Session 2: The International Manager PDF

Session 2: The international manager Chapter 1 context of international business 1. economic globalization 2. political systems 3. legal requirements and compliance Globalization Describes the growing interdependence of the world’s economies, cultures and populations, brought abou...

Session 2: The international manager Chapter 1 context of international business 1. economic globalization 2. political systems 3. legal requirements and compliance Globalization Describes the growing interdependence of the world’s economies, cultures and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people and information. Can be further described as “thinking of the world as a single place” or “globalization is a process whereby worldwide interconnections in virtually every sphere of activity are growing.” All business conducted today is influenced by transactions across international borders and by events in other countries. ○ Every international manager and many employees who may not think of themselves as “international” are likely to find themselves affected by these apparently faraway economic and political events. The work of international managers is affected by dramatic changes in economics, politics and technology changes that are often summarized by the term globalization. Increased use and sophistication of information technology The effects of technology largely results from two connected activities: Advances in information technology reduce the cost of communication, leading to more global goods. As organizations in different countries try to keep up with the changes, this globalization of trade increases competition and contributes to the global spread and further development of technology. The decreasing price and increased sophistication of computing systems has given even small organizations and individual entrepreneurs capabilities that were previously available only to large multinational firms - access to information, resources, products and markets are all affected by this improved technology. ○ Even small and Medium-sized enterprises (SME’s) can now compete globally. SMEs Small and medium-sized enterprises are defined differently around the world. In the United States it means companies with 500 employees or less. In the EU it is 250 employees or less. Growing Economic and Organizational Interconnectedness Free trade grew greatly from the 1990s. This dramatically increased economic interconnections among countries.Three largest trade groups: European Union (EU) North American Free Trade Agreement (NAFTA) Asia-Pacific Economic Cooperation (APEC) Goal = Reducing tariffs and making trade Easier. Despite protectionist measures, globalization is unstoppable. Tariffs Taxes used to restrict imports by increasing the price of goods and services purchased from another country, making them less attractive to domestic consumers. Protectionist Relates to the theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports. Protecting local industries against international competition which may be seen as unfair. Examples: Renegotiating NAFTA - Trump withdraw from NAFTA More Complex and Dynamic Work Context Related to the increased interconnectedness of economies and organizations are changes that affect the stability of the world context of organizations. These include outsourcing, downsizing, privatization, migration, and team-based management. Outsourcing and Downsizing Outsourcing The practice of hiring outside the organization to produce goods or perform services that were traditionally provided by the company’s own employees. BPO: Business Process Outsourcing Benefits: Reduce costs Larger workforces Access to industry experts Increased flexibility Organizations are increasingly outsourcing manufacturing, service, and administrative functions to developing countries where labor costs are low, there is political stability and lighter regulations which enables greater business flexibility. This, however, can lead to unanticipated problems, including cross-cultural ones. Drawbacks: Cross-cultural problems  Lack of day-to-day supervision may lead to inefficiency and threaten security Abuse Downsizing Downsizing Making an organization smaller by eliminating staff positions. For example, globalization means that because of cheaper labor in Mexico, employees in Milan organizations may be laid off. Mergers and acquisitions Defined as the consolidation of companies. A merger is the combination of two companies to form one. An acquisition is when one company takes over the other. As organizations seek to remain competitive in a more difficult international context, increased rate of mergers and acquisitions may result, also causing reductions in the workforce. These workforce changes have an effect not just on those who leave the company but also those who remain, who may suffer reduced morale, productivity and creativity. Privatization The process of transferring an enterprise or industry from the public sector to the private sector. Change of ownership in which public control over services (i.e., organizations owned or part-owned by the government) is handed over or sold to private enterprise organizations. This is usually done in the belief that a private organization will be more efficient than a government department. Drawbacks: Government loses out on any future income Controlling monopoly can be difficult Monopolies have no incentives to lower costs for customers Migration Movement by people from one place to another with the intentions of settling, permanently or temporarily, in a new location. Because of the increased interconnectedness of economies and the weakening of political boundaries, the number of permanent migrants is changing the composition of many countries' workforces. Key changes in the workforce include cultural diversity and more women. Today’s migrants are very skilled. At a nation-level, nation-states that receive migrants become more multi-ethnic and multicultural. They therefore face increased challenges of integrating migrants from other cultures while maintaining their own national and cultural identity. ○ Developed countries are the largest recipients of migrants, and China, India, and the Philippines lead the list of sources of migrants. Teams Organizations around the world increasingly seek to increase productivity through the formation of teams of workers. Teams are more difficult because of Demographic changes - including increasing cultural diversity because of ease of movement across borders by workers of all skill levels, the rising average age of employees, and the addition of more women to the workforce. As a consequence, changing work methods, compensation systems, levels of employee involvement, and the job of the supervisor. ★ In summary, the changes caused by outsourcing, downsizing, privatization, international migration, and team-based management have combined to create a more complex and dynamic work context for firms around the world. It is in these complex situations that today’s international managers must work. More and Different Players on the Global Stage Flat world Thomas Friedman coined this term to suggest the world is flat in the sense that the competitive playing field between industrial and emerging market countries is leveling and that individual entrepreneurs as well as companies, both large and small, are becoming part of a large, complex, global supply chain extending around the world. Gross domestic product Monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Foreign direct investment Investment made by a firm or individual in one country into business interests located in another country. Internet bubble A historic speculative bubble and period of excessive speculation mainly in the United States that occurred roughly from 1994 to 2000, a period of extreme growth in the use and adoption of the Internet. Transition economies A transition economy is a country that is changing from a centrally planned economy to a market economy. Global Political and Legal Contexts Shifts in the political landscape draw attention to the need for global businesses to keep in mind the possibility that a government will undergo political changes. These changes may affect the organization. Around the world, there is a wide range of political systems. The two extremes of the continuum are pure democracy at one end versus Totalitarianism at the other. Totalitarianism A system of government that is centralized and dictatorial and requires complete subservience to the state. In theocratic totalitarianism, the religious leaders are also the political leaders. In secular totalitarianism, ideological concepts as opposed to religion are the basis of the political system. Positives and Negatives of Globalization Whether globalization has a positive or negative effect is debatable. Positives: Rising number of transactions across borders that have improved the situation of emerging economies; the formation and expansion MNO’s; and the improvements in human rights. Negatives: Environmental damage caused by increased use of fossil fuels, the negative effects of global price competition, and the job insecurity caused by outsourcing. ★ The reality is that globalization has both positive and negative effects. One thing, however, is certain: Globalization affects all aspects of the contexts in which managers work and makes their jobs more complicated. The Contexts of International Management Culture A set of knowledge structures consisting of systems of values, norms, attitudes, beliefs, and behavioral meanings that are shared by members of a social group (society) and embedded in institutions and learned from previous generations. Culture is very important. It affects the goals of the institutions of society, the way the institutions operate, and the attributions (causes assigned to why people behave) their members make for policies and behavior. Unique Role of Culture Culture is fundamental (is deeply rooted in every aspect of management: identity, economic, political) Culture is largely invisible Effects of culture are pervasive Institution Social structure formed for a common purpose that influences the behavior of people and the way they live. Some institutions are government, education, religion, law, and so on. Attribution The action of regarding something as being caused by a person or thing. What International Managers Do Organizational Context, Culture, and Managerial Roles Being an International Manager https://doi.org/10.1016/0263-2373(94)90046-9 ★ Explores the essential qualities and competencies required for successful international management in a complex global business environment. It emphasizes the interplay between cognitive complexity, emotional energy, and psychological maturity as the core components of effective international management. The term ‘international manager’ refers to individuals who are managing across a number of countries/cultures simultaneously. Cognitive Complexity ○ Refers to the ability to think critically, analyze complex situations, and manage multiple tasks simultaneously. It involves understanding and navigating the intricacies of international business environments. ○ Cognitive complexity is essential for effective decision-making and problem-solving in global contexts. It allows managers to grasp the nuances of different cultures and business practices. Acting as a manager in today’s global business environment usually involves facilitating and conducting a huge variety of technical and people-related tasks. When considering the processes by which people cope with such realities, clearly a high degree of complex thinking is required. Indeed, there are those who argue that complex thinking positively correlates with higher levels of managerial performance and ultimately with organizational effectiveness. Essentially, Cognitive Complexity comprises two primary components: differentiation and integration. ○ Differentiation refers to the ability to perceive several dimensions in a stimulus rather than only one. The success of this process is often dependent upon being able to move from one frame of reference to another to explore a situation fully. ○ Integration refers to the ability to identify multiple relationships among the differentiated characteristics. This could involve formulating patterns in the differential analyses, then making links in what were previously unrelated phenomena. ○ A good example of how this might be demonstrated is the cognitively complex managers’ ability to assess their employees’ capabilities on the basis of several differentiated scales (i.e. quality, speed, teamworking, etc.). They can also go beyond this by integrating these scales in order to discover patterned interrelationships between them Although we prefer to think of cognitive complexity as being a central facility in all aspects of the international managers’ world, it is more usually associated with specific elements of the job. Its most obvious application is in understanding decision-making. Prior to making a decision, more complex managers will use larger amounts of information, identify patterns and generate several possible solutions. In addition to this, cognitive complexity has also been associated with tolerance of ambiguity, the ability to assume a leadership role and the capacity to empathize with people from very different cultural backgrounds Cultural Empathy Cognitively complex individuals can set aside their habitual ways of thinking about events in order to ‘get into the heads’ of people operating out of different perspectives from their own. Put another way, they are capable of demonstrating a sort of cultural empathy with those around them. On one level this might be thought of as a relatively straight-forward facility. However, to be performed effectively it requires a holding or bracketing of one’s assumptions in order to open oneself completely to the perspectives of the other. When considering the size of the mental ‘baggage’ which we all carry around and the vigor with which we usually protect and promote it, this is not a simple task. The extent to which this needs to be  nurtured over time and the resulting confidence which it brings was emphasized by a Swedish manager who said that: ‘When I talk to people it always depends on the county that I am going to. You have to learn how they are and how to talk to them in their way. When you are dealing with people, or negotiating a deal, you have to put yourself in the other person’s position and ask yourself “what would I do if I were him?” ‘ In order to fully understand the other person’s position many of the managers to whom we spoke believe that their only choice is to attempt to enter the other’s private world of experience as if it were their own. The relative success of this activity allows them to be able to move about freely in the other’s subjective world, perceiving as they perceive, feeling as they feel and experiencing as they experience. Ultimately, both parties are led to progressively greater heights of acceptance and understanding. The Power of Active Listening The effectiveness with which managers are able to demonstrate cultural empathy appears to be largely dependent upon the extent to which they are able to actively listen. In short, active listening is essential if one is attempting to perceive several dimensions in a stimulus rather than only one. Interestingly, during the process of recognizing relationships between what they are hearing, the most sophisticated international managers appear to attach equal importance to the hidden meaning contained in much of what they hear as well as what is not said at all. Active listening allows them to be able to integrate both simple and complex forms of information before moving towards concrete conclusions or solutions. A Sense of Humility A final quality of the more international aspects of cognitive complexity which emerged from the data was a sense of humility or a humble attitude of mind. Many of the managers to whom we spoke did not come across as arrogant in any sense of the word. On the contrary, as cognitively complex individuals they were keen to remind us that they often seek out the views of others out of a genuine need for help or assistance. There appears to be a realization here of the complexity of each of their worlds and a readiness to work constructively with others for the common good. Very often they rely on, and ask people for, help or guidance without feeling embarrassed or proud. As one manager put it, ‘leveling with people’ makes it much more likely that people will realize the benefits of working together for the good of all. This sort of attitude is often related to a readiness to admit mistakes and a positive attitude towards moving on and learning from failure. ★ To summarize, cognitive complexity appears to be heavily reliant on a capacity to think and rationalize. Much of what has been reported in this section could quite justifiably be thought of as distinctly cerebral. It is one thing for someone to acquire the reasoning powers to be able to grapple with the problems of implementing international change, but it is quite another thing for that same person to acquire an emotional commitment or even a passion in pursuit of such ends. Emotional Energy Emotional energy is described as the motivational force derived from emotions that influences human behavior and interactions. It encompasses emotional awareness, resilience, and the ability to engage with emotions constructively. It is crucial for building relationships, fostering trust, and enhancing communication in international settings. It highlights the need for managers to be emotionally attuned to their teams and stakeholders. Emotional Self-awareness Understanding one's own emotions and the emotions of others, which is vital for effective interpersonal interactions. Successful international managers are becoming more aware of their emotional selves Males tend to bring to their roles as managers a belief from childhood that understanding the emotional aspect of the self is not an important priority. A major effect of this has been the creation of ‘macho’ organizations whose cultures mirror the influences of a typical male childhood. This has been largely due to the fact that ‘getting in touch’ with one’s emotions and expressing one’s feelings are still considered to be rather feminine activities which are not part of mainstream Western culture. Why exactly might this sort of awareness be important in today’s hectic business environment? Of the many appropriate reasons, we believe that two are particularly pertinent to this study. ○ Firstly, when a person relates to another person (or group) at the emotional level (to do this there has to be awareness), on the evidence of our findings, we believe that the likelihood of trust occurring between the two parties will be greatly enhanced. This appears to be mainly due to the openness of the interaction. Clearly, this is a major concern for successful international managers because as mentioned earlier, trust is one of the most important prerequisites for becoming cognitively complex. ○ Secondly, it would appear that it is only after practicing relating to others in this way, becoming aware of, and using these faculties, that one begins the sometimes arduous route to becoming emotionally resilient. Emotional Resilience Emotional resilience is the facility to open oneself emotionally and deal with uncomfortable or stressful situations without over-reacting to them in a way which hinders a person’s capability to handle and overcome them. In certain quarters there is a common comprehension that those people who do not seem to express emotion of any kind must be blessed with emotional resilience. On the evidence presented in the previous section, it is much more likely that a lack of emotional expression occurs because it is suppressed or kept in check.  If this is the case, we suggest that eventually, the act of suppression will become so well practiced that it begins to serve as an ideal defense mechanism when confronted with uncomfortable or stressful situations. This, in turn, reduces a person’s facility to remain sensitive to people and events around them. Their insistence on putting themselves in very uncomfortable ‘face-to-face’ situations stems from a belief that both parties gain greater benefits from making contact at an emotional level. It is through this type of interaction that they are able to establish some degree of trust in order to break the bad news as fairly and humanely as possible. Risk Acceptance The act of putting oneself in potentially uncomfortable or stressful situations clearly involves a certain amount of risk. Such risks become pertinent to the emotional self especially when they are taken in interpersonal situations where the person’s self-esteem is involved. Managers who are without what they call ‘emotional muscle’ have a tendency to either withdraw from situations of emotional stress or to impulsively risk all in an effort to relieve the stress. In the long-term, the overriding consequence of such actions appears to be a conscious decision to engage in risk-avoidance behavior. Our findings suggest that emotionally resilient international managers view the concept of risk quite differently. In accepting that many of the cross-cultural interactions and situations which they face are complex and will involve certain amounts of risk, they develop: ○ Familiarization with the levels of discomfort associated with risks ○ Emotional self-awareness and resilience ○ Managing and survival techniques ○ Ways of deriving learning from the outcomes, irrespective of whether they are positive or negative A fairly familiar scenario which all managers are faced with from time to time is having to make a quick decision before they have analyzed a situation in sufficient depth. Making decisions always involves a certain amount of risk; however, it is interesting to note that successful international managers appear to have gone beyond an acceptance that risk is a natural part of management. Indeed, it almost seems as though they not only enjoy managing the process but they positively thrive on the challenge. The Emotional Support of the Family The emotional energy which they are able to apply at work appears to be inextricably linked to the emotional development and support of many of their family relationships. There appear to be two important facets to this support. Firstly, a retreat to the emotional warmth of the family provides managers with an ideal coping strategy throughout their careers, but particularly when in times of need. It is within this sort of environment  that managers are able to take stock, recharge the batteries and regain their emotional energy before reentering the organizational turmoil. Secondly, such support seems to be highly dependent upon the quality and depth of the emotional bonds which are developed within the family. Contrary to the typically Western belief that organizational life is not the forum for expressions of emotion, our findings suggest that the sort of healthy emotional energy which we have described can in fact be complementary to a manager’s facility for cognitive complexity. In effect, it gives it a more human face, particularly during their interactions with others. Psychological Maturity Refers to the development of a unifying philosophy of life, characterized by a clear value system and a consistent way of seeing meaning in one's life. It encompasses self-awareness and the ability to understand and relate to others. Core values are fundamental to psychological maturity, which guide managers in formulating meaningful goals and navigating interpersonal relationships. Psychological maturity represents a ‘healthy personality.’ Essentially, such people have a unifying philosophy of life which evolves from a clear, consistent and systematic way of seeing meaning in their lives. They simply have a value system which helps them to formulate the dominant goals or themes which make their lives meaningful. Values are the core of this maturity, they underpin a person’s basic convictions about what is and what is not of real importance in life, ultimately giving significance to practically everything one does. In their purest form, peoples’ values encompass their orientation towards the complete span of human activity (the religious, the political, the economic, the aesthetic, etc.). Three core values constitute the essential features of what we refer to as a successful international manager’s overall psychological maturity: Curiosity to Learn The attitude of openness which accompanies this is the polar opposite of defensiveness. Those who are curious to learn appear to enter into situations with an almost childlike facility to seek out the new and unfamiliar. All experience is viewed as potential opportunities to learn, although this is tempered by a mature attitude of mind which signals those opportunities which are both realistic and relevant. The situation itself does not automatically pre programme the event of genuine learning. For learning to take place, individuals have to move beyond curiosity to take advantage of the event. A large proportion of our subjects’ learning activity appears to be heavily dependent upon ‘learning by doing’ (experiential learning), especially as it is so closely associated with relevance and reality. For some, their curiosity to ‘learn by doing’ is so fervent, it extends to other areas of their lives. A good example of this was a manager who cited being a member of six or seven boards (in his spare time!) as being the best management course one could go on.  Very early on in their careers many of these managers realized that they had a strong desire to seek out the new and unfamiliar, which often manifested itself as a prime motivator for pursuing an international career. At their present stage of life, they claim that the curiosity to learn is just as vibrant as it was at the beginning. Orientation to Time Those people who spend large portions of time thinking about the future, or reflecting upon the past, usually leave little time for living their lives fully in the present. A major characteristic of the ‘healthy personality’ is a facility to live fully in the ‘here and now’. Such people perceive each moment of their lives as new - different from all that existed before. In doing so, they exhibit a capacity to appreciate even the most ordinary events in their lives with a sense of newness, awe and pleasure. ‘living today and working here today’- this is not suggesting that psychologically mature managers neglect the past or the future. On the contrary, they reflect upon the past in enough detail to be able to learn from it; similarly, they consider the future sufficiently, in order to plan the most appropriate next steps. What is clear from their transcripts is that neither of these activities are allowed to interfere with making the most of the present. Their eagerness to achieve and finish as much as they can in their present activities, reflects upon the amount of time they invest in thinking about their next job. Although they are interested in matters concerning their own personal growth, clearly they are not overly preoccupied with either their next move or the accompanying status concerns. The enthusiasm with which our mature managers enter into their ‘present-day’ activities does not suggest that they are totally ambivalent to the very real time constraints which are usually placed upon them. It is psychologically mature to be aware of time in the ways expressed, because this sort of value orientation leads managers to place a greater emphasis upon creating quality time - in effect, they are controllers of their time rather than servants of it. Such maturity ultimately stems from having a value system which leaves each of them in no doubt about what is and what is not of real importance in their lives. Personal Morality People progress through three basic levels of stages of moral development, in accordance with how well they mature psychologically. Changes in development are measured in terms of an individual’s capacity to engage in independent moral reasoning and their willingness to move from self-interested behavior to a concern for the just treatment of others. The first stage which he calls the preconventional stage, is characterized by moral reasoning which is based on fear of punishment and immediate self-interest. The second, conventional level, emphasizes loyalty to the prevailing social order and a desire to be respected by others, usually through supporting the established status quo.  At the final, post conventional level, individuals become capable of autonomous reasoning based upon either universal principles of justice and fairness (utilitarianism), or, the adoption of self-generated guidelines which stress the equality of human rights and respect for the dignity of individuals. Successful international managers have attained the necessary psychological maturity to be judged to be operating at Kohlberg’s final, postconventional level of moral development. A value orientation common to many of the managers to whom we spoke was a strong belief in the equality of human rights, accompanied by respect for the dignity of all individuals. ★ In conclusion, psychologically mature managers appear to exhibit throughout their day-to-day lives, less confusion, inconsistency and conflict than the average person about what is right or wrong, good or bad, particularly on those issues which are predominantly people orientated. Although different people may develop different central values around which their lives will purposefully revolve, the essential quality of successful international managers is a facility to ‘put it all together’ in order to make sense and give order to what, at times, is a very complex existence. Becoming A Global Manager With A Global Mindset https://www.forbes.com/councils/forbestechcouncil/2023/09/14/becoming-a-global-manager-with-a-global-mindset/ The new dynamic and international environment creates the perfect landscape for leaders to explore and master modern tools. Everything we do should be perceived through a global lens, and this global mindset is becoming increasingly necessary for today's managers. To better match today's highly globalized and dynamic world, scholars have suggested that the leadership paradigm that predominated the 20th century must be changed to embrace a new way of imagining, sensing, making and being. ○ Organizations must invest heavily in teaching and developing their resources to fulfill the needs of doing global business, promote a continuous learning culture for their individuals and provide resources and tools that help their employees stay up to date with new market dynamics and challenges. A Global Mindset Every organization needs to expand its footprint and engage in international trade. However, firms need highly skilled managers with global attitudes to prevail in these global markets. Because of this, only the right mentality will enable managers to inspire others from varying cultural backgrounds, political viewpoints, institutional backgrounds and other contextual elements that influence their behaviors, communication styles and thought processes. ○ A global mentality comes with practice. Leaders must establish business and personal criteria that are independent of one sole perspective in terms of culture. ○ A manager who has a global perspective can anticipate and notice things that other managers can't. To achieve their goals and the goals of their organizations, managers with global mindsets can shape the world holistically, spot opportunities and recognize risks. International Experience An essential element of a global mindset involves international knowledge and experience. ○ It strengthens an individual's interpersonal skills and flexibility when managing complex problems. ○ The development of a global mindset can be facilitated by various international experience mechanisms, including education, cross-border projects, international meetings, international training locations and international assignments. An overseas assignment can allow managers to live in a different environment, allowing them to develop relationships and affiliations with other international operations. International duties let managers experience new systems, platforms, cultures, languages and political environments. How Do Global Managers Work? Global managers are the pivotal link between the company's capabilities and the global market requirements. They are the ones who have to act on the ground in their home country while constantly thinking globally. They must understand their own culture and be open to foreign cultures. This kind of global manager is capable of comprehending internal organizational dynamics. Still, they are also sensitive to global issues like cultural diversity and can manage variations in people, values and cultures. They then instill this focus in those they manage. How Can I Become A Global Manager? As a global manager, you must understand the importance of assessing the risk factors before entering new projects. You must have the skills and ability to create a comprehensive plan and assist in its implementation. You must consider the value of researching different markets' options, analyzing those options and choosing the best tactic based on that research. Skills you must master to become an influential global manager: Determine if foreign trading is feasible. ○ You must weigh prospective benefits against potential risks to determine a market's viability. When launching or growing an international trade effort, you must use your knowledge to assess whether a proposal will increase revenue and align with your corporate strategy. Plan for market expansion. ○ You must create a thorough worldwide business strategy and help with its implementation. Establish successful market entrance tactics. ○ Global managers know the value of investigating and evaluating potential market entrance tactics and strategic alliances before making their choices. Adapt products and services. ○ You must understand the vital role of adapting products and services for a specific international market. Consider worldwide marketing and sales.  ○ You have to be aware that while marketing can generate demand, a successful sales plan is required to capitalize on this desire. Keep cultural sensitivity at the forefront. ○ You must be aware of multicultural differences and their effects on global trade. Consider global morality and law. ○ You must adhere to all local and foreign legal standards that regulate operations related to international commerce and be familiar with the fundamental legal concepts of worldwide business. Case 1: napster to Spotify international managers need to be more proactive than reactive ; they should be prepare and consider economical, political and legal factors. economic : drop in CD sales and the rise of streaming political EU new copyright ; digitalized; the government is more involved in these property right; more attention on th legal: new copyright legislations regarding the freedom of their users and the platforms