social and cultural factors in business week 2. the command economy enterprises governed by the plan...
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SOCIAL AND SOCIAL AND CULTURAL FACTORS CULTURAL FACTORS
IN BUSINESSIN BUSINESS
Week 2Week 2
The Command EconomyThe Command Economy
Enterprises governed by “the plan”Enterprises governed by “the plan” Annual quotas broken down toAnnual quotas broken down to QuarterlyQuarterly MonthlyMonthly WeeklyWeekly
The Command EconomyThe Command Economy
Each enterprise told what to produce withEach enterprise told what to produce with What materialsWhat materials What labourWhat labour What financeWhat finance At what priceAt what price Where to be deliveredWhere to be delivered And at what priceAnd at what price
Principal management skillsPrincipal management skills
Bureaucratic bargainingBureaucratic bargaining Understating production capabilitiesUnderstating production capabilities Overstating requirementsOverstating requirements
Hofstede Analysis – 4 Hofstede Analysis – 4 ParametersParameters
POWER DISTANCEPOWER DISTANCE Degree of inequalityDegree of inequality INDIVIDUALISMINDIVIDUALISM Reinforcement of individual achievementReinforcement of individual achievement MASCULINITYMASCULINITY Society’s reinforcement of masculine work role Society’s reinforcement of masculine work role
modelmodel UNCERTAINTY AVOIDANCEUNCERTAINTY AVOIDANCE Degree society reinforces uncertaintyDegree society reinforces uncertainty
Copernicus project – East/West Copernicus project – East/West DivideDivide
France, Germany & UK have similar France, Germany & UK have similar valuesvalues
Bulgaria, Poland & Czech Republic have Bulgaria, Poland & Czech Republic have similar valuessimilar values
Similarities “group” into East and WestSimilarities “group” into East and West EXCEPT Poland is similar to FranceEXCEPT Poland is similar to France
Comparative scoresComparative scores
USAUSA Great Great BritainBritain
GermanyGermany JapanJapan PortugalPortugal
Power Power DistanceDistance
4040 3535 3535 5454 6363
IndividualismIndividualism 9191 8989 6767 4646 2727
MasculinityMasculinity 6262 6666 6666 9595 3131
Uncertainty Uncertainty
AvoidanceAvoidance 4646 3535 6565 9292 104104
Graphical representationGraphical representation
20
40
60
80
100
120
X-Axis
Y-A
xis
USA Great Britain Germany J apan Portugal
Power Distance
Individualism
Masculinity
Uncertainty Avoidance
Hofstede's analysis
Comparative scores - 2Comparative scores - 2
RussiaRussia BelarusBelarus UkraineUkraine
Power Power DistanceDistance
4343 4444 2323
IndividualismIndividualism 3131 5858 5151
MasculinityMasculinity -5-5 -3-3 1313
Uncertainty Uncertainty AvoidanceAvoidance
103103 100100 5757
Graphical representationGraphical representation
-20
0
20
40
60
80
100
120
X-Axis
Y-A
xis
Power Distance Individualism Masculinity Uncertainty Avoidance
Russia
Belarus
Ukraine
Hofstede's analysis
Factors to consider in cross-Factors to consider in cross-cultural developmentcultural development
Cultural boundaries inhibit Cultural boundaries inhibit acceptance of western management acceptance of western management techniquestechniques
Cross-cultural adaptation processCross-cultural adaptation process
Trans-national managerial Trans-national managerial leadership (TML)leadership (TML)
Cross-cultural insightCross-cultural insight Relational trackingRelational tracking Relational skillsRelational skills Long-run optimisational pathwayLong-run optimisational pathway
Marketing as a managerial skillMarketing as a managerial skill
Marketing practices in less developed countries often Marketing practices in less developed countries often prove to be much more efficient by serving the local prove to be much more efficient by serving the local markets, than marketing transplants from their markets, than marketing transplants from their developed counterpartsdeveloped counterparts
In transition economies:In transition economies: Many of the most successful entrepreneurs Many of the most successful entrepreneurs
concentrate their efforts on how to beat the system, to concentrate their efforts on how to beat the system, to find loopholes in legislation and not develop a strong find loopholes in legislation and not develop a strong sense of satisfying the customer.sense of satisfying the customer.
Importance of marketingImportance of marketing
The whole notion of marketing is The whole notion of marketing is important because the transition important because the transition toward a market-led company puts a toward a market-led company puts a strong emphasis on the pioneering strong emphasis on the pioneering role of marketingrole of marketing
The difficulty of transitionThe difficulty of transition
Although probably no one had illusions about the Although probably no one had illusions about the changes in Eastern Europe, its length and changes in Eastern Europe, its length and complexity has probably been underestimated.complexity has probably been underestimated.
To guide and support this process careful To guide and support this process careful monitoring is needed. monitoring is needed.
This monitoring can include different This monitoring can include different measurements and descriptive research might measurements and descriptive research might also help to shape the perceptions and generate also help to shape the perceptions and generate knowledge about transitionknowledge about transition
The role of marketingThe role of marketing
Marketers can play an important part in Marketers can play an important part in the transition process, by providing a the transition process, by providing a better customer service what was better customer service what was experienced before. experienced before.
They can contribute to increase technical, They can contribute to increase technical, and hopefully non-technical efficiency, and hopefully non-technical efficiency, leading to higher customer satisfactionleading to higher customer satisfaction
The responsibility of marketingThe responsibility of marketing
Marketers also carry social responsibility. Marketers also carry social responsibility. Their practices, the delivered values and Their practices, the delivered values and role models can shape people's role models can shape people's expectations and choiceexpectations and choice
Entrepreneurial SpiritEntrepreneurial Spirit
ENTREPRENEURIAL “SPIRIT” OR ENTREPRENEURIAL “SPIRIT” OR UNDERSTANDING DRIVES BUSINESS UNDERSTANDING DRIVES BUSINESS PROGRESS IN TRANSITION PROGRESS IN TRANSITION ECONOMIESECONOMIES
Human Resource Management Human Resource Management (HRM) – The Russian Experience(HRM) – The Russian Experience
One of the key internal challenges faced One of the key internal challenges faced by foreign firms in Russia has proved to be by foreign firms in Russia has proved to be management of human resourcesmanagement of human resources
HRM in Russia – main findingsHRM in Russia – main findings
A key challenge is understanding what A key challenge is understanding what adjustments are neededadjustments are needed
It is important to understand traditional It is important to understand traditional human resource management practices human resource management practices in Russia prior to the end of in Russia prior to the end of CommunismCommunism
HRM in Russia – main findingsHRM in Russia – main findings
Viewed employees as a cost rather than as a Viewed employees as a cost rather than as a resourceresource
Little attention was paid to skill developmentLittle attention was paid to skill development The labour market has also historically been The labour market has also historically been
inefficient... limited career progression... inefficient... limited career progression... salary differentials were very small... jobs salary differentials were very small... jobs were created to ensure full employment... were created to ensure full employment... less attention was given to finding ways to less attention was given to finding ways to motivate employeesmotivate employees
HRM in Russia – main findingsHRM in Russia – main findings
When the government was privatizing a When the government was privatizing a firm, a key consideration was often job firm, a key consideration was often job securitysecurity
Firms encountered a problem with the Firms encountered a problem with the acquired employeesacquired employees
In order for firms to be able to survive In order for firms to be able to survive competent employees are essentialcompetent employees are essential
HRM in Russia – main findingsHRM in Russia – main findings
Being flexible and willing to adapt to the Being flexible and willing to adapt to the Russian environment has been found to be a Russian environment has been found to be a key success factor for operating in Russiakey success factor for operating in Russia
Most foreign firms operating in Russia felt Most foreign firms operating in Russia felt that their HRM practices were more similar to that their HRM practices were more similar to their parent firm's HRM practices and other their parent firm's HRM practices and other foreign firms operating in Russia than to foreign firms operating in Russia than to HRM practices of local Russian firmsHRM practices of local Russian firms
HRM in Russia – main findingsHRM in Russia – main findings
Foreign companies try to keep careful track Foreign companies try to keep careful track of the Russians who are studying abroad as of the Russians who are studying abroad as they are attractive candidates to recruitthey are attractive candidates to recruit
More than 50% of firms use headhunting More than 50% of firms use headhunting firmsfirms
Personality and previous work experience Personality and previous work experience are the two most important hiring criteria that are the two most important hiring criteria that companies mentioncompanies mention
HRM in Russia – main findingsHRM in Russia – main findings
A company can teach or train any A company can teach or train any person to do some specific job, but if person to do some specific job, but if the attitude is wrong that person the attitude is wrong that person wouldn't be a good employeewouldn't be a good employee
People who are highly trained even for People who are highly trained even for simple jobs can be hired for a relatively simple jobs can be hired for a relatively low salary highly educated people are low salary highly educated people are more adept at changing their mindset more adept at changing their mindset and working style...and working style...
HRM in Russia – main findingsHRM in Russia – main findings
Interviews were the most important Interviews were the most important mechanism used in selecting new mechanism used in selecting new employees. employees.
Some managers were sceptical of what Some managers were sceptical of what insight test results could give since insight test results could give since most of these tests were developed for most of these tests were developed for the West there were problems with their the West there were problems with their applicability in Russiaapplicability in Russia
HRM in Russia – main findingsHRM in Russia – main findings
Training and competence development Training and competence development are keyare key
Before one undertakes training, it is Before one undertakes training, it is important to identify what important to identify what competencies are neededcompetencies are needed
Having a good fixed salary is important Having a good fixed salary is important to Russian employeesto Russian employees
HRM in Russia – main findingsHRM in Russia – main findings
Firms with non-competitive salaries will have Firms with non-competitive salaries will have difficulty attracting, motivating, and retaining difficulty attracting, motivating, and retaining employeesemployees
Bonuses were found to be a useful Bonuses were found to be a useful complement to straight salary... in motivating complement to straight salary... in motivating employeesemployees
Managers found that with a bonus system in Managers found that with a bonus system in place they had to spend less time making place they had to spend less time making sure employees were working hardsure employees were working hard
HRM Study in Croatia - HRM Study in Croatia - problemsproblems
No future planning concerning the workforceNo future planning concerning the workforce Surplus employeesSurplus employees Lack of qualified experts and skilled shop-Lack of qualified experts and skilled shop-
floor workersfloor workers Lack of profitability so failure to attract good Lack of profitability so failure to attract good
staffstaff Reduced contacts with schools / universitiesReduced contacts with schools / universities
HRM Study in Croatia - HRM Study in Croatia - problemsproblems
Potential employees usually interviewed and Potential employees usually interviewed and selected by selected by oneone person person
Minimal access to professional improvementMinimal access to professional improvement Limited promotion prospectsLimited promotion prospects Low motivation. Main motivational factor is Low motivation. Main motivational factor is
salary and this is generally low.salary and this is generally low. No methods of appraisal / evaluationNo methods of appraisal / evaluation Autocratic management style hinders Autocratic management style hinders
development of co-operation and teamworkdevelopment of co-operation and teamwork
Knowledge and NetworksKnowledge and Networks
Existence of economic capital is vital for business Existence of economic capital is vital for business developmentdevelopment
There are other forms of capital which can be There are other forms of capital which can be converted into economic capitalconverted into economic capital
These are:These are: CULTURAL CAPITAL = access to educational CULTURAL CAPITAL = access to educational
facilitiesfacilities SOCIAL CAPITAL = network of relationships and SOCIAL CAPITAL = network of relationships and
support systemssupport systems This is the only form of capital which is common to This is the only form of capital which is common to
allall societies irrespective of level of development societies irrespective of level of development