A Report On International Management & Global Theories of Management

Prepared by:Payal Joshi Divya Panchal Ekta Panchal Roshani Panchal Kiran Paranjpe Darshan Shah Deval Purohit

What is International management?

The study of international management focuses on the operation of international firms in the host countries.
Conducting commercial national boundaries transactions across

Nature
International business has gained greater

visibility

and importance . this is due to the growth of large multinational corporations.

Globalization creates international business opportunities.

Purposes
Five purposes to Pursue International Business
1. Expanded profit potential 2. More customers 3. More capital 4. Lower cost suppliers 5. Lower costs of labor

Behaviors in different cultures.

Individualism Collectivism Large power distance Small power distance

Uncertainty Tolerance

Uncertainty Avoidance

Masculinity

Feminity

Long-term Orientation

Short-term Orientation

How managers approach Global Management?

Multiplicity of opinions and constraints.
Increasing Interdependence. Ambiguity

Forms of international business

There are total 5 forms.

Exportation

Licensing

Management

agreement

contracts

Joint Ventures & Strategic Alliances

Subsidiaries

Exportation

Parent country

Goods and Services

Host country

It is a form of international business where Local products are sold abroad

Licensing Agreement
Parent country
Primarily and technical know how

Host country

Parent company provides and shares technical know-

how to host country.

Management contracts
Parent country
Managerial and technical know how

Host country

The parent company may also engage in management

contracts that provide managerial know-how and thus helps in assisting human resource to host country.

Joint Ventures and Strategic Alliances

Parent country Material , services and personnel

Host country

Strategic

Alliances is often formed to expand geographically or to increase the market for products or services.

Subsidaries
Host countries
Parent Country

Host country

Multinationals may set up wholly owned subsidiaries or

branches with production facilities in host countries.

MNC (Multinational Corporation)

Definition:-

According to ILO(International labour organisation), The essential nature of MNC enterprises is that they have their managerial headquarters in one country and operate in many countries.

Advantages
It

brings Latest technology, more funds and management techniques. Improves the balance of payment crises situations. Creates a larger no. of jobs for all levels of employees. Healthy competition in domestic market. Provides a variety of products & services to local customers.

Disadvantages
The host country does not get advantage of the profit

earned by MNC. It kills small scale & cottage industry of host country. Cultural problems- the host countrys culture & social beliefs are highly affected. Foreigners interference in every aspect. Exploitation & pollution of natural resources. High automation creates lack of job opportunities.

Forms of MNC
There are 4 forms:
1)

Ethnocentric orientation style of foreign operations is based on that of parent company. Polycentric orientation foreign subsidiaries are given a great deal of managerial freedom. Regiocentric orientation favours the staffing of foreign operations on a regional basis. Geocentric orientation entire organization is viewed as an independent system operating in many countries.

2)

3)

4)

Challanges
Increasing nationalism in many countries.
People in developing countries acquire managerial,

marketing and technical skills. Awareness of the value of their natural resources. More skilled in international negotiations. Maintainance of good relations with country Adaption of frequent changes made by government.

From multinational to global corporations

Country Alliance Country Alliance is the group of countries. Earlier

countries in a region were competing against each other but now countries have form regional alliances that have regions competing with each other.
Eg:- EU ( European Union)

NAFTA(North American Free Trade Agreement) ASEAN(Association of South East Asian Nations)

Objectives of Country Alliance

To eliminate trade barriers & facilitate cross border

movement of goods and services. To promote fair trade. To increase investment opportunities. To protect intellectual property. To provide resulations of disputes and present opportunities to improve benefit of this agreement

European Union
It was formed in 1992.
The objective of EU was to create a single market

through the removal of trade barriers, and a free movement of goods, people, services and capital.
The changes go beyond the economic interest and

encompasses many social changes as well.

NAFTA
It came into effect from 1994 which includes the

agreement among the United States, Canada, and Mexico.

The objective was to eliminate of trade barriers, and

make cross border movement of goods and services easier , promote fair trade, increase investment opportunities, protect intellectual property, provide for resolutions of disputes, and provide opportunities to improve the benefit of this agreement.

ASEAN
It is the alliance of ten South Asian countries.
The topic discussed are political security, socio cultural

co-operation, and economic issues with the leaders of China, Japan, India, and republic of Korea.

What is Global theory of management ?

Global management theories consist of theories

practiced in different countries like, - France - Germany - Korea - Japan

Korean Management
Korean economy showed a remarkable growth.
Due to the asian economic crises that began in 1997

resulted in a dramatic downturn. A great deal of attention is received partly by Japanese management. This model has been characterized by Chaebol. Over here in organization, the family members occupy key positions. Korean labour turnover is higher than japan.

Japanese Management & Theory Z

There are two common Japanese practices:

- Lifetime employment - Decision making A. Lifetime Employment: They provide life long employment to permanent employees. Employees spend their entire working life with a single enterprise. The culturally induced concept of WA makes the employees more loyal towards the company.

Contd..
Permanent employment practiced by large firms.
The seniority system provides privileges for older

employees for long time. It provides advancement opportunities for young people. A. Decision making: Lower level employees prepare proposals for higher level personnel. Superiors question, suggest and encourage them.

Theory Z
In Theory Z, selected japanese managerial practices

are adapted to the environment of the U.S. It is practiced by companies such as IBM, HewlettPackard and Dayton-Hudson. Here, emphasis is laid on the interpersonal skills needed for group interaction. But, the responsibility remains with an individual only. Also, the informal & democratic relationships based on trust are emphasized. And not only goals but also authority, rules, & discipline guide the corporate behavior.

Germany: Authority & Coordination

The German cultural environment relied on authority

in directing the work force. On one hand, the managerial style is characterized by considerable use of authority, while on other hand, labour is actively involved in managing large corporations. In 1951, a law for codetermination was passed requiring labour membership. Here, a labour director must represent the interests of employees & make decisions in the best interest of enterprise.

France: Le Plan & the Cadre

In France, government planning on a national scale

helps coordinate the plans of individual industries & companies. The governments aim is to utilize most effectively the countrys resources & to avoid expansion in uneconomic areas. Cooperation & assistance are provided by other government departments, unions & consumers. The plan becomes a global strategy. Also, there is a close relationship between government planning & firms.

Drawbacks
It may limit managers to dealing with non quantifiable

& nonrational data & to responding quickly to changes in the environment.