case summary-Fiat Chrysler

International
Management
Managing Across Borders and Cultures
T e x T a n d C a s e s N i N t h E d i t i o N

helen deresky
Professor Emerita, State University of New York-Plattsburgh

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Authorized adaptation from the United States edition, entitled International Management, Ninth Edition,
ISBN 978-0-13-437604-2 by Helen Deresky, published by Pearson Education © 2017.

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ISBN-10: 1-292-15353-9
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To my husband, John, for his love and support, and to my family members, who always inspire me:
John J. and his wife Alyssa: John Rock, Helena, Max

Mark and his wife Sherry: Jacob, Sarah, Rachel
Lara and her husband Thomas: Thomas (TJ), Luke.

This page intentionally left blank

Brief Contents

Preface 13

Part 1 The Global Manager’s environment 21
Chapter 1 Assessing the Environment: Political, Economic, Legal,

Technological 22
Chapter 2 Managing Interdependence: Social Responsibility, Ethics,

Sustainability 62

Comprehensive Cases 93
NEw: Case 1 Facebook’s Internet.org Initiative: Serving the Bottom

of the Pyramid? (several countries) 93
Case 2 an Ethics role-Playing Case: Stockholders versus Stakeholders

(Global/Sri Lanka) 103

Part 2 The Cultural Context of Global Management 105
Chapter 3 Understanding the Role of Culture 106
Chapter 4 Communicating Across Cultures 148
Chapter 5 Cross-Cultural Negotiation and Decision Making 182

Comprehensive Cases 213
NEw: Case 3 Vodafone in Egypt: National Crises and their Implications

for Multinational Corporations (Egypt) 213
NEw: Case 4 Hailing a New Era: Haier in Japan (China/Japan) 223

Part 3 Formulating and Implementing strategy for
International and Global Operations 233

Chapter 6 Formulating Strategy 234
Chapter 7 Implementing Strategy: Small es, Global Alliances,

Emerging Market Firms 279
Chapter 8 Organization Structure and Control Systems 306

Comprehensive Cases 335
NEw: Case 5 alibaba versus tencent: the Battle for China’s M-Commerce Space

(China/Global) 335
NEw: Case 6 Model and Competitive Strategy of IKEa

in India (India) 343
NEw: Case 7 Wal-Mart in africa (africa) 355
NEw: Case 8 Fiat Chrysler automobiles N.V. (2015): From an alliance

to a Cross-Border Merger (Global) 365

5

6 BrIEF CoNtENtS

Part 4 Global Human Resources Management 371
Chapter 9 Staffing, Training, and Compensation for Global Operations 372
Chapter 10 Developing a Global Management Cadre 404
Chapter 11 Motivating and Leading 436

Comprehensive Cases 465
NEw: Case 9 Ethical Leadership: ratan tata and India’s tata

Group (Global) 465

Integrative section 475
Integrative Term Project 475
NEw: integrative Case: Case 10 IKEa in russia: Emerging Market Strategies

and Ethical Dilemmas (russia) 477

Glossary 485

Index 491

Contents

Preface 13

Part 1 The Global Manager’s
environment 21

Chapter 1 assessing the environment:
Political, economic, Legal,
Technological 22
opening Profile: western es
Scramble to Assess their Risks in Russia
as Geopolitical tensions Escalate 23
the Global Environment 25

Globalization 25
Global trends 26
Globality and Emerging Markets 26
Backlash against Globalization 29
Effects of Institutions on Global trade 30
Effects of Globalization on Corporations 30
Small and Medium-Sized Enterprises (SMEs) 31
the Globalization of Human Capital 32
the Globalization of Information technology 33

Management in action: Global
Cybertheft of Corporate Secrets an
Increasing Risk 33

regional trading Blocs 34
the European Union 34
asia 36

Comparative Management in Focus:
China Loses its Allure 37

the americas 39
other regions in the World 40

the russian Federation 41
the Middle East 41
Developing Economies 41
the african Union (aU) 41

the Global Manager’s role 42

the Political and Economic
Environment 42

Political risk 44
Political risk assessment 45
Managing Political risk 45
Managing terrorism risk 46
Economic risk 46

the Legal Environment 47
Contract 48
other regulatory Issues 48

the technological Environment 49
Under the Lens: The Global Role of
Information Technology (IT) 51

Global E- 52

Conclusion 53
Summary of Key Points 54 • Discussion
Questions 55 • Application
Exercises 55 • Experiential
Exercise 55

CASE Study: Apple’s iPhones—Not “Made
in America” 56

Endnotes 58

Chapter 2 Managing Interdependence:
social Responsibility, ethics,
sustainability 62
opening Profile: the Bangladesh
disaster: Can Companies outsource
Responsibility for workers in its Supply
Chain? 63
the Social Responsibility of
MNCs 64

CSr: Global Consensus or regional
Variation? 67
From CSr to Shared Value? 67

Under the Lens: Nestlé
Company Creates Shared
Value Globally 68

MNC responsibility toward Human
rights 69

Comparative Management in Focus:
doing in China—CSR and the
human Rights Challenge 70
Ethics in Global Management 72

Ethics in Uses of technology 75
Bribery 76

Under the Lens: Rolls-Royce Accused
of Bribery to Obtain $100m Petrobras
Contract 78

Making the right Decision 79

Managing interdependence 80
Foreign Subsidiaries in the United States 80
Managing Subsidiary–Host Country
Interdependence 81
Managing Environmental Interdependence and
Sustainability 83

7

8 CoNtENtS

Culture and Management Styles around
the world 134
Under the Lens: Doing in
Brazil—Language, Culture, Customs,
and Etiquette 134

Saudi arabia 138
Chinese Family Small es 140

Conclusion 140
Summary of Key Points 141 • Discussion
Questions 141 • Application
Exercises 141 • Experiential Exercises 142

CASE Study: An Australian Manager in an
American Company 142

Endnotes 145

Chapter 4 Communicating across
Cultures 148
opening Profile: the impact of Social
Media on Global 149
the Communication Process 150

Cultural Noise in the Communication Process 151

the Culture–Communication Link 152
trust in Communication 152
the GLoBE Project 153
Cultural Variables in the Communication
Process 153

Under the Lens: Communicating in
India—Language, Culture, Customs, and
Etiquette 154

Nonverbal Communication 161

Under the Lens: Communicating Italian
Style 162
Under the Lens: How Feng Shui Affects
163

Context 165

Management in action: Oriental Poker
Face: Eastern Deception or Western
Inscrutability? 167
Comparative Management in Focus:
Communicating with Arabs 168

Communication Channels 170

information technology: Going Global
and Acting Local 173
Managing Cross-Cultural
Communication 174

Developing Cultural Sensitivity 174
Careful Encoding 174
Selective transmission 175
Careful Decoding of Feedback 175
Follow-up actions 175

Conclusion 176
Summary of Key Points 177 • Discussion
Questions 177 • Application
Exercises 177 • Experiential Exercise 177

Under the Lens: Mining Corporations
and Pollution Charges: Lynas
Corporation in Malaysia 85
Management in action: Recycling
Lives—Social Entrepreneurship
Breaking Down Barriers 86

Implementing Sustainability Strategies 87

Conclusion 88
Summary of Key Points 88 • Discussion
Questions 89 • Application Exercise 89 •
Experiential Exercise 89

CASE Study: Levi Looks to Cut Its Cloth
Differently by Rewarding
Responsible Suppliers 90

Endnotes 90

Comprehensive Cases 93
NEw: Case 1 Facebook’s Internet.org Initiative:

Serving the Bottom of the Pyramid? (several
countries) 93

Case 2 an Ethics role-Playing Case:
Stockholders versus Stakeholders (Global/
Sri Lanka) 103

Part 2 The Cultural Context of Global
Management 105

Chapter 3 Understanding the Role of
Culture 106
opening Profile: Social Media Bring
Changes to Saudi Arabian Culture 107
Culture and its Effects on
organizations 109

Societal Culture 109
organizational Culture 109
Culture’s Effects on Management 110
Influences on National Culture 114

Under the Lens: Religion and the
Workplace 114
Cultural Value dimensions 116

Project GLoBE Cultural Dimensions 116
Cultural Clusters 118
Hofstede’s Value Dimensions 118
trompenaars’s Value Dimensions 122
Consequence or Cause? 123
Critical operational Value Differences 124

the internet and Culture 125
Management in action: Google’s
Street View Makes Friends in Japan but
Clashes with European Culture 127
developing Cultural Profiles 128
Comparative Management in Focus:
Profiles in Culture—Japan, Germany,
Latin America 129

CoNtENtS 9

Part 3 Formulating and Implementing
strategy for International and
Global Operations 233

Chapter 6 Formulating strategy 234
opening Profile: Amazon, eBay, and
Flipkart Bet Big on india 235
Reasons for Going international 237

reactive reasons 237
Proactive reasons 238

Comparative Management in Focus: Global
Companies take Advantage of Growth
opportunities in South Africa 239
Strategic Formulation Process 242
Steps in developing international
and Global Strategies 243

Step 1. Establish Mission and
objectives 244
Step 2. assess External Environment 245

Under the Lens: 2012: US BANS HUAWEI
FROM GOVERNMENT CONTRACTS: IN
2015, CHINA BANS CISCO. POLITICS OR
BUSINESS AS USUAL? 246

Step 3. analyze Internal
Factors 248
Competitive analysis 249
Step 4. Evaluate Global and International
Strategic alternatives 251
approaches to World Markets 252
Global Integrative Strategies 254
Using E- for Global
Expansion 255
Step 5. Evaluate Entry Strategy
alternatives 257

Under the Lens: Modern Mexico:
Reshoring—Location and Young
Workforce Prove Attractive 260
Strategic Planning for Emerging
Markets 265
Management in action:
Strategic Planning for Emerging
Markets 266

Step 6. Decide on Strategy 271
timing Entry and Scheduling
Expansions 272
the Influence of Culture on Strategic
Choices 272

Conclusion 273
Summary of Key Points 273 • Discussion
Questions 274 • Application
Exercises 274 • Experiential Exercise 274

CASE Study: “Foreign es Tread
Carefully as Cuba Opens
Up” 274

Endnotes 276

CASE Study: Miscommunications with
a Brazilian Auto Parts
Manufacturer 178

Endnotes 180

Chapter 5 Cross-Cultural negotiation and
decision Making 182
opening Profile: Facebook’s Continued
Negotiations in China 183
Negotiation 184
the Negotiation Process 185

Stage one: Preparation 185
Negotiating teams 186
Variables in the Negotiation Process 186
Stage two: relationship Building 186
Nontask Sounding 187
Stage three: Exchanging task-related
Information 188
Stage Four: Persuasion 188
Stage Five: Concessions and agreement 189

understanding Negotiation Styles 189
Successful Negotiators around the World 191
Comparing Profiles 192

Managing Negotiation 192
Using the Internet to Support Negotiations 194
Managing Conflict resolution 194
Context in Negotiations 194

Comparative Management in Focus:
Negotiating with the Chinese 195
decision Making 199

the Influence of Culture on Decision Making 200

Under the Lens: Negotiations and
Decisions to Save the Eurozone
System 200
Management in action: Target: Frozen
Out 202

approaches to Decision Making 203

Comparative Management in
Focus: decision Making in Japanese
Companies 204
Conclusion 206
Summary of Key Points 206 • Discussion
Questions 206 • Experiential Exercises 207

CASE Study: Search Engines Aid Decision
Making and Negotiation 208

Endnotes 209

Comprehensive Cases 213
NEw: Case 3 Vodafone in Egypt: National Crises

and their Implications for Multinational
Corporations (Egypt) 213

NEw: Case 4 Hailing a New Era: Haier in Japan
(China/Japan) 223

10 CoNtENtS

Evolution and Change in MNC
organizational Structures 308

Integrated Global Structures 310

organizing for Globalization 312
organizing to Be Global, act Local 314

Under the Lens: Amazon of India Uses
Curry-Carrying Dabawallas to Spice Up
Parcel Delivery 314
Management in action: Procter &
Gamble’s Think Globally–Act Locally
Structure 315
Emergent Structural Forms 317

teams as a Global–Local Structure 317

Comparative Management in Focus:
Changing organizational Structures of
Emerging Market Companies 318

Interorganizational Networks 318
the Global E-Corporation Network
Structure 319
the transnational Corporation (tNC) Network
Structure 320

Choice of organizational Form 321
organizational Change and Design
Variables 322

Control Systems for Global
operations 323
Under the Lens: FIFA—Restructuring
for Governance Oversight of Ethics 324

Direct Coordinating Mechanisms 325
Indirect Coordinating Mechanisms 326

Managing Effective Monitoring
Systems 327

the appropriateness of Monitoring and reporting
Systems 327
the role of Information Systems 327
Evaluation Variables across Countries 328

Conclusion 328
Summary of Key Points 329 • Discussion
Questions 329 • Application
Exercises 329 • Experiential Exercise 330

CASE Study: HSBC in 2015: Complex
Global Operations and
Downsizing 330

Endnotes 332

Comprehensive Cases 335
NEw: Case 5 alibaba versus tencent: the Battle

for China’s M-Commerce Space (China/
Global) 335

NEw: Case 6 Model and Competitive
Strategy of IKEa in India (India) 343

NEw: Case 7 Wal-Mart in africa (africa) 355
NEw: Case 8 Fiat Chrysler automobiles N.V.

(2015): From an alliance to a Cross-Border
Merger (Global) 365

Chapter 7 Implementing strategy: small
es, Global alliances,
emerging Market Firms 279
opening Profile: tAG heuer in
Smartwatch Alliance with Google
and intel 280
Strategic Alliances 280

Joint Ventures 281
Equity Strategic alliances 282
Non-equity Strategic alliances 282
Global Strategic alliances 282
Global and Cross-Border alliances: Motivations
and Benefits 283
Challenges in Implementing Global alliances 284
Implementing alliances between SMEs and
MNCs 285
Guidelines for Successful alliances 285

implementing Strategy 286
Comparative Management in
Focus: Joint Ventures in the Russian
Federation 287

Implementing Strategies for SMEs 289

Under the Lens: Breaking Down Barriers
for Small- Exports 290

Implementing a Global Sourcing Strategy: From
offshoring to Next-Shoring? 291

Under the Lens: Global Supply Chain
Risks—The Japanese Disaster 292

Implementing Strategies for Emerging Economy
Firms 293

Management in action: Infosys’s Path
From Emerging Start-up to EMNE 294

Challenges in Implementing Strategies in Emerging
Markets 295
Managing Performance in International Joint
Ventures 295
Knowledge Management in IJVs 297
Government Influences on Strategic
Implementation 297
Cultural Influences on Strategic
Implementation 298
E-Commerce Impact on Strategy
Implementation 300

Conclusion 301
Summary of Key Points 301 • Discussion
Questions 301 • Application Exercise 302

CASE Study: Foreign Companies in China
Under Attack 302

Endnotes 303

Chapter 8 Organization structure and
Control systems 306
opening Profile: BMG Signs distribution
deal with Alibaba 307
organizational Structure 308

CoNtENtS 11

the Role of Repatriation in developing
a Global Management Cadre 410

Knowledge transfer 410

Under the Lens: Expatriates’ Careers
Add to Knowledge Transfer 412
Global Management teams 413

Virtual transnational teams 413
Managing transnational teams 416

the Role of women in international
Management 417
Management in action: Women in
Management Around the World 418
working within Local Labor Relations
Systems 419

the Impact of Unions on es 420

Under the Lens: Ford’s Bitter Struggle
to Close a Plant in Belgium 420

organized Labor around the World 421
Convergence versus Divergence in Labor
Systems 423

Under the Lens: Vietnam: The Union
Role in Achieving Manufacturing
Sustainability and Global
Competitiveness 424

adapting to Local Industrial relations
Systems 426
NaFta and Labor relations in Mexico 427

Comparative Management in Focus:
Labor Relations in Germany 427
Conclusion 430
Summary of Key Points 430 • Discussion
Questions 430 • Application
Exercise 430 • Experiential Exercise 431

CASE Study: Expatriate Management at
AstraZeneca Plc 431

Endnotes 433

Chapter 11 Motivating and Leading 436
opening Profile: the Eu
Leader—Myth or Reality? 437
MotiVAtiNG 438
Cross-Cultural Research on
Motivation 438

the Meaning of Work 440
the Needs Hierarchy in the International
Context 442

Comparative Management in Focus:
Motivation in Mexico 443
Under the Lens: Managing in
Russia—Motivation and Leadership
Challenges 446

reward Systems 447

LEAdiNG 448
the Global Leader’s Role And
Environment 449

Part 4 Global Human Resources
Management 371

Chapter 9 staffing, Training, and
Compensation for Global
Operations 372
opening Profile: Staffing Company
operations in Emerging Markets 373
the Role of ihRM in Global Strategy
implementation 374
Staffing for Global operations 376
Under the Lens: HSBC’s Staffing
Challenges in the UAE 378
Managing Expatriates 382

Expatriate Selection 383
Expatriate Performance Management 383

Under the Lens: Tales from Trailing
Husbands 384

Global team Performance Management 386

Expatriate training and
development 386
Comparative Management in Focus:
Expatriate Performance Management
Practices: Samples from Five
Countries 386

Cross-Cultural training 388
training techniques 390
Compensating Expatriates 392

training and Compensating
host-Country Nationals 394

training HCNs 394

Management in action: Success!
Starbucks’ Java Style Helps to Recruit,
Train, and Retain Local Managers in
Beijing 395

training Priorities for E-
Development 397
Compensating HCNs 397

Conclusion 398
Summary of Key Points 398 • Discussion
Questions 398 • Application
Exercises 399 • Experiential Exercise 399

CASE Study: Kelly’s Assignment in
Japan 399

Endnotes 402

Chapter 10 developing a Global Management
Cadre 404
opening Profile: the Expat Life 405
Expatriate Career Management 407

Preparation, adaptation, and
repatriation 407
the role of the Expatriate
Spouse 408
Expatriate retention 409

12 CoNtENtS

CASE Study: Interview: Carlo D’Asaro
Biondo, Google’s Europe
Strategy Chief in Charm
Offensive 461

Endnotes 463

Comprehensive Cases 465
NEw: Case 9 Ethical Leadership: ratan tata and

India’s tata Group (Global) 465

Integrative section 475
Integrative Term Project 475
NEw: integrative Case: Case 10 IKEa in russia:

Emerging Market Strategies and Ethical Dilemmas
(russia) 477

Glossary 485
Index 491

Under the Lens: Interview:
Yoshiaki Fujimori: Lixil Builds
a New Style of Japanese
Multinational 451

Women in Global Leadership roles 452
Global team Leadership 452
the role of technology in Leadership 452

Under the Lens: Women in
Leadership 453
Cross-Cultural Research on
Leadership 454
Management in action: Leadership in a
Digital World 455
Contingency Leadership: the Culture
Variable 456

the GLoBE Project 456
Earlier Leadership research 458

Conclusion 460
Summary of Key Points 460 • Discussion
Questions 461 • Application
Exercises 461 • Experiential Exercise 461

Preface

nInTH edITIOn CHanGes
• Comprehensive cases: Ten comprehensive cases are new and current; one is a popular one

from the eighth edition. Two of the new cases have won awards: Vodafone in Egypt; Ethical
Leadership: Ratan Tata and India’s Tata Group. The case selection provides increased cover-
age of emerging markets and high-technology companies. A range of topics and geographic
locations is included as well as the interactive “Ethics Role-Playing” case.

• Integrative section: The new comprehensive case in the Integrative section—“IKEA in
Russia: Emerging Market Strategies and Ethical Dilemmas”—is especially informative
and challenging because it covers a range of topics from throughout the book. In addition,
the popular Integrative Term Project has been retained.

• The feature box called “Under the Lens” has been expanded with a total of 19 boxes.
This feature gives an in-depth look at important aspects of the chapter subjects, including,
for example, “Nestlé Company Creates Shared Value,” “The Global Role of Information
Technology (IT),” “Doing in Brazil—Language, Culture, Customs, and Eti-
quette,” “Modern Mexico: Reshoring—Location and Young Workforce Prove Attractive,”
“Communicating Italian Style,” “Breaking Down Barriers for Small- Exports,”
“Amazon of India Uses Curry-Carrying Dabawallas to Spice up Parcel Delivery,” “Tales
from Trailing Husbands,” “Women in Leadership,” and “Interview: Yoshiaki
Fujimori: Lixil Builds a New Style of Japanese Multinational.”

• Maps added throughout.

• Chapter-opening profiles: There are seven new opening profiles, such as “BMG Signs Dis-
tribution Deal with Alibaba,” “Social Media Bring Changes to Saudi Arabian Culture,” and
“TAG Hueur in Smartwatch Alliance with Google and Intel.” The rest are updated favorites.

• Chapter-ending cases: There are seven new chapter-ending cases (keeping four favorites,
such as, “Kelly’s Assignment in Japan”). New examples are, “Foreign Companies in
China Under Attack,” “Foreign es Tread Carefully as Cuba Opens Up,” and
“An Australian Manager in an American Company.”

• All of the “Comparative Management in Focus” sections have been revised and updated.
These provide in-depth comparative applications of chapter topics in a broad range of
specific countries or regions.

• All of the “Management in Action” boxes have been replaced or updated; examples
consider global cybertheft, Infosys, Target, and emerging markets.

• New coverage of geopolitical developments, such as in Ukraine, and their effects on
strategy have been added throughout the ninth edition.

• Updated coverage of developments in globalization and its growing nationalist backlash.

• Expanded coverage on sustainability and creating shared value.

• Expanded and updated coverage of management issues regarding emerging market
economies—in particular China, India, Brazil, Africa, and Russia.

• Expanded section on strategies for emerging markets.

• Added and expanded sections on small businesses and strategies for SMEs.

13

14 PrEFaCE

• Expanded sections on e-businesses, on born-global companies, and on strategy models.

• Expanded sections on the role of technology on business planning and operations.

• New sections throughout the chapters on global management teams and virtual teams.

• New research data and examples added throughout.

The ninth edition of International Management: Managing Across Borders and Cultures prepares
students and practicing managers around the world for careers in a dynamic global environ-
ment wherein they will be responsible for effective strategic, organizational, and interpersonal
management with a focus on sustainability. Although managing within international and cross-
cultural contexts has been the focus of this text since the first edition, the ninth edition portrays
the burgeoning level, scope, and complexity of international business facing managers in the
twenty-first century. The ninth edition explores how recent developments and trends within a
hypercompetitive global arena present managers with challenging situations; it guides the reader
in what actions to take and how to develop the skills necessary to design and implement global
strategies, to conduct effective cross-national interactions, and to manage daily operations in and
with foreign subsidiaries and with global allies and partners. Emphasis is also placed on the con-
siderable cross-border management that takes place among teams—often virtually. Companies
of all sizes wishing to operate overseas are faced with varied and dynamic environments in which
they must accurately assess the political, legal, technological, competitive, and cultural factors
that shape their strategies and operations. The fate of overseas operations depends greatly on the
international manager’s cultural skills and sensitivity as well as on the ability to carry out the
company’s strategy within the context of the host country’s business practices. Although much
of the research has originated in the United States and Europe, we stress that there is no one best
way …