The Rise of Multinational Corporations

On the last decades, the Multinational Corporations (MNCs) have appeared to reduce the power of governmental privileges and sovereignty, especially in developing nations which have far less resources in size and scope than MNCs. The effective State sovereignty might have decreased under the impact of globalization forces, but the MNC role in this process seems to be more receptive than usual. Traditionally, the international relations were held by governments’ officials or through authorized State channels. The emergence of MNCs seemed to challenge this way of negotiations, especially with the constant growth of Foreign Direct Investment (FDI). The FDI mode allowed foreign companies to be far more involved in the host countries in comparison to other entrance methods, giving MNCs a great impact on domestic production, employment and other socioeconomic factors.

The influence from the MNCs comes more from the firm’s connection to a particular nation’s economy in terms of local production, employment, exports technology and even these measures provide little protection to MNCs when confronted by a determined sovereign government. The expropriations are a way of demonstrating how the governments still outrank the MNC’s in terms of sovereignty and power, but those practices are not focused on a long-term orientation since it dispel other investments required to the nation.

Changes in the relationship between MNCs and States are fixed in larger models described by concepts as interdependence and globalization. It is thought that States have less control of globalization conditions and that MNCs complicate the regulatory execution of a government’s policy. However, MNCs still manage to be a little bit of a challenge to the national control. Statistical descriptions of contemporary MNCs make look them to have a huge power and influence in the global economy. At another level, the growth of MNCs can also offer national governments, especially less powerful ones, more options in pursuing their national interest objectives, like when MNC’s cover some of the basic needs of the population like utilities or health services.

As their overall numbers increase, MNCs also began strategic transformations that reduced their potential to either challenge a government or constitute an alternative policy. Many large MNCs decentralized management controls, combined corporate culture and reduced their stability as unitary company. These adjustments increased the ability of MNCs to respond flexibly to the speed and magnitude of global economic change, but those changes also make more difficult for the MNCs to be given the attributes of a political actor over a period of time.

Due to mergers and acquisitions and international strategic alliances to achieve quick and adaptable growth, there has been a trend of transformation in MNC’s character. The increasingly changes in MNC composition and character alter their potential to challenge national government sovereignty.












QUESTIONS

1.Do Corporations pursue today other interest or the "bottom-line" remains as their single priority? What are the factors influencing the corporation’s objectives and goals?

It’s a fact that MNC’s priority is and has always been making money; turning a profit and nothing more, which is why they have been involved in many cases where they are accused of pursuing unethical ways of making money. Whether it is hurting the environment or engaging in disloyal competition. However giving this bad reputation MNC’s today see the necessity of assuring their consumer and stakeholders that they are a socially responsible company which has their best interests at heart, and people nowadays buy the products from the corporations they feel fulfill this promise. But this raises the question: are they doing this just because they don’t want to lose their consumer base? Or because they actually care about the environment and the well being of the populations where they are present? We can never know. The good thing about this trend is that more and more companies are being forced to change the way they do things, they way they manufacture, which kind of raw materials they use, etc.



2.The film focuses on the negative consequences that the Corporation’s behavior causes to the environment, to human health and animal life. We’re going to discuss the possible benefits arising from the actions of MNCs for these 3 groups.

ENVIRONMENT

Even though the MNCs have the reputation of devastating the forests, they are now putting into place reforestation programs to give back the trees that were cut down. Another example are mines, that when they don’t produce any more, those lands are transformed into natural parks in order to create more natural environments and, by planting more trees and creating more lakes they reduce the pollution of the area.

With the “green” tendencies, many companies have stopped using non-renewable energy resources to use more environmentally friendly ones, such as wind, sun and hydroelectric energy, reducing considerably the amount of CO2 and other toxic substances that are released into the environment.

MNC’s have the capacity, resources and technology to come up with great solutions to today’s environmental problems and the governments and the general population benefit from it.

HUMAN HEALTH

Some MNCs create health programs on poorer regions where they are located, in order to improve the quality of life of the population. Additionally, they have the double purpose of having a health population, so they will have a healthy work force in the near future.

We can also see that in many countries around the world, if not all of them, the ones that manufacture medicines, equipment used in healthcare and some of the hospitals are MNC’s. The governments sometimes cannot take on this task so the MNC’s are the best solution and everyone benefits.

MNC’s also help governments with financial resources and personnel to get the necessary medical assistant to some of the most depressed regions due to the lack of resources of some governments, which without this help couldn’t helped this people.

ANIMAL LIFE

Corporations are becoming more and more involved with the environment therefore with the animal life as well. They make donations to organizations that fight to protect different species. Although sadly MNC’s are the ones that usually don’t say anything when they know their affecting the animal life if doing so could hurt their financial benefits. So in this matter we see little progress when it comes to the involvement of MNC’s but in some countries where the resources are scarce some MNC’s are the ones sustaining several animal reserves and protected areas.




3. Should a corporation be considered a "person"? Which are the possible implications and limitations of granting such legal existence to corporations?
To the eyes of the law a corporation is a person. They are granted legal personality which is a good thing because by doing so they are giving both rights and responsibilities just like natural persons have, which they must honor in order for them to be able to function.
Since they are recognized as persons they can be made accountable for their actions just like human beings and have to fulfill their obligations.

This recognition is necessary because if they are considered to be something other than a person then in a court of law there can be no equal treatment between them and regular people who they may have caused damages to. If they are considered to be different entities it could difficult to make them accountable.

The good thing is that the law acknowledges the differences between a regular person and a corporation, that’s why their rights are limited, they cannot do everything they want and their responsibilities are greater.








Sources:
M. KLINE, John. “MNC’s and Surrogate Sovereignty”. Brown Journal of Worid Affairs. 2006

Picture:
http://www.metapedia.com/wiki/index.php?title=Alp26

The Role of Workers & Migrant Workers & Expatriate Assignments

The Role of Workers

Workers within a company are essential, without them there would be no company, however despite this importance, workers or employees haven’t always been treated accordingly. This has changed in the past few decades though, mainly because of the trade unions which are growing more and more and are having a bigger say on what goes on inside the companies and even influence national policy making.

Because of these trade unions employees now feel like they have more power, like they have a saying in the companies they work at. Their participation has increased in such a way that the employees and their representatives actually now sometimes share the same amount of decision making power as the managers of the company. The employees become just as important and relevant as the shareholders.


Migrant Workers



A migrant worker is a person who willingly leaves his home country and moves to another to work for reasons of personal convenience or necessity and not because they are forced to leave. The factors pushing these people to move from their country are varied, usually it’s because the economic and social situation is very bad and they want to try their luck somewhere else.

A distinction must be made between a migrant worker and an immigrant. The latter seek to stay permanently in the host country while the first one is only temporary. The categories of migrant workers are:

• Job seekers, who look for a better job and opportunities
• Students who are looking for better educational opportunities.
• Family members of migrants who want to be reunited with their family.

There are also regular migrants and irregular migrants. The regular ones are those who have the permission to stay, to perform remunerated work and are under the law. The irregular migrants are those who have no permission to stay, they are illegally in the country.

The biggest difference between migrant workers and expatriates (we’ll take about them later) is that the migrant workers usually have no other choice but to go work somewhere else like the construction workers in Dubai. They are in great demand in the city and usually people from Pakistan, India and other Arab countries see it as an opportunity, however they are paid very little and usually have to endure horrible working conditions and treatment. On the other hand expatriate workers are sent by their companies in their country to spend some time working in one of their branches abroad or other companies. They have all the benefits ensured by their employer and perform high level jobs.

Asylum seeker, refugees and internally displaced people are not migrants, since they are forced to leave their country against their will.


Expatriate Assignments



Expatriates are workers who leave their home country to work in another but they are usually sent by their employer to perform an important job or as a part of the company’s policy which is all about sending employees abroad for them to have the experience of working in another country with different people and then go back to apply what he/she had learned in the benefit of the company.

This category of migrant workers is treated separately because of the nature of the movement itself. Normal migrants move because they want to find better opportunities and sometimes that’s not the case and because of their low level of training and skills they find themselves working in worst conditions as they would be in their home country. Expatriates on the other hand leave their home country with all the guarantees and the support of the company who sends them. They don’t have to worry about what job will they find or if they’ll even find one, they have their accommodation arranged for them and usually with the same or more comforts than they have at home.
















THE CO-DETERMINATION PRINCIPLE



The Co-determination principle (from the german word Mitbestimmung) refers to a practice whereby the employees have a role in management of a company. Co-determination rights are different in different legal environments. In some countries, like the USA, the workers have virtually no role in the management of a company, and in some, like Germany, their role is more important. The first serious co-determination laws began in Germany.
In 1974, a general law was passed ordering that worker representatives hold seats on the boards of all companies employing over 500 people.

In systems with co-determination workers in large companies usually form work councils and in smaller companies elect worker representatives. These act as intermediaries in exercising the worker’s rights of being informed or consulted with on decisions concerning employee status and rights.

But what benefits or disadvantages this brings? Well from the employees point of view this is very positive, they feel that they have more saying in the company and that policies are not being made without them, they are more involved, which has a positive influence in the productivity. Relations are more harmonious with low levels of strike actions, while better pay and conditions are secured for employees.

On the other hand for the employers this could be a double edged sword, because sometimes having the employees involved can be positive because they feel better within the company and therefore the productivity rises. Also they might come up with great ideas that managers may have never thought of on their own, given their poor involvement in the day-to-day activities of the company. But there can also be a negative side to this. Disgruntled employees may try to sabotage the decision making process just out of spite. It can also happen that when managers are trying to pass a policy that may seem harsh on the employees but that is nevertheless necessary; the representative of the employees may try to veto this proposition, maybe delaying important decisions over an undetermined amount of time.

So it is hard to say just how positive or how well the co-determination works. In Germany everyone swears by it because employees tend to feel more satisfied in the companies where they feel they are being taken care of, and as a result productivity and efficiency increase. So one can say that it is more useful to see just how it can work in different companies and in different legislations, we cannot forget that also corporate culture and national culture may play a major role in determining how well co-determination works.






Source:
Piette, Jean-Jacques. 2004. “Understanding Management German style”. Les Amis de L’ecole de Paris.

Pictures:
http://www.abc.net.au/news/stories/2007/10/24/2069538.htm
http://www.expatfinancial.com/expatgroup.htm
http://www.aks.at/shop

Merging Organizational Cultures

Mergers and acquisitions have a unique potential to transform firms, and to contribute to corporate renewal. They can help a firm renew its market position at a speed not achievable through internal development.

Value creation is the main goal in successful acquisitions yet more and more studies highlight the low success rates associated with acquisitions. No matter how attractive is the business opportunity, value is not created until capabilities are transferred and people from both organizations collaborate in order to create the expected benefits and the unpredicted opportunities. This collaboration relies on the will and ability of managers from both organizations to work together towards a new future.
The key to integration is to obtain the participation of the people involved without compromising the strategic task.

A very important aspect that could prove sufficient to avoid employee dissatisfaction and at the same time ease the transition is finding similar organizational cultures and management styles. Some authors believe that is crucial to analyze the compatibility of the organizational cultures to see which candidates are appropriate for a merger or acquisition. However this is more and ideal scenario than an actual possibility, so managing the cultural diversity has proven to be a more successful and realistic strategy in integration processes than finding the “perfect cultural fit”. In bringing together companies with different skill and knowledge bases, acquisitions create unique learning opportunities for the partner firms.

Effective integration happens when two or more firms become one single unit working or group working as a whole to fulfill the goals of the new organization. But obstacles arise when trying to achieve this, nationality and the perceived cultural differences are some of them. Merging implies the construction of a brand new identity.

Two organizational integration variables are particularly relevant in the acquisition process:

1. The reason for the acquisition (strategic fit and decision making process)
2. The process of implementation (including the “acculturation” process)

The reason or motive for the acquisition is important because it will determine the degree of required interaction between the members of each organization.

The Acculturative Process

It refers to the process in which two groups adapt to each other and resolve emergent conflict.

A basic acculturative process occurs between the conflictive subgroup desires for cultural differentiation and organizational forces for integration. Some people may not be willing to give up some particular culturally bound ideologies, traditions or behaviors and therefore may intentionally delay the integration and acculturation process or lag behind the rest in terms of accepting cultural change.

Conflicts can occur between the two merged organizational groups in the post-merger stage. Members may begin to refer to the situation in antagonistic terms of “us” vs. “them”, and power struggles evolve as organizational groups begin to bicker over scarce resources.

Some authors recognize that the success of a particular integration process depends primarily on the manager’s ability to reconcile the need for strategic interdependence between the two firms and the need for organizational autonomy.














CHALLENGES AND OPPORTUNITITES ON MERGIN ORGANIZATIONAL CULTURES

It has been widely discussed that the merger and acquisition process is challenging because it involves merging the corporate cultures as well, so here I would like to illustrate some of the challenges and opportunities that can arise on a merger or acquisition process based on three real life examples.

Deutsche Bank (DB) and Bankers Trust (BT) deal was very successful but they faced some problems in the process. BT had some people from Alex Brown the oldest US investment bank which made it more appealing to DB, a couple of years prior to the DB/BT deal BT had acquired Alex Brown but the process was not done right so the two companies were operating on different levels. There was a big crisis between them emphasized by the fact that the Alex Brown people felt like “they had lost their identity”, so DB saw an opportunity here. To gain the trust and confidence of the Alex Brown employees was a strategic priority for DB, so they decided to name the new company in the US Deutsche Bank – Alex Brown Investment Bank. This way they kept the identity of Alex Brown and also reinforced the brand. By doing so the Alex Brown employees felt like DB had rescued them from BT and that they had actually saved their identity.
There were also some issues regarding national cultures. BT saw DB as a very German company, bureaucratic, hierarchical, with a slow decision making process, but this awareness helped the people from DB to start challenging their working values and adopting new ones.

And interesting opportunity that can arise when merging different companies is that you get to see which people and areas of both companies are better than the other and combining the best part of each, a much stronger, more solid and bigger company is born. We can clearly see this in the British Petroleum (BP) and Amoco merger. The merger team decided to choose the best and most efficient assets of each company to use them to strengthen the new company. The BP performance management process was considered the best practice in terms of generating strong performance but the Amoco allocation of capital model proved to be better.

However the BP/Amoco merger did not escape from the share of problems. The merging of the HR department proved more challenging because for a lot of people the grade of their jobs was a big part of their identity in the heritage company. In order to create a new corporate culture several meeting took place with the 500 managers to explain BP’s philosophy. It also encouraged them to socialize with the counterparts from the Amoco Corporation. These activities encouraged breaking down the barriers between the two groups. During the meetings the objective was to reinforce the target synergies and the future growth prospects.

Another interesting case is the Volvo/Ford merger, where two very different cultures are finding a way to live together.
Volvo is a very typical “Swedish” company, they are a decentralized and team work oriented company. The participatory management style prevails in Volvo. Their decision making process happens at the lowest level of the organizational structure. It is the traditional Scandinavian way of doing things; there’s no hierarchy.
On the other hand Ford is perceived as a very structured and hierarchical US firm. In another way in which the Ford and Volvo culture differ is the way the deal with union’s issues. Volvo’s management and employees work very closely together with the union representatives to come up with the best business results. This high level of cooperation is not seen in Ford.

So they faced a big challenge right of the bat, but instead of perceiving this as a major threat to the merger they saw it more as a learning opportunity for both companies. They believed that these differences could not be overcome so they had to learn to respect and accept these differences.

So for instance Swedish engineers go to the US to offer knowledge to Ford employees about safety and ergonomics and the American engineers go to Sweden to share information on new engines and raw materials to work with. The employees perceived these synergies as an excellent outcome of the integration.

The integration also brought great opportunities in the dealer market for Volvo, because being a smaller brand it was not attractive for dealers to sell only Volvo products, but after the merger if they can sell Jaguar, Land-Rover and Volvo, that’s a whole other deal. Another area where this synergy can be seen is in the purchasing and environmental care. Volvo’s vehicles are 100% recyclable, so Ford is using this knowledge.












Source:
Alzira Salama, Wayne Holland, Gerald Vinten, (2003) "Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies – Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo", Journal of European Industrial Training, Vol. 27 Iss: 6, pp.313 – 321.

Organizational Learning

What is learning?

Many scholars have developed theories on the meaning of learning. One of them was Säljö in 1979; he determined a set of steps in the process of learning:

1. Acquiring information – Quantitative, amount
2. Memorizing – reproducing information
3. Acquiring facts, skills and methods to be used later
4. Making sense, building connections
5. Interpreting and understanding reality-comprehension

He named 1. and 2. The “knowing that…” part and 3. To 5. The “Knowing how..” part of the process.

There are several perspectives on learning:

Behaviorist Approach

It is based on experimental procedures. John B Watson created the stimulus-response model in which he observed the learning leads to changes in behavior and that the environment plays has a huge influence on this process.

Two forms of conditioning were established: classical and operant

• Classical Conditioning: It’s all about modifying behavior using conditioned plus unconditioned stimulus to produce a conditioned response. However the application on humans is limited.

• Operant Conditioning: The use of negative/positive consequences through:

o Reinforcement: Used to strengthen desirable behavior in two ways; by positive consequences and withholding negative ones.
o Punishment: Used to eliminate or weaken and undesirable behavior. It can be achieved by applying two methods: reinforcing negative consequences or withholding positive consequences.
o Extinction: Ignoring undesirable behavior. Behaviors that don’t produce any consequences tend to be weakened.

Cognitive Approach

The cognitive approach is based on the individual’s mental process. It says that learning is not about acquiring habits, it’s about acquiring plans and strategies.

Key principles:
 Well organized instructions
 Clearly structured instructions
 Perception plays a role in task acceptance
 Prior knowledge is important
 Differences between individuals count
 Cognitive feedback is the most powerful rewards

Humanistic Approach

It’s focused on human growth. Basically it is based on the Maslow’s hierarchy of needs mentioned on the blog entry “Motivation”.

Social/Situational Approach

Individuals, as learners, are members of social structures. It acknowledges learning as a social process and based on observation.


ORGANIZATIONAL LEARNING

It’s all about increasing capabilities, knowledge and skills. It’s a continuous process.

There are two approaches:
• The Technical View: effective processing, interpretation of, and response to, information both inside and outside the organization. This information may be quantitative or qualitative, but is generally explicit and in the public domain.
• The Social Perspective: focuses on the way people make sense of their experiences at work. These experiences may derive from explicit sources such as financial information, or they may be derived from tacit sources, such as the “feel” that skilled craftsperson has, or the intuition that a skilled strategists posses.

TYPES OF ORGANIZATIONAL LEARNING

1. Adaptive vs. Proactive Learning

Proactive learning is having willingness to change. Uses double loop learning which instead of solving the immediate (single loop learning) problem focuses on finding the root of the problems. On the other hand adaptive learning occurs as a reaction to changes in the environment in an automatic manner. Uses single loop learning.

2. Experiential Learning

It’s based on experiences as the key source for any kind of learning.



3. Kolb’s Learning Styles



source: http://www.nwlink.com/~donclark/hrd/styles/kolb.html

4. Communities of practice

It refers to learning as a social process. It’s an ongoing activity without a beginning or end.
These communities are everywhere and individuals are members to more than one.

Key Characteristics:
• The domain: a shared interest – is not just a club
• The community: joint activities and discussions, relationships
• The practice: shared resources to act – shared practices acquired with time and sustained interaction



5. Informal Learning

It says that education should not be about acquiring knowledge but about developing capabilities.
The most important learning is the ability to carry on learning.
This informal learning is difficult to define: does it occur outside the classroom?, is it an implicit process?, should it be non-course based?, does it happen outside the academic life?















LEARNING ORGANIZATION

The term has been thrown around for years without having a clear understanding of what that means, and it also confused or used indistinctly with organizational learning, but they are two very different things even on its nature. Organizational learning is process sometimes important within a learning organization which is a type of organizations where processes of learning in some way or another are important.

Another concept states that a learning organization is the term given to a company that facilitates the learning of its members and continuously transforms itself.

Some of its key characteristics are: flexibility, teamwork, continuous learning and employee participation and development.

Organizations do not become learning organizations over night; there are factors which contribute to such change. As organizations grow, they lose their ability to learn as company structures and individual thinking becomes rigid. When problems arise, the proposed solutions often turn out to be only short term (single loop learning) and re-emerge in the future. To remain competitive, many organizations have restructured, with fewer people in the company. This means those who remain need to work more effectively.
To create a competitive advantage, companies need to learn faster than their competitors and to develop a customer responsive culture.

The main benefits it has are:
 Maintaining levels of innovation and remaining competitive
 Being better placed to respond to external pressures
 Having the knowledge to better link resources to customer needs
 Improving quality of outputs at all levels
 Improving corporate image by becoming more people oriented
 Increasing the pace of change within the organization
A learning organization shows 5 main characteristics:

1. Systems Thinking: Learning organizations use this method of thinking when assessing their company and have information systems that measure the performance of the organization as a whole and of its various components. Systems thinking state that all the characteristics must be apparent at once in an organization for it to be a learning organization. If some of these characteristics are missing then the organization will fall short of its goal.

2. Personal Mastery: The commitment by an individual to the process of learning is known as personal mastery. There is a competitive advantage for an organization whose workforce can learn quicker than the workforce of other organizations. Individual learning is acquired through staff training and development; however learning cannot be forced upon an individual who is not receptive to learning.

3. Mental Models: The assumptions held by individuals and organizations are called mental models. To become a learning organization, these models must be challenged. Individuals tend to adopt theories, which are what they intend to follow, and theories-in-use, which are what they actually do. Similarly, organizations tend to have “memories” which preserve certain behaviors, norms and values. In creating a learning environment it is important to replace confrontational attitudes with an open culture that promotes enquiry and trust.

4. Shared Vision: The development of a shared vision is important in motivating the staff to learn, as it creates a common identity that provides focus and energy for learning. The most successful visions build on the individual visions of the employees at all levels of the organization; learning organizations tend to have flat, decentralized organizational structures whereas traditional organizations impose their vision from above stalling the creation of a shared vision.

5. Team Learning: The accumulation of individual learning constitutes Team learning. The benefit of team or shared learning is that staff grows more quickly and the problem solving capacity of the organization is improved through better access to knowledge and expertise. Learning organizations have structures that facilitate team learning with features such as boundary crossing and openness. Learning organizations typically have excellent knowledge management structures, allowing creation, acquisition, dissemination, and implementation of this knowledge in the organization.

Comparing traditional and learning organizations is easy to see where they differ, in a learning organization change is always fostered and there’s a willingness to let, all the necessary measures in order to change, be implemented. For instance the individual input is valued in a learning organization, what the employees have to say is taken in to consideration at making decisions, which are not impose upon them but on the contrary are taken with them.

Learning organizations have a flexible approach to management, they understand that in order to be competitive in an ever increasingly changing world, companies must also adapt and change, so they are open to it. Traditional companies on the other hand say that the way they’ve been doing things has proven to be successful so there’s really no need to change it.

In a general sense learning companies are flexible, dynamic and open, traditional ones are more rigid, like the name says traditional, and more reluctant to change.


BENEFITS OF FOSTERING INFORMAL LEARNING

Informal learning is the unofficial, unscheduled, impromptu way people learn to do their jobs. Learning is adaptation. We learn from one another.

Informal learning covers a number of areas within an organization and concepts. For instance it says that the traditional ways of training employees are obsolete.

It also makes reference to the cost/outcome ratio. People learn how to do their jobs informally, talking, observing others, trial and error and simply working with knowledgeable people. Training and workshops account for 10% to 20% of what people actually learn at work so most companies are spending way too much in formal training while neglecting more natural and simple processes through which people actually learn. They are cheaper and people learn more.

The concept of Network is essential when talking about informal learning. This network should then replace the hierarchical way to manage. As networks engage our lives, centralize power crumbles and people gain more control over their own destinies.

Another benefit that informal learning brings is that training is something pushed on you; informal learning is something you’re pulled into. Knowledge workers thrive when they’re given the freedom to decide how they will do what they’re asked to do.

Informal learning is like riding a bike. The rider chooses the direction, the route and the speed. The rider may also take a detour to slow down or to help a fellow rider. Whereas formal learning is like riding a bus, the driver decides where the bus is going; the passengers are just along for the ride.
Informal learning emerges in complex environments called Learnscapes. Learnscaping involves removing obstacles, seeding communities, increasing bandwidth, encouraging conversation and growing networks.

The concept of unconferences is also introduced. New approaches are creating business meetings that people enjoy. Successful gatherings are those where everyone participates. No podium. No positions carved in stone.

All of these concepts and theories can bring considerable benefits for a company. It not only can it reduce its costs when it comes to training but it can also make the working environment a lot more comfortable for everybody and more efficient because when people are given more freedom to act and more responsibilities they perform better than when they’re being watched over the whole time.
If employees are included in the decision making process the amount of ideas that can come out at a meeting can easily double, because not everyone knows exactly what is happening at every department in the company.

Informal learning proves to be a more cost efficient and easier way to train your employees and to improve the working environment, not to mention that employees may feel more loyal towards a company that believes in them and that shows them that they matter, which is something that is usually neglected but really shouldn’t be.










Sources:
• Pedler, M., Burgogyne, J. and Boydell, T. 1997. The Learning Company: A strategy for sustainable development. 2nd Ed. London; McGraw-Hill.
• O’Keeffe, T. 2002. Organizational Learning: a new perspective. Journal of European Industrial Training, 26 (2), pp. 130-141.
• Senge, P.M. 1990. The Fifth Discipline. London: Century Business.
• http://elearningargentina.files.wordpress.com/2008/03/informal-learning.jpg

Management & Leadership styles

The way managers’ deal with different situations in a company depends highly on the management style they choose of apply. A management style is an overall method of leadership used by a manager.

But in this ever changing business environment it is very important for managers to understand and know the different styles of management because not every style is valid for every situation. The challenge for the managers is to be able to successfully apply the correct style taking into consideration the work environment and people’s behavior given its constant changing nature.

The best known and applied styles today are:

1. AUTOCRATIC MANAGEMENT STYLE: using this style you give instructions to your team but you don’t ask or get their opinion. If you are someone who likes to control an office situation, then you tend to use this autocratic style. This style makes the decision making easier but employees tend to be less motivated and don’t take the initiative.
This style is effective when in need of making quick decisions like in a crisis, fire or emergencies.

2. DEMOCRATIC MANAGEMENT STYLE: this style encourages managers to delegate work to his staff, involving more people to get things done. The manager must give authority and responsibility at the same time. One thing to keep in mind using this style is that the people to whom the responsibilities were given must be competent enough to perform the task.
This is appropriate when you want to train your staff to make certain decisions.

3. PARTICIPATIVE MANAGEMENT STYLE: this style is similar to the democratic but here you ask for your staff’s opinion but you modify it into your decision.
The use of this style is recommended when you want to make certain changes in policies which affect one or more people, their benefits or morale. If you ask for the staff’s opinion, it is more likely for them to accept the decision easier.

4. LAISSEZ FAIRE MANAGEMENT STYLE: this style is all about getting things done through other people. The manager sets the task and gives it to his staff and they have total freedom to perform the task all on their own.
A manager should use this style when dealing with confrontation or conflicts because you don’t want to be seen as taking sides.


It’s very important to note that a manager shouldn’t use just one management style but try to assess the situation and decide which style is better.





LEADERSHIP STYLES

The leadership styles refer to the leader’s behavior. It is usually the result of the background, personality and previous experiences of the leader.

The styles of leadership are quite similar to management styles but one must not confuse them, because a management style comes from the way you handle a situation it is more external, but a leadership style is sometimes determined by your personality, more internal.

Three styles were defined by Kurt Lewin:

1. Authoritarian leadership: Authoritarian leaders give clear instructions for what needs to be done, there’s also a clear division between the leader and the followers and all the decisions are made by the leader with almost no input from the rest of the group. It was found that the decision making process is less creative under this kind of leader.

2. Participative leadership: Lewin’s study found that participative leadership is usually the most effective leadership style. Democratic leaders guide the group but they also allow the group members to participate and give input. The leaders have the final word though.

3. Delegative leadership: they offer little or no guidance to the team and leave all the decision making to the group. It was found that people under this type of leadership are the least productive out of all the three styles. Employees made more demands to the leader, couldn’t work independently and showed almost no cooperation.






KOREAN AND JAPANESE MANAGEMENT STYLE

Main differences and Similarities

Japanese firms are not all alike but they do share some common characteristics. For instance market share is very important for Japanese firms, aggressive pricing and the search of economies of scale.
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. Participation of workers and middle management has been important to Japanese firms. Employees are viewed as assets, plus consensus building and group loyalty are emphasized as very important principles.
Japanese firms scan both customers and competitors. Studies have shown that the real value of Japanese costumer contact is not the customer analysis but the right kind of customer.
Connecting product design and production is an important value for Japanese firms.
Corporate values seem to guide a Japanese firm’s organization.

Korean and Japanese management styles have connections that are not only explained by their common geographical location but also for the fact that Korea was annexed to Japan as a colony in 1910. These 36 years of occupation had a huge influence in the Korean management system. Some authors even think that organizational structures in Korea are almost a duplicate of those in Japan. There’s some true to that given that Korea took Japan as their dominant model of economic development and because of the direct and indirect influence of Japan on Korea in the past and the two countries common cultural heritage of Confucianism and Buddhism it is believed that the Korean management style is quite similar to that in Japan but there are some element in which they differ, important elements like the life time employment practice in Korean firms is flexible, in that layoffs are more common than in Japanese firms and Korean workers tend to change jobs more freely.
Top management in Korean firms tend to be authoritarian and important decisions are made mostly by top managers and most large Korean member belonging to Chaebol (large business groups in Korea, similar to the pre-war Zaibatsu) are run by the family members of the founder.

Korean and Japanese use similar words – Inwha and Wa respectively - to stress group harmony as an important principle of management. However the Korean term does not emphasize the group elements like group loyalty and consensus as in Japan. Koreans are more individualistic than Japanese. The family system in Korea could explain the practice of family management. These differences show that Korean management has never achieved a high degree of “groupism” like in Japanese management due to the individualistic and hierarchical aspects of Korean culture.





CONVERGENCE

The convergence phenomenon in terms of management styles occurs when a company takes the management style of another for themselves.
In this case with the Korean and Japanese management styles we see a great level of convergence of the Korean companies towards the Japanese style.
What exactly explains this convergence? As stated above Korean and Japanese share very similar elements in the way they do business and in their culture, so when Korea adapted the economic model of Japan as their dominant role model then convergence was bound to arise.

Which factors or forces help the convergence to happen? Continuing with our example of Korean and Japanese firms studies have found that both growth and internationalization of Korean firms have caused a convergence between the Korean and Japanese styles. Being internationalization the most relevant in this case. But the convergence found in this case is to a regional rather than a worldwide model. And even though differences in the management culture exist the convergence remains.

Why are growth and internationalization such strong forces to push convergence? Well when a company becomes internationalized they have to increase the sophistication of their management practices to solve managerial problems and one way to do so is by imitating good practices done by competitors, and Korean firms have had to endure with fierce competition from Japanese companies. Internationalization is the stronger force for convergence than growth because organizations by nature are isomorphic to their environment, meaning that they have to adapt to each inconsistent environmental demand, so large domestic firms on Korea have to adapt their management to the local environment whereas internationalized Korean firms had to adapt to meet the requirement of the international competition, and Korean firms are late entrants to the international competition its easier for them to copy what the Japanese have done so well over the years.








Sources:
LEE, Jangho, ROEHL, Thomas W., CHOE, Soonkyo. “What Makes Management Style Similar and Distinct Across Borders? Growth, Experience and Culture in Korean and Japanese Firms”. Journal of International Business Studies 2000. pag 631-652
http://managementstyle.org/
http://psychology.about.com/od/leadership/a/leadstyles.htm

Decision Making and Ethical Behavior

Decision making is a process involving a series of steps. The first step is recognition of the problem; the managers realize that a decision must be made. The second step is to identify the objective of the decision which is to say what we want to achieve by it.
The third step is to gather and evaluate data relevant to the problem. The next step would be to list and evaluate courses of action.
The fifth step is to select the best alternative followed the implementation of the action chosen. But a follow up and feedback process must be put into place in order to control how well it is actually working.


Models of Decision Making

• The Rational Model

Rationality refers to a step-by-step approach to decision making. This model comes from classic economic theory and states that the decision maker is completely rational in his/her approach. The model has the following assumptions
• Outcome will be completely rational
• The decision maker has a consistent system of preferences
• He /she is aware of all the possible alternatives
• He /she can calculate the probability of success for each alternative

The decision maker always strives to optimize, meaning choosing always the best alternative.
But given its assumptions this model is unrealistic. There are time constraints and limits to what knowledge a person has, plus manager’s preferences and needs often change.

• Bounded Rationality Model

This model recognizes the deficiencies of the rational model awarding it a Nobel Prize in 1978.
The model is also referred to as the “administrative man” theory, is based on the idea that there are constraints that force a decision maker to be less than completely rational. The model has four assumptions:
• Managers select the first alternative that is satisfactory
• Managers recognize that their conception of the world is simple
• Managers are comfortable making decisions without determining all the alternatives
• Managers can make decisions by rules of thumb or heuristics (short-cuts)

Heuristic are short-cuts the managers develop to make decisions in order to save mental activity. Basically heuristics are rules of thumb that help managers make decisions based on past experiences. But heuristics can also cause error in judgment due to previous biases.

• Garbage Can Model

He decisions in this model are random and unsystematic. In the model the organization is a garbage can in which problems, solutions, alternatives and participants are random. If the 4 factors connect then a decision is made. However the quality of the decision depends on timing.
The model illustrates that decisions in an organization are not made on a step-by-step manner. Some decision may come out of luck.


Jung’s Cognitive Styles

Individuals have different styles of making decisions, that’s why Carl Jung has come up with this original theory in which he identifies two styles of information gathering (sensing and intuiting) and two judgment making styles (thinking and felling). The theory also states that subjects prefer one style of perceiving and one of judging, making the combination of the two a single cognitive style.

There are four types of cognitive styles:
• Sensing/thinking (ST): relies on facts
• Sensing/feeling (SF): gather factual information, but make judgment in terms of how they affect people
• Intuiting/thinking (NT): focus on alternative solutions and then evaluate them objectively and impersonally
• Intuiting/feeling (NF): also search for alternative possibilities but they evaluate the possibilities in terms of how it affects people.

Each of these styles affect managerial decision making.

Decisions can also be made or be affected by groups. One of the reasons for making group decisions is synergy, which occurs when group members stimulate new solutions to problems through mutual influence and encouragement. Another reason is the gain of commitment to a decision.

Although making group decision has its advantages it also has disadvantages. Some advantages are: more knowledge and information through the input of every member, increased acceptance of the decision and greater understanding of the decision.
Some disadvantages may be: pressure within the group to conform and fit in, domination of the group by one stronger member and the amount of time required, a group makes slower decisions than an individual.

When to use individuals or groups? It all depends on the type of task.

Another very important element to be considered is the ethical implications of the decision. Ethical decision making is influenced by many factors, among them individual differences and organizational rewards and punishments.
To make an ethical decision the decision maker should make himself three questions:
1. Is it legal? (Will I be violating the law or company policy?)
2. Is it balanced? (Is it fair to all the parties involved in the short and long term?)
3. How will it make me feel about myself? (Will it make me proud of my actions?)

All decisions made by individuals or groups must be evaluated by their ethics.








ETHICS AND CULTURE

A study done in the US tried to show how the culture can affect the ethical decision making of an accountant. This profession was chosen for the study given the long history of high ethical standards it has maintained. Culture, and possibly, religion have been the key variables examined as a basis for differences in an individual's ethical decisions. As more and more minorities enter the profession of accounting in the U. S., an important question that should be answered is "Will American minorities approach ethical situations similarly to their non-minority American peer group?", or "will their cultural backgrounds influence their ethical norms?”

Surveys were conducted among students. They were asked hypothetical ethical questions and scenarios and they had to respond what they would do, or how they would treat this situation. The results of the study concluded that there were almost any difference in the way both non-minority and minority groups dealt with the situation. The situation was that someone is applying for a job at a company but he lies about his resume. Dealing with ethical issues, it was found that the largest difference was in the perceptions of students to whether or not the liar is preventing a more qualified person from getting the job. The minority students felt much stronger than the non-minority students that the liar was preventing a more qualified person from getting the job. The researchers believe that minority students may be more sensitive to the difficulties of getting a professional job. The students' ethnic background also had an impact in their sense of loyalty to the university. Minority students felt a stronger sense of loyalty to the university than their non-minority counterparts. The findings suggest that minority students are more sensitive to ethical transgressions by their peers and feel more negatively impacted if someone lies in the process of getting a job.

The authors suggest diversity is essentially about cultural norms and values. Business enterprises should create an inclusive work environment. The same can be said about the classroom. The experience shows that ethnic background did not play a difference in the students' reactions to this ethical dilemma. The researchers believe the students' extensive experience in their multi-cultural education explains the results.


Source:
Nelson, D.L. & Quick, J.C. 2010. Organizational Behavior: Science, the Real World and You. South-Western College Publication, 7th. Pp. 326 - 356.

EBSCO Database. RICH, Anne J.; MIHALEK, Paul H.”In The United States Accounting Profession,Will Minorities Make Different Ethical Decisions?”. Journal of Diversity Management 2010

Communication & Virtual Teams

COMMUNICATION

Communication is a shared or common meaning, key to social support in two dimensions: interpersonal and technological communication.

Interpersonal Communication

This is the base to form relationships and to keep them, therefore is not replaceable by technology. It’s conformed by 4 elements: the communicator, the message, perceptual screens and the receiver.

• Reflective listening

It’s all about listening carefully to another person in order to reduce distortions or misunderstandings and ensure the meaning of the message. It considers emotions as part of the message.

Verbal response to Reflective listening: affirming contact, paraphrasing, clarifying the implicit, silence, eye contact.

Communication and Managers

1. Expressive speakers

They openly express their thoughts, opinions, ideas and feelings. They are usually extroverted people. The result of being an expressive speaker is that your employees will know where they stand.

2. Empathetic listeners

This type of manager is willing to listen, is patient and responsive and is concerned about others without taking responsibility for their actions or problems.

3. Persuasive leader

They try to persuade instead of being directive and autocratic. They encourage others to achieve results.

4. Sensitivity to feelings

This manager is sensitive to others feelings and self-image, can adopt a critical perspective and provide – in confidence – negative feedback in a constructive way.

5. Informative managers

These managers are all about the dissemination of information but appropriately and selectively, in order to keep employees well informed and avoid information overload.

Principles of effective communication:
• Clarity: avoid ambiguity
• Objective: the purpose of the message
• Understanding: awareness of the ”full picture”
• Consistency: avoid conflict
• Completeness: include relevant information
• Feedback: two-way process
• Time: adequate timing

Defensive and Non-defensive Communication

DEFENSIVE
ü Aggressive
ü Confrontational
ü Angry
ü Attacking

NON-DEFENSIVE
ü Assertive
ü Direct
ü Powerful
ü Constructive + healthy
ü Individuals who are: centered, informative, realistic

There are two forms of Defensive communication:

1. Subordinate defensiveness: It’s characterized by passive, passive-aggressive and submissive behavior. It is usually related to low self-esteem and people have the tendency to adopt this attitude of “you’re right, I’m wrong”
2. Dominant defensiveness: people show a more active behavior, more aggressive in nature and offensive. People have this attitude of “I’m right, you’re wrong”.

Like in everything else an effective communication finds barriers in its application and development. Barriers like the common language, sometimes or most of the times in an international work place we don’t always speak the same language; relating to language there are also semantic barriers, this is when we have the same word or similar but with different meanings or interpretations, also poor vocabulary and punctuation can become barriers for an effective communication.

There are also physical barriers like noise, a different conception of time and its importance also the difference in time zones, physical distance between and ways of linking the communicator and the receiver, age in aspects like maturity, educational background stereotypes and diverse interests and gender.

And thirdly there are the social-psychological barriers like status which refers to the social ranking involving elements like salary, abilities, seniority and age; there’re also the attitudes and values which influence the perception and interpretation of the message; the different perceptions people have can affect the way we see things and understand them; abstracting is also a barrier. It consists of the receiver abstracting from the message only what it considers to be relevant for him/her. An important barrier in communicating effectively is close-mindness, here our prejudices come to play, also feelings of superiority or inferiority, neglecting people and ideas.


VIRTUAL TEAMS

“Groups of geographically, organizationally and/or time dispersed workers brought together by information technologies to accomplish one or more organization tasks”[1]
Powell et all., 2004

These teams must fulfill certain characteristics to be called virtual like for example its members must be geographically dispersed over different time zones, their communication must be possible through communication technologies, they are all driven by the same purpose, the team it’s not permanent, it’s usually of a small size, some of the members may be from different companies and they must be involved in cross boundary cooperation

There are different types of virtual teams and they all differ in terms of the number of people and the degree of interaction.




Telework: It’s all about telecommuting; it’s usually done outside the work place (fully or partially). It presents several advantages to the companies thinking of incurring in this, for instance it can be cost and time saving, it can allow workers to access the information from a remote location and it offers flexibility.

Virtual groups

A virtual group is a combination of a number of Teleworkers, who all report to the same boss, and they don’t have the same goals or objectives, they perform independent tasks and activities.

So a virtual team happens when the members of a virtual group interact with each other and this time they do have common goals.

Virtual Communities

They are larger entities usually initiated by one of the members. The member participation is done online and they also have common purposes, roles and norms.

What advantages do the virtual teams offer? Well they offer relocation of time and costs, they can link experts together even if they are in different locations, and they also enhance productivity making the time it takes to develop a new product smaller. They offer flexibility as well, as new changes are easier to introduce.

But they also may have some potential disadvantages like maybe the technology is very expensive to implement, the conceptual understanding of situation face to face is compromised, self-monitoring employees are needed, conflicts may arise over power, mistrust, etc.

What must a virtual team deliver to be effective? In the area of communication it must receive constant feedback, there must be clarity in the message and the communication must be on a constant. There must be understanding, meaning sensitivity, a value of opinions and empathy towards others. The role must be clear, the responsibilities, who has the authority and who is accountable; and leadership must be shown, assertiveness, good relationship building and keeping and consistency are mandatory requirements.




“If InterContinental were a sound….

The use of sound in a marketing strategy seems like a pretty good idea. It’s something that not everybody does and it can bring a greater degree of brand loyalty and association to any product or company. But can this be easily done? Can it be applied to any product or brand?

The experiment done by InterContinental and their idea to create a unique sound to identify the brand shows us that it is a good idea and that it can be very successful, but on the other hand it also shows the difficulty of achieving this goal.

As mentioned before it can bring advantages to any company, because it just adds to a brand or product. If your brand has a very well identifiable logo, or slogan or color and you add a sound, your brand equity will definitely grow making your brand much more competitive. The possible disadvantages that this may have is that sometimes a sound does not send a clear message about your brand or product, it can be not easily related to the product or even hurt its market positioning. But like I said before, when done properly it can be very successful and a great addition to the brand, so this poses more a challenge for the team in charge of making this happen, especially the area of communication.

Communication is all about a shared or common meaning, so we have a big challenge right off the back. We have to find a way to really capture the essence of our brand and our product in order to effectively communicate it to the public through sounds, so we might even come to the realization that a sound is not the proper strategy for our product.

Once decided to go with the sound and having identify a good option for it, now we must see if this sound sends a clear message of who we are, and here is where perceptions and the different ways people interpret something come to play, and they do play a significant role on whether this idea is a successful one or a failure. The company must pay close attention to what exactly are they saying with this sound or song, because for some people it can bring back a feeling of relaxation but for other just annoyance, or it can have a luxurious feel to some people but for others it may just be pretentious. And the message that you send with the sound must also be consistent with that of the other brand elements that make the product.

Other challenges may arise when you take into consideration some barriers that an effective communication face, like for instance age or gender, because the music that older like may not be the same young people like, or gender, men usually don’t like the same music as women. But when all this challenges are met and overcome, a sound strategy is great plus to have on your brand because sometimes it reaches more people, now radio is a great way to advertise the product without needing words or anything else but the sound.


[1] Source: Ebrahim, Nader Ale, Shamsuddin Ahmed, and Zahari Taha. 2009. "Virtual Teams: a Literature Review." Australian Journal of Basic & Applied Sciences 3, no. 3: 2653-2669.

Graphic: Adapted from Cascio & Shurygailo (2003) in Ebrahim, Nader Ale, Shamsuddin Ahmed, and Zahari Taha (2009).