Advanced International Business

Affective: (Kuwait, Egypt, Spain, Italy, Russia, Argentina, France) = Its normal to lead with emotions

• Reactions are shown immdiatly (verbal & non-verbal)
• Show emotions
• Humorous
• Exoressive
• Verbally commubicative
• close body sapce
• tactile

Neutral (Japan, Hong Kong, China, India, Canada, Denmark) = How can you control a company, when you cant control yourself?)

• Serious
• Controlled
• Reserved
• Non-Verbal communication
• larger body space
• non-tactile

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Specific (Israel,Sweden, Netherlands, UK, Denmark, US, Canada, AUS)

• Clear & direct communication --> from specific to general
• Public & private life separation
• Objective oriented, analyzing, segmenting
• hard-selling
• open, direct
• Shareholders
• 1 person responsible for outcome

Diffuse (China, Japan, Nigeria, Kuwait, Venezuela)

• Indirect communicatiom --> from general to specific,
• hardly no separation of public & private life
• slower personal involvement
• polite, implicit communication
• client relationship
• Everyone is responsible for positiv outcome
• Stakeholders

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Achievement (Norway, Denmark, NZ, AUS, France) i.e. Steve Jobs

• Respect or status is based on skills and knnowledge (what you do)
• MBO & pay for performance

Ascription (Kuwait, Austria, Thailand, India, Serbia) i.e. Prince Harry

• Respect or status is based on seniority  (who you are)
• Extensive use of titles
• Highest hierachy consist mostly out of older seniors

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Internal/Inner (Israel, Norway, US, UK, France) 

• Seeks for a big idea and wants to become the master of his own fate
• In management: Decision maker, inventors, direct orders, clear objectives, MbO works when everyone is having same objecives
• Often dominating attitude / Could have the succeed by any means and costs 
• Discomfort when environment out of control 
• Internal push, focus ond own organization, planning & control
• Stick to the plan

External/Outer: (Venezuela, China, Russia)

• Often flexible attitude --> willing to compromise and keep peace, sensible
• In management: listener, refiner, riddler, work quitely through conflicts, achieve congruents among various peoples goals
• External pull
• Focus on others 
• Trouble shooting
• Go with the flow

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Sequential

• Time is linear --> used to brind order and set limits, times are precise
• 1 activity at a time (time is limited/money)
• situations are subject to planning
• break time into separate blocks
• universalistic time
• In management: first come first served, I cause it to move, straight-production line, rigid time

Synchronous

• Time is cyclical-->whats has been will bei again, time is a concept, time is relative
• Parallel activities, times are guidlines/Intentions
• more paths to reach the goal
• time horzions can blend togheter
• Subjective time
• In managemnent: pragmatic order, elastic time, trigger response

Past orientation: France

• Talks about history, origin of family
• shows respect for ancestors and older people
• always in context of tradition & history
• In business: understand the history & tradition, do not fix deadline for completion

Present-orientation: Spain, Germany

• Activities of the moments are most important
• interest in the here and now
• In business: understand the history & tradition, do not fix deadline for completion

Future-orientation: USA, Japan, Canada

• Activities are directed towards future prospects --> focus on planinf
• Much talks of prospects, potential, great interest in future potential
• planing and stratgizing is done with joy
• present & past used for future advantage
• In business: emphasize the freedom, limitless scope for the company, agree to deadlines, understand the prospects & technological potentials

Antecedent Variables (Einflussfaktoren)

• Dispositional (Persönlichkeitseigenschaften)
• Biographical (Lebenserfahrung)
• Self & identity (Selbstwahrnehmung und kulturelle Identität)

Cross-cultural Competence

• Knowledge (Kulturelles Wissen über Werte, Normen, Traditionen)
• Affect/Motivation (Motivation, Empathie und Interesse ana nderen Kulturen)
• Skills (Praktische Fähigkeiten, wie effektive Kommunikation und Problemlösung)

Intercultural Effectiveness

• Job performance & work adjustment (Bessere berufliche Leistung und Anpassung an internationale Arbeitsumfelder)
• Persoanl adjustment (Persönliches Wohlbefinden in fremden Kulturen)
• Interpersonal relationships (Aufbau/Pflege von Beziehungen über kulturelle Grenzen hinweg)

Situational & Organizational Variables

• Diese wirken sich auf die Anwendung und Effektivität der interkulturellen Kompetenz aus

1. Charismatic / value based leadership
2. Team-oriented leadership
3. Participative leadership
4. Human-oriented leadership
5. anonymous leadership
6. Self-protective leadership

1. Charismatic/Value-based
2. Team-oriented

Accepted in West: Participtaive leadership

Accepted in Eats + Sub-Sahara: Human-oriented leadership

• A global mindset is the ability to step outside one's based culture
• There is no universally correct way of doing things --> Global mindset leadership is situational

1. Psychological Capital: Passion for diversity, quest for adventure, self-assurance

2. Social Capital: Openness, Interculural Empathy, Interpesonal Impact, Diplomcy

3. Intellectual Capital: Global Business versed, Cognitive complexity, cosmopolitan outlook

1. Openness
2. Cognitive Complexity
3. Cosmopolitan outlook
4. Passion for diversity
5. Intercultural empathy

• Language skills
• culture/region-specific knowledge
• cultural-general knowledge
• prior international experience

Benefits of decetralisation:

• More responsive to local needs (depends from country to country)
• Quicker decision making (authority is delegated) 
• Increase motivation of subunit managers (intrinsic&extrinsic)
• Sharpens the focus of subunit managers (economic mindset)

Costs of decentralisation:

• Leads to suboptimal decision making
• Managers focus more on subunit than the organisation as a whole
• Increases costs of gathering infomration (Tailormade solution for subunit, Consolidation)
• Results in duplication of activities (Marketing, Accounting)

Multinational firms that operate worldwide are often decentralized (Beacuse cetralized control of subunits is impossible)

1. Cost centre - The manager is accountable for costs only (f.e IT Support)
2. Revenue centre - The manager is accounable for revenue only (f.e Sales)
3. Profit centre - The manager is accountable for revenues & costs (f.e Production Department)
4. Investment centre - The manager is accounatble for investments, costs and revenue (capital expenditures) - big responsible person (Division, Department)

Tranfer price: The price that one subunit charges for a product or service supplied to another subunit of the same company

In decentralized organizations, much of the decision making is in its subunit - Those units often supply goods to another subunit. (Transfer price is not defined by HQ)

Top Management uses the transfer prices to coordinate actions of subunits and to evaluate the performance of their managers

• Transfer price creates revenue for the selling subunit and purchase costs for the buying subunit - affects each subunits operating income
• Operating incomes can be used to evaluate the subunits perfromances (and to motivate managers)
• Intermediate Product
• Well-designed transfer-pricing system: Manager focusig on maximizing their performance of the subunit

1. Promote goal concruence --> division managers acting in the objectives of Top Management
2. Induce managers to a high level effort
3. Help top managers evaluate the performance of individual subunits
4. Preserve autonomy to top managers (if decentralization is favored)

1. Marked-based transfer price
2. Cost-based transfer price
3. Hybrid transfer price

Optimal decision if 3 conditions are satisfied:

• the market for the intermediate product is perfectly competitive --> optimal case
• interdependencies of subunits are minimal
• It makes no difference for the company whether the product is traded internally between departments or bought/sold on the external market. The company's total costs and revenues remain the same.

Not usefull if:

• Markets not perfectly competitive, selling prices affect the quantity of product sold

ATTN: When the market for the good is imperfectly competitive the transfer price must generally be set below the external market price (but above the selling divisions variable cost)

Useful when market prices are unavailable, inappropriate, or too costly to obtain, such as:

• When markets are not perfectly competitive
• When the product is specialized
• When the internal product is different from the products available externally in terms of its quality (higher/lower) and the customer service provided for it

Top managers choose a transfer price based on the costs of producing the intermediate product:

• Full-cost-bases --> based on variable and fixed costs (long term business decision)
• Variable-cost bases --> Contribution margins --> Short term business decisions

Advantages:

• They represent relevant costs for long-run decisions
• Facilitat external pricing based on variable and fixed costs
• Least costly to administer

Issues:

• How are the subunits indirect costs allocated to products?
• How to choose the actual fixcost rate? (actual or budget)
• Have the correct activities, cost pools been identified=

• Hybrid transger prices take into account both: cost and market information

• Prices may be set in the middle of the minimum price and the market price (maximum price) The max price is the same as the local market price and the minimum price needs at least to cover the purchase price and the variable costs. Everything above that (Purchase+Variablecost) contributes a margin to cover the fix cost

Types:

1. Prorating the difference between the max & min transfer prices
2. Negotiated pricing -->most common hybrid type (internal or external)-->often used when markets are volatile; subunits are free to negotiate
3. Dual pricing: Using 2 seperate transfer pricing methods to price each transfer (full cost pricing / market pricing)

• Transfer prices affecting income taxes, payroll taxe, custom duties, tariffs, sales taxes etc.
• Parent companies can save large sums of money in taxes by:
  • Choosing  the right transfer pricing method 
  • Generate more profit in low tax rate countrys, less profit in high taxe countrys