Managing a Business/International Business
Please do needful help.
Que1. Define international business, and compare the contrast growth of international business
during the pre and post World War 2nd period?
Que2. What is the transaction cost approach? Examine the relevance of the natural type market
Imperfection in its development, and discuss the various ways transaction cost theory operates
in the Foreign Trade?
Que3. Define MNE? Differentiate between the evolutionary patterns of MNE originating from
different Countries. Like U.S, Japan and Europe?
Que4. What is planning evolution? How role of strategic alliances and subsidiaries are very
important in reference of achieving flexible co-ordination in different countries?
Que5. Do you agree with the view that workers in less developed countries are always less
productive than their counter parts in developed countries?
Que6. “Negotiation should be seen in the context how human communication managing
negotiation is in fact managing communication.” Explain and discuss the barriers to crosscultural
Que7. What are the objectives of trade grouping? Discuss the success achieved by individuals
grouping in realizing the objectives?
Que8. What attempts have been made to evolve international norms for conducting
international? Business? How far have these initiatives been effective? Also discuss Uruguay
round of WTO?
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Que3. Define MNE? Differentiate between the evolutionary patterns of MNE originating from
different Countries. Like U.S, Japan and Europe?
multinational enterprise (MNE] is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation. They play an important role in globalization
Differentiate between th evolutionary pattern of MNEs originating form different countries like U.S., Japan and Europe.
Definition Economists are not in agreement as to how multinational or transnational corporations should be defined. Multinational corporations have many dimensions and can be viewed from several perspectives (ownership, management, strategy and structural, etc.)
Ownership criterion: some argue that ownership is a key criterion. A firm becomes multinational only when the headquarter or parent company is effectively owned by nationals of two or more countries. For example, Shell and Unilever, controlled by British and Dutch interests, are good examples. However, by ownership test, very few multinationals are multinational. The ownership of most MNCs are uninational.
Depending on the case, each is considered an American multinational company in one case, and each is considered a foreign multinational in another case. Thus, ownership does not really matter.
Nationality mix of headquarter managers: An international company is multinational if the managers of the parent company are nationals of several countries. Usually, managers of the headquarters are nationals of the home country. This may be a transitional phenomenon. Very few companies pass this test currently.
Business Strategy: global profit maximization
Multinational companies may pursue policies that are home-country-oriented.
or host country-oriented or world-oriented. Perlmutter uses such terms as ethnocentric, polycentric and geocentric.However, "ethnocentric" is misleading because it focuses on race or ethnicity, especially when the home country itself is populated by many different races, whereas "polycentric" loses its meaning when the MNCs operate only in one or two foreign countries.
MNC is a parent company that
engages in foreign production through its affiliates located in several countries,
exercises direct control over the policies of its affiliates,
implements business strategies in production, marketing, finance and staffing that transcend national boundaries.
In other words, MNCs exhibit no loyalty to the country in which they are incorporated.
initial inquiries ⇒ firms rely on export agents
further expansion ⇒ foreign sales branch or assembly operations (to save transport cost)
There is a limit to foreign sales (tariffs, NTBs). Wages and land rents might be lower in the foreign countries.
Once the firm chooses foreign production as a method of delivering goods to foreign markets, it must decide whether to establish a foreign production subsidiary or license the technology to a foreign firm.
Licensing is usually first experience (because it is easy)
e.g.: Kentucky Fried Chicken in the U.K.
it does not require any capital expenditure
there is little financial risk
payment = a fixed % of sales
Problem: the mother firm cannot exercise any managerial control over the licensee (it is independent)
Risk: The licensee may transfer industrial secrets to another independent firm, thereby creating a rival.
It requires the decision of top management because it is a-critical-step.
it-is-risky(lack of information)
plants are established in several countries
licensing is switched from independent producers to its subsidiaries.
The company becomes a multinational enterprise when it begins to plan, organize and coordinate production, marketing, R&D, financing, and staffing. For each of these operations, the firm must find the best location.
A company whose foreign sales are 25% or more of total sales. This ratio is high for small countries, but low for large countries, e.g. Nestle (98%: Dutch), Phillips (94%: Swiss).
24 of top fifty firms are located in the U.S.
Petroleum companies: 6/10 located in the U.S.
Food/Restaurant Chains. 10/10 in the U.S.
US Multinational Corporations Exxon, GM, Ford, etc.
Motives for Foreign Direct Investment (FDI)
New MNCs do not pop up randomly in foreign nations. It is the result of conscious planning by corporate managers. Investment flows from regions of low anticipated profits to those of high returns.
Growth motive: A company may have reached a plateau satisfying domestic demand, which is not growing. Looking for new markets.
Protection in the importing countries
Foreign direct investment is one way to expand. FDI is a means to bypassing protective instruments in the importing-country.
European Community: imposed common external tariff against outsiders. US companies circumvented these barriers by setting up subsidiaries.
Japanese corporations located auto assembly plants in the US, to bypass VERs.
High Transportation Costs
Transportation costs are like tariffs in that they are barriers which raise consumer prices. When transportation costs are high, multinational firms want to build production plants close to either the input source or to the market in order to save transportation costs. Multinational firms (e.g. Toyota) that invest and build production plants in the United States are better off selling products directly to American consumers than the exporting firms that utilize the New Orleans port to ship and distribute products through New Orleans.
Japanese firms (e.g., Komatsu) invest here to produce heavy construction machines to avoid excessive exchange rate fluctuations. Also, Japanese automobile firms have plants to produce automobile parts. For instance, Toyota imports engines and transmissions from Japanese plants, and produce the rest in the U.S. Toyota is behind GM and Volkswagen in China, and plans to expand its production in China and has no plans to build more plants in North America. (China's autoparts are cheaper.) It may have been a mistake for Toyota to overexpand its plants in the US. GM and Volkswagen have expanded their production plants in Shanghai.
The most certain method of preventing actual or potential competition is to acquire foreign businesses.
GM purchased Monarch (GM Canada) and Opel (GM Germany). It did not buy Toyota, Datsun (Nissan) and Volkswagen. They later became competitors.
Labor Costs and Taxes
A foreign country may have cheap labor or land. Taxes may be lower in foreign countries. United Fruit has established banana-producing facilities in Honduras.
Due to high transportation costs, FPE does not hold. ⇒Cheap foreign labor. Labor costs tend to differ among nations. MNCs can hold down costs or avoid high taxes by locating part or all their productive facilities abroad. (Maquildoras)
Supplying Products to Foreign Buyers
Export versus Direct Foreign Investment
Foreign production is not always an answer. Foreign markets can be better served by exporting, rather than by creating a foreign subsidiary if there are economies of scale. If large scale production reduces unit cost, it is better to concentrate production in one place.
MES is the minimum rate of output at which Average Cost (AC) is minimized. If minimum efficient scale (MES) is not achieved, then export.
In other words, if there exists excess capacity, why not utilize it and export outputs to other countries? There is no point in creating another plant overseas when domestic capacity is not fully utilized.
If foreign demand exceeds the minimum efficient scale, then-FDI.
JV is a business organization established by two or more companies that combines their skills and assets.
A JV is formed by two businesses that conduct business in a third country. (US firm + British firm jointly operate in the Middle East)
joint venture with a local firm (GM + Shanghai Automotive Industry Corporationi (SAIC))
joint venture includes local government.
Bechtel Company, US
Messerschmitt-Boelkow-Blom, Germany => Iran Oil Investment Company
National Iranian Oil Company
Large capital costs - costs are too large for a single company
Protection - LDC governments close their borders to foreign-companies
e.g.: US workers assemble Japanese parts. The finished goods are sold to the US consumers.
Control is divided. The venture serves "two masters"
The new venture increases production, lowers price to consumers.
The new business is able to enter the market that neither parent could have entered singly.
Cost reductions (otherwise, no joint ventures will be formed) increased market power => not necessarily good.
Their offices are located in major international cities, metropolitan areas, and port cities to meet local consumer demands and to acquire resources such as materials and laborers.
Operating in many countries, MNCs are subject to multiple tax jurisdictions, i.e., they must pay taxes to several countries. National tax systems are exceedingly complex and differ between countries.
Differences among national income tax systems affect the decisions of managers of MNCs, regarding the location of subsidiaries, financing, and the transfer prices (the prices of products and assets transferred between various units of MNCs)
Multiple Tax Jurisdictions creates two problems, overlapping and underlapping jurisdictions. When overlapping occurs, two or more governments claim tax jurisdictions over the same income of an MNC. The overlapping may result in double taxation.
Conversely, when underlapping occurs, an MNC falls between tax jurisdictions and escape taxation. Underlapping encourages tax avoidance.
National governments may choose a territorial jurisdiction or national tax jurisdiction or both.
Territorial Tax Jurisdiction: The government taxes business income that is earned on the national territory.
Any business income earned on the US territory is subject to income tax, regardless of whether the business is owned by foreigners.
any foreign source income earned by the nationals are exempt from taxation. This approach is used by France, Italy, Netherlands. About 30 countries
Tax comptition: Since countries have different tax rates, multinational companies choose low tax countries to save, invest, and produce. Governments may compete to attract multinational enterprises by offering them lower tax rates and other incentives. This is called tax competition. Since high tax countries lose lucrative businesses, they want to harmonize tax rates, especially within a free trade area or customs union
National Tax Jurisdiction: Both domestic and foreign source income of national companies are subject to income tax.
Historical Basis for Trade: Throughout history, countries have tended to trade with each other, but usually to a much lesser extent than they do today. There are several reasons:
Difficulties in transportation and communication made it difficult to transport manufactured goods which would, in any event, arrive with long delays after manufacturing;
Border disputes, a history of invasions, and other tensions between countries discouraged trade with historical or potential enemies; and
Paper money was less readily available, so it was more difficult to match products for barter between the same buyer and sellers.
Nevertheless, countries did have to trade with each other to a more limited extent since:
Certain natural resources (e.g., iron, gold) were not readily available in some countries;
Some countries did not have the technology to produce certain goods (e.g., when steel was introduced, it could be made only in some countries);
In some countries, there was a demand for certain specialized goods, but not enough of a market to justify local production within reasonable economies of scale.
Today, trade is necessitated by several factors:
Technological advances are so fast that, at any point, a different country may have the latest and most effective technology in compelling areas (e.g., computers, medical);
Certain product lines (e.g., automobiles) require tremendous economies of scale to be cost effective, so these costs must be spread over several different markets;
With advances in transportation, it becomes essential to take advantage of relative strengths that different countries have (e.g., technological leadership, low labor costs).
Although trade generally benefits a country as a whole, powerful interests within countries frequently put obstacles—i.e., they seek to inhibit free trade. There are several ways this can be done:
Tariff barriers: A duty, or tax or fee, is put on products imported. This is usually a percentage of the cost of the good.
Quotas: A country can export only a certain number of goods to the importing country. For example, Mexico can export only a certain quantity of tomatoes to the United States, and Asian countries can send only a certain quota of textiles here.
"Voluntary" export restraints: These are not official quotas, but involve agreements made by countries to limit the amount of goods they export to an importing country. Such restraints are typically motivated by the desire to avoid more stringent restrictions if the exporters do not agree to limit themselves. For example, Japanese car manufacturers have agreed to limit the number of automobiles they export to the United States.
Subsidies to domestic products: If the government supports domestic producers of a product, these may end up with a cost advantage relative to foreign producers who do not get this subsidy. U.S. honey manufacturers receive such subsidies.
Non-tariff barriers, such as differential standards in testing foreign and domestic products for safety, disclosure of less information to foreign manufacturers needed to get products approved, slow processing of imports at ports of entry, or arbitrary laws which favor domestic manufacturers.
Justifications for protectionism: Several justifications have been made for the practice of protectionism. Some appear to hold more merit than others:
Protection of an "infant" industry: Costs are often higher, and quality lower, when an industry first gets started in a country, and it thus be very difficult for that country to compete. However, as the industry in the country matures, it may be better able to compute. Thus, for example, some countries have attempted to protect their domestic computer markets while they gained strength. The U.S. attempted to protect its market for small autos American manufacturers were caught unprepared for the switch in demand away from the larger cars caught U.S. auto makers unprepared. This is generally an accepted reason in trade agreements, but the duration of this protection must be limited (e.g., a maximum of five to ten years).
Resistance to unfair foreign competition: The U.S. sugar industry contends that most foreign manufacturers subsidize their sugar production, so the U.S. must follow to remain competitive. This argument will hold little merit with the dispute resolution mechanism available through the World Trade Organization.
Preservation of a vital domestic industry: The U.S. wants to be able to produce its own defense products, even if foreign imports would be cheaper, since the U.S. does not want to be dependent on foreign manufacturers with whose countries conflicts may arise. Similarly, Japan would prefer to be able to produce its own food supply despite its exorbitant costs. For an industry essential to national security, this may be a compelling argument, but it is often used for less compelling ones (e.g., manufactures of funeral caskets or honey).
Intervention into a temporary trade balance: A country may want to try to reverse a temporary decline in trade balances by limiting imports. In practice, this does not work since such moves are typically met by retaliation.
Maintenance of domestic living standards and preservation of jobs. Import restrictions can temporarily protect domestic jobs, and can in the long run protect specific jobs (e.g., those of auto makers, farmers, or steel workers). This is less of an accepted argument—these workers should instead by retrained to work in jobs where their country has a relative advantage.
Retaliation: The proper way to address trade disputes is now through the World Trade Organization. In the past, where enforcement was less available, this might have been a reasonable argument.
Note that while protectionism generally hurts a country overall, it may be beneficial to specific industries or other interest groups. Thus, while sugar price supports are bad for consumers in general, producers are an organized group that can exert a great deal of influence. In contrast, the individual consumer does not have much of an incentive to take action to save about $5.00 a year.
Effects of protectionism: Protectionism tends to lead to additional tariffs or other protectionist measures by other countries in retaliation, reduced competition (which results in inflation and less choice for consumers), a weakening of the trade balance (due in part to diminished export abilities resulting from foreign retaliations and in part because of the domestic currency loses power as there is less demand for it). An overall effect may be a vicious cycle of trade wars as each country responds to the other with a "tit for tat."
Efforts to encourage trade: The General Agreement on Trade and Tariffs (GATT), which was negotiated at the Bretton Woods Conference in 1947, sought to encourage international trade following World War II, when many countries were in bad shape after the war. There were several objectives:
To encourage trade in general;
To replace non-tariff barriers with tariff barriers—i.e., it is acceptable but not encouragable to impose some burden on foreign products, but this must be in the form of a readily identifiable duty rather than a more vague restriction which is less transparent;
Reciprocity: Countries should respond in kind when other countries reduce tariffs or barriers;
Providing the most favorable trade terms offered to anyone to all members of the agreement.
"Open" vs. "closed" currencies. Not all currencies can be freely traded—some countries prohibit their currencies from leaving their borders, although this is mostly confined to developing countries that want to encourage tourists to spend their remaining currency rather than converting it back to their own currencies and spending it in their home countries. There are, however, some currencies for which international markets are not readily available, because the demand for those currencies is limited.
Exchange rates come in two forms:
"Floating"—here, currencies are set on the open market based on the supply of and demand for each currency. For example, all other things being equal, if the U.S. imports more from Japan than it exports there, there will be less demand for U.S. dollars (they are not desired for purchasing goods) and more demand for Japanese yen—thus, the price of the yen, in dollars, will increase, so you will get fewer yen for a dollar.
"Fixed"—currencies may be "pegged" to another currency (e.g., the Argentinian currency is guaranteed in terms of a dollar value), to a composite of currencies (i.e., to avoid making the currency dependent entirely on the U.S. dollar, the value might be 0.25*U.S. dollar+4*Mexican peso+50*Japanese yen+0.2*German mark+0.1*British pound), or to some other valuable such as gold. Note that it is very difficult to maintain these fixed exchange rates—governments must buy or sell currency on the open market when currencies go outside the accepted ranges. Fixed exchange rates, although they produce stability and predictability, tend to get in the way of market forces—if a currency is kept artificially low, a country will tend to export too much and import too little.
Trade balances and exchange rates: When exchange rates are allowed to fluctuate, the currency of a country that tends to run a trade deficit will tend to decline over time, since there will be less demand for that currency. This reduced exchange rate will then tend to make exports more attractive in other countries, and imports less attractive at home.
Dealing with culture. Culture is a problematic issue for many marketers since it is inherently nebulous and often difficult to understand. One may violate the cultural norms of another country without being informed of this, and people from different cultures may feel uncomfortable in each other’s presence without knowing exactly why (for example, two speakers may unconsciously continue to attempt to adjust to reach an incompatible preferred interpersonal distance).
Warning about stereotyping. When observing a culture, one must be careful not to over-generalize about traits that one sees. Research in social psychology has suggested a strong tendency for people to perceive an "outgroup" as more homogenous than an "ingroup," even when they knew what members had been assigned to each group purely by chance. When there is often a "grain of truth" to some of the perceived differences, the temptation to over-generalize is often strong. Note that there are often significant individual differences within cultures.
Learned. Culture is not genetically based—if that were the case cultures across the World would have been much more similar to each other. We learn what is considered appropriate in our culture through trial and error. If a child engages in competitive behavior, this might be rewarded in the United States with the expression of parental approval, while in Japan it might result in subtle shows of disapproval, such as lack of attention.
Shared. The beliefs, interpretations, and behaviors are shared by all or most of the people within the culture, so that it becomes a truly society-wide phenomenon.
Compelling: Culture must have implications (such as social disapproval if contradicted) in order to be considered important.
Interrelated. Although there may be conflicts between elements of culture (e.g., respect for seniority may come into conflict with a growing value of achievement in Singapore), for the most part, elements of culture constitute a coherent and relatively consistent whole. For example, the tendency for Japanese business people to bow when meeting each other and the tendency of lower level Japanese employees to show great deference to their superiors are both manifestations of a strong emphasis on respect.
Beliefs. While Americans may attribute success to hard work or skill, it may be attributed to luck or connections in other cultures.
Attitudes. Beliefs, feelings, and behavioral intentions may differ. While the American may appreciate getting a bargain in a sale, this may conjure up images of not being able to afford the full price in other cultures.
Goals. While "progress" (having new and improved products, for example) is considered a good thing in the U.S., many Japanese parents are concerned that the "wa-pro" leaves their children unable to write the traditional Japanese pictographs.
Values. In the U.S., individual uniqueness is generally considered a good thing while in some cultures fitting in with the group is a higher priority. Thus, for example, an American may enjoy wearing relatively innovative clothing, which may be frowned upon in a more collectivistic society.
Laws across borders.
When laws of two countries differ, it may be possible in a contract to specify in advance which laws will apply, although this agreement may not be consistently enforceable. Alternatively, jurisdiction may be settled by treaties, and some governments, such as that of the U.S., often apply their laws to actions, such as anti-competitive behavior, perpetrated outside their borders (extra-territorial application). By the doctrine known as compulsion, a firm that violates U.S. law abroad may be able to claim as a defense that it was forced to do so by the local government; such violations must, however, be compelled—that they are merely legal or accepted in the host country is not sufficient.
The reality of legal systems. Some legal systems, such as that of the U.S., are relatively "transparent"—that is, the law tends to be what its plain meaning would suggest. In some countries, however, there are laws on the books which are not enforced (e.g., although Japan has antitrust laws similar to those of the U.S., collusion is openly tolerated). Further, the amount of discretion left to government officials tends to vary. In Japan, through the doctrine of administrative guidance, great latitude is left to government officials, who effectively make up the laws.
One serious problem in some countries is a limited access to the legal systems as a means to redress grievances against other parties. While the U.S. may rely excessively on lawsuits, the inability to effectively hold contractual partners to their agreement tends to inhibit business deals. In many jurisdictions, pre-trial discovery is limited, making it difficult to make a case against a firm whose internal documents would reveal guilt. This is one reason why personal relationships in some cultures are considered more significant than in the U.S.—since enforcing contracts may be difficult, you must be sure in advance that you can trust the other party.
The reality of legal systems. Some legal systems, such as that of the Legal systems of the World. There are four main approaches to law across the World, with some differences within each:
Common law, the system in effect in the U.S., is based on a legal tradition of precedent. Each case that raises new issues is considered on its own merits, and then becomes a precedent for future decisions on that same issue. Although the legislature can override judicial decisions by changing the law or passing specific standards through legislation, reasonable court decisions tend to stand by default.
Code law, which is common in Europe, gives considerably shorter leeway to judges, who are charged with "matching" specific laws to situations—they cannot come up with innovative solutions when new issues such as patentability of biotechnology come up. There are also certain differences in standards. For example, in the U.S. a supplier whose factory is hit with a strike is expected to deliver on provisions of a contract, while in code law this responsibility may be nullified by such an "act of God."
THE STRATEGIC MANAGEMENT PROCESS HELPS TO UNDERSTAND
HOW YOU ADAPT THE PRODUCT TO THE NEEDS OF THE CONSUMERS.
FACTORS TAKEN INTO CONSIDERATION IN VARIOUS COUNTRIES
IN INTERNATIONAL MARKETIN
THE ADAPTATION OF THE PRODUCT IS CARRIED OUT
FOR THE FOLLOWING REASONS:
-to meet the local regulations.
-to meet the customs/ beliefs.
-to meet the customer needs.
-to meet the customer wants.
-to meet the customer satisfaction.
-to meet the challenge of the competition.
-to increase the sales volume.
-to increase the market share.
-to increase the profit.
-to improve / increase the return on investment
Que4. What is planning evolution? How role of strategic alliances and subsidiaries are very
important in reference of achieving flexible co-ordination in different countries?
Purpose with PLANNING Evolution
The purpose is to offer an alternative way of working in projects where new or unsure results are expected. When it is obvious that a similar solution does not exist or have failed before.
Evo:s way of work facilitates a significant reduction of risk in the project.
There is a need for more management capacity Management capacity is needed for resource and relation handling as well as for goal steering.
planning Evolution demands a clear vision and well defined goals to achieve expected results.
During the execution phase user requirements, the result itself and the way of production are refined in a learning process. The planning Evolution work method takes care of existing knowledge and systems in the user environment.
A planned Evo. step during the execution phase is short and effective, major driving force are user participation and learning (immediate feedback).
System integration and test are taken well care of during execution.
Test and integration will not be a problem at the end of the project.
Huge problems and technical difficulties will surface fast due to Evo's priority planning rules.
Each step is normally 2%-4% of the projects total estimated time. 2% is recommended.
When you want to ...
• run a project with fuzzy/untested requirements and new technical design (High-High risk)
• implement a vision in steps and improve the possibility to meet the market window with something working
• use partial results as a mean for follow up (for orderer/steering group e.g..)
• get early feedback from your users
• get early feedback on the result (product)
• get early feedback on the process of result design
• control project risks with a high degree of result/work break down
meet a "burning" need up front
• facilitates a high degree of goal focus in the project. This creates high project productivity
• investigates and describes a new way of working together with users
• gives a continuous series of improvements in the user organization
• creates a result that is integrated with it's surroundings
• takes care of existing data, systems and information. That's easily forgotten during "normal" development projects
How to work in an evolutionary project
Project initiation (outside Evo.):
• Initiation- prerequisites (my suggestion)
• Maturity evaluation, process status (in user organization)
• Gain approval for, get commitments from user management, motivation
• How to package and sell Evo. Project's (if you are a consultant or internal supplier)
Evo. Main planning process:
1. Investigate known, needed benefits of the desired vision.
- Perform a user organization study
2. Prepare/define benefits and measurable goals.
3. Risk analyze
4. Suggest project strategies, brainstorming / seminar around strategies
5. Do impact evaluation of chosen strategies and ideas / seminar ?
5a. Decide upon project goals
(Those function- and quality goals the project takes responsibility for)
6. Complete/adjust/remove strategies
7. Do Impact estimation / evaluation
8. If not 150-300% go to 6
9. Make a step plan, and time schedule
10. If needed perform a new risk analyze
11. Step planning
- define use-scenarios, group function
12. Prioritize (most benefit and high risk first)
13. Staff the project - key roles (user manager, design manager, project management)
14. Personal Commitment from project staff
15. Start of execution phase
Evo project execution:
Follow up of overall project:
• Progress:- Infrastructure/technology- Achieved benefit (user org.)
and cost so far
• Adjust step plan/strategies
• Resources/consumption (users and project team)
• Follow up, Guide for measurements ß
• (Project analyse)
Execution of an Evo. step:
• Decide upon improvement goals for actual step
• Choose and decide upon ideas - solution strategies
• Evaluate ideas (Goal/benefit Impact estimation)
- What's the impact on important goal's from each idea and strategy
- Learning (lessons learned) from earlier steps
- Assumed benefit from coming steps
• Do step (develop) or buy a result/solution for the step
• Do internal test in the development group
- Usually a task for the user liaison (user coordinator).
• Deliver and execute the step result with user (s),
• Study results / benefit
- Engage users in decision making about next step
• Update plan - time e.g.
PROJECT ORGANIZATION DURING EXECUTION
How well something is done
- maintenance ability
- access (data)
- sound level Project goals can
be both quality-
and function goals. Benefit can be partly or all three.
The BUSINESS DEAL decides. The function itself
- response time
- "task nn"
Advantages with Evo:
• Runs through the full cycle from user and customer needs and benefit to usable step results. This promotes a high degree of learning for all involved and between each step.
• Challenging for the team, demands a good mix of different competence.
• Creates usable early results, normally 2, at most 4 weeks after start of execution phase.
• Builds user and orderer confidence by a succession of usable deliveries with benefit.
• Integration, test and result approval is a part of each step. This will not become a difficult obstacle at the end of the project.
• Installation and start of production are also done in each step and will not become a problem at the end.
• Gives early feedback from real production. This facilitates that maintenance goals are met.
• Gives feedback from real experience of chosen technology.
• Gives early proof if chosen design and strategies are enough. (Due to Evo. planning priority rules)
• It the project is cancelled/aborted before it is competed, all results achieved up to that date are in practical use
• It's easy to follow project progress on results in practical use
• Evo. suits well for projects working with object technology
Drawbacks with Evo:
• Evo. expects competence for defining goals and competence for working with user management in this
• it can be difficult to find and identify small steps with user benefit
• most project members are not used to work and think this way
• Evo. uses new ways for project (and management) decisions
• all involved needs good insight in the Evo. method itself
• there might be resistance from system maintenance staff (to? many deliveries)
• the orderer/customer will not get the whole result at the only (and first) delivery
• the orderer/customer will have difficulties with replacing the result when the project have finished
• do not start without a clear vision and not without well defined goals
• plan for extra roles and project management capacity
• plan for installations and get commitment and understanding from current maintenance staff
• do not start with simple tasks without real usability (user benefit)
• plan for introduction/education of project members in the new Evo. work method
• if you do not get a first delivery within 2-4 weeks, it's probably not going to be an Evo. project
Why Evo with add-ons.:
• Evo. needs resource management (missing)
• Evo. needs a conclusion process as well as a good project review (missing)
• Evo. points out a need for a number strategic decisions during the project
Evo. also offers a Impact evaluation tool for strategy and idea's
• Evo. have got the most developed way of describing goals on market today
MANAGING THE DIVERSITY WHEN STRATEGIC ALLIANCE AND
THERE ARE VARIOUS DIMENSIONS OF DIVERSITY,
MOSTLY INFLUENCED BY CULTURE.
1.UNDERSTANDING AND MANAGING WITH
**Perhaps the most visible aspect of culture.
**Whorfian hypothesis — considers language as a major determinant of thinking.
**Low-context cultures — the message is conveyed by the words used.
**High-context cultures — words convey only a limited part of the message.
2: BY UNDERSTANDING AND MANAGING WITH
**Circular view of time.
**No pressure for immediate action or performance.
**Emphasis on the present.
**Linear view of time.
**Create pressure for action and performance.
**Long-range goals and planning are important.
3. BY UNDERSTANDING AND MANAGING WITH
*Use of space.
**The study of how people use space to communicate.
**Reveals important cultural differences.
**Concept of personal space varies across cultures.
**Space is arranged differently in different cultures.
4.BY UNDERSTANDING AND MANAGING WITH
**A major element of culture.
**Can be a very visible aspect of culture.
**Influences codes of ethics and moral behavior.
**Influences conduct of economic matters.
5.BY UNDERSTANDING AND MANAGING WITH
*Values and national culture.
**Cultures vary in underlying patterns of values and attitudes.
**Hofstede’s five dimensions of national culture:
6.BY UNDERSTANDING AND MANAGING WITH
**The willingness of a culture to accept status and power differences among members.
**Respect for hierarchy and rank in organizations.
**Example of a high power distance culture — Indonesia.
**Example of a low power distance culture — Sweden.
7.BY UNDERSTANDING AND MANAGING WITH
**The cultural tendency toward discomfort with risk and ambiguity.
**Preference for structured versus unstructured organizational situations.
**Example of a high uncertainty avoidance culture — France.
**Example of a low uncertainty avoidance culture — Hong Kong.
8.BY UNDERSTANDING AND MANAGING WITH
**The cultural tendency to emphasize individual or group interests.
**Preferences for working individually or in groups.
**Example of an individualistic culture — United States.
**Example of a collectivist culture — Mexico.
9.BY UNDERSTANDING AND MANAGING WITH
**The tendency of a culture to value stereotypical masculine or feminine traits.
**Emphasizes competition/assertiveness versus interpersonal sensitivity/relationships.
**Example of a masculine culture — Japan.
**Example of a feminine culture — Thailand.
10.BY UNDERSTANDING AND MANAGING WITH
**The tendency of a culture to emphasize future-oriented values versus present-oriented values.
**Adoption of long-term or short-term performance horizons.
**Example of a long-term orientation culture — South Korea.
**Example of a short-term orientation culture — United States.
11.BY UNDERSTANDING AND MANAGING WITH
*cultural differences helps in dealing with parochialism and ethnocentrism.
**Parochialism — assuming that the ways of one’s own culture are the only ways of doing things.
**Ethnocentrism — assuming that the ways of one’s culture are the best ways of doing things.
12.BY UNDERSTANDING AND MANAGING WITH
*Cultural differences in handling relationships with other people.
**Universalism versus particularism.
-Relative emphasis on rules and consistency, or on relationships and flexibility.
**Individualism versus collectivism.
-Relative emphasis on individual freedom and responsibility, or on group interests and consensus.
12. BY UNDERSTANDING AND MANAGING WITH
*Cultural differences in handling relationships with other people .
**Neutral versus affective.
-Relative emphasis on objectivity and detachment, or on emotion and expressed feelings.
**Specific versus diffuse.
-Relative emphasis on focused and narrow involvement, or on involvement with the whole person.
13.BY UNDERSTANDING AND MANAGING WITH
*Cultural differences in handling relationships with other people .
**Achievement versus prescription.
**Relative emphasis on performance-based and earned status, or on ascribed status.
14.BY UNDERSTANDING AND MANAGING WITH
*Cultural differences in attitudes toward time.
**Sequential view of time.
-Time is a passing series of events.
**Synchronic view of time.
-Time consists of an interrelated past, present, and future.
15. BY UNDERSTANDING AND MANAGING WITH
*Cultural differences in attitudes toward the environment.
-Members view themselves as separate from nature and believe they can control it.
-Members view themselves as part of nature and believe they must go along with it.
COORDINATION IS THE
SYNCHRONIZATION AND INTEGRATION OF ACTIVITIES,RESPONSIBILITIES
AND COMMAND AND CONTROL STRUCTURES TO ENSURE THAT THE
RESOURCES ARE USED MOST EFFICIENTLY IN PURSUIT OF THE SPECIFIED
OBJECTIVES. ALONG WITH THE ORGANIZING, MONITORING , AND CONTROLLING
COORDINATING IS ONE OF THE KEY FUNCTIONS OF MANAGEMENT.
Co-ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the other functions of management.
“Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals”.
“Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding”.
Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing, directing and controlling. That is why, co-ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management. Co-ordination is the essence of management and is implicit and inherent in all functions of management.
A manager can be compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group members. Co-ordination is an integral element or ingredient of all the managerial functions as discussed below: -
Co-ordination through Planning – Planning facilitates co-ordination by integrating the various plans through mutual discussion, exchange of ideas. e.g. - co-ordination between finance budget and purchases budget.
Co-ordination through Organizing – Mooney considers co-ordination as the very essence of organizing. In fact when a manager groups and assigns various activities to subordinates, and when he creates department’s co-ordination uppermost in his mind.
Co-ordination through Staffing – A manager should bear in mind that the right no. of personnel in various positions with right type of education and skills are taken which will ensure right men on the right job.
Co-ordination through Directing – The purpose of giving orders, instructions & guidance to the subordinates is served only when there is a harmony between superiors & subordinates.
Co-ordination through Controlling – Manager ensures that there should be co-ordination between actual performance & standard performance to achieve organizational goals.
From above discussion, we can very much affirm that co-ordination is the very much essence of management. It is required in each & every function and at each & every stage & therefore it cannot be separated.
The four key functions of management are applied throughout an organization regardless of whether it is a business, a government agency, or a church group. In a business, which will be the focus here, many different activities take place. For example, in a retail store there are people who buy merchandise to sell, people to sell the merchandise, people who prepare the merchandise for display, people who are responsible for advertising and promotion, people who do the accounting work, people who hire and train employees, and several other types of workers. There might be one manager for the entire store, but there are other managers at different levels who are more directly responsible for the people who perform all the other jobs. At each level of management, the four key functions of planning, organizing, directing, and controlling are included. The emphasis changes with each different level of manager, as will be explained later.
Planning Planning in any organization occurs in different ways and at all levels. A top-level manager, say the manager of a manufacturing plant, plans for different events than does a manager who supervises, say, a group of workers who are responsible for assembling modular homes on an assembly line. The plant manager must be concerned with the overall operations of the plant, while the assembly-line manager or supervisor is only responsible for the line that he or she oversees.
Planning could include setting organizational goals. This is usually done by higher-level managers in an organization. As a part of the planning process, the manager then develops strategies for achieving the goals of the organization. In order to implement the strategies, resources will be needed and must be acquired. The planners must also then determine the standards, or levels of quality, that need to be met in completing the tasks.
In general, planning can be strategic planning, tactical planning, or contingency planning. Strategic planning is long-range planning that is normally completed by top-level managers in an organization. Examples of strategic decisions managers make are who the customer should be, what products or services should be sold, and where the products and services should be sold.
Short-range or tactical planning is done for the benefit of lower-level managers, since it is the process of developing very detailed strategies about what needs to be done, who should do it, and how it should be done. To return to the previous example of assembling modular homes, as the home is nearing construction on the floor of the plant, plans must be made for the best way to move it through the plant so that each worker can complete assigned tasks in the most efficient manner. These plans can best be developed and implemented by the line managers who oversee the production process rather than managers who sit in an office and plan for the overall operation of the company. The tactical plans fit into the strategic plans and are necessary to implement the strategic plans.
Contingency planning allows for alternative courses of action when the primary plans that have been developed don't achieve the goals of the organization. In today's economic environment, plans may need to be changed very rapidly. Continuing with the example of building modular homes in the plant, what if the plant is using a nearby supplier for all the lumber used in the framing of the homes and the supplier has a major warehouse fire and loses its entire inventory of framing lumber. Contingency plans would make it possible for the modular home builder to continue construction by going to another supplier for the same lumber that it can no longer get from its former supplier.
Organizing Organizing refers to the way the organization allocates resources, assigns tasks, and goes about accomplishing its goals. In the process of organizing, managers arrange a framework that links all workers, tasks, and resources together so the organizational goals can be achieved. The framework is called organizational structure, which is discussed extensively in another article. Organizational structure is shown by an organizational chart, also discussed extensively in another article. The organizational chart that depicts the structure of the organization shows positions in the organization, usually beginning with the top-level manager (normally the president) at the top of the chart. Other managers are shown below the president.
There are many ways to structure an organization, which are discussed extensively in the articles referred to previously. It is important to note that the choice of structure is important for the type of organization, its clientele, and the products or services it provides—all which influence the goals of the organization.
Directing Directing is the process that many people would most relate to managing. It is supervising, or leading workers to accomplish the goals of the organization. In many organizations, directing involves making assignments, assisting workers to carry out assignments, interpreting organizational policies, and informing workers of how well they are performing. To effectively carry out this function, managers must have leadership skills in order to get workers to perform effectively.
Some managers direct by empowering workers. This means that the manager doesn't stand like a taskmmaster over the workers barking out orders and correcting mistakes. Empowered workers usually work in teams and are given the authority to make decisions about what plans will be carried out and how. Empowered workers have the support of managers who will assist them to make sure the goals of the organization are being met. It is generally thought that workers who are involved with the decision-making process feel more of a sense of ownership in their work, take more pride in their work, and are better performers on the job.
By the very nature of directing, it should be obvious that the manager must find a way to get workers to perform their jobs. There are many different ways managers can do this in addition to empowerment , and there are many theories about the best way to get workers to perform effectively and efficiently. Management theories and motivation are important topics and are discussed in detail in other articles.
Controlling The controlling function involves the evaluation activities that managers must perform. It is the process of determining if the company's goals and objectives are being met. This process also includes correcting situations in which the goals and objectives are not being met. There are several activities that are a part of the controlling function.
Managers must first set standards of performance for workers. These standards are levels of performance that should be met. For example, in the modular home assembly process, the standard might be to have a home completed in eight working days as it moves through the construction line. This is a standard that must then be communicated to managers who are supervising workers, and then to the workers so they know what is expected of them.
After the standards have been set and communicated, it is the manager's responsibility to monitor performance to see that the standards are being met. If the manager watches the homes move through the construction process and sees that it takes ten days, something must be done about it. The standards that have been set are not being met. In this example, it should be relatively easy for managers to determine where the delays are occurring. Once the problems are analyzed and compared to expectations, then something must be done to correct the results. Normally, the managers would take corrective action by working with the employees who were causing the delays. There could be many reasons for the delays. Perhaps it isn't the fault of the workers but instead is due to inadequate equipment or an insufficient number of workers. Whatever the problem, corrective action should be taken.