A history has shown that organizations that are stagnant and bound by tradition are increasingly fading from the limelight. Why? Because one of the biggest problems in managing an organization today is failing to adapt to the changing world. Economies throughout the world are going through turbulent change. A generation ago, successful managers valued stability, predictability, and efficiency achieved through economies of large size. But many of yesterday's stars - for instance, Sears and Bell & Howell - have faded because they didn't adapt to what was happening around them.
What common factors characterize the stars of the 2000s? They are lean, fast, and flexible. They are dedicated to quality, organize work around teams, create ethical work environments, minimize hierarchical overhead, and exhibit entrepreneurial skills when facing change. Globalization poses numerous challenges for managers who frequently encounter unfamiliar laws, cultures, political regimes, and languages. Yet if the managers of a firm are flexible and willing to learn, they will have opportunities to develop rewarding personal as well as professional international business relationships.
Part of the rapidly changing environment that managers face is the globalization of business. Management is no longer constrained by national borders. BMW, a German-owned firm, builds cars in South Carolina. Similarly, McDonald's sells hamburgers in China. Exxon, a so-called American company, receives more than three fourths of its revenues from sales outside the United States. Toyota makes cars in Kentucky. General Motors makes cars in Brazil. And Mercedes sport-utility vehicles are made in Alabama. Parts for Ford Motor Company's Crown Victoria come from all over the world: Mexico (seats, windshields, and fuel tanks), Japan (shock absorbers), Spain (electronic engine controls), Germany (antilock break systems), and England (key axle parts). These examples illustrate that the world has become a global village. To be effective in this boundaryless world, managers need to adapt to cultures, systems, and techniques that are different from their own.
In the 1960s, Canada's Prime Minister described hie country's proximity to the United States as analogous to sleeping with an elephant, "You feel every twitch the animal makes." In the 2000s, we can generalize this analogy to the entire world. A rise in interest rates in Japan, for example, instantly affects managers and organizations throughout the world. The fall of communism in Eastern Europe and the collapse of the Soviet Union created exciting opportunities for business firms throughout the free world.
The trend toward increasingly greater globalization is of major importance to managers. Modern technology enables information to be communicated instantly among far-flung locations. Today's managers have almost instant access to information on sales, revenues, and other marketplace factors. It is not unusual for a product to be manufactured in the United States, assembled in Mexico, and sold in Europe. Jamaican-based workers process airline reservations from American customers. Insurance policies sold in the United States are reviewed for accuracy by Metropolitan Life personnel in Ireland.
By the mid-1990s, U.S. multinationals had 6.7 million foreign employees and Americans had invested some $450 billion in equipment and facilities located in other countries. Britain, Germany and Japan are the largest direct foreign investors in the United States. Multinational corporations do business in more than one country. Such household names as Exxon, IBM, General Motors, and Dow Chemicals are among the largest of these companies. Royal Dutch Shell, Pillsbury, Toyota and Nestle are examples of well-known, foreign-owned multinationals. Why are more and more firms becoming interested in doing business on a global basis? According to a survey of 433 chief executive officers from three continents, the top-ranked reason for going global was to increase corporate revenues. Other major reasons were to increase profitability and lower business expenses. Over one-half of the CEOs expected to expand into new foreign markets within 12 months of the survey.
Today, however, the pressure for globalization is driven not so much by diversification or competition as by the needs and preferences of customers. Managing effectively in this new, borderless environment means paying attention to delivering value to customers. Before everything else, comes the need to see your customers clearly. The Globalization Age offers opportunities for success and well-being of every company or even country. And it's managers' job to see these opportunities and to provide them, to make them reality.
One result of Globalization is the exposure of management inadequacies. And these management inadequacies are the products of a management culture that developed in older, less complex times. Those times are times of economic isolation and insulation, times of an absence of strong outside competition. But those times are over. Today's world offers new challenges for managers. One specific challenge is managing in countries with different national cultures. For success it's very important to know the peculiarities of different national cultures.
The next challenge is recognizing the differences that might exist, and finding ways to adjust to these differences. And of course managers should percept "foreigners".
U.S managers once held a rather parochial view of the world of business. Parochialism is a narrow focus; these managers saw things solely through their own eyes and within their own perspectives. They believed that their business practices were the best in the world. They did not recognize that people from other countries had different ways of doing things or that they lived differently from Americans. In essence, parochialism is an ethnocentric view. Of course, this view cannot succeed in a global village - nor is it the dominant view held today. But changing U.S. managers' perception first required understanding of the different cultures and their environments.
All countries have different values, morals, customs, political and economic systems, and laws. Traditional approaches to studying international business have sought to advance each of these topic areas. However, a strong case can be made that traditional business approaches need to be understood within their social context. That is, organizational success can come from a variety of managerial practices - each of which is derived from a different business environment. For example, status is perceived differently in different countries. In France, for instance, status is often the result of factors important to the organization, such as seniority, education, and the like. This emphasis is called ascribed status. In the United States, status is more a function of what individuals have personally accomplished (achieved status). Managers need to understand societal issues (such as status) that might affect operations in another country.
Countries also have different laws. For instance, in the United States guard against employer's taking action against employees solely on the basis of an employee's age. Similar laws do not exist in all other countries. As a case in point, an employee of SmithKline Beecham, PLC, a British firm that operates in the United States, was denied a promotion for jobs outside the United States because company officials determined him to be "too old". Such action would be discriminatory and illegal in the United States, but the law was not applicable to the United Kingdom. Of course, if SmithKline officials had made that same decision about an employee for a job in the United States, they would have been breaking the law. The issue this example raises for organizations is that viewing the global environment from any single perspective may be too narrow and potentially problematic. A more appropriate approach is to recognize the cultural dimensions of a country's environment.
All illuminating study of the differences of cultural environments was conducted by Geert Hofstede. He surveyed over 116,000 employees in 40 countries - all of whom worked for IBM. By analyzing various dimensions of a country's culture, Hofstede was able to provide a framework for managing in the global village. His data indicated that, in general, national culture has a major impact on employees' work-related values and attitudes. He was able to classify those values and attitudes into four specific dimensions of national culture. These are individualism versus collectivism, power distance, uncertainly avoidance, and quantity versus quality of life.
Individualism/Collectivism
Refers to a loosely knit social framework in which people are supposed to look after their own interests and those of their immediate family. Collectivism is characterized by a tight social framework in which people expect others in their group (such as the family of organization) to look after them and to protect them.
Power Distance
A measure of the extent to which a society accepts the fact that power in institutions and organizations is distributed unequal. A high power distance society accepts wide differences in power in organizations. Employees show a great deal of respect for those in authority. Titles and rank carry a lot of weight.
Uncertainty Avoidance
A society that is high in uncertainty avoidance is characterized by a high level of anxiety among its people, which manifests itself in great nervousness, stress, and aggressiveness. Because people in these societies feel threatened by uncertainty and ambiguity, mechanisms are created to provide security and reduce risk. Their organizations are likely to have formal rules; there will be little tolerance for deviant ideas and behaviors; and members will strive to believe in absolute truths.
Quantity versus Quality of Life
Some cultures emphasize the quantity of life and value such concepts as assertiveness and the acquisition of money and material goods. Other cultures emphasize the quality of life. Placing importance on relationships and the expression of sensivity and concern for the welfare of others.

What implications does Hofstede's research have for managers? Into which country is it easier to fit? Where are they likely to have the biggest adjustment problems? All we have to do is to identify those countries that are most and the least like our own on the four dimensions. For example, the United States is strongly individualistic but low on power distance. This same pattern was exhibited by in Hofstede's study by England, Australia, Canada, the Netherlands, and New Zealand.
The United States scored low on uncertainty avoidance and high on quantity of life. This same pattern was shown by Ireland, England, Canada, New Zealand, Australia, India, and South Africa. The countries least similar to the United States on these dimensions were Chile and Portugal.
These results empirically support part of what many of us suspected - that the U.S. manager transferred to London, Toronto, Melbourne, or a similar city would have to make the fewest adjustments. Hofstede's results allow us to identify countries in which "culture shock" is likely to be the greatest and where managers would most likely have to significantly change their style.
But not all dealings with individuals from other cultures occur when managers cross international borders. Most such encounters are likely to involve interactions between managers in the United States and individuals who come to work here. What then can managers do? When working with individuals from different cultures, a manager must understand that individuals informally learn about their cultures and that most such learning is unconscious. The Mars Company (the candy maker), for example, recognizes and builds on this informal development. It provides formalized training to its U.S employees that focuses on the "major differences, which may lead to problems", such as communication barriers and ways in which differences can be resolved. Managers need to be flexible in their dealings with their foreign-born employees. Because of cultural differences, these employees just may not understand you. Managers must, therefore, recognize and acknowledge that differences do exist in their backgrounds, customs, and work schedules and major adjustments accordingly.

Three important trends will definitely have a tremendous impact on the business environment.

1. Elimination of Trade Barriers. There is a definite trend to bring down trade barriers of all types among all nations. On April 2, 1993, for example, Chile and Venezuela signed a trade pact that will eliminate many customs duties between the tow countries over the next four years. It certainly appears that we will have truly barrier-free competition worldwide in the not-so-distant future.
2. Regional Trade Areas. The second trend is the creation of regional trading areas-geographic areas without trade barriers-through free-trade agreements.
3. New Markets. The third trend is the emergence of new markets in Eastern Europe and Russia. Both the size and the potential of these markets are enormous, and they will become even more desirable as their economies become better adjusted to a market-based economy.

International businesses have been with us for a long time. For instance, Siemens, Remengton, and Singer were selling their products in many countries in the 19th century. By the 1920s, some companies, including Fiat, Ford, Unilever, and Royal Dutch/Shell, had gone multinational. But it was not until the mid-1960s that multinational corporations (MNCs) became commonplace. These corporations, which maintain significant operations in two or more countries simultaneously but are based in one home country, initiated the rapid growth in international trade. Today, companies such as Gillette, Mobil Oil, Coca-Cola, and Aflac are among a growing number of U.S.-based firms that earn more than 60% of their revenues from foreign operations.
The expanding global environment has extended the reach and goals of MNCs to create an even-more-generic global organization called the transnational corporation (TNC). This type of organization does not seek to replicate its domestic successes by managing foreign operations from home. Instead, decisions in TNCs are made at the local level. Nationals (individuals born and raised in a specific country) are typically hired to run operations in each country. The products and marketing strategies for each country are tailored to that country's culture. Nestle, for example, is a transnational corporation. With operations in almost every country on the globe, it is the world's largest food company, yet its managers match their products to their consumers. In part of Europe, Nestle sells products that are not available in the United States or Latin America. Another example is Frito-Lay, which markets a Dorito chip in the British market that differs in both taste and texture from the U.S. and Canadian version.
Many large, well-known companies are moving to more effectively globalize their management structure by breaking down internal arrangements that impose artificial geographic barriers. This type of organization is called a borderless organization. For instance, IBM dropped its organizational structure based on country and reorganized into 14 industry groups. Ford merged its culturally distinct European end North American auto operations and plans to add a Latin America and an Asia-Pacific division in the future. Bristol-Myers Squibb changed its consumer business to become more aggressive in international sales and installed a new executive in charge of worldwide consumer medicines such as Buffering and Excedrin. The move to borderless management is an attempt by organizations to increase efficiency and effectiveness in a competitive global market place.
In recent years, and especially in the late 1980s and early 1990s, many U.S. companies have turned to the international arena for new markets and profits. For example, in 1992, the 100 largest U.S.-based multinationals had aggregate foreign sales of $702 billion with foreign-source profits of $30 billion.
Of this group of 100 largest U.S. multinationals, 22 companies realized more that 50 percent of their revenues from international markets and 58 companies realized between 25 and 50 percent of their revenues from international markets. As U.S. companies have been expanding internationally, more foreign countries have been entering the U.S. market. Leading this group have been the Japanese, Taiwanese, and Koreans, Although recently bridled by the worldwide economic slowdown, foreign investment in the United States was still $130 billion in 1992. Even companies that do not trade directly in the international and global markets are often greatly affected by foreign competition. As a result, U.S. managers have and are being forced, to think in terms of international and global rather than local or national markets.
An important factor in the management of any organization is the increasing internationalization of business activity. International business activities range from exporting goods to establishing manufacturing operations in other nations. The internationalization of American companies has been dramatic, with companies such as Ford, Coca-Cola, and IBM building large and growing international operations. Companies such as Exxon and General Motors receive over 50 percent of their net profits from foreign operations.
However, U.S. companies are not only international corporations. Names such as Toyota, Nestle, and Olivetta are familiar to American consumers. 28 of the 50 largest multinational corporations in the world are located outside of the United States. Some familiar American Names such as Howard Johnson's, Carnation, Baskin-Robbins, Alka-Seltzer, and Bantam Books are owned by foreign multinationals.
While not all businesses are directly involved in international activities, events that affect U.S. organizations occur almost daily in other nations Thus, it is increasingly important that all managers understand the nature of international business activity.

Decisions on International Business Involvement
Generally, the decision to extend an organization's operations to other countries is based on profits, stability, or competition. In terms of profit, international operations give organizations the chance to meet the increasing demand for goods and services in foreign countries. In addition, new sources of demand for an organization's output can stabilize the organization's production process. Finally, when competitors enter foreign markets, companies often respond in a like fashion.
The decision to enter international business activities is based on the comparative advantages of countries and the competitive advantages of the individual business. A country has a comparative advantage when it can produce goods more efficiently or cheaply that other countries because of its specific circumstances. Factors determining a county's competitive advantage include the presence of material recourses, the availability of labor, and the relative costs of these recourses. Competitive advantage, sometimes called business specific advantage, refers to some proprietary characteristic of the business, such as brand name, that cannot be imitated by competitors without substantial cost and risk.
Comparative advantage influences the decision concerning where to manufacture and market a firm's products. Competitive advantage influences the decision concerning which activities and technologies along the value-added chain a business should concentrate its recourses, relative to its competitors. The value-added chain refers to the process by which a business combines the raw material, labor, and technology into a finished product, markets the product, and distributes the product. A company may be involved in any part of all of the value-added chain.

The Domestic-Market Approach to International Management
When a firm of any size decides to enter the international marketplace, it is most common for management to begin by employing the first domestic-market management approach. This approach usually consists of exporting the firm's current products to a foreign agent or broker. Unfortunately, this method allows the manufacturer very little control over how its products are marketed once they are sold to the agent or broker. On the plus side, risk to the firm is minimal because products are normally sold on a cash basis.
The next most common domestic-market method of operation is to establish a licensure agreement. Here, a firm grants certain rights to another firm to use its brand name, symbols, product specifications, or other identifying characteristics in either the manufacturing or the marketing of its products. Disney World, for example, has many licensure agreements, which, for a fee and usually continuous royalties, allows other firms to utilize Mickey Mouse on all types of clothing articles. Under this form of management, more control is secured. However, the risk increases because the firm holding the licensure agreement is not the manufacturer in this market.
The third way to employ a domestic-market approach is to sign a manufacturing contract with a foreign manufacturer. Here, the domestic, parent firm shares its profits with a foreign manufacturer; in return, the domestic firm establishes a local presence in the foreign market without making a major investment of capital. With this contract, the foreign manufacturer produces the product under the domestic firm's supervision. Again, control increases but so does risk, since these contracts are usually for extensive periods of time and disagreements may occur.

The Multinational Approach to International Management
Once the management of a firm decides to enter a foreign international market on an even more established basis, the next logical step is to take a multinational management approach, in which the business firm moves away from producing its original domestic products and starts to modify them to meet the cultural demands of the foreign markets that the firm is entering. Here, the firm is making a strong commitment to the international marketplace in terms of sales and profits and, in many cases, fixed investments. The two most common ways to become a multinational firm are to form joint ventures or partnerships and to establish wholly-owned subsidiaries. Joint ventures or partnerships, the most common form of international management, are formed when one firm actually purchases a minority, a majority, or an equal portion of a foreign firm. The two firms technically become partners. Normally, the foreign firm provides local market enterprise and may receive favorable tax benefits and generate greater consumer acceptance. The investor firm provides new technology, access to a new market for the foreign firm, and new strategies for attacking different markets. Some examples of joint ventures include the formation of the NUMMI plant by General Motors and Toyota and U.S. Steel's joint venture with Kobe Steel in Japan. As in any partnership, each firm's role and responsibilities in a joint venture must be clearly communicated to all parties to the agreement.
The wholly-owned subsidiary in the multinational firm is normally given quite a bit of operational freedom from the parent firm. Many times, multinational corporations employ several local nationals as members of the management team and an almost totally local sales force. The idea is to try to get the government and people of the local country to accept the multinational by providing jobs and products for the local economy. Honda's plant in Maryville, Ohio, Chrysler's plant in Mexico, and Ford's plant in England are all examples of multinational operations. Here, of course, the risk to the investing firms is substantial, since large financial commitments are made. However, the parent firm is in control because it owns and operates the plant.

The Global Approach to International Management
The final approach to international management is the global management approach. Here, the two basic methods of operation are the wholly-owned subsidiary and the global strategic partnership. Utilizing wholly-owned subsidiaries on a global basis involves a lot of vertical integration. The firm then has complete control; it owns or controls the manufacturer, distributors, retailers, and/or marketing firms. The emphasis in not on modifying products to fit different markets but on developing a single-product marketing strategy worldwide.
Finally, the most recent way for a firm to approach global markets is through the use of global strategic partnerships. These partnerships are far more than just joint ventures, which concentrate on single national markets. A global strategic partnership stresses worldwide leadership by developing a single-product marketing strategy that is designed to dominate its products or service area. An example of a global strategic partnership is General Electric and France's state-owned SNEEMA, which have joined together to produce a low-pollution engine for a high-performance aircraft. The two firms are sharing the $800 million in development costs and hope to dominate all markets worldwide in this product area.

For the companies to become more competitive internationally management must concentrate on four key factors: strong customer focus, improvement of quality and productivity, development of human recourses, and continuous improvement stressed in every area of the firm. If a company is going to survive in today's business world, doing these things is no longer an option.
CUSTOMER FOCUS means that managers look at the firm's products or services from the customer's point of view and strive to give customers innovative features and offer them added value. In order to determine what features are most desirable to customers, a strong avenue of communication must be established with them.
IMPROVED QUALITY AND PRODUCTIVITY can only occur if the business is synchronized. The entire process from design to production to suppliers and even to customer service must be quality-oriented. Once business learns how to make it right the "first time", both quality and productivity improve. The competition is constantly improving and each firm must also improve on a continuous basis.
THE DEVELOPMENT OF HUMAN RECOURCES. The knowledge and productivity of a firm's human recourses-its employees-must be improved through constant education and training. Managers must realize that their employees are their only true competitive advantage. A firm's products, technology, and everything else can be copied, but the people in the organization cannot be duplicated.
Management should be aware of three important points here.
The person who does a job is normally the person who is most knowledgeable about the job.
Employees must be encouraged to participate in the decision-making process and to use all their talents on the job. Communication must flow easily and continuously between all levels of management and employees. Management must realize that its main role is to support workers by giving them the proper training, materials, equipment, and leadership.
CONTINUOUS IMROVEMENT in every area of the business must be constant. A firm needs to adopt this belief as a part of its organizational culture. If management does not constantly strive to improve, the business will quickly be left behind by its competitors.

The Growth and Development of International Management
Some business firms still adhere to the belief that an their firm really does not need to get involved in international markets. After all, dealing with international markets can pose a lot of problems, and the managers of these firms may feel that they are doing just fine in their present domestic markets. In short, why does a business even need to seriously consider international marketing?
The answer to this question is both simple and complex. The simple part of the answer is that a firm may not have any choice; the opportunity may be so profitable that it literally would be foolish to pass it up. The complex part of the answer is that doing business internationally may be very difficult due to differences in the business environment.
Let's look at some of the things that are currently happening that may change the way you think about international markets.
1. Markets are regionalizing in terms of free trade. This creates more competition from new companies that were not of major concern previously due to such regulations as protective tariffs. If these firms are going to attack the market share why not attack them first?
2. Manufacturing firms and other suppliers must grow with companies that market abroad or lose overseas business to local foreign suppliers. Losing this new business may come back to haunt a domestic manufacturer if the new foreign supplier later decides to expand its operations to another country.
3. The cost of developing new products in some fields has risen dramatically. It is not a sound business practice for one supplier to spend a great deal of money establishing new product technology so that competitors can simply pick it up and benefit from it. An example of a new-product joint venture of this type is the alliance between Boeing, Fuji, Mitsubishi, and Kawasaki to build a new 777-jet passenger airplane.
4. Selling products internationally is a way to extend product life cycles. Many products that are in a mature stage in the United States may be in the introductory stage or growth stage overseas. For example, phone service in Venezuela, Argentina, and Mexico is very poor and unreliable.
5. New markets are opening up that will not last forever in terms of their ease to entry. So often, small- and medium-sized firms think they are not large enough to enter the international marketplace. What the management of these firms fails to see is that a business can begin overseas operations on a very limited, almost risk-free basis. As the international market develops, a firm can switch to alternative forms of business ownership/control to take advantage of the opportunities at hand. Since domestic markets are becoming more and more saturated, the need to find new foreign markets is truly growing.

Global competition is literally changing how organizations are managed, both at home and abroad. Some of the factors that contribute to changes in management techniques are advancing technology, shorter product life cycles, and high-speed communications. Time factors in all areas of business are getting shorter and shorter.
All of these changes add up to a new business environment that is forcing managers to replace old management styles with new ones. This new approach stresses constant, on-going communications, which, in turn, produces
� Extremely high levels of employee involvement
� Flexible organizational structures that adapt to market changes
� Inspiring leadership at all levels
� On-going staff-development programs
� Design-control procedures that are understandable and acceptable to everyone in the firm
What we are talking about here is a shift in management values. Although the old values of honesty, trust, and hard work are certainly still valid, to be truly effective, the new international manager must be a visionary who is able to convince everyone in the firm of the need to realize specific organizational objectives. Commitment is becoming a very important watchword in the business world.

Planning
Managers of the international organization must be sure that their plans fit in with the distinct cultures of the member countries in which they are doing business. Company strategies must be planned and developed not only to fit the competition but also to account for the competitive playing field.
Long-term strategic planning is generally done worldwide; however the length, amount of detail, and degree of flexibility of these strategic plans do vary. International companies as a whole need to think and plan on more of a long-term basis. Typically, U.S. firms plan three to five years ahead for short-term results, and their current losses to competitors are proof of the lack of effectiveness of this approach.
The role of government in a firm's planning process can also be a major factor to contend with in the business world. In countries such as India, the array of government regulations and bureaucracies is very large and must be considered in a foreign investor's planning process.

Organizing
The way in which managers organize companies so that they can compete successfully on a global basis is also going to require a major overhaul. The rate of change is accelerating so quickly that organization must be designed to adjust and adapt to an alteration in the business environment very quickly and easily, regardless of its location. Years ago, when a firm decided to compete on a global basis, management usually set up "clones" of itself in foreign counties. This style of international management is becoming quit obsolete because it fails to utilize all of the firm's capabilities worldwide.
The new international management model organizes all of the divisions of a company into one company worldwide. For instance, when Whirlpool Corporation purchased the $1 billion European appliance manufacturer N. V. Phillips in 1989, corporate management transformed the two companies into one large global firm. As a result, the new Whirlpool set the pace and the price structure for the global appliance industry.
However, new products may still need some variations to accommodate special local market needs worldwide. If product-development specialists from every country in the company are consulted, common basic models can be designed that utilize the best product technologies and manufacturing processes. For example, Whirlpool recently won a contest sponsored by a group of U.S. utility companies for developing a new, super-efficient refrigerator. The developing of this new product was worldwide. The insulation technology came from Whirlpool's European affiliates; the compressor technology from its Brazilian affiliates; and the manufacturing and design expertise from its U.S. affiliates.
The management of an international firm must create a whole new organizational style that is extremely responsive to foreign customers, employees and suppliers. Obviously, international organizational structures must redesign their communication system to reflect the decision- making process, with increased amounts of participation at all levels, increased flexibility to respond to rapid changes in the business environment, and instituted control procedures that vary from very loose and strict control. Perhaps the toughest job facing international managers is to realize that they will have to manage differently in a foreign country if they are going to be as successful abroad as they are at home.
Every person in every country feels that his or her way of doing business is right. The only way to make the entire company more efficient is to show management why and how the company-and everyone in it- benefits from this new organizational style. To do this, top management must communicate with employees continuously and get them involved so they can see the results firsthand. There must also be financial incentives and other "rewards" to help encourage all employees and managers to reach for new goals.

Staffing
Staffing is a critical function of any organization. Management must realize that no matter where in the world their firm is doing business, competitors can replicate its technology, copy its products, generate large sources of capital, and even duplicate its marketing programs. The one true difference between competing firms is the quality of their human resources.
Top management is going to have to do a better job of selecting highly skilled managers and employees and developing them into their utmost potential. Only then will a firm be able to gain a true long-term competitive edge. When staffing overseas, the management of a firm must be aware of the national labor laws. For example, mangers at Findley Adhesives, Inc., in Wauwatosa, Wisconsin, found the company was required to pay a Swedish employee three month severance pay after he was hired from its plant in Sweden.
The question of whether to send an American manager abroad or to hire a foreign national for the position can also be a difficult one. It is always helpful to have a manger in charge of a foreign business who is well-known to the parent company, but there usually is a price to be paid for this agreement,. Most firms must offer salary incentives and cost-of0living adjustments, which can be very expensive, in a recent survey of 50 Fortune 500 firms, it was found that companies select employees for assignments abroad on the basis of their technical expertise 90% of the time. However, the personal characteristics that show the highest success rate overseas are cultural sensitivity, interpersonal skills, adaptability, flexibility, previous overseas experience, and interest.
Hiring a native or a foreign or a foreign national to run a company abroad is a good way to acquire knowledge about the local market in question. The main problem here is how to attract a competent national, especially if the firm is not very large or particularly well known. Despite this problem, many human-recourse experts in international staffing agree that it is better for most firms to send only a few expatriates to develop local talent. This reduces costs and leads to fewer cross-cultural problems.
Finally, hiring foreign nationals may be quite difficult for employers. Some countries require that a certain percentage of foreign nationals make up labor force of an international firm. Some countries, like Russia, have labor shortages due to declining birth rates. Also, it is difficult to find trained or educated employees in some countries. Example "Global View": through its International Graduate Trainee Program, Gillette International staffs and trains for positions located throughout the world. The company's international subsidiaries recruit business students at local colleges and provide six month of training before sending them to the United States for additional professional development. Those who complete the program are offered trainee positions and return to their home countries. Nearly one-half of the programs graduates have earned promotions to important managerial positions with the company.
Gillette's strategy enables the company to train its own employees rather than recruit executive-level persons at considerably higher salaries. According to Gillette's international personnel director, the ideal job candidate "is someone who says, "Today, it's Manila. Tomorrow, it's the United States. Four years from now, it's Peru or Pakistan".
Managers should not underestimate the importance of making successful transitions to live in other cultures. According to a Conference Board survey, business knowledge, a high level of tolerance as well as flexibility, and an ability to work with others are among the most important factors. A variety of approaches are used to prepare persons for international assignments. Some firms actually hold training sessions at overseas locations. Others make special efforts to include training exercises that emphasizes awareness of cross-cultural considerations. What qualities influence the selection of persons for overseas positions? Research conducted by International Orientation Resources indicates that 90% of all employers consider technical knowledge to be most relevant quality. Managerial capability ranked second; language skills ranked a distance fifth.
To experience success abroad is it necessary for managers to speak a foreign language? Companies seem to have different philosophies. At Colgate, fluency in another language is regarded as a vital factor. Before leaving for another country, personnel at 3M Corporation are encouraged - but not required - to know another language.

Leading
Good leadership is an extremely important attribute if a business firm is going to be competitive, much less dominate foreign markets. First and foremost, the managers of the new international organization must realize that the particular leadership style that motivates employees to honestly commit themselves to the firm varies tremendously, depending on the culture of the foreign country. To generate this type of commitment, management must
� Know what style of leadership the employees expect and what style they are willing to accept. In France, for example, mangers tend to be quite Napoleonic and discourage informal relations among employees, in contrast, Italian managers tend to be quite flexible and view informal employee networks as very important. German managers tent to "go by the look" and are usually quite regimented. Whatever management style is employed, it must be acceptable to the employees.
� Recognize that the type of employee-incentive system used in the U.S typically is not as effective as in Europe or Japan. Most employees in these countries feel that additional economic incentives, such as bonuses, are not as important as the provision of a good, stable place of employment that offers competitive salary and benefits packages.
� Encourage employees to accept participative management in the "right spirit". Employee participation in managerial decisions is essential only in some countries, including Japan, Sweden and the United States. Managers should carefully suggest or request that employees help to implement a particular management approach and take honest interest in their attitudes and views. Participative management can help to develop team spirit and make the solution to a problem everybody's idea.
� The effectiveness of leadership is clearly shown in the case of Jaguar, the British automobile manufacturer. In the early 1980s, Jaguar was in trouble in the marketplace. The relationship between management and employees was as poor that managers did not eve dare to go onto the production floor widhout formally going through union channels first. Then Jaguar brought in new leadership in the form of a chief executive officer named John Egan.
� In a desperate bid of survival, Egan went to the employees and explained the current problems at Jaguar and what management is planning to do to try and solve them. But most important, he asked for their help and their input. Egan established weekly briefings to keep communication channels open and used films to demonstrate to employees what problems customers and dealers were complaining about. He also cut bac{ on the number of inspestors to try to show employees that he had faith in their ability to solve these problems on their own. Finally, new bonus schemes linked to productivity were instituted as well as a new attitude on the part of managers toward the employees.
� The results have been truly remarkable. Manager-employee relations are now very cordial. Today, Jaguar is the number-two selling European import, second only to Mercedes in the U.S. automobile market.

Controlling
A new type of control system is reauired as a company becomes more and more involved in global competition. When faced with shorter product life cycles worldwide and other environmental changes, control in any country is eventually going to have to come from within the individual employees. Since true control always comes down to this, managers must have an organizational control system in place that is understandable and acceptable to their employees.
For example, at Nixdorf AG, a German computer manufacturer, lower-level managers are allowed to "wheel and deal" as they like as long as they stay within general corporate guidelines. As a head of their human-resource department puts it,"We are strongly market-oriented company� operating in a competitive environment that has extremely short time spans for decision making".
Managers at Nixdorf need and are given some freedom to decide how much to pay a new employee, based on their need and the value of the person to the company. Also managers are encouraged to take initiatives without fear of recrimination. One example of this occurred during the 1970s, when a group of managers and employees tried to design a new electronic learning system for state-run school system. The project lost $2.5 million before it was shut down, but no jobs were lost because of the failure.

Even though international and global markets appear very inviting and in some cases almost mandatory, all firms must be aware of the dangers and potential problems. Basically, there are four potential problem areas.
1. The first area of concern is selecting the right market. Once a firm decides to enter a particular market, there is always a danger that one or several environmental factors will change. Political changes economic changes, shift in demand away from the firm's product, new competitors entering the market, and even the lack of acceptance by local market are only a few of the problems that can make market selection a complete disaster.
2. New competitors can emerge from a number of places. For example, Malaysia is now the world's third largest producer of semiconductors. Even in the United States, we find unexpected competitors like the Hungarian buses that service people and streets of Portland, Oregon.
3. Economic reforms may take a lot longer that expected and may never be as successful as hoped. Dealing with structural barriers of all types can be tremendously difficult. Many eastern European countries, including Russia, have very poor manufacturers by U.S. standards. Things that American take for granted-adequate water and sewage installations, highways, and transportation systems, and even telephone systems-may be totally inadequate for some firms to establish a business in a particular country.
4. The last, and possibly the greatest, risk area is getting into the marketplace too late. Japan is already the biggest foreign investor in Southeast Asia, and Germany is the leader in the eastern Europe. You can be sure that neither of these countries are going to voluntarily relinquish their leadership roles or make it easy for new investors to come into their "new" countries.

The success enjoyed by many foreign international companies has led to the study of their management practices in order to determine their applicability across national boundaries. Because of Japan�s phenomenal economic success since World War II, Japanese management practices have been widely studied. Authorities cannot agree on whether there is one Japanese management style used in all Japanese companies or whether the Japanese style is better than others. However, Japanese management practices generally include the following:
*Morning physical exercise for all employees.
*Managers and workers all wearing the same company uniforms on the job.
*Morning pep talks by foreman or supervisors.
*High value placed on loyalty to the company; loyalty stressed as a condition of employment.
*Bonuses paid for extraordinary performance (although fringe benefits of all kinds are generally lower than in America-owned firms).
*Vague job classifications (Honda lumps all of its employees as �automobile assembly workers�).
*Quality circles and zero-defect movements fully implemented.
*One dining room or cafeteria for managers and workers alike (meaning there is a marked improvement in the quality of the food from the workers� point of view).
*No direct orders given to workers, lots of lateral communication, and bottom-up consensus-type decision making.
*Overtime expected of all workers (at the option of management).
*The just-in-time system of inventory reduction in place and used.
*No layoffs to the greatest extent possible.
*Lawyers and lawsuits not tolerated within the enterprise.
*After-work socializing with fellow employees to build company loyalty.
*Company outings and retreats for all members of an employee�s family.

Many people argue that Japanese management practices work because of the Japanese culture and that they cannot be readily transferred to other countries without modifications. However, the one theme of Japanese management appears to be that an employee is viewed as human capital that should be cultivated and developed as carefully as any trade secret. That lesson transcends national boundaries.
Peter Drucker outlined six lessons he believes can be learned from foreign management, especially from Western Europe and Japan:Foreign managements increasingly demand responsibility from their employeesForeign managements think through their benefits policies carefully and, especially in Japan and Germany, structure benefits according to the needs of recipients.Foreign managements take marketing more seriously in that they attempt to know what is value for the customer.
1. Foreign managements base marketing and innovation strategies on the systematic and purposeful abandonment of the old, the outworn, and the obsolete.
2. Foreign managements keep separate those areas where short-term results are the proper measurement and those where the results should be measured over longer time spans-innovation, product development, product introduction, manager development, etc.
3. Managers in large Japanese, German, and French companies see themselves as national assets and leaders responsible for the development of proper policies in the national interest.
Drucker readily admits that each of those lessons is American in origin. However, reexaming and possibly reinstituting practices developed earlier is never bad, especially when they have been emulated so successfully by foreign managements.

A world leader in tire manufacturing, Japan�s Bridgestone Corporation has 60 factories and 83,000 employees worldwide, including 13 factories in Japan that employ 16,000 employees. Today, more than 90 percent of Bridgestone�s employees in Japan Receive some from of training. At Bridgestone, training encompasses international, domestic, and local operations.
The 300 Japanese employees who travel internationally are trained in management skills that go beyond traditional Japanese business practices. International training consists of four parts:
*Language instruction (English as well as 11 other languages).
*Management skills.
*Cross-cultural awareness building.
*Business skills.
Training for employees who are going to live overseas covers the following areas:
*Strategic thinking.
*Foreign-language instruction.
*Communication skills.
*Business manners and etiquette.

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