Module 15: Latin America (summary)

When we talk about Latin America we are making reference to all the countries in both central and South America since Mexico until Argentina. Main economic powers of the area are Brazil, Mexico and Chile. One characteristic of the companies from Latin America is that they usually tend to expand regionally before going further abroad.

We can find 9 dimensions in Latin America that explain most of the behavior in a working environment or when doing business. These are: Sympathy (warm personal relations), personal dignity and classism (rigid social divisions); personalism (personalized and individualized attention); particularism (high degree of sacrifice looking for the common welfare but just of the closest group of persons -“For friends everything, for strangers nothing, and for enemies the law”); trust (low level of trust with unknown people); collectivism, and in-group/out group behavior (loyalty to the group, lack of interest and distrust outside the group); paternalism and hierarchical relationships (this plays a major role in management); power (more power, more responsibilities); humor and joy (generate a better environment in the workplace); and fatalism (is a proof of indirect negativism).

There is a common factor that we have to take into account in many of these dimensions. Family and friends play an important role for Latin America. Good relations are very important so it has to be kept in mind when doing business and in the workplace.

Due to the unique background and the posterior mixture with other cultures we can say that Latin America have a hybrid model in human resources. This model is characterized for being, as said before, paternalistic, is also characterized by obedience and in a certain way a tendency for avoiding direct intervention.

In the recruitment process there are some factors that are taken into account as physical characteristics, friends, family and relatives, the social status of the applicant, and also in the transferences being near to the family and the close ones plays a major role.

As its constituted by mainly not developed countries, there is a lack of technical knowledge (this can be explained in the levels of education). There is a generalized mistake in directing low level of budget in training and preparation of the employees.

The working system is common to find that in Latin America people prefer working in teams, in which a leader is accepted and followed, and sometimes he is expected to take the decisions.

References:

Class presentation

http://sourcingthreads.files.wordpress.com/2009/03/latin-america.jpeg
http://neorepublica.com/media/blogs/republica/latin_american_flags_oas.gif
http://farm3.static.flickr.com/2377/2325462852_1e3864905a.jpg

Module 14: North America (summary)

North America is the third largest continent (after Asia and Africa) but is one of the most important in the world. The continent is composed by Canada, Mexico, some Caribbean countries, Greenland and the U.S. We are going to focus in the United States in this review and we will take a look at the consumist phenomenon occurring there.

It is an alarming situation the fact that they have 5% of the world population but it produces 30% of the waste and consumes 24% of world’s energy. United States is a very consumist country, and this culture has evolved over the years. Nowadays a regular American consumes much more than an average one would have done 50 years ago, and the tendency is not stopping so we can imagine that the future Americans are going to consume even more.

A main player in these high consumption rates is the media advertising. The advertising has a major role in the American consumption because it influences the consumer mind directly. The population is exposed to advertising since they are kids and this exposure to the Medias keep growing with their age building a mass consumer. We can also make a comparison with the Medias today and in the past. Nowadays a regular American is exposed to more advertising by the Medias in one year than an American in his whole life 50 years ago. Now we can deduce why has been evolving the consumption average.

So this evolution in consumption and advertising has marked the lifestyle of the people in the US, and as a consequence, their management styles have been adapting to these characteristics. Nevertheless, as the USA is the main economy in the world we can notice that these styles (both consuming and management) have been spreading all over the world. The important issue is not to demonize or take as a model none of them, but to know what are the main aspects to take or to reject in order to adapt them in the best way to your own culture.

References:

Class presentation

http://ptjalogistic.com/userfiles/image/north_america_map.jpg
http://static-p3.fotolia.com/jpg/00/09/98/00/400_F_9980087_mbFJjGEjSRNbKerslBPfRF1cMxayPiH1.jpg
http://www.balloonplanet.com/shop/images/products/product_5223_large.jpg
http://www.funbumperstickers.com/images/USA_round_flag1.gif
http://www.gettyimages.com/detail/95909620/Flickr
http://pinwii.files.wordpress.com/2008/10/times-square-1024x7681.jpg

Module 13: Oceania (summary)

Oceania is a commonly forgotten continent. It is composed mainly by islands; the biggest continental territory is Australia (which is also an island). Nevertheless a common mistake is thinking in Australia as the only country in Oceania, this continent is also composed by Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

In this blog we will focus as usual only in one country: Australia. On its territory we can find a mix of cultures, mainly accounting for Europeans, Asians and Australian natives. Australian history comes from 40.000 years ago, when it was populated by natives coming from Southeast Asia, but its recent history starts in the XVIII century when Captain Cook discovered it in the name of Great Britain. It became a penal British colony until 1839, and finally in 1901 it became the independent country that we know today.

On its beginnings Australia held a posture of discrimination by the name of “white Australia”, but during the 60s and 70s it took a more relaxed posture towards immigration and diversity. Today it is considered as one of the most diverse countries. They defend the key concepts of egalitarianism, openness and individuality.

Australian corporate culture has had a great influence from European models. It counts with a decentralized management with flexibility, soft skills and humanistic values. Creativity is very important and is the result of an individualistic management approach. As a consequence of these factors and the key values mentioned above we can notice that all people in the organization have an important role to play and the managers recognize all value the specialized knowledge that employees at all levels bring to the company. An important characteristic in the Australian management style is that the managers play a very participative role, meaning that they listen the opinions of the different levels implied and let them do part of the decision making process.
Australian style has a high tolerance for taking risk in the decisions and projects, and is able to adopt any change. They value the hard work and the time, so missing a deadline can be seen badly. They are direct in the negotiations and are open to discuss different perspectives. We can see after this the European influence, but we can also notice some major differences that can be explained by the circumstances they’ve lived.

References:

Class presentation

http://www.world-atlas.us/oceania-map.gif
http://www.broadmindgroup.com/images/AustraliaFlagRound.jpg
http://www.movingforwardtogether.com.au/winningvisual_l.jpg

Module 12: Europe (summary)

Known as the old continent, Europe has a population of 735 million people distributed in 49 countries. This makes Europe one of the most (if not the most) diverse continents in the world. We can find a mixture of many different cultures, religions, backgrounds and languages coexisting in Europe, some of the in a very efficient and pacific way, others not that much.

When talking about Europe it is necessary to talk about the European Union. It is constituted by 27 countries of Europe and its origins can be found in the early 50s. Nowadays it constitutes the most powerful economy in the world. There are some European countries that are not part of the EU but they want to be. The case that we are going is precisely between one member and one candidate, Germany and Turkey, and the Turkish migration.

This migration finds its origins since the 17th and 18th centuries when the Ottoman Turks attempted to expand their territories through the Balkans. The German-Turk relations were strengthened by the mutual support of both during the different conflicts, especially the World War I. nevertheless it was during the post war period when the migration became to be massive.
Decimated by the war the German soldiers were not able to cover the labor force needed when they came back to their home. Until 1950 this gap in the demand was covered by the fugitives of the East Germanic zones. After this period Germany suffered a huge lack of qualified handlabor, so they created the concept of “Gastarbeiter” (guest worker), many of whom were Turkish men. These guest workers were expected to leave a few years later but they didn’t, starting this way the Turkish population of Germany.

Negative sentiments towards immigrants are often expressed as fears that immigrants adversely affect the economic welfare of the native population. These sentiments are not an exception in Germany, which have had led to many intercultural conflicts between locals and migrants, and the main problem in Germany is that the solution has to be by consensus and integration, but none of the parts want to do concrete actions. Turks want to preserve everything of their culture, but they have to adapt some aspects since they are in a foreign country; and Germans have to help to make the transition. Since none of them is doing anything concrete we can say that the conflict may take a long time to find a solution.

References:

Class presentation

http://www.bbc.co.uk/schools/gcsebitesize/geography/images/pop_003.gif

http://europa.eu/

Module 11: Islamic banking

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law and its application through the development of Islamic economics. A number of innovative concepts and techniques were applied in early Islamic banking, including bills of exchange, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms of capital (al-mal), capital accumulation (nama al-mal), cheques, promissory notes, trusts, startup companies, transactional accounts, loaning, ledgers and assignments.

Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of riba (usury). Common terms used in Islamic banking include profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the bank's profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid). There are several other approaches used in business transactions. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.

Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc. This is the concept of ethical investment complemented with moral purchasing under the islamic banking.

Islamic banking system has been gaining a lot of share in te whole world. One of Germany's biggest banks, Deutsche Bank, announced a joint venture with Ithmaar Bank of Bahrain and Abraaj Capital of Dubai to launch a $2bn Sharia-compliant financial fund. The banks say the fund is designed to boost education initiatives and investment in media and energy companies, and infrastructure in the Middle East. More and more conventional international banks, such as Citibank, HSBC and UBS, are converting some of their services to interest-free Islamic finance models. Looking at this we can say that there is a big potential in the future for the Islamic banking system.

References:

http://www.islamic-banking.com/

http://www.biyokulule.com/view_content.php?articleid=2061

http://islamonline.com/news/articles/73/Islamic-banking-Interest-free-or-interest-based-.html

http://www.biyokulule.com/sawiro/sawirada_waaweyn/Islamic%20Banking1.jpg

http://www.islamicmediacity.com/cms_files/news_images/1237554989.jpg

http://www.theworldonline.ae/wp-content/uploads/2008/09/business10.jpg

Module 11: Middle East (summary)

When talking about the Middle East we are talking about a region located in the southwest Asia and Egypt. The Middle East has always been a centre for world affairs throughout history and also nowadays remains as a strategically region in many aspects.

We can find a huge diversity in both religions and cultures. We can find religious groups as Arabs, Turks, Persians, Jews, Kurds, between many others; nevertheless we can say that Muslims are the main group (followed by Christians and Jews).

We will focus our study in Israel. Israel is the main Jew country in the world. Its origins are found in 1947 where the division of Palestine was purposed in order to create a Jewish state. The idea was accepted by Jews by rejected by the Arabs. Israel is considered one of the most developed countries in southwest Asia and we can find important cities such as Jerusalem and Tel Aviv.

There is a specific and very interesting phenomena occurring in Israel. This is of course, the Kibbutz and its particular management style. Kibbutzes are societies based on mutual aid and social justice and have a socioeconomic system in which people share work and property. The social organization of work is unique in Kibbutz society. It is based on democratic foundations, with equal say for all members on work planning and the division of labour within their agricultural or industrial branch. They don’t use any differential type of retribution for the members, their reward is motivational.

It is important to clarify that the Kibbutz system has evolved along the history to become what we know now. It started as a miracle done in the hostile lands of the desert, and it was built up under some socialist principles. We cannot say that it was part of the former Soviet Union but some of their ideals and goals matched with the ones of the communist power. Nevertheless the systems in the Kibbutz have evolved in an accelerated way becoming in a very efficient capitalist form.

Nowadays we can find differentiation in the Kibbutz, where different members can earn more money and save at their own will. Even if many aspects of this practice have changed, the common ideals shared by its people are still very strong, and we can assure that Kibbutz is a very important source of power (both cultural and economic) for Israel.

References:

Class presentation

http://www.autosuficiencia.com.ar/imagenes/israel.gif
http://communa.org.il/hcommuna/tmunot/34-comun.jpg
http://www.good-hotels-guide.com/middle-east/middle-east.gif

Module 10: Africa (question)

We will analyze the Ubuntu philosophy and its application to a very specific case. We will see how it helped in the case of the African Bank Miners Credit. In order to understand the context of the case it is important to know what this organization is. Established in 1993, African Bank Miners Credit is a division within African Bank. The company provides mine workers with access to finance. The challenge was to change the traditional behavior and mentality of the mining population and merge it with the new financial program. They were planning to do so by using the Investors in People (IIP) standards, but it was needed to be careful in the process. It was successfully done due to the implementation and internalization of the process by applying the Ubuntu philosophy. Now we will see what is exactly Ubuntu and how did it help.

Ubuntu is premised on the philosophy that one finds one’s own humanity in helping others to find theirs. It is a philosophy that reinforces the collectivist behaviors and creates a strong sense of community. It is a common philosophy in Africa no matter the differences in tribes or particular traditions. It argues that their existence depends on the welfare of the others, “I am, because we are”. At the workplace, Ubuntu generates trust for the relatives, a preeminence of the collective, kinship ties, teamwork, and also is very important to legitimate the power.

As a perfect example of the integration of the Ubuntu culture into the organiz

ation, African Miners Credit has used drums as an important part of the Ubuntu process and e

very employee has been given a drum. An Ubuntu drum even stands beneath the company’s Investors in People plaque. Drums have been used to symbolize communication and loyalty.

Another clear example of a successful measure was the explanation of the five key areas that the company would be focusing on using the medium of storytelling. Every employee was given one of the company’s “Our Ubuntu” booklets, which not only explained the Ubuntu culture campaign, but how employees would be able to contribute towards the overall success of the campaign.

Ubuntu was also an important tool to eradicate fraud from the organization, if one person is dishonest; this impacts negatively on the entire company. Employees were told that it was everyone’s responsibility to work together to eradicate dishonest practices and to create an environment in which respect, trust and honest business practices are upheld. They were also instructed to report any dishonest practices, irrespective of the level of the perpetrator.

References:

African Bank Miners Credit – Case Study
http://media.photobucket.com/image/ubuntu%20africa/MotherTongues/SouthAfrican8.gif
http://www.ruby-sapphire.com/images/madagascar_sorcerers/swiss_bank_low.jpg

Module 10: Africa (summary)

Africa is the world's second-largest and second most-populous continent, after Asia. This continent is composed by 61 territories, most of them defined after the European colonization it suffered. We are going to see some of these countries and its characteristics.

When talking about Africa it is essential to make reference to one of its most important countries, South Africa. We can consider South Africa as a country with a huge diversity, with over 47-million people of diverse origins, cultures, languages and beliefs. As a legacy of the British colonization we can find many white people in the country, and also English plays an important role as spoken language. We can find a huge diversity of other languages in the country (mainly native dialects). We can find another important footprint of the colonization by looking at the religious beliefs; two-thirds of South Africans are Christian, mainly Protestant; Islam, Hinduism and Judaism also play a significant role. South Africa has suffered a lot of different processes and has been exploited during it history. The discovery of diamonds and gold has motivated since the XIX century the arrival of outcomers looking for the wealth of the country. We will focus in all the problems that the diamonds as a resource have brought to South Africa and many other countries of the continent. An important player when talking about diamonds is the De Beers company, it was founded by Cecil Rhodes 110 years ago in South Africa, and its Central Selling Organization (CSO), dominate the diamond industry Together, De Beers and the CSO sell about 80% of the diamonds in the world market.

Another country that has been victim about the problems brought by the so called “blood diamonds” is Angola. In this country the diamonds have been source of internal wars and rebellions. The rebel leader of the National Union for the Total Independence of Angola (UNITA) funded the war primarily from diamond sales which has given a lot of power to this movement. Sierra Leone’s case is very similar to this one.

Due to all these conflicts it was developed the Kimberly process. It certifies the trade of legal diamonds, assuring that they are “conflict free”. This helps to support the development of the region by legal means. Today 49 participants covering 75 countries are part of this process.

References:

Class presentation

http://www.granma.cubaweb.cu/2010/04/13/cubamundo/africa.jpg
http://www.emac-online.com/imprint/images/flag_southafrica.jpg
http://www.freakingnews.com/Valentine-s-Day-Pictures--930-0.asp

Module 9: South Asia (Question)

Compare CAMS’ organisational culture vs. India’s traditional management style. Choose at least 3 aspects and use examples to illustrate differences or similarities.

In this blog entry we are going to see the case of CAMS (Computer Age Management Services) Ltd. This is a company operating in the highly competed market of outsourcing in India. Now we are going to compare CAMS’ organizational culture with the traditional Indian management style. Looking at both we can identify some similarities (as it is logical because of being an Indian company); nevertheless I consider that it is more interesting to focus in the differences that allow CAMS to be a differentiated leader.

The first of them is that CAMS don’t do any kind of discrimination in their recruitment process based on casts or status. They focus on the candidate’s skills and qualifications. We can find the perfect example of this when we see that CAMS make its recruitment by using “all available channels of recruitment, including advertisements, employment agencies, employee referrals, walk-ins, job sites and write-ins.” We saw in the previous study that a common problem in the Indian management style is precisely its discrimination (mainly due to castes systems) which normally has consequences such as mediocrity in the work.

The second and third main differences are tightly related with each other. In the Business Process Outsourcing industry there are normally few possibilities of growing professionally and grow in a career. Nevertheless CAMS break this rule by believing that their employees can do so in their company. They have “The CAMS Functional Certification Program (CFC).” Through this program, employees have an option to graduate as specialists or experts in more than one functional area. This way they can succeed as professionals and a career in the company.

It is precisely this last part the other difference. In the outsourcing industry it is common to see that handlabor is commonly easy to replace and that there are no big ties between the company and the worker. CAMS is very concerned about this point and is interested in building long term relations with the employees of the company and to become permanent members of it. As I said before, this issue is linked with the past one. We can see this for example in the high level of exigency and selective basis by which they re-accept a former worker who had left the company and want to come back in order to “teaching them a lesson”.

References:

- Vijaya, T.G., D`Netto, Brian and España, Juan. 2007. “HR Challenges at Computer Age Management Services (P) Ltd.” The Management Case Study Journal 7 (2): 41-51.

http://www.camsonline.com/
http://www.altergroup.com/blog/wp-content/uploads/2009/09/india-outsource.jpg
http://indiatoday.files.wordpress.com/2008/07/india_flag_icon.jpg

Module 9: South Asia (summary)

When we talk about South Asia we must have clear that we are talking by the region conformed by: Afghanistan, Bangladesh, Pakistan, India, Nepal, Bangladesh, Bhutan, Maldives and Sri Lanka. This region has a population of more than 1.5 billion people what makes it one of the most populated regions in the world. This region also has the biggest production of rice grains and exotic spices in the world. The region is composed by a rich mixture of several different cultures and religions. We can find religions such as Buddhism, Islamism, Hinduism, between some others. In this blog we will focus in one specific country of the region: India.

India is one of the most populated countries of the world (after China) with almost 1.2 billion of inhabitants. The main languages spoken in India are the Hindi and the English, even though there are more than 400 different languages and dialects (most of them derived from the Hindi).
Indian culture is strongly influenced by the Hinduism or Sanatana Dharma which main concepts can be summarized as: Maya (visible world), Samsara (spiritual reincarnation), Karma (goodness and badness earned), and Dharma (the must be, must act law under a specific birth situation).

India can find one of its main strengths in its diverse nature, which help to complement the abilities of the society in a harmonized way. Indian middle class is the largest one impulsing the economy towards the development.

A critical issue to be understood in the Indian culture is their cast system. The caste system is a type of social structure that divides people due to their inherited social status. In this system people is expected to interact and be married only with people of the same class. The system goes from the Brahmin, Kshatriya, Vaishya (middle class), Sudra, until the Dalits (the “untouchable”).

The implementation of the castes system normally leads to discrimination in all aspects. Nevertheless it is forbidden by law to make such discriminations such as “untouchability”. Despite of this legal support, the discrimination and oppression of the highest classes to the lowest is still remarkable.

One of the main problems with the fight between castes and the interventions done to fight against it is the higher levels of mediocrity seen in the companies due to the selection of unqualified workers just because they are from one caste, or in the other hand just because they have to fill a quota of castes imposed by the government (which finally lead to more discrimination).

Thanks to India’s economic expansion, industries are paying less attention to castes, and are looking beyond their traditional sources of employees which have led to a better inclusion of different sectors in the society and to a certain level of less discrimination. Multinationals don’t care about the caste system, but to find competitive and qualified workers in order to compete in the international market.

References:

Class presentation

http://farm3.static.flickr.com/2165/2095633020_262520a10d.jpg
http://www.dosmanzanas.com/wp-content/uploads/2009/07/india-taj-mahal.jpg
http://www.dieteticaonline.es/data/productos/El_te_en_india_info_01.jpg
http://www.lasociedadgeografica.com/viajes-india-imagenes-y-fotos/mapa-india-fisico.jpg

Module 8: China (Question)

Discuss in your blog the relevance of Guanxi and the existence of Chinese business networks as supporting factors to the internationalization process of Chinese companies.

The Chinese social system is classified as a relation-based system, which focuses on the special relations between individuals, and is based on reciprocity in order to achieve harmony. Good relationships are based on co-operative behavior among members of the community. In Chinese societies, guanxi can be defined as “a friendship with unlimited exchange of favors”, which means if two people share a guanxi relationship they feel fully committed to each other. To make guanxi work a Chinese businessman/ woman must complete his or her obligations, try to be loyal to friends, do favors and maintain a reputation for fairness. (S) He will try hard to maintain the image of a person who can be fully relied on and will always reciprocate.

In terms of FDI, Chinese and Taiwanese firms tend to depend highly on networks when going abroad, at least at the beginning. Network resources are less important for entering a mature market such as the United States where institutions exist that can facilitate internationalization.
There has been certain degree of westernalization in the Taiwanese companies and there are questions about how much Chinese values will remain. Chinese management faces technological and economic challenges from both Western and Japanese MNCs. The challenge of Western influences: in order to advance high technology and provide services in the global market, they require leverage and the capability for research and design, which may change traditional Chinese management. Second, economic influences: as Taiwan faced the economic downturn between 2000 and 2003, Western management practices such as HRM were brought into Taiwan; therefore the Chinese management may have been altered toward Western style. Third, industrial influences: unlike the traditional industry emphasis on recruitment and guanxi as mentioned above, a rejection of guanxi in recruitment can be found in high-tech organizations. Finally, management fashion influences: as the ideas of HRM and business strategy integration spread from the USA, organizations in Taiwan started to introduce HR methods, and hence the way of managing employees (laouzi guanxi) may have been challenged.

Guanxi is the crucial factor in the internationalization of Taiwanese MNCs as well as IHRM practices. The horizontal guanxi can be found in the Taiwanese MNCs in the UK IT industry, and they choose to locate near to their business partners in UK. On the other hand, the forming of guanxi in business relations occurs after Taiwanese MNCs in the financial service industry have made their entry to the UK. However, there is no guanxi associated with the investments of Taiwanese MNCs when implementing internationalization strategies; foreign direct investment is the common method. The vertical guanxi can be found in Taiwanese MNCs in the British context as well. Taiwanese managers believe that personal relationships with employees (laouzi guanxi) are very important in managing human resources in an international organization in respect of trust, renqing, face and reciprocity. Sectorial differences were apparent within the Taiwanese companies regarding their degree of preference for guanxi related to recruitment. In Taiwan the conflicts in the office can be resolved through socializing.

References:

Chen, I Chun Lisa. Easterby-Smith, Mark. Is Guanxi still working, while Chinese MNCs go global? The case of Taiwanese MNCs in the UK

http://www.regent.edu/acad/global/publications/rgbr/vol2iss1/images/2008_April_Guanxi.jpg

http://rejon.org/wiki/images/a/a8/Guanxi-characters.png

Module 8: China (Summary)

We all know that China is one of the main players in today’s world economy. China is a millenary country that has been always one of the main (when not the main) powers in Asia. Today it is the most populous country in the world with 1,338,612,968 inhabitants.

China is the third world economy and registered a 9, 5% average economic growth in the last two decades which represents one of the most solid economic transformations in the history. They have identified themselves as a socialist country with a market economy.

China’s background is characterized by agrarism (Two-thirds of the Chinese people still live in rural areas and there are collective farms –Mao’s legacy), Confucianism (that has served as the foundation of Chinese education for 2,000 years; Confucius maintained that a society organized under a benevolent moral code), pictographic language, and wariness of foreigners (in a big part due to the country’s violent history being attack from all the powers).

Chinese organizations work based on eight principles. These elements are a blend of Maoist bureaucrat in learning, Confucian gentleman, and Sun Tzu-like strategist. The first one is the Guanxi principle, which is related with personal relations. According to this principle Chinese place a premium on individuals' social capital within their group of friends, relatives, and close associates. Zhongjian Ren is a principle more related with intermediaries and distrust. It stands that In China, suspicion and distrust characterize all meetings with strangers. Other principle is Renji Hexie (Interpersonal Harmony) which underlines the importance of harmonious relations between business partners. The social status and the Confucian values of deference and obedience to superiors are very strong and are tied to Shehui Dengji’s principle. We can see a big difference between Chinese and western culture, Chinese think in term of the whole (in a holistic way) while Americans think sequentially and individualistically and this is due to the Zhengti Guannian principle. Jiejian (Thrift) is a principle related with saving money; Chinese negotiators will pad their offers with more room to maneuver than most Americans are used to, and they expect both sides to make concessions on price. In Chinese business culture, a person's reputation and social standing rest on saving face, which is observed in Mianzi principle. Finally, thanks to the Chiku Nailao (Endurance, Relentlessness) they prize highly relentless hard work.

References:

Class presentation

http://www.indap.gob.cl/observatorio/images/stories/china%5B1%5D.jpg

http://www.ultimacurva.com/wp-content/uploads/2008/10/gp-de-china.jpg

Module 7: East Asia (Question)

1. List the main similarities and differences of Japanese and Korean management styles.

We can notice certain influence of Japanese management styles in part due to their presence during the time that Korea was a colony of Japan. Korean government was heavily involved in the economic activities of the private sector through credit and foreign exchange rationing and the supervision of private investment plans. Export growth was the main national economic goal until the late 80s in Korea. In order to promote these goals the government offered rewards to the successful exporters in form of low-rate long-term loans, export subsidies and sometimes special political favors. This governmental support led to the creation of the Chaebols, similar to the Japanese’s Zaibatsu. Nevertheless there are also some differences in both styles; we are now going to see which these similarities and differences are.

Market share has always been important for Japanese firms. This has led to an emphasis on aggressive pricing strategies and the search of economies of scale (this pursuit is consistent with long term firm value maximization). The Japanese firm is often modeled as optimizing more that simple stockholder value, while still remaining the calculating economic actor. The relationships developed with the suppliers are also a very important factor in Japanese competitive success; by doing so, firms make longer term commitments and reduce the market options they might have in order to take advantage of the close cooperation and coordination of the production process and coordination of the production process and the fast and flexible development of new products. Participation of workers and the middle management has been important for Japanese firms, in addition, consensus building and group loyalty are emphasized as important principles in Japanese management. Japanese firms scan both customers and competitors. Studies have shown that it is not just customer analysis, but the right kind of customer, that is the source of value in Japanese customer contact. Conecting product design and production is an important value for the Japanese firm. Flexible manufacturing is also strength of Japanese manufacturers. Finally, corporate values seem to guide a Japanese firm’s organization.

In terms of management style and working practices we can notice main some differences between Korea and Japan. The lifetime employment practice in Korean Firms is flexible, in that layoffs are more common than in Japanese firms. Korean workers tend to change jobs more frequently. Top managers in Korean firms tend to be authoritarian and important decisions are made mostly by the top management. Korean management styles tend to be more individualistic that Japanese management in part due to the Korean culture.

References:

Lee, Jangho. Roehl; Thomas W; Choe, Soonkyoo. What makes management styles similar and distinct Across Borders? Growth, experiance and culture in Korean and Japanese firms.

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Module 7: East Asia (Summary)

In the module referring to East Asia, we focused on the Korean case, the so called “Korean miracle”. It adopted this name due to the accelerated growth in economy that this Asian country lived during the XX century. We must start by knowing that Korea liberated from Japan only in 1945 and finally created a government in 1948. The main growth took place between 1960 and 1990. Nevertheless the Japanese influence on Korea during all the colonial period is one of the factors that marked the Korean success.

Korea developed an export-led growth strategy, which main objective was to develop the industry in order to increase the level of exportations. This way Korea started the transition from an agricultural based economy to an industrial developed one and their products (such as manufactures) started to be known around the world.

A very important concept that we are going to study are the Chaebols. They are powerful global multinationals conglomerates owning numerous international enterprises. The Korean word means "business family" or "monopoly". Chaebols had a great impact in economy growth and granted the access to new technology.

After the departure of the Japanese in 1945, some Korean businessmen obtained the assets of some of the Japanese firms, a number of which grew into the chaebol of the 1990s. Government industrial policy set the direction of new investment, and the chaebol were to be guaranteed loans from the banking sector. In this way, the chaebol played a key role in developing new industries, markets, and export production.

Government-chaebol cooperation was essential to the subsequent economic growth and astounding successes that began in the early 1960s. Driven by the urgent need to turn the economy away from consumer goods and light industries toward heavy, chemical, and import-substitution industries, political leaders and government relied on the ideas and cooperation of the chaebol leaders. The government provided the blueprints for industrial expansion; the chaebol realized the plans. However, the chaebol-led industrialization accelerated the monopolistic and oligopolistic concentration of capital and economically profitable activities in the hands of a limited number of conglomerates.

The tremendous growth that the chaebol experienced, beginning in the early 1960s, was closely tied to the expansion of South Korean exports. Growth resulted from the production of a diversity of goods rather than just one or two products. Innovation and the willingness to develop new product lines were critical. In the 1950s and early 1960s, chaebol concentrated on wigs and textiles; by the mid-1970s and 1980s, heavy, defense, and chemical industries had become predominant. While these activities were important in the early 1990s, real growth was occurring in the electronics and high-technology industries. Some of the most known Chaebols nowadays are LG, Hyundai and Samsung.

References:

Class presentation

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Module 6: Expatriates assignments and overseas experiences (Summary)

An expatriate is a person who is designated to work in another country for the company. It occurs in a temporally basis and subsequently that person return to the same company (normally in another position) in the original country.

The company decision of sending a worker to another country is usually influenced by the requirement or availability of a job in a subsidiary. For these purposes companies need a worker with knowledge of the company’s strategy, procedures, etc. Ability to work and live successfully in a foreign environment is also an important criterion to determine who would be the best option.

When sending an expatriate worker, the companies are looking to achieve the completion of the job assignment, obtain a good degree of organizational learning and to transfer new skills and knowledge to the specific subsidiary.

The choice about who will be the employee who will do the work has to be very carefully chosen and there has to be a plan well developed. When it is not, some mistakes related with succession plans for example may occur. Another common mistake is the candidate selection criteria, it is important to identify in which cases it would be more efficient to look for technical skills and knowledge and when it would be better to select a person with a higher adaptability level. Mentoring and cross cultural training are essential to avoid cultural clashes that may destroy the whole work.

Some of the most common problems related with this are the short term progress made by expatriates, high rates of expatriates returning early, returnees that have no position waiting for them when they come back, high rates of quitting by repatriates, the high costs of failure of the project, and some others.

In the other hand we can see success factors that help to develop a good expatriation program. Job factors play an important role, finding similarities in the job held by the expatriate in the original country with the one that is going to develop; relational dimensions (cultural empathy, flexibility) are also very crucial in order to succeed; motivational state and interest for the work; family situation, implying that a worker with some familiar characteristics may be more or less compatible with working abroad; and finally language skills can be also very helpful, if the employee can handle the language of the host country his/her adaptation could be easier (language is just a factor that may ease the condition but is not the only one to take into account).

Overseas experiences are more related with individual goals and development. They can have as results the construction of valuable social networks, career development results from cultural experiences rather than work, eventual return to homeland, broadening perspectives, awareness of cultural differences building confidence and independence, changing career focus and starting new business when coming back home with different perspectives and ideas.

References:

Class presentation
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Module 5: Migrant workers (Question)

¿Do you think the Points System in Canada is meant to protect the country’s sovereignty? Or is it just a deliberated form of discrimination? Why?

My answer to this question is that it is neither one nor the other option, but it is both at the same time. This answer may seem complex and contradictory but it isn’t. We have to understand all the facts that this system implies and we will see that it is one or the other or none of them according to the perspective.

The system was implemented in first place in order to avoid direct discrimination. That means that it didn’t matter whether the immigrant was black, Asian, Latin, European, Muslim, catholic, gay, white or whatever; the only factor determining if he/she was a desired “future Canadian citizen” was his own personal skills. Nevertheless the system is by nature promoting discrimination. It was not a racial or religious explicit discrimination but however discrimination. It discriminated for example people coming from undeveloped countries that were looking for a better future for they and their families but unfortunately hadn’t had the opportunity for qualified education.

The problem is that by trying to attract only qualified and skilled people they were making a big mistake. They were not thinking about the long term (unqualified worker’s sons could be qualified workers in the future for example) and they have payed a high tax for it. Another big mistake was that by emphasizing skilled immigration through its points system, “Canada has selected for itself the very individuals with the most flexibility and maneuverability in the global, transnational economy, and therefore with the least incentive to stay in Canada or any one spot”; that means that the migrants coming to Canada have a high chance of not staying there due to the increasing possibilities of better jobs and payments (=better lifestyle) in other countries.

Another failure seen about this system was the possibility to violate it. “The efficacy of the points system, with its emphasis on immigrants of a skilled or professional occupational profile, has been mitigated by the number of individuals admitted to Canada as dependents, family members, or refugees”, meaning that it was easy to avoid the point system by fitting in one of these kinds of immigrants (which were noticeably higher than the number of the “wanted skilled immigrants”). “Family class immigrants tend to have lower incomes and higher unemployment and social assistance use”. This proves that the system that was intended to attract only qualified workers in order to promote economic growth, protect Canadian borders of those “unwanted” visitors, and avoid any direct discrimination; finally turned against itself generating some of the problems that was trying to solve.

References:
Verbeeten, Dvid. The past and future of immigration to Canada.

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Module 5: Migrant workers (Summary)

Migrant workers are people who are engaged or have been engaged in a remunerated activity in a State of which he or she is not a national. This is the official UN definition, but we can see that it is very broad. It doesn’t specify for how many time or under which status, so we can consider a migrant worker a Spanish person who goes to work in Portugal for summer vacations (according to that definition).

The most common example for us when we think about migrant workers is the Mexican (Latin in general) workers migrating (legally or illegally) to the US. This is the closest case for us because of the familiarity and closeness of it, but it is not the only case. Migration of workers is present around the entire world; and actually it has been like that since a long time ago.

Working migration has its roots in the colonial times when the people of the powers left their hometowns looking for wealth and better life conditions. That’s a reason why most of the former colonies of the big powers were highly influenced by the migrants’ cultures. Later on the migrations continued to appear, mainly in crisis times. During big crisis the people look for a better future leaving the problems of their countries and trying to find a new life in more prosperous nations.

This is for example the reason why the US is a heavily migrant country. During the crisis generated by the wars in Europe, many European workers left their homes and came to the new world trying to find better opportunities. The migration may be generated due to economic, social and/or political reasons.

One of the main problems today is the illegal migration. Due to the lack of a legal status, the irregular migrant is often target of work exploitation and this generates a lot of problems for the host country (resentments, social differences, discrimination, violence, etc). In the other face of the coin we have cases like the European Union, where it is perfectly normal (and legal) to go from one country to another looking for better job options and social stability. This case can also bring some problems because as the nationals may see their works threatened by the migrants from other countries it can generate xenophobic feelings.

We have seen that migration of workers has been present from a long time in the history and with the globalization of the world we can assume that it is not going to stop. The real important point is to find an equilibrium where the migrants don’t be a problem but a complement for the society and that they can get some securities (such as education, health, etc) to avoid the problems that may be associated with them.

References:

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