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Comparative Management

What- Comparative management is the study and analysis of how management differs in various environments- The study and analysis focus on the differences in management styles based on geographic locations; dynamics and personalities of the management team and employees; and size of the company or corporation

http://www.ask.com/business-finance/definition-comparative-management-cfc06b989c287ecf#http://www.academia.edu/6009600/Comparative_Managementhttp://bankofinfo.com/definition-of-comparative-management/

Importance- Comparative management theories examine leadership differences associated with;- Processes of operation- Human interactions- Social systems- Decision making - Productivity strategies in a variety of workplace settings- Compares various management styles used in different countries- Helps to study cross cultural differences among the countries- Assessing the transferability and applicability of Management Know how- Identify, describe, explain and predict the impact of the environmental constraint - Formulate policies to make FDI for international businesses- To manage international technology transfer

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Comparative Management

Scope- Centralization of Authority: variation among cultures have been identified with respect to the degree to which authority for making important business decisions is centralized with a small group of senior managers as opposed to delegating authority downwards in the organizational hierarchy - Risk tolerance: cultures vary with the level of uncertainty & risk that managers are willing to comfortably manage. - Reward systems: some cultures prefer the use of reward systems that are based on measuring & motivating individual achievement while other cultures generally rely on incentives that reward desired collective behavior of groups - Level of formality: cultures vary in degree to which they prefer to rely on formal management procedures- Organizational loyalty: In some cultures, there is a high level of identity

with & loyalty to the company while in other companies the loyalty of the employee lies with their occupational group or profession as opposed to any specific employer- Level of cooperation: cultures differ in terms of level of cooperation between managers & employees as opposed to encouraging competition within employees to find the most efficient way to achieve company objectives

http://alangutterman.typepad.com/files/omddc---wp-1-2010-july-2010.pdf

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Comparative Management: Farmer & Richman Model

Details- Professors Richard N. Farmer and Barry M. Richman were the two pioneers in comparative management- They emphasized that environments external to the firm do affect management practices

http://bankofinfo.com/comparative-management-models/http://cadeiras.iscte-iul.pt/CIM//CIM-Intro.pdf

External Constraints Management & Managerial

Effectiveness•Educational•Sociological•Legal- political•Economic

Elements of the Management

Process

•Planning•Organizing•Staffing•Directing•Controlling•Policy making operation areas

Firm Efficiency

System Efficiency

Affect Affect

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Comparative Management: Farmer & Richman Model

Educational Cultural

Variables

- Literacy level- Specialized vocational & technical training- Higher education- Special management development programs- Attitude towards education- Educational match with requirement

http://alangutterman.typepad.com/files/omddc---wp-1-2010-july-2010.pdf

Sociological Cultural

Variables

- Attitude towards industrial managers & management- View of authority & subordinates- Inter- organizational cooperation- Attitude towards achievement & work- Class structure & individual mobility- Attitude towards wealth & material gain- Attitude towards scientific methods- Attitude towards risk taking- Attitude towards change

Political- Legal Variables

- Relevant legal rules of the game- Defense & military policy- Foreign policy- Political stability- Political organization- Flexibility of law & legal changes

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Comparative Management: Farmer & Richman Model

Economic Variables

- General economic framework- Central banking system & monetary policy- Fiscal policy- Economic stability- Organization of capital markets- Factor endowment- Market size- Social overhead capital

http://alangutterman.typepad.com/files/omddc---wp-1-2010-july-2010.pdf

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Comparative Management: Koontz Model

http://bankofinfo.com/comparative-management-models/

Management Sci.

•Concepts•Principles•Theory•Know. of gen. appl.

Enterprise Function

ScienceEngineeringProductionMarketing/ Finance

External Env.

Educational/ Political/ Legal/ Eco./ Tech./ Socio- Cultural/ Ethical

Human ResourcesMaterial Resources

Managerial Practices

•Planning•Organizing•Staffing•Controlling.

Non- managerial

•Engineering•Production•Marketing•Finance

•Enterprise•Excellence

•Excellence due to managerial factors

•Excellence due to non- managerial factors

Affect

Affect

Affec

t Affect

Affect Due

To

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Management Comparison: China, Japan & USA

http://www.usfca.edu/fac-staff/weihrichh/docs/management_practices.pdf

USA Japan ChinaUSA

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International Organization: Definition

Definition

- Organization established by a treaty or other instrument governed by international law and possessing its own international legal personality- International organizations generally have States as members, but often other entities can also apply for membership- The decision-making process of international organizations is often less a question of law than one of political judgment

- International Law Commission

- The definition and role of international organizations vary along different analytical approaches - Might include international governmental organizations (IGOs), nonprofit international nongovernmental organizations (INGOs), and for profit international nongovernmental organizations, the latter also usually referred to as multinational corporations (MNCs)

- Oxford Bibliographies

http://www.peacepalacelibrary.nl/research-guides/international-organisations-and-relations/international-organizations/http://www.britannica.com/EBchecked/topic/291157/international-organizationhttp://www.oxfordbibliographies.com/view/document/obo-9780199743292/obo-9780199743292-0033.xml#obo-9780199743292-0033-bibItem-0001

- International organizations serve many diverse functions, including; - Collecting information and monitoring trends, e.g; UN’s Environment Programme - Delivering services & aid, e.g; WHO - Providing forums for bargaining, e.g; European Union - Settling disputes, e.g; World Trade Organization

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International Organization: Definition

Evolution

- Nascent international organizations were formed by Greek city-states and were envisioned by European writers such as Pierre Dubois(c. 1250–c. 1320) and Emeric Cruce (c. 1590–1648)- Following the French Revolution and the Napoleonic wars of the late 18th and early 19th centuries, leaders of the major European powers met periodically, in a system of consultation known as the Concert of Europe, to attempt to preserve the status quo and to protect their governments from internal rebellion- Later in the 19th century, various international organizations, such as the International Telegraph Union (1865; now the International Telecommunication Union), were established- the Hague Convention, which included agreements on the peaceful settlement of war, the treatment of prisoners of war, and the rights of neutral states. - The 20th century- the League of Nations and the United Nations-Spurred by the political and economic interdependencies and advances in communication and transportation that developed after World War II, the UN became the centerpiece of a network of international organizations

http://www.britannica.com/EBchecked/topic/291157/international-organization

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International Organization: IMF

Background

- IMF was established in 1945 with 29 member countries. - Began financial operations in 1947- It is an organization of countries that - Seeks to promote international monetary cooperation - Facilitate the expansion of trade - Contribute towards an increased employment opportunity & improve

economic conditions of member countries

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Objectives

- Promote international monetary cooperation- Facilitate the expansion & balanced growth of international trade- Promote exchange stability & maintain orderly exchange arrangements among members - Assist in establishing a multilateral system of payments in respect of current transactions among members countries, also assist in eliminating foreign exchange restrictions that hamper the growth of world trade - Make available to members the general resources on a temporary basis

to enable them to correct BoP (balance of payments) problems without

restoring to measure s that would harm national or international prosperity

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International Organization: IMF

Organization

- Board of Governors- Executive Board- Managing Director- Staff of International Civil Servants - Development Committee

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Facilities & Policies

- Resources: Quotas & Borrowings- Financing Facilities- Regular lending facilities- Special lending facility: Supplemental Reserve Facility (eg: Facilities during ‘Asian Financial Crisis’), Contingent Credit Lines for members that

are pursuing strong economic policies to obtain IMF financing on a short term basis, Compensatory Financing Facilities for timely financing to members who are experiencing a temporary shortfall in export earnings- Concessional lending facility: Poverty reduction & growth facility

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International Organization: World Bank

Background & Resources

- WB was established in 1945- Subscribed by its member countries- Substantial contribution of bank’s earnings come from retained earnings & flow of repayment of its loans- Bank finances its lending operation form its own borrowings in the world capital market- The loans have a grace period of five years & are repayable over 20 years or less

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Organization

- All the powers are vested in the Board of Governors (consists of Governor for each member country)- The Governors of the Bank have delegated their powers to the Board of

Executive Directors that performs its duties (on full time basis) at Bank’s

headquarters. There are 21 Executive Directors- The 5 main Directors are appointed as per the largest share in the capital stock; the rest are elected by the Governors (from other member countries)

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International Organization: World Bank

Objectives

- To assist in the reconstruction & development of territories- To restore the economies of the member countries- To encourage the development of productive facilities & resources in the less developed countries - To promote Private Foreign Investment by means of guarantees of participation in loans & other investment made by private investors- Finance for productive purposes out of its own capital funds- To promote the long range balanced growth of international trade

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Financing Policies

- Finances for infrastructure development; roads, rails, telecommunication, ports, power- Stepped into energy development- Largest share goes for power reforms & energy programmes- Increase in financing for oil & gas development- Structure Adjustment Lending: contribute to a more sustainable BoP in maintenance of growth in situations of serious constraints- Special Action Programme: to help countries implement adjustment measures & high priority projects

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International Organization: WTO

Background

- GATT was superseded by WTO, & came into force on January 1, 1995- Round of trade negotiations were held lasting for 7 years (1986 ~ 93) called the ‘Uruguay Round’- A ministerial conference was held in Morocco in 1994, attended by 125 govt representatives from across the world to sign the establishment of a new successor institution to GATT, viz; WTO- Initially there were 4 sub- committees; - Budget, finance, & administration - Institutional procedural, and legal matters - Trade & environment - Services

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Objectives

- To help trade flow as freely as possible- To achieve further liberalization gradually through negotiations- To set up an impartial means of settling disputes- Administer WTO agreements- Provide a forum for trade negotiations- Handle trade disputes- Monitor national trade policies- Provide technical assistance & training for developing countries- Cooperate with other international organizations

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International Organization: WTO

Areas of Negotiations

- Basic telecommunications- Maritime transport- Movement of natural persons- Financial services- General Agreement on Trade & Services (GATS)- A reaffirmation of the rule of the law in trade & economic relations- A reversal of long standing protectionist practices in agriculture, textiles

& clothing- An extension of multilateral rules to services & intellectual property rights

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Organization

- WTO is run by its government- Decisions are made by the membership as a whole, either by ministers (who meet every two years) or by officials (who meet regularly in Geneva)- Decisions are made normally by consensus- The highest authority is the Ministerial Conference which meets at least once in every two years- Routine work is supervised by the General Council- Numerous other councils, committees, working parties, and negotiating groups cover the wide range of WTO issues

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International Organization: International Finance Corporation

Background

- IFC was established in 1956- It has its own operating & legal staff- It depends on World Bank for administration & other services

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Mission

- To contribute to the World Bank Group’s overall purpose of reducing poverty & improving the living standards by playing a leading role in the

development of a sustainable private sector- IFC’s basic tools to achieve these goals are; - Loan & equity financing of private enterprises - Mobilization of external capital alongside its own resources - Provision of related advisory and technical assistance services

Objectives

-To assist the economic development of developing countries by promoting growth in the private sector of their economies- Help to mobilize domestic & foreign capital for this purpose - It acts as a catalyst in bringing together entrepreneurship, investment capital, and production

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International Organization: International Finance Corporation

Main Features of Assistance

- IFC makes its investments in partnership with private investors- Its investment will never be more than half of the capital requirements of the enterprise- The minimum investment IFC will make in an enterprise is fixed at $10,000 but no upper limit is fixed- The rate of interest would be a matter of negotiation depending on the risks & other investments- The IFC will not seek or accept a govt guarantee for the repayment of any of its investment, not will it seek formal govt approval of any proposed financing, except when such approval is required by the law in any country

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

IFC’s Distinguishing

Features

- It’s commitment to provide project sponsors with the necessary technical assistance that will help to ensure potentially productive & financially sound ventures- It provides policy assistance to its member govts in support of their efforts to develop the necessary investment climate that will encourage

productivity

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International Organization: Asian Development Bank

Background

- ADB was set up in 1966 with the support of the UN’s Economic Commission for Asia & Far East (ECAFE)- It was set up to foster the economic development of Asian countries- Its headquarters are in Manila- Its funds are contributed by developed countries such as; Japan, US, Canada, West Germany, Australia & others

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Objectives

- To promote investment in the ESCAP (Economic & Social Commission for Asia & the Pacific) region of public & private capital for development- To utilize the available resources for financing development, giving priority to those regional, sub- regional, national projects which contribute more effectively to the harmonious economic growth of the region as a whole

Main Features of Assistance

- Greater priority on alleviating poverty & protecting the environment - Must strengthen its assistance to the private sector to improve productivity & efficiency - Must work with its developing members to create a policy framework that makes the most efficient use of human & capital resources

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International Organization: UN’s Conference on Trade & Development

Background

- Widening trade gap b/w developed & developing countries- General dissatisfaction of the developing with GATT- Need for a new organization for international economic cooperation in the field of trade & aid - Establishment of UNCTAD in 1964 as a permanent organ of the UN General Assembly- The conference, which is a plenary body of a large number of countries, meets normally at an interval of four years

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Functions

- To promote international trade with a view to accelerate economic development- To formulate principles & policies on international trade & related problems on economic development- To negotiate multi lateral trade agreements- To make proposals for putting its principles & policies into effect- Research & support of negotiations for commodity agreements, & technical elaboration of new trade activities for developing countries

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International Organization: UN’s Conference on Trade & Development

Basic Principles- Every country has a sovereign right to freely dispose of its natural resources in the interest of the economic development and well being of its own people and to freely trade with other countries- Economic relations among countries, including trade relations, shall be based on respect for the principles of sovereign equality of states, self determination of people, and non- interference in the internal affairs of

other countries- There shall be no discrimination on the basis of differences in the socio- economic systems, and the adoption of various trading methods and trading policies shall be consistent with this principle

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Key Results- The Generalized System of Preferences: GSP is a preferential tariff system which provides for a formal system of exemption from the more

general rules of the WTO- A maritime shipping code: This code provides for maritime shipping activities, covering seagoing vessels, crew, seaports, marine navigable channels, ocean shipping prevention of environmental pollution and other activities related to the use of seagoing vessels for economic, cultural, social, sport, public service and scientific research purposes- Special international programmes to help the LDCs - International aid agencies

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International Organization: UN’s Industrial Development Organization

Background- UNIDO was set up in January 1967, is an organ of UN General Assembly- Its primary function is to promote industrialization in the developing countries by encouraging the mobilization of national & international resources- UNIDO works directly with business firms, generally on an industry basis

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Major Activities- Operational Activities: - Direct technical assistance to industries, at the request of the govt of developing country - In- plant training programmes; groups of technicians & engineers from

developing countries, are brought together to consider how industry in more advanced countries solve similar problems - Research: conducts feasibility studies on the requirements for a potential industry, export oriented industries are given a special attention - Coordination: includes the organization & sponsoring of inter- regional & international meetings, seminars

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International Organization: International Trade Centre

Background- ITC was created in 1964 & since 1968 has been operated jointly by GATT (now WTO) & UN (through UNCTAD)- As an executing agency of UNDP, ITC is directly responsible for implementing UNDP- financed projects for trade promotion in developing countries

Business Environment; 2nd Edition, Shaikh Saleem, Pearson

Major Activities- Developing a national trade promotion strategy, including analyzing the

export potential, choosing the priority markets, & setting the export targets- Establishing appropriate govt institutions & services, such as Central Trade Promotion Organization & Services for the exporters in trade information, export financing, export quality control, export costing & pricing, export packaging, trade fairs, legal aspects of foreign trade, international physical distribution of goods, commercial representation abroad, trade promotion services for SME- Finding market opportunities for current export products, and using effective marketing strategies to promote them abroad, developing new items for export- Training govt trade officials, businessmen and instructors in export marketing & trade promotion- Improving import operations & techniques to optimize scarce foreign exchange resources