Air France & Quantas

by Chelsea Lange, Research Intern for GLOBAL ID LLC

Many airlines have recently seen a decline in first-class and business-class tickets causing them to recoup sales by adding upgraded economy seating. Many airlines are removing business-class seating or shrinking it to add more premium economy and coach seats. Air New Zealand is adding lie-flat seats in coach. They are also adding premium economy seats where couples can relax together and dine at a common table. The “Skycouch,” can be made into a bed for two. Due to the economy, many airlines may be misjudging the market. It takes a couple years for a company to come up with a vision for the planes and a lot of money to implement the changes. If the changes were incorrect it takes a lot of time and money to rectify the mistake. Airlines could be missing out if the premium travel industry turns around. It is very important for companies to consider all of the possibilities before making large, time consuming and expensive changes.

Source:
http://www.businessweek.com/news/2010-03-14/air-france-qantas-enter-all-out-war-for-downgraded-fliers.html

Toyota

by Chelsea Lange, Research Intern for GLOBAL ID LLC

Recently Toyota has had some mechanical problems with their vehicles. Toyota“got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture.” The problems began back in 1995 when Okuda took over the company. Bad decision-making and lack of execution began the downfall of Toyota. In 2003, the company began CCC21 ("Construction of Cost Competitiveness for the 21st Century"). Toyota began to focus on low cost. This caused the company to sacrifice quality for low price. Later came the aggressive version of CCC21, “dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market.” This Value Innovation led to an even greater decrease in quality. Earlier this year Toyota faced the sudden-acceleration problem in their vehicles as well as some other issues. Currently Toyota is offering incentives such as no-interest loans and discounted leases to try to win back customers. It takes a long time for companies to build up a good reputation and only a few problems to ruin it.

Source:
http://www.businessweek.com/magazine/content/10_12/b4171032583967_page_2.htm

Management Strategies for Subsidiaries

The attitudes of companies and managers can affect how they successfully adapt to foreign cultures. Polycentrism is one type of attitude towards cultural diversity in which the company believes that its business units must mirror its local competitors as much as possible. The problem with a Polycentric orientation is that the company can become too cautious about certain countries and pass up good opportunities. Also, home-country practices may actually work well in a foreign country, yet the company that is too Polycentric will not implement its home-country practices in its business units abroad.

Another management orientation towards cultural diversity is Ethnocentrism. This is the belief that what works in the home-country should work in the host-country as well. The problem with Ethnocentrism is that it ignores important cultural variables in the foreign country. Sometimes, companies understand the environmental factors affecting their industry, but fail to change their objectives to fit the foreign market. This results in a loss of long-term competitiveness in the foreign market as the business unit cannot perform as well as its local competitors.

Geocentrism is a third orientation that is between the extremes of Polycentrism and Ethnocentrism. This approach is implemented when the company adapts to the cultural differences abroad while also adopting some of the practices that are successful within the home market. This allows the company to increase its innovation as well as success rate in its international operations.

Importance of Culture in the Workplace

Cultural differences are one of the key components that companies must consider when expanding internationally. Culture is made up of attitudes, beliefs, and values that are shared by a certain group of people. These behavioral differences greatly affect how businesses operate as companies need to be aware of many aspects within a particular culture. For example, different social class systems can change what types of people the company should use in their marketing campaigns in order to reach their target market. There are several cultural factors that companies should consider when conducting business in a foreign society:

• Performance Orientation
• Gender Attitudes
• Age Attitudes
• Family Attitudes
• Occupation Perception

Companies need to be aware of cultural differences both in how they market their product and in hiring their employees. Cultural differences can affect employee performance due to differences in motivation, expectation, and assertiveness. Generally, people of dissimilar cultures are motivated differently. Some are motivated by material goods whereas others may be motivated by leisure time. This is an important factor in learning how to get the most out of a group of employees who are ethnically diverse. In urban Chinese cities many laborers that have migrated from rural areas are more motivated by gift cards to McDonalds than by overtime or pay raises, this is because these migrant workers must send their money to the families in the country-side.

Protectionism and Restricting Free Trade

by Brittney Smith, Research Associate with GLOBAL ID

Protectionism can no longer exist. The world has steadily become intertwined with one another as each country performs its own comparative advantage in hopes of receiving cheaper goods and services from abroad. This connected world can be seen in today’s current economical situation. One country (particularly the United States) began to decline, and like dominoes all lined up, the fall of one economy led to the fall of others. Globalization seems to be the easiest blame for this worldly recession, but (putting political corruption and greed aside) looking back on our own history we can see that opening up borders to the free flow of goods and services—with fair and limited regulation of course—in fact increases productivity and therefore, the economy as a whole, not decreasing it. During the Great Depression the United States imposed The Tariff Act of 1930, ultimately leading to a decrease in foreign exports as other countries followed suit. Fewer exports results in less revenues.

Restricting trade has proven time and time again to cause more harm than good. Many of the goods created are produced in various countries, not just one as it has been in the past. American cars may be put together in America, but the parts to these cars come from Mexico and other countries outside the United States. This integrated global supply chain hurts everyone across the globe when borders are closed to the outside and trade shrinks. It is obvious governments want to protect domestic interests, but looking ahead to better times, the only way these interests will be kept safe is if trade continues without any hindrances.