Chapter 3

Global Comparative and quality Management

Global Comparative and quality Management

Introduction; International Management

International Management focuses on the operation of

international firm s in the host countries

Combinations of external and internal conditions influence

managers selection of international operating forms

Whether a country produces in its home country or abroad

is a convenient way to begin describing operating forms

Global Comparative and quality Management

The purpose and Nature of International

Business

Global Comparative and quality Management

Forms of international business

Global Comparative and quality Management

Forms of international business
Licensing
Primarily
agreement
Technical

Global Comparative and quality Management

Forms of international business
Management
Managerial
contracts
and technical

Global Comparative and quality Management

Forms of international business
JointManagerial
ventures &and
strategic
technical
alliances

Material, services and personnel

Material, services and personnel

Global Comparative and quality Management

Forms of international business

Collaborative Forms

Joint venture:
Two or more companies share ownership of an FDI

Consortium:
When two or more organizations participate, this is what
the resulting joint venture is sometimes called

Equity alliances:
Involves a companys equity position in the company with
which it has a collaborative arrangement

The purpose of equity ownership is to solidify a

collaborating contract

Collaborative Forms
Licensing:
A company grants rights to intangible property to
another company ; cross-licensing

Franchising:
A specialized form of licensing in which the franchiser not
only sells an independent franchisee the use of a
trademark but also assists on a continuous basis in the
operation of the business

Management contracts:
Arrangements whereby, for a fee, one company provides
personnel for another company

Turnkey operations:
Involve a contract for construction of operating facilities
that are transferred for a fee to the owner when they are
ready to commence operations

10

Multinational corporations
A multinational corporation is an entity
headquartered in one country that does business in
one or more foreign countries.
Many MNCs progress through the following stages:
1. Exports products to foreign countries.
2. Establishes sales organizations abroad.
3. Licenses use of patents and technology to
foreign firms that make and sell the MNCs
products.
4. Establishes foreign manufacturing facilities,
but control remains at the home office.

Multinational corporations
MNCs: Have their HQ in one country but operate in many
countries

From Ethnocentric to Geocentric orientation;

The style of the foreign operation is based on that of the

parent company.

Multinational corporations
MNCs: Have their HQ in one country but operate in many
countries

Polycentric orientation;

The foreign subsidiaries are given a great deal of

managerial freedom

Multinational corporations
MNCs: Have their HQ in one country but operate in many
countries

Regiocentric orientation;

The foreign operation are staffed on regional basis

Multinational corporations
MNCs: Have their HQ in one country but operate in many
countries

Geocentric orientation;

The entire organization is viewed as an interdependent

system operation in many countries

Advantages & Challenges of MNCs

Cheaper labor costs

Transportation costs
Lack of domestic capacity
Cheaper foreign production
Can require additional investment
Need to alter products and services

Advantages & Challenges of MNCs

Loss of certain economies from large-scale

production

Trade restrictions

Country-of-origin effects

Every country continues to place some

barriers on the import of products and
services from abroad
Some customers prefer to purchase locally
made goods for nationalistic reasons

International Management; cultural and country

Behaviors In Different Culture

Individualism
The degree to which people prefer to act as individuals
rather than a member of groups

Collectivism
A tight social framework in which people expect others in
groups of which they are a part to look after them and
protect them

4-19

Hofstedes Framework: Masculinity

Masculinity
The extent to which the society values work roles of
achievement, power, and control, and where assertiveness
and materialism are also valued (lady truck Driver)

Femininity
The extent to which there is little differentiation between
roles for men and women

4-20

Hofstedes Framework: Uncertainty

Avoidance
The extent to which a society feels threatened by uncertain and
ambiguous situations and tries to avoid them

High Uncertainty Avoidance:

Society does not like ambiguous
situations and tries to avoid them.

Low Uncertainty Avoidance:

Society does not mind ambiguous
situations and embraces them.
Leave application Aug. 2014

4-21

Hofstedes Framework: Time Orientation

Long-term Orientation
A national culture attribute that emphasizes the
future, thrift, and persistence

Short-term Orientation
A national culture attribute that emphasizes the
present and the here and now

4-22

Porters Competitive Advantage

Porters Diamond
Government

Porter Contends that a

nation's characteristics
have a major impact
Structure & on its firms performance.
Structure &

Rivalry of Firms
Rivalry of Firms

Factor
Factor
Conditions
Conditions

Demand
Demand
Conditions
Conditions

Related and
Related
and
Support
Industry
Support Industry

Chance

Adapted From: Porter, M.E., (1990), The Competitive Advantage of Nations,

Free Press, Cited in de Wit, B & Meyer, R, (1998), Strategy Process, Content
Context, an International Perspective 2nd Ed, West.p, pp 775.

Home Diamond
(Porter, M.E. 1990)

Firm Strategy
Structure, &
Rivalry

Do management & organisational

structures in nation match industry needs?
Does industry attract outstanding talent?
Do investors goals meet industry needs?
Are there capable domestic rivals?

Factor conditions:

Demand conditions:

Does the nation have advanced

Are the nations buyers
factors of production?
sophisticated & demanding?
Are there advanced factor
Does the nation have unusual
creating mechanisms? E.g. 1st
needs?
Do home \customer needs
rate University
research, Top grade Universities.
emulate those elsewhere?
Are selective factor conditions
Does the nation have
indicators of foreign
sophisticated distribution
Demand
conditions:
circumstances?
channels
Does the nation have world-class
supply industries
Are there strong related
Adapted From: Porter, M.E., (1990),
The Competitive Advantage of Nations, Free Press, Cited in de Wit, B
industries
& Meyer, R, (1998), Strategy Process, Content Context, an International Perspective 2nd Ed, West.p,
pp 775.

The diamond
To reach true prosperity and the innovation driven stage all
4 corners of the diamond must be in place in the home
base country.
FACTOR CONDITIONS
specialized factors, skilled labour

DEMAND CONDITIONS
the most sophisticated consumers

RELATED AND SUPPORTING INDUSTRIES

clusters of suppliers, consultants, users

FIRM STRATEGIES AND STRUCTURES

intense rivalry amongst domestic firms

Gaining a Global Competitive Advantage through

Quality Management
1. TQM
2. Malcolm Baldrige National Quality Award
3. European Model for TQM

Gaining a Global Competitive Advantage through

Quality Management
What is quality?

Dictionary has many definitions: Essential

characteristic, Superior, etc.

Some definitions that are accepted in various

organizations:

Quality is customer satisfaction,

Quality is Fitness for Use.

What is TQM?

A comprehensive, organization-wide effort to improve

the quality of products and services, applicable to all
organizations.
28

Malcolm Baldrige National Quality Award

European Model for TQM

Managing Performance The EFQM-Model
The European Foundation for Quality Management model focuses
on;
Customer Satisfaction
People Satisfaction (employee)
Impact on society are achieved through leadership
This derives the policy and strategy, people management,
resources and processes that lead to excellence in business
results

30

Overview of the EFQM Excellence

Model

European Model for TQM

Enabler
People

Results
People
Results

Key
Policy &
Customer
Leadership
Processes
Performance
Strategy
Results
Results
Partnerships &
Resources

Society
Results

Innovation and Learning