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.

Jobs in International Business

As an International Business professor I have the opportunity to talk to hundreds of students with grandiose travel plans; most after they finish their degree and some through studying abroad. I commend these students as there is no textbook that can accurately teach the lessons learned while traveling abroad (for work or pleasure). I would even recommend taking out a loan to get the opportunity to study abroad as long as specific goals are set beforehand…but we will get to these in another blog.

I often ask my students what type of job they want after they graduate. The most frequent answer is “You know professor, a job in International Business.” This may even have been the answer that I gave my academic advisor when I was asked the same question (a long time ago). The problem is that International Business is a concept, not a profession. You do not graduate with a IB degree and have a job title called “International Business Expert” – although that would be a great job. So what types of jobs exist that allow you to travel?

The positions that I encounter the most often while traveling abroad include:
· Sales, sales, and more sales – mostly in B2B
· Project Manager – especially for oil and gas companies
· International Marketing Specialist
· Market Researchers
· Government and Nonprofit Organizations

Other related positions that could (or occasionally) travel:
· Accountants
· Consultants
· Store Managers
· Hospitality Industry Managers
· Investment Bankers
· Manager Trainees
· Political Risk Analysts
· HR Managers
· Public Relations Specialists
· Purchasing Agents
· Education
· Lawyers
· Production Engineers
· Finance Specialists
· Production Planners
· Logistics Experts

How do you find out about job opportunities? You can order our resource manual at https://www.smashwords.com/books/view/2321 (shameless plug). Or you can search these websites:
http://www.jobsoverseas.com/
http://www.4icj.com/
http://www.amanet.org/index.htm

Let me also add that international travel is not as glamorous as the concept. Vacationing abroad is one thing, but getting off a 14 hour flight, hoping into a taxi, sitting in traffic for an hour, delivering a presentation to prospective clients, then going out with prospective clients for a karaoke marathon session is another! Those who frequently travel to conduct international business do not usually have a lot of time to sight-see.

For more resources on living/traveling/studying abroad, download our Resource Manual for International Business at https://www.smashwords.com/books/view/2321 (another shameless plug).

Holidays and International Business

Yesterday, my eastern European friend mentioned that the Americans working for multinational corporations in his country were on holiday (July 3rd was reserved). However, the Europeans had to go to work, of course, as they had no reason to celebrate. Maybe some of the British had reason to be morose, but they don’t let you go on holiday to sulk, do they?

I find it interesting that Europeans would let Americans celebrate their holidays while working abroad. I’m not so sure that Americans, with our tenacious “time is money” mentality, would allow expatriates to celebrate their home country holidays without requiring them to use personal vacation time. For example, every year we see celebrations of the Chinese New Year or Cinco de Mayo in the U.S., but how many Chinese or Mexicans living in America get to take off from work for their respective holidays without using their allotted vacation days?

Maybe this concept is just part of the European culture as a whole. They seem to work fewer hours than Americans and even entry-level positions start out with at least four weeks of paid vacation. Also, Europeans spend less money on healthcare than Americans. In general, they seem to be happier than Americans and they definitely live longer (if only by a few years). So is this the key?

The impact of the global economic crisis has made me reevaluate the best places to live and work. In many cases, emerging markets are recovering faster than developed markets. While Europe is far from perfect, their socialized system does more to protect European citizens than America’s broken system.

Recent issues of the Economist discuss Obama’s challenges with reforming healthcare as well as how the developed world will deal with aging populations. At least two more years of work, anyone? Maybe the European system is not the answer, but more vacation and living longer sure seems nice to me. Happy Independence Day!

Resource Manual for International Business

We have recently published a comprehensive resource manual for International Business. Whether you are a business professional in need of resources to gain market share abroad or are simply considering "going global", this manual will be useful. Whether you are a student working on a research project or deciding to study/work abroad, the 264 resources in our manual will help.

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