FREE ESSAY ON BUSINESS STRATEGIES

BUSINESS STRATEGIES

In chapter seventeen several topics for debate are presented about managing global
operations. For many global organizations, or organizations that produce or sells goods
or services in more than one country, a difficult question is how to develop and place
managers in foreign operations. Some people believe organizations should let foreign
managers run foreign subsidiaries because of the large differences among national
cultures while others believe that domestic managers should be trained to run foreign
subsidiaries because of loyalty issues. 
Nation culture is the particular set of economic, political, and social values that exist
in a particular nation. This culture effects all aspects of global organizations
operations. Foreign exchange rates, banking and accounting laws, and tax codes can all
affect the profitability of foreign subsidiaries. These rules and regulations vary from
country to county. The way Japan accounts for good will varies dramatically from the way
the United Sates regulatory agency demands it be recorded. In some countries politics
play a larger role than others. In smaller less industrialized countries it may be
necessary to support specific political candidates in order to be able to establish a
profitable business. To do business in a country like Iraq you would probably have to
make a large donation to the Hussein family, however in England you don't have to support
the Royal Family to operate an organization. In addition to economic and political
problems a more fundamental problem appears. Social values have a dramatic affect on how
products and services are perceived and how effective advertising can be. An advertising
campaign with women in bikinis promoting Budweiser products may be highly effective in a
small collage town in the United States, but in Saudi Arabia it would probably offend a
number of people, because of the local customs. Having a local foreign manager can aid in
the efficiency of foreign operations because of their better understanding of local laws
and regulations, lobbying systems and societal norms.
Placing a local manager in head of foreign operations can also lead to insecurities about
loyalty. It becomes easier for subsidiaries to be overtaken and spun off if the local
management has little ties to the central organization. Training and placing loyal
domestic managers in foreign operations can be on way of countering this potential
problem. Some companies have successfully employed this type of global strategy with
success but training mangers in local customs and laws can be timely and costly.
Although in the future the world may merge customs, languages and currencies, in today's
world there is a vast difference between national cultures. An effective way to operate a
foreign organization is to have a manager that has previously lived, been educated and
has operated in that particular nation. Loyalty to any one organization is based on other
things besides just nationality. So training and placing a domestic manager in a foreign
division may not be the best choice for the organization. By placing the most trained and
qualified people, regardless of race, religion, sex, or nationality, to do the best job
in each part of an organization is the most effective way to do business. And who more
qualified than those who know first hand what the national culture is.