concession in return.Do not display emotions during negotiationsTake a long-term perspective toward business opportunities.Doing Business in China (3)Doing Business in RussiaBuild personal relationships with partnersUse local consultantsBe careful to uphold your own business ethics and the policies of your companyBe patientStress exclusivityDeal with just one firm at a timeDo not share your company's financial informationDoing Business in Russia (2)Research the company and the business environmentStress mutual gainClarify business terminologyBe careful about compromising or settling things quickly – most concessions should be made at the end.Russians believe that contracts are binding only if they are mutually beneficial. Continue to stress the benefits of the deal to them.Do not get into a dispute with the government.Doing Business in IndiaMany business people speak English.When dealing with people from India, one shouldBe on time for meetingsAvoid asking personal questionsUse formal titles when addressing othersAvoid public displays of affectionDoing Business