Telecon Subash Bijlani 080704

International Business and Leadership: 

International Business and Leadership Subash Bijlani Executive-in-Residence MBA Graduate School University of Maryland University College AMBA 606 Teleconference Saturday, August 7, 2004

Drivers of Change: 

Drivers of Change Concern for Ecology Emergence of new Economic Powers Political Realignments Growing literate and Knowledge oriented Society Concern for Human Rights Explosion of Knowledge Technology Revolution Increasing Borderlessness

13/129th of Business: 

13/129th of Business Over ten years ago, Philip Morris in the US bought Kraft for $12.9 billion. This was considered a fair price for this acquisition. But the tangible assets in this purchase were only $1.3 billion. 13/129, just 10 percent! The “other” assets were valued at $11.6 billion. We can variously call these intangible assets brand equity, goodwill or the creativity of an organization's people (in this case Kraft). This is a tough concept for many managers who devote most of their efforts in managing 13/129th of their businesses.

Slide4: 

Kodak sued by Polaroid Kodak paid $925 mn, bought back $500 mn of cameras and shut down a $1.5 bn plant If patented at 1% royalty Xerox would have earned $500 mn dollars between 1984-98 COMPANIES IMPACT Swiss watch industry has never been able to catch up and recover its market share Instant Cameras Invented & patented by Polaroid in 1969 Copied by Kodak in 1976 Invented by Xerox. Decided not to patent in 1979 Copied by Microsoft and Apple Invented by Swiss manufacturers Not patented as it was considered “mere curiosity” Copied by Seiko, Citizen and others GUI QUARTZ WATCHES The New Strategic Issue

Slide5: 

Intangible Assets as % of Companies Net Worth in the US 1968 2000

Slide6: 

0 2 4 6 8 1958 1962 1966 1970 1974 1978 1982 1986 1990 Korea Ghana Source: WBI Knowledge, Poverty and Wealth Difference attributed to knowledge Difference due to physical and human capital 1985 (in thousands USD)

Labor Shortages and Avenues of Supply: 

47 Mn 19 Mn 7 Mn 3Mn 5Mn 3Mn India Bangladesh Pakistan Iran Brazil Mexico Philippines 5Mn 4Mn Vietnam 2Mn Turkey Potential surplus population in working age group (2020) -10 Mn China -6 Mn Russia 5Mn Indonesia 1Mn Malaysia 0Mn Ireland Israel 0Mn Labor Shortages and Avenues of Supply Iraq 2Mn -1Mn Czech Republic Note: Potential surplus population is calculated as the number of people in the working age group (15-59) that each country will either be in shortage of or will have a surplus in 2020 assuming the ratio of working population to total population needs to remains constant to sustain current levels of economic growth Source: U.S. Census Bureau; BCG Analysis 4Mn Egypt -17Mn US -2 Mn UK -2 Mn Italy -3 Mn France -9 Mn Japan -3 Mn Spain -3 Mn Germany

Outsourced Services Will Increase due to Ageing: 

Worldwide remote services market (US $ Bn) Ageing related factors Workforce shortages in multiple sectors Additional cost pressure of high wage workforce Cost related factors Outsourced Services Will Increase due to Ageing Source: IDC; NASSCOM; U.S. Census Bureau; BCG Estimates & analysis

Paradigm shift in global competitiveness: 

Paradigm shift in global competitiveness

Small &Medium Enterprises (SMEs) and the Global Economy - 1: 

Small &Medium Enterprises (SMEs) and the Global Economy - 1 In Asia, more than 90% of enterprises are SMEs that employ less than 50 people. In the US, 88% of enterprises are SMEs that employ less than 100 people. SMEs account for over 95% of enterprises and up to 70% of employment in OECD countries.

SMEs and the Global Economy - 2: 

SMEs and the Global Economy - 2 SMEs dominate wholesale and retail trade, hotel and restaurant, communications, business services and construction, and provide at least 50% of manufacturing employment in many advanced economies. SMEs operate strategic business services relating to information technology that has led to 10% annual growth in knowledge-based services.

New Paths in Innovation Development : 

New Paths in Innovation Development Over 50 years ago World War II and after 21st Century Individuals and small enterprises Large scale: Government funded Cold War years: economics and defence Post-cold War: economic growth and social issues Privatisation and corporatization of innovation effort.

Innovation in SMEs: 

Innovation in SMEs Some facilitators: Free of bureaucratic constraints Place innovative activity at the centre of their competitive strategy Decision to innovate is made by a small number of people

The New Leadership: 

The New Leadership Managing and leading across multiple country and cultural * borders simultaneously: Working virtually Acting in chaotic situations Finding more ways than one to do the same thing *the expectations and assumptions that people hold of how others ought to behave

How Change Impacts Behavior: 

How Change Impacts Behavior Implementers No Impact / Wait and see attitude The Blockers - High Resistance to Change Anxiety + Reactive state Positive Restlessness + Proactive State Observation / Experience Changes in the Environment Manifests in New Behavior The Leaders

Types Of Benchmarking: 

Types Of Benchmarking

International Business Leadership: 

International Business Leadership Core Skills Pivotal Skills Knowledge of how business is conducted in a variety of countries Cultural Adaptability Ability to see the world from others’ point of view. Innovation: ability to form novel associations Skill in providing purpose, inspiration, motivation and commitment at work. Skill to take action Skill to cope with stress and remain optimistic Based on Global Leadership Development Research Project, Center for Creative Leadership

Slide18: 

Paradox When the borders come down, the cultural obstacles go up. We become more, not less, ethnocentric. Paradox The global realities are changing much faster than our mindsets and business practices. The Power of Context: Paradigm Shifts

The Impact of Culture: 

The Impact of Culture Decision-making processes Training in the various cultures Hiring practices and employment communication Leaving the organization

Sensitivity to Cultural Differences: 

Sensitivity to Cultural Differences When cultures come into contact, they may converge on some aspects, but their idiosyncrasies will likely amplify. McDonald serves wine and salads with its burgers in France. In India, where beef products are a taboo, it created a mutton burger: The Maharajah Mac. Middle Easterners like tooth paste that tastes spicy. The Japanese like herbs in their medicines.

Sensitivity to Cultural Differences: 

Sensitivity to Cultural Differences The American manager prides himself or herself on being direct, frank, being in-your-face, and being accountable. This approach is almost unique in the world. In fact, these qualities are viewed as offensive in many parts of the world including Asia, Latin America, and Nordic European countries

Leadership is Culturally Contingent: 

Leadership is Culturally Contingent Views of the importance and value of leadership vary across cultures: Americans, Arabs, Asians, English, Eastern Europeans, French Germans. Latin Americans and Russians tend to romanticize the concept of leadership. Many people of German-speaking Switzerland, the Netherlands and Scandinavia are skeptical about leaders. In these countries it is difficult to find commemoration of leaders.

Cultural Dimensions: Anglo: 

Cultural Dimensions: Anglo Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Dimensions: Germanic Europe: 

Cultural Dimensions: Germanic Europe Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Dimensions: Confucian Asia: 

Cultural Dimensions: Confucian Asia Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Dimensions: Middle East: 

Cultural Dimensions: Middle East Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Dimensions: Southern Asia: 

Cultural Dimensions: Southern Asia Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Dimensions: Latin America: 

Cultural Dimensions: Latin America Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Dimensions: Sub-Saharan Africa: 

Cultural Dimensions: Sub-Saharan Africa Source: Culture, Leadership and Organizations: The GLOBE Study of 62 Societies, Sage Publications

Cultural Competencies: 

Cultural Competencies Understanding the concepts of culture Understanding one’s self Cross-cultural thinking Cross-cultural communication Negotiation and decision making Motivating others Developing teams

The Time Management Matrix: 

The Time Management Matrix Not Important Important Urgent Not Urgent

Culture and Business Ethics: 

Culture and Business Ethics Values and ethical behaviour are culturally defined. Each company too brings its own cultural perspective and a mindset of how they view the world. Even when there are universally desirable attribute such as integrity, does it mean the same thing to a Chinese as it does to American? People in different countries (and in different organizations within the same country) perceive and exhibit behavior differently that reflects integrity. There is an increasing concern on ethical conduct as an integral part of doing business in most countries.

Non - Verbals: 

Non - Verbals Relative Impact of Verbals & Non-Verbals Verbal Words 7% Non - Verbal Tone 38% Body Language (facial expressions, posture, gestures) 55%

Levels of Listening: 

Levels of Listening Level 3 Level 1 Quiet, Passive Listening Hearing Sounds and Words Active, empathetic Listening

Are You Listening?: 

Are You Listening? “ I know you believe you understand what I said, but I’m not sure you realize that what you heard is not what I meant ” Raw Data Filtered Data Receiver Filter

The Global Literacies: 

The Global Literacies Personal Literacy Social literacy Business Literacy Cultural Literacy Willingness to learn. Reinvent oneself. Reflective and self-aware. Understanding and valuing oneself Building relationships in uncertain environments. Engaging and challenging others. Building trust. Listening. Valuing and leveraging cultural differences. Building on the wisdom of other cultures and values. How does international business generate value. Focusing and mobilizing the organization