Lecture 4

- Management and Organization Systems

- Managing Across Cultures

 Learning Objectives

 Explore organizing models

 Examine the challenges of living and working

globally, as well as managing the expatriate
experience of others
Organizations and environments
 Corporate Level Strategy
in the International Perspective

• Ethnocentric (home country–oriented) approach

• Polycentric (home country-oriented, but decentralised
decision-making structure and more authority to the
subsidiaries)
• Regiocentric (regionally oriented, e.g., Regional people are
developed for key positions anywhere in the region.
Performance management occurs within regional
frameworks etc.)
• Geocentric (world-oriented- e.g., collaboration of
headquarters and subsidiaries around the world)
Some interesting
international/ ‘other’ examples….
‘Family’ organizing models
(e.g., business in China)- may include…

 Cardinal virtues: absolute loyalty to one’s superiors,

strict observance of seniority, subservience to superiors,
and mutual trust between friends and colleagues
 Guanxi: strong personal relationship between two
people with implications of a continual exchange of
favors
 Face: dignity, self-respect, and prestige (& avoid
‘public’ criticism/humiliation- can rather occur
‘privately’)
 Rank
 Harmony
‘Network’ organizing models (e.g., network,
subsidiary models popular in Japan)

Keiretsu and kaisha:

A keiretsu refers to a uniquely Japanese form of corporate

organization, consisting of a network of affiliated
companies (kaisha) that form a tight-knit alliance to work
towards each other’s mutual success.
(e.g., Mitsubishi)
 Also in Japanese organizations…

 Seniority (years of service) pay and promotion systems,

rather than merit based
 LEAN, TQM, Toyota
 Lean management (‘Kaizan’) is an approach to managing an
organization that supports the concept of continuous
improvement, a long-term approach to work that
systematically seeks to achieve small, incremental changes in
processes in order to improve efficiency and precision/quality
(and eliminate errors/flaws).
 The lean manufacturing principles have made it possible for
The Toyota Motor Corporation and its subsidiary companies
and suppliers to attain incredibly efficient production
processes with maximized elimination of waste and
maximized profit.
 ‘The Toyota way’
 The Toyota Way is built on two pillars: Continuous
Improvement, which takes in the concepts of Kaizen, and
Respect for People (and team work)
 Kaizen (continuous improvement) strives to eliminate
waste and overproduction, as well as to create a
reporting/management system where any employee can
suggest a change where they see fit. There is a high value
placed on human participation.
 Toyota vehicles have an outstanding record for offering
reliability and durability. They are known for providing
convenience, comfort and safety to their customers
 ‘The Toyota way’

 Toyota implemented the ‘Kanban System’ to make its

assembly line more efficient. The company decided to keep
just enough inventories to fulfill customer orders as they were
generated (sometimes refered to as ‘just-in-time-
management’ (The Just in Time method involves creating,
storing, and keeping track of only enough orders to supply the
actual demand for the company's products)…
 However…While this stream-lined approach can cut down
on costs and increase efficiency during business-as-usual, it is
susceptible to both supply and demand shocks. When global
supply chains are disrupted for one reason or another, JIT
production can leave factories unable to meet demand and
worsen an economic downturn
LEAN processes (increasing ‘value’ for
consumers, whilst using minimal resources)

1. Are safe operations assured?

2. Do we minimize defects and continuously improve
production for our customers?
3. Can we improve productivity with ease?
4. Does our cost reduction strategies result in
company profits?
5. Are our personnel continuously developing
professionally?
10 Steps to TQM (10)

1. Have excellent leaders as supervisors and

managers
2. Build and train teams of employees within each
department and later cross departmentally in problem
solving
3. Teams decide on, and write down the appropriate
levels of excellence and relative weighting
4. Set mission, goals, and strategies based on
consumer expectations
5. Empower and inspire teams to reach goals
10 steps of TQM (continued)...

6. Identify deficiencies, which are areas where

product/service falls below expectations
7. Analyze and resolve identified deficiencies
8. Modify processes to incorporate corrections to
improve product/service to expected levels
9. Track results – improvements in service, consumer
satisfaction, employee satisfaction, cost reduction, and
profit
10. Evaluate and support the process
Regional organizing models:
mutual benefit model e.g., Germany
 German Business System

 Retains comparatively large manufacturing sector

 Large managerial hierarchies in some instances
 Integrated production chains, focus on diversified quality
production, and precision engineering
 Higher levels of inter-firm cooperation than in US
 Lesser focus on shareholder value due to integrated
institutional relationships between financial institutions
and industry
 Education and vocational training system highly
developed and nationally certified
 US Business System

 Large firms with large managerial hierarchies, recently

subject to downsizing
 Complex coordination of production chains, early
deployment of scientific management
 Emphasis on large-scale volume mass production,
standardized goods for mass markets
 Centralization of financial control and HR strategies
 Operate in several sectors
 Highly entrepreneurial, e.g. Silicon Valley (Uber,
Amazon, facebook, Google)- drive for profit, and
positive and negative consequences of this?
 Six Sigma (US)

 American quality system, built from previous

knowledge of Japanese quality systems
 Six Sigma's focus is on eliminating defects and
reducing variation
 The term ‘six sigma’ comes from statistics and is used
in statistical quality control, which evaluates process
capability. Originally, it referred to the ability of
manufacturing processes to produce a very high
proportion of output within specification. Processes
that operate with ‘six sigma quality’ are assumed to
produce long-term defect levels below 3.4 defects per
million opportunities (DPMO).
…and…Reporting relationships…

• Chain of command- a clear and distinct line of

authority among the positions in an organization (and
ultimate responsibility for each decision/action)

• Span of control- who, and how many employees will

report to each supervisor or manager

• Tall versus Flat organizational design

• Centralization versus Decentralization

Bureaucratic versus ‘Adaptive’ models

(Schermerhorn et al 2020)
 A management challenge:
Managing global employees

Paradoxically, living and working globally is both

exciting and routine. It is both easy and difficult.

 A foreign assignment brings with it a number of

challenges, including both psychological and socio-
cultural adjustments.
 In addition, there are personal, time, family, and career
considerations.
 There is also the problem of returning home following
the assignment.
 Nationality and Staffing

 Managers/employees can be hired from three groups:

 parent country nationals (PCNs)
 host country nationals (HCNs)
 third country nationals (TCNs)

 Dowling et al. (2018) argue that a mix of PCNs, HCNs,

and TCNs can impact significantly on an MNCs ability
to achieve learning, innovation and strategic success
Selection criteria for MNE’s
Expatriates and
frequent flyers who
travel regularly to
work in global
operations often
express the same
frustration: on
foreign assignments,
they often feel
decidedly like
outsiders, yet they
must find ways to
‘break into’ the local
culture simply to do
their job.
 Factors that moderate success

In your
expatriate
experience,
or in
managing
that of
others’
(employees)
Reasons behind early returns

 Family concerns
 Accepted new position in the company
 Completed ‘assignment’ early
 Cultural adjustment challenges
 Security concerns
 Career concerns
 Culture shock

 Culture shock can take many forms, from a

psychological sense of frustration, anxiety, and
disappointment to full-fledged chronic depression.
Some individuals may also experience physiological
responses such as insomnia or headaches
 Even so, culture shock is not a disease. Rather, it
signifies that an individual is trying to come to terms
with his or her new environment – a good starting point
for psychological adjustment.
 As such, the question is not how to avoid culture
shock, but how to manage it.
Coping with culture shock

Adjustment challenges:
Psychological adjustment: the process of
developing a way of life in the new country that is
personally satisfying.

Socio-cultural adjustment: an individual’s ability

to interact competently with the host culture(s).
The Process of Adjustment
Or…Stages in psychological adaptation
Strategies for coping with culture shock
Influences on acculturation success
Reactions to repatriate adjustment
Coping strategies of returning expatriates
(repatriates)