1. Managing Across Cultures
Chapter 5

2. Chapter Outline
 Strategic orientations of global companies
 Ethnocentric orientation
 Polycentric orientation
 Regioncentric orientation
 Geocentric orientation
 The globalization imperative vs. pressures for
regional and national responsiveness

3. Chapter Outline (2)
 Doing business around the world
 China
 Russia
 India
 France
 Poland

4. Ethnocentric Strategic Orientation
 The values and interests of the parent company guide
strategic decisions

5. Ethnocentric Strategic Orientation (2)
 Mission is profitability.
 Top down decision making – major decisions are made at
headquarters
 Global strategy, determined at headquarters.
 Global product (based on needs of home country)
 Home country managers hold key positions everywhere.
Profits from subsidiaries are repatriated (go back) to
corporate headquarters
 Headquarters makes decisions about budgets, profit targets,
and capital investment for the subsidiaries.

6. Polycentric Strategic Orientation
 Strategic decisions are tailored to suit the cultures
of the countries where the company operates.

7. Polycentric Strategic Orientation (2)
 Mission is public acceptance (legitimacy)
 Subsidiaries set their own strategic objectives.
 Subsidiaries use national responsiveness strategies
(based on local needs).
 Products are based on host country needs.
 Most profits are retained by the subsidiary.
 Subsidiary makes decisions about its budget and capital
investment.
 Local citizens are trained for key positions.

8. Regioncentric Strategic Orientation
 The firm tries to balance its own interests
with the interests of its subsidiaries on a
regional basis.

9. Regioncentric Strategic Orientation (2)
 Mission is profitability and public acceptance.
 Strategy is based on regional integration and national
responsiveness.
 Strategic objectives are negotiated between regional
headquarters and subsidiaries.
 Regional product, often with local adaptations
 Most profits are retained in the region.
 Capital investment decisions are made on a regional basis.
 Managers are trained for key positions anywhere in the region.

10. Geocentric Strategic Orientation
 The company uses a global approach to
decision making.

11. Geocentric Strategic Orientation (2)
 Mission is profitability and public acceptance.
 Strategy is global integration and national
responsiveness.
 Strategic objectives are negotiated among
subsidiaries, regions, and headquarters.
 Global product, with local variations

12. Geocentric Strategic Orientation (3)
 Headquarters redistributes profits among subsidiaries
to meet capital investment and budget needs.
 The best managers are developed for key positions
anywhere in the world.
 Combines best features of geocentric and polycentric
strategies.
 Requires more coordination and communication than
other strategies.

13. Globalization Imperative
 The "globalization imperative" is a belief that
one worldwide approach to doing business is
the key to both efficiency and effectiveness.
 In response to pressures for national and regional
responsiveness, a growing number of firms have
switched to regioncentric or geocentric strategies.

14. Pressures for National and Regional
Responsiveness
 Different product standards
 Different customer needs and tastes
 Businesses or consumers prefer locally made
products
 Managing details in a global organization is difficult
and complex.
 Subsidiaries know local market needs and
management practices better than headquarters.
 Employees in subsidiaries seek promotion
opportunities.

15. Doing Business in China
 Technical competence is the primary criterion for
doing business in China *
 Time is the major cultural difference between many
Western countries and China – Chinese are patient
negotiators and may take advantage of American
impatience or time constraints.
 Guanxi :Good connections that result in lower costs,
increased business, and better business
opportunities.

16. Doing Business in China (2)
 Be a good listener
 Realize that China is a collective society
 Understand that the Chinese are less animated than
Westerners. China is a neutral culture
 Early negotiations are likely to focus on general
principles. The Chinese will be reluctant to change
those later.
 Older Chinese may place values and principles
above money and expediency. They value the good
of their country or group.

17. Doing Business in China (3)
 Allow Chinese host to signal the beginning of a
meeting
 Understand that Chinese are slow to decide on a
course of action, but stick to the decision once made
 Chinese negotiators expect concessions but do not
always make a concession in return.
 Do not display emotions during negotiations
 Take a long-term perspective toward business
opportunities.

18. Doing Business in Russia
 Build personal relationships with partners
 Use local consultants
 Be careful to uphold your own business
ethics and the policies of your company
 Be patient
 Stress exclusivity
 Deal with just one firm at a time
 Do not share your company's financial
information

19. Doing Business in Russia (2)
 Research the company and the business environment
 Stress mutual gain
 Clarify business terminology
 Be careful about compromising or settling things
quickly – most concessions should be made at the
end.
 Russians believe that contracts are binding only if
they are mutually beneficial. Continue to stress the
benefits of the deal to them.
 Do not get into a dispute with the government.

20. Doing Business in India
 Many business people speak English.
 When dealing with people from India, one
should
 Be on time for meetings
 Avoid asking personal questions
 Use formal titles when addressing others
 Avoid public displays of affection

21. Doing Business in France
 Social class and status are more important in
France than in the United States
 In contrast to Americans, the French are:
 More tolerant of different points of view
 More inclined to determine a person’s
trustworthiness on the basis of personal
characteristics rather than accomplishments

22. Doing Business in France (2)
 In contrast to Americans, the French are: (2)
 More inclined to have highly centralized
organizations with rigid structures
 Top-level managers are more autocratic and less
likely to be questioned.
 Less moved to industriousness and more
concerned with the quality of life

23. Doing Business in France (3)
 Typical behavior of French negotiators
 They try to find out about the other company’s
objectives at the beginning of negotiations
 They don’t reveal their own objectives until the last
stages of negotiations
 Do not like to be rushed into making a decision
 Usually will not make a decision during a meeting
with another company
 Usually will not make concessions unless you give
them a logical reason for doing so

24. Doing Business in Poland
 Design products for Poland and use a Polish
advertising agency.
 Do your homework. Poles are often shrewd
negotiators.
 Be prepared to provide data. People are not
impressed by "sales talk".
 Be prepared to make a long-term commitment.
 Take time to build relationships and gain trust.
 Be willing to "give something back" to the community.

25. Doing Business in Poland (2)
 Don't be afraid to ask questions about things that you
don't understand.
 It's okay to ask sensitive questions, but be polite.
 If a question is important, keep asking until you get
an answer. You may have to ask the question
differently.
 Local governments have a large role in business
regulation. Some areas are more conducive to
business than others.

26. Doing Business in Poland (3)
 When dealing with older Poles, use professional titles
(example: engineer), and do not call people by their
first names until you are invited to do so.
 Business entertainment is less elaborate than in the
U. S. Entertainment should be reciprocated.
 Be patient. Establishing a business will take longer
than it would in the U. S.
 Many of these points would also apply in the Czech
Republic and Slovakia.