PMIA-1 appunti libro da capitolo 4 PDF

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CHAPTER 4 - MANAGING INTERNATIONALLY- Geographical extension of the activities of the firm => physical position of theproduction plant and where it operates and distributes services and goods > the way in which you manage depends on the location of the production, the destination of the produc...

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CHAPTER 4 - MANAGING INTERNATIONALLY! - Geographical extension of the activities of the firm => physical position of the production plant and where it operates and distributes services and goods > the way in which you manage depends on the location of the production, the destination of the products and the nationality of the employees = WHERE the production plant is the distribution goes supply chain comes from Human Resources come from money comes from

- When an organization goes international, it could face common problems • Where to focus investments • How to organize overseas activities • How to adapt to local tastes • How to ensure it adds value > some face the challenge of balancing the consistency of a global brand with what local customers expect > managers consider (not only) the economic aspects of growing overseas BUT also the political stability of that country and whether the country’s legal system will protect their investments

- international management: managing business operations in more than one country > working as an expatriate manager > joining or managing an international team with members from several countries > managing in a global organization

- Despite projects of a business firm to go international, there are borders > that imply laws and other restrictions => put together the will to act internationally with the constraints

- Trend towards globalization went up between the 90s and more or less 5 years ago > the fall of the Berlin Wall facilitated it = it was the end of the confrontation between two models (socialist vs capitalistic / east vs west) - Global economy was a thing to celebrate because it allows to have a similar (sometimes the same) market everywhere

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WAYS TO CONDUCT BUSINESS INTERNATIONALLY - Companies that conduct international business are likely to do most of it by one or more of the methods outlined > whichever they use, their success will depend on how well they take account of the local context Import and Export → if we sell the majority of our products in a foreign country and even if foreign countries provide material for us > even if we are very local, but we do one of those thing we are international → transporting physical products or delivering services across national boundaries Off-Shoring → when a part of our activities are made in another country that will add more value (ex. Apple) > practice of contracting out activities to companies in other countries who can do the work more cost-effectively Foreign direct investment → establish new business in another country → a firm could build or acquires facilities in a foreign country and menages them directly > if the venture is a wholly owned subsidiary, the profit stays in the company > some build and manage their facilities, some buy the assets of an existing business

Licensing → when a firm gives another firm the right to use assets such as patents or technologies in exchange for a fee > when you own a particular type of resource (knowledge, design, symbol for example) > the license is a piece of paper > you give the right to incorporate your immaterial product in another product (F.e Gatto Silvestro > Warner Bros vende licenze per mettere la sua immagine in altri prodotti tipo magliette) > BUT you don’t control the production process → the licensing firm receives a payment for every unit sold while the licensee takes the risk of investing in manufacturing and distribution Franchising is similar → practice top extend a business by giving other organizations the right to use your brand name, in return for a fee → used by the businesses to expand rapidly F.e: (Starbucks, McDonald's, Calzedonia) >> you take in the name, the logo, the products you sell everything of the firm > you are an entrepreneur but a significant part of your decisions are limited by a contract (the franchise contract) Joint Venture → a firm that is conducted jointly by two firms (usually in two different countries) => it is an alliance in which the partners agree to share risks and resources to conduct business internationally > rather than developing certain skills in a particular aspect of the business they scout another firm that already does that > often happens that joint ventures link a foreign firm with one in the host country to take advantage of the latter’s facilities and/or knowledge of the local customs, politics, ways of working > the organizations remain independent

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> the parties agree their respective investments and how to share the profits Wholly-owned subsidiary Multinational companies → based in one country but operates in many countries > managed from one country (the home country) but have a significant production and marketing operations in many others > NOT only the big ones but also small and medium enterprises Transnational companies → they operate in many countries, are totally decentralized -sell and produce products- but they maintain a consistent local image (ex. Coca-Cola) > many decisions are delegated to local managers Global companies → integrated operations across many countries (F.e: Nestlè headquarters are in Switzerland but only 2% of sales and 4% of employees are there ) > they work in many countries > securing resources snd finding markets in whichever country is more suitable

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THE CONTEXTS OF INTERNATIONAL BUSINESS -PESTEL- Those conducting managing internationally pay close attention to the international aspects off the general business environment > aspects that are always present in their context but they are only likely to come to their attention ECONOMIC - One area of economic theory tries to explain why nations trade with each other rather than being self-sufficient > the theory of absolute advantage is a trade theory —> it proposes that by specializing in producing goods and services which they can produce more efficiently than others, and then trading them, nations will increase their economic wealth > the theory partly explains the rapid internationalization of production since the 1960s EVEN THOUGH >> companies sometimes find that remote operations requires more management time than they are worth -> so they repatriate the outsourced activities

- The internationalization of markets happens when —> companies in developed countries see market opportunities in less developed ones

- The economic context of a country includes its

Stage of development Inflation Exchange rates Debt …etc > the usual measure of economic development is —> average income per person POLITICAL - Political factors also affect a country’s attractiveness to investment > they shape the political risk => is the risk of losing assets, earning power or managerial control due to political events or actions of the host governments - The political system in a country influences business > managers adapt to the prevailing ideology, a set of integrated beliefs that helps to direct the actions of a society

- Political systems affect business life through: The balance between state-owned and privately-owned enterprises The amount of state intervention through subsides, taxes and regulation Policies towards foreign companies trading in the country, or acquiring local firms Policies on employment practices, working conditions and job protection TECHNOLOGICAL - Infrastructure includes all of the physical facilities that support economic activities (airports, electricity, telecommunications…etc) > companies operating abroad are very interested in the quality of this aspect of a country —> it has a huge effect on the cost and convenience of conducting business in that area

- A poor infrastructure would be an opportunity for companies that supply such facilities ENVIRONMENTAL - One aspect of the environment is an economy’s natural resources (as we know many resources are not renewable) > this consideration affects the kind of business that people create in a country and the pattern of world trade

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- Economic development itself causes pollution => a problem for people in that area and an opportunity for companies that clean up the mess (very controversial)

SOCIO-CULTURAL - As a business becomes more international > managers try to balance the unified way of working across the world with the unique local culture in which they operate

- There are many differences between people in geographically separated areas in how they communicate, how they respond to authority, when they go to work…etc HIGH-CONTEXT AND LOW-CONTEXT CULTURES - High/Low context is subjective >> it depends on the origins of the observer, In relationship with the place in which he operates High-context —> information is implicit, can be fully understood by those with the benefit of shared experience in the culture > the more it is different from our context, the more we can talk about high-context = context harder to understand (F.e for us in Europe > Japan, Arab countries, southern Europe) Low-context culture —> information is explicit and clear > people are more psychologically distant, they depend on explicit information to communicate = easier to understand because they are culturally more similar to us (F.e for us in Europe > US, Germany, Scandinavia) ATTITUDE TO CONFLICT AND HARMONY - Some countries (individualistic cultures US, The Netherlands) > see dissent as normal and expect conflict, they see conflict as healthy > because it could be useful for innovation and change for those organizations that don’t aim for a routine > everyone as the right to express their view => discuss and find out the common points (problems/solutions/solution of the problems) celebration of the ability to extract benefits from this = see conflict as constructive

- Other countries place greater value on social harmony = conflict disrupts the peace > talk down all together ATTITUDE TO CHANGE - The result of positive human action ? = what we do “yes, we can”, try to change and face the obstacles - Events beyond human influence ? = environment, history > change is seen as something that goes beyond human action, the capacity of humans to act and to change things is limited ATTITUDE TO TIME - Infinite resource ? - Scarce resource to manage ? (we western cultures) → THOSE are three factors that have a lot to do with management which usually implies a discussion, a change, the right use of time HOFSTEDE’S COMPARATIVE ANALYSIS - Hofstede saw culture as a collective programming of people’s minds > which influences how they react to events - 5 dimensions of culture

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1) POWER DISTANCE —> it is the extent to which the less powerful members of organizations within a country expect and accept that peer is disturb used unevenly > countries differ in how they distribute power and authority AND in how people view the resultant inequality High power distance => accept inequalities, they are part of the natural order countries: France, China, Arabian States, Brazil… Low power distance => do NOT accept inequalities countries: Denmark, Germany, GB, Sweden… 2) UNCERTAINTY AVOIDANCE —> is the extent to which members of a culture feel threatened by uncertain situations High uncertainty avoidance => low tolerance of ambiguity, precision is requested > people are reluctant to move without clear and specific instructions Low uncertainty avoidance => tolerate ambiguity, if things are not clear they use their initiative and improvise > low UA bring to negotiation and to u understand the specific rules of the specific game 3) INDIVIDUALISM / COLLECTIVISM Individualistic societies celebrate the individual skills > they stress the individual responsibility and success > ties between individuals are loose countries: US, UK, France, Canada, Australia Collectivistic societies celebrate the collective achievements > stress loyalty to a group in return for support > help each other through difficulties countries: South American countries, asian Countries 4) MASCULINITY / FEMININITY Masculine society => society in which emotional gender roles are clearly distinct > men are supposed to be assertive, tough and focused on material success > women are supposed to be more modest, tender and concerned with the quality of life countries: Japan, China, Austria, Germany, UK and US Feminine society => societies in which emotional gender roles overlap countries: Sweden, Norway, The Netherlands, Denmark 5) LONG TERM / SHORT TERM ORIENTATION ( high ) LTO values reward that will come in the future > in particular perseverance and thrift countries: China, Hong Kong, Taiwan, Japan ( low Lto ) STO values the past and the present > in particular respect for tradition, preservation and fulfilling social obligations countries: GB, US, Canada; New Zealand, Australia

CHAPTER 5 - CORPORATE RESPONSIBILITY -

- Managers are increasingly affected by questions of corporate responsibility > which they need to be able to deal with in a confident way

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> they have to generate a profit but also to meet a social goal

- There are many conflicting interests => so there are few easy answers - Negative examples of business practice include Poor treatment of suppliers/staff Wasteful uses of energy and other resources Unfair treatment of customers Senior management fraud High compensation to failed managers

- In contrast => there are many examples of philanthropy, in which people give to charities and other causes without expecting any specific benefit in return ==> between these extremes lies the broad area of responsible corporate activity CORPORATE MALPRACTICE, PHILANTHROPY AND RESPONSIBILITY MALPRACTICE - Negative business practice => malpractice - Controversial issues of malpractice arise when F.e: companies reward senior executives who have damaged the business banks sell customers unnecessary insurance retailers source goods from factories that disregard workers’ well-being => these practices erode trust and damage reputation PHILANTHROPY - Practice of contributing personal or corporate wealth to charitable or similar causes => philanthropy - There is a long tradition of individual philanthropy, when people that have made money in business give part of their wealth to charities and other good causes F.e Bill Gates (Microsoft) and his wife have given very large sums to health and education Jeff Skoll (ex-president of eBay) gave 5£ millions to the Said Business School at Oxford University => they do not expect this to increase sales or profit -> it is a goodwill gesture to activities they support > they recognize that their success was in part due to the society in which they work and decide to give something back (some of their wealth) > enhancing their status and reputation - enlightened self-interest => is the practice of acting in a way that is costly or inconvenient at present BUT is believed to be in one’s best interests in the long term > for example to improve reputation, brand image, access to the government, reduce the risk of bad publicity… etc CORPORATE RESPONSIBILITY CR (The responsibility of a corporation) - Between malpractice and philanthropy lies the broad area of corporate responsibility => which refers to the awareness, acceptance and management of the wider implications of corporate decisions > it implies taking account of other criteria than financial ones when making decisions PERSPECTIVES ON CORPORATE RESPONSIBILITY 1) ECONOMIC - Milton Friedman (as an economist) believed that managers should satisfy shareholders

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“ In a free economy there is one and only social responsibility of business: to use its sources and engage in activities designed to increase its profits so long as it stays within the rules of the game (without deception or fraud) ” - He believe that operating business without deception or fraud > provided social benefit by creating wealth or employment (enough) - The directors should concentrate on generating wealth and distribute it to shareholders, who can decide how to use it - Many agree on the fact that environmental or other regulations increase costs > making a business less competitive

2) LEGAL - Societies expect managers to obey the law (By not misleading investors, exploiting staff or selling faulty goods…etc) > some companies take these responsibilities seriously BUT go no further => they do what is legal > as long as decisions meets that test they will take it, even if others question their morality 3) SOCIETAL - While society depend on business to provide products and services >> business in turn depend on society > education of employees, capital, good physical infrastructure AND socially created institutions that enable business to operate => society and business have mutual obligations within a societal contract, which consists of the mutual obligations that society and business recognize they have to each other > managers may do things that support a wider social interest 4) PHILANTHROPIC - This includes areas of behavior that are entirely voluntary (independent of economic, legal or societal considerations)

AN ETHICAL DECISION-MAKING MODEL

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- Examines the influence of individual characteristics and organizational policies on ethical decisions > someone’s response to an ethical dilemma depend on individual and contextual factors ✴ Stage of moral development —> the extent to which someone can distinguish between right and wrong - the higher it is the more likely they will act ethically ✴ Ego strength —> the extent to which someone can resist impulses and follow their convictions - the greater it it the more likely they will do what they think is right ✴ Locus on control —> the extent to which someone believes they control their life the more they see themselves as having control, the more they will act ethically ✴ Work-group norms —> beliefs within the group about right and wrong behavior ✴ Incentives —> management policies on rewards and penalties ✴ Rules and regulations —> management policies about acceptable behavior - Behavior has consequences for the individuals and their context > which may shape future responses

- Ethical relativism is a principle that suggests that ethical judgements cannot be made independently of the culture in which the issues arises > it suggest that people should acknowledge the context, and incorporate local norms and values in their decisions > if local and home country norms conflict —> they should follow the local ones

STAKEHOLDERS AND CORPORATE RESPONSIBILITY > as we already know, stakeholders contribute to and have expectations of organizations

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*Stakeholders > Shareholders > Ethical investors: strong CR policies, reputation, long term financial return > they only invest in businesses that meet specified criteria of ethical behavior STAKEHOLDERS INFLUENCE MANAGERS - If the most powerful stakeholders believe in a Friedmanite position, managers will deliver that > perhaps with a public commitment to socially acceptable practice - Other companies have powerful shareholders that while expecting a financial return > also believe that managers can best deliver long-term returns by accommodating stakeholders’ expectations > firms with this perspective will invest in social initiatives because they believe that such investments will result in increased profitability MANAGERS INFLUENCE STAKEHOLDERS - THE LOBBYING BUSINESS - Companies invest substantial resources to lobby governments to alter laws in their favor

CORPORATE RESPONSIBILITY AND STRATEGY MAKING OPERATIONS MORE SUSTAINABLE - Most activity can be redesigned to use fewer resources and make less waste > many companies are responding to the challenges posed by the climate change F.e >> industries that use a lot of electricity are investing in renewable energy supplies (especially wind and hydro-electric) >> Mars, is working with the Rainforest Alliance to produce all its cocoa sustainably by 2020 > these includes aluminum producers, cement makers, tech companies which need to power their huge data centers - Some companies focus on meeting the needs of ethical customers =...