Cultural and Political Analysis for International Business Planning and Management

1
Cultural and Political Analysis for International
Business Planning and Management

• Ilan Vertinsky
• Aviad Peer
• BAIM 502, HA 412, April 20-May 20, 2003
• Tuesdays and Thursdays 200 400 p.m.

2
Outline of todays class

• Introductions
• Course Overview
• Discussion on Globalization and Its Cultural,
  Political, and Economic Implications

3
Introductions

• Personal Introductions
• 2 things you would like people to know
• Past education, experience, accomplishments
• Something that could be an asset in this class
• 1 thing others would never guess about you
• Please use anecdotes, short-stories, and examples
  if appropriate

4
Course Overview

• Main topics covered
• New skills and learning outcomes
• More about the learning method
• Case study teams
• Case draws
• Grading
• Questions

5
Main Topics Covered

• Part I Cultural Analysis
• Sources of Cultural Differences
• a) Sensitivity to Different Cultural Values
• b) Local Customs (History, Demographics, Social
  Change)
  
• Influences on Managerial Models
• Business Concepts
• Internal Practices
• Inter-firm Transactions
• Part II Political Analysis
• Political Risks, Evaluation and Management
• Business-Government Interactions

6
New Skills and Outcomes

• Culture
• Develop your own intuition and interpretations
• Specific applications changes in organizational
  design, adjustments in negotiation styles,
  relevant issues in the formation and management
  of cross-border alliances
• Political Risk
• Identify relevant risks, choosing where to invest
  and how to reduce or manage risks strategic
  decisions.
  
• Governmental Actions
• Observation, anticipation, planning, and
  management of on-going interactions strategic
  decisions.
  

7
Learning Approach

• Readings offer rich information -- not a burden
• Practice sorting out the important facts
• Identify main actors and their views
• Look for relevant symptoms, but seek causes
• Each case a Trial Run of an actual decision
  (situations are real and frequently encountered)
  
• Think of team effort as providing Expert
  Advice
  
• Content Thorough thinking, insights,
  flexibility
  
• formal presentations not required
• Process Mutual reliance on class members

8
Learning Support

• Lectures notes posted before class case comments
  will only be presented in class
  
• A variety of in-class exercises opportunities
  to have fun while learning and practicing
  specific skills
  
• I am available to work with you (specific
  questions, discuss readings, case preparation,
  debriefing after class-discussions)
  
• Office hours 12-1 make appointments
• Consultation with your group members is strongly
  encouraged (cases, class preparation)

9
Grading

• Class Participation (40)
• Presence, Preparation, and Participation
• A short journal entry for each week (1 page)
• due the following Tuesday
• Case Presentations (30)
• Final Exam (30)
• Comment on a specific aspect of one the four
  cases
  
• An applied question from the readings
• A brief essay (2 pages)

10
Syllabus

• Questions?

11
Globalization

• We are moving away from economic systems where
  national markets are distinct entities isolated
  from each other by trade barriers, distance, time
  and culture toward a system of a global
  marketplace.
• What factors are pushing globalization?
• Distance is shrinking
• Lower costs of communication
• Flows of people across borders
• Governmental reforms
• Liberalization of trade and investment flows

12
International Production

• 1. GM
• 20,000 (paid) to GM for LeMans - An American
  Car
  
• 6,000 to South Korea for assembly
• 3,500 (goes) to Japan for advanced components
  (engines, transaxles, and electronics)
  
• 1,500 (goes) to Germany for design
• 500 (goes) to GB for advertising and marketing
  services
  
• 100 (goes) to Ireland for data processing
  services
  
• 7,600 to GM headquarters in the U.S. for
  financial and legal services, etc.

13
International Production (cont.)

• 2. Airbus Consortium
• Joint ownership (companies from 4 countries)
• wings from U.K. fuselage and tail Germany
  doors Spain cockpit and final assembly
  France
  
• 1500 suppliers 27 countries
• 35 of components from 500 U.S. companies
• Other suppliers in India and Singapore
• 3. Vegetable Exports from Zimbabwe to Tesco
• Cheap air transport
• Modern telecommunications (internet-based to
  order)
  
• Open British Market

14
Changes in Trade Flows
15
International Trade Flows (2001)
48
Latin America
3
6
Asia
25
8
17
68
21
10
Western Europe
North America
19
61
2
12
17
Latin America
17
16
Empirical Evidence Retail Chains
 
Source Rugman Girod, European Management
Journal 21(1), 2003
 
17
FDI Inward Flows in US billions

• 1989-94 1997 2000 2000
• World 200.1 447.9 1270.8
• Developed Countries 137.1 271.4
  1005.2 79
  
• Developing Countries 59.6 187.4 240.2
  21
  
• Africa 3.9 7.2 8.9 1
• Lat America 17.5 71.2 86.2
  7
  
• Asia/Pacific 37.9 107.3 143.8
  11
  
• C E Europe 3.4 19.2 25.4
  2
  
• LLDCs 1.4 3.0 4.4
• China 14.0 44.2 40.8 3
• Source WIR 2001

18
Discussion -- Globalization

• What is globalization?
• What are the characteristics of the new economy
  and how do they promote globalization?
  
• What are the dimensions of globalization?
• How can we measure the extent of globalization?
• What are the implications to businesses along the
  different dimensions?

19
Discussion -- Canada

• How is globalization reflected in the Canadian
  experience?
  
• Does the border with the US matter?
• In what ways?
• What are the values underlying globalization?
• Are these American values?
• Are these values typically associated with
  modernization?
  

20
Foreign Content in Canada Cultural Goods and
Services
21
Discussion National Identity

• What defines national identity? What does it
  mean to you to be a Canadian, Chinese,
  Japanese, Italian etc.?
  
• How important is it to you that your national
  identity be preserved?
  
• Do you think that different aspects of
  globalization might influence your national
  identity? In what ways?

22
Discussion Protectionism?

• How does the government try to protect culture in
  Canada? Are governmental actions effective?
  
• What are the forces that prompt or promote
  protection attempts? What are their effects?
  
• What are the implications of globalization?
• for domestic businesses?
• for multinationals?
• for government-corporate relationships?

23
Summary Comments

• Dimensions economic, social and cultural
• Cannot separate economics from culture
• Values efficiency and standardization
• American melting-pot values
• Canada made several indirect politic choices
  (e.g. immigration policy) that effectively
  counterbalanced these globalization values
  
• Mosaic tolerance and diversity
• However, Canadian protectionist attempts have
  been rent-seeking (domestic lobbying for local
  interests) rather than culture-driven.