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MBA 134: Understanding Business

Assignment 1, Research Based Assignment

Name:Meera Joshy Register Number:1927436 Submission Date:
Article Title: Comparison of mangement practices of China and USA

Articles Reviewed :
1. Weihrich, H. (1990). Management practices in the United States, Japan, and the
People's Republic of China. Industrial Management, 32(2), 3-7.
2. Bloom, N., Genakos, C., Sadun, R., & Van Reenen, J. (2012). Management practices
across firms and countries. Academy of Management Perspectives, 26(1), 12-33.
3. Chinta, R., & Capar, N. (2007). Comparative analysis of managerial values in the USA and
China. Journal of Technology Management in China, 2(3), 212-224.
Write up based on review of above articles (1200 to 1500 words):
Many studies is concentrated on organizational policies and procedures in the
industrialized countries and multinational corporations activities in global leadership.
Researchers have also been increasingly interested in innovations in emerging economies
(EEs) and SMEs. This report aims to show the differences between the management
practices of USA and China.
In order to understand what management is, we need to ask "What do managers actually
do?" One of the most widely used frameworks for managerial knowledge structuring is to
take the managerial process and divide it into the functions of planning, organizing,
staffing, leading and controlling as a first order classification. We will discuss these
functions first and then highlight the management differences in the United States and
China. It is clear that not all businesses are managed in the same manner as mentioned
here. Many authors point to the variations in organizational methods in China and the
U.S., or in the West in particular. But others report that, in China and elsewhere, for
instance, there were no variations in involvement in the decision-making process or job
Planning is the method of thinking about the operations necessary to reach a desired
objective. Achieving required outcomes is the first and foremost activity. It includes
creating and maintaining a plan, such as elements of psychology that require conceptual
Often, U.S. managers are under pressure from stockholders to show favorable financial
ratios every time they report. Unfortunately, this may not encourage investments in the
more remote future that have a payout. Also, Americans generally remain only a
comparatively short time in their managerial roles, and the manager who made the choice
can rarely be traced to myopic choices.
The situation is quite different in China. Most of the undertakings are state-owned, and
it is only lately that some private undertakings have emerged. However, we concentrate
only on the former in our comparison. Both long-term and short-term plans are being
prepared in these companies. The five-year plan is prepared at the top , while at reduced
levels more comprehensive plans are produced.
Decisions are made in U.S. organizations primarily by people and usually involve only
a few people. Therefore, it has to be sold to others after the choice has been made, often to
individuals with distinct beliefs and distinct views of what the issue really is and how it
should be solved.
People at the top make significant choices in China, but many individuals are engaged
in operational choices. Lower-level executives have little decision-making power.
Decision-making is under the immediate control of the state through the central planning
office. This, sadly, results in the execution of the choices being lacking in flexibility.
Organizing involves setting up a structure to coordinate human efforts so that people
can contribute effectively and efficiently to the aims of the business. This requires
determining roles, responsibilities, and accountability.
United States organizations emphasize individual responsibility, with efforts to clarify
who is responsible for what and make it explicit. Job descriptions may be the strongest
proof of this. Many organisations have been quite effective in using the official
bureaucratic organizational structure, particularly those working in a stable setting.
Chinese managerial methods are greatly affected by the reality that the enterprises are
state-owned and government officials are guided. This results in a structure of a
bureaucratic organisation that does not react well to environmental modifications. This
may not have been crucial in the past (although it is ineffective) because managers did not
have to respond to competition.
Staffing requires identifying human resource needs and filling the organization
structure-and keeping it filled-with competent people. It is in the management of human
resources, in addition to the decision-making process, where the Japanese and Chinese
approach to managing differs greatly from that of the United States.
Lacking in China is the profession's dedication and loyalty (as in the US). Performance
reviews are rarely conducted in China. Promotions should be primarily based on
performance, education and potential ability. Family ties and good relationships with the
superior, however, greatly influence an organization's progress. Training programs were
only available to the few chosen in China in the past.
Leading includes influencing individuals to contribute to organisational goals; it is about
management, motivation, and communication. Chinese executives are seen as part of the
work-group's social integration. Managers demonstrate excellent concern for the welfare
of their subordinates using a paternalistic management strategy.
In U.S. firms, the management function of leading is performed quite differently.
Leaders are seen as group leaders; they are anticipated to be guiding, powerful, and
determined. Their task is to incorporate varied values, but the emphasis on individualism
in culture in general, and particularly in organisations, may hinder collaboration.
Leading managerial function in China has U.S. practices characteristics. The leader is
the group leader (for example, in committees), but the style of leadership is generally quite
directive. One interviewee described the relationship in terms of transactional analysis
between the leaders and followers as "parent-child." In other words, commands from the
leaders are expected to be obeyed.
Controlling, according to Western executives, includes setting norms, measuring
efficiency, and correcting undesirable deviations. U.S. control often implies performance
measurement against precise standards. Goal management, commonly practiced in this
nation, involves setting verifiable goals that are measured against individual results.
Control in China is mainly practiced by group leaders. The focus of the control is on
the group, but also on the individual. For instance, factory managers are anticipated to
fulfill their annual quotas. Thus, a combination of U.S. managerial practices are Chinese
control practices. There is a tendency to face the people accountable for bad results in
recognizing deviations from norms. Quality circles are somewhat used, but this is not
prevalent practice.
Management in the United States Management in China
 The orientation is mainly short-  Long-term and short-term
term orientation (5-year plan and annual
 Individual decision-making plan)
 Participation of a few individuals  Committee decision-making.
in creating and selling: decision for Often individual top-down
individuals with divergent beliefs  Top-down participation at reduced
 Decisions start at the top and flow levels. Top-down-initiated top-
down down
 Fast decision-making  Slow decision-making / slow
slow execution requiring execution.
compromise, often leading to
choices that are not optimal
 Responsibility and accountability  Collective responsibility and
for individuals individual responsibility
 Responsibility for decision clarity  Attempts to implement the "factory
and specificity system of accountability"
 Formal structure of bureaucratic
 Formal structure of bureaucratic
 Corporate identification but no
 Lack of prevalent organizational competitive spirit
culture; professional identification
rather than business identification
 People hired from schools and  Most of them recruited from
other firms; company changes college, less from other firms
frequently  Slow promotion but an increase in
 Highly desired and requested rapid regular wages
progress!  Lack of corporate and professional
 Professional loyalty allegiance
 Frequent assessment of  Frequent review of results
performance for fresh staff (generally once a year)
 Short-term performance  Five-year plan, otherwise short-
assessment term objectives
 Promotions based mainly on  Promotions should be based on
performance individually performance, future skills, and
 Hesitantly undertaken training and education. But it is essential to
growth (employees may go to have family connections and
another company) excellent relations with top
 Insecurity in employment prevails executives
 Available training programs. State
examination for executives
 Leader functions as group leader  Leader as group leader
and decision-maker (committees)
 (Strong, firm, determined)  Directive. Relationships between
Directive style Sometimes parents and children (in terms of
divergent values ; sometimes TA)
individualism hinders  Ordinary values. Focus on
collaboration harmony Avoid confrontation
 Common confrontation face-to-  Top-down communication
face ; emphasis on clarity
 Communication mainly from top to
 Superior control  Group leader control (superior)
 Control focuses on employee  Primary group control, but also
results individual control
 Fix blame  Try saving your face
 Limited use of quality control  Limited application of quality
circles control

I feel that the management of USA is better than management of China because USA
practices are more individual oriented than group oriented .Therefore, when it comes to a
group not sure that all the individuals are participating.But in case of USA,since all
practices are individual oriented so they use make of all the human resources better than
China.Despite of USA having superior control ,they make sure all individuals are into
these practices.And set many targets which is not visible in case of China.. The
management in USA has got a very fast decision making ability therefore, they take very
fast decisions as compared to the management of China.