Tuesday, December 10, 2019

International versus Domestic Management

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Introduction


Today's globalize economy rose out of the previous international trading system, As the world economy developed, it moved through different phases, progressing from a trading economy based upon exporting in the 1th century towards a economy that made it easy for companies to setup operations in many countries. At each turn of the economic development, the type of companies that dominated the scene changed. Earlier, it was the international trading firms that dominated. Then we saw the rise of the exporters, eventually evolving to the multinational firms of the 160s and 170s, which dotted the world map with plants. With the emerging global imperative fueled by the liberalization of the world economy in the 180s, the dominating organizational paradigm changed from the multinational to the global firm.


The globalizing economy has had a tremendous influence on firms, forcing them to adapt to new realities. Expanded competition meant that firms would be able to enter many markets, and local or domestic firms were increasingly faced with competitors from far away. Management in firms faced with global competition cannot expect to cope using the managerial philosophy from the past.


Domestic managers are characterized by a reliance on one market as the key reference and are the mindset most managers are born with. Domestic mindsets rely on a single reference point or experiences come from a single culture or business environment. The person born in Japan goes to school in Japan with Japanese as a language. He attends university in Japan, so most reference points are from Japanese society. Domestic managers usually have more difficulty absorbing developments and ideas from other parts of the world.


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International Managers are individuals who had at least one major experience in a second country. A person becomes internationalized as a result of casual travel and ability to conduct business in another culture. Most typical of gaining such experience is to be assigned by own firm to work abroad for an extended period of time by assuming the role of an expatriate manager. The importance of international managers lies in their ability to serve as a bridge between home country (i.e. Head office Country) and host country environment, playing the role of cultural interpreter on both sides. International managers are able to interpret for host country locals, or intercede with head office on their behalf, and can provide interpretations of head office intent.


For Global managers to get a firm grasp of the challenges they face, they must first develop a realistic picture of the new, expanded and diverse environment in which they operate and how it differs from the relatively homogeneous setting of the domestic manager.



From the book, "The manic Logic of Global Capitalism", writer William Greider provides a lucid and vivid description of the crucible in which novice International Manager finds themselves.


1.It is a world in which managers are required to process, integrate and make decision based on huge amounts of disparate information.


.Negotiate with governments that have very different notions of how business should be done.


.Interact with a complex web of organizational relationships in multiple and diverse countries.


4.Recruit and develop the best talent from anywhere in the world.


5.Develop Strategic alliances even with competitors that operate within different models of capitalist system.


The above scenario sums up the sense of ambiguity and stress inherent in a global work environment.


The common problem faced by the International Manager must be able to deal with the inconveniences of time differences and the practical and psychological difficulties of not always being able to see the people with whom they work. Similarly, International Manager must negotiate multiple and sometimes antithetical variations in political and economic systems, regulatory and legal frameworks and civic and labor practices. At the same time, they must familiarize themselves and comply with a wide range of sometimes startling expectations in regard to behavior, their own and that of their colleagues, employees, customers, suppliers, and distributors and the way in which work should be done.


The complexity faced by International Manager grows exponentially with the number of countries, cultures, and time zones in which they work. During teleconferences, for instance, each participant could well be in a different time zone. An International Manager at a meeting in Tokyo must be aware not only of Japanese exchange rates, corporate culture, laws, investment policy and labor union but also of the infrastructure of each other nation in which his or her company does business.


To have International Business Knowledge means having a thorough grasp of your organization core business and how to leverage that business within and across each country where your organization has markets, vendors, resources and manufacturing operations. On the grassroots level, it means knowing the laws, histories, and custom of each those countries. Gaining international business knowledge involves taking classes, reading books and talking with experts. The knowledge will allow the manager to behave appropriately and stay out of trouble. It will also keep them aware of how decision at one location affects possibilities and outcome of others.


International Manager must act on their knowledge of cultural differences and use that knowledge to help them interact effectively with people from different cultures. A large part of the culture adaptability is being able to deal with the stress and the perceptions of eccentricity and strangeness that can arise from global complexity. For instance, a female International Manager in Europe who is negotiating with a Saudi Arabian to use her knowledge of the role of hierarchy, class status and gender in Saudi culture and to adjust her words and action accordingly.



Everyone has a personal perspective, images of and beliefs about what things are and should be, but not everyone is adept at taking the perspective of others. The processes and behavior involved in perspective taking are largely the same, listen, absorbing information skillfully, recognizing that other people's view might be different from you and accepting the limitations of your own point of view.


Implementing these processes can be difficult as the frame of reference held by each individual changes from culture to culture. Examples of different cultural perspectives offered by Erica Goode in August 8, 000, New York Times article "How culture Molds Habits of Thought" which reported on a study of U.S. and Japanese managers who were asked to look at the same picture and describe it. The U.S. managers talk about the people in the picture, the Japanese talk about the setting of the picture. The study shows how two people look at the same thing but will have different aspect due to difference in cultural perspectives. International Manager who learns to take the perspective of others and reorganize their own sense-making frameworks will grow to see multiple perspectives as not incompatible but as all having potential for contributing to solid managerial decisions and action. Such managers will make sense to, rather than confound, the people from other cultures with whom they work.


Through skills in innovation, International Manager take their international business knowledge, understanding different cultures and perspective of others to create something new, a new policy, procedure, product, service or practices. It takes the managers beyond merely managing the complexity of global operations to turning that complexity to their advantages. Building skill as an innovator is a step-by-step process of gathering information, listen, paying attention and seeking out useful combinations.



Case Study Example


Federal Express- Problems faced when going global.


Frederick W. Smith created an overnight sensation when he founded Federal Express, which quickly established itself as the giant in America's fledgling express mail service. Smith's initial attempts to duplicate the same success overseas foundered on the rocks of realty. Federal Express's North American system of centralized controls and hub-and-spoke delivery was a disaster in Europe, and by the time the company began its global strategy, competitors such as Brussels based DHL Worldwide Express had already established loyal followings around Europe and Asia.


Federal Express executives' brash approach did not really appeal to Europe's tradition-steeped business culture. The company attempts at tight control also ran headlong into cultural problems, such as the late office hours in Spain and the penchant among Russian workers faced with the shortages for taking home the soap used for daily truck cleaning. A staggering US$1.5 billion was lost in 5 years, Federal Express closed its Brussels hub and operations in over 100 cities across Europe were wounded up in 1.


The challenges faced from managing internationally are vast and wide as compared with the domestic scope. To overcome all barriers and succeed in the international market is never a simple ordeal, and it is also tough to overcome obstacles for example cultural differences which could simply be the deciding factor of success, and to tackle such problems is definitely one which a domestic manager need not face sleepless nights. As in the illustrated case regarding Federal Express, it can be seen that with the incorrect preparation and mindset when entering into the global frontier, disasters can happen, which is definitely not experienced at the domestic warfront of management.


References


- Jean-Pierre Jeannet, P.1, and Managing with a Global Mindset, Prentice Hall London.


Christopher Ernst, Global Managing Mastering the spin of a complex World, LIA,Volume 1, Number 6, January/February 00.



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