environmental factors that affect sbmp

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Environmental Factors that affect SBMP S. Sredharran – M.C.A, M.B.A, M.Phil, M.Sc(Psychology)

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Environmental Factors that affect SBMP. S. Sredharran – M.C.A, M.B.A, M.Phil , M.Sc (Psychology). What is a culture?. Culture is the "lens" through which you view the world. It is central to what you see, How you make sense of what you see, How you express yourself. - PowerPoint PPT Presentation

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Page 1: Environmental Factors that affect SBMP

Environmental Factors that affect SBMP

S. Sredharran – M.C.A, M.B.A, M.Phil, M.Sc(Psychology)

Page 2: Environmental Factors that affect SBMP

What is a culture? Culture is the "lens" through which you

view the world. It is central to what you see, How you make sense of what you see, How you express yourself.

"Culture is the arts elevated to a set of beliefs." – Tom Wolfe

Page 3: Environmental Factors that affect SBMP

What is different?

1. Communication Styles2. Attitudes toward conflicts3. Decision making style4. Approaches to knowing

What is hidden below the surface?

1. Beliefs2. Values3. Expectations4. Attitudes

Four Fundamental Patterns of Cultural Difference

Page 4: Environmental Factors that affect SBMP

Cross – Cultural UnderstandingThe interaction of people from different backgrounds in the business world. Cross culture is a vital issues in international Business, as the success of international trade depends upon the smooth interaction of employees from different cultures and regions. A growing number of companies are consequently devoting substantial resources toward training their employees to interact effectively with those of companies in other cultures in an effort to foment a postive cross-cultural experience.Cross-culturalism is distinct from multiculturalism. Whereas multiculturalism deals with cultural diversity within a particular nation or social group, cross-culturalism is concerned with exchange beyond the boundaries of the nation or cultural group.

Page 5: Environmental Factors that affect SBMP

Cross Cultural Understanding Cross culture can be experienced by an

employee who is transferred to a location in another country. The employee must learn the language and culture of those around him, and vice-versa.

This can be more difficult if this person is acting in a managerial capacity; someone in this position who cannot effectively communicate with or understand their employees' actions can lose their credibility. In an ever-expanding global economy, cross culture and adaptability will continue to be important factors in the business world.

Page 6: Environmental Factors that affect SBMP

Cross Cultural Understanding National culture has always been a

complex and difficult construct to define. All cultures are more nuanced than we might ever imagine. In today’s globalizing world where cultures increasingly connect and collide, the art of finding distinctive or even unique characteristics of any national culture is becoming harder.

Greater access to knowledge, data and multiple opinions adds complexity rather than simplifies our ability to capture and distil the essence of a nations’ culture accurately.  

Page 7: Environmental Factors that affect SBMP

Cross Cultural Considerations

There are many considerations that might help one assess the level of emphasis that one should place on cultural awareness before specifying what type of cultural learning is appropriate for your international managers. Here are some:

Priorities – The relative importance of a country / market in relation to your international strategy.

Economics – The alignment of favourable national economic conditions at a macro and market level. 

Politics – The relative compatibility of national political intentions and prevailing ideology.   

Legal – The consistency of legal infrastructure and the fit of ethical codes with company requirements.  

Linguistic Compatibility – The ease of linguistic clarity between key people operating in different languages.

Engagement – The degree of success dependent or reliant on high levels of local workforce performance.

The greater the lack of compatibility...the greater the need to enhance your organization’s cross cultural capability. 

Page 8: Environmental Factors that affect SBMP

Cross Cultural HR Differences Percentage of people who agreed with this statement:

It is important for a manager to have, at hand, precise answers to most of the questions that his or her subordinates may raise about their work

High percentage countries Japan 77% Indonesia 67% Italy and France 59%

Low percentage countries USA and Sweden 13% Netherlands 18% Denmark 27% Great Britain 30%

Page 9: Environmental Factors that affect SBMP

Cross Cultural Communication

Verbal CommunicationWordsVoiceNon-Verbal CommunicationGesturesPosturesFacial ExpressionsEye ContactVocal CharacteristicsPersonal AppearanceTouch

Page 10: Environmental Factors that affect SBMP

High Context and Low Context Cultures

High Context Culture:- Cultures that rely heavily on non-verbal and subtle situational cues in communication.

Low Context Culture:- Cultures that rely heavily on words to convey meaning in communication

Page 11: Environmental Factors that affect SBMP

Cross Culture Communication

Intercultural Communication is the process of sending and receiving messages between people whose cultural background could lead them to interpret verbal and non-verbal signs differently.

Page 12: Environmental Factors that affect SBMP

Why Cross Culture communication ?

Globalization: Cross border movement of people, goods and data brings more and more cultures into contact with one another and increases the potential of cross culture communication.

◦ Business Opportunities◦ Job Opportunities◦ Improves the contribution of employees in a

diverse workforce◦ Sharing of views and ideas◦ Talent improvisation◦ An understanding of diverse market

Page 13: Environmental Factors that affect SBMP

Blocks to Cross Cultural Communication

Ethnocentrism : Inability to accept another culture's world view; "my way is the best." Discrimination : Differential treatment of an individual due to minority status; actual and perceived; e.g., "we just aren't equipped to serve people like that." Stereotyping : Generalizing about a person while ignoring presence of individual difference; e.g., "she's like that because she's Asian – all Asians are nonverbal." Cultural Blindness: Differences are ignored and one proceeds as though differences did not exist; e.g., "there's no need to worry about a person's culture

Page 14: Environmental Factors that affect SBMP

Blocks to Cross culture communication

Cultural Imposition: Belief that everyone should conform to the majority; e.g., "we know what's best for you, if you don't like it you can go elsewhere." Tone Difference : Formal tone change becomes embarrassing and off-putting in some cultures.

Page 15: Environmental Factors that affect SBMP

Welcome topics during a conversation

Welcome Topics of Conversation: Indonesia: Family, travel/tourism, sports,

praising the local cuisine, future plans and success of the group or organization

Germany: Sports--particularly soccer, tennis, current events, politics, among those who imbibe, beer is often a good topic of conversation

Page 16: Environmental Factors that affect SBMP

Topics to avoid during a conversation

Indonesia: Politics, corruption, criticism of Indonesian ways, commenting on Indonesian customs that you find peculiar, religion

Saudi Arabia: Middle Eastern politics and International oil politics, Israel, criticizing or questioning Islamic beliefs, women/ inquiries or complimentary remarks about the female family members of your Saudi associates

South Korea: Korean politics/local politics, The Korean War, Socialism and Communism, Japan and your contacts in Japan, your host's wife, Personal family matters

Germany: World War II, personal questions

Page 17: Environmental Factors that affect SBMP

Precautions in Cross Cultural Communication

1. Slow Down2. Separate Questions3. Avoid Negative Questions4. Take Turns5. Write it down6. Be Supportive7. Check Meanings8. Avoid Slangs9. Watch the humour10. Maintain Etiquette

Page 18: Environmental Factors that affect SBMP

Boundary Spanning Roles

Boundary Spanning Lateral relationships that help to

integrate and coordinate the activities of the organization.

Examples include: Liaisons, committees, task forces,

integrating positions, and interfunctional work teams.

Page 19: Environmental Factors that affect SBMP

Locus of Decision Making

Locus of Decision Making The degree to which decision making is centralized

versus decentralized. Centralized decision making

AdvantageGives top-level management maximum

control.Disadvantage

Limits the organization’s ability to respond quickly and effectively to changes in the environment.

Page 20: Environmental Factors that affect SBMP

Locus of Decision Making

Locus of Decision Making Decentralized decision making

AdvantageOrganizations can respond to environmental change more rapidly and effectively because the decision makers are the people closest to the situation.

DisadvantageTop-level managers lose some control.

Page 21: Environmental Factors that affect SBMP

Mechanistic versus Organic Systems

Mechanistic Systems Highly centralized organizations in which

decision-making authority rests with top-level management.

Organic Systems Decentralized organizations that push

decision making to the lowest levels of the organization in an effort to respond more effectively to environmental change.

Page 22: Environmental Factors that affect SBMP

Management of Foreign Subsidiary

Three levels of subsidiary responsibility Local Implementation

Very well defined roles to play Very little independence

Specialized Contribution An interdependent network of subsidiaries,

with each subsidiary making a unique contribution

Often in a production role Global Mandate

Have responsibility for and entire global business

Activities integrated by the subsidiary itself, not the corporate office

Page 23: Environmental Factors that affect SBMP

Industrial Relations – Cross Cultural

We need to consider some general points about the field of international industrial relations. First, it is important to realize that it is difficult to compare industrial relations systems and behavior across national boundaries; an industrial relations concept may change considerably when translated from one industrial relations context to another.

Cross-national differences also emerge as to the objectives of the collective bargaining process and the enforceability of collective agreements.

Page 24: Environmental Factors that affect SBMP

Industrial Relations - CC

Because national differences in economic, political and legal systems produce markedly different industrial relations systems across countries, multinationals generally delegate the management of industrial relations to their foreign subsidiaries. However, a policy of decentralization does not keep corporate headquarters from exercising some coordination over industrial relations strategy.Generally, corporate headquarters will become involved in or oversee labor agreements made by foreign subsidiaries because these agreements may affect the international plans of the firm and/or create precedents for negotiations in other countries.Multinational headquarters involvement in industrial relations is influenced by several factors, as detailed in the next slide :

Page 25: Environmental Factors that affect SBMP

Industrial Relations - CC

The degree of inter-subsidiary production integration. High degree of integration was found to be the most

important factor leading to the centralization of the industrial relations function within the firms studied.

Industrial relations throughout a system become of direct importance to corporate headquarters when transnational sourcing patterns have been developed, that is, when a subsidiary in one country relies on another foreign subsidiary as a source of components or as a user of its output.

In this context, a coordinated industrial relations policy is one of the key factors in a successful global production strategy.

Page 26: Environmental Factors that affect SBMP

Company Domicile A domicile of choice is a domicile acquired,

through the exercise of his own will, by a person who is legally capable of changing his domicile.

To acquire a domicile of choice, a person must establish a dwelling-place with the intention of making it his home.

The fact of physical presence at a dwelling-place and the intention to make it a home must concur; if they do so, even for a moment, the change of domicile takes place.

A question of domicile as between the state of the forum and another state is determined by the law of the forum.

Page 27: Environmental Factors that affect SBMP

Role of Headquarters

Providing direction and Purpose Leveraging Corporate Performance Ensuring Continual Renewal Problems in international management

mostly arise from control-related issues (headquarters-subsidiary relationships)

Page 28: Environmental Factors that affect SBMP

Head Quarters & Subsidiary Relations

Cosmopolitan liaison personnel Project teams Cross-border teams Informal integration and structural

integration International job rotations

Page 29: Environmental Factors that affect SBMP

Head quarters – Subsidiary Relations 1920-1950

Multidomestic – strategic decisions decentralized

Loose, simple controls

Little coordination Subsidiaries are

managed as portfolios

Mainly financial flow – capital out, dividends back (Market approach)

1950-1980 International

companies Control through

budgets, structural mechanisms

Formal system controls – output controls Subsidiaries are managed as portfoliosRules approach predominatePlanning Budgeting, Replicating HQ’s administrative system

Page 30: Environmental Factors that affect SBMP

Headquarters – Subsidiary Relations 1980-1990

Efficiency-driven global companies

Centralized control on strategic decisions (product decisions –cost, quality emphasis)

Local autonomy on operational decisions What control approach predominates?

1990-Present Transnational Complex process of

coordination and cooperation in an environment of shared decision making (emphasis on worldwide innovation)

Control mechanisms from previous periods, but with increased reliance on integrative techniques and socialization (international job rotation, cross-border teams,…etc.,)

Page 31: Environmental Factors that affect SBMP

Nationality of Ownership of Subsidiary US firms tend to exercise greater centralized control over labor

relations than do British or other European firms. US firms tend to place greater emphasis on formal management

controls and a close reporting system (particularly within the area of financial control) to ensure that planning targets are met.

Foreign-owned multinationals in Britain prefer single-employer bargaining (rather than involving an employer association), and are more likely than British firms to assert managerial prerogative on matters of labor utilization.

US-owned subsidiaries are much more centralized in labor relations decision making than the British-owned, attributed to: More integrated nature of US firms Greater divergence between British and US labor relations

systems than between British and other European systems, and More ethnocentric managerial style of US firms

Page 32: Environmental Factors that affect SBMP

Subsidiary Characteristics Subsidiaries formed through acquisition of well-

established indigenous firms tend to be given much more autonomy over industrial relations than are greenfield sites.

Greater intervention would be expected when the subsidiary is of key strategic importance to the firm and the subsidiary is young.

Where the parent firm is a significant source of operating or investment funds for the subsidiary – a subsidiary is more dependent on headquarters for resources – there will tend to be increased corporate involvement in industrial relations and human resource management.

Poor subsidiary performance tends to be accompanied by increased corporate involvement in industrial relations.

Page 33: Environmental Factors that affect SBMP

Strategic Control Options

Input Control – A control system that emphasizes employee selection, training and socialization fo these employees within the organization and its values, vision and objectives.

Behavior Control - A control system that emphasizes top-down control in the form of articulated operating processes and procedures

Output Control - A control system that sets and measures actual targets, such as financial results and productivity

Page 34: Environmental Factors that affect SBMP

Orgn Attributes that support Behaviour Control

The degree to which a firm weighs evaluations based on behavior

Whether an employee is held accountable regardless of the outcome

The degree to which there is concern for procedures or methods

The degree to which performance programs are imposed from the top down

The frequency in which employees receive feedback or performance information

Page 35: Environmental Factors that affect SBMP

Dimensions of Output Control

The degree to which a firm uses evaluations with significant weightings on results

Pay based on performance Pre-established targets used for

evaluating personnel Numerical records as indices of

effectiveness Performance linked to concrete results Appraisals based on goal achievement

Page 36: Environmental Factors that affect SBMP

Host Country Cultural Distance from Home Country

Control System “Fit” Knowledge of

Input- Output Transformation

> Output Measurability

Subsidiary Operating Strategies (e.g.; Inventory Levels, Profit Repatriation)

Control System Selection

- Input - Behavior - Output

Host CountryPolitical RestrictionsAnd Risk

Host CountryEconomic and ForeignExchange Instability

Control Selection

Page 37: Environmental Factors that affect SBMP

Developing Performance Measurement and Control Systems: Host Country Factors

The cultural distance between the headquarters home country and the country hosting the international firm’s subsidiary

The degree of host country political risk as reflected in host government restrictions on the international firm’s operations

Economic factors such as the volatility of a host country’s foreign exchange rates and host country inflationary pressures that are linked to foreign exchange movements

Page 38: Environmental Factors that affect SBMP

Core Values - CSRIntegritySafety and healthQuality of workTreatment of peopleAccountabilityProfitabilityInclusiveness & Diversity

• Supplier Diversity• Design• Innovation• The Environment• Operational

Excellence• Technology

Page 39: Environmental Factors that affect SBMP

Enterprise Level – Strategic Thinking

Establishment of committees: Public policy/issues Ethics Governance Social audit Corporate philanthropy Corporate citizenship Ad hoc committees

Public affairs office

Identification/analysis of social or public issues

Page 40: Environmental Factors that affect SBMP

Corporate Public Policy

Page 41: Environmental Factors that affect SBMP

Ethical Issues

Ethics Accepted principles of right or wrong

governing the behavior of a person, the profession’s members, or an organization

Business ethics Accepted principles of right or wrong

governing the conduct of business people Ethical strategy

A strategy that doesn’t violate the accepted principles

Page 42: Environmental Factors that affect SBMP

Ethical Issues in International Business

Arise most often in the context of:

Employment practices

Corruption

Human rights

Moral obligations• Social responsibility

Environmental pollution

Page 43: Environmental Factors that affect SBMP

Ethical Issues in Employment Practices

When work conditions in a host nation are clearly inferior to those in a multinational’s home nation, what standards could be applied? Host nation’s standards Home nation’s standards Both or other’s standards

Rights (e.g. freedom of association, speech, assembly & movement) granted in the developed world are by no means

universally accepted Example: No specific human rights in South Africa,

Nigeria & Myanmar Examples

Royal Dutch/Shell: Human Rights in Nigeria Child Labour in China

Page 44: Environmental Factors that affect SBMP

Ethical Issues

Corruption (e.g. hoarding, smuggling, & side payments to government bureaucrats) occurs when preexisting political structures limit the

workings of the market mechanism can speed up approval for business investments

Conflicting viewpoints of economists towards corruption Stimulates economic growth Reduces the returns on business investment & leads

to low economic growth Example:

Corruption fears over China ventures

Page 45: Environmental Factors that affect SBMP

CSR

Social Responsibility Business decisions should be made after consideration of

social consequences of economic actions Corporate Social Responsibility

Firms make contributions to society by engaging in social activities

Example: Environmental protection 3M company in US

develops biodegradable products which cause less pollution collects the waste paper for recycling

Example: Hiring and Promotion

Page 46: Environmental Factors that affect SBMP

Ethical Decision Making:Hiring & Promotion

Ethical issues

Fair compensation Reasonable working hours

Equal pay for work of equal value

Prohibition of forced / prison labor

Prohibition of child labor

Prohibition of discrimination & disciplinary actions

Page 47: Environmental Factors that affect SBMP

Ethical Decision Making Step 1

Identifying a decision which would affect stakeholders & in what ways

Internal stakeholders People who work for or who own the business such as

employees, the board of directors, & stockholders External stakeholders

Individuals or groups who have some claims on a firm such as customers, suppliers, & unions

Step 2 Judging the ethics of the proposed strategic decision

i.e. whether a proposed decision would violate the fundamental rights of any stakeholders

Step 3 Managers establish moral intent to resolve moral

concerns where the fundamental rights of stakeholders or key moral principles

have been violated

Page 48: Environmental Factors that affect SBMP

Ethical Decision Making

Step 4 Requiring the company to engage in ethical behavior

Step 5 Companies need to audit its decisions & ensure that they

are consistent with ethical principles

Page 49: Environmental Factors that affect SBMP

Environmental Issues

Pesticides often harm or kill fish and birds and can cause illness in children. Too much pesticide is dangerous to adults, so only safe levels are allowed keeping adults in mind, but such levels are still probably too dangerous for children.  A 2011 study by UC Berkeley has shown that prenatal exposure of pesticides in pregnant women can also lower the IQ of their children.

Air pollution contaminates the air, despoils vegetation and crops, corrodes construction materials, and threatens our lives and health. We generally assume we get sick from allergies, bacteria, or viruses; but pollution is a very common cause of illness as well.

Page 50: Environmental Factors that affect SBMP

Environmental Issues

Nuclear power plants require minding, processing, and transporting of nuclear materials that causes cancer in many people, and it’s unclear that our methods of disposing of nuclear waste are entirely safe.

Toxins — Chlorofluorocarbons,  Endocrine disruptors, Dioxin, Toxic heavy metals, Environmental impact of the coal industry, Herbicides, Pesticides, Toxic waste 

Waste — Electronic waste, Litter, Waste disposal incidents, Marine debris, Medical waste, Landfill Environmental impact of the coal industry, Incineration, Great Pacific Garbage Patch,  Exporting of hazardous waste

Page 51: Environmental Factors that affect SBMP

Stakeholder Management Stakeholder Management is an important discipline that

successful people use to win support from others. It helps them ensure that their projects succeed where others fail

Remember that although stakeholders may be both organizations and people, ultimately an organisation can only communicate with individual people. An organisation has to make sure that they identify the correct individual stakeholders within a stakeholder organization.

An organization may have a long list of people and organizations that are affected by their work. Some of these may have the power either to block or advance it. Some may be interested in what the organizations are doing, others may not care.

An organization has to map out their stakeholders on a Power/Interest Grid and classify them by their power over their work work and by their interest in an organization’s work.

Page 52: Environmental Factors that affect SBMP

HighLow

Low

High

Power

Interest

Stakeholder Interests

Page 53: Environmental Factors that affect SBMP

Stakeholder Interests

High power, interested people: these are the people you must fully engage with, and make the greatest efforts to satisfy.

High power, less interested people: put enough work in with these people to keep them satisfied, but not so much that they become bored with your message.

Low power, interested people: keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project.

Low power, less interested people: again, monitor these people, but do not bore them with excessive communication.

Page 54: Environmental Factors that affect SBMP

Keep Satisfied Manage Closely

Monitor Keep informed

Low

Low

High

Power

Interest High

Stakeholder Interests

Page 55: Environmental Factors that affect SBMP

Institutional Differences Across Countries

Emergingeconomies:

Brazil, Russia,India, China, South Africa

Group-centered

economies:Korea

Family-centeredeconomies:

Sweden,France, Italy

Bank-centeredeconomies:

Japan, Germany

Market-centered

economies:U.S., U.K.

Less-developed

economic andtransaction

environments

Well developed

economic andtransaction

environments

Page 56: Environmental Factors that affect SBMP

BRICS BRICS originally "BRIC" before the inclusion of South

Africa in 2010, is the title of an association of emerging national economies: Brazil, Russia, India, China and South Africa.

With the possible exception of Russia, the BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs.

As of 2013, the five BRICS countries represent almost 3 billion people, with a combined nominal GDP of US$14.9 trillion, and an estimated US$4 trillion in combined foreign exchange reserves. 

Presently, India holds the chair of the BRICS group.

Page 57: Environmental Factors that affect SBMP

Reasons behind BRIC The BRIC grouping's first formal summit commenced

in Yekaterinburg on June 16, 2009, with  Luiz Inacio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India and China, all attending. 

The summit's focus was on means of improving the global economic situation and reforming financial institutions, and discussed how the four countries could better co-operate in the future. There was further discussion of ways that developing countries, such as the BRIC members, could become more involved in global affairs.

In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be 'diversified, stable and predictable'. Although the statement that was released did not directly criticise the perceived 'dominance' of the US dollar – something which Russia had attacked in the past – it did spark a fall in the value of the dollar against other major currencies.

South Africa joined the group in December 2010 and the forum became BRICS.