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Lecture Provided ByNadia Newaz Rimi Lecturer Dept. of Management Studies
Globalization refers to the shift toward a more integrated and interdependent world economy.Diff. On the other hand national responsive is the need to understand the different customer tastes in segmented regional markets and respond to different regional markets and different national standards and regulations imposed by autonomous govt. Nat Resp.High product diff .Price completion 3.Integrated prod.Niche market . The strategy is explained conceptually by following diagramsHigh 1. Mixed (integration) -International Standardization Low Low 4.One of the major problems of MNCs is a natural tendency to do things abroad the way they are done at home.Low economics of production.Acquisition & merger . . Mixed .Localizing global focus Globalization 2. and agencies. . Globalization . In other words globalization is the production and distribution of products and services of a homogeneous type and quality on a worldwide basis. . High National responsiveness (Differentiation) The vertical axis measures the need for economic integration or globalization that generates economies of scale and which are captured through centralizing specific activities in the value added chain. This is commonly known as globalization VS national responsiveness conflict. Marketing .
the need for differentiation is high but concern for integration is low. Quadrant 2 incorporates those cases in which. both the potential to obtain economics of scale and the benefits of being sensitive of differentiations are of little value. By responding the cultural needs of local operations and customers. Here merger and acquisitions often occur. This suggests that MNC must address local taste and govt. In quadrant 4.The horizontal axis measures the need for multinational to respond to national responsiveness or differentiation. In quadrant I the need for integration is high and for awareness of differentiation is low. And finally quadrant 3 is the most challenging quadrants where the needs for integration and differentiation both are high. MNC’s find that regional strategies can be used effectively in capturing and maintaining world wide market niches. regulation. The figure illustrates 4 basic situations. This situation leads to competitive strategy based on price competition. . Globalization Imperative Research reveals that many MNCs are committed to a globalization imperative which is a belief that one world wide approach to doing business is the key to both efficiency and effectiveness. Despite this tendency to use home country strategies many MNCs are continuing their efforts to address local needs.
German want advertising that is factual and rational. 2. Toothpaste – cosmetic product in Spain and Cavity-+fighter (functional commodity) in US. The difficulty of managing global organizations.Factors for Developing Unique Strategies A number of factors helping to facilitate to this need to develop unique strategies for different cultures. Thomson Consumer Electronics German Plant – High feature large TV Set Spanish Plant – low cost small screen set. as in the case of consumer goods that must meet local tastes. The importance of being an insider. The British value laughter above all else. 5. The French avoid reasoning or logic. as in the case of customers who prefer to “buy local” 4. including: 1. The need to allow subsidiaries to use their own abilities and talents and not be restrained by headquarters as in the case of local units that know how to customize products for their market and generate high return on investments with limited production outputs. . 3. where television sets must be manufactured on a country by country basis. A continual demand by local customers for differentiated products. The diversity of world wide industry standards such as those in broadcasting. as in the case of some local subsidiaries that want more decentralization and other that want less.
Arabs. The MNC must stay abreast of local market conditions and sidestep the temptation to assume that all markets are basically same. young and old people. organizations find themselves leading work forces that have a variety of cultures (and subcultures) and consist of a largely diverse population of women. Managing Multiculturalism & Diversity: Both domestically and internationally. men. First. Indians and many others. Asians. Second.Challenges for MNC to Adjust Global Strategies for Regional Market The need to adjust the global strategies for regional markets present three major challenges for most MNCs. The MNC must give the subsidiary more autonomy so that it can respond to the changes in the local demand. The MNC must know the strength and weakness of its subsidiaries so that it can provide these units with the assistance needed in addressing local demands. blacks. whites. Latins. Phases of Multicultural Development: The effect of multiculturalism and diversity will vary depending on the stage of the firm in its international evolution Location of International Cross-cultural Interaction: Phase 1 Domestic firms Phase 2 Internation al firms Phase 3 Multinatio nal firms Phase 4 Global firms . Third.
The following discussion examines both domestic and group multiculturalism and the potential problems and strengths. One is to focus on the domestic multicultural and diverse work force that operates in the MNCs home country. Homogeneous groups. and most residents speak Spanish fluently. more Israelis than in any other city outside Israel. there is a diverse works force in other geographic locals. In Switzerland. Four of the most common include: 1. Indian. In Miami. In Los Angeles. Domestic Multiculturalism: It is not necessary for today’s to do business in another country to encounter people with diverse cultural backgrounds. millions of first generation immigrants have brought both their language and their culture. In addition to domestic multiculturalism. An example would be a group of male German bankers who are forecasting the economic outlook for a foreign investment.Types of Multiculturalism For the international management arena. Culturally distinct populations can be found within organizations almost everywhere in the world. and more first and second generation Mexican than in any other city except Mexico City. In Singapore. interpret. B. A. Italian and Romansch. over onehalf the population in Latin. In the United States. and evaluate events in similar ways. there are four distinct ethnic communities: French. Group Multiculturalism: There are a number of ways that diverse groups can be categorized. In Belgium there are two linguistic groups: French and Flemish. Eurasian. for example. and Malay. and increasingly common are the mix of domestic and overseas personnel found in today’s MNCs. . German. for example. there are four distinct cultural and linguistic groups: Chinese. there are several ways of examining multiculturalism and diversity. More Puerto Ricans live in New York City than in Puerto Rico. which are characterized by members who share similar backgrounds and generally perceive. there are more Samoans than on the island of Samoa.
diversity may cause a lack of cohesion that result in the unit’s inability to take concerted action. Mistrust: An example of an attitudinal problem in a diverse group may be the mistrust of others. On the other hand. 3. be productive. in which all members but one have the same background. and create a work environment that is conducive to both efficiency and effectiveness. Bicultural groups. 3. engineers from economically advanced . three German. These potential problems are rooted in people’s attitudes. Unfortunately. which have two or more members of a group. In initial meetings. three Uruguayan and three Chinese managers who are looking into mining operation in Chile. 4. the likelihood of all members perceiving things in the same way decreases sharply. As the diversity of a group increases. Perceptual: Another potential problem may be perceptual. Potential Problems Associated with Diversity 1. An example would be a group of Japanese retailers and a British attorney who are looking into the benefits and shortcomings and setting up operations in Bermuda. in which there are individuals from three or more different ethnic backgrounds. perceptions and communication in general may be a problem. when culturally diverse groups come together. Token groups. represent each of two distinct cultures. An example is a group of three American. diverse groups. An example would be a group of four Mexicans and four Canadians who have formed a team to investigate the possibility of investing in Russia. Attitudes. 2. Multicultural groups. Lack of Cohesion: Overall.2. for example. they often bring preconceived stereotypes with them. there also are significant advantages associates with the effective use of multicultural.
Advantages of Diversity While there are some potential problems to overcome when using culturally diverse groups in today’s MNCs.countries often are perceived as more knowledgeable than those from less advanced countries. but this takes time. they often are able to create a greater number of unique solutions and recommendations. there is growing evidence that culturally diverse groups canEnhance creativity ↓ leads to Better decisions and ↓ leads to More effective and productive performance. which could occur for a number of reasons. Status Related Problems: Perceptual can result in status related problems. In particular. there also are a host of benefits to be gained. erroneous perceptions often are corrected. 6. 5. 4. Inaccurate Communication: Because of Language Difference: Still another potential problem with diverse groups is inaccurate communication. Because group members come from a host of different countries. Communication Problem: Diversity also may lead to communication problems because of the different uses of time. Time consuming for building cooperative environment: As the diverse group work together. Because some of the groups initially are regarded as more competent than others and likely are accorded status on the basis. 7. Misunderstanding may be caused by words used by a speaker that are not clear to other members. . One main benefit of diversity is the generation of more and better ideas.
For example. they typically question each other. however.S MNC recently was preparing to launch a new software package aimed at the mass consumer market. The company hoped to capitalize on the upcoming Christmas season with a strong advertising campaign in each of its international markets. Unlike homogeneous groups. group participants believed that their ideas and actions are correct and that those who disagree with them are either uninformed or deliberately trying to sabotage their efforts. and must be persuaded to change their minds. Therefore unanimity is achieved only through a careful process of deliberation. . the sales campaigns proved to be one of the most effective in the company’s history. the decision may be more effective. As a result. he suggested the company focus its sales campaign around the value of the software and how it could be useful to customers and not worry about getting the product shipped by early December. A second major benefit is that culturally diverse group can prevent groupthink. Thanks to these ideas. When this occurs. which is social conformity and pressures on individual members of a group to conform and reach consensus. Instead. a U. Multicultural diverse groups often are able to avoid this problem. A meeting of the sales manager from this markets in Spain. because in Latin cultures. The Spanish Manager suggested that the company focused its campaign around the coming of the Magi (January 6) and not Christmas (December 25). so a Christmas campaign would not have much meaning in this area. where everyone can be “of one mind. offer opinions and suggestions that are contrary to those held by others. the Middle East and Japan helped the company to revise and better target its marketing effort.” diverse groups may be slower in reaching a general consensus. because the members do not think similarly or feel pressure to conform. The Middle East pointed out that most of his customers were not Christians. but additionally suggested that some of the colors being proposed for the sales brochure be changed to better fit with Japanese culture. The Japanese manager concurred with his Middle East colleagues. gifts typically are exchanged on the date that the Magi brought their gifts.
Working 3. To counteract this problem find experienced multicultural managers focusing attention on the team member’s equivalent professional qualifications and status. Contrast between task oriented and relationship-oriented members of a diverse team may cause difficulty in creating cohesion. They are far less effective when they are assigned to routine task. 2. attention may be directed more toward describing and analyzing the problem or task that has been assigned. they can be the best. The following sections provide the conditions and guidelines for managing diverse groups in today’s organization effectively. because they can draw on the diversity of the members in generating ideas. Entry Stage: The focus should be on building trust and developing team cohesion. This stage often is fairly easy for managers of multicultural teams. Action 1. whose members are accustomed to working in different ways. They can hurt the organization. activities must be determined by the stage of team development: 1. Working Stage: In the work stage of development. A. This can be a difficult task for diverse teams. . but if managed effectively. diverse groups are more powerful than single culture groups. Entry 2. Understanding the conditions for effectiveness: Multicultural teams are most effective when they face tasks requiring innovativeness. In other words.Building Multicultural Team Effectiveness Multi culturally diverse teams have a great deal of potential to be either very effective or very ineffective. In achieving the greatest amount of effectiveness from diverse teams.
• Teams often have difficulty determining what is a good or bad idea or decision. B. because it often requires consensus building among the members. managers must give teams positive feedback on their process and output to help members to see themselves as a team. must have equal power. Action Stage: In the action stage. These guidelines can be useful in helping leaders to manage culturally diverse teams effectively.3. to teach them to value and celebrate diversity. Power distribution based on personal ability to contribute to . the focus shifts to decision-making and implementation. The managers choosing members of equal ability. -If the task is innovative. making prior accomplishments and task related skills known to the group. a number of specific guidelines for effectively managing culturally diverse groups have been identified. experienced managers work to help the diverse group recognize and facilitate the creation of ideas with which everyone can agree. Cultural dominance always is counterproductive. -If the task is routine homogeneous membership often is favorable. • The team leader must help the group to identify and define its overall goal. • Team members must recognize and be prepared to deal with their differences. In achieving this objective. • Members task. Here are some of the most useful: • Team members must be selected for their trust related abilities and not solely based on ethnicity. multicultural membership typically is best. • Members have mutual respect for each other. recognize contribution made by the individual members. The goal is to facilitate a better understanding of cross-cultural differences and generate a higher level of performance rapport. This can be a difficult phase. minimizing early judgment based on ethnic stereotypes. and trust the collective judgment of group. Using the proper guidelines: Besides some overall conditions.
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