![Page 1: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/1.jpg)
Cha
pter 11
Management Decision and Control
The specific objectives of this chapter are:
1. PROVIDE comparative examples of decision making in different countries.
2. PRESENT some of the major factors affecting the degree of decision-making authority given to overseas units.
![Page 2: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/2.jpg)
Cha
pter 11
Management Decision and Control
The specific objectives of this chapter are:
3. COMPARE and CONTRAST direct controls with indirect controls.
4. DESCRIBE some of the major differences in the ways that MNCs control operations.
5. DISCUSS some of the specific performance measures that are used to control international operations.
![Page 3: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/3.jpg)
3
Decision and Control Linkages
Decision Making The process of choosing a course of action among
alternatives.
Controlling The process of evaluating results in relation to plans or
objectives and deciding what action, if any, to take.
Management Decision and Control The choice of a course of action among alternatives and the
evaluation of results of those choices in relation to plans or objectives.
![Page 4: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/4.jpg)
4
Decision-Making Processand Challenges
Do decision-making philosophies and practices differ from country to country?
Comparative Examples of Decision Making
Some countries tend to use more centralized decision making than others
Most British organizations are highly decentralized French managers graduated from the Grand Écoles and lack
confidence in their middle managers so decision making tends to be centralized
![Page 5: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/5.jpg)
5
Decision-Making Processand Challenges
Codetermination A legal system that requires workers and their managers to discuss
major decisions German MNCs tend to be fairly centralized, autocratic, and
hierarchical managers focus more on productivity and quality of goods and
services than on managing subordinates Decision making in Sweden is decentralized and participative
Focus more on quality of work life and the importance of the individual in the organization
Comparative Examples of Decision Making
![Page 6: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/6.jpg)
6
Decision-Making Processand Challenges
Ringisei A Japanese term that means “decision making by consensus.”
Japanese consensus decision making can be very time-consuming In practice most Japanese managers know how to respond to
“suggestions” from the top and to act accordingly, saving much time Tatemae
A Japanese term that means “doing the right thing” according to the norm.
Honne A Japanese term that means “what one really wants to do.”
Comparative Examples of Decision Making
![Page 7: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/7.jpg)
7
Decision-Making Processand Challenges
MNCs based in the United States Use fairly centralized decision making in managing their overseas
units Ensure that all units are operating according to the overall
strategic plan Thus providing necessary control for developing a worldwide
strategy
Most evidence indicates the overall decision-making approaches used around the world favors centralization
Comparative Examples of Decision Making
![Page 8: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/8.jpg)
8
Centralization and DecentralizationCentralization and Decentralizationof Decision Making in Subsidiary Operationsof Decision Making in Subsidiary Operations
Adapted from Table 11–1: Factors That Influence Centralization or Decentralization of Decision Making in Subsidiary Operations
![Page 9: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/9.jpg)
9
Decision-Making Processand Challenges
An organizational strategy and the accompanying techniques that result in the delivery of high-quality products or services to customers
TQM is critical to achieve world-class competitiveness
Manufacturing is a primary area
U.S. automakers have greatly improved the quality of their cars in recent years
The Japanese have continuously improved quality and thus still have the lead
Total Quality Management Decisions (TQM)
![Page 10: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/10.jpg)
10
Decision-Making Processand Challenges
Many successful TQM techniques applied to manufacturing MNCs use TQM techniques
Tailor output to customer needs
Require their suppliers use same approach
Concurrent engineering/interfunctional teams Designers, engineers, production specialists, and customers work
together to develop new products
Empowerment
Total Quality Management Decisions (TQM)
![Page 11: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/11.jpg)
11
Decision-Making Processand Challenges
Rewards and Recognition Pay and benefit increases, merit pay, and discretionary bonuses Pay-for-skills and knowledge plans Plaques, and public recognition
Success of rewards and recognition varies by country U.S. workers may value individual recognition Japanese do not like to be singled out for personal praise
Total Quality Management Decisions (TQM)
Many successful TQM techniques applied to manufacturing
![Page 12: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/12.jpg)
12
The Emergence of New Beliefs The Emergence of New Beliefs Regarding QualityRegarding Quality
Adapted from Table 11–2: The Emergence of New Beliefs Regarding Quality
![Page 13: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/13.jpg)
13
The Controlling Process
Methods by which MNCs control overseas operations
Most combine direct and indirect controls
Some prefer heavily quantifiable methods – others more qualitative approaches
Some prefer decentralized approaches – others greater centralization
![Page 14: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/14.jpg)
14
The Controlling Process
Three common performance measures used to control subsidiaries are in the areas of finance, quality, and personnel
Financial performance is typically measured by profit and return on investment
Quality performance is often controlled through quality circles
Personnel performance is typically judged through performance evaluation techniques
![Page 15: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/15.jpg)
15
Models of PC ManufacturingModels of PC Manufacturing
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Adapted from Figure 11–1: Models of PC Manufacturing
Manufacturer orders PC parts based on sales forecasts
PC parts are warehoused until needed by the manufacturer
Manufacturer builds PCs & stores them in their warehouse
PCs are ordered by distributors & shipped to their warehouse
PC orders received from retailers are shipped to them by distributors
Customer buy PC from retailer & receives assistance setting PC up
Traditional Model
![Page 16: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/16.jpg)
16
Models of PC ManufacturingModels of PC Manufacturing
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Adapted from Figure 11–1: Models of PC Manufacturing
Manufacturer orders a small number of PC parts from its suppliers
Business & individual customers place orders by phone or over the internet
Manufacturer builds PCs to customer’s exact specifications
Manufacturer ships PCs directly to customer
Direct-Sales Model
![Page 17: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/17.jpg)
17
Models of PC ManufacturingModels of PC Manufacturing
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Adapted from Figure 11–1: Models of PC Manufacturing
Manufacturer builds shells – a case, power supply, floppy disc, basic circuitry
Shells are shipped to distributors & components suppliers establish parts inventory with or near distributor
Customer orders PC through retailer or direct from manufacturer – order is forwarded to distributor
Distributor gathers parts to assemble PC to customer’s specifications
Distributor ships PC direct to customer on dealers behalf – dealer provides setup & additional services for separate fee
Hybrid Model
![Page 18: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/18.jpg)
18
The Controlling Process
MNCs experience many control problems
Objectives of the overseas operation may cause conflict
Objectives of joint-venture partners and corporate management may not be in accord
Degrees of experience and competence in planning vary widely among managers running the various overseas units
Basic philosophic disagreements about objectives and policies of international operations may exist
![Page 19: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/19.jpg)
19
The Controlling Process
MNC will focus on the things that it does best Management wants to ensure there is a market for the goods
and services it offers
First the company needs to find out what the customers want and be prepared to respond appropriately
This requires an external control focus
Internal and external perspectives of control – one is often given more attention than the other.
Types of ControlInternal and
External Control
![Page 20: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/20.jpg)
20
The Impact of Internal and External-Oriented CulturesThe Impact of Internal and External-Oriented Cultureson the Control Processon the Control Process
Adapted from Table 11–3: The Impact of Internal and External-Oriented Cultures on the Control Process
![Page 21: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/21.jpg)
21
The Controlling Process
The use of face-to-face or personal meetings for the purpose of monitoring operations
International Telephone and Telegraph (ITT) holds monthly management meetings at its New York headquarters
Meetings are run by the CEO of the company
Reports are submitted by each ITT unit manager throughout the world
Problems are discussed, goals set, evaluations made, and actions taken to help the unit to improve its effectiveness
Types of Control Direct Controls
![Page 22: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/22.jpg)
22
The Controlling Process
Other examples Top executives visit overseas affiliates or subsidiaries to learn
firsthand the problems and challenges facing the unit and to offer assistance
By determining who to send overseas to run the unit, MNCs can directly control how the operation will be run
Designing a structure that makes the unit highly responsive to home-office requests and communications ensures MNCs that all overseas operations are run in accord with central management’s desires
Types of Control Direct Controls
![Page 23: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/23.jpg)
23
The Controlling Process
The use of reports and other written forms of communication to control operations at subsidiaries
Financial statements Statements prepared to meet the national accounting standards and
procedures prescribed by the host country Statements prepared to comply with the accounting principles and
standards required by the home country Statements prepared to meet the financial consolidation
requirements of the home country
Types of Control Indirect Controls
![Page 24: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/24.jpg)
24
The Controlling Process
Great Britain Financial records sophisticated and heavily
emphasized Top management tend to focus attention on major
problem areas and not get involved in specific, detailed matters of control
Control used more for general guidance than for surveillance
Operating units had a large amount of marketing autonomy
Approaches to Control Some Major Differences
![Page 25: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/25.jpg)
25
The Controlling Process
France French managers employed a control system
that was closer to that of the Germans than to the British.
Control was used more for surveillance than for guiding operations
The process was centrally administered The French system was less systematic and
sophisticated then the German’s
Approaches to Control Some Major Differences
![Page 26: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/26.jpg)
26
The Controlling Process
How do U.S. MNCs differ from their European counterparts? U.S. firms tend to rely much more heavily on reports
and other performance-related data Americans make greater use of output control –
Europeans rely more heavily on behavioral control Control in U.S. MNCs focuses more on the
quantifiable, objective aspects of a foreign subsidiary – control in European MNCs tends to be used to measure more qualitative aspects
Approaches to Control Some Major Differences
![Page 27: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/27.jpg)
27
Planning and ControlPlanning and Control
Adapted from Table 11–4: Selected Beliefs Related to Planning and Control
![Page 28: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/28.jpg)
28
Planning and ControlPlanning and Control
Adapted from Table 11–4: Selected Beliefs Related to Planning and Control
![Page 29: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/29.jpg)
29
Control Techniques
The most important part of the ROI calculation is profits – can often be manipulated by management
The amount of profit directly relates to how well or how poorly a unit is judged to perform – for example:
Sometimes differences in tax rates can be used to maximize overall MNC profits
Financial Performance
![Page 30: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/30.jpg)
30
Control Techniques
Bottom-line (i.e., profit) performance of subsidiaries can be affected by a devaluation or revaluation of local currency
If a country devalues its currency subsidiary export sales will increase
The price of these goods will be lower for foreign buyers whose currencies now have greater purchasing power
If the country revalues its currency export sales will decline The price of goods for foreign buyers will rise since their currencies
now have less purchasing power in the subsidiary’s country
Financial Performance
![Page 31: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/31.jpg)
31
Control Techniques
Devaluation and revaluation of local currency are outside the control of the overseas unit
A devaluation of the currency will increase the cost of imported materials and supplies for the subsidiary
A revaluation will decrease these costs because of the relative changes in the purchasing power of local currency
Financial Performance
![Page 32: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/32.jpg)
32
Control Techniques
Why are Japanese-made goods of higher quality than the goods of many other countries?
Quality Control Circle (QCC) Japanese firms train their people carefully Staying on the technological cutting edge Focus on developing and bringing to market competitively priced
goods Design, engineer, and supply people to ensure that the product can be
produced at prices customers can bear Fostering continuous cost-reduction efforts (kaizen)
Quality Performance
![Page 33: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/33.jpg)
33
Performance of Suppliers When ServingPerformance of Suppliers When ServingU.S. and Japanese-Owned Auto PlantsU.S. and Japanese-Owned Auto Plants
Adapted from Table 11–5: Performance of Suppliers When Serving U.S. and Japanese-Owned Auto Plants
![Page 34: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/34.jpg)
34
Solving a Quality Problem: Taguchi Method vs. TraditionalSolving a Quality Problem: Taguchi Method vs. Traditional
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Adapted from Figure 11–2: Solving a Quality Problem: Taguchi Method vs. Traditional
Production problem:Blemishes appear in paint on finished hood
Perform experiment:Change one factor & hold the others constant in a production run of 70 hoods
Measure results:If problem is not resolved – design experiment with another 70 hoods – vary different factors & hold others constant
Repeat experiments:Each possible cause must be studied in separate production runs of 70 hoods until the culprit is found
Traditional MethodPossible causes are studied one by one while holding the other factors constant.
![Page 35: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/35.jpg)
35
Solving a Quality Problem: Taguchi Method vs. TraditionalSolving a Quality Problem: Taguchi Method vs. Traditional
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Adapted from Figure 11–2: Solving a Quality Problem: Taguchi Method vs. Traditional
Production problem:Blemishes appear in paint on finished hood
Brainstorming session:Identify factors that could be responsible
Experimental runs:Eight sets of five hoods each are produced varying several possible causes at once
Taguchi MethodBrainstorming and a few bold experiments seek to quickly find the problem.
Employ Taguchi statistical sampling method:A handful of experiments are designed – many possible causes are varied based on statistical techniques
Confirm results:The experiments are evaluated and a changed production run is made to confirm findings
![Page 36: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/36.jpg)
36
The 50 Most-Admired Global CompaniesThe 50 Most-Admired Global Companies
Adapted from Table 11–6: The 50 Most-Admired Global Companies
![Page 37: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/37.jpg)
37
The 50 Most-Admired Global CompaniesThe 50 Most-Admired Global Companies
Adapted from Table 11–6: The 50 Most-Admired Global Companies
![Page 38: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/38.jpg)
38
The 50 Most-Admired Global CompaniesThe 50 Most-Admired Global Companies
Adapted from Table 11–6: The 50 Most-Admired Global Companies
![Page 39: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/39.jpg)
39
Seven Common Themes of Successful MNCs
1. Top managers take their mission statements seriously and expect everyone else to do the same
2. Success attracts the best people and the best people sustain success
3. The top companies know precisely what they are looking for
4. These firms see career development as an investment – not a chore
5. These companies promote from within whenever possible
6. Performance is rewarded
7. The firms are genuinely interested in what their employees think and measure work satisfaction often and thoroughly
![Page 40: Chapter 11 Management Decision and Control The specific objectives of this chapter are: 1. PROVIDE comparative examples of decision making in different](https://reader035.vdocuments.us/reader035/viewer/2022062301/56649cb65503460f9497bfe8/html5/thumbnails/40.jpg)
40
Case
Air Asia What opportunities exist in the Asia-Pacific region for the entrance of new low-fare airlines?
How might demand for low-fare service differ in the Asia-Pacific region and in North America and Europe?
Do governments pose a significant obstacle to the expansion of low-fare airlines in Asia? Compare AirAsia’s strategy with the strategies of Southwest and Ryanair. How is it similar to
and different from the strategies of those carriers? Did Tony Fernandes weigh the range of political, economic, and operational risks when he
took over AirAsia? What risks might he have overlooked? How would you describe Tony Fernandes’ entrepreneurial strategy? How should AirAsia respond to the challenges posed by (a) new low-fare carriers entering the
Asian Marketplace and (b) low-fare strategies pursued by incumbent carriers? How do you think the Asian passenger air transport marketplace will shake out? What lessons
can be drawn from the North American and European experience?