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Global National Cultural

The impacts of the globalisation on managers and attempt to identify competencies for managers working in Multi-national enterprise (MNE). Most of the world's organisations operate on a multinational scale. Managers in these organisations operate on a global scale, across national and cultural boundaries and face additional demands not experienced by managers in local businesses. Since the globalization of business the most of the world's organisations operate on a international level.

Globalization –extent and impact on managers

Globalization means strengthening of economic, social, cultural and political associations across nations. It is a transformation of all these forces turning from domestic to international. It can be symbolized by saying world has turned into a tiny village. According to Friedman 2005 in his book the “World is flat. The globalized world in the twenty-first century” globalization has “flatten the world thus creating” a competitive atmosphere where economical “playing field is being levelled” meaning developing countries are now able to compete with their more advance rivals like the USA. Remarkable growth and potential of emerging markets clearly shows that driving force in globalization is moving from the western world towards a more “diverse” group of individuals. “Individuals from every corner of the flat world are being empowered” The world we live in today has been changed everlastingly by advancements in technology (ex: internet), outsourcing of production and improvements in supply chain management. Globalization had three eras according to Freedman, the first one involving “countries globalizing at a dynamic force” was the beginning of globalisation. Second era was mostly dominated by “companies globalizing at a dynamic force”. The third era which also represents the current period was uniquely different from the other two. It differs in the sense that not only it “shrinked and flattened the world” but also allow individuals to become participants. Globalization of today works on a bigger scale and is at a faster rate, involves and embraces more individuals, countries and participants.

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There are different types of Globalization. They can be categorized into three headlines. First one being the economic globalization, which is the most common form of globalization. Globalization at a macro level can be described by a greater integration and interdependency of national economies. Also this greater interdependency creates more free movement of goods, services, capital, and knowledge all around the world. At a micro level, globalization stands for business enterprises entering a new foreign market with the idea of expansionism. Despite its risks in order to be successful and continue growth within the organization MNEs must collaborate when doing business and find reliable foreign partners. They have to transform their local operation and carry it on to a global platform, building their global capabilities and a global organization in order to survive on the competitive globalized market. Political globalization can be summarized by issues in today’s politics. As also mentioned in our IBE lectures political globalization involves the cooperation of two of more governments and/or levels of government which is called “Intergovernmental organisations”. Furthermore if one has to add more to the list, It would definitely be “Trans-national pressure groups” which form the interconnectivity between different countries in the form of free flow of labor, capital and commodities which are facilitated by the advancements in technology. The last form of globalization is cultural. Globalization has altered cultural values, mindsets and consumer buying behavior through media, brands and Hollywood. MTV is an example of globalization entering everyone’s houses for the better or the worse and filling the mind of teens all across the world with American pop culture and presenting fake and misguided life styles for easily influenced teens. These three categories of globalisation are all interlinked with each other. Managers operating on an international level will have to encounter and deal with every complication that arises from economical, political and cultural influences. Multi-National Enterprises (MNE) “import and adapt their values from the environment” and on the other hand they are “most likely to export new values” (Elsayed-Elkhouly, 1999, p.1). MNE carry and reinforce values, beliefs and norms. Cultural, also, changes over time because of value shifts. Elsayed-Elkhouly (1999, p.1) argues that “Given the diversity of global cultures, it is inevitable that conflicts of decision-making styles would arise between nations included in the global organizations. Our concern about decision making in a global environment is a result of the changes that impact the economy and the quality of life in our society.” As Elsayed-Elkhouly states in order to successfully make a decision one has to take in consideration cultural values. Choy (2007) examines diverse workforce in MNEs in Singapore. He (Choy, 2007, p.7) argues that: “By establishing and organising the staff according to their unique attributes, it will enable business managers to have a more objective understanding and appreciation of their diverse staff's behaviours”, approaches and ideals. An international manager must have a premium understanding and application of personal relationships. As all people the subordinates are also looking to some recognition for their good work and ideas. They have to feel that they are a part of the team, their opinions matter and that their contributions are able to bring about a chance. Managers have to adapt to the cultures and the environment they are working in. So they can be effective at understanding “values and beliefs” of the people there are working with.

Hofstede (1993) argues that "In the U.S. the manager is a cultural hero." In Germany, a manager is barely an "expert in resolving technical problems." In Japan, there is a managerial class rather than a manager. "The French do not think in terms of managers versus non managers but in terms of cadres versus non-cadres; one becomes cadre by attending the proper schools and remains it forever; regardless of their actual task, cadres have privileges of a higher social class, and it is very rare for a non-cadre to cross the ranks." (Hofstede, 1993, p.84). In Holland the most important principle to manage is to reach consensus. Hofstede (1993) tries to explain the cultural differences between nations by using five bipolar dimensions: Power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance and long term/short term. He warns us that the national level and organizational level culture are two different phenomena, and that the organizational (corporate) culture changes more quickly than the national culture. He concludes his article working in different cultural context is like Alice in Wonderland, one could meet with different organizational cultures and bring home new experiences. Hofstede, Geert (1993) Cultural constrains in management theories, Academy of Management Executive, Vol. 7, No. 1.

Identifying the Right Strategy

The most successful teams and managers that where interviewed by Brett J, Behfar K & Kern M (2006) use four strategies for dealing with problems: adaptation (acknowledging cultural gaps openly and working around them), structural intervention (changing the shape of the team), managerial intervention (setting norms early or bringing in a higher-level manager), and exit (removing a team member when other options have failed). Adaptation is the ideal strategy because the team works effectively to solve its own problem with minimal input from management– and, most important, learns from the experience. The guide in annex 1 can help you identify the right strategy once you have identified both the problem and the “enabling situational conditions” that apply to the team.

The critics of Globalization all come to agree on the following issues and every International manager should be aware of these consequences and how to deal with them. Benefits of globalization are not evenly distributed. Globalization causes dislocation of jobs. Wages for unskilled labor are declining and Manufacturing moves offshore to avoid workplace safety and health regulations. MNEs fail to protect the environment and

Power shifts to multinational corporations and supranational organizations; nations loose sovereignty. Concentration of power by multinational corporations leads to monopoly. International financial markets are inherently unstable

Globalization results in loss of national cultural values and identity

Globalization results in loss of national cultural values and identity.

Globalization trends

Global economic realignment

Geography made redundant by technological connectivity

Consolidation of industries on a worldwide scale

Strains on natural resources and the environment

Remarkable growth and potential of Emerging Markets…

Global economic realignment

Consolidation of industries on a worldwide scale

strains on natural resources and the environment

Developing countries

Effects of globalization can be seen by everyone and everywhere. It does not matter if we like it or not, nothing can stop the globalization and shift in the balance of world powers which will be seen in near future. The emerging world now accounts for over half of global economic output. They are driving global growth. The economic power is shifting away from the advanced economies towards emerging ones, especially in Asia.Their share of exports has jumped to 43%. The emerging markets have now become low-cost source countries. In the footwear industry, besides China, Vietnam, Brazil, Romania, in Asia, India, and Thailand have become low-cost source countries.

Emerging market dynamics

Source of customers, suppliers, ideas, and human capital.

One billion new consumers will enter the global markets in the next decade!

Household income will reach threshold level of $5,000 in EMs.

Consumer spending will increase from $4 trillion to more than $9 trillion by 2015, nearly matching Western Europe.

Implications for management

Building interconnectedness: ‘global orchestration’ of value-chain activities

Exploiting knowledge

Search for maximum flexibility in manufacturing, sourcing and other value-adding activities

Relentless search for productivity gains and operational efficiency

Recognizing, cultivating, and measuring key global strategic assets of the organization

Gaining and sharpening partnering capabilities…

Skills for a global manager

Cultural empathy / Open-mindedness

Tolerance for ambiguity

Perceptiveness

Premium on personal relationships.

Flexibility/Adaptability/Self reliance

A good sense of humor

Warmth in human relationships

Curiosity

Bibliography

Friedman T (2005) The World is Flat, a brief history of the globalised world in the twenty-first century, London: Penguin

Elsayed-Elkhouly, Sayed M. (1999) ‘Globalization: The Need to Understand Other Cultural Values and Decision-Making Styles’, Global Competitiveness. http://www.allbusiness.com/specialty-businesses/398664-1.html accessed on 15 April 2008.

Hofstede, Geert (1993) Cultural constrains in management theories, Academy of Management Executive, Vol. 7, No. 1.

Source Brett J, Behfar K & Kern M (2006) Managing Multicultural Teams, HBR, November, 82, 11, p.89.

Bigelow, John D.; International Skills for Managers: Integrating International and Managerial Skill Learning, June, 1993, Boise State University, ID, USA.

http://cobe.boisestate.edu/msr/jbskills/imskil93.htm accessed on 30 March 2008.

MINA Management Institute, Global Management Skills,

http://www.acusa.net/articles/globalmanagementskills.doc

Earley explained (2004: 141) that training programs on other cultures will not prepare a person for every situation, therefore a newcomer should have learning strategies. If a businessman would work in Lebanon and checks the web-pages on working culture of this country, like I did, she/he would learn that in Lebanon ‘(n)ormal western forms of address are accepted and used. Handshakes are a customary greeting.’ (UK Trade and Investment) However, majority of Shi’a Muslims (and their political representatives in Hezbullah) would not shake hands in opposite sexes. Therefore, it is better and may be the safest way to mirror the behavior of the host (Early, 2004: 141).

If WB would like to be successful it should train its staff on culturally sensitive issues. Its managers and employees should not think that all social groups in Lebanon are the same.

Burasi analysis olarak degerlendirilebilir, Hofstede’nin modelini senin PowerPoint lecture notlarindan buldum:

One of the known models to understand the multinational business context is Hofstede’s Classification Scheme. Hofstede defined five dimensions, which will be examined within Lebanon context below:

1. Power and distance: Although Lebanon is an Arabic country and there are large number of population who has been exposed to western systems and cultures. While inequality could be accepted within some communities, in others one can find very strong individual “equal rights” approach. WB, which promotes equal and transparent business environment, has identified “the problem of a perceived lack of inclusiveness in access to systems for policymaking and for dispute resolution” especially for small firms (WB, 2003: 89).

2. Uncertainty avoidance: Business people in Lebanon will be able to tolerate very large uncertainty. They will take risk without problem. However, the threshold for WB would be higher than the local flexibility. Business meeting should be booked in well in advance since the Lebanese have flexible working hours. For example, WB reports ‘Evidence on perceptions about grand corruption in the region suggest that large private businesses and wealthy individuals play a disproportionately large role in manipulating the system for their personal gain…’ (WB, 2003: 89) As ‘the rules of the game’ is unclear, it is likely the international investors would avoid Lebanon.

3. Individualism: There is a very strong group identity in Lebanon. It is almost impossible to reach an ‘individual’ without his group identity. As there are many group identities and very little to cohesiveness among them, a multinational enterprise like WB, with a mandate to address poverty and development would have serious challenges in Lebanon.

4. Masculinity: Lebanon’s societies, regardless of their differences, are all very competitive and assertive – including women. Female values, such as solidarity, are rarely an issue.

5. Long-term orientation: The focus in Lebanon is on past and today. The only person, with a vision for future of Lebanon as market-driven, service sector economy (banking, tourism, and retailing), was the former Prime Minister Mr Hariri, who has been assassinated in February 2005 (Hennock, 2005).

While discussing whether Lebanon’s society culturally focuses on long term or short term orientation, I have already enter the discussion on political environment of Lebanon. Unfortunately, political assassinations are not rare. The political climate is very unstable and volatile. Lack of consensus within the political actors (often in the parliament and government) reflects as civil unrest.

Although the working environment is very challenging, WB and its experienced managers has been operation in Lebanon and providing important support for the government, business and people of Lebanon.

Earley, P.C. and Mosakowski, E. (2004), ‘Cultural Intelligence’, Harward Business Review, pp. 139-146.

World Bank (2003) Better Governance for Development in the Middle East and North Africa: Enhancing Inclusiveness and Accountability - MENA DEVELOPMENT REPORT, The International Bank for Reconstruction and Development / The World Bank; Washington, D.C.

Hennock, M. (2005) Lebanon’s economic champion, BBC reported on 2005/02/24 http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4265565.stm, access 24 February 2008).

UK Trade and Investment web page on Lebanon/Cultural context/Business etiquette https://www.uktradeinvest.gov.uk/ Accessed on 24 February 2008

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