Global Strategic Management Process

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• Global Strategic
  Management Process
• 
  Mission/Objectives
• (marketing, production,
  finance, profitability, RD)
• 
  Environmental Scanning (global host)
• Political (stability/nationalism),
  economic (growth, BOP, inflation, ex. rate),
  cultural.
• 
  Internal Analysis
• (current
  or potential strength, weakness)
• 
  Competitive analysis
• assess ability and core competency
  compared to competitors using SWOT analysis.
• Choose
  strategy, managerial style/staffing
• select the best managerial style/staff
  to execute the strategy for the host country
• 
  Control and evaluation
• centralized vs.
  decentralized/evaluation by standard
  ratio/ROI/MBO

2

• A) Managerial Style
• Theory X
  Theory Y
• Assumption
• (about Human) (
  hierarchy)
• Attitude
• (about work)
• Mgmnt style
• /Supervision
• Leadership

3

• B) Theory Z (Ouchi and Jaeger)
• (American) (Japanese)
• a. Employment short term long term
• 1. security
• 2. loyalty
• b. Decision Individual
  Consensual
• c. Responsibility Individual
  Collective
• d. Eval/promo fast
  slow

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• (American)
  (Japanese)
• e. Control explicit
  implicit
• f. Career path specialist all-rounder
• g. Concern Segmented Holistic

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• C) H R Management
• 1. HCN (host country national) Manager
• Advantage a.
• b.
• c.
• d.
• e.
• Problems a.
• b.
• c.
• d.

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• 2. PCN (parent country national) Manager
• Advantage a.
• b.
• c.
• d.
• Problems a.
• b.
• c.
• d.
• e.
• 3. TCN (Third country national) Manager
• Advantage a.
• b.
• c..
• Problem

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• 4. PCN manager needed when
• a.
• b.
• c.
• d.
• 5. Qualifications for PCN Manager
• a.
• b.
• c.
• d.
• e.
• f.

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• Factors that can help integration of PCN w/HCN
• Positive
  Negative
• develop personal relationship only formal
  relationship
• team player
  solo player
• learning local language only
  home language
• friendly cooperative Arrogant
  non-cooperative
• transfer knowledge
  reluctant to transfer
• cultural sensitivity
  lack of sensitivity
• willingness to learn new things reluctance to
  change/adapt
• open minded
  close minded
• sense of unity
  we-they distinction
• strong ethical code
  unethical
• self confidence
  lack of confidence
• listening skills
  inattentive

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• D) Team effectiveness
• Mono-culture
  Multi-culture
• Traits cohesive
  creative/innovative
• linear thinking
  multi-dimensional thinking
• pressure for conformity
  free floating ideas
• effective communication with effective
  coordination with
• less barriers
  more resources/talent
• Appropriate
• repetitive/routine works
  innovative works
• at the later stage
  at the initial stage
• low level staff team that senior level
  team that requires
• requires clear communication more
  innovative solution
• authoritative leadership
  democratic/participatory
• Performance
• average
  very effective or dysfunctional

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• Process to maximize
  effectiveness of PCN
• Evaluate the candidates
• cultural adaptability, family support,
  communication skills, etc.
• Select the manager
• best match with host country and his/her
  credentials.
• Develop contract
• agree on financial/support package and
  reassignment (retain).
• 4) Assess development and support needs
• provide cultural training, HQ/local mentor,
  monitor feedback.
• Periodical evaluation
• retrain/resolve problems or early
  repatriation if unresolved.
• Repatriate or assigned to HQ or local mentor
• If successful, provide support for
  repatriation.
• Integrate value-added to firm
• debrief expatriate integrate experiences to
  future HR practice

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• E) Model for PCN managers competency
• Selection criteria most firms only focus on
  functional competency.
• Self efficacy Ability to maintain mental,
  physical health and effective stress
• management.
• Relationship skills ability to foster
  relationship with host nationals.
• Perception skills cognitive ability that
  the candidate need to correctly perceive
• evaluate the
  differences.
• Cultural novelty cultural-psychic distance
  between home and host cultures.

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• F) Control
• Factors to make intl control more difficult
  
• a. Distance geographic and cultural distance
• b. Diversity different business environment
• requires different operation
  
• different structure
• c. Uncontrollable factors Government action
  and force majeure
• d. Unreliable and inaccurate data

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• 1) Level of Parent control autonomy for
• subsidiary Competency Argument
• Factors for Decentralization vs.
  Centralization
• a. socio-cultural distance
• b. amount of experience
• c. size of foreign operation
• d. level of competency of local managerial
  group
• e. nature of the product (consumer vs.
  industrial)
• f. nature of foreign operation
  (manufacturing vs. service)
• g. individual function involved

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• General Consensus
• a. Initial period Decentralization
• b. Middle stage Centralization
• c. More advanced Combination of both

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• G) Evaluation Methods
• a. Standard Operation Ratio
• Parent company establishes standard
  manufacturing cost/unit or selling expenses/unit.
• Problem different cost structure (labor and
  R.M )
• b. Return On Investment
• Most common method to evaluate performance.
• Problems 1. Relevant Investment Base
• 2. Relevant Return
• 3. Relevant unit to be compared

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• c. Budget Approach
• 1. Fixed budget
• 2. Flexible budget Most preferred way to
  evaluate foreign subsidiaries together with
  MBO approach
• Reason too many uncontrollable factors like
  government action and exchange
  fluctuation.