Theme 5 - Special Ib Issues

Unisa SBL’s MBL

International Business

Theme 5 Topical IB Issues Jopie Coetzee © (+27) 082 336 8118: [email protected] 2009

Agenda • • • • •

Expatriate management Management of cross border risks Managing your IB career Developing your C&C astuteness New developments in IB research

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Expatriate management (1) • Roles & responsibilities of the expatriate manager: – Represent parent company in host country – Implement strategies • As Project Manager, or as • Project Team Member in a critical position

– – – – –

Transplant corporate DNA (values, standards, procedures…) Mentor local employees Mentor new expatriate families Act as change agent Act as node for parent company’s business intelligence network – Build-up and maintain parent company’s business network in host country – Act a cross-cultural interpreter between host and home-based executives & business systems 3

Expatriate management (2) • Trends & key issues: – The transnational business model – The rise of local managers – The “virtual” expat manager – The rise of collectivist cultures in global business – The rise of the “B-team” – Expat managers vs expat families 4

The Expatriate’s network Family

Peers

Key support staff

Expat Manager

Host country Exco

Home country Exco 5

Evolution of parent and host culture identification (Sanchez, Spector and Cooper, 2000)

Time as Expatriate Manager

Proficient

Culture Shock Cycle for Expat Managers (Thomas, 2000)

Mood High Honeymoon

Gradual adjustment

Irritability and hostility

Adjustment

Low Months in foreign culture …the same applies when returning to home country!!

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Kinds of expat managers =impact on selection criteria and “expat army” make-up= (Black and Mendenhall, 1991)

Allegiance to local operation

Allegiance to parent

Low

High

Low

Free agents

Gone native

High

Homebound

Dual citizens

Management of 10 cross-border risks • Not uncommon for an IB manager to deal with 20 different nations/cultures at the same time!!! Case: For the development of a global nickel business • Americas: USA, Canada, Cuba, Colombia • Europe: UK, Holland, Finland, France • Africa: South Africa, Guinea, Mozambique • Australasia: Australia, New Caledonia, Indonesia, Philippines, Singapore • Far East: Hong Kong, Japan, China, Vietnam (How many cross-border interfaces? 20x? = zillion) 9 •

1: Mindset risk

Level of IB Astuteness

Must Develop IB-Mature Project Teams for Host & Home Country



B



A

Time 10

2: Cross-cultural project team risk • Low Cultural Intelligence (CI) • Defusing cultural differences upfront to craft a multi-cultural team, vision, mindset & value system: – The Fluor Daniel & Sasol approach • IB facilitator to synchronise client’s & project team’s understanding of joint issues, such as wording in terms of reference & design approach & construction approach……. – The Billiton approach • Competent IB manager as Project Leader

• Multi-cultural team dumped into fast track project 11

3: Negotiations risk (IB negotiations by Chauri & Usunier, 2005)

• Pre-negotiations: – Identify contents of the deal; create alternatives; put yourself in their shoes; gauge the appropriateness of the message; build-up relative power

• Face to-face: – Who should negotiate?; the expendable person; individuals vs teams; what makes a good negotiator?; Patience;

• Post negotiations: – What makes a good outcome? (Event vs process?) 12

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4: Expatriate management risk • Reasons why expats fail: – – – –

Inability of spouse to adjust Inability of manager to adjust Family problems Inability to cope with larger responsibility

• Failure rates: – USA (~15%); European (~10%) RSA (~1,8%)

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5a: Relationship Risk Culture Money and time spent - can’t I do better elsewhere?

loose-loose Relationship:

• Culture • Country in transition •IB maturity: • Local mindset • No critical mass •Corruption

win-win

win-loose

Project completion: - on time - within budget - quality compliance 16

Building guanxi

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5b: Relationship risk (also known as reputational risk)

• Top 3 bribe paying nations: – Russia, China, Taiwan. • Corruption perception index: – Least 3: Finland, Denmark, New Zealand. – Most 3: Bangladesh, Nigeria, Uganda/Indonesia • Top 3 nations using unfair business practices: – USA, France, UK. • Top 3 industries where most corruption takes place: – Public works, Arms/defense, Oil/gas. (Transparency International) 18

6: Productivity Risk Adjustment factors in planning, such as: • Electricians to do a “unit of work”: – RSA = 1; XYZ = 1,3 • Time required to do daily maintenance: – RSA = 1; ABC = 0.8 • Delivery of spare parts: – RSA = 1: XYZ = 3,5 • Weather conditions, religious requirements.. • Management time, decision making time.. • MUST get local insights… • MUST develop your own data base... 19

7: Trade-off analysis risk (compromising too much on key deliverables)

QUALITY 20

8: Dilution of values risk Typical global corporate values

• • • •

Quality (time, cost & quality perceptions) Integrity (x = corruption vs. x = cost of doing business) Governance (trust vs control) Respect & fair play

– meaning of in various cultures? • Accountability (analysts requirements, Triple bottom line, Global Reporting Initiative?) – local partner’s preference?? • Optimal use of local labor (in a high tech. plant?) – Community employment - case of Australian Aboriginals – Child labor – case of China’s agricultural sector 21

9: Corruption Risk • IB requires that you do business differently… – Definitions of corruption vary between countries & cultures.. – Clarify your value system up-front..

• Do NOT set yourself up to be in corruption business – It’s a never ending downward spiral

• Cost of business contributions: – – – –

Payments as tokens of country, community commitment.. Neutral contributions, eg library, school…. Do openly… Remain within acceptable payment levels - get local advice..

• Rather walk away from a project/country.. Reputation risk • Why not agree with competitors to jointly beat the “demon”? • Setting a new “rule of the game”? Your role as master of business leadership? 22

10: Alignment risk of business with C&C nature and dynamics of Host Country • Lecture 4 – Vectors 1-4 – – – –

Cultural distance Administrative distance Geographic distance Economic distance

• See handout for logic on mis-alignment –  structured for failure? – structured for success? 23

IB Career Development • Topics: – Professional advancement – Develop personal C&C astuteness

• Find your own level – Unilever’s experience = 1:200 are suitable for IB!!

• Take charge of your own CV – 5 models to guide your own training & development 24

Global Efficiency

Global Business Development Managers

Blending global management roles with global strategic thrusts

Local responsiveness Country/Regional Manager

Global innovation and learning

Global Functional Managers

(Bartlett & Ghoshal, Managing across borders) 25

Pipeline of designated Venture Managers to be designed

in line with actual and anticipated projects pipeline

Conceptual stage

Feasibility

Construction

Operations

Closure

Progression from novice to mastery A => B => C => D

Protected waters

Open sea

Multiple sites

BD AC Single site

Home country

Host countries

Development route towards IB Maturity Drotter’s Leadership Pipeline

D

Business development manager

C B A Functional manager

Country/Region manager

IB Maturity Novice

Mastery

Venture Manager

Composition of IB Maturity competences (Jopie Coetzee, Unisa SBL 2006)

Country & cultural intelligent Global wealth builder

Mentor

Systems thinker

Diplomat

Global mindset

Global integration

Cross-border implementer Strategic capabilities

Stewardship

Doing capabilities Mindset disposition

Personal development of C&C astuteness • Training: language, reading, travel, negotiation.. • Move out of own your comfort zone: new friends, new club, hunt new life experiences.. • Obtain expat experience = ƒ(willingness, ambition, volunteering, personal curiosity) • Use of mentors from Home & Host countries • Read & listen & practice …..use your eyes & ears! • Develop a “cultural ear” & be willing to “learn”

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Some practical guidelines for GBM’s (“man, all you just gotta do is to act naturally”..…. Ringo Star!!) (“old fashioned good manners work every time”..…Jopie Coetzee)

OUT • • • •

Be be arrogant Be racism & sexist Religious fundamentalism Use stereotypes as a benchmark • Discuss periods of “national shame” • Critical of theirs… • Do as the Romans do, at all cost

IN • Listen to Ringo & Jopie! • Be sensitive to “face”, protocol and custom • Utilise local talent • Create climate of trust • Get to know the individual • Be yourself, but as an IB literate person!! • Do not “give-up your own values”

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New developments in IB research • Arguably the fastest growing knowledge area • The MNC in a global societal and environmental whole…. • The discovery of hidden non-G3 IB business • The merging & up-scaling of IB knowledge between: – G3 & BRICS – Tiers 1,2,3 & 4 of the human pyramid

• The role of technology – eg the virtual expat 32

Reflection…… Your role as a Master of Business Leadership: – in the world of global business? – in society? – as a steward of The Earth?

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