IBT.

PRE FINALS Every member of the IMF keeps a Reserve

Account, a bit like a savings account, with holdings
MODULE 8: The International Monetary the country can draw on when needed to finance trade
System and Financial Forces or investments or to intervene in currency markets.

The International Monetary System: A Brief The Floating Currency Exchange Rate
History System

The international monetary system consists of - In 1971 President Nixon announced that the
institutions, agreements, rules, and processes that United States would not exchange gold for the
allow for the payments, currency exchange, and cross- paper dollars held by foreign central banks,
border movements of capital required for international relieving the dollar of much of its role as a
transactions. stabilizer for the international monetary system
- The Jamaica Agreement that established the
THE GOLD STANDARD rules for the floating system was both worked out
and accepted by IMF members after the fact, in
Based on its scarcity and easily assessed level
1976. It allows for flexible exchange rates among
of purity, gold has been trusted since ancient times as
IMF members, while condoning central bank
a way for people to store, exchange, and measure
operations in the money markets to smooth out
value.
volatile periods
In 1717, Sir Isaac Newton, the great
CURRENT CURRENCY ARRANGEMENTS
mathematician and master of the English mint,
established the price of gold in terms of British The IMF now recognizes eight types of currency
currency at 3 pounds, 17 shillings, 10.5 pence per exchange arrangements, extended from an initial
ounce, putting England on the Gold Standard. Until three.
then, Britain had used the silver standard, as did
China, Spain, and India Exchange arrangement with no separate legal
tender: One country adopts the currency of another, or a
THE BRETTON WOODS SYSTEM group of countries adopt a common currency.
Currency board arrangement: A currency board
- The 1944 discussions among 44 Allied nations at
arrangement commits the country’s government to
Bretton Woods (NH) to plan for post–World War II
holding foreign reserves of a specific currency in an
monetary arrangements reached a consensus that
amount equal to its domestic currency supply and
stable exchange rates were desirable but that
exchange the two at a fixed rate.
experience might dictate adjustments.
- In establishing the International Monetary Fund
Conventional fixed-peg arrangement: A fixed-peg
or fixed-rate relationship allows a currency’s exchange
(IMF), they also set up the new Bretton Woods
rates with one or a basket of currencies to fluctuate
System, also called the Gold Exchange around a fixed rate within a narrow band of less than 1
Standard and the Fixed-Rate System. This percent.
historic agreement served as the basis of the Stabilized arrangement: Pegged exchange rate
international monetary system from 1945 to 1971.
within a horizontal band: In a different peg
- Bretton Woods set up fixed exchange rates
arrangement, exchange rate fluctuations greater than 1
among member nations’ currencies, with par percent are allowed.
value based on gold and the U.S. dollar, which Crawling peg: In a crawling peg strategy, a currency is
was valued at $35 per ounce of gold. readjusted periodically at a fixed, preannounced rate or in
response to changes in indicators.
- Reserves are funds held by a nation’s central Crawling band: A crawling band readjusts the
bank or treasury and used to back its liabilities; country’s currency to maintain fluctuation margins around
they can include various hard currencies a central rate.
(Japanese yen, U.S. dollar, British pound sterling,
Managed floating: In a managed float the currency
EU euro) and gold. They are often called central fluctuates, while the country’s monetary authority actively
reserves intervenes on the exchange market without specifying or
making public its goals and targets.
- The SDR 1969 (Special Drawing Reserve) Free floating exchange rates: Free floating
is a virtual currency with no tangible, physical exchange rates rely on the market. Governments may
presence; its value is based on a trade-weighted intervene, but to moderate the rate of change rather than
basket of four currencies: the euro, the Japanese to establish the currency’s level.
yen, pound sterling, and the U.S. dollar.
THE BANK FOR INTERNATIONAL
THE CENTRAL RESERVE/NATIONAL SETTLEMENTS
CURRENCY CONFLICT
 The Bank for International Settlements (BIS) is  Arbitrage—simultaneous buying and selling to
an international organization of central banks that make a profit with no risk—will quickly close any
exists to build cooperation in order to foster monetary gaps and the markets will be back at equilibrium.
and financial stability.  The economic explanation of When the law of one
price is applied to interest rates, it suggests that
Financial Forces: Fluctuating Currency interest rates vary this relationship, which results
Values in interest rate parity, is known as the Fisher
effect.
FLUCTUATING CURRENCY VALUES – In a
post–Bretton Woods monetary system, freely floating
 Fisher Effect – states that the real interest rate
currencies fluctuate against each other. At times, will be the nominal interest rate minus the
central banks intervene in the foreign exchange expected rate of inflation.
markets by buying and selling large amounts of a  International Fisher Effect, says that the
currency in order to affect the supply and demand of interest rate differentials for any two currencies
that particular currency. will reflect the expected change in their exchange
rates.
WHY FOREIGN CURRENCY EXCHANGE  Purchasing Power Parity (PPP) – Is the
OCCURS amount of adjustment that must be made in the
exchange rates for two currencies in order for
 Vehicle Currency is a currency that is used for them to have equivalent purchasing power
international trade or investment.
 Intervention Currency is one that is used by EXCHANGE RATE FORECASTING
central banks to intervene in the foreign currency
exchange markets. Often the intervention involves
 Efficient Market Approach assumes that
current prices fully reflect all available relevant
buying up domestic currency to reduce its supply
information. This assumption also suggests that
in the market, and thereby strengthen it.
forward exchange rates are the best possible
EXCHANGE RATE QUOTATIONS AND THE predictor of future spot rates, because they will
FX MARKET have taken into account all the available
information.
 The Reciprocal Currency is a currency that is  Random walk hypothesis, which holds that
quoted as dollars per unit of currency instead of in because the factors that influence prices are
units of currency per dollar. unpredictable, stock market prices evolve much
 The exchange rate for a purchase or trade for delivery like a random walk, turning here and there
within two business days is known as the Spot Rate. without a controlling logic, so that the best
 There is also a Forward Currency Market that predictor of tomorrow’s prices is today’s prices.
allows managers to lock in contracts to purchase  Fundamental Approach to exchange rate
currencies at known rates, for delivery in the future. prediction looks at the underlying forces that help
 The Forward Rate is the exchange rate, the cost determine exchange rates and develops various
today, of a commitment to buy or sell an agreed econometric models to capture them and their
amount of a currency at a fixed future date, usually 30, correct relationships.
60, 90, or 180 days from now.  Technical Analysis, looks at history and then,
 The Bid Price is the highest-priced buy order assuming that what was past will be future,
currently in the market. projects these trends forward.
 Ask Price is the lowest-priced sell order CURRENCY EXCHANGE CONTROLS
currently in the market.
A government has the power and authority to
CAUSES OF EXCHANGE RATE MOVEMENT limit the amount of its currency that can be exchanged
for another currency in any given transaction.
 Monetary Policies control the amount of
money in circulation, whether it is growing, and, if  Convertible Currencies can be exchanged for
so, at what pace. other currencies without restrictions.
 Fiscal Policies address the collecting and  Nonconvertible, its value is arbitrarily fixed,
spending of money by the government. typically at a rate higher than its value in the free
 Parity Relationships describe equivalencies, market, and the government imposes exchange
and two of these relationships, interest rate parity controls to limit or prohibit the legal use of its
and purchasing power parity, are fundamental to currency in international transactions.
our further consideration of exchange rates.
 Law Of One Price, which states that in an TAXATION
efficient market, like products will have like
While taxation is a legal force, it is also a
prices. If price differences exist, the process of
financial factor whose impact is significant. If a
corporation can achieve a lower tax burden than its
competitors have, it can lower prices to its customers
 or generate higher revenue with which to pay higher 4. set corporate objectives
wages and dividends. 5. quantify goals
6. formulate strategies, and
Value-added tax (VAT) is a tax charged on 7. make tactical plans.
the value add.
STEP 1: Analyze Domestic, International,
INFLATION AND INTEREST RATES And Foreign Environments
Inflation is a sustained increase in prices. - An environmental scanning process is useful for
Some economists hold that it is caused by demand’s continuous gathering of information, but managers
exceeding supply, while others view the cause to be an also need to develop and implement appropriate
increase in the money supply. responses to any changes in key environmental
forces such as competitors’ actions and changes in
BALANCE OF PAYMENTS government taxes and regulations
The Balance Of Payments (BOP) is a STEP 2: Analyze Corporate Controllable
record of a country’s transactions with the rest of the
Variables
world. So it actually tracks the flows of capital in and
out of the country - The managers of the various functional areas will
either personally submit reports on their units or
o BOP Accounts – are recorded in double-entry provide input to a planning staff that will prepare
bookkeeping form. Each international transaction is an a report for the strategy planning committee
exchange of assets with a debit and a credit side.
- A value chain is a set of interlinked activities
that adds value to the final product or service.
o Deficits and Surpluses in BOP Accounts – The - A value chain analysis is an assessment
BOP current account and capital account add up to the conducted on the chain of interlinked activities of
total account. A deficit in the current account is always an organization or set of interconnected
accompanied by an equal surplus in the capital account, organizations, intended to determine where and to
and vice versa. what extent value is added to the final product or
service.
MODULE 9: INTERNATIONAL
COMPETITIVE STRATEGY KNOWLEDGE AS A CONTROLLABLE
CORPORATE RESOURCE
What Is International Strategy, and Why Is
It Necessary? Knowledge Management refers to the
practices that organization and their managers use for
International Strategy is a plan that identifying, creating, acquiring, developing,
guides the way firms make fundamental choices about dispersing, and exploiting competitively valuable
developing and deploying scarce resources knowledge.
internationally, including what products or services to
offer, which markets to enter, and ways to compete. Much valuable knowledge is TACIT, which
means that it is known well by the individual but is
The purpose of having an international difficult to express verbally or document in text or
strategy is to enable a company to achieve and figures.
maintain a unique and valuable competitive position
both within a nation and globally, generating higher EXPLICIT, codified knowledge and then
rates of profit than its competitors—an ability that has making this knowledge quickly and effectively
been termed Competitive Advantage. accessible to other employees who need it.

Why Plan Globally? STEP 3: Define The Corporate Mission,

Vision, And Values Statements
Strategic Planning is the process by which an
organization determines where it is going in the - The mission statement is a broad statement
future, how it will get there, and how it will assess that defines the purpose for a company’s
whether and to what extent it has achieved its goals. existence, including its business, objectives,
The Process of Global Strategic Planning and approach for reaching those objectives.
- A vision statement is a description of the
The process of strategic planning provides a company’s desired future position, of what it
formal structure in which managers address the hopes to accomplish if it can acquire the necessary
following steps: competencies and successfully implement its
strategy.
1. analyze the company’s external environments,
- In contrast, a Values Statement is intended to
2. analyze the company’s internal environment,
be a clear, concise description of the fundamental
3. define the company’s business and mission
values, beliefs, and priorities expected of the
 organization’s members, reflecting how they are to CONTINGENCY PLANS are plans for the
behave with each other and with the company’s best- or worst-case scenarios or for critical events that
customers, suppliers, and other members of the could have a severe impact on the firm.
global community.
STEP 7: Prepare Tactical Plans
STEP 4: Set Corporate Objectives
- Because strategic plans are fairly broad, tactical
- Objectives direct the firm’s course of action, (also called operational) plans are a requisite for
maintain it within the boundaries of the stated spelling out in detail how the objectives will be
mission and vision, and ensure its continuing reached.
existence.
Strategic Plan Features and Implementation
STEP 5: Quantify The Objectives Facilitators
- To develop a strategy for reaching its objectives, a SALES FORECASTS AND BUDGETS
company must quantify them. But despite most top
managers’ preference for verifiable objectives, - The Sales Forecast, which is a prediction of
they frequently do have non-quantifiable or future sales performance, not only provides
directional goals. managers with an estimate of the revenue to be
received and the units to be sold but also serves as
STEP 6: Formulate The Competitive the basis for planning in the other functional
Strategies areas.
- Competitive Strategies are action plans to - Budgets are an itemized projection of revenues
enable organizations to reach their objectives. and expenses for a future time period.
- Home Replication Strategy – Companies
pursuing a home replication strategy typically FACILITATION TOOLS FOR IMPLEMENTING
centralize product development functions in their STRATEGIC PLANS
home country. After they develop differentiated
products in the home market, they often transfer - Policies are broad guidelines issued by upper
them to foreign markets to capture additional management for the purpose of assisting lower-
value. level managers in handling recurring problems.
- Multidomestic Strategy – A multidomestic - Procedures are guides that specify the way
strategy is effective when pressure to adapt certain tasks or activities will be carried out,
products or services for local markets is strong. thereby ensuring uniform action on the part of all
Decision making tends to be more decentralized, corporate members.
to allow the company to modify its products and
respond quickly to changes in local competition PERFORMANCE MEASURES
and demand.
- measures of the company’s success in obtaining
- Global Strategy – A global strategy works when and applying the required resources, such as
a company faces strong pressures for reducing financial, technological, and human resources
costs and limited pressure to adapt products for - measures of the effectiveness of the company’s
local markets. Strategy and decision making are employees, within and across the firm’s
typically centralized at headquarters, and the international network of operations, in performing
company tends to offer standardized products and their assigned jobs;
services. - measures of the company’s progress toward
- Transnational Strategy – A company that achieving its mission, vision, and objectives and
confronts simultaneous pressures for cost- doing so in a manner consistent with the
effectiveness and local adaptation, and that can company’s stated values.
gain competitive advantage from responding to
both, may adopt a transnational strategy. Kinds of Strategic Plans
- Standardization and Planning in Strategy
Formulation – While the preceding discussion TIME HORIZON
addressed basic strategic alternatives at a - the time horizon will vary according to the age of
business or corporate level, not all activities of an the firm and the stability of its market.
organization confront the same mix of
globalization and localization pressures. METHODS OF PLANNING
Using Scenarios in Strategy Formulation - Top-down planning is a planning process that
begins at the highest level in the organization and
SCENARIOS, which are multiple, plausible continues downward.
stories for probable futures.
- Bottom-up planning operates in the opposite
Contingency Planning as Part of Strategy manner, since it is a planning process that begins
Formulation
 at the lowest level in the organization and domestic division and is responsible for all non-
continues upward. home-country activities.
- Iterative planning consists of repetition of the
bottom-up or top-down planning process until all
differences have been reconciled. INTERNATIONAL PRODUCT STRUCTURE

WHO DOES STRATEGIC PLANNING? - An international product structure represents a

return to pre export department times in that the
- Top management, at the urging of strategy domestic product division is given responsibility
consultants, is assigning strategic planning to for global line and staff operations.
teams of line and staff managers from different
business, geographic, and functional areas, much
GEOGRAPHIC REGION STRUCTURE
as it has already done with process improvement - Firms in which geographic regions are the primary
and quality improvement. basis for organizing their operations put the
responsibility for all activities under geographic
HOW STRATEGIC PLANNING IS DONE
area managers who report directly to the chief
- Top managers of many companies have come to executive officer.
realize there is no point in making new detailed
five-year forecasts when international crises are
GLOBAL FUNCTIONAL STRUCTURE
exploding their earlier ones.
- In this type of organization, those reporting to the
CONTENTS OF THE PLAN CEO might be the senior executives responsible
for each functional area (production,
- They need an approach to strategic planning that marketing, finance, and so on)
effectively incorporates a long-term perspective to
decision-making and resource allocation decisions. HYBRID ORGANIZATIONAL STRUCTURES

- A hybrid organization is a structure organized

by more than one dimension at the top level.
MODULE 10: ORGANIZATIONAL DESIGN - The top level is a mixture of the organizational
AND CONTROL forms described above, and the lower levels may
or may not be.
How Does Organizational Design Impact
International Companies? MATRIX ORGANIZATIONS

Organizational Design is a process that - The Matrix Organization is an organizational

determines how a company should be organized to structure composed of one or more super imposed
ensure its worldwide business activities are integrated organizational structures in an attempt to mesh
in an efficient and effective manner. product, regional, functional, and other expertise.

What elements need to be considered when MATRIX OVERLAY

designing the structure of an IC? There are
- The Matrix Overlay is an organization in which
four:
top-level divisions are required to heed input from
1. Product and technical expertise for the a staff composed of experts of another
company’s different businesses. organizational dimension in an attempt to avoid
2. Geographic Expertise on the countries and the double-reporting difficulty of a matrix
regions in which the company operates. organization but still mesh two or more
dimensions
3. Customer Expertise to gauge the similarity of
client groups, industries, market segments, or STRATEGIC BUSINESS UNITS
population groups that transcend the boundaries
of individual countries or regions. - Strategic Business Units (SBUs), self-
4. Functional Expertise in the company’s value contained business entities, each with a clearly
chain activities. defined market, specific competitors, the ability to
carry out its business mission, and a size
appropriate for control by a single manager
Evolution of International Company
Structure CURRENT ORGANIZATIONAL TRENDS

INTERNATIONAL DIVISION STRUCTURE - The rapidly changing business environment

caused by increased global competition, a growing
- An International Division is a division in the customer preference for custom-made rather than
organization that is at the same level as the mass-produced products, and faster technological
change is pressuring companies to step up their
 search for organizational forms that enable them and each other, on whether headquarters
to act more quickly, reduce costs, and improve the management thinks it understands host country
quality of product offerings. conditions, on the distance between the home
- REENGINEERING – Involves redesigning country and the host country, and on how big and
organizational structure, hierarchy, business how old the parent company is. Let’s briefly look
systems, and processes in order to improve at each of these factors.
organizational efficiency.
- VIRTUAL CORPORATION – also called a SIZE AND AGE OF THE IC
network corporation or a modular - The longer a company has been an IC, the more
corporation, is an organization that coordinates likely it is to have a number of experienced
economic activity to deliver value to customers executives who know company policies and have
using resources outside the traditional boundaries worked at headquarters and in the field.
of the organization.
- HORIZONTAL CORPORATION – A HEADQUARTERS’ WILLINGNESS TO
horizontal corporation is a form of organization BENEFIT THE ENTERPRISE AT THE
characterized by lateral decision processes, SUBSIDIARY’S EXPENSE
horizontal networks, and a strong corporate-wide
business philosophy. - An IC may decide to move factors of production
from one country to another, or to expand in one
REQUIREMENTS FOR THE FUTURE OF country instead of another. In addition to the cost,
INTERNATIONAL COMPANIES availability, and skill levels of labor, other possible
reasons for such a move include corporate tax
- Managers in many ICs can expect to make greater rates, market conditions, currency fluctuation, and
use of the dynamic network structure that political instability.
breaks down the major functions of the firm into
smaller companies coordinated by a downsized - TRANSFER PRICING – Pricing established for
headquarters organization. transactions between members of the same
enterprise.

Where Decisions Are Made in Wholly Owned THE SUBSIDIARY’S FRUSTRATION WITH
Subsidiaries ITS LIMITED POWER
- SUBSIDIARIES are companies controlled by - An extremely important consideration for parent-
other companies (known as parent companies) company management is that the management of
through ownership of enough voting stock to elect its subsidiaries be motivated and loyal. If all the
a majority of the voting members on the big decisions are made, or are perceived to be
company’s board of directors. made, at the IC headquarters, the managers of
- AFFILIATES are companies controlled by other subsidiaries can lose incentive and prestige with
companies, but less-than-majority owners may their employees and community. These managers
exercise control by a variety of means, both those may grow hostile and disloyal.
involving stock ownership and those involving non-
ownership mechanisms. Where Decisions Are Made in Joint Ventures
and Subsidiaries Less Than 100 Percent
Owned
STANDARDIZATION OF THE COMPANY’S
A joint venture may be a corporate entity
PRODUCTS AND EQUIPMENT
whose ownership is shared between an IC and local
- Some large global manufacturers of consumer owners, a corporate entity owned by two or more
products, such as Procter and Gamble (P&G) and companies foreign to the area where the joint venture
Colgate, are developing products that are is located, or one company working on a project of
standardized from the outset for global or regional limited duration (such as constructing a dam) in
markets. In these situations, the affiliates have to cooperation with one or more other companies.
follow company policy. Of course, representatives
of the affiliates may have an opportunity to LOSS OF FREEDOM AND FLEXIBILITY
contribute to the design of the product, which is
- If shareholders outside the IC have control of the
typically introduced first in the home market
affiliate, they can block any IC headquarters’
COMPETENCE OF SUBSIDIARY efforts.
- Even if outside shareholders are a minority and
MANAGEMENT AND HEADQUARTERS’
cannot directly control the affiliate, they can bring
RELIANCE ON IT legal or political pressures on the IC to prevent it
- The extent to which an IC relies on subsidiary from diminishing the affiliate’s profitability for the
management to make decisions can depend on IC’s benefit.
how well the executives know company policies
CONTROL CAN BE HAD EVEN WITH propensity and ability to synthesize across this
LIMITED OR NO OWNERSHIP diversity.”

- With less than 50 percent of the voting stock and Global Leadership: What It Is and Why It
even with no voting stock, an IC can exercise Matters
control over a subsidiary’s decisions and activities.
Some methods of maintaining control are: - the way the individual uses power to influence, the
- Drawing up a management contract context of the leadership situation, and a
- Retaining control of the finances combination of these approaches.
- Retaining control of the technology - LEADERSHIP – the behaviors and processes
- Putting people from the IC in important executive required for organizing a group of people in order
positions to achieve a common purpose or goal.

REPORTING HOW GLOBAL LEADERSHIP DIFFERS

FROM DOMESTIC LEADERSHIP
For decision making and control of
organizational resources to be effective, all operating - MULTIPLICITY – which refers to the geometric
units of an IC must provide headquarters with timely, growth in the volume and nature of issues global
accurate, and complete reports, including (1) financial, leaders deal with;
(2) technological, (3) market opportunity, and (4) -
political and economic reports. - INTERDEPENDENCE – which recognizes that
although dispersed geographically, the different
FINANCIAL REPORTING units of the company are systematically linked to
- A surplus of funds in one subsidiary often is each other and increasingly dependent on external
retained there for investment or contingencies. On organizations;
the other hand, such a surplus might be more
useful at the parent company, in which case, the - AMBIGUITY – which refers to the challenge of
parent would pay the subsidiary a dividend. dealing with information that lacks clarity and
incorporates both quantitative and qualitative
TECHNOLOGICAL REPORTING dimensions, hindering the understanding of cause-
an
- New technology is constantly being developed, - effect relationships and the effectiveness of
and when it happens locally, the subsidiary or subsequent problem-solving efforts;
affiliated company is likely to learn about it before
IC headquarters, hundreds or thousands of miles
- DYNAMISM – which recognizes that the
away.
international system itself is constantly changing.
REPORTING ABOUT MARKET
OPPORTUNITIES
What Competencies Are Required for
- The affiliates in various countries may spot new or
growing markets for some product of the Effective Global Leadership?
enterprise. This could be profitable all around, as
Research conducted by Aperian Global, a
the IC sells more of the product while the affiliate
consulting company whose goal is to open the world
earns sales commissions.
for its clients, identified five abilities returning
POLITICAL AND ECONOMIC REPORTING expatriates thought necessary for a successful global
leadership assignment. These are the ability to:
- Democracies have replaced dictatorships, one
dictator has replaced another, countries have  See Differences, a self-awareness in cultural
broken apart or reunited—changes have occurred contexts. Leadership patterns are shaped by
on almost every continent. culture, and other ways to get things done exist.
 Make connections because in the global
environment, relationships are a prerequisite for
getting things done. “Results through
MODULE 11: GLOBAL LEADERSHIP relationships” is a key observation.
ISSUES AND PRACTICES  Adjust, a kind of “frame-shifting” that requires
cognitive flexibility to see differences and adjust
The Global Mind-set behavior quickly.
 Integrate and lead change, a complex ability
- is a “pre-requisite for global industry dominance.”
to adjust to some local practices while selling
Global mind-set is defined as a view “that
other practices into the local environment, a
combines an openness to and awareness of
combination of adapting and questioning the
diversity across cultures and markets with a
status quo.
 Localize, an ability to develop local talent. empower others, energizing, rewarding
and feedback, connective teaching,
Management scholar Henry Mintzberg and sharing leadership
others have identified a range of roles that a global
 Teaming Skills – Team building,
leader may need to take, including:
multicultural teaming, managerial ability,
 Monitor—scanning environments, seeking
information, monitoring different units of
with an emphasis on teamwork and
 the company. interpersonal skill
 Spokesperson—advocating and representing
the company, communicating with different levels
of internal and external stakeholders. SELF COMPETENCIES
 Liaison—networking, coordinating, spanning  Resilience – Stress and emotional
internal and external boundaries. resilience, resourceful, optimistic,
 Leader—motivating and coaching individuals and energetic, self-confidence, personal
teams, building and maintaining corporate culture. management, life balance
 Negotiator—making deals, managing conflict.  Character – Integrity, maturity, exhibit
 Innovator—seizing opportunities, generating character, honesty, conscientiousness, self
new ideas, promoting a vision for the company. identity, core values and flexibility, make
 Decision maker—troubleshooting, making ethical decisions, tenacity
decisions.  Inquisitiveness – Inquisitiveness,
 Change agent—taking action, developing and curiosity and learning, aggressive insight,
implementing change plans. openmindedness, openness to experience,
inviting the unexpected, non-
BUSINESS COMPETENCIES
judgmentalness, confident humility,
 Vision and Strategic Thinking – motivation to learn (also mistakes)
Intellectual intelligence, able to deal with  Flexibility – Thinking agility, authentic
complexity, oscillation between details flexibility, open-minded and flexible in
and big picture, environmental scanning, thought and tactics, interest flexibility,
frame shifting tolerance for ambiguity, embrace duality
 Business Savvy – Business acumen,  Global Mind-set – Global mind-set
results orientation, global capitalist, cosmopolitanism, cognitive complexity,
technical savvy, finding creative solutions, thinking
third-way solutions globally
 Managing Communities – Customer
orientation, stakeholder orientation,
building partnerships and alliances, ASSESSING GLOBAL LEADERSHIP
influence stakeholders, build community, COMPETENCIES
boundary spanning
 Cross-Cultural Adaptability Inventory
 Organizational Savvy – Total
(CCAI) – Is a tool for self-assessment of cross-
organizational acumen, designing and
cultural adaptability. It can be used to assess an
aligning, architecting, managing a budget
individual’s capability to adjust to a new culture
on a world-wide basis
and to design a training program to enhance
 Leading Change – Catalyst for strategic success in relocating to another culture.
change, catalyst for cultural change, lead  Intercultural Development Inventory
change
(IDI) – Identifies the competencies associated
with intercultural sensitivity, and it often is used
to assess ability to modify cultural perspective
PEOPLE COMPETENCIES
and to adapt behavior to different cultural
 Cross-Cultural Communication – contexts.
Communication skills, culture bridger,  Global Competencies Inventory (GCI)
cultural interest and sensitivity, cultural assesses personality predispositions linked with
understanding, mindful communication, effective intercultural behavior and global
cultural self-awareness managerial skills. It addresses competencies in
 Interpersonal Skills – Emotional 16 areas, categorized within perception
intelligence, influencing, urgent listening, management, relationship management, and
relationship interest, social flexibility, self-management.
results through relationships
 Global Executive Leadership Inventory
 Valuing People – Skilled people reading,
(GELI) – Is a 360-degree feedback approach for
understand actors, cultural acumen,
identifying leadership competencies and gaps.
respectful modernizer, respect for others,
pragmatic trust
 Empowering Others – Being able to
 MODELS FOR DEVELOPING GLOBAL VIRTUAL AND GEOGRAPHICALLY
LEADERS DISPERSED TEAMS

The Global Leadership Expertise - Many global teams are geographically dispersed
Development (GLED) Model and communicate through technology. Leading a
team whose members are on different continents
- A model designed for developing the expertise of and in different time zones, and who connect
global leaders through technology such as texting, e-mail, or
- This transformational process consists of the set video-conferencing, creates unique leadership
of experiences, interpersonal encounters, challenges. Virtual communication, even with
decisions, and challenges related to the global video content, lacks the richness of face-to-face
leader’s expertise, and it is thought to be the communication
primary cause of the different levels of global
leadership expertise we observe among leaders PERFORMANCE MANAGEMENT IN GLOBAL
with global responsibilities. TEAMS

The “Right Stuff” Model - SOCIAL LOAFING – tendency of some people

to put forth less effort when they are members of a
- The “right stuff” model focuses on developing group.
global leaders that have the “right stuff” in terms
of what they have learned and what they are able Leading Global Change
to do as leaders.
Jim Clawson believes change is the central
TOOLS AND TECHNIQUES FOR part of leadership. He writes that leadership has three
DEVELOPING GLOBAL LEADERSHIP elements: “(1) seeing what needs to be done; (2)
SKILLS understanding all the underlying forces at play in the
situation; and (3) having the courage to initiate actions
- Recognize first that it is a nonlinear process that to make things bet.
may include all sorts of diverse experiences.
Differences in personal backgrounds and CHANGE MODELS
attributes, as well as in the companies and their
contexts, suggest that development efforts need to - Unfreezing – requires overcoming inertia and
be individualized. preparing people for change, including dealing
with defense mechanisms against the proposed
Leading Global Teams change. At this point, there is stress, tension, and
recognition of the need for change.
GLOBAL TEAMS – are characterized by high
levels of diversity, geographic dispersion, and virtual - Moving – proposed behaviors into practice, a
rather than face-to-face interaction. period often characterized by confusion.
- LEADING TEAMS – Leading teams in almost
- Re-freezing – Is the final stage, when the new
any context includes three main activities:
behaviors are either accepted and institutionalized
establishing the team, coaching team members,
or rejected.
and setting team norms.
CHANGE AND CULTURE
COMPLEXITY FOR TEAMS IN THE GLOBAL
CONTEXT - These include cultural traits that govern our
tolerance of ambiguity, power distance, attitude
- The three specific conditions identified in the toward planning, communication styles, and
international context that contribute to flexibility.
globalization’s complexity are increased
multiplicity, increased interdependence, and
increased ambiguity. We look at these forces
a bit more closely to understand the
complexity that global team leaders face.

GLOBAL TEAM LEADERSHIP AND CULTURE

- Global team leaders have to address the basic
conditions of team performance— organization,
social processes, and task processes—as well as
the issues that accompany an international
context.