Global Environment
When a manager goes to any other country for managing a branch over there for the company it is evident that he or she is going to face some of the biggest challenges. There will be huge difference in overall environment what you can face in your home country. There are some of the environments that a new manager should keep in consideration.
Legal and political environment:
Some of the countries have a stable legal and political condition in their country. Suppose if a new manager is in United States he or she is going to face a very stable political condition over there. There will be set procedure in all political and legal matters. The elections will take place after a certain interval and even after the election if a new party comes in power any radical change is not going to happen.
However, in some of the other countries the political situation is not stable. Rather the situation is risky. As a result of global recession the political and legal environment of some of the countries like Zimbabwe, Yemen, Venezuela, Sudan, Somalia, North Korea, Iraq, Iran, Afghanistan and many other countries. It is true that the political condition of the country will not have direct effect on the managers. However, one thing must keep in mind that to understand the opportunities a manager is going to get in a new country will be effected by this.
Whether the political environment is stable or risky does not have any relation with the managers. The only important thing that a manager needs to keep in mind is the difference it has with the political situation of the home country.
Economic environment:
If a manager is going in a different country he or she must understand about the economic system of that particular country. Then only he or she will be able to make the right plan for investing or promoting any product or service in the business. Normally there are two kinds of economic systems. One of them is free market in which the private sectors will have the control on the economy of the country. On the other hand in planned economy the central government will have the control on the economy of a country.
However, now, no country only maintains a particular way of economic system. For example in United States, free market is the maintained economical System but Government has kept his own control on the economy. On the other hand in the countries like China they go for planned economy but right now they are more interested to go for free market. There are some of the other things like the rates of currency exchange, rates of inflation, and tax policies of different countries which a manager should understand to make better global business.
The strength of the currency at home country and in the foreign country where the manager is working is also quite an essential thing to check. Any revaluation of the currency exchange can have a big effect on the profit of the company which they will generate in a foreign company. Same kind of situation happened when the value of EURO raised and due to that reason German companies increased their profit to huge extent.
Inflation is another thing that the managers need to take care of. In case of inflation the price of various products which are used on daily basis by people increase. However, this is not the only thing which happens with the inflation. At the same time it makes a big difference cost of living, exchange rates, interest rates and many other things. A manager who is working abroad need to give importance to that so that he or she can understand the changes happened in the monetary policies of that particular country. Then the manager will be able to make the pricing and purchasing perfect as per the situation of the country.
Tax policies of the different countries are also going to be an economical worry for the managers who are going to work abroad. In some of the countries the tax laws can be much more stringent than the home country of the manager. In such a scenario it will be crucial to understand the situation and behave accordingly. The managers need to know about the exact tax rule of the country so that the right tax amount can be judged and accordingly the manager can handle tax obligation perfectly.
Cultural Environment:
In Mexico one US manager stopped providing Fiesta to the employees and because of the same overall performance of all the employees was down. When the higher management went to go through the actual reason why this has happened then they found that as the fiesta was stopped by the manager because he thought it is wastage of money and time the employees understood that the manager is not giving importance to the values of the employees. After talking to the several employees it was found that it is the only reason why 20 percent of the performance was down. It was solved when the fiesta was started again.
At Hewlett-Packard confusion happened due to same kind of cultural differences. In a software project of cross-global team the US team was sending long descriptive e-mails to the French engineers. The French engineers found the e-mails quite patronizing and they replied with small and crisp e-mails. Now, the American engineers misunderstood the same and thought that the French engineers are concealing something from them. This situation became more and more complicated and it had a very much negative impact on the production of the company. Finally cross cultural training was given to the employees and then only the situation was under control.
It is quite clear from Chapter 2 each international company has its own work culture. At the same time there will be national culture in a foreign country. Now for a manager who is handling a branch in a foreign country it will be crucial to give importance on the national culture because only then he or she will be able to connect with the employees and the customers of that particular country.
When you consider about different countries economic, political and cultural differences are obvious. However, it will not at all be easy to understand the cultural differences between the home country and the foreign country. It is tough for an American also to describe the exact cultural value or the other characteristics of the other inhabitants of the country. So, as a manager if one thinks of understanding about the cultural differences by discussing the same with the other employees of that country then it is not going to happen completely. So, as a manager you need to judge the cultural values of the other employees in a foreign country. The identification process of different national cultures can be found in Exhibit 3-4.
Hofstede’s Framework:
To understand different national culture Geert Hofstede has developed a very effective way of understanding the national cultures of different countries. As per his research there are five separate dimensions of national cultures which a manager needs to understand. These dimensions are given in details in the following Exhibit 3-5.
Among the other dimensions two of the dimensions go directly with Hofstede. Other three dimensions are similar to Hofstede’s theory. Four other dimensions are also similar. These nine dimensions will help a manager to improve his or her understanding about the global culture and how to handle the national cultural differences. The definition of the nine such dimensions are given below.
Global Management in modern time:
If you consider the environment of today’s world it is not that much easy to run a business worldwide. A manager needs to give importance on two most important aspects. He or she has to focus on the globalization. Managing the openness which is the other name of globalizations will be a challenge. Challenges faced for handling the global workforce will be considered as the other aspect.
There are plenty of challenges associated with the openness. One of the biggest challenges which are faced is about the terrorists. When you are talking about openness it can be considered as openness to both good and bad. So, in the age of globalization the terrorists also have a global group which comes as the biggest threats to the managers. Another risk factor which has come up with the openness of the various countries is their economic dependence. Now a day, it is quite clear if one of the countries face financial crisis for any particular reason than the other countries which are interrelated for various reasons will also be affected with the same.
Another biggest challenge which is faced by the managers for global management is the cultural differences. Now, this cultural difference is also associated with a lot of things. It depends on the religion, history, traditions, and deep rooted values from ancient times. Managing in such a diverse situation will surely be a big challenge. The benefit of globalization is already proved. Most of the people feel that globalization has played a crucial part in economic benefits of various countries. However, as per some of the other people globalization has become the Americanization where plenty of other countries are trying to adopt the cultural value of United States in their countries. One of the best things what is happening with globalization is that a lot of misunderstandings are getting solved within a very quick time.
Managing Workforce:
For a manager of a multinational company managing the workforce will also be a crucial thing that he or she needs to take care of. In the different countries the wages of the employee will be different. Their cultural differences will also be there. According to a research cultural intelligence of a manager will be a crucial thing what is required to be taken in consideration. There are three dimensions of cultural intelligence. 1) Knowledge of different kinds of cultural values will be crucial. 2) It will also be crucial to understand various reactions and signals of the employees and the customers with mindfulness. 3) Third will be the behavioral skills by the help of which the managers will be able to cope with the various situations which come up because of cultural differences.
As per another research global mindset can also play a crucial part for a global leader to understand and handle various cross cultural behavioral attributes. There are three different aspects for the same.
Now a day in a multinational company the managers who have the cross cultural abilities and skills get the greatest of importance in the company. Now for all the managers who are working in the other countries it is extremely important to have the sensitivity and skill to understand cross cultural behaviors of the employees and the other customers to run the business smoothly.
As per the necessity the managers need to change their managerial styles. They should know how to handle the different diverse situations and finally reach the goals of the company. It is not only important to know about the people who will agree with your decisions but you need to understand the views of those people who will disagree with your decision. Their leadership styles have to be adjusted accordingly so that they can understand what the other employees are wanting from them.
Links of Previous Main Topic:-
- management and organizations a managers dilemma
- Understanding managements context constraints and challenges
- Managing in a global environment
- What is your global perspective
Links of Next Fundamentals of Management Topics:-
