II. Implementing Strategy, Structure, and Systems

1. II. Implementing Strategy, Structure, and Systems

2. Strategy Implementation • “Normal” modes of operations are culture bound! • strategy: allocates resources to achieve long term goals • structure: defines relationships among people to execute tasks • administrative systems: align people and specific jobs • Managers must interpret information from multiple environments (tacit knowledge)

3. Strategy Implementation • Organizations are sociotechnical systems • technical areas with specific tasks and operations • input acquiring: capital, raw materials • technology + processes to create products • functional areas • social systems: human element--individuals, groups • skills, needs, expectations, experience, beliefs • Managers have to link social and technical elements

4. “FIT” • An organization becomes successful if it achieves “fit” • Internally • strategy, structure, work tasks, people • Externally • organization’s strategy and environment • What is “success” for an MNC?

5. Impact of National Culture Differences • Managers use “judgment” to assess organization’s environment and internal strengths/weaknesses • “Judgment” requires use of tacit knowledge of differences among countries to understand the explicit information from/in these markets

6. Difference of International from Domestic Business • national culture • Systems in national environments • government system • economic system • legal system

7. Managers make decisions based on cultural/governance system in their home country • Use rational analyses with domestic assumptions • Assess economic environment and conduct: • cost-benefit analysis • competitive assessment • employee selection/training/motivation • Use domestic assumptions to develop structures, systems, practices

8. Cultural/governance systems vary across countries • Can home country systems apply to other countries which operate with different assumptions? • If not, how can managers know what to do abroad? • IB organizations are more than socio-technical systems, they are socio-cultural-technical systems

9. Strategy-Structure-People-Performance Market Share Market Concentration Market Growth Market Profitability Product Diversity Market Diversity Market Entry Technology Environment Company Size External Conditions Strategy Market Structure Work Tasks/People Structure Performance

10. Global Strategy Tensions:Globalization vs … (Localization) • Globalization: need for global efficiency • goods/ideas/systems moved around the world with little change across borders • economic efficiencies, their causes: • elimination of trade barriers • tariff barriers • non-tariff barriers • global media/communications: convergence of tastes, standards • information technology: facilitation of MNC’s subsidiary coordination

11. Global Strategy Tensions:(Globalization) ... vs Localization • Localization: need for local responsiveness • cultural preferences for: • goods and services • structural relations • systems preferences • tensions leading to local responsiveness • non-tariff and tariff barriers • trading blocks • foreign exchange shortages • production technology • reduces economies of scale • allows customization

12. Global Strategy Success Factor:Global Learning • Transfer and sharing of new ideas and knowledge across the MNC’s “network” • technology • marketing strategy and research • Understanding of consumer through identification of differences • product design • Transfer through • organization systems (formal and informal processes) • individuals

13. Overseas Entry Decisions • Geographic entry decisions • Where to go: culture distance vs geographic distance • How to go: mode of operation in overseas market • How to organize • Culture distance vs geographic distance • Mode • wholly owned subsidiaries (FDI) • international joint ventures (FDI, joint ownership) • Franchising/Licensing • Exports/Imports • How to organize: global vs multidomestic strategy

14. Culture’s effect on Strategic issues: • Strategy Formulation • Start-up challenges • Operational pitfalls • Headquarters-subsidiary relations and communication • Joint-venture management • Importance of Relationships • N. America: means to an end • Much of world: end in themselves • trust and linkage on which any business can be built • cause/influence on strategy not implementation tool

15. What Strategy? • Which part of strategy to globalize? Which to localize? • globalize activities which achieve economies of scale • localize activities which depend on local people for effective implementation, except... • those which need to keep the eye on the global picture • What legal constraints?

16. Strategy Implementation Concerns in IB • What do we know how to do well? • What do we still need to learn and how? • How can we make sure that our strategy is interpreted correctly in each local culture? • What are the culture “gaps” which will offer resistance? • Can we take the time to implement our global strategy? • Do we know enough about a country to assess risk?

17. Organization Structures • Different structures make sense for different situations • International division • Product division • Geographic/Regional structure • Matrix organization • Transnational or networked organization

19. Expatriates (and Inpatriates) • Managers with foreign assignment experience • Only way to: • gain cross-cultural experience • develop global way of thinking • think/act with qualitative difference from the way managers who operate domestically or operate in a few disconnected overseas markets

20. Expatriation Issues • Selection: who is suitable for expatriate assignment? • Training • Culture shock • Support in overseas assignment • Professional • Family/personal • Repatriation

21. Managing the Global Organization • Culture influences human resource systems • what they are • must fit global strategy • to what extent and how they can be designed • HR systems dependency on external influences varies • government and of unions less important in US than Europe • external constraints must be integrated in HR system • Standardization vs adaptation • outcome should be the “driving” force • systems are tools not ends in themselves

22. Key Issues • Expatriates: cross-country transfer employees • local country issues (culture bound...) • legal: hiring/firing • quotas: explicit/implicit, politically sensitive • ethnic or racial backgrounds • interpersonal differences • ethnic, tribal, linguistic, religious • gender issues • styles: management, decision making, negotiating

23. Use of Expatriates: • Allows companies to develop managers with • an understanding of different cultural and strategic perspectives • global vs local strategy view • global corporate culture • Expatriates: managers serving in market away from their “home” • Inpatriates: • managers serving away from their “home” viewed from the “host” point of view • HQ focus; short-term vs long-term assignments

24. Expatriate/Inpatriate Issues: • High failure rate; high cost • High value to MNC; high value to manager’s career • Conditions for success • high-potential individuals • careful selection • training • career management, repatriation issues • family fit

25. Expatriate/Inpatriate Issues: • Selection • proven high potential/performance • at “home”? at internationally focused job? • ability to work with foreign employees (often ignored...) • technical expertise/knowledge (most often considered...) • adaptability • personal and family • gender

26. Training Time Cross-Cultural Training Training Rigor Months High Immersion Approach Assessment Field experience Simulations Sensitivity training Language: “intensive” Affective Approach Weeks Culture assimilator training Role-playing Cases Stress reduction training Cultural Briefings Language: “Moderate” Information Giving Geographic briefings Cultural Briefings Films/Books Interpreters Language: “Survival” Day(s) Low Length of Assignment Weeks Months Years

27. Culture Shock! • Disorientation upon entering new cultural environment • Normal use of own cultural filter fails • interpretation of perceptions • communication of intentions • All experience culture shock... experience and training can shorten its length

28. Culture Shock: • Responses • Gone native (assimilation): accepts the new... rejects own • Participator (integration): adapts to the new ... but retains own • Tourist (separation): avoids the new... • Outcast (marginalization): won’t/can’t adapt... rejects own...

29. Phases • honeymoon • euphoria, unrealistically positive attitudes towards host country, stay in hotel shields from mundane difficulties, house hunting/school hunting exciting, sightseeing!! • irritation and hostility (the crisis stage) • problems adjusting at work, local clocks don't fit yours, difficulties getting the routine daily tasks done (always taking "tests" to meet the daily needs), everything stinks, some never recover

30. Phases • gradual adjustment • can manage, cope with situation now • biculturalism/coping • ability to function in both cultures, acceptance of local customs and values for what they are (not going native), possible to get by, positive and growth gaining experience

31. Nature of Culture Shock • not a jolt, a series of cumulative experiences • cultural differences become focus of attention • foreign ways are quaint no more... they seem inferior to your own

32. Symptoms • homesickness • boredom • withdrawal (reading is an obsession, focus on home nationals, avoid host nationals) • excessive sleep need, compulsive eating and drinking • irritability • exaggerated cleanliness

33. Symptoms • marital stress, family tension, conflict • stereotyping host nationals • hostility towards host nationals • loss of ability to work effectively • fits of weeping • psychosomatic illnesses

34. Re-Entry • problem finding new niche in corporate structure: responsibility span diminished, old colleagues/allies gone, career options unclear • while coping with culture shock abroad expatriate may over-idealize the attributes of home culture; on return great disappointment • changed executive may never fit the old culture again • standard of living may actually go down on return

35. Re-Entry • anger at how unaware of world friends, colleagues and neighbors are... and how uninterested they are in trying to learn • total lack of psychological support for the returnee; he/she is expected to fit back home!! • no interest on part of home colleagues and friends to learn from returnee's experiences

36. What to do??? • stay home... or • prepare!! • study the culture • become familiar with patterns of communication • cultural self-awareness

37. Some Hints • tolerate ambiguity; react to new and unexpected situations without irritation • display empathy; be able to put yourself in others' shoes • personalize observations; recognize that your truth is not everybody's truth... • show respect; this does not mean "go native" but it does mean knowing why the locals do what they do • be non judgmental; what is "appropriate" or not is different across cultures, your wish to "get things done quickly" may be resisted for example... • be resourceful; do your best with limited resources to cope with new situations • keep a sense of humor; don't take yourself too seriously

38. More Hints • Avoid home country ghettos • Be adventurous • Involve the whole family • Manage stress • Stay healthy • Be realistic • Let go of home • Realize there are no absolutes • Have self-confidence and confidence in locals • Accept that you will make mistakes • Your good-will shall come across in the long run