LAGOS CITY POLYTECHNIC/SOUTHWESTERN UNIVERSITY E-LEARNINGSCHOOL OF MANAGEMENT AND BUSINESS STUDIES

DEPARTMENT OF BUSINESS ADMINISTRATION PROGRAMME: Higher National Diploma and Bachelor of Science in Business Administration and ManagementCOURSE TITLE: Comparative ManagementCOURSE CODE: BAM 326; BUA 410CREDIT HOURS: 3 HOURS A WEEKLECTURER: ADEGOKE, O. O. (Ph.D.)PROGRAMME GOAL: This course is intended to provide students with understanding of analysis of management practices in various environmental settings in order to identify the causes of differences and similarities in organizational results or performance.OBJECTIVES:At the end of this course, the students should be able to: Understand the general overview of comparative management Understand the historical background and evolution of school of management thoughts Understand various models/theories of comparative management Understand the concept of Globalization Understand the concept of competitive advantage and its various strategies.

COURSE OUTLINESChapter 1: OVERVIEW OF COMPARATIVE MANAGEMENT1.1 Comparative Management1.2 Managerial Practices1.3 Environmental Setting1.4 Management Functions and Comparative Management1.5 Business Functions and Relevance to Comparative Management1.6 The Entrepreneur1.7 International Business1.8 Factors That Encourage A Company to Go Multinational1.9 Types and Forms of The Multinational Company1.10 Factors to Be Considered Before Starting An MNC1.11 Problems Faced by MNC Mangers1.12 Assignments1.13 Quizzes

Chapter 2: DEVELOPMENT OF MANAGEMENT THOUGHT OR SCHOOL OF THOUGHT (NOT FOR THIS COURSE)2.1 Classical School of Thought2.2 The Behavioural School (1960s)

2.3 The Quantitative and Systems School 2.4 The Contingency Approach2.5 Comparative Management (CPM) And Its Relationship to Schools of Thought2.6 Assignments2.7 Quizzes

Chapter 3: COMPARATIVE MANAGEMENT THEORIES AND MODELS 3.1 Introduction3.2 Major Approaches In The Study Of Cpm3.2.1 Socio-Economic Approach3.2.2 The Ecological Approach3.2.3 Koontz Model3.2.4 The Behavioral Approach3.2.5 The Eclectic Empirical Approach3.3 Assignments3.4 Quizzes

Chapter 4: INTERNATIONAL/COMPARATIVE MANAGEMENT IN SELECTED COUNTRIES4.1 Introduction

4.2 Japan4.3 The United States of America4.4 Germany4.5 India4.6 Saudi Arabia4.7 Assignments4.8 QuizzesChapter 5: GLOBALIZATION5.1 What Is Globalization?5.2 Positive Effect5.3 Negative Effect5.4 Assignment5.5 QuizzesChapter 6: COMPETITIVE ADVANTAGE6.1 Introduction6.2 Strategic Competitive Advantage6.3 Sustainable Competitive Advantage6.4 Gains of Competitive Advantage6.5 Other Strategies for Competitive Advantage6.6 How Do You Create A Competitive Advantage?6.7 Assignments6.8 Quizzes

CHAPTER ONEOVERVIEW OF COMPARATIVE MANAGEMENT

1.1 COMPARATIVE MANAGEMENTin the main, comparative management provides a forum in which managerial practices in various environmental settings are analyzed with the objective of identifying the causes of differences and similarities in managerial behaviour and the attendant similarities and differences in organizational results or performances. From the above description, two terms need further explanation, namely, managerial practices and environmental setting.

1.2 MANAGERIAL PRACTICESManagerial practices refer to the way and manner managers perform their functional activities of planning, organizing, coordinating, motivating and controlling. Involves identifying the degree of efficiency and effectiveness with which these activities are performed in the dynamic business environment of various countries the world over.

1.3 ENVIRONMENTAL SETTINGThe environmental setting of a business organization refers to factors or forces (political, cultural, socio-economic, technological, educational etc.) that affect the growth and development of business in a locality. These factors become significant, in the sense that they affect business results and the business has little or no control over such factors. As a business grows, it takes wider areas and boundaries or a nation. At this point, the extent of management required to run the affairs is domestic, however, as the business grows beyond a point and extends to other countries the nature of the management changes too. The area of operation becomes international environment and the nature of administration then is described as international management. The elements of environment remain, political, technological, economic, cultural and social but the development, complexity assumes greater degrees and dimes

1.4 MANAGEMENT FUNCTIONS AND COMPARATIVE MANAGEMENTFunctions are what occupiers of posts are expected to do. Comparative management (CPM)- functions are usually "pressed through the analysis of activities that are expected to be performed during the international operations by managers. Such activities including decision making, staffing, planning, organizing, controlling etc., which are performed in special ways apparently different from that at the domestic level.

DECISION MAKINGManagers operating in an international environment have to choose a course of action from given alternatives in- order to achieve the goals of the organization. In the process, conscious recognition is given to the effects of political differences or diplomatic agreements, disparity in natural endowments, supply of. skilled manpower for technological progress, cultural and

religious constraints and others that make joint venture, business integration and management possible, but complex, in different countries.

STAFFINGStaffing is the process by which international managers select train and promote both indigenous and expatriate employees. Unique differences in cost of jiving, salary scales, languages and currencies, quality and level of education can create problems in the employment processes in the different countries.ORGANISINGOrganizing is the arrangement of men equipment and materials so that jobs are allocated, and structure determined. It usually involves creating international structures that make domestic activities merge with- that of international, practices. It may require the division of organization by product, by grid or matrix and by geographical location.PLANNINGPlanning involves anticipation of the future of men and women and the organization and identifying the courses of action. It involves choosing countries out of several zones that have profitable opportunities for expansion and whose needs and development plans are compatible with the requirements of the host country. Plans also include forecasts of risks, such as political instability, foreign exchange and currency fluctuations, permanent nature and type of incentives provided for attracting foreign investment and taking adequate coverage of them. Plans in international operation may require reducing, rear of domination of the host country by foreign nationals. There may be plans to ensure the recruitment of adequate proportion to top management positions. It is necessary to allay the fear of exploitation of host's resources (raw materials, minerals etc.) and repatriation of profits without participating in local community development programmes.DIRECTING OR LEADINGDirecting involves the function of getting the members of the organization both foreign and domestic to perform in ways to achieve the established goals. Care is required to choose the appropriate leadership styles which differ from country to country. In some countries autocratic rather than subordinate centered styles have been found effective. In others, the class, position act the charisma of the leader are considered a prerequisite to effective leadership.COMMUNICATINGCommunicating is the process through which information is circulated in the organization. At the international operation it may involve knowledge of more than two or three languages. A manager fluent in many languages has • more impact in influencing his workers, psychologically. It has also been found that non-verbal communication might have more impact than written or spoken, during negotiations, in certain cultures. The technology affects the rate, form and efficiency and the rate of transmitting business messages within or outside the organization and this may involve crossing •international boundaries of developed and developing countries. The use of telephone, telex and fax and fast hand delivered messages

are in vogue. The choice of which to employ depends on the urgency of the message, the • cost, and level of development of the countries involved.

CONTROLLINGControlling involves establishing standard of performance, knowing the current- performance level and comparing it with the standard and accounting for the variance. Practicalizing this at the international level, will require using some units of measure or units that can be converted to measure lengths or distances, currency, or weights. Such conversion may include changes from yards to metres, pounds to grammes, and changes in the purchasing powers of dollars, pounds sterling, and local currencies, naira and yen etc. In effect the measurement of the standard of performance, productivity, variance and .corrective actions must, as much as possible, be equally understood in the same way by individuals in the different countries. Issues concerning centralization or decentralization of control are important and may be determined by the constraints or opportunities of the environments in different countries

1.5 BUSINESS FUNCTIONS AND RELEVANCE TO COMPARATIVE MANAGEMENT. Business Functions are the functional areas into which a business operation is divided, namely, production, personnel or human resources management, finance, and marketing, for effective management. Each unit must be planned, organized, controlled, coordinated and its workers motivated to achieve effective performance: For a good and complete analysis of the practices of managers in their attempts to achieve competitive advantage in foreign markets, each of these units must be scrutinized and well known. In order to do this, the application of elements of Strategic Management namely, environmental scanning, diagnosis of the business, choice of strategy and the implementation in each business functional area, is compulsory. This is because each unit forms a practicing field for the application of management fundamentals, skills, and technology.The analysis of differences in skills required for performing each functional managerial duty becomes clearer and easier when treated separately for instance difference between the salesmanship and accounting skills become obvious. Similarly, the modifications required in both technology and management fundamentals needed for operation in different environments become more easily identifiable and comparable. Also, the equipment and inventory control required to work in the labour intensive assembly plants of say the Mexican cluster might be quite different from the Japanese technology intensive affiliates assembly plants that practice J.I.T techniques to avoid inventory cost in the United States. In effect, using the functions of business approach, enables one to appreciate how; for example, the concept of "controlling" can be differently interpreted to mean quality control in production, budgetary control in accounting, financial control in finance, sales and inventory control in marketing, and discipline in personnel administration. Each control is associated with the area of practical application and hence comparative analysis is easily affected. It becomes dearer how the additive results of the effectiveness and efficiency of the individual units sum

up to the effectiveness and efficiency of the businesses individually, nationally or across political boundaries in the case of MNCs.But before then, it is important to discuss the role of the entrepreneur and the application of strategic management elements in each functional unit

Management and Administration Comparative management can be defined as the area of study dealing with differences and similarities of managerial systems and management practices in different cultural settings. It requires an understanding of the complexity and diversity of environmental variables and their impact on institutions. Management, on the other hand, is the process of achieving organizational goals by engaging in the four basic functions of management, namely, planning, organizing, leading and controlling (David C. Martins, 2006). This definition recognizes that management is an on-going process and activities aim at achieving set goals and objectives. Richard Daft (1999) saw management as the attainment of organizational goals in an effective and efficient manner through planning, organizing and controlling organizational resources.

Differences between Administration and Management Administration is being granted enough conceptual clarification in this unit. The obvious thing is that many people have attempted to look at the two concepts (administration and management) as the same. However, Harry (2005) believe strongly that administration and management are not synonymous. The word management is often used in the place of administration but some differences still exist. The above observation is in consonance with the scientific thought in the field which sees a dichotomy between administration and management. Furthermore, it has been stressed that the term administration is used in the process of public sector administration, while management is used to describe the processes in private sector administration.

In addition, it is believed that management is dynamic and business-oriented while administration is static, emphasizing the maintenance of the status quo and non-innovation. This distinction may look acceptable but the globalization of political and management systems have rendered the differences insignificant. The realities emerging from these polemics is that, administration is seen as part of management and management as part of administration. The controversy surrounding this dichotomy between management and administration was as a result of the translation of Fayol‘s book titled “administration” from French to English (1929) where management was introduced to replace administration.

Scholars like Gullick and Herbert Simon share the view that management is part of administration. To them management is one of the actions in administration. In their words, management activity unites controls and coordinates all other activities of a group towards the achievement of the set objectives. Similarities between Administration and Management The following are the areas where administration and management are seen as similar:

a. Administration and management are distinctive academic discipline, art and science of pursuing knowledge.

b. Both concepts are used in modern organizations. They embrace organizational activities such as organizing, coordinating, budgeting, evaluating other organizational activities for the achievement of the set goals.

c. Management and administration take place in every area of human endeavor. They aim at meeting individual and organizational goals.

d. Management and administration represent global phenomenon, cutting across cultural boundaries. They remain the buzz words in human interaction in the world of work and business.

e. Administration and management enhances how far both human and material resources are channeled for purposive enterprise. They enable organizations to effectively and efficiently organize and utilize their resources for productive activities.

f. They are directed towards the enhancement and attainment of goals and objectives of individuals and organizations.

Organization and Administration Organization is the fundamental task in every administration. Organization is the machine for getting things done. It is chiefly concerned with provisions, arrangements, and mobilization of manpower which enables the administration to vary out its obligations (Sidhu, 2006). Organization refers to the complex pattern of communication and relationships in a group of human beings. This pattern provides each member of the group much of the information and many of the assumptions, goals, and attitudes that enter into decision making. It also provides them with a set of stable and comprehensive expectations as to what the other members of the group are doing and how they will react to decisions made.

This definition is slightly different from that of Sears (2002) who refers organization as a machine for doing the required work. It may be composed of persons, materials, ideas concepts, symbols, rules, principles or more often than not, a combination of this machine can work automatically. Its operation may be subject to human judgment and will. Professor Stead (2006), stated that organization is an agency by which we achieve our goals. Based on the above statement, we can say that organization stands for a structure, framework, system, organized body, a set of collection, concerned with the process of regulations and facilitating work. Organization can take the form of organization of materials, organization of human resources, and organization of ideas and principles as discussed below:

Organization of materials This encapsulates organization of building, campus, grounds and accommodation. This implies arrangement of each physical facility in such a way that each item can be most efficiently used

and no wastage takes place. Equipment will be proportional to the number of people to be served.

Organization of Human Resources This involves organization of human factors, board of management and workers. It is organization and mobilization of all the persons who are legally or legitimately concerned and interested in a firm. This includes each member contributing his best in the common activity and collective responsibility. Organizational members have to participate in the activity in conformity with planned purpose and well thought out procedure.

Organization of Ideas and Principles We can also organize our ideas and principles. This embraces the art of cementing desirable ideas and principles, such as, norms of achievement, rules and regulations, policy formulation, and administration, and working out of innovations and institutional programmes for improvements and reforms. Therefore, organization deals with making systematic arrangements so that the purposes of the entire system are achieved. Good organization ensures unity of action, efficiency, economy, optimum utilization of resources, well being and satisfaction for all, and good results for collective goals. Without proper organization, there would be confusion, chaos, and haphazard activity resulting into wastage of time, effort and resources.

Functions of Organization (i) Organization is the administrative expression of the theory of administration. (ii) Organization stands for, an organized body or system, or structure, or framework for human undertakings. (iii) Organization is concerned with the provision of materials, human equipment, regulations, forms and facilities of work. (iv) Organization provides a machine or set of machines for doing some work. (v) Organization provides resources. Organization is that agency by which we achieve the desired objective. (iv) Organization defines and determines functions, programmes, and activities. (vii) Good organization ensures unity of efforts, efficiency, goodwill, and proper use of resources.

Functions of Administration Functions of administration include the following: (i) All activities designed to make an organization to function effectively. (ii) Administration stands for running, handling, conducting, controlling and organizing. (iii) Administration is the process of integrating these efforts of personnel and of utilizing appropriate materials to draw maximum benefit from available facilities. (iv) Administration deals with the functioning and operation of the machines of the set up.

(v) Administration deals with the functioning and operations and management of resources. Administration arises out of organizational schemes, programme, and practices. (vi) Administration is basically concerned with the efficient execution of programmes and activities. (vii) Good administration ensures proper planning, direction, and evaluation.

1.6 THE ENTREPRENEURThe entrepreneurs are people who have the ability to identify and evaluate business opportunities or constraints; to gather the necessary resources, to take advantage of them, and to initiate appropriate action to ensure success - Meredith, C.G.R.E. Nelson and P. A, Neck (1991).The entrepreneurs-referred to above are individual business people. However, when their functions are performed in large organizations, corporate bodies, firms, companies and governments, they are formed by Strategic Managers, and process through which they performed the functions is described as strategic management.In other words, in big organizations, the role of the entrepreneur is performed by Strategic Business Unit (SBC)). The group is composed of Strategic Business Unit—managers, Corporate partners:

FIGURE 1ELEMENTS OF STRATEGIC MANAGEMENT

To discover opportunities or threats

To discover strength or weakness of Business functions

To consider alternative action to take

Execution of decision

From the definition and Figure 1 above, it would appear that entrepreneurs and hence SBU teams are engaged in performing the following activities:

1. Analysis of the business environment in order to identify "business opportunities or threats and discover the weaknesses and strengths of the business functions (Production, Marketing, Finance and Personnel)

ENVIRONMENTSearching or Scanning

DIAGNOSIS OFCompany or Business

CHOICE OF STRATEGY

IMPLEMENTATION

2. Evaluation of the extents of the opportunities, threats, strengths and weaknesses in order to determine' how to exploit the opportunities and meet the threats;

3. Gathering data, human and materi.al resources for decisions that would enable the utilization of the opportunities/ threats build up sustainable competitive advantage over competitors; and

4. Planning and taking actions that would ensure success i.e. that would guarantee the achievement of the set business, goals.

1.7 INTERNATIONAL BUSINESSInternational business is the business involving activities that cross national boundaries. It is unique and different from domestic business, because it involves foreign transactions in different environments. It is subject to different laws and subjects to different monetary systems. Companies which engage in this type of business are those which because of high technology or natural endowment are able to produce a surplus and use large quantities of (raw) materials they can obtain from other nations to produce goods and services. They usually take advantage of international economics, principles such as comparative advantage, which require producers to specialize in producing goods that they can produce more cheaply than other and refrain from producing those items they can buy more cheaply elsewhere. They also take advantage of foreign exchange mechanism that provide rate at which the currency of a country is exchanged for another country", or of how balance of payments is determined etc. From this emerges international investment and finance. Later, the subsidiaries of some large firm; grow to act as export agents to the parent company. The development of international business goes through the formation of international companies and finally the evolution of global comp. (MNC) in which overseas operations have departments in finance personnel, and production in the foreign countries.1.8 FACTORS THAT ENCOURAGE A COMPANY TO GO MULTINATIONALCompanies go multinational as a result of a number of factors:

1) The heavy accumulation of capital and technology and technical know-how in the developed countries;

2) The rapid rate of communication and transportation;3) The rapid growth of markets in the countries where a company is chartered; and the

organization of economic communities that favor regional markets and free trade agreements.All the points mentioned above have encouraged the overgarment of the MNC, but do not explain why they are in existence. MNC's are in existence to meet the need for direct foreign investment foreign operations. This means the home country transfers funds to other host countries, to acquire plants, warehouse offices etc., and maintain managerial control over the operations in the host country.

A MNC may come into being as a result of a desire to source for raw materials e.g. palm kernel, petroleum, palm produces or ores, at a cheap rate and reasonable quantity. may also be because of a wish to expand existing markets or find new markets for a Company’s goods.Another reason may come as a result of desire of the MNC to beat its competitors in sales race, to first utilize opportunities in the new culture or environment.A government sponsored company may go multinational to gain political advantages over other competitors.1.9 TYPES AND FORMS OF THE MULTINATIONAL COMPANY FORMS

There are a number of forms in which a MNC can involve itself in foreign operations. The mode of involvement can be one of the following:JOINT VENTUREJoint Venture involves the sharing or ownership with others. T nis type of venture interests developing countries. A company may join a multinational company with foreign ownership and control, but which needs a local identification. The advantage lies in its adaptability am flexibility to local or foreign needs. Ownership is always shared at agreed percentages."EXPORT OF HOME COUNTRY PRODUCTSThe country producing the goods engages experts to negotiate with foreign companies and only trades internationally. This method is employed by a company that is inadequately experienced in international operations. The advantage is that it minimizes risks and cost of exporting and marketing.MANAGEMENT CONTRACTManagement Contract is a service contract requiring no capital. A MNC provides a country (e.g. Saudi Arabia where managerial skill is scarce) with only that service and nothing else. The M NC is rewarded accordingly.FRANCHISINGThis is an involvement in which an individually owned (franchised) business or company operated as though it were a part of a multinational company or group of business (franchise) employing uniform operating procedures trademarks, patents, names or other valuable intangible assets. It is used more in hotels, e.g. Holiday Inn and Hilton, Fast food - McDonald and Kentucky Fried chickens.LICENSINGThis is an arrangement under international licensing agreement in which a firm license or grants right to a foreign firm (Licensee). The firm granting the right provides technical information and assistance to the foreign firm which then compensates the granting firm for the services. For example, a drug company may license foreign companies to sell its patented products in another country, or an author grants his copy rights to foreign publisher.

FOREIGN SUBSIDIARYA subsidiary company is one whose controlling interest is owned by another company. A subsidiary is almost 100 per cent owned by MNC. The MNC takes all the risks of the foreign business operations but also has maximum managerial. control.1.10 FACTORS TO BE CONSIDERED BEFORE STARTING A MNCWith the above forms of operation, factors to be considered before« the choice, would include the following factors:Risks, legal restrictions, competition and markets, foreign expertise and experience, and the degree of managerial control.RISKS If the reason for the choice is to. avoid risks, then licensing and franchise are preferred.

Since the risks are assumed by licensee and franchise respectively, Joint venture shares the risk. In management contract and exporting, capital is not required outsidethe home country and thus risks are reduced. Most companies with little or no foreign experience find less risky forms of operation attractive.LEGAL RESTRICTION All MNC's operate within legal structures of both home and host countries. Hence, the

MNC may have to face in home countries tax restrictions, foreign exchange control and structural adjustment problems, while the host country may limit the amount of profit that can be repatriated. The host country may also prohibit private ownership of business in critical industries, and restrict operation of foreign companies. The host country may be operating religion-based laws (e.g. Sharia in Saudi} that is unknown in-home countryCOMPETITION AND MARKET

The market size, potential and the intensity of competition from local companies and other MNCs are crucial factors to be considered in the choice of operations of a MNC, particularly regarding risks.FOREIGN EXPERTISE AND EXPERIENCEForeign expertise and experience will likely dictate the choice between investing in foreign subsidiary or mere export, licensing or franchise agreements.MANAGERIAL CONTROLThe degree of managerial control desired by a MNC will influence the choice it will make between a subsidiary having 100 per cent ownership and another with limited managerial control.1.11 PROBLEMS FACED BY MNC MANGERSProblems of international managers are many but the major ones can be grouped into cultural differences, lack of education and skills, currency and accounting differences, laws and regulations, scarcity of raw materials, gender-role, custom duties, diplomatic and political pressures.CULTURE

The capacity to understand social and religious beliefs may pose serious problems in countries e.g. • (Nigeria) where the belief is strong that elders are the wise ones and should be so respected even when it concerns managerial decisions. Religious beliefs that prohibit collection of interest on loans may not be comprehended by Western MNCs in a Moslem state, like Saudi Arabia. MNCs may also not understand why women in Puddah may not be allowed to work with men.LACK OF EDUCATION AND SKILLS In some developing countries where economy is labour intensive where technical skills are -lacking, MNC managers may see productivity as low. In few cases where equipment and machinery are available there may not be technical people to maintain the equipment leading to poor capacity utilization and low production level.CURRENCY AND ACCOUNTING SYSTEMThe currency that is used may be different and the purchasing power too, leading to different foreign exchange rates and associated risks. Also, differences in accounting system may lead to difficulties in comparing operations in the different countries. LAWS AND REGULATIONSLaws and regulations differ among cultures, governments, and political set-ups. The Sharia laws that are used in Muslim states may be strange to the home country (government of MNCs). Regulatory laws may be protective to the host country but harsh to home countries of MNC managers.SCARCITY OF RAW MATERIALSCommunication devices and other infrastructural inadequacies may make business less profitable and to be at level MNC managers may find impossible to operate.Political disturbances and diplomatic decisions may not favour the operations of MNC managers.General business practices, customs duties, and tariff imposed by government may make national operations difficult in certain countries, in spite of Genera! Agreement on Tariff and Trade (GAIT)

1.12 Assignments1. Explain the relationship between management functions and comparative management2. Explain the relevance of business functions to comparative management3. What are the factors that encourage a company to go multinational?1.13 Quizzes1. Explain briefly, the environmental setting of a business organization2. What are the elements of strategic management?

CHAPTER TWODEVELOPMENT OF MANAGEMENT THOUGHT OR SCHOOL OF

THOUGHT2.1 CLASSICAL SCHOOL OF THOUGHT

The classical school has two branches (scientific management and classical organization theory).Scientific management was concerned with improving/increasing productivity of the shop and individual worker. Taylor the acclaimed father of scientific management provided four principles for improving productivity by determining.1) One best way of performing a task,2) The one best way of selecting the workers that are best suited for a job;3) The best way of educating and developing the worker,4) The one best way of encouraging cooperation between labour and management.Other contributors are H. Gantt, Frank and Lilian Gilbreth etc. The other branch of the classical universal school is the classical organization theory founded by Henri Fayol. This branch of the school believes that there exist principles that can be generally applied to determine what managers do. Fayol's approach looks at:i The functional activities in all organizationsii What managers do at work using his 30 years’ experience as Managing Director

(MD) as a basis for his expertise? Fayol grouped business operation into six activities.

1. TECHNICAL Producing goods and services2. COMMERCIAL Buying, selling and exchanging of goods and services3. FINANCIAL Acquiring and using capital4. SECURTTY Protection of workers' and company's Property5. ACCOUNTING Taking statistics of costs, profits and Loss and records6. MANAGERIAL Planning, organizing, staffing and coordination.The above group of activities to Fayol, are present in ail organizations whether, big or small, political, educational or economic, cultural or religious.PRINCIPLES OF MANAGEMENTWhat activities managers engage in at work are, according to Fayol, based on fourteen principles.1. DIVISION OF LABOUR: Specification2. AUTHORITY: Position and personnel right to order and compel obedience3. DISCIPLINE: Respect for rules and agreement4. UNITY OF DIRECTION: one channel for directing related operations.5. UNITY OF COMMAND: Receiving of orders from only one boss.6. SUBORDINATION: Of Individual to general interest.7. REMUNERATION: Fairness of compensation to workers and employers.8. CENTRALIZATION: Extent of concentration of authority.9. SCALAR CHAIN: Lines of authority in organization chart.10. ORDER: Giving places for everything and everybody.11. EQUITY: Fairness and justice to subordinates12. STABILITY OF TENURE: Control of labour turnover13. INITIATIVE: Ability to conceive and carry out plans

14. ESPRIT DE CORPS: Is to develop the spirit of team work or concept of "in union there is strength".

Other members of the school are Frederick Taylor (1919) Galic and) Urwich (1937), Koontz and Cyril O. Donnel (1968) etc.Critics: Mintzberg (1975) one of the strong critics of the school claimed, "Fayol's

elements of management tell little about what managers do at the best they indicate some vague objectives manager have when they work.He further claimed the work of manager is:"Great pace unrelenting, varied, fragmented and brief.The manager concentrates on current specific, and adhoc issues and relies on verbal forms of communication".These characteristics are at variance with Fayol’s management elements (planning, organizing controlling etc.). Other critics are Herbert Simon (1945) Ernest Dale (1959). George Terry (1968) etc.The classical organization theory and the principles of classical organization have been described as more appropriate for the past than the present. They have been also criticized as being too general for today's needs.CONTRIBUTIONS: Irrespective of what critics say, the school has provided:1. A body of management principles,2. What managers do at work, and3. Has identified management as skills that can be taught2.2 THE BEHAVIOURAL SCHOOL (1960s)

The school was concerned with ways to improve working morale in order to increase productivity. Major contributors of the school areElton Mayo (1953) Kurt Lewin (1951) Chris Argyris (1964), Rensis Likert (1967) Douglas McGregor (1960) and Frederic Hertzberg (1996) etc.Elton Mayo and the Hawthorne experiment tailed to explain productivity as a function

of illumination but discovered the importance of the informal group and the adequate communication between the worker and management as the central issues in industrial relations.Kurt-Lewin's force field theory says, human behaviour (B) is a function of a person (P)

and his environment (E) or the behaviour environment (E) or the behaviour is a result of equilibrium-l between DRIVING and RESTRAINING forces of the environment. Chris Argyris theorized that an effective leader will help move people from a state of immaturity (dependence) towards a state of maturity (independence).Rensis Ukert developed a model of four systems of management which he described in systems one through four, as:1. Exploitive authoritatively autocratic managers2. Benevolent authoritative by managers with little confidence in subordinates,

3. Consultive, by managers with substantial but not full, confidence in subordinates, and

4. Participative, by managers with complete trust in subordinates.Douglas McGregor examined the assumption about human behaviour which underlie managerial action in his "Theory x" and "Theory Y" The traditional concept of administration by Fayol is based on direction by management/ Douglas suggested, Theory Y assumption in "integration" to replace direction and control. Frederick Herzberg developed the two-factor theory to explain mo ovation at work. The conclusion had been that job content must be enriched to increase job performance.Contribution: The school stressed the importance of human and social factors in industrial relations. It also identified sources of motivation and leadership Criticism: The school over emphasized the role of leadership, and underplayed the role of technological structure and task nature in influencing productivity.

2.3 THE QUANTITATIVE AND SYSTEMS SCHOOL The quantitative group employed mathematical models or operations Research (OR) to solve decisional problems. The systems approach emphasized that the activities of one part of the organization affects the activities of every other part. The importance of feedback in quality control and computer memory in aiding managerial decisions are sure bits or evidence of systems contribution to management.Contribution: The use of O.R. and the computer have increased the capacity of managers to cope with complexity or problems and environmental influencesCriticism: The Chief limitation lies in the fact that there still are many behavioral problems that cannot be solved using mathematical approaches2.4 THE CONTIGENCY APPROACHThis approach was developed by researchers and consultants who tried to apply the concepts of the main schools of thought to real life situations. They found there is not a single design that is best for all situations. Solutions to problems depend on the particular situation of environment. Contributors include:

(i) Joan Woodword (1965) who showed that organizational structure and human relationship were a function of the existing technology.

(ii) Fiedler (1967) who theorized that leadership situation is contingent upon the position power, the task structure and leadership member relation,

(iii) Lawrence and torch (1967) who showed that the degree of differentiation may be contingent upon the variability of the environment.

(iv)Rosemary Stewart (1982) who found that similar Jobs may be undertaken very differently by individual, managers not just in terms of styles but in the kind of tasks they initiate emphasize, or neglect. Her argument has been that managerial

effectiveness is contingent upon choices managers have and the recognition of

demands and constraints implicit in the jobs.Contributions: The approach is a product and the best amalgam of all the. other schools. Members of the school (also called the situationalists) recommend the rejection of "the one best way to organize under all conditions" and emphasize the consideration of organizational members and the external pressures facing them in reaching decisions.2.5 COMPARATIVE MANAGEMENT (CPM) AND ITS RELATIONSHIP TO SCHOOLS OF THOUGHTThe essence of CPM is to explain how managerial activity, effectiveness and efficiency, vary divergently between different periods of management evolution. In the 1960s, many management practitioners and theorists produced volumes of ideas, principles, theories and concepts in management that were unrelated, different, uncoordinated and even controversial that some writers like Luthans 1 975) and Koontz (1961) described the situation as “A jungle of management theories”. This can be demonstrated by the one best way to organize as suggested by the scientific management school and the varied bureaucratic principles of the classic organization theorists and the barrage of theories from exponents of behavioral scienceMajor reasons for such confusion- originated from the fact that most of the writers were from different locations. Fayol from France, Havard study from the US and Woodward from Britain, were writing independently of each other’s work, and at different times.A major function of CPM is to explain why management Practitioners think in a certain way at a particular time and place and differently at other times. CPM noted that the industrial revolution provided the industrial climate that required labour intensive machinery to cope with productivity. Hence the concern of scientific management school was with the best way to achieve productivity. Soon the employees of the young industries were over worked with only little time for rest and recreation.Workers complained and the Human relations and the behavioral schools expressed more concern for people than for the cask. They provided the barrage of theories and the confusion that followed. For each emerging school, CPM provided criticisms that led to corrective actions for management improvement. The system schools noted the need for the inter-relatedness of units rather than the departmentalization of organization of the universal school, while the situationalist attached conditions to achieving best designs for best results, contrary to the one best way approach advocated by management scientists. With regard to the time element and planning, there was nothing systematized

procedure and process. At times there were lags between a discovery and its application or usefulness. Fayol had identified management functions as planning, organizing controlling as early as 1916 but the idea did not get to management mainstream in the US until about the 1950s. He even had said "there is nothing rigid about management before the contingency school. Part of the effect of time has been shown in the

usefulness of concepts at one time and not at another. Fayol's bureaucratic organizational approach was good at his time when business environment was systematic appropriate unlike what since 1960 has been the case a state of dynamic and unpredictable business environment, where only the contingency approach management. Hence the situationalist concept seems the latest and the accepted approach presented as an amalgam and product of the other schools.Finally, CPM shows the varying limitations of knowledge, skill availability and technology, and their infrastructures on the practice of management.Globally sponsored researchers have enhanced business schools' knowledge of management. Technology has provided quality goods at unprecedented rates, while communication and television have brought marketing and promotion of goods to most house-holds in the nooks and corners of the globe.CPM has also noted, as major flaws in the contigency approach, that the concept covering all situations is so broad that it tells little that People do not know. It also tends to eliminate possible existence of absolutes. See Ernest Dale (1959)It discourages moves to discover courses of environmental difference of universal principles because the concept relies too much on judgement of managers for the application, of principles.

2.6 Assignments1. Explain in full the propositions of the classical school of thought.2. What are the contributions of the behavioural school of thought to management?3. What is the relationship of comparative management to management school of thoughts?2.7 Quizzes1. Highlight the 14 principles of management as propounded by Henry Fayol.2. Highlight the contributions of the quantitative and systems school of thought to

management

CHAPTER THREECOMPARATIVE MANAGEMENT THEORIES AND MODELS

3.1 INTRODUCTIONThis chapter provides the major models and summary of the orientations on theoretical frameworks which in the past three decades have been employed to advance the theory of comparative or international management.In the 1960s there was proliferation of different conceptual approaches to comparative management theories. Models were designed to explain these CPM theories. A model being a standard set for imitation or comparison provides simpler description of an otherwise complex system. It hence became handy for use in the identification, detection and evaluation of uniformities and differences of these theories. Because theories are systematic groupings of interpedently concepts together significant knowledge, they became attractive knowledge to researchers for use in conjunction with models in the study of CPM.GROWTH: The study of management as a discipline is a recent event. CPM's stud is even more recent, starting about the 1960s.3.2 MAJOR APPROACHES IN THE STUDY OF CPMJust like there were different schools of thoughts on the study of management, so are different conceptual approaches to the study of CPM. The different orientations and classifications to the study of CPM are those that had been identified some twenty-five years ago. Hans Scholl Hammer (1969) wrote about the Comparative Management. Theory jungle and identified four different conceptual approaches namely: Socio -economic, Ecological, Behavioural, and Eclectic-Empirical approaches.

3.2.1 SOCIO-ECONOMIC APPROACHThe starting point can be traced to the works of Harbison and Meyers (1959). They identified the manager as a critical factor in achieving economic success. The manager is to them, a catalyst to the interaction existing between economic and social environments to bring about economic change. Their major hypothesis have been that economic progress and industrialization depend on managers. They argued since it is the manager who takes risks, handles uncertainties, plans, leads and coordinates and also controls economic resources, exercises authority and power and leads or takes decision for the organization, then the relative level of economic activity and achievement, depends on the intensity of utilization of the manager, the degree of exercise of his authority and the level of the use of the power as group members of the elite. Other members of this school are David McClelland (1961), Everett Hageh (1962).MERITThe school provides analytical instruments for the study of the sociological and economic factors that influence managerial behaviourDEMERIT

Determine

i) The results have been found ambiguous ana incapable of supporting predictions, ii) The approach does not pay equal attention to individual differences in

managerial behaviour and interfirm differences in a given culture.iii) Discussion of environmental differences is restricted to sociological and

anthropological aspects.

3.2.2 THE ECOLOGICAL APPROACHThe pioneers of this approach are Professors Richard Farmer and Barry Kichman (1965). The approach emphasizes the interaction between a business organization and its environment and the opportunities and constraints this has on managerial effectiveness. The main concepts are shown in the model

The basic hypotheses of the authors have been that:1) The external constraints of the environment (educational, sociological, legal-

political and economic factors) affect both managerial effectiveness and elements of management process.

2) Elements of management process defined as planning, organizing, staffing, directing etc. will also affect managerial effectiveness.

3) Managerial effectiveness will in turn determine a firm's efficiency and consequently the efficiency of the country or nation. The last point assumes that

Affect

SYSTEM EFFICIENCY

the aggregate efficiency of a nation is a summation of the individual economic units;

3.2.3 KOONTZ MODELKoontz (1965) employed a more complex model to achieve more accurate results from analyzing the universally and transferability of management fundamentals.

Koontz hypotheses have been that: 1) Organizational activities can be grouped into two; managerial or non-managerial

practices which affect each other.2) Lither or both practices can cause enterprise effectiveness 3) Non-managerial activities will be affected by enterprise function science.

a. Managerial activities will be affected by management science.4) Managerial and non-managerial practices will be affected by human and material

resources and the constraints of environment.MERITKoontz model unlike other ecological models has been successfully used to explain the universality and transferability of management practice. It identifies both constraints and opportunities in the environment, and other factors that contribute to organizational effectiveness.DEMERITThe ecological approach ignores that manages (or management) could have active influence on the environmental constraints, instead regards an enterprise as a passive creature of the environment.The approach has failed to explain and define the inter-relatedness of environmental conditions in its analysis and thus renders it empirically impossible to evaluate precisely the impact of constraint of management practice.3.2.4 THE BEHAVIORAL APPROACHThe scholars of this school were concerned with the study of typical behaviour pattens and the attitudes of managers in different cultures and the manager’s interaction with individuals and groups in their environment.Anant Neghandi and Bernnard Estafen (1965) in their study of American Know-How in different cultures have employed three factors;1. Management philosophy, defined as the expressed attitude and relationship with

consumers, suppliers, distributors, government union, leaders, community, etc.2. Managerial effectiveness expressed in terms of profitability or change in profit and

sales, employee’s morale, public image of company, etc. and3. Managerial functions, meaning (planning, organizing, controlling, staffing,

etc.)The main hypothesis has been that management effectiveness depends on managerial practices and behaviour while executing management policies and practicalising its philosophies across nation; boundaries.Other writers are Mason, Haire Edwin Ghiselli and Lyman Porter1969) who looked at managerial behaviour, attitudes and satisfaction in 14 countries and concluded that there is high degree of similarities but at the same time, exist substantial national and culture differences.Also, Howard Perimutter (1965) and Hans ThoreIli 1966) identify three management philosophies of MNCs. An ethnocentric management philosophy attempts to implement the same values policies, sentiments, etc. as adopted by parent company. It hence exhibits attitudes of superiority that are regulatory to host country.A polycentric philosophy, exhibits attitudes that recognize environmental differences and hence shows a rather permissive attitude when in Rome, do as the Romans type of attitude. A. Geocentric philosophy accepts that differences in culture are a reality and

that culture is not superior to each other but is just different. They exhibit co-operative behavior.The author's conclusion has been that both polycentric and ethnocentric management philosophies give rise to conflict situations whereas geocentric philosophy will lead to more desirable result

WEAKNESSThe concepts of the Behavioural approach are not comprehensive enough (e.g. Neghandi-Estafen) and the variable/factors are arbitrarily selected. There is the danger of over-emphasis on socio-psychological relationships.MERITThe variables are controllable and hence can be used for empirical investigation, to achieve a large body of knowledge.3.2.5 THE ECLECTIC EMPIRICAL APPROACHThe contributors using this approach are many. They employ empirical investigation in looking at managerial attitudes and practices in various countries. The attempts are eclectic since they have been concerned with practical the broad field of CPM and have not come up with comprehensive CPM concept.

THEORIES OF COMPARATIVE MANAGEMENT The Universalistic Theory of Management The universalistic theory of management claim that the phenomena of management and organization are subject to the same universal laws everywhere in the world. An example is the positive relationship between the size of an organization and its degree of internal differentiation, which has been found in, many studies. Universalistic theory posits that this relationship is valid everywhere in the world, because it is based on fundamental characteristics of human behavior Universalistic theory tend to predict that cross-national differences in management and organization, in so far as they exist, will disappear in the future. A driving force for this homogenization process is globalization. As more and more markets become subjected to world-wide competitive pressure, less efficient ways of management and organization will give way top best practices, regardless of the nationality of the company, management or employees. Existing cross-national differences may be seen as temporary disequilibria, which will disappear when obstacles to the free market are removed.

Universalistic Theories – The Contingency perspective The contingency approach was developed by the Aston School in the 1960s. Much of the contingency theory research studied organizational structure and for this reason is usually referred to as structural contingency theory. This theory posits that, given similar circumstances, the structure of an organization – that is, the best patterns of control, coordination and communication – can be expected to be very much the same wherever it is located. (Hickson, et al., 1974). The theory further posits that, if they are to be successful, organizations, must structure in response to a series of demands or contingencies posed by then scale of operation,

usually expressed as size, the technology employed and the environment within which operations take place.

The contingency theory states that the mechanistic structure (hierarchical, centralized, formalized structure) fits a stable environment because a hierarchical approach is efficient for routine operations. Given the routine nature of operations, the management at the upper level of the hierarchy possesses sufficient knowledge and information to make decisions, and this centralized control fosters efficiency. In contrast, the organic structure (participatory, decentralized, unformalized structure) fits an unstable environment and situations of high task uncertainty. A major source of task uncertainty is innovation, much of which comes from the environment of the organization, such as technological and market changes.

3.2.2 Strengths of Contingency Theory The strengths of contingency theory are that the theory is straightforward and the methodology, though complex, is highly standardized. The various dependent and independent variables are operationalized so that they can be quantified and measured in a precise way (i.e. by size or number of employees engaged). These strengths gave the contingency approach considerable influence, and for a long time, it gave the approach advantage over culture, which had remained both theoretically and methodologically unsophisticated.

Weaknesses of the Contingency Theory The contingency approach, however, also has numerous weak points and blind spots. It has been pointed out that, although, this theory is able to show the consistency and strength of correlation between the two sets of variables – that is, between contingency variables such as size, or technology and the structural features of an organization – it has never provided an adequate explanation for this. Furthermore, the theoretical status of contingencies has remained uncertain. For instance, are they imperatives or do they merely have the force of implications if a certain threshold is crossed? In addition, the contingency approach only elucidates properties of formal structure and neglected informal structure.

3.3 The Particularistic Theory of Management The particularistic theory of management, on the other hand, predicts that cross-national differences in management and organization will persist. The reason is that management and organization reflect expectations and preferences that differ between countries. This theory strongly believed that organizations and management in different countries can differ fundamentally, and that different explanations are necessary for different countries. Furthermore, particularistic interpretation of organization and management imply that history matters, as national systems of management and organization are pat-dependent. For instance, the question may be asked whether Japanese management and organization can be truly understood without

taking into account Japan‘s late industrialization halfway through the nineteenth century, leading to dramatic changes in a society that still bore the characteristics of the feudal era.

3.3 Assignments1. Explain in full, the socio-economic approach in the study of comparative management

highlighting the Merits and Demerits2. What are the basic hypotheses of the authors of the ecological approach to the study of

comparative management?3.4 Quizzes1. Explain briefly, the eclectic empirical approach to study of comparative

management2. What are the major hypotheses of the Koontz model to the study of comparative

management? Highlight the merits and demerits also

CHAPTER FOURINTERNATIONAL/COMPARATIVE MANAGEMENT IN SELECTED

COUNTRIES4.1 INTRODUCTIONSince Business environment is dynamic the enterprise and the analysis of its management cannot remain static, changes therefore do occur over time in societies all over the world. A practice that is traditional in one country today may be shared or copied by more than four or five countries during a decade, especially if it is conducive to profitable business.4.2 JAPANThe geographical and historical back grounds of Japan have not been favorable to the business success of Japan. Japan with a small area of about (145.870 square miles or 377,801 square kilometers) has very poor natural and mineral endowments has restricted space area for its huge industries.With regard to its-historical development it has the unique expends of being the only nation whose largest industrial cities (Hiroshima and Nagasaki) experienced the annihilation of modern atomic bomb, of the 2nd world war. The country was militarily and physically occupied. The post war government and business were disorganized and messy.Japan resumed its business activities in 1951. It was not until mid-1980s that a real' surge in Japanese business occurred. Between 1985 and 1989, Watanabe, Susumu (1993) claimed that Japanese overseas direct investment (ODI) increased more than 400% of the world. Its business success was a feat that attracted focus of intense scrutiny of its business strategy, operation and management at home and abroad. Even America countries felt compelled to be grossly involved in such studies.A REVIEWHow the Japanese managed their business is better considered through the administration of functions of business, namely:(1) Production (2) Personnel (3) Marketing and (4) Finance.PRODUCTIONImportation of technology: The major factor responsible for the growth of the Japanese industries is technical catch-up. Inchkawa (1983) claimed the Japanese imported technology from the highly developed countries and applied this to their production system and process and improved upon them. This stimulated investment had promoted rapid economic growth. They also employ quality circle.QUALITY CIRCLE (QC) QC is an arrangement whereby the collective wisdom of employees are pooled together in order to achieve quality goods, at low cost and in great volume. Japanese management is very enthusiastic about quality control. They ensure sectional managers, fore-men and

regular workers meet regularly to plan quality into their design, build quality into the production and inspect for quality in the products. Their product are reliable and durable. Japanese firms try to achieve “no defect production” and attempt to eliminate waste in all the business activities through the Just-in-Time (JIT) production system.JUST-IN-TIME (JIT) PRODUCTION SYSTEMThis system is employed in the manufacturing process and its suppliers deliver their raw materials or components and parts to the production line just-in-time to be used or assembled. It avoids storage and its cost, for the raw materials and assembled goods. It also reduces production and delivery time. In general, the JIT is an attempt to eliminate waste in all the business activities. According to Watanabee (1983) in order to make JIT work the Japanese ensure:

i) The quality of the parts is very high and they employ team work based on flexible task sharing

ii) Product design and production process are simplified to enlarge the scope of low-cost automation

iii) Also, the suppliers are reliable and have dependable relationship with the producers and

iv) In general, they are both located near the producers or steady transportation is assured to ensure zero inventory.

PERSONNELRecruitment and EmploymentThe Japanese, employ lifelong Employment technique.In this technique the Japanese employ their workers from new graduates and are given employment in one enterprise till they retire while they are employed, they will have job security, and would not be sacked even during depression. Watanabee ( 1993) claimed Japanese firms may stick to their no-lay-off rule more firmly in developing countries. Even at the expense of profitability, they sometimes try to maintain their work force. In order for this to work well, emphasis is placed on training and retraining programmes to develop the skills of the workers.

PROMOTION AND WAGE SYSTEMIn Japanese industries wage systems are based largely on seniority. Promotion takes place at regular intervals and the basic criteria being mainly the length of time spent in the service of the company.The security system provides privileges for long service older employees. Executive positions are occupied by the older serving employees. However, there is a mandatory retirement age system most employees are retired at the age of 55 years. The wage system is becoming a controversial issue, particularly in their subsidiaries abroad. Host countries prefer that promotion be based on merit.

DECISION MAKING PROCESSIn Japanese companies, joint decision-making approach, ‘the Ringi System’ is employed. It is also called “the Bottom-up approach” because it is an approval seeking process where a proposal (ringisho) prepared by a lower functionary works itself up through an organization hierarchy in a snail-paced manner (Akpala 1987). At each level, it is examined by proper official who may if necessary, send the proposal to the initiator for more information, then make suggestions, and indicate his approval by fixing a seal. The proposal then passed up until it gets to the desk of the top executive. If the proposal is approved, it is returned to the initiator for implementation. The implementation is swift since approval of proposal is based general consensus at every level.PETERNALISTIC MANAGEMENTThis system of management is one in which the managers express concern and takes cognizance of workers needs. It is believed showing concern for employee’s wellbeing and providing them their needs is essential to attaining productivity and high standard, in the practice of this concept, Trade unions are seen as friends and not as enemies. Managers view themselves and members of unions as members of one big family. Hence strikes are very rare in japans enterprises.4.3 THE UNITED STATES OF AMERICAThe United States (US) is composed of 52 states forming a Federal Republic. US is the fourth largest country in the world. It occupies an area of about (3,679,192) square miles or (9,529,063) square kilometers in North America. It is bounded in the North by Canada, on the East by Atlantic Ocean, on the West by the Pacific Ocean and on the South by Mexico and the Gulf of Mexico.U.S is one of three super powers of the world. It is rich in nature resources, has enormous agricultural output and highly developed industry. It is the world's second largest petroleum producing nation with its major oil fields located in Alaska, California, the Gulf of Mexico, Louisiana and Oklahoma. It has large iron ore deposits in Minnesota and Michigan. Its major industry is in transportation; motor vehicles, ships, aircraft and space equipments.PRODUCTIONU.S. is endowed with abundant natural resources and industrious work force. The Americans are hard working. They belief that hard work is a virtue and that persistent, purposeful effort is necessary to achieve high goals. The American use their technology to produce for the comfort of their people.An emphasis is hence placed on production, in large quantity but sometimes to the neglect of high quality. Such mass production though is accompanied by social benefits like increased standard of living is also according to Nowotony (1964), leading to excessive standardization and over stifling individual initiative.

QUALITY CONTROL

Although quality control is claimed to originate form U. S. It has not been perfected there as in Japan. The Americans do not provide adequate service support system to their products Hence their products suffer at international competition.PERSONNELThere are two areas that show the characteristics of personnel administration of US organizations namely training and staffing.Great importance is placed on training of workers. However, US companies abdicate the training of new workers to the public and Rational School system. Management tends to avoid technical training because of the cost and fear of losing graduates of such training institutions to other companies. U.S. companies therefore experience severe shortage of the most skilled workers.STAFFINGThe Americans believe that job applicants should be employed only because they are the best qualified persons available. Family connections, friendship and sponsorship of an influential person, are never considered in selection. The workers feel if you don't like a job you can always quit. The employer also has a right to fire the non performing employee without any guilt feeling. However, while on job the American remain loyal, committed and dependable.MANAGEMENTThe American tradition holds that all men are born equal. Neither noble birth, nor advanced age, gives an individual the right to tell others what to do.In U.S., authority is equated with hierarchical position. Top managers formulate company policies, set objectives and issue orders. Decisions are made from the top by a few people and passed down. Communication is mainly in writing and is top-down. Decision making is swift but the implementation is slow since they are affected by those who did not partake of the initial decision.Another outstanding feature of the American administration is importance attached to use of time for effective business. There should be an effective use of one’s own time. Activities are scheduled with precision, unlike in Muslim culture where lateness’s. A business activity may be ascribed to the will of Allah.INDUSTRIAL RELATIONSTrade unionism is strong in U.S. because employers care more about the productivity and profit level than for employees. For them, the objective of an enterprise is ‘Maximum of Profits’.PROMOTIONIt uses the merit system as a method of advancing their workers. Length of employment is less of importance. The merit system is based on rational appraisal of individual performance. It is done yearly.Even though the above, are traditional and customary with U. S changes have occurred with great modification of these practices.

4.4 GERMANYIt was rebuilt almost from scratch after the World War Il that ended 1945. Today Germany is one of the most industrialized nations of the world, and certainly the leader of the European economic immunity. It has become a major economic power of the world. economy.

Contemporary writers, looking for the qualities, traits and values of Germans which earn them the miracle transformation, have described them as neat and meticulous [Hayes and Limprecht (1982) and hardworking, thrift and obedient to authority. Hodgetts and Luthans (1994): Others noted that German leadership is worker centered and authoritarian and link their prowess to attitudes of "we are in it together" imbibed during the post-world war Il occupation.The truth is German success is the result of their outstanding managerial capabilities shown in the functional areas of business production, marketing and personnel (training, development, staff and industrial relations).PRODUCTION AND MARKETING

The German managers and manufacturers believe that the essence of production is to provide goods and services of high quality. and value that will satisfy their consumer wants They therefore ensure that their goods are well engineered, solid and provided with superb after sales service. They also ensure that the goods are delivered on time. They employ crafty management strategy that would bear their competitors in the scramble for market share. They achieve competitive position by offering their products for sale at low profit margin with a long span guarantee.Another issue distinct from those mentioned is that the German possess technical competence at all levels of the organizational hierarchy.Workers at managerial levels must have had a masters degree in their disciplines while their tradesmen must have attended vocational school for 3 years and passed state-set trade exams. In effect, the German production system is manned by competent works at all levels.In discussing the German way of doing things Limpretchand Hayes (1982) focused on the German attitude to work. They claimed German managers and workers insist that "what goes out of the door of their factories be as dose to perfect as possible’. Such an attitude had encouraged improved productivity and superior goods manufacturing that have earned Germans worldwide reputation for quality. In effect in-built quality is the chief tool that advertises German products.PERSONNELTraining and development: German managers are aware of the need to support good quality production system with real technical competent workers who are homemade tailored to their technical requirements through their apprenticeship programmes. The apprenticeship programme: is a training-employment arrangement that receive support from Government, unions and the industry. Under the system young people who are 16+ years old, leave full-time school to start a three-year apprenticeship programme

While on the course they spend an average of four days a week the industry doing the practical aspect of the job. Once a week the apprentices attend theoretical courses in a vocation school whose curriculum is jointly planned by management, trade union association and the state. e programme is a continuation of the basic schooling with an emphasis on technical knowledge and job skills. It provides an adequate qualification for youth employment. The programme has to be supplemented with additional education to form a base for employment as a supervisor or a first line manager in Germany. The vocational academy programme is being experimented to meet this need by teaching managerial skills.They significance of the apprenticeship system lies in its ability to build a work force that is young, highly skilled, technically proficient and versed in the theoretical principles of their professions that they can adapt easily to new technological processes. The programme has made youth unemployment of Germans the least in the industrialized world.

INDUSTRIAL RELATIONSThe codetermination process is a provision by law that compels that workers should be represented in the supervisory boards and executive committees that are responsible for decision making in large organizations in Germany. By the 1951 and 1976 acts managers are required to negotiate at the plant level with work council/ majority of whom are workers such deliberations are further submitted for scrutiny by supervisory boards (Boards of directors) fifty percent of whose members are workers-elected representatives. At least one of the employee-seats is held by an "executive" who is expected to vote with the stock holder representatives. The Act also prescribed the procedure for dispute settlement.The objective is to reach decisions by consensus and avoid conflict and thus achieve industrial peace in which workers can adapt their skills to changing technologies and circumstances.COLLECTIVE BARGAINING In Germany collective bargaining takes place at the industry level. Wages, hours and working conditions are negotiated by trade unions and employers’ organizations. According to the Works Constitution act of 1952, agreements between works council and management must not deal with wages or other matters normally included in collective bargaining agreements. Strikes a e rare and may only be conducted by unions in collective bargaining. Disputes are settled by conciliation boards. However, disputes on the interpretation of a collective bargaining agreement are resolved by the labour courts.ADMINISTRATIONThe leadership style in Germany is still extensively patriotic and authoritarian. Workers’ rights are established by statutory provision. There is a general lack of delegation of authority and work centered behaviour designed to ensure task accomplishment. Even

though changing, there is a general attitude that one can obtain most of the knowledge, necessary for managing the enterprise only through experience. (Fassbendei, 1972).4.5 INDIAIndia is a densely populated country located in Southern Asia. It has a population of about 875 million people and an area of 1.27 million square miles. Over 80% are Hindus speaking Hindi language. The country was formerly a British colony but became independent in 1947. It has a large number of educated people and English is the official and international language of business.Economic Development: At independence in 1947, India had an industrial base of about 700 textile mills and one iron and steel plant. The government was the key regulator, investor and innovator employing import substitution and export promotion as strategy to economic growth. By 1977, India became the 10 th largest industrial producer and fourth in world food production and had $4 billion in foreign reserve. (Nambudiri and Sayadain (1978)).Thirteen years after, the story had changed. The government's socialistic approach -to. economic development has not worked. The government took loan from World Bank and aid from IMF. By 1989, the country was in a serious balance of payment problem and a high fiscal deficit. By 1990 the foreign exchange reserve was almost totally depleted; to worsen the situation the political situation was not stable. Two general elections were held within three years.BUSINESS IN INDIAIn the past, (1970s-80s), doing business in India was quite difficult. In the 1970s, lots of red-tape barriers were created for those applying to enter India market, e.g. the U.S. Razor blade company’s approval took 8 years [Hodgetts and Luthans 1995], the government also required that MNCs could not hold more than 40% of ownership of any business. In consequence, many MNCs including Coca-Cola and IBM left India. [Adit Jain 1995].A TURN AROUNDPrime Minister Rao administration came into office in June 1991 abolished the licensing requirements and removed the limitation set on buiness ownership for MNCs. A fringe investment promotion board was established in the prime minister’s office to review and speedily approve foreign investments, applications. The new trade policy liberalized import and export trade.IMPACTThe effects of the change has been tremendous. There has been an in-rush of investment into the country. IBM and Coke who left India in 1977, returned together with a host of multinational corporations from different sectors. Foreign investment inflows exceeded US $4 to 5 billion per year, Addit Jain (1995).PRODUCTION AND MARKETING AND FINANCEFrom the 1970s, the Government strongly pursued the self reliance objective in manufacturing in almost every sector of industry. Foreign investment was rarely

allowed and even importing of foreign technology for manufacturing was carefully scrutinized. Everything that you could see around-refrigerator, television, bulbs, cars, kitchen, appliances, cement, plants etc. are crafted with pride in India, (Adit Jain 1995). A market from such a production suggested absence of competition in sale, and lack of competition for quality.However, with the new change, investment is created that brings profit and employment and eventual economic growth.

PRODUCTIVITYIn order to achieve economic growth productivity has to be encouraged and reward system may also have to be adjusted. The output -input ratio with due consideration for quality and time has long been neglected in India because wages paid to workers are low. Low productivity and absenteeism were considered as facts of life in India. However, in the new dispensation, changes are occurring to increase the workers output by, modifying the recruitment system that was focused on the caste system, retraining workers and by introducing profit sharing and other incentives.HUMAN RESOURCE MANAGEMENTThe cast system is practiced in India. It is a joint family system that encourages team work and submissive attitude towards authority. It has been found very useful in human resources management.GAIN(1) India social system(2) Rao’s administration(3) Weaknesses of the Indian management systemWorkers are generally more recruited from the member of the same caste owning a business. The major reason has been to have around people who could be trusted especially in times of crisis. However, caste recruitment has been criticized as providing a pool of people who depend on others for decision making and people who lack initiative. Another problem related to personnel management concerns the reluctance of women to work over-time and the fact that by constitution women use barred from night shifts. These are possible sources of embarrassment to MNC managers who ate liberated from such cultural practices.

LESSONSThe lessons from the India experience show:

a) That insulated economies cannot row i.e. countries who refuse and do not attract foreign investment would have their business strangulated.

b) That investors need the comfort of political stability, i.e. foreign investment wills nor goes to countries with unstable government.

c) That investor's look for markets where their business can grow.d) Business needs minimal restrictions in the flow of service goods and capital.

e) That MNCs do not necessarily have the same ambition as Host country governments for economic growth and can-shirt foreign investment to other countries.

4.6 SAUDI ARABIAINTRODUCTIONSaudi Arabia covers an area of about 86,500 sq. miles in the Middle East close to the Arabian Desert. The weather is hot with daily temperature ranging from 1000F to 1200F. The Kingdom is divided into three major regions, Western, Central and Eastern provinces. In the Western province is located-the-city of Jedda as the heart of commercial activities. In the central province, is Riyadh the capital and the seat of Government and the embassies of foreign countries. In the eastern province lie large numbers of expatriates, who work in the Arabian American oil company and at YARAMCO facilities and Jubail Industrial Complex.About 114 million Moslem Arabs, who are mainly herdsmen and peasant farmers live there, ironically, the per capital income is about $10,000. The country is the largest exporter of oil in the world. It has the second largest supply of foreign exchanges and the largest oil reserve in the world. Saudi is an Islamic State ruled by a Monarch who combines the role of the religious leadership with thatCONSUMPTION OR EXPORT BASED ON CULTUREAll goods produced for export or consumption (import) in Saudi Arabia must meet certain adaptation requirements that would make the goods meet the wants of the people.Major factors considered are the culture and climatic conditions, culture relate here to the religious beliefs, values, norms, attitude and styles of lifeSaudi Moslems do not eat pork or drink alcohol. Any business dealing in alcohol or pork cannot be allowed to operate in Saudi. In addition, any imported products having traces of alcohol or pork cannot sell in the kingdom. Ingredients labels or imported food products are scrutinized to catch items that do not conform to this cardinal rule (Secil Tuncalp 1988). All meat products imported to Saudi must have come from animal slaughtered according to Moslem rules. Perhaps for the same season the Saudis prefer fresh meat to imported frozen meat. Fresh meat from New Zealand, Australia and Turkey dominate the market. Other traits of Saudi consumer are reflected in their clothing and choice of colour. Men prefer white for clothes, red or black for caps while women use long black robes with veiled tops.

PRODUCT INNOVATIONThe weather in Saudi Arabia is very hot and humid. So, clothing whether black or white must have thin texture. White colour is the preferred choice for cars since white colour reflects heat.

The Kingdom has one of the largest markets for air conditioning equipments in the

world. The Japanese have adapted their export cars to the kingdom to have large cooling systems to prevent overheating of engines as innovation to catch the competitive market.Japanese have manufactured compass that points to Mecca, the direction for Muslims to turn to at Prayer. Japanese have also been marketing special clocks that remind Moslems of the five prayer times, Japanese computers now use Arabic language, British MNCs are also marketing non-alcoholic beer.PRICEBecause of the large market and many producers competing for market share prices of goods are low, in addition a strong factor for the low price is that Saudi Arabia is tax free i.e., no taxes are charged for the sale or purchase of goods conducted within the country. Tuncal S. (1988) suggested that Japanese electronic equipment bought in Saudi Arabia could be as much as 40% cheaper in EuropeMORALE AND VALUESAdvertisement of Tobacco smoking is prohibited, advertisement would be worded that it does not clash with social values and believes, so allusion to sex, nudity and propaganda of other religions are not allowed.SAUDI PERSONNEL ADMINISTRATIONWith big business in hand and large market to cater for, Saudi faces a need for a strong work force. However, 'skilled and educated managerial Personnel are in short supply, hence Saudi business and MNCs make use of large number in their work force.The Saudi business men in small companies base their recruitment (of indigenes) on affiliation friendship and right of birth. As a result of this approach to recruitment, a manager in most cases is unable to terminate workers who are not performing well in their positions. Companies often carry employees on their payroll who perform poorly on their jobs.LESSONS FROM SAUDI ARABIAN EXPERIENCE

1) Culture and in particular religious belief, is an important factor influencing the management of business in Saudi Arabia.

2) Integration of political and religious leadership is required to rule the Saudis successfully.

3) Liberal trade policy encourages competitive market, create values needed for quick economic growth.

4) Some degree of government control through legal process is needed to guide foreign investment needed for economic growth.

4.7 Assignments1. Write in full about Japan’s business management styles under the following headings:

Production Quality Cycle

Just-in-time production system Personnel Promotion and wage system Decision making process Paternalistic management

2. Compare management styles of United States companies with Germany4.8 Quizzes1. Compare the personnel management of companies in these two countries

Japan and United States of America2. What are the lessons from India’s experience in comparative management?

CHAPTER FIVEGLOBALIZATION

5.1 What is Globalization?Globalization is the process of extending social relations across world space. Such

extension arises from the movement of people, things and ideas.Globalization describes the interplay across cultures of macro social forces. These

forces include religion, politics and economics. Globalization can erode and universalize the characteristics of a local group. Advance in transportation and telecommunication, infrastructure, including the rise of the internet are major factors in globalization generating further independence of economic and cultural activities.

Since the beginning of the 20th century, the pace of globalization has intensified at a rapid rate.

Globalization process affect and are affected by business and work organization, economic, social-cultural resources and the natural environment.

Furthermore, the tremendous growth of population over the past several decades has been both a primary and official globalization.

The volume of goods produced has increased twenty-seven-fold from $296 billion in 1950 to more than $8 trillion in 12.2 percent in 2009. The steepest decline since world war II trade is again on the upswing.As a result of efficient production, customers around the world enjoy a broader selection of products.

Productivity and the quality of goods have increased across the globe which results in raising incomes, creating more jobs, reducing prices and increasing worker’s earning power. Trade can also bring about economic, political and social disruption.

Since the global economy is interconnected when large economics suffer recessions, the effect are felt around the world, even inefficient production is the quality of goods produces. When producing and trade decreases, jobs and business are lost.

According to Amir Z. an observer economics MS on the implementation of world trade which is very complicated and complex. The complexity in productivity and quality of goods is partly due to political and state boundaries trade, for example, cultural difference, languages, currency exchange rate, estimates, ranges and commercial law.The positive effect of globalization in productive are positive and negative5.2 POSITIVE EFFECT

1. World production could be improved2. It increases the standard of living of the citizens3. It creates job opportunities4. It makes the world a global village where everything is integrated7More profit

can be made due to enhanced technology

5.3 NEGATIVE EFFECT1. Because of the development of the foreign trade becomes freer which can inhibit

the growth of the industry2. It can worsen the balance of payment3. The financial sector is increasingly unstable4. Exacerbate the process of long-term economic growth.

In conclusion, the central operating principle of production is that commercial interest should supersede all others, we now communicate with one another through travels and trade, transporting products around the world in hours or days. We are in a huge global economy where something that happens in one area can have knock-on effects worldwide. This process is called globalization.

5.4 Assignment1. What are the challenges to Globalization for productivity and quality of goods?5.5 Quizzes1. Highlight the positive and negative effects of Globalization in production.

CHAPTER SIXCOMPETITIVE ADVANTAGE

6.1 INTRODUCTIONCompetitive advantage is a condition or circumstance that puts a company in a favorable or superior business position. Expansion is vital to maintaining a competitive advantage. Competitive advantage is a superiority gained by an organization when it can provide the same value as its competitors but at a lower price or can charge high prices by providing greater value through differentiation.Competitive advantage results from matching core competencies to opportunities

6.2 STRATEGIC COMPETITIVE ADVANTAGEWhen a firm sustains profits that exceed the average for the industry, the firm is said to have a competitive advantage over its rivals. The goal of business strategy is to achieve a sustainable competitive advantage.Competitive advantage can be gained by offering the consumers a greater value than competitors such as, by offering lower prices, or providing quality services or other benefits that justify a higher price.Competitive advantage is the leverage that a business has over its competitors. This can be gained by offering clients better and greater value.Micheal Porter defined the two ways in which an organization can achieve competitive advantage over its rivals.1. Cost: The company seeks to be the lowest producer relative to competition. Cost

advantage results from efficiency. Efficiency is the value of input to output. Efficiency is enhanced if holding output constant, inputs are reduced or holding input constant, output are increased. Output can be increased by increasing units of production, decreasing down time, etc. Economy of scale by large organization also results in greater efficiency by reducing costs.

2. Differentiation strategy: These are responses that the firm possesses. A non-price attribute that distinguishes the firm are superiors to its peers. It means offering a valued variation of the physical product. However, some products do not lend itself to much differentiation e.g. beer, notebook, paper. Some products on the other hand can be highly differentiated e.g. appliances, restaurants, automobiles, etc.Product differentiation can be done by manipulating many characteristics e.g. features, performance, style, design consistency, durability, reliability, etc. Additional service after sales can also help to differentiate a product. E.g. Mary Kay cosmetics offer skin care and glamour cosmetics similar to those offered by many other cosmetics companies but products are accompanied by informational, instructional training session provided by the consultant. Dell and Gateway claim to provide excellent technical support services to handle any glitches in their products

Focus: This directs attention, narrow product lines, buyers’ segment or geographical market. Focus will use cost and differentiation to gain advantage but only within narrow target market.The strongest competitive advantage is a strategy that cannot be imitated by other companies.

6.3 SUSTAINABLE COMPETITIVE ADVANTAGESustainable competitive advantage involves ensuring that the advantage is permanent as other firms will try to catch up with the company. Sustainability occurs when the competitors are not able to catch up or duplicate the benefits of the firm strategy. For sustainability, firm’s generic strategy must be grounded in an attribute that meets the following criteria.1. Valuable: Must provide value to customers2. Rare: It is not commonplace or easily obtained3. Inimitable: Product cannot be easily imitated or copied by competitors.4. Non-substitutable: Consumers cannot or will not substitute with another product.

6.4 GAINS OF COMPETITIVE ADVANTAGE1. Positioning is better than prospecting2. Plans fail but movement don’t fail.3. Stand on the shoulders of giants4. Becomes a people developer5. Creates raving fans and advocates

6.5 OTHER STRATEGIES FOR COMPETITIVE ADVANTAGE1. Defensive strategy: It involves skipping those advantages in place and defending what

he has by keeping the advantages away from competitors.2. Alliances: This involves entering into strategic alliance with other businesses. This

however should not lead to collision.

6.6 HOW DO YOU CREATE A COMPETITIVE ADVANTAGE?1. Review your core strengths 2. Reduce costs3. Focus on service4. Focus on product or service quality5. Differentiate your product and service6. Form an alliance with another company.

6.7 Assignments1. Compare, strategic competitive advantage with sustainable competitive advantage2. Explain the main strategies that a company can employ to gain competitive advantage 6.8 Quizzes1. What are the gains of competitive advantage to a company?

2. How does a company create competitive advantage?

REVIEW QUESTIONS1. Managerial practices refer to the way and manner managers perform their functional

activities of planning, organizing, coordinating, motivating and controlling and involves identifying the degree of efficiency and effectiveness with which these activities are performed in the dynamic business environment of various countries. Discuss.

2. How does a strategic business unit (SBU) apply strategic management concept to effectively run a business for success (Profit)?

3. Explain the concept of international business. What factors encourage a company to go global?

4. There are a number of forms in which a multinational company can involve itself in foreign operations. What are the various modes of this involvement?

5. Explain in full the factors to be considered before starting a multinational company.6. What are the major groups that the problems faced by multinational managers can be

classified into?7. The classical school of management thoughts has two branches. Discuss these two

branches in full.8. The behavioural school of management thought was concerned with ways to improve

working morale in order to increase productivity. Discuss this fully.9. The quantitative school of management thought employed mathematical model and

operational research to solve decision problems while the system approach emphasized that the activities of one part of the organization affect activities of every other part. What are the contributions and criticisms of this school of thought?

10. Explain the relationship of comparative management to schools of thought.11. The socio-economic approach to the study of comparative management can be traced to

the works of Harbison and Mayer (1959), who identified manager as a crucial factor in achieving economic success. Discuss this and highlight the merits and demerits of this approach.

12. The ecological approach emphasizes the interaction between a business organization and its environment and the opportunities and constraints that it has on managerial effectiveness. Discuss the main concept of this approach and highlight the basic hypotheses of the authors (Professor Richard Farmer and Barry Kishman)

13. Highlight the hypotheses of Koontz model and also the merits and demerits14. Explain the behavioral approach to the study of comparative management.15. Compare the management styles in two selected countries of the world.16. What are the challenges to Globalization for productivity and quality of goods?17. Micheal Porter defined the two ways in which an organization can achieve competitive

advantage over its rivals. What are these two ways?