MNC

1
Lecture VII

• MNCs Cultural Framework and Managing across
  Corporate Boundaries (ch. 6)

2
Cultural Complexity Contextual variations E.
T. Hall, The Silent Language, 1973

• Low-context culture
• Explicit
• More legal paperwork
• Verbal communication 
• High-context culture
• Implicit
• Nonverbal communication
• Emphasis on value, social norms
• Individuals position in society

3
High-context culture

• Implications on MNEs managerial ideologies, ways
  of doing business, and cross-cultural
  negotiations

4
Cultural Typology of MNCs Organization

• Monolithic Homogeneous, minimum structural
  integration
• Plural Work force includes host nationals
• (structural integration), but the company
  doesnt value its cultural diversity
• Multicultural Full structural and informal
  Integration

5
Case Study

• Use the above cultural typology to illustrate the
  differences among BGs four strategic
  orientations of international, multinational,
  global and transnational companies

6
Factors influencing cultural diversity

• Acculturation
• Method of resolving the difference between the
  dominant culture and the minority culture through
  assimilation, pluralism, or separation
• Structural integration
• Informal integration
• Cultural bias
• Highest in the monolithic organizations least in
  the multicultural organizations
• Intergroup conflicts
• Conflicts are higher in the plural organizations

7
Benefits of multiculturalism Fatehi, 1996

• Reduced costs, and better resources allocation
• Marketing advantage
• Creativity
• Problem solving
• Flexibility .. etc

8
National Customs and Business customs

• Coincide Language
• Religious effect
• Political effect
• Laws
• Taxes
•  Differ Subject matter
• Degree of technicalities

9
National Customs and Business customs (Contd..)

• Business customs change continually.
• Although highly resistant to change, national
  customs are transformed by the rapid changes in
  the business customs

10
Other cross-cultural issues in international
business research

• Gender role rigidity
• Hofstedes cultural dimensions of
  Individualism/collectivism, Power distance,
  Uncertainty avoidance,
• P-time, M-time cultures

11
International Negotiation

• Intracultural models
• Position oriented
• Interest-oriented
• Fisher and Ury 1981, principled negotiation
• Intercultural models building the rapport

12
A 10-point intracultural/intercultural
negotiation Strategy (F. L. Acuff, 1993)

• Plan the negotiation
• Adopt a win-win approach
• Maintain high standards
• Use language that is simple and accessible
• Ask lots of questions, then listen with your eyes
  and ears
• Build solid relationships
• Maintain personal integrity
• Conserve concessions
• Be patient
• Be culturally literate and adapt to the
  negotiating strategies of the host country
  environment

13
Why Strategic Alliances

• Technology
• Market Access
• Pool Capital
• Capacity
• Shared Risks reduced risks
• An alternative to Merger
• Test the water before a full-fledged global
  integration

14
Strategic Alliances

• Risks and Costs
• competitive collaboration cases in China
• Speed easy, but not always the best solution
• Alliances need not be permanent
• Flexibility
• Learning