Midterm Prep Flashcards
What is PESTEL?
Political, economical, socio-cultural, technological, environmental, legal
What is Oligopoly?
a market structure that has enough firms to influence a certain industry but doesn’t have enough power to steal market share
Primary Stakeholder
directly impacted by the organization. for instance, what would happen if companies merge
Secondary Stakeholder
indirectly affected, for example, the competitors or governments
Tertiary Stakeholder
entities are least impacted such as transportation companies. example, you can take other transportation like a car, bus or train if the plane is not available
What is the Institutional theory?
consists of isomorphisms which are forces by which an organization operates in order to survive
Name the three isomorphisms and explain each with an example
Coercive, mimetic and normative
Coercive
legal and political forces based on laws and practices that must be followed. Ex: airlines and governments indicating which planes can enter what countries
Mimetic
copying competitors’ practices and always benchmarking themselves. Ex: Instagram and snapchat
Normative
How involved you should be with professional bodies and continuing their practices. ex: CHRP and CPA
Richard Scott’s forces similar to the institutional theory, explain each
regulative elements, normative elements and cultural cognitive elements
Regulative elements
legal and political organizations that promote specific behaviours
Normative elements
desirable and undesirable values in moral standard
Cultural cognitive elements
beliefs, values and attitudes that shape an organization’s behaviour
How is HRM different from IHRM?
different cultural preferences and laws/regulations
What is an expatriate?
An employee who is working and is temporarily outside the foreign country. Expat goes from home country to host country
What is a self-initiated expat?
An individual that travels to another country by themselves and learns the culture/policies
What is an inpatriate?
Employee shares local knowledge from a subsidiary to the headquarters
What is a third country national?
Hiring someone from a third country like Mexico
Culture and Reverse Culture Shock
negative experience who move from their own culture to another, requires adjustment in a short period of time. there can be misunderstandings, questioning yourself, cultural faux pas
Emic vs Etic approach
Emic is viewing the world from a specific cultural lens and etic is a cross-cultural approach
VAB Model
Values, attitudes and behaviours
BAV Model
Behaviours, attitudes and values
What is cross cultural management?
comparing cultures and behaviours within countries and being able to improve interactions with customers, business partners, employees
What is culture?
the custom of art, social institutions, family traditions
What is multiculturalism?
maintaining their identity, taking pride in ancestry and a sense of belonging within the community (Ex: Canada)
What is a melting pot?
As a legal resident, you can do whatever you want and follow whatever culture
What is an assimilationist?
you are required to blend in with other cultures, values and behaviours. Ex: Quebec
What is a monoculturalist?
only one culture and ethnic group is prioritized. Ex: Its hard to become a PR in Japan
Low power distance vs high power distance
low PD has a low social hierarchy but more fairness whereas high PD has a social hierarchy and unequal rules. Ex: wealthy vs unhealthy, men and women in their jobs
Individualism vs Collectivism
Individualism people work on their own, and take care of themselves and their immediate family whereas collectivist people expect others to look after them in exchange for loyalty
Uncertainty avoidance
High uncertainty avoidance → whatever they feel comfortable with (don’t go out of their comfort zone, resistant to change, follow rules and regulations) Ex: Mexico has to be aware of their crisis’
Low uncertainty avoidance → they aren’t afraid to try new things (entrepreneurs take this risk) Ex: USA isn’t afraid of trying new things
Masculinity (Quantity of Life)
Only care about money, wealth and success. They are very assertive. Ex: Singapore has the 4Cs, if you have a car, condo, cash and credit card you are winning in life
Femininity (Quality of life)
Care about cooperation, modesty, caring for the weak, and work-life balance. Ex: countries are offering 4 day work weeks, work from home, they are very flexible
Confucian Dynamism
the basic orientation of life within people either long-term or short term
Long-term culture characteristics
pursuing goals, having a good status and adapting to modern conditions
Short-term culture characteristics
low savings rate, respect for traditions, greetings/presents
Indulgence
free gratification of basic human drives to enjoy life and have fun. Ex: get a paycheque and spend it
Restraint
Suppress gratification of needs. Ex: saving money for long term gratification
Gender Egalitarianism
Promoting equal opportunities for both men and women
What is the aim of global standardization?
to reach consistency, transparency and alignment of the workforce around objectives. Equal treatment among managers and what is expected by employees.
What is localization?
to respect local cultures, traditions, values and other government policies, and education systems. Certain techniques may be appropriate to one region and not to another
Define Meta-National
identify and access new technologies and market trends ahead of their competition. Take that knowledge and turn it into innovative products and services
Sensing Units
uncover and predict trends - market insights
Magnet Units
attracting unpredictable innovative processes creating a business plan to convert these innovations to products and services
Global marketing and production capabilities
producing products for a wide range of customers
The Transnational
a complex process of coordination and cooperation involving strong cross-unit devices and developing worldwide perspectives
What is the challenge of balancing standardization and localization?
challenging to create an effective system in multiple countries that have local differences and interdependencies
What factors drive standardization?
strategy, structure, corporate culture, firm size and maturity
What factors drive localization?
Environmental and institutional
Country of origin effect
multinationals are shaped by institutions existing in their country and try to introduce the parent countries’ HRM practices to the foreign subsidiary. Ex: USA is more flexible in sharing their practices with Britain than Germany because they have strict laws
Host country effect
HRM practices are impacted by the host country. Ex: Germans don’t choose their pay and pay mixes, it is regulated by wage agreement policies
Home country effect
Occurs in HQ where HRM practices are similar to the home country’s environment
What is the role of a subsidiary
position of unit related to the rest of the organization and defines what is expected from MNEs
Subsidiaries from global innovators
provide knowledge for others who gained importance in MNE towards the transnational model where the parent company develops HR policies/practices that are transferred overseas
Local innovators
subsidiaries engage in the creation of the region’s specific knowledge because they have local responsibility
Why do organizational structures change?
- the pressure placed by growth and geographical spread
- the need to improve coordination across business units
- restrictions placed by hose government regulations on ownership and equity
What are the stages of internationalization?
Exporting, sales subsidiary, licensing, subcontracting and foreign production
Stage 1 - Exporting
- the initial stage for manufacturing firms rarely involves organizational response
- tends to be handled by an intermediary foreign agent/distributor because local market knowledge is critical
- if export sales increase, the export manager may be appointed to a new market and this is a person from domestic operations
Stage 2: Sales Subsidiary
- The corporate HQ controls exporting but the firm needs to decide on the coordination of sales subsidiaries like staffing
- this can become more work for the locals (to train and compensate)
- it is possible to send an expat or use a host country national/manager
Stage 3: Licensing
- a contractual agreement to use intellectual property (trademarks, copyright) Ex: McDonalds
Stage 4: Subcontracting
outsourcing certain parts of the production to third parties which can help save money. Ex: Tesla
Stage 5: foreign production
- entering into a joint venture with a local firm or buying a local firm and this could cause to create of international divisions where all international activities are grouped
Global production/area of division
- the tension between HQ and subsidiaries where the demand for national responsiveness occurs due to differences in the market structure such as customer needs, local culture and pressure from the host government. Ex: Beef products in India
What is the matrix?
the MNE is trying to integrate and combine products/services with geographical locations. It is considered to match the structure of management with the decision making process.
Problems in using the matrix?
- dual or multiple reporting leads to conflict and confusion
- need more coordination
- information overload
- barriers in culture, language and time
How can MNEs be successful by using the matrix?
focus less on the structure and more on the abilities, behaviours and performance of individual managers as the firm can respond to complicated environments. Choose managers who know the business and deal with responsibilities
Define Heterarchy
the ability of the multinational to formulate, implement and reinforce the required HR elements along with rewards and punishment systems. the ability for different centers to make the right choices and take responsibility
