CROSS CULTURAL MANAGEMENT

CROSS CULTURAL MANAGEMENT (Deresler)

Global Management

Host county environment of a global manager
Ways to maintain Dependency of host country towards foreign firms
Criticism of MNC ( Multi national Company) subsidiary activities
MNC benefits / cost to host country

Role of culture

Hofstede's Value Dimension
Project GLOBE Culture Dimensions
Trompenaars' value dimension
Country clusters
Critical Operational Value Differences
CASE STUDY - Chinese Consumer Buying Process

Communicating Across Culture

Cultural variable affecting communication
Context
Communication Channel Variable affecting Communication
Managing cross-cultural communication

Cross- Cultural Negotiation

Negotiation process
Manage conflict resolution
Decision making

Staffing and Training for Global Operation

Staffing philosophies
Expatriate success factor
Expatriate failure causes
Factors influencing staffing policies

Cross cultural training

Cultural shock
Training techniques
Compensating expatriates

Global alliances and strategy implementation

Reasons for alliance
Problem in creating alliance
How to choose the right partner / form alliances

Formulating strategy

Reasons for going international
Steps in developing international and global strategies

Global management (top)

def: process to develop strategy. design operating system and ensure competitive advantage
globalism - global competition characterized by network that binds countries, institution and people in an interdependent global economy

Host county environment of a global manager (top)

politics
- form of government - democracy, communist
- political stability
- role of military - limited?
- terrorism level
- political risk - any government action that could affect firm profitability
  - example of political risk
    - expropriation of corporate assets - host govern. take over firm asset
    - forced sales of equity to host country
    - discriminating foreign firm (increase tax)
    - barrier to expatriation of funds ( not allowed to bring back profit out from host country)
    - loss of technology, intellectual property - patents, trademark
    - dishonesty by govern. officials - eg cancel or alter agreement
  - reducing political risk by
    - equity sharing - share power equally eg M'sia 51% local - 49% foreign
    - participative mgt
      - making locals involve in decision making
      - collaborate with union workers
    - development assistance - facilitate technology transfer to host country
    - insurance - foreign firm getting insurance
      - OPIC -Overseas Private Investment Corp
      - FCIA - Foreign Credit Insurance Assoc
    - social debt financing
      - money borrowed from host country
      - thus, protected firm from forced out by host
    - operation localization
      - modify company mgt, style
      - transform subsidiary to a national form
economic
- economic system - capitalist, socialist
- development stage - developing, developed, least developed
- inflation rate
- monetary / fiscal policies
regulatory
- legal system
- protection for proprietary property eg Microsoft Window software
- technology environment - infrastructure, availability of local technical skills
- environmental regulation - strict ?

Ways to maintain Dependency of host country towards foreign firms (top)

input control - firm control key inputs
market control - by means of distribution
position control - high mgt position in the hands of expatriate managers
staged distribution strategy - give contribution to host nation - tax, job, employment, technology transfer

Criticism of MNC ( Multi national Company) subsidiary activities (top)

MNC stock owned by parent company - host has no control of MNC operation
MNC reserves key mgt position for expatriate - do not contribute to development of host-country personnel
MNC does not adopt / transfer technology to host country
MNC concentrates R&D at home, restrict technology transfer
MNC does not produce essential consumer goods
- not sensitive to host market
- usually produce luxury goods
MNC purchases existing host firms, not developing new productive facilities
MNC dominates major industrial factor
- contribute to inflation by manipulating demand for scarce resources eg: petroleum
MNC does not concerned with host country plan and development - only respond to law

MNC benefits / cost to host country (top)

	Benefits	Costs
Capital market effect	- broader access to outside capital - foreign exchange earning - risk sharing to joint venture with foreign company	- increased competition for local scarce resources - increased interest rate as supply of local capital declined - capital service effect of balance of payment
Technology and production effect	- access to new technology, R&D development - export diversification	- technology transfer is always not appropriate - government infrastructure investment is more than expected benefit
Employment	- direct creation of new jobs - income multiplier effect on local community business - opportunities for management development	- low % of managerial job to local people - employment instability because of ability to move production operation freely to other country - competition for scarce skills - limited skill development and creation

Role of culture (top)

culture
- shared value, understanding, assumption by society members
- learned from past generation succeeding to next generation
subculture - diversity
- Canada - anglophone (Eng-speaking people), francophone (France-speaking people), native Canadians
- M'sia - Indian, Chinese, Malays
cultural savvy - working knowledge of cultural variables affecting management decision
cultural sensitivity / empathy- awareness / honest / respect caring about other culture
self-reference criterion - unconscious reference point of one's own cultural values
parochialism - expect others country to fall into own country behavior
ethnocentrism
- regard self-culture is the best
- judge other culture as bad
- lacked cultural sensitivity
value
- society ideas
- about what is good / bad
- eg: stealing is immoral

Hofstede's Value Dimension (top)

4 dimensions - power distance, uncertainty avoidance, individualism, masculinity
- do not operate in isolation - interdependent / interact with each other

Value	High	Example	Low	Example
Power distance - level of acceptance by society of unequal distribution of power in an institution	acknowledge authority power do not bypass chain of command	M'sia Philippines Mexico	supportive and subordinate regard as equal in power harmony cooperation	Denmark Israel Australia
Uncertainty avoidance extent people in society feel threatened by ambiguous scenario	strict law and procedures strong sense of nationalism more rules, procedures means more security and career stability manager make low risk decision employee less aggressive, seeking lifetime employment	Japan Greece Portugal	nationalism less pronounced more protest, march company activities les structured, less formal high job mobility	Denmark Britain US
Individualism tendency of ppl to look after themselves, immediate family only neglect society needs	individual initiative individual achievement highly valued relationship in org. is independent	Australia US Britain	collectivism tight social framework sense of belonging to org. emphasize group decision	Singapore Pakistan Panama
Masculinity degree of traditionally 'masculine' value that prevail in the society	women expected to stay at home, raise kids stress on job for man org. interest encroach employee private life eg: work over time, do not spend time with family	Japan Austria	less conflict less job stress more woman participation in high level jobs	Switzerland New Zealand

Project GLOBE Culture Dimensions (top)

	Low	Medium	Most
Assertiveness tough, confrontational, competitive	Sweden	Egypt	Spain
Future orientation planning, investing future orientated behavior	Russia	Sweden	US
Performance orientation result orientated	Russia	Slovenia	Denmark
Humane orientation encourage reward, people generous, caring	Germany	Hong Kong	Indonesia

Trompenaars' value dimension (top)

	More Personal	Example	Towards Society	Example
Obligation	Universalistic - apply rules and system objectively rules legal system contract 'objectivity' one right way	USA Germany Sweden	Particularistic -put relationship 1st personal system interpersonal trust duty to friends, family 'relativity' many ways	China Spain Japan
Emotional orientation in relationship	Neutral - reserved, silent expression physical contact reserved for close friend and family subtle communication hard to 'read'	Japan UK Germany	Affective -expressive emotion physical contact more open expressive, vocal strong body language	China Italy Spain
Involvement in relationship	Specific - separate work and personal life direct confrontational open: extrovert separate work and personal life	UK US France	Diffuse - work and private life interact indirect avoid direct confrontation more closed: introvert link private life with work	China Spain Sweden
Legitimization of power and status	Achievement -based on individual performance status based on competency and achievement women and minorities visible in workplace newcomers, young ppl gain respect if they prove themselves	USA UK Sweden	Ascription - status based on age, gender status based on position, age, schooling homogenous workforce primarily male deference based on specific criteria	China Japan Spain

Country clusters (top)

developed by Ronen and Shenkar
8 clusters based on
- importance of work goals
- need fulfillment and job satisfaction
- managerial / org. variables
- work role and interpersonal orientation
clusters
- Nordic - Finland, Norway, Denmark
- Germanic- Germany, Austria, Switzerland
- Anglo - US, Canada, NZ
- Latin European - France, Belgium, Italy
- Latin American - Chile, Argentina, Peru
- Far Eastern - M;sia, Singapore, Thai
- Arab - Oman, Kuwait, UAE
- NEar Eastern - Turkey, Greece
- Independent - Japan, Brazil, India

Critical Operational Value Differences (top)

times
- For American, time is money, valuable - need to meet deadline
- Other culture - some project need not to be rushed
change
- Western believe in internal control. Individual can manipulate events
- Non-Western
  - external control
  - believe in destiny
  - adopt a passive attitude
  - feel hostility to introduce 'evil of change'
  - resistant to change
material factors
- Western believe that nature is used for their benefit. Value physical goods
- Non Western - atheist. Korean worship nature as religious belief
individualism
- American value individual goals
- China emphasize on conformity, co-operation

CASE STUDY - Chinese Consumer Buying Process (top)

Need / Problem recognition
- 'cult of restraint' - slow to accept new product
- reluctant to pioneer - slow to change brands
- 'prudence' / risk averse - enjoy available thing, reluctant to try new thing
- International marketing
  - create dissatisfaction woth one's actual state
  - educate on benefit of product
  - provide free sample trials
  - adopt within one's 'in-group' thing
Information search
- past time orientated - used more distributional info. (based on experience of use) - value product that stand test of time
- respect authority culture - think info. announced by official media is trustworthy
- value family orientation - rely more on word of mouth (WOM)
- value ' face' - prefer well-known brand
- well translated brand name - eg: Coca-Cola means 'taste good, make you happy'
- mental presentation represented visually - use logo design that enforce writing / calligraphy
Pre-purchase alternative evaluation
- hard work, thrifty - only buy necessarily product
- regard imported products high class, better than domestic product
- collectivism - product affiliation to a group eg Pepsi -F4 singers brand
- lose 'face' in return defective product = attribute failure of product to fate
- International marketing
  - promotion might 'cheapen' the product
  - brands high image in country origin but made in less developed country - erode brand image
Choice - purchase
- conformity culture - not likely deviate from 'normative' product
- thrift - aversion using credit
- International marketing
  - advertising -collective appeal better than individualistic
Post -purchase evaluation
- submit to fate - less likely to regard product failure as company fault
- face saving - less likely to complain but easy to switch product once dissatisfaction occur
- International marketing
  - enable unhappy customer easy access to complaint eg:
    - 1-800 toll free number
    - postal forms
  - Chinese prefer non-confrontational way (personal contact) to solve dissatisfaction

Communicating Across Culture (top)

communication - process of showing meaning by transmitting message through media - words, behavior, material artifacts
noise - anything that undermine communication of intended meaning
inter-cultural communication - member of one culture sends a message to member of another culture
attribution - process of people understanding another people behavior

Cultural variable affecting communication (top)

role - perception of manager role
- American - delegation - participative mgt
- Greece - lack initiative - 'he's the boss' attitude
language
- arise from
  - incapability to speak local language
  - cannot explain idioms
  - poor translation
- Pepsi slogan 'Come Alive With Pepsi' translated to German means 'Come out of grave'
- Boeing 747 'rendezvous lounges' means 'prostitution' in Portuguese
non-verbal communication- communication without words
- kinesics behavior
  - body movement -posture, gesture
  - culturally specific / learned
  - eg
    - eye to eye contact - Japanese uncomfortable, American like it
    - Europe, Asia - relaxed sitting posture during meeting is rude
    - Japanese - bow head out of humility - show respect
    - America -'look at me when I am talking'
- proxemics
  - influence of space / proximity on communication
  - 2 type
    - personal space
      - high contact - stand close, touch eg South American
      - low contact - stand afar, less touch eg North American, Asian
    - office space
      - Asia - open space allows working / talking with each other
      - Germany, US - top floor means 'power', 'hierarchy'
      - French - middle floor means central position - stay informed and in control -centralization
- paralanguage
  - 'how' something is said rather than the content
  - rate of speech, tone, laugh, yawn
  - eg: silence in meeting
    - American - uncomfortable if silence > 10 seconds
    - Chinese - prefer to wait 30 seconds before speak
- object language (material)
  - refer to 'how' to communicate via materials, office design, car, cosmetic, clothing
  - eg: In Mexico, take time out to appreciate surrounding architecture before negotiate a business
  - eg: glass wall in office reveal an open-channel working environment
attitude
- eg : ethnocentric - stereotyping
social org.
- influenced by differences in value - based on religion, profession
- eg: wearing 'headcover' in Muslim country
thought pattern
- reasoning
- eg: Greek has different time estimate for job completion
time
- monochronic time system
  - time experienced in a linear way
  - classified, compartmentalized time
  - concentrate one thing at a time
  - in individualistic culture
  - eg: Germany, US, Swiss adhere to time commitment, short-term relationship
- polychronic time system
  - tolerate many thing simultaneously
  - collectivism culture
  - hold open meeting
  - mobile, highly distractible
  - eg: Latin America, Arabs

Context (top)

2 types:
- high context
  - feeling, thought not explicitly expressed
  - read between lines
  - most communication takes place from close personal relationship
  - eg: Asia, Middle East, Africa
- low context
  - personal and business relationship separated and compartmentalized
  - feeling, thought expressed explicitly
  - information made more readily
  - eg: Germany, US, Canada
high context culture people perceives those low context culture people as
- talkative, too obvious, redundant
low context culture people perceives those high context culture people as
- non disclosing, sneaky, mysterious

Communication Channel Variable affecting Communication (top)

organizational structure
- South America
  - centralized
  - direct - ONE flow
  - top to downward flow
  - no feedback
- US
  - 2 flow - has feedback
  - delegation component
context
- high context
  - information spread freely, rapid because frequent close contact
  - informal
  - eg: Middle East
- low context
  - information is controlled, focused
  - flow slowly
  - more formal eg: US
type of media used
- based on speed required
  - America
    - prefer fast, quick, clear details example the use of fax machine
    - eg: letter showing all the plans in one piece / delivery
  - French
    - slow channels, sometimes require mediators
    - eg: subsequent letters building up to a proposal

Managing cross-cultural communication (top)

develop cultural sensitivity
- understanding other culture
- awareness of his/her cultural baggage - stereotyping
- cultural background - social, economic, organization value
- where the communication take place? in a low or high context culture area
careful encoding
- use proper words, picture, gesture
- in appropriate to receiver frame of reference
selective transmission
- type of media chosen
  - face to face interaction - relationship building in intercultural communication
  - tele-conferencing - long distance international dealing
  - modern electronic- eg; e-mail
    - shorten time for info. communication
    - faster info. dissemination
careful decoding of feedback
- ensure existence of 2-ways communication
- improve on listening / observation skills
- emphatic listening
- recognize feeling behinds words
- understand speaker perspective
follow-up action
- respect - conveyed through eye contact, body posture, voice tone / pitch
- interaction posture - polite
- orientation to knowledge - recognize knowledge valid only for oneself and not to others
- empathy
- tolerance for ambiguity
- intercultural communication effectiveness (ICE)
  - 2 personalities type
    - openness
      - open minded
      - tolerance for ambiguity
      - extrovert
    - resilience
      - internal focus of control
      - resourcefulness, ambiguity tolerance

Cross- Cultural Negotiation (top)

Negotiation
- process of discussion between 2 or more parties aiming an mutual acceptable agreement
- create a win-win situation - benefit to all parties
- avoid projective cognitive similarity
  - assuming others think the same way

Negotiation process (top)

preparation
- familiarize with context / background of others
- understand own style first
- comparing cultural profiles
- understand variable cultures in negotiation
  - value of time - speed of neg. process
  - decision making system - individual / consensus
  - nature of argument - rational / emotional
  - basic concept- competitive process / problem-solving approach
  - form of satisfactory agreement - just a handshake? / legally bind
  - type of issue - price / relationship focused
  - risk-taking propensity - risk taker / risk avoider
relationship building
- important in most world than US
- Middle East - trusted intermediary - 'relationship bridge'
exchange of task-related information
- each side make a presentation and state its position
- America - direct, objective, efficient, straightforward approach
- French - enjoy debate, conflict
- Chinese - ask many questions
persuasion
- hard bargaining start
- usually through mutual contact
- Far East - backdoor approach - 'houmani'
- threat, promise
- 'dirty trick' - misled opponents
- using stressful situation to hasten a deal eg:
  - uncomfortable room temperature
  - rudeness
  - too bright lightning
  - take it or leave it attitude
- use of non-verbal behaviors
  - ingrained aspects of culture in daily lives
    - Japanese - use silent period, less facial gazing
    - America - more touching, more facial gazing
concession / agreement
- Russian / Chinese - bargain with extreme position. Bargain more than expected
- Far East - decide on the whole deal. Demand less incremental concessions
- Sweden - settle for what is expected
- how contract is honored
  - America - take it seriously
  - Japanese - waste of time. Prefer to operate on trust and social understanding

Manage conflict resolution (top)

2 approach
- instrumental orientated
  - distinguish between people involved and information
  - based on factual / logical analysis
  - eg: low -context culture
- expressive orientated
  - handled indirectly, implicitly
  - no clear demarcation of situation from person handling it
  - avoid confrontation - avoid loss 'face' or 'lien'
  - eg: high-context culture

Decision making (top)

stages
- define problem
- gather / analyze data
- consider alternative
- decide best solution
- implement decision
cultural variable affecting decision making
- different approach
  - objective
    - based on rational
    - eg: Western countries
  - subjective
    - based on emotion
    - eg: Latin America
- risk tolerance
  - lower risk tolerance - Belgium, Germany
  - high risk tolerance - America
- locus of control over outcome
  - internal locus
    - manager in control of event
    - believe in self- determination - eg: American
  - external locus
    - manager has no control of event
    - believe in destiny, fate, nature
    - eg: Indonesia
- alternative solution consideration
  - stay with familiar one answer (past orientation)
    - decision based on past experience
    - emphasize quality
    - eg: Europe
  - try new answer (future orientation) - innovative
    - find new idea
    - creative
    - eg: America

Staffing and Training for Global Operation (top)

Staffing philosophies (top)

Philosophies	Advantage	Disadvantage
Parent-country nationals (PCN) ethnocentric staffing fill key mgt position with people from HQ / parent country (expatriate)	familiar with org. goals, policies, procedures fill the gap of inadequacy of local managerial skills centralized approach internationalization stage of strategic expansion high-level technical capability is required in top level mgt	lack opportunities for local managers poor adaptation to host countries -create inefficiency
Host-country nationals (HCN) polycentric staffing use local / host country managers (inpatriate)	familiar with local culture, language and ways of doing thing easier to be accepted inside / outside subsidiary low cost - lower wages, no need to transfer expatriate	poor coordination between HQ and subsidiaries because local manager not familiar with org. policy HQ manager will lack overseas experience
Global- staffing approach best managers recruited regardless nationality	provide a greater pool of qualified applicant 3rd county national (transpatriate) is used could bring more cultural flexibility / adaptability considered as an acceptable compromise between HQ and local managers cost-effective pay scale, benefits lower some 3rd country labor is cheaper to maintain compared to host labor	Barrier / limitation availability of qualified people to be transferred dual career constraint family / career transfer time / cost constraint conflict with host government host government wants locals to be employed ineffective HRM policies
Regional-staff approach recruiting based on regional basis	able to understand regional market better understand local regional culture but not individual specific area	failure to penetrate smaller domestic market

Expatriate success factor (top)

job factor - self efficiency
relational dimensions
- cultural empathy, flexibility
- adaptation
motivational state
family situation - supportive
language skills

Expatriate failure causes (top)

selection based on HQ criteria, not assignment needs
insufficient preparation, training
alienation, lack support form HQ
cultural insensitivity
family problems - poor adaptation, unhappy family
insufficient compensation, financial support - increase living cost
poor programs for career support and repatriation
- upon returning to origin country, less career advancement opportunities

Factors influencing staffing policies (top)

Depends on:

strategy of MNC
- HCN for localisation
- transpatriate for globalisation
factor related to subsidiary
- duration of operation of subsidiary
  - long term- HCN - cheaper
  - short term -HCN / PCN
- type of technology
  - high - maybe need PCN
  - low - can use HCN
factor related to host countries
- local government regulation on ownership and staffing - maybe require providing certain % for local employment
availability of qualified managers in host countries
- PCN - top management (expatriate)
- HCN - mid / lower mgt (inpatriate)

Cross cultural training (top)

Cultural shock (top)

state of disorientation and anxiety about culture unfamiliarity
lose familiar cues that were used daily to interact
subculutre shock - 'shock' experienced within country due to cultural differences eg KL- Sarawak
stages:
- honeymoon
  - presence of positive attitudes, excitement, expectation
- irritation and hostility
  - crisis when cultural differences result in problem at work, home, daily living
- gradual adjustment
  - period of recovery in which gradually understand culture and language
- bi-culturalism
  - stage at with manager and family members appreciate and accept local people
  - can function in 2 cultures

Training techniques (top)

Areas studies - documentary programs, books, brochures, articles about country geography, economics, socio politics
Cultural assimilator - expose trainees to situation - eg: role-playing
Language training
Sensitivity training - cross cultural management course teaches trainee to be cultural savvy, cultural empathy
Field experience - exposure to people from other cultures within trainee's own country

Compensating expatriates (top)

must fit between compensation and goals of company
manager purchasing power with net income affected by relative cost of living in host country
'keeping the expatriate whole' policy - maintain standard of living of expatriate = colleague at home + compensate additional cost
'Balance Sheet Approach'
- equalize standard of living between host and home country with some compensation

Global alliances and strategy implementation (top)

strategic alliances- partnership of 2 or more firms to combine resources in achieving mutual goals
global strategic alliances- co-operation across national boundaries
type of strategic alliances
- joint venture - 2 or more create an independent company eg: Nuumi Company by Toyota and General Motors
- equity strategic alliance - have different ownership shares
- non equity strategic alliance - agreement carried via contract rather than ownership sharing eg: Chrysler suppler network

Reasons for alliance (top)

avoid import barrier, licensing requirement eg: Toyota, Japan allies with General Motor to avoid import quota to US
share cost risk, R&D expenses eg: Toshiba (Japan) with Samsung (Korea)
gain specific market into market such as Europe (fortress) or China
- eg: Chrysler (US) allies with Daimler Benz (Germany) to penetrate Eastern European
reduce political risk
- Coca-Cola using small scale alliances to be 'political' in China
gain rapid ascess and derived synergy benefit
- eg: AT&T alliance with Japan NEC

Problem in creating alliance (top)

shared ownership - profit agreement, who invest more? who will own more?
integration of different structure / system - different org. structure, different culture
power distribution - who will lead? who has the final say?
conflict in relative locus of decision making and control
- participative vs autonomic system
- who will decide?
- how to arrive at a decision?
mistrust
- propriety technology transferred to other partner
- copy trademark, managerial skills, technology

How to choose the right partner / form alliances (top)

choose the one with same goals, mission
has complimentary skills, not distinctive skills
work out to manage sensitive information, patency, technology transfer
recognize alliance would fail one day. So, absorb partner skills as much as possible

Formulating strategy (top)

strategic planning - process evaluate future prospect of firm and achieve long-term objective
strategy - ways to differentiate from competitors

Reasons for going international (top)

proactive reasons (plan ahead)
- economies of scale
  - achieve world-scale volume
  - mass production - cheaper cost / quantity
- growth opportunity
  - market saturation in home country
  - seek new market, prolonged product life cycle in developing market
- resource access, cost saving
  - raw material, labour - cheaper in host country
  - transportation cost - reduced
  - greater control of input
- incentives
  - given by developing countries
    - subsidies
    - tax exemption
    - cheap loan interest rate
reactive reasons (react to something)
- globalization of competitors
  - to challenge 'pioneer' for market power
  - to reduce 'advantage' of globalized competitors
- trade barrier (home country)
  - switch from exporting to overseas manufacturing
  - eg: trade barrier - buy local policy, quotas, tariffs
  - trade barrier cause export to overseas more expensive
- regulation / restriction (home country)
  - strict rules (home country) making it not conducive operation environment
  - seek other country which have lax rules, less labour union
- customer demand
  - respond to logistic demand by customer
  - enable foreign customer better control over company supply
  - eg: McD joint venture with local company to provide 'halal' burger in M'sia

Steps in developing international and global strategies (top)

mission / objective
- mission - reason to be, function in society
- strategic vision - what we want to be, 'proactive' approach
- objective - flow from mission, in the areas of
  - marketing - annual % sales, market share increased
  - production - economies of scale, quality cost control
  - finance - effective auditing
  - profit - long-term growth
  - R&D - new product
environmental assessment
- environmental scanning
  - done by
    - 'doer' - pioneer (proactive)
    - 'follower' - see other competitor move (reactive)
- factors / variable to be considered
  - political instability
    - Iraq instable
  - currency instability
    - inflation rate, money value
    - eg: Argentina, Mexico devalue currency
  - nationalism (host economic policy)
    - home country government goals for economic improvement
      - Japan - protect local market
      - China - lax patent trademark, protection law
      - infrastructure - roads, ports
  - international competition
- conducted in 3 levels
  - MNC - worldwide trend eg oil price
  - regional - eg: EU policy market- protective or open?
  - local - host country - legal law, economic, cultural
internal analysis (internal resource audit) - strength or weakness (SWOT)
- technology capabilities (Intel, Microsoft)
- effective distribution channel (K-mart)
- superior promotion capabilities (Disney)
- patency and new product pipeline (Merck) - R&D
- marketing superiority (McD, Cola)
competitive analysis - opportunity and threat (SWOT)
- important to avoid emulation by other in gaining competitive advantage
- identify core competencies or key strength
  - Sony - able to miniaturize product
  - Philips - optical media expert
global / international strategic alternative - approach to world market
- pressure to
  - globalize
    - increased competition due to regional trading block
    - reduce tariff, encourage trading across borders
    - IT explosion, increased commonality of consumer taste
  - regionalize
    - unique customer preference due to different culture culture
    - domestic subsidies
    - new technology facilitate production variation to suit different customer taste
global integrative strategy
- integrate vertically, horizontally
- eg: Dell - productive, marketing, assembly, distributive, contractor around the world
using E-business for global expansion
- benefits of e-business
  - expand sales channel
  - lower operational cost
  - better customer service
  - rapid entrance into new geographic market
  - improved customer loyalty
E-global or E-local
- E-global good (eg: Yahoo) when
  - no delivery process
  - trade is global in scope
  - business easily hijacked by local competitor
- E-local good (e-Bay, Amazon) when
  - production / consumption are regional
  - customer behaviour, market structure different across region
  - supply chain mgt is important
Entry strategic alternative
- evolution
  - simple export
  - large scale export
  - assembly abroad
  - full production abroad and its own subsidiaries
  - MNC undertake global integration of foreign subsidiaries
Strategic choice
- depends on
  - firm (company)
    - international experience
    - core competencies
    - core capabilities
    - national culture
    - corporate culture
  - industry
    - industry globalization
    - industry growth rate
    - technology
  - host country
    - country politic
    - risk
    - cultural differences
    - local market knowledge
    - competition locally