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.

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.

View our Resource Manual for International Business at: http://www.smashwords.com/books/view/2321

Maximizing International Trade with South Korea

By: Kelly Kasic, president of GLOBAL ID LLC

South Korea is strategically located in the heart of Northeast Asia and is the 13th largest economy in the world. The U.S. has had a long history of successful trade with Korea and opportunities are continuing to increase due to this country’s sophisticated consumer markets and high-tech industry focus. According to the U.S. Department of Commerce, the U.S. and Korea exchange nearly US$83 billion worth of goods and more than US$15 billion in services annually -- that is more than 70 percent of the total bilateral trade that the U.S. enjoys with all 10 trading partners with whom we have implemented Foreign Trade Agreements since 2000.

Due to their favorable business climate, there are numerous reasons to expand your Asian presence to South Korea. The country houses several Free Economic Zones (FEZs), which are self-contained living and business districts that provide numerous advantages to a variety of industries. These districts are located in Incheon, Busan-Jinhae, Gwangyang, Hwanghae, Daegu/Gyeongbuk, and Saemangeum/Gunsan; and feature air and sea transportation, logistics complexes, international business centers, financial services, residences, schools, hospitals, shopping, and entertainment.

The main industries in which South Korea ranks high in global competitiveness include: Semiconductors, Shipbuilding, Automobiles, and Displays. According to the Korean Trade-Investment Promotion Agency (KOTRA), this country has captured 11.3% of the global semiconductor market, with US$39 billion in exports (2007). Additionally, KOTRA states that South Korea is ranked number one globally in terms of new ship building orders; capturing 40% of all worldwide orders.

With US$981.9 billion GDP in 2007 (a 4.9% real growth rate) along with low unemployment, South Korea is a viable market that should be considered; particularly in the industries of Information Technology, Biotechnology and Life Sciences, Nanotechnology, Aerospace and Defense, as well as the Entertainment industry.

When conducting business with South Korean companies it is important to building strong relationships with the best agents and distributors. Koreans tend to be more straightforward and individualistic in comparison with other Asian neighbors. When making business deals it is important to be sincere and honest; conduct meetings in person whenever possible. Sales and marketing techniques will need to be adapted to fit the Korean market. Companies should also consider joint venture partnerships. Whichever market entry method is chosen, ensure that you obtain legal consultation. Last, Korea is a collective culture where decisions tend to be made by group consensus; be patient as the process is often slower than in Western cultures.

GLOBAL ID LLC is a management consulting and international market research company that specializes in assisting small- to medium-sized businesses with international market expansion. If your company falls into one of the emerging industries in South Korea, contact us for a free 1 hour consultation: be sure to mention that you read this article in our blog. We can be reached at 720-334-6982 or Kelly@globalidllc.com.

EU-US Relations

The European Union (EU) and the United States (US) are two of the largest economies in the world. The two markets trade heavily with each other, as the US is the EU’s largest trading partner. Relations between the two, however, have always been strained. In 2001, the US passed steel tariffs and farm subsidies that worsened the relationship between the two powerhouses. The tensions eased, however, when the World Trade Organization (WTO) pressured the US into dropping the steel tariffs.

In 2004, a new dispute between the US and EU, arose regarding the aircraft industry. The US accused the EU of providing launch aid to Airbus, which are illegal according to the WTO. These soft loans would not have to be completely repaid unless Airbus performs well in the market. In retaliation, the EU accused the US government of giving Boeing illegal tax breaks and funneling Research & Development money to Boeing through NASA and the Pentagon. Both sides filed complaints with the WTO, and agreed to enter into bilateral negotiations in order to avoid harsh penalties from the WTO.

Today, the relationship between the US and the EU remains somewhat strained due to these disruptive disputes. Ironically, the largest union in the US, the AFL-CIO, will be lobbying the US government to purchase Boeing planes rather than Airbuses for an upcoming procurement. Union representatives will be in Washington DC on May 19, 2008.

Written by Kelly Kasic and Carl Phelps
For additional information, visit our website: www.globalidllc.com

BOOM: why India's economy can't be ignored

India has the world’s second largest population (after China). The country’s economy is growing at a rapid rate, causing many U.S. businesses to consider this market for future product sales. As India’s middle class rises, discretionary purchases will become much more prominent.

We often think of India as a location for outsourcing, particularly within the Information Technology industry. This is due to the “Y2K” scare at the turn of the century when U.S. businesses were frantically searching for enough IT experts to assist with the problem, at the lowest possible cost. Y2K was India’s opportunity to prove that their technicians could not only solve the IT issues involved, but to do so at a reasonable price.

Outsourcing customer service to India is also on the rise. Who hasn’t called a help line and spoken to someone with a foreign accent? This trend has ultimately resulted in less expenses for many U.S. companies, which is then passed onto the customer.

Should we be outraged because U.S. jobs are being transferred overseas? Many would say “YES”!!!! But, the reality of the situation is that many more jobs are created within our own market due to an increase in global trade. Furthermore, we save money when goods cost less. Additionally, the outsourcing phenomena has created much more disposable income throughout India. We should view this as an opportunity to sell our products within the Indian market.

To learn how to sell to India, visit www.identifyglobal.com or contact Kelly Kasic directly: kelly@identifyglobal.com

Foreign Safety Standards

In the United States we often take for granted the safety standards and regulations that are in place to protect us. The picture above from May 2007 demonstrates the conditions that window cleaners in Beijing endure. Without a safety net, these men hang from rope as they descend from floor to floor of a very large building (looking very similar to a cat toy). While I will always be a supporter of overseas investment, it is still important to think about the specifics as to why production costs are low in other markets. When investing in overseas production, ensure that reasonable safety standards are met. Be socially responsible to your foreign employees and implement the highest standards possible without sacrificing the benefit of accessing cheaper resources abroad.

To learn how you can meet partners throughout Asia, visit www.identifyglobal.com

Written by Kelly Kasic, President of GLOBAL ID, LLC.

Beyond China: The Current Debate on Globalization

Lately, globalization has been a hot button among US manufacturing managers. While there is currently much debate about creating production centers in China to lower costs, I propose that you look past China. Although China does offer cheap labor and materials, quality control is still a major issue. In addition, while government crack-downs are improving, Intellectual Property Rights (IPR) violations can found in every major city and they are much more difficult to control in a country as large as China. Then there is also the high level of corruption: you may need to pay manufacturers just to maintain quality levels. What manager wants to worry about these issues?

There are two other Asian countries that also offer cheaper labor solutions, without as many IPR and corruption headaches. One of these countries is Vietnam, specifically Ho Chi Minh City. Known as the “Pearl of the Orient”, this city is growing at a rapid rate and it desires to “become a hub of industry, services, science and technology in Southeast Asia” according to city officials. Vietnam has the fastest growing economy in Southeast Asia, with a recorded growth of 8.4% in 2005 and a GDP growth of almost 50% over the last 5 years.

The opening of the Vietnamese economy, through accession to the World Trade Organization (WTO), will create extensive opportunities for US companies. WTO accession requires the Vietnamese government to promote transparency and eliminate corrupt practices in its effort to participate in the global rules-based system, effectively reducing your investment risk. Some people might argue that Vietnam is even more corrupt than China, but this is incorrect – Vietnam is a smaller country, less isolated from the West, and is taking the WTO much more seriously than China. In addition, Vietnam has finalized intellectual property regulations and legislation that is concurrent with the TRIPs (Trade and Related aspects of Intellectual Property Rights) agreement administered by the WTO – thereby safeguarding foreign companies from IP violations. These are only some of the implications of Vietnam’s accession to the WTO that could tremendously benefit your organization.

Another country that is receiving increased Foreign Direct Investment is Thailand. As a creation of the Thai Ministry of Commerce, the Department of Export Promotion (DEP) plays an essential role in the promotion of international trade with Thailand. The DEP seeks to boost exports in an effort to grow their national economy. To achieve its goals, the DEP is focused on developing the country’s core competencies to add value to locally produced goods and services. Additionally, the application of new approaches to international trade including the DEP’s 53 Overseas Trade Promotion Offices, have facilitated the growth of Thailand’s international trading network.

What could the DEP’s strategy mean for your company? First, by employing superior technology in manufacturing, product quality levels will increase. Global sourcing for raw materials, machinery, and other inputs will allow the maintenance of competitive production costs. Thai manufacturers will receive assistance from the DEP to raise product quality to international standards. And the elimination of trade barriers through numerous free trade agreements is streamlining all business activities. These are just few of the benefits arising from trade in Thailand.

While there are benefits to producing and sourcing in China, it is important to evaluate other viable alternatives. Vietnam and Thailand offer many benefits to foreign manufacturers and welcome foreign direct investment.
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For additional information, contact Kelly Kasic, President of GLOBAL ID, LLC. – a Management Consulting and International Market Research Company. http://www.identifyglobal.com/ (720) 334-6982

Beijing Travel Tips

Whether traveling to China for business or pleasure, it is helpful to know what to expect when you hit the ground. Starbucks is the first thing that you will see upon leaving Customs in Beijing. This capital city is growing and updating rapidly as they prepare for the 2008 Summer Olympics; construction cranes decorate the horizon. Yet, red and pink roses beautify street medians, while trees line the immaculate sidewalks. The skies are clear and blue as the government has stepped up pollution control tactics.

As I traveled from one cultural icon to the next (don’t miss the Great Wall), I had no problem locating a good restaurant. While I preferred to avoid the Bat on a Stick (seriously), I did make my way into several local restaurants. Many offer pictures or English on their menus, but for those that didn’t, communication was not too difficult and I was always able to order a delicious meal – often for less than $8. For those visitors that must have “American Food” while traveling abroad – McDonalds, KFC, Pizza Hut, Taco Bell, and Starbucks are everywhere.

The people of Beijing were very friendly, curious, and polite. The taxis were not – be careful as you walk down the street, taxis do not always obey road rules.

Written by Kelly Kasic, President of GLOBAL ID LLC

Visit Our Website! www.identifyglobal.com

Trade Adjustment Assistance

There is much debate about the benefits and disadvantages of globalization. The main issue of concern is that many low-skilled workers in developed countries lose their jobs due to cheaper imports from low-wage countries. What alternatives do the displaced workers in the developed countries have when they are terminated?

In the United States there is one potential solution called the Trade Adjustment Assistance (TAA) Program. According to the US Department of Labor "The TAA Program provides aid to workers who lose their jobs or whose hours of work and wages are reduced as a result of increased imports. Workers whose employment is adversely affected by increased imports may apply for TAA. TAA offers a variety of benefits and reemployment services to assist unemployed workers prepare for and obtain suitable employment. Workers may be eligible for training, job search and relocation allowances, income support and other reemployment services."

When the Democrats recently took control of congress, they proposed an amendment to the TAA Program to assist both manufacturing workers as well as service workers whose jobs have been off shored. The amendment would also offer assistance to whole industries instead of just individual factories.

At GLOBAL ID, we believe that it is the ethical responsibility of companies that transfer production abroad to assist their displaced, domestic employees. Programs such as TAA allow companies to receive free assistance for the retraining of their displaced employees. We will continue to provide additional information about this topic in future articles. In the meantime, additional information can be found on the TAA Program at the following sites:
http://www.whitehouse.gov/infocus/internationaltrade/taapager.html
http://www.doleta.gov/programs/factsht/taa.htm

Written by Kelly Kasic, President of GLOBAL ID, LLC
Visit Our Website! http://www.identifyglobal.com/

Shanghai’s Gem of the French Concession

A visit to Shanghai would not be complete without dinner at "1931" – a famous Bar and Restaurant in the French Concession area, approximately 15 minutes away from the Bund. Without reservations, tables are usually not available until after 10 p.m., which is about the time that this bustling city starts to come alive. I was seated around 10:30 p.m. on a Thursday night in late May with a group of 5 others. Instantly, I fell back in time.

Our waitress wore a royal blue qipao dress (a high necked, traditional piece typically worn in Shanghai during the 1930s). Her hair was pulled back in a tight braid that seemed to match her stern expression. The tables were very small and the wooden chairs were adorned with velvet cushions. The walls were decorated with pictures from the 1930's era set on top of flowed wallpaper. A wooden curio cabinet was backed against one wall holding dishes made of china along with various pieces of art.

The food was as amazing as the ambiance. We decided to sample and share many dishes, as is customary when eating with a group in China. While everything was delicious, I particularly enjoyed the thin wraps that were called pancakes which we stuffed with delicious duck and finely chopped vegetables in a soy-like sauce. I was not disappointed with any of the dishes and was surprised when the bill came to only 600 Yuan (about $78 US) which included several pints of beer for all of us.Brushing past the long curtains to leave, I collected a "souvenir" – a business card for "1931" with a picture on one side and a map and phone number on the other. This marketing tool is creatively used by restaurants and hotels so customers can show to cab drivers when they want to return.

You will feel incredibly safe in the French Concession section, as you should in most areas of Shanghai – disturbing foreigners is a crime! After leaving "1931" finish the night by walking down the cobble stone streets to the Ruijin hotel – an old colonial mansion. Inside building 4 you will find a unique bar called "Face". This is the perfect location to have an after dinner cappuccino while seated on the spacious patio or enjoy a slightly-above-average-price martini while relaxing on one of the plush couches.

For additional information on Shanghai travel, contact Kelly Kasic, President of GLOBAL ID, LLC. – a Management Consulting and International Market Research Company.
http://www.identifyglobal.com/

A Common Misconception

There is a common misconception by U.S. companies that lower wage countries are less productive when in reality the opposite is true. The higher rate of unemployment in many low-wage Asian countries, as compared to the U.S. rate of unemployment, means that manufacturing companies can be more selective about who they choose to hire. The higher rate of unemployment leads to a genuinely lower turnover rate. Therefore, companies can spend more money on training and development in their Asian subsidiaries and production facilities. The end result is not just lower wages, but also higher productivity than in the U.S.

Written by Kelly Kasic, President of GLOBAL ID, LLC

Visit Our Website! www.identifyglobal.com

Summer Palace Pleasure

There are many cultural sites that make Beijing a vacation destination; the Great Wall, the Forbidden City, Linggu Temple, Dr. Sun Yat-sen’s Mausoleum, the Temple of Heaven, and Tiananmen Square to name a few. A month ago I traveled to all of these sites, but none of them impressed me as much as the Summer Palace. Don’t get me wrong, the Great Wall is certainly impressive and not to be missed, but after about an hour of walking you still are looking at a lot of bricks.

The Summer Palace is located about 9 miles northwest from the heart of Beijing. This imperial palace sits atop a lush, green hill overlooking the large, blue Kunming Lake. Originally built in 1153 under the Jin Dynasty, the palace received its name in 1888 when Empress Dowager Cixi used silver to repair and restore it. Walking through the palace you are instantly taken back in time.

In order to tour the Summer Palace, you must climb several small stairs that wind and cut through large boulders – but this cultural tour is not dangerous nor is it strenuous (there were even women performing Tai-Chi in a stone courtyard midway up the hill). When you reach the top there is a breathtaking, nearly panoramic view of the Lake and the land. But, your tour is not complete. Next you must walk through the vibrantly painted rooms and halls, past the towering pagoda, to the lakeshore. There you will take a dragon-shaped boat across the Lake to an island. The neatly manicured island is attached to the 17-Arch Bridge. Cross over this magnificent bridge to a vendor-lined, cobblestone street. Make sure to enjoy an ice cream treat before riding another dragon boat back to the entrance of the remarkable Summer Palace.

You will want to have an empty memory card to take several pictures of this brightly painted Palace set atop a hill.

­­­­­­For additional information on Beijing travel, contact Kelly Kasic, President of GLOBAL ID, LLC. – A Management Consulting and International Market Research Company. http://www.identifyglobal.com/

Exporting May Not be the Best Option

There are several situations in which exporting may not be the most feasible form of entering a foreign market. If it is cheaper to produce the product abroad then it is more cost-effective to establish a manufacturing facility in the foreign market. This will be a more productive way to serve that market and its surrounding export markets. If the transportation costs of exporting to the foreign market are a high percentage of the manufacturing costs, then exporting won’t be very efficient. Keep in mind that the farther the market is from the home country, the higher the transportation costs and transportation costs can vary a lot depending on the product. If the product needs to be altered to better serve this foreign market, an additional investment might be needed. It may be more efficient to make this investment in the foreign market to save on transportation costs. Also, trade barriers play a huge role in deterring exports to foreign markets. If the market is large enough, it might be worthwhile to invest directly in these countries in order to bypass the trade restrictions. These are several situations in which exporting may not be the appropriate option for pursuing international business, however there are many factors that go into such an important decision.

Written by Carl Phelps, Research Associate for GLOBAL ID

To Learn More About Exporting and Other Options For Expanding Overseas, Visit Our Website: http://www.identifyglobal.com/

The Shanghai Experience

After recently returning to Denver from several weeks in China, I can’t wait to revisit. The purpose of this trip was to tour several businesses discussing their triumphs and struggles in the “New China”, but I also spent many days enjoying the tremendous cultural icons of this unique country.

With towering sky scrapers and an endless nightlife, Shanghai is a truly amazing experience. I recommend staying downtown near the Bund as there are several attractions close by. Your trip would not be complete without a visit to the Urban Development Center in Shanghai, followed by a leisurely stroll through the park in the People’s Square, located in the heart of the city. One thing to be aware of is that everyone will attempt to speak English to you as you peruse the shops.

After visiting the Pearl of the Orient, make sure to visit the French Quarter, specifically the restaurant 1931 – but, don’t expect to get a reservation before 10pm, the infamous restaurant is always packed.

Overall, I was surprised at how extroverted and friendly the people of Shanghai were – truly hospitable!

Written by Kelly Kasic, President of GLOBAL ID

Visit Our Website! http://www.identifyglobal.com/