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Chapter 06 - International Management

chapter
6
International Management
CHAPTER CONTENTS

Learning Objectives 2

Key Student Questions 3

Class Roadmap 4

Bottom Line 12

Social Enterprise 13

Lecturettes 14

Discussion Questions 18

Experiential Exercises 21

Concluding Case 23

Examples 25

Supplemental Features 28

Chapter Video 28

Manager‘s Hot Seat 28

Self-Assessment 32

6-1
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Education.
Chapter 06 - International Management

LEARNING OBJECTIVES

1 Discuss what integration of the global economy means for indi-


vidual companies and their managers.

2 Describe how the world economy is becoming more integrated


than ever before.

3 Define the strategies organizations use to compete in the global


marketplace.

4 Compare the various entry modes organizations use to enter


overseas markets.

5 Explain how companies can approach the task of staffing over-


seas operations.

6 Summarize the skills and knowledge managers need to manage


globally.

7 Identify ways in which cultural differences across countries influ-


ence management.

6-2
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Education.
Chapter 06 - International Management

KEY STUDENT QUESTIONS

Students have very practical questions about international management - they want to know:

 1. “What implications does globalization have for my job - what can I do


to keep my job from being outsourced?”
2. “How does a manager know when to take a business global?”

While every industry is different, you can offer students the following advice:

 An article in Business Week outlines the skills that programmers need to find a job in the
United States.1 It seems that technical skills aren‘t enough anymore. In order to be success-
ful, programmers also have to show that they can lead and manage teams, think strategically,
and become software architects, not just the implementers of someone else‘s vision.
 Most managers today don‘t really have the choice of whether or not to take a business global
- as soon as they post their first corporate website, they are doing global marketing. What
companies do have, however, is a choice about whether or not to target global markets over
domestic ones. James F. Foley has written a book entitled The Global Entrepreneur, which
discusses some of the reasons why companies decide to go global, including:
o accessing markets beyond their domestic territory
o avoiding a changing domestic environment, especially decreasing customer bases
or when selling seasonal items
o lowering costs
o a strategic plan to increase global brand awareness, achieve worldwide distribu-
tion and manufacturing capacity, and exploit extranational economies of scale
and experience effects.2

1
Baker, S. and Kripalani, M. “Software:Will Outsourcing Hurt America‟s Economy?” Business Week, March 1, 2004, Online at
http://www.businessweek.com/magazine/content/04_09/b3872001_mz001.htm
2
Foley, J. The Global Entrepreneur. Dearborn Trade, 1999.

6-3
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Education.
Chapter 06 - International Management

CLASS ROADMAP

Management in Action
How Lenovo Is Becoming a Global Brand
A few years ago, Lenovo was barely known outside China, but today it is ―the first Chinese
global consumer brand,‖ according to the Wall Street Journal. Lenovo is the world‘s largest PC
maker and competes directly with HP in computers and servers.

Selling computers in China‘s huge and fast-growing market gave Lenovo the capital it needed to
expand. After a Western manager stumbled at the head of Lenovo‘s laptop business, the compa-
ny turned to Yang Yuanqing, a former salesperson who had risen through the ranks, and Lenovo
cofounder Liu Chuanzhi. They developed the strategy of selling first in fast-growing markets
(China, India, Russia, and Brazil) and using the revenues to enter countries with established
markets.

Lenovo‘s strategic challenge is whether the products and processes that enable it to meet the
needs of developing economies will translate well to the needs of consumers in other parts of the
world.

I. MANAGING IN A (SOMETIMES) FLAT WORLD

LO 1: Discuss what the integration of the global economy means for individual companies and their
managers.

A. Implications of a Flat World

B. The Role of outsourcing


1. Outsourcing occurs when an organization contracts with an outside provider to
produce one or more of its goods or services
2. Offshoring is a specific type of outsourcing whereby companies move jobs to
providers in another country, typically where wages are lower.
3. Managers should ask these questions when considering offshore business:
a. What is the competitive advantage of the products they offer?
b. Is the business in its early stages?
c. Can production savings be achieved locally?
d. Can the entire supply chain be improved?

E.G.
Use Example 6.1 – Global environment here

6-4
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Education.
Chapter 06 - International Management

II. THE GLOBAL ENVIRONMENT

LO 2: Describe how the world economy is becoming more integrated than ever before.

A. European Unification

1. European Union (EU) will allow goods, services, capital, and human resources to
flow freely across national borders.
2. Unification will create a more competitive Europe.
3. The United States must remain vigilant to ensure that a Fortress Europe does not
close itself to U.S. goods and services.

B. Asia: China and India’s Ascent

1. Japan dominated world attention toward the end of the last century.
2. China has now surpassed Japan and Mexico, becoming America‘s second largest
trading partner. (Exhibit 6.5)

E.G.
Use Example 6.2 – Global economy consequences here

C. The Americas

1. North American Free Trade Agreement (NAFTA) is an economic pact that com-
bined the economies of the United States, Canada, and Mexico into the world‘s larg-
est trading bloc.
2. Industries that have benefited in the short run include capital-goods suppliers, manu-
facturers of consumer durables, grain producers and distributors, construction equip-
ment manufacturers, the auto industry, as well as the financial industry.

D. The Rest of the World

1. Middle East, Africa, and Latin America comprise a major share of the world‘s natural
resources and are among the fastest-growing economies.

III. GLOBAL STRATEGY

LO 3: Define the strategies organizations use to compete in the global marketplace.

6-5
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Chapter 06 - International Management

A. Pressures for global integration

1. Universal needs create strong pressure for a global strategy.


2. Competitive pressures to reduce costs may force a company to globally integrate manufactur-
ing.
3. Global strategic coordination is another factor that creates pressure for global integration.

B. Pressures for local responsiveness emerge when:

1. Consumer tastes and preferences differ significantly.


2. There are differences in traditional practices
3. There are differences in distribution channels and sales practices.
4. Host country governments impose economic and political demands.

C. Choosing a global strategy (Exhibit 6.6)

1. The international model is designed to help companies exploit their existing core capabilities
to expand into foreign markets.
a. The advantage of this model is that it facilitates the transfer of skills and know-how from
the parent company to subsidiaries around the globe.
b. One disadvantage of the international model is that it does not provide maximum latitude
for responding to local conditions.

2. The multinational model uses subsidiaries in each country in which the company does busi-
ness, and provides a great deal of discretion to those subsidiaries to respond to local condi-
tions.
a. One advantage of allowing local responsiveness is that there is less need for coordination
and direction from corporate headquarters.
b. A major disadvantage of this model is higher manufacturing costs and duplication of ef-
fort.

3. The global model is designed to enable a company to market a standardized product in the
global marketplace and to manufacture that product in a limited number of locations where
the mix of costs and skills is most favorable.
a. Companies that adopt the global model tend to become the low-cost players in any indus-
try.
b. On the downside, because a company pursuing a purely global approach tries to standard-
ize its products and services, it may be less responsive to consumer tastes and demands in
different countries.

4. The transnational model is an organization model characterized by centralization of certain


functions in locations that best achieve cost economies; basing of other functions in the com-
pany‘s national subsidiaries to facilitate greater local responsiveness; and fostering of com-
munication among subsidiaries to permit transfer of technological expertise and skills.
a. A distinguishing characteristic is the fostering of communications among subsidiaries.
b. Achieving such communications across subsidiaries requires elaborate formal mecha-
nisms, such as transnational committees staffed by people from various subsidiaries who
are responsible for monitoring coordination among subsidiaries.

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Chapter 06 - International Management

c. These organizations transfer managers among subsidiaries on a regular basis.


d. Achieving coordination among subsidiaries requires that the head office play a proactive
role in coordinating their activities.

E.G.
Use Example 6.3 – Global strategy systems here
Management in Action –
Progress Report
A primary challenge of Lenovo‘s strategy to build outward from China is that selling in a developing
economy requires high efficiency and low prices, while selling high-tech products requires constant inno-
vation, which can be expensive. CEO Yang Yuanqing and vice president Gerry Smith settled on an ap-
proach they believed could accomplish both goals: manufacturing at its own facilities, located in key
markets.
• Where in this example do you see pressures for global integration?
• Where do you see pressures for local responsiveness?
The primary source of pressure for global integration would be the pressure to reduce costs for the devel-
oping markets. Pressures for local responsiveness involve differences in consumer tastes. In developed
economies, consumers are looking for electronic devices that are exciting, not just functional, whereas
low price drives more sales in developing markets.
• Which global strategy (international, multinational, global, or transnational) do you think is most ap-
propriate for Lenovo? Why?
Answers will vary but should reflect an understanding of the four global strategies presented in Figure
Exhibit 6.6. Based on the description in the case, Lenovo seems to be aiming for a transnational strategy
with manufacturing facilities located to enable local responsiveness, while coordination mechanisms keep
the local operations aligned with Lenovo‘s growth strategy.

IV. ENTRY MODE

LO 4: Compare the various entry modes organizations use to enter overseas markets

A. Exporting

1. Advantages of exporting are:


a. Provides scale economies by avoiding the costs of manufacturing in other countries.
b. Is consistent with a pure global strategy.

2. Disadvantages of exporting are:


a. Exporting from the company‘s home base may be inappropriate if other countries offer
lower-cost locations for manufacturing the product.
b. High transportation costs can make it uneconomical, particularly in the case of bulk prod-
ucts.
c. Host countries can impose tariff barriers.

B. Licensing

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Chapter 06 - International Management

1. An arrangement whereby a licensee in another country buys the rights to manufacture a com-
pany‘s product in its own country for a negotiated fee.

C. Franchising

1. It is used primarily by service companies.

2. The company sells limited rights to use its brand name to franchisees in return for a lump-
sum payment and a share of the franchisees‘ profits.

E.G.
Use Example 6.4 – Difference between franchising and licensing here

D. Joint ventures

1. Joint ventures benefit a company through:


a. The local partner‘s knowledge of the host country‘s competitive conditions, culture, lan-
guage, political systems, and business systems
b. The sharing of development costs and/or risks with the local partner.
c. Two possible disadvantages:
i. In the case of licensing, a company runs the risk of losing control over its technology
to its venture partner.
ii. Because control is shared with the partner, the company may lose control over its
subsidiaries.

E.G.
Use Example 6.5 – Joint ventures here

E. Wholly owned subsidiaries

1. An independent company owned by the parent corporation.


2. The most costly method of serving an overseas market.

V. MANAGING ACROSS BORDERS

LO 5: Explain how companies can approach the task of staffing overseas

Managing Across Borders

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Chapter 06 - International Management

A. When establishing operations overseas, headquarter executives have a choice between


sending:
1. Expatriates
a. cost
b. personal security
c. stress (Exhibit 6.9)
2. Host-country nationals
a. availability
b. familiarity with language and culture
c. cost less
3. Third-country nationals
a. can soften political tensions
b. ‗compromise solution‘ between expatriate and host country national

E.G.
Use Example 6.6 – Cultural differences here

LO 6: Summarize the skills and knowledge managers need to manage globally.

A. Skills of the Global Manager

1. Failure rate is the number of expatriate managers of an overseas operation that come
home early. Failure can be prevented by:
a. structuring assignments clearly
b. creating clear job objectives
c. developing performance measurements based on objectives
d. using effective, validated selection and screening criteria
e. preparing expatriates and families for assignments
f. creating a vehicle for ongoing communication
g. using repatriation to facilitate reentry
h. developing a mentor program that will help in case of trouble (Exhibit 6.11)

2. Skills and knowledge include:


a. flexibility
b. emotional stability
c. empathy for the culture
d. communication skills
e. resourcefulness
f. initiative
g. diplomatic skills

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Chapter 06 - International Management

E.G.
Use Example 6.7 – Multidimensional perspective here

LO 7: Identify ways in which cultural differences across countries influence management.

B. Understanding cultural issues

1. Culture shock is the disorientation and stress associated with being in a foreign envi-
ronment.

2. Geert Hofstede‘s dimensions of cultural differences: (Exhibit 6.12)


a. power distance
b. individualism/collectivism
c. uncertainty avoidance
d. masculinity/femininity

Multiple Generations at Work


Do Millennials Need International Work Experience?

According to the results of a survey of working Millennials from six countries, the answer is yes.
PricewaterhouseCoopers asked early career employees the following question: ―Thinking of
working outside your home country, do you agree/disagree that\you need international experi-
ence to further your career?‖ A large majority of Millennial respondents from emerging econo-
mies, Brazil, China and India view international experience as important for their career. In con-
trast, just over half of respondents from the United States and Germany, both developed econo-
mies, think international experience will benefit their careers.

3. An inpatriate is a foreign national brought in to work at the parent company

4. When working with foreign nationals, it is important to explain U.S. cultural norms
with regard to:
a. Holding meetings
b. Work schedules
c. E-mail
d. Fast-trackers
e. Feedback

E.G.
Use Example 6.8 – Working with foreign nationals here

D. Ethical issues in international management

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Chapter 06 - International Management

1. Without an understanding of local customs, ethical standards, and applicable laws,


expatriates are unprepared for international work.

2. Ch. 5 identified several steps companies can take to enforce ethical behavior. In a for-
eign context these activities must be carried out with employees in any subsidiary,
franchise, or other company operation.
3. Most people embrace five core values, regardless of religion or nationality:
a. compassion
b. fairness
c. honesty
d. responsibility
e. respect for others

Management in Action –
Onward
Lenovo‘s strategy requires managers who understand local markets and can run efficient manufacturing
operations. Lenovo meets the need with a combination of host-country and third-country nationals. R&D
in China enables the company to innovate with products that will please the developing markets where
Lenovo launches new products. In the United States, CEO Yang Yuanqing is patiently building the
brand‘s reputation over the long run.
• What advantages does Lenovo have from its choice of entry modes?
By selling products manufactured in its own strategically located facilities, Lenovo should experience
scale economies and keep engineering and production aligned with its global strategy. On the downside,
exporting can involve high transportation costs and tariff barriers. But because Lenovo is headquartered
in China and launches products in developing nations, it avoids the disadvantage of manufacturing in
high-cost areas.
• What cultural issues should an American-born manager at Lenovo be prepared to handle?
An American-born manager at Lenovo will be working for a company whose executives are Chinese.
Therefore, this manager will encounter differences in executives‘ history, language, geography, social
conditions, and perhaps race and religion. Conversational practices also differ between China and the
United States. To succeed, the manager should be aware of his or her own cultural norms and practices, as
well as those of Lenovo‘s Chinese leadership.

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Chapter 06 - International Management

BOTTOM LINE

p. 195: Why might innovation be important for a U.S. company in a global market?
Answers will vary. The previous section gave one hint, however, and that is the higher cost of labor in the
United States relative to many parts of the world. A company operating in the United States may need to
excel in technology, entrepreneurship, and innovation in order to compete with low-cost businesses else-
where.

p. 201: What is one way in which a global strategy can help reduce costs?
A company can enjoy economies of scale from making large quantities of standardized products for sale
in many countries. It can locate production in a few facilities where its costs (including production and
transportation) are optimal.

p. 202: Give an example of a product for which quality standards would apply globally.
Answers will vary. Students should think of widely valued products. The text refers to IBM (computers),
Xerox (office equipment), Kellogg (breakfast cereal), Coca-Cola (soft drinks), and others.

p. 203: What kind of product might experience rapid changes in local demand?
Answers will vary. Logical choices would include products for which weather affects demand, as well as
fashion-driven products such as clothing, which could quickly go in and out of style.

p. 204: Could this model apply to a jewelry company? If so, how? If not, why not?
Students should give a reason for either answer. A jewelry company that specializes in high-end or hand-
crafted jewelry might not want to use this global model, even though it drives down costs, because its
customers don‘t want a standardized product and don‘t mind paying a premium. But a maker of costume
jewelry or jewelry for children might embrace a global model.

p. 205: Does that mean the transnational model is always best? Why or why not?
No. The transnational model is the best strategy if the company faces high pressures for both global inte-
gration and local responsiveness. In some cases, a company is more likely to succeed with a standardized
product or with attention to the particular needs of each individual buyer.

p. 207: Can services be exported? Why or why not?


The traditional answer has been that it is difficult or impossible to export services because they are deliv-
ered directly to the consumer by the person who produces them. However, with advances in technology,
more companies are exporting services such as answering phones, writing software, handling a compa-
ny‘s accounts, or researching legal issues. The resulting information or data can readily be shared online.

p. 208: Why does quality control pose a risk in franchising?


With franchises, much of the value is in the brand; customers expect the same level of quality whenever
the patronize one of the company‘s businesses. If they have a good experience, they will expect more of
the same. But if they have a bad experience, they may avoid all of the company‘s establishments in the
future.

p. 210: How might training an expatriate manager differ from training a local manager?
An expatriate manager is likely to need more training in cultural differences and business practices of the
host country, including the needs and values of local customers. A local manager, especially in countries
where the economy is less developed, may need more training in general management skills and in the
company‘s organizational culture and principles.

6-12
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Education.
Chapter 06 - International Management

SOCIAL ENTERPRISE

Student Social Entrepreneurs Compete for $1 Million

1. Of the three recent award-winning start-ups mentioned above, which do you find
most likely to succeed? Why?
Student answers will vary depending on the social entrepreneurship concept they like the
most. There should be a brief analysis on how this related to global management and the
likelihood that the company will succeed in today’s market.

2. The Hult Prize has been awarded to new social enterprises from all over the world.
Why do you think the competition has a global focus?
Social entrepreneurship, like many other facets of business, has become a global endeav-
or. Companies cannot just make a difference in one nation as they need to make a differ-
ence in the entire world based on the interconnectivity of global issues. For example, a
developed nation has certain resources that can help a poorer nation, and social entre-
preneurs need to make these connections.

6-13
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Chapter 06 - International Management

LECTURETTES

LECTURETTE 6.1: Untangling the Trade Deficit

TRADE DEFICIT

1. There are many misunderstood economic statistics, but there is one that clearly stands out as the most
confusing: the trade deficit. No other number is interpreted so differently by professional economists
and the general public. It is thought that America‘s trade deficit exists either because of the skulldug-
gery and unfair trade practices of countries that shut out U.S. products, or because American compa-
nies are failing to compete against their global competitors. In either case, the preferred solution is
often to get tough in trade negotiations for the sake of protecting U.S. jobs.

2. The U.S. trade deficit rose from $56 billion in 1992 to $155 billion in 1997. The economic troubles
in East Asia prompted predictions that producers in those countries would flood U.S. markets with
imports while reducing their purchases of U.S. Exports, which could increase the 1998 trade deficit
by another $50 billion or more. However, as of September 2011, the U.S. trade deficit stood at $43.1
billion. What occurred to close this gap?

COMPONENTS OF THE TRADE DEFICIT

1. Part of the confusion about the trade deficit arises because the U.S. Department of Commerce reports
several versions of the trade deficit, and the differences among them can be tens of billions of dollars.

The biggest trade-deficit number, which was revised in June 1998 from $191 billion to $198 billion
for 1997, is calculated by taking America‘s exports of goods and subtracting America‘s imports of
goods. The fact that it is a deficit, rather than a surplus, means that imports of goods are $198 billion
larger than exports.

2. In the modern economy, it is surely too limited to consider goods only. In 1997, only 36 percent of
the U.S. gross domestic product (GDP) were goods, while 55 percent was services. (The rest is struc-
tures and changes in inventories.) Some services are obviously difficult to trade internationally: It‘s
not clear how one ships housecleaning or haircutting services overseas. But many services like fi-
nance, law, expert design, computer programming, and advertising can be and are traded internation-
ally. While the U.S. economy runs trade deficits in goods, it runs substantial and growing surpluses
in service trade.

The goods and services deficit is clearly a better measure of the trade deficit than goods taken alone.
There is no economic justification for arguing that goods like computers should be counted in the
trade statistics, while services like computer programming should not be, or that goods like cars
should be counted in the trade statistics, but the services of car advertising and providing loans to buy
cars should not be.

POPULAR MYTHS

1. Much popular thinking about the trade deficit is based on a few well-known facts about the United
States and Japan. The Japanese economy is more closed to trade than the U.S. economy. In certain
areas, Japanese firms have made considerable inroads into U.S. markets. Japan runs trade surpluses
while the United States has a trade deficit.

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Chapter 06 - International Management

2. If one is to believe that trade deficits occur because of how well U.S. firms match up to foreign com-
petition, then one must believe that the competitiveness of U.S. firms collapsed from 1981 to 1987,
surged back toward equality from 1987 to 1991, and has collapsed again since then. If one is to be-
lieve that trade deficits occur because of unfair trade practices then one must believe the following:
From 1981 to 1987, the rest of the world unfairly blocked U.S. exports; but, from 1987 to 1991, it al-
lowed free trade, only to retreat to gross unfairness during the last six years. Again, there is literally
no evidence that trade laws, whether here or abroad, have changed in the dramatic ways that would be
needed to explain what has actually occurred.

THE TRUE MEANING OF TRADE DEFICIT

1. We must return to the question of what a trade deficit really is. All the items on the surplus side of
the current account balance—exports of goods and services, investment income received by U.S. in-
vestors who have capital abroad, and unilateral transfers to the United States—involve money flow-
ing from elsewhere into this country. Conversely, all the items on the deficit side of the current ac-
count balance involve money flowing abroad. It would be insufficient, however, simply to stop here.
Something else must be considered.

Money flowing out of the United States is in U.S. dollars; money that is earned by U.S. exporters—
say, when an American-built car is sold in Germany—is not originally received in U.S. dollars but,
instead, in foreign currencies. A U.S. company that earns foreign currency by exporting abroad will
seek to convert that money to U.S. dollars at the prevailing exchange rate, and then use those dollars
to pay off its American-based costs.

2. The U.S. trade balance can be viewed as a matter of comparing the amount of U.S. imports of goods,
services, investment income, and transfers—all paid in U.S. dollars—with the value of U.S. exports
of these items—all paid in the form of various world currencies—at the world‘s prevailing exchange
rates. Again, the trade deficit means that imports are larger, by $155 billion in 1997.

The existence of the $155 billion trade deficit in 1997 reveals that this many U.S. dollars were earned
and not traded for foreign currencies by foreign companies and investors. They apparently remained
in the form of U.S. dollars!

CAPITAL FLOWS ARE KEY

1. In a world without foreign trade, a nation can only consume what it produces. But in a world with
trade, a nation can borrow from abroad, use the money to consume more goods and services than it
currently produces, and promise to repay later. A nation like the United States, which does this, is
running a trade deficit and the amount of the trade deficit measures both the extra goods purchased
from abroad and the inflow of capital from abroad. Conversely, economies like Japan with trade sur-
pluses are producing more than they consume. They are taking the amount that they earn from pro-
ducing more than they consume and investing it abroad.

2. Thus a trade deficit means that a nation is receiving net investment from abroad. Equivalently, a
trade deficit means that a nation is consuming more than it is producing. Again equivalently, a trade
deficit means that a nation is investing more than its domestic savings. A trade surplus would reverse
these statements.3

3
Taylor, Timothy, “Untangling the Trade Deficit,” Public Interest, Winter 99 Issue, 134, p 82

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Chapter 06 - International Management

LECTURETTE 6.2: Stand Up and Fight

It‘s tough being an aggrieved consumer in Big Business-oriented Japan. Mitsubishi hid consumer com-
plaints in a company locker rather than turning them over to the government. Shareholders are angry
about Mitsubishi‘s cover-up and poor quality control. The company is accused of poor crisis manage-
ment and public relations skills. A new appreciation in Japan for the rights of consumers is the best
things that could come out of the scandal. The philosophy of management should be a commitment to
please their customers, to develop a competitive edge, and improve their market share in the long run.
Management decisions must create customer satisfaction and strive toward the goals and strategies to be
achieved and in the same vain meet stockholder demands. Profits are an important goal; however, the
long run orientation to pursue profits is consistent with the Japanese philosophy of management.

Japanese judiciary believes it must preserve the social-structure and this means protecting big companies,
not the individual. In Japan, companies have little reason to fear litigation; they pay small heed to con-
sumers‘ complaints. Japan has double standards and it is a place where companies can get away with ac-
tions that would never be tolerated in the United States or Europe. Management decisions are built upon
social responsibility and organization politics is an inherent part of the Japanese culture. Japanese firms
operate in the market place in a unique way so they can be competitive and meet industry wide standards
that are acceptable to employers within a given industry.

Consumer complaints have also come from Bridgestone/Firestone, and the company president all but dis-
appeared following allegations from faulty tires. The company has been mum, except for a news confer-
ence to announce the recall. This type of action could be damaging in the long run. This company must
network and meet group performance standards that will be acceptable in the market place. There is a
fine line between creating customer satisfaction and organization politics that exist among the firms with-
in a given industry. Political overtures are an inherent part of the Japanese culture, and have an impact on
the philosophy of management and decisions that are made.

Workers at a uranium reprocessing facility set off a nuclear reaction that caused two deaths and exposed
439 people to radiation. The company was under pressure to cut costs and the government failed to con-
duct adequate inspections. This is a classic illustration of Japanese management and the networking be-
tween the government and firms within this industry.

Milk sold by Snow Brand Milk Products Co., Japan‘s largest dairy failed to notify the public of the prob-
lem for two days after 14,500 people fell ill after drinking the tainted milk. Health authorities declared
Snow Brand products safe for consumption before establishing the cause of the poisoning. A reactive
approach, compared to a proactive style of management, is often exercised in making decisions of a social
responsibility philosophy of management.

One of the reasons it is hard for Japanese consumers to get a hearing is that the Product Liability Law
lacks muscle. Activist lawyers are lobbying for new measures to help the legal profession go after com-
panies. The courts need a United States-style ―discovery‖ system that would force defendants in product-
liability cases to turn over relevant documents, which is not the case now. Japanese companies aren‘t
afraid of the law. In response, consumers are advocating tougher penalties for offenders.

One of the most critical needs in Japan is for judicial reform. Japan suffers from a serious shortage of
both lawyers and judges. The consumer has no one to turn to when problems arise with products. Con-
sumers need to raise their voices if they expect to change the situation. Tougher inspectors and higher
standards could help, but corporations must improve quality—and heed the complaints of the customers

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Chapter 06 - International Management

who keep them in business. There is a need to become socially responsive to meet the needs of stake-
holders that are an inherent part of the Japanese culture.4

4
Kunii, Irene, “Stand up and Fight,” Business Week, September 11, 2000, p 54-55.

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Chapter 06 - International Management

DISCUSSION QUESTIONS

1. Why is the world economy becoming more integrated? What are the implications of this inte-
gration for international managers?

The global economy has become more integrated than ever before. Half a century of emphasis on free
trade by major industrial countries such as the United States, Great Britain, and Germany has resulted
in a gradual lowering of barriers to the free flow of goods, services, and capital among nation states.

This has enabled both large and small companies to view the world, rather than a single country, as
their marketplace. It has also enabled companies to disperse their manufacturing, marketing, and re-
search facilities to locations around the globe where costs and production conditions are most favora-
ble.

Increased integration has the following implications for management:


 World trade is growing at a faster rate than the volume of world output.
 Foreign direct investment (FDI) is increasing.
 Imports are penetrating deeper into the world‘s largest economies.
 Companies around the world are finding their home markets under attack from foreign com-
petitors.

Today‘s managers in developed countries must constantly make decisions about whether and how to
pursue opportunities around the globe. Managers must also consider potential foreign competition
when making even routine strategy decisions.

2. Imagine you were the CEO of a major company. What approach to global competition would
you choose for your firm: international, multinational, global, or transnational? Why?

The approach selected would depend, at least conceptually, on the nature of the company, its goals
and objectives, its strengths and weaknesses, etc. Each of the approaches has advantages and disad-
vantages, and the CEO would need to determine which model was most consistent with the compa-
ny‘s needs.

If the company has strong core capabilities, the international model (involving the establishment of
subsidiaries in foreign countries) is an attractive one. Skills and know-how flow from the parent com-
pany to the subsidiaries, and thus the parent company maintains a high level of control.

The multinational model, by contrast, gives far more autonomy to the local subsidiary that has its own
functional units and is better able to respond to changes in the local market. This is the preferred ap-
proach if local responsiveness is a critical variable and the management of the parent company is not
overly concerned about maintaining tight control of its worldwide operations.

A CEO would choose the global organization model if the company were attempting to market a
standardized set of products globally with manufacturing conducted in a limited number of markets.
Under this approach, only the marketing and service functions are controlled by the subsidiaries.

Selecting the transnational model results in certain functions (such as research) being centralized in
the parent country with other functions concentrated in any country of the world. The main question
being: Where is the most effective location for this function? A CEO would select this model if he or

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Education.
Chapter 06 - International Management

she felt comfortable with having key functions outside the home country and had faith in the compa-
ny‘s personnel‘s ability to effectively coordinate activities and communicate among themselves.

3. Why have franchises been so popular as a method of international expansion in the fast-food
industry? Contrast this with high tech manufacturing where joint ventures and partnerships
have been more popular. What accounts for the differences across industries?

The key to fast food industry is visibility and that means locations. The franchiser has to be able to
promote the product using mass media and this requires as many locations as possible offering identi-
cal products. Franchising is the optimal approach because it allows for rapid expansion in terms of the
number of locations (since the franchisee provides much of the financing). The franchise agreement
requires that the franchisee operate in a specific manner (although as the text points out, maintaining
quality control is not always easy).

By contrast, a high tech manufacturing firm is looking for a limited number of locations where the
emphasis can be placed on quality production. While the manufacturer is highly skilled in the produc-
tion end of the business, it is often not as familiar with the host country‘s competitive conditions, cul-
ture, political system, etc., and thus needs a professional and knowledgeable local partner.

In the case of franchising, the cost associated with one or two franchises failing is not particularly
high. They can be readily replaced. However, the risk associated with establishing a high tech manu-
facturing operation is much greater, and thus the manufacturer is usually looking for both hands-on
control and a long-term relationship, and a partnership or joint venture better provides for this need.

4. What are the pros and cons of using expatriates, host-country nationals, and third-country na-
tions to run overseas operations? If you were expanding your business, what approach would
you use?

There are advantages and disadvantages of each option. Expatriates generally have the advantage of
being familiar with the parent company and how it functions. They have well-established contacts
with top management and are familiar with their approach to business. They are, in effect, an exten-
sion of top management. On the negative side, using expatriates is an expensive approach. They tend
to be paid higher salaries and often have families, which also need to be moved and housed overseas.

Using host-country nationals has an advantage in terms of cost. They are often less expensive, and
they don‘t normally have to be moved. However, their experience with the parent company and its
culture is less extensive, and thus moving a project forward aggressively may require more communi-
cation and involve more hurdles and challenges.

Third-country nationals suffer from the weaknesses of both the expatriates and host country nationals
in that they (a) have to move from one country to another and (b) may not be as familiar with the
management style and culture of the parent company. They do, however, have the advantage of not
being from the host country, and thus may be able to soften the political tensions between the parent
company and the host country.

Which would you use? Students probably will conclude that the decision will depend on the circum-
stances (what critical problems the company faces and how rapidly it wants to move ahead) and its
resources (whom it has available with the necessary skills). If the critical task is that of establishing
the operation, it might use an expatriate. However, if the main problem involves dealing with the lo-
cal labor force, contractors, etc., one might use a host-country national. A third-country national

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Education.
Chapter 06 - International Management

might be the best individual if the company wants to smooth its relationships with the local govern-
ment.

5. If you had entered into a joint venture with a foreign company, but knew that women were not
treated fairly in the culture, would you consider sending a female expatriate to handle the
startup? Why or why not?

This is one of those circumstances where one is ―damned if one does and damned if one doesn‘t.‖

Some students may argue that if the female expatriate has the appropriate skills and experience for the
position, then she certainly should be considered, and that it would be disriminatory not to consider
her. Some may think that all personnel in the company, irrespective of their sex, race, religion, etc.,
should have an equal opportunity when it comes to overseas postings.

The reality, however, is that a female expatriate may find it extremely difficult, if not impossible, to
succeed in business in a country where women are not treated fairly or are expected to play a very
subordinate role. Sending a female to such an environment may not only jeopardize the success of
the project but also harm the individual‘s career. Sending a female in this instance could be construed
as setting her up to fail.

6. What are the biggest cultural obstacles that we must overcome if we are to work effectively in
Mexico? Are there different obstacles in France? Japan?

People in different countries have very different shared values and beliefs. As Geert Hofstede indi-
cated, some societies value the quantity of life (accomplishments, money, etc.) far more than the qual-
ity of life (compassion, beauty, etc.). In some countries, the society believes firmly in collective deci-
sion making, whereas in other countries, tremendous emphasis is placed on individualism.

In Mexico there is a relatively high level of both collectivism and power distance in that they tend to
see power in organizations as being distributed unequally. Rather surprisingly, Japan shows some-
what less emphasis on collectivism (although it is known for this characteristic), and society sees
power more evenly spread in organizations. France, by contrast, is in the southeast quadrant and
places a relatively high emphasis on individualism even though it is somewhat between Mexico and
Japan on the power scale.

More pragmatically, students will probably mention the importance of the siesta in Mexico and, pos-
sibly, the prevalence of bribery. In France, they may mention the cultural anti-Americanism, the love
of wine, the August vacation period, and the importance of the tour de France. In Japan, some of
popularly mentioned cultural characteristics are collective decision-making, the relatively low posi-
tion of women in both society and business, the emphasis on continuing meetings at local geisha
houses, etc. While some of these perceptions may be stereotypical (and not universally valid), they
should be considered when dealing with the local culture.

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Chapter 06 - International Management

EXPERIENTIAL EXERCISES

6.1 Global Integration - Local Responsiveness Worksheet

Objective
To understand how companies compete in the global marketplace.

Instructions
An effective way to learn how companies respond to the competing pressures to be globally integrated
and locally responsive is to study them in action. Referring back to Exhibit 6.6, search online for exam-
ples of companies that are currently using a global, transnational, international, or multinational organiza-
tional model. Please provide answers to the following questions:

Part I: Global Model

Name of company using a global organizational model: _________________________________


URL of website/article describing the company‘s global strategy:______________________

Explain why the company uses a global strategy to complete:


_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Part II: Transnational Model

Name of company using a transnational organizational model: _________________________


URL of website/article describing the company‘s transnational strategy:______________

Explain why the company uses a transnational strategy to complete:


_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Part III: International Model

Name of company using an international organizational model: ________________________


URL of website/article describing the company‘s international strategy:______________

Explain why the company uses an international strategy to complete:


_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Part IV: Multinational Model

Name of company using a multinational organizational model: _________________________


URL of website/article describing the company‘s multinational strategy:______________

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Chapter 06 - International Management

Explain why the company uses a multinational strategy to complete:


_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Source: Adapted from R.R. McGrath Jr., Exercises in Management Fundamentals, 1st, p. 177. Copyright
1985.

6.2 Cross-Cultural Anthropologist

Assume you are a cross-cultural anthropologist. In this role, please visit multiple public places that are
frequented by one or more ethnic or cultural groups. Observe four to five behaviors that strike you as
unique or different compared to what you consider to be ―normal.‖ After you make your observations,
walk to a quiet location and record what you observed in a notebook or mobile device. Think about why
these behaviors caught your attention in the first place and then analyze them from the perspective of
Hofstede‘s cultural dimensions (individualism, power distance, uncertainty avoidance and masculinity).

Learning Objectives:
1. To help students interpret in a more culturally neutral manner non-verbal communication.
2. To encourage students to understand their own reactions to different cultural behaviors.
3. To reinforce the importance of observation skills in cross-cultural encounters.

Steps:
1. Visit multiple public places where you can observe the behaviors of one or more ethnic or cultur-
al groups. Example include major airports, ethnic associations, foreign consulates, religious enti-
ties, cultural centers, museums, and cultural or affinity groups at universities.

2. Bring a notebook or mobile device and:


a. On the left side of the page, make a column entitled: ―Observation/description‖
i. In this section, describe what you saw. Any behavior that strikes you as different,
frustrating, funny, confusing, is appropriate. Stick to the facts when describing
these behaviors. Write down 5-10 observed behaviors.
b. On the right side of the page, make a column entitled: ―How This Observation Relates to
Hofstede’s Dimensions‖
i. In this section, interpret the behaviors by using Hofstede‘s dimensions (individu-
alism/collectivism, uncertainty avoidance, power distance and masculinity).
How can these dimensions help explain what you observed? Explain.

3. Type and hand-in your anthropologist‘s analysis. This should include:


a. Your name, date, and the name of each public place you visited.
b. Include 5-10 observed behaviors (left side of notebook) that you made while visiting the
place(s) and how these observations relate to Hofstede‘s cultural dimensions (right side
of notebook).

Source: Adapted from L.R. Kohls and J.M., Knight, Cross-cultural journal in Developing Intercultural Awareness:
A Cross-cultural Training Handbook (Yarmouth, Maine: Intercultural Press, 1994), p. 67.

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Chapter 06 - International Management

CONCLUDING CASE

A Global Launch for Net-Work Docs

Case Summary:

Net-Work Docs is a start-up company founded to help business clients create and manage their doc-
uments electronically. Its founders, Nina Jones and Matt Smith, are planning to launch Net-Work
Docs as a global company, serving clients in any country. They assume businesses around the world
need to document policies and procedures, and the software and support will be easy to distribute
online.

However, potential investors have questioned whether a company can operate globally before it has
built a local reputation for good service. The founders believe that by setting up an English-language
website, they will start by serving English-speaking clients whose culture will not be much different
from theirs.

Chapter Topics Related to the Case:

• Discuss the impact of globalization on a company such as Net-Work Docs


• Describe the various methods available for a company like Net-Work Docs to use to enter the
foreign market arena
• Discuss the concepts of exporting and
• Identify and discuss the impact of cultural differences on international operations

Case Discussion Questions:

QUESTIONS

1. What are some possible advantages of Net-Work Docs serving a global market?

Suggested Response:

The obvious advantage is a larger pool of potential customers. In addition, Net-Work Docs may find
that some countries‘ markets are only beginning to switch to electronic documents, and in such mar-
kets, the company can establish a good reputation and brand recognition before much competition ar-
rives.

2. How are the founders balancing pressures for global integration and local responsiveness? Is their
global strategy likely to succeed? Why or why not?

Suggested Response:

The founders seem to hope they can succeed by offering businesses worldwide a service designed for
their local market, rather than researching each country‘s business needs. To some extent, needs for
documentation do exist worldwide. However, the founders are likely to find many differences in the
specific requirements and business practices of business customers in other countries. The plan to
minimize differences by creating an English-only website is a risky one. First, English is spoken as a
first language or business language in a wide variety of countries. Second, it is possible to attract non-

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Chapter 06 - International Management

English-speaking customers who have used translation software to render the website in their own
languages.

3. What skills of a global manager could help Net-Work Docs succeed?

Suggested Response:

Relevant skills of a global manager include integrity, insightfulness, commitment, risk taking, and
sensitivity to cultural differences (useful in selling and providing after-sales services). Managers us-
ing feedback, being culturally adventurous and flexible, being open to criticism, and seeking opportu-
nities to learn also would help Net-Work Docs succeed.

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Chapter 06 - International Management

EXAMPLES

Example 6.1 – Global Environment: In June, 2007, the ―Fast Company‖ magazine did a cover
story on ―China‘s New Creative Class: How a Dynamic, Business-Savvy Generation is Poised to
Redefine Product Design, Architecture, Fashion, and Entertainment.‖ Profiled inside were nine
young Chinese people, all of whom are at the heart of China‘s creative revolution - the founder of
a gallery showcasing China‘s new street culture, a member of the Creative Committee for the
2008 Olympics, the publisher of an art magazine, a furniture and ceramics maker, an actress, ar-
chitects, a DJ, a graphic designer, and a fashion designer. If you read a little more closely, you
begin to realize how truly global all these people are - the fashion designer studied in London, the
architects have offices in Beijing, but are working on a huge project in Toronto, the DJ built his
skills in Japan, the furniture designer is selling her works in Milan, the Olympic Committee
member worked in New York before coming home to Beijing, and the actress, Ziyi Zhang, is an
international star. China is no longer just a manufacturer for Wal-Mart - it is looking to use inno-
vation and creativity to awe the world.5

Example 6.2 – Global economy consequences: Naresh Goyal, the founder and chairman of Jet
Airways, is ready for his airline to take off. Jet Airways is the largest private airline in India. To-
day, Jet Airways is expanding its service worldwide - from India to London, Brussels, New York,
Toronto, Shanghai, and even Johannesburg. Part of the expansion is based on the fact that Indian
expertise is in demand all over the world, and Indians who leave their home country for work in
other countries still want to come back to visit family and friends. Additionally, part of the ex-
pansion is because Jet Airways is having a difficult time competing in its own domestic market,
where several new low-cost carriers have pushed fares unacceptably low.6

Example 6.3 - Global strategy systems: To compete in the global marketplace, GE uses a mul-
tinational system that consists of independent company subsidiaries in other countries and pro-
vides great discretion to those subsidiaries to respond to local conditions. For example, in India,
GE has a stake in GE Capital International Services (GECIS.) GECIS is now an independent
company, and GE owns less than half of it, which allows for even greater local flexibility.7 Other
systems include international (extending current strength into other countries), global (centralized
decision making for a company‘s foreign arms), and transnational organization models (basing
functions of a company in the country that is most favorable).

Example 6.4 – Difference between franchising and licensing: Students often want to know
more about the differences between franchising a business and licensing a business (or a business
opportunity.) According to an article at Entrepreneur.com8, there are four key areas of difference
between the two:

Common Name
 Franchise: A franchisee's business is identified by the franchisor's trademark.

5
Chen, Aric. “The Next Cultural Revolution.” Fast Company, June, 2007, Vol. 116, pp. 65-75.
6
The Economist. “Taking Flight.” Sept. 8, 2007, pg. 70.
7
O‟Connell, P. “GE‟s Indian adventure.” Business Week, August 22, 2005. Online at
http://www.businessweek.com/magazine/content/05_34/b3948459.htm
8
Seid, Michael H. and Ainsley, Kay Marie. “Franchisees and licensees - what‟s the difference?” Entrepreneur.com,
http://www.entrepreneur.com/article/0,4621,276740,00.html.

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Chapter 06 - International Management

 Business Opportunity: The licensee may not be identified by the company's


trademark.
Support
 Franchise: A franchisee receives training, marketing and other support on a
continual basis.
 Business Opportunity: The licensee may receive very little, if any, in the way
of support from the company—except for sources of products.
Standards
 Franchise: A franchisee typically offers products and services on an exclu-
sive or semi-exclusive basis and has minimal standards of performance set by
the franchisor.
 Business Opportunity: The licensee can usually handle a variety of different
lines of products and services—some of which may compete with each other.
Fees
 Franchise: Franchisees typically pay a continuing royalty based on the gross
sales of their business.
 Business Opportunity: The licensee's payments aren't typically based on sales
but on the purchase of products they make from the licensor.

Example 6.5 – Joint ventures: CNH Case New Holland is a manufacturer and supplier of agri-
cultural equipment. Owned by Fiat, the Italian automobile manufacturer, CNH is a conglomerate
of some of the biggest names in the agricultural equipment business - International Harvester,
New Holland Machine Company, and Case in the American market, Steyer in the Austrian mar-
ket, and Braud in the French market. Today, CNH continues to create joint ventures with busi-
nesses all across the globe - with the Shanghai Tractor and Internal Combustion Engine Corpora-
tion (STEC), with the BNP Paribas Lease Group in France, with the Kobelco Construction Ma-
chinery Co., Ltd. in Italy - the list goes on and on. CNH has distributorships in 160 countries - it
is truly a global business.9

Example 6.6 – Cultural differences: High costs and difficulties associated with expatriation, to-
gether with the impact of cultural differences are leading some companies to develop local man-
agers in the countries in which they operate. To accomplish this, Enrique Tarelli, Outplace-
ment/Career Management Director for Sociologia de Empresa in Argentina, uses an immersion
process aimed at acquiring a wide range of competencies, such as, knowledge, developing rela-
tionships with people all over the world, the ability to operate at the highest standards, and inter-
acting with culturally different environments.10

Example 6.7 – Multidimensional perspective: When Texas Pacific Group, a private-equity firm
was looking for a new manager to help oversee venture deals, they went global - to Vivek Paul,
the vice chairman of Wipro Ltd., an Indian information-technology and outsourcing company.
Mr. Paul demonstrated multidimensional perspective by leading companies from different busi-
nesses and cultural adaptability by working with countries that are based in different countries.11

Example 6.8 – Working with foreign nationals: Straddlers. Navigators. Learners. These are
the terms the employees at Grupo Gallegos, an advertising agency in Long Beach, CA, use to de-
scribe different sorts of Hispanics in the U.S. Who are they? The Learners are foreign born, and

9
http://www.cnh.com/about/about.asp.
10
Tarelli, Enrique. “How to transfer responsibilities from expatriates to local nationals.” SHRM Information Center. January 2003.
11
Sender, H. “Texas Pacific brings in Paul of Wipro, Ltd.” Wall Street Journal, June 30, 2005.

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Education.
Chapter 06 - International Management

they speak Spanish primarily. On average, they have 3 children, and 65% of them rent their
homes. The Straddlers immigrated to the U.S. at a young age. Most of them are in blue collar or
semi-professional jobs, and while they are bilingual, they still speak mostly Spanish. Navigators
speak primarily English, although they know some Spanish. 78% of them have at least some col-
lege, 60% of them own their own homes, and their average household income is $76,000 a year.
What is interesting is how different the cultures of all of these groups can be, even though most
people would simply lump them together under the title of ―Hispanic.‖. With Learners, most ad-
vertising agencies use what Gallegos refers to as ―abuelita advertising‖ - commercials showing a
mother and grandmother in the kitchen, both talking about how great a particular product is. But
Gallegos recently reached out to Straddlers in a unique way. In an ad for Tecates Beer, a young
man named Basilio puts up with people mispronouncing his name all day, but when he walks into
a bar full of Latinos, they all say his name correctly as they raise their Tecates beers.12

12
Gorney, Cynthia. “How Do You Say „Got Milk” en Español?” The New York Times, Sept. 23, 2007,

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Chapter 06 - International Management

SUPPLEMENTAL FEATURES
Please see the following additional materials in Connect.

CHAPTER VIDEO

 Ch 6 Walmart

Mass Mart is a well-known company in Africa that Walmart has decided to acquire. The compa-
ny has a strong management team and represents an emerging market. Walmart‘s strategy in Af-
rica is to pursue growth city by city rather than country by country. This strategy is beneficial for
allowing Walmart to understand the market. Walmart believes the markets they are currently ex-
ploring, including Africa, represent great opportunities for growth.

What are some advantages of entering a foreign market via an acquisition?

Walmart can rely on Mass Mart‘s existing management team and customer base.

Do you see any drawbacks to Walmart’s recent decision to acquire the Mass Mart chain in South
Africa?

Some critics think Walmart‘s growth in Africa will damage Africa‘s home-grown businesses.
Walmart believes that by creating jobs they empower residents to, in turn, purchase products and
continue to grow the economy.

MANAGER’S HOT SEAT (MHS)

Cultural Differences: Let’s Break a Deal

I. Introduction

The internationalization of companies has created the need to become more aware of cultural dif-
ferences in order to successfully conduct business. This scenario depicts a situation where indi-
viduals in a business relationship have incongruent cultural norms and values. Using this vignette
as a springboard to discussing how to manage cultural differences in the global economy would
be valuable for students of Management, Organizational Behavior, or Human Resources.

II. Learning Objectives

1. To assess students‘ understanding of different cultural values and their impact on business rela-
tionships.
2. To analyze and evaluate a cross-cultural business meeting.
3. To explore aspects of self-awareness using Johari‘s Window as a model.

III. Scenario Description:

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Chapter 06 - International Management

Overview: Michael Sokolow has just been tasked with handling international clients. He needs
to close a deal with Norio Tokunaka from PopWear that has already been thoroughly worked out
with Sokolow‘s predecessor, Roger Small. Michael is unaware of the need to establish a relation-
ship with Norio before he discusses business. Norio becomes disenchanted and refuses to sign the
deal.

Profile:
 Michael Sokolow is the Director of Foreign Sales at Mustang Jeans. After working at
Mustang as a real estate attorney for six years, acquiring property for retail and manufac-
turing, Sokolow moved into sales at an executive level.
 Norio Tukunaka has worked at PopWear, a large retail clothing chain for his entire ca-
reer. In his current position as Vice President of Merchandising, Norio is responsible for
expanding the contemporary clothing line, which includes adding new suppliers and
brands for PopWear‘s 36 stores throughout Japan.

References: The references included in the DVD are:


 National Cultural Values (PPT 8-3)
 Hofstede‘s Model: Definitions (PPT 8-4)
 The Johari Window (PPT 8-10)
 The Johari Window: Definitions (PPT 8-11)

Back History: Michael Sokolow has been a sales manager at Mustang Jeans for two years. He
was ―recruited‖ or ―wooed away‖ from a competing company. He was given ―an offer you can‘t
refuse‖, an indication of his stellar reputation. Sokolow is very much a no-nonsense straight-
ahead kind of guy. He is friendly, but not big on small talk. He fits the stereotypical American
businessman in many ways – informal, a little loud, all about money, very direct and forthright.
Michael‘s career has focused in national sales – this is his first foray into international business.
Mustang Jeans is reorganizing to increase efficiency – all managers are now assuming larger ter-
ritories.

Tokunaka has been with PopWear for his entire career. He has been working with American
companies for many years, importing a variety of products. Most of these American companies
are alliances that were formed by Tokunaka‘s superiors, many years before. All of Tokunaka‘s
accounts are pre-existing accounts as opposed to newly created accounts. This year, PopWear is
expanding their contemporary clothing line, which includes adding new suppliers and new
brands.

Tokunaka has been working on a deal with Michael‘s associate for a very long time. Michael has
just taken over this region. The prior associate‘s report indicates that the Tokunaka account is a
done deal, with only logistics and details remaining. Sokolow and Tokunaka are having their first
meeting.

Scene Set-up: Norio arrives at Michael‘s office after arriving from Japan.

Scene Location: Michael‘s office at Mustang Jeans corporate headquarters

The Meeting - Summary: Michael spends less than a minute building rapport with Norio. He
then begins to talk about signing the deal that had been previously worked out with Small. Norio
wants to continue to talk about good Japanese food and seems insulted that Michael doesn‘t like
eel. Michael continues to press for the deal but Norio is very evasive. Michael then gets inter-

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Education.
Chapter 06 - International Management

rupted by his assistant notifying him of his next appointment. He apologizes to Norio about the
short amount of time that he has to spend with him. Norio says he‘ll just leave and come back
later in the week.

3 Days Later – Norio comes back and Michael apologizes for the prior meeting. When asked to
sign the deal again, Norio suggests that he‘s been talking to other companies in the past few days
in New York. He doesn‘t commit to the deal and says he‘d enjoy hosting Michael in Japan and
hopes they can maintain their relationship. He leaves before signing the deal to catch a plane.

Afterthoughts – Summary: Michael notes his frustration with the interaction. He acknowledges
that he should have waited for Norio to start talking about the deal first. He understands that the
Japanese businesspeople place a high priority on the relationship but also points out that he didn‘t
have a long time to devote to small talk when it was unclear whether Norio was going to sign the
deal or not.

Dossier: The specific artifacts included in the DVD are:


1. Emails between Small and Sokolow after the 1st meeting
2. Small‘s PopWear Account Notes
3. Voice message to Norio Tokunaka from Slo-Groove (competitor of Mustang
Jeans)

IV. Discussion Questions:

The References and related Discussion Questions may be found in PowerPoint slides 8-1 to 8-11.

Learning Objective #1: To assess students’ understanding of different cultural values and their impact on
business relationships.

1. How did the differences between Japan‘s and the United States‘ national cultural values affect the
interaction between Norio and Michael? Use the information on PPT 8-3 and 8-4 to support your
answer.

Long-term orientation differences seemed to have a major impact. While Norio is likely to value
a long-term approach to developing and conducting business, Michael‘s relatively shorter-term
approach was insulting to Norio. However, Norio demonstrates less achievement orientation than
Michael in this particular scenario which is somewhat contradictory to Hofstede‘s research. You
may ask students their opinions and alternative explanations for this.

2. Hofstede‘s research on national cultural values has practical implications for business people.
Assume you are Michael and you have to conduct a similar meeting with another client from
Russia. How will you modify your behavior to effectively conduct business with this individual?
Use the information on PPT 8-3 and 8-4 to support your answer.

Student‘s answers will vary. Students should incorporate the fact that Russians tend to have a
short-term orientation, much like Americans, in their answer.

1. What is Michael‘s strategy?


A. Find problem
B. Pressure Norio
C. Show patience

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Education.
Chapter 06 - International Management

Michael says ―let‘s get the ball rolling‘ indicating that he‘s trying to pressure Norio into signing
the agreement because it‘s important to the company and he has other business to attend to.

2. How was this [initial] meeting?


A. Successful
B. A failure
C. A good start

Seems to be a failure, they neither established a firm relationship or accomplished Michael‘s goal of
signing the deal.

Learning Objective #2: To analyze and evaluate a cross-cultural business meeting.

1. What information should Michael have possessed before his meeting with Norio?

Michael should have been better prepared by Roger as to what to expect from Norio. He needed
to know the history of the interactions and the best way to proceed and to explain the transition to
Michael.

2. Why is Norio acting somewhat evasive with his responses?

Even though the deal was almost done, Norio was expecting to now build a relationship with Mi-
chael. He seems to be offended that his contact has been reassigned and is unsure he wants to
move forward.

3. What is Norio hinting [when he mentions Roger likes sushi]?


A. Misses Roger
B. He‘s hungry
C. Dislikes deal

He misses Roger and that fact he knows Roger likes sushi indicates that they had a gotten
to know each other. He expects to develop a relationship with his business associates and
Michael wants to get right to business.

3. What could Michael have done better in the second meeting to continue the business relationship?

Learn more about the cultural differences at play. He also could have tried to contact Norio earli-
er and ask him to a social event (like the competition did) to begin to build the relationship. He
makes the same mistake in the second meeting by again insisting on signing the deal. His apolo-
gy for the first meeting is appropriate and seems to be well-received but is not enough to woo
back Norio.

4. Norio is indicating [when he says he‘s been meeting with other people]:
A. There‘s competition
B. He enjoyed trip
C. Deal is off

He‘s suggesting that there is competition but Michael doesn‘t seems to grasp that and
makes a flippant comment that he expected Norio would have other meetings while in
New York. Michael doesn‘t take this opportunity to discuss his stay in New York, but
instead tries even harder to have Norio sign the deal.

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Chapter 06 - International Management

5. Michael‘s concern [that they are having a communication problem] is:


A. Accurate
B. Off target
C. Insulting

It was probably insulting because it insinuated that Norio‘s language ability may have been con-
tributing to the problem. They were misunderstanding each other because there was a lack of
sensitivity to each other‘s cultural norms.

4. Both individuals in this scenario were acting in alignment with their cultural norms and values.
Who should have the primary responsibility for changing their interaction style? When is it ―too
much‖, as Michael suggests in the Afterthoughts, and necessary to refuse to change one‘s busi-
ness style?

This question should generate an interesting discussion among students. Some factors to consider
may be who has more to gain (leverage) in the situation, whose values and norms are relatively
stronger, etc.

Learning Objective #3: To explore aspects of self-awareness using Johari’s Window as a model.

1. Apply the concepts of the Johari Window to this scenario (see PPT 8-10 and 8-11). How do these
concepts help explain what happened in this scenario?

As relationships progress, more information about oneself becomes known to others and to one-
self. Disclosure and feedback flow more freely which enhances a relationship. In this scenario,
Michael was not disclosing at all and did not seem to interpret subtle hints of feedback. This ap-
proach was not consistent with what Norio had come to expect from his interactions with Roger.

6. Michael should [when Norio says ―I‘m sure we‘ll have a good relationship in the fu-
ture‖]:

A. Be angry
B. Be gracious
C. Keep trying

At this point, being angry or continuing to try would not result in positive outcomes. He needs to
be gracious and then reevaluate his approach with Norio.

SELF-ASSESSMENT

There is no Self-Assessment for this chapter.

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172. General Rules.
1. If the front is very extended, or if it runs through close or broken
country, it may be broken up into sections of defence.
2. When acting independently the officer commanding will himself
give the signal for the decisive counter-attack. This attack will, as a
rule, be commanded by the officer specially detailed to command the
general reserve.

173. Duties of the Commanding Officer.


1. He will see that the reserve ammunition is conveniently placed.
2. He will ensure that communication is maintained with the troops
on either flank.
3. He will report all movements of the enemy.
4. If he commands a section of the defence, he will watch for
opportunities for local counter-attack.
5. He will keep up communication by means of his signallers with
his brigadier.
6. He will fix on some central position, where he can receive
reports, and communicate rapidly with all portions of his force.
7. He will arrange for first treatment of casualties on the spot, and
for their transfer to the dressing station of the bearer company.
8. He will make himself acquainted with the best line of retirement
to the rallying position.

THE BRIGADE AND DIVISION IN DEFENCE.


174. General Rules.
1. The duties of a brigade or divisional commander are practically
the same as those of the officer commanding a battalion.
It may be repeated, however: (i) that the rule of detailing a
complete unit, with an adequate staff, for the delivery of the decisive
counter-attack, should always be observed; (ii) that the position of
the officer commanding should be carefully selected.
2. On an extended field of battle, and particularly in broken
country, it is not always easy to find a place where the firing-line can
be supervised, and the opportunities for counter-attack observed
before it is too late to take advantage of them; and in some cases,
the officer commanding will have to rely entirely on the reports of his
staff officers and the subordinate commanders. It is essential, then,
that the system of collection and transmission of information should
be complete and thoroughly understood; in peace exercises as much
attention should be paid to this most important point as to training
officers and men to make clear, concise and useful reports.

SUPPLY AND TRANSPORT OF S.A. (·303-INCH) AMMUNITION IN


THE FIELD.

175. Supply and transport of ammunition in the field.


1. Service ammunition and regimental reserve.—A battalion takes
with it into the field, in regimental charge,
100 rounds per rifle, carried by the soldier;
Service
4,000 rounds packed on the carriage of the
ammunition.
machine gun[8];

2 boxes on each of eight pack animals (i.e.,


one pack animal per company); and 16 boxes in
each of five S.A.A. carts, also 6,600 rounds per
Regimental
machine gun in one S.A.A. cart. (1,000 rounds
reserve.
for Short L.E. rifle and for machine gun, and
1,100 rounds for L.M. or L.E. rifle are carried in
each box).
On the march one pack animal will be in rear of each company;
four S.A.A. carts (including that carrying the machine gun
ammunition), will be in rear of the battalion; the remaining two carts
will form a brigade reserve.
Officers commanding battalions will arrange for the replenishment
of this ammunition at every favourable opportunity. They are
responsible that the ammunition carried by the men is complete, and
that when ammunition is expended, it is replaced with the least
possible delay.
2. Brigade Reserve.—A brigade reserve of small arms
ammunition will be formed by two S.A.A. carts being detached from
each battalion, these will follow in rear of the brigade. Each brigadier
will detail a mounted officer to take charge of the brigade reserve.
3. Divisional Reserve.—A divisional reserve of 100 rounds per
rifle and 8,800 rounds per machine gun is carried in the small arms
ammunition section of the ammunition columns of brigades of
divisional artillery, each of which will supply one of the infantry
brigades of the division to which they belong. The same number of
rounds for corps troops is carried in the special section attached to
the ammunition column of the horse artillery brigade. The divisional
reserves are in artillery charge.
4. Ammunition Park.—Fifty rounds per rifle and 9,000 rounds per
machine gun.
5. General arrangements in the action.—In action the ammunition
pack animals will be advanced as close as possible to their
respective companies, every advantage of cover being taken in
doing so; two S.A.A. carts will follow as close in rear of the supports
to the firing-line as the hostile fire will permit, one being usually in
rear of each wing; the remaining cart will follow in rear of the
battalion reserve. The cart carrying the machine gun ammunition will
move as directed by the officer commanding the machine guns.
During an action the regimental reserve ammunition carried in the
carts will be in charge of the serjeant-major, who should get into
communication with the supports and also the brigade reserve by
means of signallers.
The brigade reserve of ammunition will follow in rear of the centre
of the brigade, or as the General Officer Commanding may direct. It
should be accompanied by signallers, who should maintain
communication with the various regimental reserves.
When a S.A.A. cart with the supports is emptied, it will be
replaced by a full cart from the regimental reserve, the empty cart
being sent back to the brigade reserve, when it will be replaced by a
full one. As soon as there are four empty S.A.A. carts with the
brigade reserve the officer in charge will send a message as follows
to the officer in charge of the divisional reserve: “Send up four S.A.A.
carts to the —th brigade.” It is, however, unnecessary to wait till four
carts are empty, if ammunition is urgently required.
On the arrival of the carts from the divisional reserve, the horses
will be unhooked and changed, and empty carts sent back to the
divisional reserve.
In the event of a brigade in action being ordered to advance
through woods or over broken ground where communication cannot
be maintained, the S.A.A. carts of the brigade reserve may be
distributed between battalions, and the divisional reserve would
conform to the general movement.
In the case of a battalion being detached to any distance a similar
course would be pursued, a brigade reserve being reformed as soon
as possible.
6. Instructions for the officer in charge of the brigade reserve of
ammunition.
(i) He will as soon as possible open up communication with the
divisional reserve and also with the various regimental reserves.
(ii) A mounted orderly will be sent to him from the divisional reserve to
be used only for the purpose of communicating with the divisional
reserve. He will communicate with the regimental reserves by
means of signallers.
(iii) The earliest opportunity is to be taken (when four S.A.A. carts are
empty, or sooner if necessary) to fill up empty carts from the
divisional reserve. The brigade reserve should be regarded as
available for the brigade generally, and also in case of necessity it
will supply ammunition to any troops engaged.
(iv) Men and horses belonging to the brigade reserve are not to be
sent to the divisional reserve.
Men and horses belonging to the divisional reserve are not to
be sent further to the front than the brigade reserve, except in a
case of emergency.
(v) Empty S.A.A. carts are to remain with the brigade reserve until
they are replaced by full ones.
(vi) Receipts prepared by the officer in charge of the divisional reserve
will be signed by the officer in charge of the brigade reserve for
the number of full carts received by him.
(vii) After an action or during a pause in the engagement all
deficiencies of ammunition must be made good from the
divisional reserve.
7. Battalion arrangements for issuing extra ammunition.—Each
company commander will detail one non-commissioned officer and
two privates to act as ammunition carriers (if the company is strong,
three privates should be detailed). Only men of strength and activity
should be selected for this duty, the importance of which cannot be
overrated.
Whenever a serious engagement is imminent, officer commanding
battalions will issue to the men 50 rounds from the S.A.A. carts, so
that, if possible, every man shall carry 150 rounds on his person.
The extra ammunition should generally be issued before leaving the
halting place of the previous night.
During an action every opportunity will be taken for supplying
ammunition to the firing line by sending some up by carriers or with
reinforcements. The carriers bring the ammunition from the pack
animals (or from the S.A.A. carts) in canvas ammunition bags, and
distribute it to the men in the ranks. The bags, when not in use, are
carried on the pack animals. The loads are not to exceed 600 rounds
to each carrier.
When more ammunition is required by the firing-line it will be
taken forward by any men at hand, acting as carriers.
The carriers will move direct to the companies for which they are
destined. If there is a difficulty in their getting back they may be
retained in their ranks till the action is over.
It is the duty of section and squad commanders to make sure that
all ammunition from the killed and wounded is collected and
distributed.
The system of carrying ammunition by hand, here provided for, is
not to prevent every endeavour being made to push the S.A.A. carts
as far forward as practicable. They ought, in ordinary circumstances,
to get within 1,000 yards of the firing-line, and in broken and
undulating ground considerably nearer. With pack animals, it should
be practicable to get within 500 yards of the firing-line.
The immense importance of having a supply of ammunition out of
sight of the enemy, and yet within easy reach of the firing-line, will
justify great risks being incurred in getting it to such a position.

176. Entrenching Tools.


1. The entrenching tools of a battalion are carried on two tool
carts and on eight pack animals (i.e., one per company).
A brigade reserve of entrenching tools is carried on one G.S.
wagon.
2. On the march, the pack animals carrying the tools will be with
those carrying the ammunition, i.e., one in rear of each company.
3. In action, the pack animal carrying the tools will keep as close
to its company as the enemy’s fire will admit, but the driver must use
his discretion in doing so; for instance, on bare open country it will
seldom be advisable to advance the animals close to the firing line,
whereas when advanced positions have been secured, it will usually
be necessary to take tools at once up to the firing line, in order that
the position may be strengthened against counter-attacks.
The tool carts will usually accompany the ammunition cart with the
reserve, and will be under the serjeant-major, the tools, if necessary,
being carried forward when required by men from the reserve.
The brigade reserve of tools will remain with the brigade
ammunition reserve, and will be under the orders of the officer in
charge of the latter.
PART V.
ANNUAL COURSE OF TRAINING.
177. Description of Course.
1. The annual training of the soldier[9] will be conducted on
systematic and progressive principles. Militia and volunteer
battalions will, as far as circumstances permit, observe the spirit of
these instructions.
2. At home it will commence on the 1st March, and terminate on
the 31st October. At tropical or semi-tropical stations the course may
be modified to suit climatic and other conditions; but these
instructions will be observed as closely as possible.
3. The course will commence with company training, continue with
battalion training, which will be followed by brigade and division
training, and terminate with combined manœuvres of all arms.
4. Exercises in the field will as a rule be carried out in service
conditions as regards equipment.
5. Musketry classification practices will be carried out as may be
ordered by the general officer commanding; field practices will be
carried out periodically throughout the course.

178. Detail of the Course.


1. Company Training.—The first period of the annual training will
be exclusively devoted to company training. During this period each
company will be struck off all duties for 36 consecutive working days.
After a brief revision of elementary work the instruction of trained
soldiers will for the most part consist of exercises in the field to
practise subordinate leaders in the art of command and the handling
of men in all service conditions.
Company training will invariably conclude with a practical
inspection by the commanding officer.
2. Battalion Training.—As soon as the company training is
completed, battalion training will commence, for which purpose each
battalion, or portion of a battalion, will be struck off all duties, and be
at the disposal of its commander for at least 18, and if possible 24,
consecutive working days. The training will mainly consist of
exercises in the field, including firing, marching, &c.
(i) In the earlier portion of this period battalions may, if their
commanders consider it expedient, be sub-divided, and exercised
under arrangements similar to those laid down for the company.
(ii) At stations where single battalions are quartered, or where
detachments are formed, the spirit of the above instructions will
be observed.
(iii) The General Officer Commanding will hold his inspection towards
the conclusion of the training.
3. Brigade and Division Training and Manœuvres.—Brigade and
division training and manœuvres will take place during the remaining
months of the annual course, the time allotted to each being decided
by the General Officer Commanding.
4. In carrying out the course it is open to General Officers
Commanding, while conforming to the spirit of the above detail, to
modify it to suit the circumstances of any particular command. Thus
in some cases it may be more convenient to strike off for training
each company or battalion for three days during each week; or, at
stations where brigade and division training and combined
manœuvres cannot take place, more time may be allotted to
company and battalion training respectively. It will, however, be
exceptional for a battalion not to be trained annually with its own and
other arms of the service.
5. During the furlough season every facility is to be given to well
conducted men to visit their friends; but this period will be occupied
by such officers and men as are present with the battalion in:—
The training of officers in professional duties (see King’s Regulations,
para. 676, and “Combined Training,” S. 180.)
The special training of subaltern officers of companies as instructors
and leaders.
The special training of non-commissioned officers.
Instruction of scouts.
Company officers, non-commissioned officers and men should have at
least two hours physical training every week during the furlough
season.
Obstacle training.
Drill.
Visual training (see S. 18, Musketry Exercises).
Training and inspection of signallers.
Training of machine gun detachments, and range takers.
Training in semaphore signalling. All officers and non-commissioned
officers and 20 per cent. of the men to be trained.

179. Annual Course of Training of Auxiliary Forces.


1. The annual training of units will be carried out on the same
systematic and progressive principles as have been laid down for the
Regular Forces.
2. It is not possible for the Auxiliary Forces in the limited time for
training at their disposal to carry out the provisions of the annual
course as laid down for the Regular Army, but the spirit of the
instructions will be observed.
3. The annual training in camp will be confined to tactical
exercises and fire discipline, &c., except in the case of the Militia, by
whom drill may, in addition, in very exceptional circumstances be
practised.

180. General rules for annual training.


1. All ranks to be instructed.—Every available officer, non-
commissioned officer, and man, with the exception of private soldiers
of more than fifteen years’ service, bandsmen, pioneers, and such
as are exempted from the annual course of musketry, will be
present, and will be relieved of all other duties. Leave or furlough
will, on days of instruction, be granted only in very exceptional
circumstances.
2. During the course the battalion should, if practicable, go into
camp or bivouac in service conditions for four days; this may be
done separately by companies if more convenient.

181. Company training.


1. Method of instruction.—The duty of the officer commanding the
battalion is to supervise the training of the company and give
company leaders the benefit of his experience, but he should not lay
down the method to be employed in the training of companies. The
training must be carried out by the officers of the company without
undue interference on the part of superiors. It is only when the
methods are manifestly wrong, and would work harm, that there
should be interference.
Particular attention must be paid to the individual instruction of the
soldier, and to the improvement of his capacity to think and act for
himself. This can best be attained by explanation previous to and
during an exercise, and by repetition of the practice when necessary;
it should be remembered, however, that the interest of the men is apt
to flag if they are kept too long at one subject.
The basis of the whole system of training is careful individual
instruction, and gradual progression from the simple to the more
difficult.
During instruction in elementary principles companies should act
alone, or against a marked enemy and the company commander
should concentrate his attention on the individual instruction of his
men; but in many of the advanced exercises an opposing body gives
not only increased interest to the practice, but also makes it more
instructive.
When companies act as opposing forces, each practice should be
based on a definite supposition and object, a scheme should be
drawn up and executed as far as is possible in conditions of actual
warfare, and a mounted officer should be detailed to act as umpire.
The greatest attention must be paid to the development of section
and squad command. The capable leading of smaller units is an
important item of success in the attack.
During inclement weather, instruction will be given in the drill shed
or barrack room by means of lectures, explanations, &c.
Each day’s work should be carefully prepared by company
commanders, and short lectures of about 20 minutes on the
exercises to be carried out, given to all ranks.
At the practice of outpost duties a broad distinction should be
drawn between individual instruction and tactical training. During the
former every private should be posted as sentry, the company
should be exercised in the rudiments of outpost work, and the
prescribed duties should be carried out without reference to the
tactical situation, or the employment of the minimum number of men
in the sentry line; the main body of the piquet may, in order to save
time and give more practice in sentry and patrol duty, be indicated by
a flag. Daring tactical training outposts should be placed in
accordance with a scheme, strictly in service conditions.
2. Examination by the commanding officer.—At the end of the
course the officer commanding the battalion will devote one day to
an examination of the company. The scheme for this day should be
drawn up either under the direction of the general officer
commanding, or by the commanding officer.
3. General officers commanding.—They will personally supervise
the companies under training as much as possible, and when
circumstances permit be present at the examination by the
commanding officer.
4. Musketry course to be combined.—The field practices which
can be combined with training, should be carried out as part of a
tactical exercise.
In field practices in which the whole company fires at one time,
the exercise may, in the first instance, be practised with blank
ammunition, and afterwards be carried out with ball cartridge. During
the exercise the manner in which the men take advantage of cover,
and how they adapt the firing position to the irregularities of the
ground, will be carefully watched by the company instructor.
5. Equipment for instruction.—The tents and tools authorised
Equipment Regulations, Part I, S. X, “Camp Equipment and
Intrenching Tools,” and the bridging stores laid down in Regulations
for Engineer Services, will, in ordinary circumstances, be sufficient
for the instruction. Should any increased issue be required, a special
application will be made through the general officer commanding.
6. Returns.—To ensure that every man is accounted for, A.F. B
214 will be kept during the annual training and produced for the
inspection of the general officer commanding, if he desires.
5. Night Operations.—On days when night operations are to be
carried out the work during the day should be of a light nature,
although not suspended altogether.
Night outposts should be practised on four occasions at least.
6. Intrenched posts, &c.—Arrangements will, whenever possible,
be made by general officers commanding for a post to be placed in a
state of defence in order that the defences and obstacles mentioned
in para. 8 (vii) may be shown to the men. They should occasionally
place the services of an officer of the Royal Engineers at the
disposal of company commanders to give technical advice on the
entrenchments and field work executed by the company.
7. Blank ammunition.—Blank ammunition will be used in
practising the more advanced exercises.
8. Syllabus of Instruction.—The Syllabus of Instruction is given as
a guide; the captain being held responsible that his company is
thoroughly instructed. To ensure this it may be necessary to repeat
many, and combine some of the practices.
(i) Attack and defence; general principles; control of fire; effect of fire;
fire discipline; infantry formations with regard to fire; protection of
flanks; duties of half company, section, and squad commanders.
Infantry in attack; general rules; distribution; duties of several
bodies; the decisive attack; the assault; rallying and redistribution;
measures to secure a position won; holding attacks; feints; flank
attacks; surprises; issue of orders; formations generally and
formations to meet emergencies; frontage, direction, pace;
utilisation of cover and adapting formations to ground; fire
positions and mutual support of units, by fire, to cover advances;
practice of casualties. Infantry in defence; distribution; occupation
of a position; counter-attacks. Attack and defence of positions,
woods, defiles, bridges, houses, &c. Retirements. Action against
cavalry and artillery. Escort to guns. Supply of ammunition.
(ii) Composition, formation and action of advanced, rear and flank
guards, by day and night, in various circumstances.
(iii) Scouting. Conduct of patrols by day and night in varying country.
Reconnoitring positions, woods, defiles, villages. Importance of
observing and reporting accurately what is seen. Necessity of
transmitting information. Ambuscades.
(iv) Outposts, general principles; importance of vigilance of change
from day to night positions; attack by day and night. Opportunity
must be given for locating sounds and estimating their distance
by night. Night marching to be combined with surprise attacks on
the outpost line.
(v) Convoys; their escort, attack and defence.
(vi) Use of pick and shovel; marking out and execution of tasks;
extension of working parties by day and night. Execution of
shelter trenches and a portion of a field work; selection of site,
profile, construction by day and under cover of darkness.
(vii) Defence of hedges, banks, ditches, posts, houses, &c. Obstacles.
Construction of loopholes. Use of cutting tools. Revetments.
Penetration of bullets.
(viii) Knotting and lashing. The loading of pack animals Method of
packing wheeled transport.
(ix) Camping. Pitching, striking, unpacking and packing tents in the
valise. Telling off camp parties. Bivouacs. Sanitary precautions in
camp and on the line of march; position and construction of
latrines. Field kitchens; cooking in mess tins; kneading and
baking bread and chupatties; cooking of ration biscuits. Orders
concerning water supply and boiling of water. Expedients for
increase of men’s comfort in the field; care of feet.

182. Battalion Training.


1. Method of instruction—
The training of the battalion will be carried out on the principles
that have been laid down for the company.
SPECIAL TRAINING OF NON-COMMISSIONED OFFICERS.

183. Method of Instruction.


The non-commissioned officers of companies, and privates likely
to become non-commissioned officers, will be instructed by the
officers of the company in the following subjects. The value of the
instruction given to non-commissioned officers, and their knowledge
in map reading, &c., will be tested by general and commanding
officers.
1. Subjects—
(i) Map reading.
(ii) Duties as commanders of sections and squads.
(iii) Duties on outposts.
(iv) Duties on advanced, rear and flank guards.
(v) Scouting and the development of powers of observation.
(vi) Duties as commanders of patrols.
(vii) Writing brief reports of information gained.
(viii) Defence of small posts.
2. Method of instruction—
The training in the subjects enumerated in para. 1 will be carried
out partly by lectures, but chiefly in the field. The following points
may be mentioned to show the line which should be adopted in
carrying out the instruction.
(i) Map reading.—Having received theoretical instruction in this
subject, non-commissioned officers should be shown how to fix their
position on a map, how to identify places by means of it, and how to
use it in a strange country. They should next be assembled at a point
in the vicinity of the station; each provided with a map, and directed
to meet the officer at some other point at a given hour, to move by a
different road, and to march at a given rate.
(ii) Outposts.—By small outpost schemes, when the non-
commissioned officers’ knowledge of the subjects should be tested
by questions as to the positions they would suggest for the various
portions of the outposts.
(iii) Reconnaissance.—By sending the non-commissioned officers
out from an imaginary outpost line as commanders of patrols and
directing them to furnish short reports.
PART VI.
CEREMONIAL.
184. General Rules.
1. Except when it may be necessary to line the streets for
ceremonies, the instructions given in this Part are to be confined
exclusively to the occasions mentioned.
2. Formation of companies.—Companies will fall in in line, be
equalized and sized from flanks to centre, numbered from right to
left, and told off into half companies and sections. Squad
commanders will be in the ranks. The commanders of the outer
sections will be on the flanks of the front rank; they will carry out the
duties laid down in Part II for squad commanders in a similar
position, and will dress the company if required; they will fix bayonets
when the men do. In other respects the instructions in Parts II and III
are applicable to the formation of companies, and to the position of
supernumeraries. Signallers and pioneers will remain in the
supernumerary rank of their companies. When a non-commissioned
officer is in command of a company, he will, in marching past in
column, or column of double companies, take post three paces in
rear of the centre of the company.
3. Posts of mounted officers.—In line, the commanding officer will
place himself twenty paces in front of the centre of the line.
The second in command will be on the right, and the adjutant on
the left of the line of company commanders.
A third field officer, if present, will be on the right of the adjutant.
In column or quarter column the mounted officers will be in the
same positions as in Part III, with the exception that the adjutant will
be four paces from the centre of the directing flank of the rear half-
battalion.
When a column or quarter column is on the move, the second in
command will place himself in a position from which he can best
superintend the direction of the advance and the covering of the
section commanders on the directing flanks.
4. Posts of other officers.—The position of the other officers is as
detailed in Parts II and III, except that in marching past in quarter
column, in line of quarter columns, or in mass, the company
commanders will, when on the saluting base, take post on the
directing flank of their companies, covered by the section
commander (aligned with the rear rank).
5. The Colour party.—In line the Colours, each carried by an
officer (as directed in the King’s Regulations), will be placed between
the two centre companies; the King’s Colour on the right, the
Regimental Colour on the left, with a serjeant between them and two
non-commissioned officers or selected privates, covering them in
line with the rear rank. The officer carrying the King’s Colour will
command the party.
If the line is ordered to retire the Colour party will turn about, and
the centre serjeant, stepping forward two paces, will align himself
with the rear rank.
In column or quarter column, the Colour party will be in rear of the
leading centre company, its front rank aligned with the
supernumerary rank covering the fourth, fifth, and sixth files from the
directing flank.
In quarter column, as above, but the two non-commissioned
officers in the rear rank will move up respectively on the right and left
of the Colours.
In column of double companies the Colour party will be in rear of
the centre of the second double company.
6. Posts of staff officers, &c.—Posts of staff officers and staff
serjeants, band and drams (or bugles), machine gun, regimental
transport and stretcher bearers and cyclists, when present, are
shown in Plates IX and X.
7. Officers’ swords, when to be drawn and returned.—On
ceremonial parades, officers will draw their swords as they fall in; the
commander of a parade will not draw his sword unless a senior
officer be present on parade. Swords will be at the Carry when
colours are at the Carry, S. 189, on other occasions they will be at
the Slope.
8. Marking points and markers.—Flags or posts may be set up to
mark the line on which troops are to form, or the line may be picked
out, or marked by whitewash.
The section commanders of the inner sections of a company are
available to act as markers, and one or both may be employed, if
desired. The words on markers should precede the command
given when it is required to dress on markers. Markers in giving
points should turn towards the point of formation at arm’s length in
front of the alignment, with arms at the slope on the shoulder furthest
from the alignment. When the men approach they will extend their
inner arm at right angles to the body with the fist clenched, on which
the line will dress. When the dressing is completed markers will
resume their positions on the command steady.

185. Sizing a Company.


Companies will be sized in the following manner.
tallest on The whole will break off and arrange
the right, themselves according to their size in single rank,
shortest the tallest on the right and the shortest on the left,
on the carrying their rifles at the short trail, and take up
left. in their dressing by the right.
single
rank.—
size.

number. From right to left of the whole company.

slope The odd numbers will take one pace forward,


arms. odd and the even numbers will step back one pace.
numbers

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