Bma181 Tutorial2

BMA 181 Tutorial Two Differences between Countries 1. 2.

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Free market economies stimulate greater economic growth, whereas statedirected economies stifle growth! Discuss. A visiting American executive finds that a foreign subsidiary in a poor nation has hired a 12-year-old girl to work on a factory floor, in violation of the company’s prohibition on child labor. He tells the local manager to replace the child and tell her to go back to school. The local manager tells the American executive that the child is an orphan with no other means of support, and she will probably become a street child if she is denied work. What should the American executive do? How might Japan’s changing culture affect the way Japanese businesses operate in the future? What are the potential implications of such changes for the Japanese economy? How did traditional Japanese culture benefit Matsushita during the 1950s1980s? Did traditional values become more of a liability during the 1990s and early 2000s? How so? What is Matsushita trying to achieve with human resource changes it has announced? What are the impediments to successfully implementing these changes? What are the implications for Matsushita if (a) the changes are made quickly or (b) it takes years or even decades to fully implement the changes?

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Free market economies stimulate greater economic growth, whereas statedirected economies stifle growth! Discuss. When economies are measured from the perspective of GNI per capita and PPP over the past 3 decades the answer is clear – free market economies stimulate greater growth because countries with free market economies top the list with the highest GNI per capita and PPP. GNI = Gross National Income is a common measure for the economic activity of a country and PPP = is a common measure of the differences in the cost of living. The base for the adjustment is the cost of living in the US The reality however, is a little more complex. Measures like GNI per capita and PPP are static measures, and they do not capture how economies are changing with time. For examples the growth rates of economies after the 1980s, countries like India and China have some of the highest growth rates in the world and they certainly are not free market economies. The rapid growth of many high growth economies in recent years can be traced to two factors. – First these countries are beginning at a very low base level of economic development so their capacity for growth is immense. – Second, in each of these cases – whether you consider India, China, South Korea or Thailand – the spike in growth rate always coincides with the initiation of free market reforms in an economy that was historically centrally planned.

GNI-PPP-GDP Country

GNI

GNI-PPP

GDP Growth Rate 19932003(%)

Brazil

$2,710

$7,480

2.60%

China

$1,100

$4,990

9.30%

$25,250

$27,460

1.20%

$530

$2,880

6.10%

$34,510

$28,620

1.20%

Nigeria

$320

$900

3.10%

Poland

$5,270

$11,450

4.80%

Russia

$2,610

$8,920

0.10%

Switzerland

$39,880

$32,030

0.90%

UK

$28,350

$27,650

2.80%

United States

$37,610

$37,500

3.20%

Germany India Japan

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A visiting American executive finds that a foreign subsidiary in a poor nation has hired a 12-year-old girl to work on a factory floor, in violation of the company’s prohibition on child labor. He tells the local manager to replace the child and tell her to go back to school. The local manager tells the American executive that the child is an orphan with no other means of support, and she will probably become a street child if she is denied work. What should the American executive do?

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What do you think the American manager should or can do?

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The underlying challenge here is to sort through whether the corporate rule on child labor is universal or particular in its application. Is it tied to a developed-nation context or is it the rule for all places and all times? Are there special circumstances in the developing nation that might allow for child labor? Are there ways child labor can be combined with education? This may not be an all-or-nothing situation. It also brings forward the idea of lesser evil and individual moral responsibility. Would it be ethical for the American executive to do nothing?

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One difficulty in making ethical decisions across cultures is connected to the difficulty of giving meaning to what you are seeing. Expatriate managers may interpret a local practice in a way that such behavior would be interpreted in their home culture, not in the local context. If the manager does not attempt to understand the meaning of the practice in the local culture, the manager may miss a huge step in ethical analysis. For example, Western standards might lead an observer from a Western culture to fail to properly interpret the local practices. Remember to consider context when conducting an ethical analysis. In such a process, a local informant can be helpful. At the same time, be aware of the trap of cultural relativism, the “When in Rome, do as the Romans do.”

Matsushita’s and Japan’s Changing Culture

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Forefront consumer electronic giant in Japan during the 1907s and 1980s. Company was regarded as a leader of traditional Japanese values based on strong identification, reciprocal obligations, and loyalty to the company. Company taken care of employees from cradle to grave and provided them with a wide range of benefits – housing, seniority-based pay systems , generous retirement bonuses and most of all – lifetime employment. In return the company expected and got, loyalty and hard work from the employees. However, as discussed in lecture, culture does not stay constant, it evolves with time and generation and environmental changes. Newer generations born after 1964 lacked the same commitment to traditional values as their parents. They grew up in an environment that was richer and more opportunities and possibilities. The economy in the 1990s was slower and companies needed to change to compete with international companies. Change of HR practices and products innovations have helped the company to get on the road of recovery and in 2004, the company reported a profit.

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How might Japan’s changing culture affect the way Japanese businesses operate in the future? What are the potential implications of such changes for the Japanese economy?

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Japanese businesses may place more risk on the individual. In the past, Japanese businesses operated in a quite paternalistic way, assuming much of the risk of an individual employee’s economic life. The implications for the Japanese economy suggest a growth in external businesses connected to areas that were formerly company responsibilities: employment agencies (more job switching), individually managed employee retirement account investing, and more employees choosing to pursue entrepreneurial interests. Over time, this may lead to increased innovation. Increased leisure may also be a result of these changes. Such changes will have a profound effect on family life, since traditionally, the salary earner or the bread winner was not home much.

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How did traditional Japanese culture benefit Matsushita during the 1950s1980s? Did traditional values become more of a liability during the 1990s and early 2000s? How so? Traditional culture benefited Masushita because the deal was loyalty and dedicated service for the benefits Masushita provided. The company shouldered much responsibility and the bread winner’s level of ambiguity was greatly reduced. As the recession progressed, the costs to Masushita of supporting non-productive workers rose, while their business was falling off. They needed a workforce focused on innovation and efficiency. They had a workforce high in loyalty and obedience. They need to turn this loyal and obedience workforce into an innovative and productive workforce to improves its competitive advantage

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What is Matsushita trying to achieve with human resource changes it has announced? What are the impediments to successfully implementing these changes? What are the implications for Matsushita if (a) the changes are made quickly or (b) it takes years or even decades to fully implement the changes? Masushita is looking for efficiencies so it (Panasonic) can compete successfully in the global market. The impediments to implementing these changes include cultural expectations. A quick change might be quite difficult to implement because it would appear outside the norm and negative. A slow change, which gives some measure of control to the worker, makes much more sense. Culture changes slowly. The three steps of culture change: – Unfreeze – Change – Refreeze