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International Management: Introduction To
International Management: Introduction To
International Management: Introduction To
Introduction to
International Management
D.C.Singhal
Levels of Management
Most organizations have three management levels: first-level, middle-level,
and top-level managers. These managers are classified in a hierarchy of
authority, and perform different tasks. In many organizations, the number
of managers in every level resembles a pyramid.
(1) Top-level managers Comprises the board of directors, president, vice-
president, CEOs and other members of the top-level executives.
(2) Middle-level managers Comprises of general managers, branch
managers and department managers
(3) First-level managers Consist of supervisors, section leaders, 3
foremen, etc.
D.C.Singhal Introduction to Intl Mgt
Functions of Management
In 1916, a French coal mine director named Henri Fayol wrote a book
entitled Administration Industrielle et Generale - Prevoyance,
Organisation, Commandement, Controle, [General and Industrial
Administration - Planning, Organisation, Command and Control] which set forth
five distinct functions of managing applicable in any industry. In the 1950s,
management textbooks began to incorporate some of Fayols ideas. Fayol
originally set forth five management functions, but management book
authors have condensed them to four as follows:
(1) Planning How the job is to be done?
(2) Organizing Classifying and assigning responsibilities to staff
(3) Directing/Leading Guiding the staff in the right direction
(4) Controlling Comparing desired performance against actual and taking
corrective action (or modifying the plan, if necessary).
(The fifth function was staffing i.e. selecting the right man for the right job.
It could be included under organizing)
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D.C.Singhal Introduction to Intl Mgt
1. Planning 2. Organizing
4. Controlling 3. Directing
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D.C.Singhal Introduction to Intl Mgt
Concept of International Management
International Management (IM) is the management of business operations
for an organization that conducts business in more than one country.
International management requires knowledge and skills above and
beyond normal business expertise, such as familiarity with:
(1) The business regulations of the nations in which the organization
operates,
(2) The understanding of local customs and laws, and
(3) The capability to conduct transactions that may involve multiple
currencies.
Managers must be trained in facets of international business that are not
normally the concern of domestic managers. On a broad scale, these
issues include:
(1) A knowledge of other countries' infrastructures,
(2) Business practices (including accounting practices), and
(3) Foreign trade dynamic (i.e. changes in supply and demand and prices)
In addition, international managers must be knowledgeable about:
(1) International exchange rates and
(2) The legal-political and socio-cultural traits of other countries, as well as
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(3) International competition.
D.C.Singhal Introduction to Intl Mgt
Further, International managers must be:
(1) Multilingual,
(2) Sensitive to cultural differences, and
(3) Have knowledge about global management theory, philosophy,
psychology, and their practical applications.
Acquiring the skills to be a successful international manager is
demanding, especially since the global market will continue to expand in
future.
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Reduce cost. Access to low cost resources, inputs like raw material,
power, labour enable cost reduction
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3. What is of foreign product?
A foreign product is one that is made in country other than ones own.
The perception of a foreign product and its country of origin affects their
purchasing behaviour. Much research relating to consumer attitudes
toward foreign products has been conducted in large industrialized
countries. Consumer ethnocentrism and feelings of animosity result in
reluctance to purchase products from particular country. Product
evaluation is, however, mediated by perceived lower availability of
domestic alternatives and travel and exposure to other countries.
[ethnocentrism = Conviction of own cultural superiority, a belief in or assumption
of the superiority of the social or cultural group that a person belongs to]
Yet, while some consumers prefer global or foreign products and view
them as symbols of status, others exhibit strong preferences for domestic-
made products and have negative attitudes towards foreign or imported
products. For example, Toyota had a relatively poor performance in selling
its products in continental Europe including France. Aside from
chauvinistic (prejudiced) concern for domestic manufacture, there were
also genuine concerns that Toyotas models were out of touch with French
and general continental European preferences. In the end, Toyota felt that
the new small car, which was to be made at Valenciennes stood better
chance of succeeding in France if it is made in France. 12
D.C.Singhal Introduction to Intl Mgt
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4. Organization growth and international entry mode decision
Growth is something for which most companies strive, regardless of their
size. Small firms want to get big, big firms want to get bigger. Organizational
growth has the potential to provide businesses with many benefits,
including greater efficiencies from economies of scale, increased power,
greater ability to withstand market fluctuations, increased survival rate,
greater profits, and increased prestige for organizational members. Since
the ultimate goal of most companies is profitability, most companies will
measure their growth in terms of net profit, revenue, and other financial
data.
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For example, among the European countries, the UK has had the most
inward investment from Japanese companies. Japanese investments
were influenced by the UK governments financial support and tax
concessions. Also, a relatively cheap but well educated workforce in UK
and English language familiarity of Japanese business people. Also
drawings of products, instruction sheets, computer programmes were
available in English without the need for further translation for the UK.
This meant lower risks of misunderstandings and mistranslations,
smoothing communication between the new UK location and Japanese
head office.
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To make India more attractive for International business, steps require to
be taken to improve infrastructural facilities and enhancing labour market
flexibility.
Any trip outside urban areas highlights the problem of bad infrastructure
in India. Roads are shoddy and are strewn with potholes. Even in urban
areas, the infrastructure needs to be improved. The other problem is
availability of power. It is very common for towns and villages to face daily
blackouts averaging more than 8 hours a day. The other infrastructure
issues are the ports and airports, both which are either too small or bad
when compared to world-class ports and airports.
http://www.transparency.org/cpi2012/results/
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In addition to paying higher taxes, business owners in socialist countries
are often expected to comply with very strict labour laws designed to
protect workers against exploitation. These laws include restriction on
work hours and mandate regular vacations, sick time, and leave for
numerous reasons, such as birth or adoption of a baby. Employers are
typically not expected to provide health insurance coverage since medical
care is usually provided as national health care systems.
(4) Mixed Economies Very few societies are purely capitalistic or purely
socialistic, although most are strongly one than the other. The United
States is considered to be a capitalist, but the Social Security system
which provides support for people who are unable to work, is socialistic.
Sweden is considered by some people to be a socialist country because
of its high tax rate and large welfare system, but the majority of the
industry in the nation is in private hands, which is capitalistic.
Expertise. NRIs not only bring investments but also expertise to the
country.
The recent depreciation of the value of the Indian rupee's against the US
dollar and the subsequent hike in interest rates offered by banks on non-
residents' deposits have led to a considerable rise in the flow of NRI
deposits to India, according to bank reports. 30
D.C.Singhal Introduction to Intl Mgt
NRIs also help to project the image of India abroad. For example, NRIs in
the US played a crucial role in pressurizing the US Government to pass
the Indo-US Nuclear Deal. NRIs help to project a favourable view of India
in the countries they live.
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D.C.Singhal Introduction to Intl Mgt
9. Technological Advancements
Technological innovation is almost certainly the key driver of long-term
economic growth. Development economists around the world directed
their policy advice toward ways to raise the savings rate in an economy
and on ways to channel savings into productive investments.
A central finding of economics over the past fifty years has been that
technological advancement is critical to long-term economic growth.
More recent research distinguishes between the crucial roles for
technological diffusion in the catch-up phase of economic development
and innovation once economies reach a fairly high level of development.
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Even high performers with proven technical skills at home may find that
their styles and attitudes do not work well overseas.
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(i) First, these issues usually lengthen the time to make an agreement.
As a rule, international deals take longer to conclude than purely
domestic deals.
(ii) Second , they increase the risk of disagreement, an agreement that
may not last.
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Appendix 2. EFFICIENCY vs. EFFECTIVENESS
"There is nothing quite so useless as doing with great efficiency something
that should not be done at all." - Peter Drucker
Definitions
Efficiency: Performing or functioning in the best possible manner with the
least waste of time and effort.
Effectiveness: Adequate to accomplish a purpose; producing the intended or
expected result
Efficiency
Tries to get the maximum output with minimum input
Considers the present state
Does things consistently
Focuses on process
Effectiveness
Measures if the actual output meets the desired output
Considers long term strategy
Desires innovative ways of working
Focuses on results 39
D.C.Singhal Introduction to Intl Mgt
EFFICIENCY
EFFECTIVENESS
TARGET
Effective
Doing Right Things
Inefficient Efficient
Use of Resources /
Doing Things Right
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https://www.youtube.com/watch?v=z1kb56vywQU
Effectiveness vs Efficiency [6.15 minutes]
https://www.youtube.com/watch?v=maTQCD3p78Y
Efficiency & Effectiveness, 3 Levels of Managers [3.34 minutes]
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