#5975 - International Management Managing Across Cultures - International Management

Managing Across Cultures

TERMS

• Ethnocentric Predisposition – A nationalistic philosophy of management whereby the values and interests of the parent company guide strategic decisions.

• Polycentric Predisposition – A philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates.

• Regiocentric Predisposition – A philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis.

• Geocentric Predisposition – A philosophy of management whereby the company tries to integrate a global systems approach to decision making.

• Globalisation Imperative – A belief that one worldwide approach to doing business is the key to both efficiency and effectiveness.

• Parochialism – The tendency to view the world through one’s own eyes and perspectives.

• Simplification – The process of exhibiting the same orientation toward different cultural groups.

• Guanxi – Chinese for “good connections”.

THE STRATEGY FOR MANAGING ACROSS CULTURES

• As MNC’s become more transitional their strategies must address the cross cultural similarities and differences in their varied markets.

Strategic Predispositions

• Most MNC’s have a cultural strategic predisposition toward doing things in a particular way. Four distinct predispositions have been identified; ethnocentric, polycentric, regiocentric and geocentric.

• If an MNC relies on one of these profiles over a period of time, the approach may become institutionalised and greatly influence strategic planning.

• A predisposition toward any of these profiles can provide problems for a firm if it is out of step with the economic or political environment.

• Successful MNC’s use a mix of these predispositions based on the demands of the current environment.

Meeting the Challenge

• Despite the predilection to use home strategies, effective MNC’s are continuing their efforts to address local needs.

• A number of factors are moving companies to facilitate the development of unique strategies for different cultures, including:

  • The diversity of worldwide industry standards

  • A continual demand by local customers for differentiated products, as in the case of consumer goods that must meet local needs.

  • The importance of being an insider, in the case of customer who like to buy local.

  • The difficulty of managing global organisations, as in the case of some local subsidiaries that want more decentralisation and others that want less.

  • 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 customise products for their market and generate high returns on investment with limited production output.

• Responding to the cultural needs of local operations and customers MNC’s find that regional strategies can be used effectively in capturing and maintaining worldwide market niches.

• The need to adjust global...