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Structuring Global Coordination [WLO: 1] [CLOs: 2, 4] Prior to beginning work on this discussion forum, · Read Chapter 5 in the textbook. · Read Success by Steering CommitteeLinks to an external site.. Many transnational firms use lateral steering groups as part of their global coordination. For this discussion forum, you are the HR director of such a transnational firm that has a manufacturing business divided into six major trades being established in your select foreign country while the corporate headquarters is in San Diego, California. While there are many management design options available to you (i.e., internal boards, formal or informal, functional councils, product development committee, a regional board, or a single person that has vertical functional responsibility for the whole operation), you will discuss the challenges in using the lateral steering group management design. In your initial discussion forum post, · Discuss at least two challenges in using the lateral steering group management design to expand into a foreign country. · Discuss one of the four critical operational domains (i.e., resource utilization, global competence manager, global account manager, or alliance manager) that require lateral leadership. · Explain how you will incorporate lateral steering into a transnational firm. Your responses should be a minimum of 300 words. Support your statements with at least one scholarly, peer-reviewed, or credible source. Introduction In Week 2, you evaluated multi-level approaches to talent management, explaining the competencies necessary to manage employees from home headquarters, employees from your select foreign country, and third-country nationals. This week you will evaluate the different characteristics needed for a company to operate in a global market—specifically how different demographics impact the management of employees. Week 3 - Weekly Lecture "We need diversity of thought in the world to face the new challenges." -Tim Berners-Lee In Week 2, you evaluated multi-level approaches to talent management, explaining the competencies necessary to manage employees from home headquarters, employees from your choice of foreign country, and third country nationals. This week you will evaluate the different characteristics needed to for a company to operate in a global market—specifically, how different demographics impact the management of employees. Globalization requires new skills for managing diversity as well as changes in how managers see business issues. It is now generally accepted that culturally insensitive attitudes and behaviors stemming from ignorance or misguided beliefs, the ‘my way is best’ or ‘what works at home will work here,' are not only inappropriate but often impact business practice badly both nationally and internationally (Trapp, 2014). Therefore, an awareness of cultural differences and diversity is necessary for the HR manager at corporate headquarters as well as in a host country location. Each of us is unique, different in many ways and yet have some things in common. Some social differences relate to age, gender, religion and cultural diversity. As HR professionals, we must keep in mind at all times that there are specific protected groups based on such things as race, disability, gender, religion and belief, sexual orientation, and age. Though not all countries afford such legal protections, many firms manage to the anti-discrimination practices of the home company policy. We must be aware of the individual differences and managing them sensitively and effectively. This is compounded when international cultural differences come into play. Managing diversity can be defined as valuing everyone as an individual, an employee, customer and client alike. “If everyone in your organization had a very linear, analytical, planned approach to completing projects and didn’t value the disruption of new ideas, your company’s next big, fresh, bold idea is not even a possibility. And if everyone in your organization had a very big-picture, strategic, intuitive approach to completing projects and chafed against the structure of project plans, then you might frequently find yourself over budget and behind schedule.” (Tate, 2015, para 2). The Cultural Environment HR Managers need to understand the way differences in national cultures can affect attitudes and behaviors in the work environment. These attitudes and behaviors, in turn, become embedded in organizational cultures and systems. National culture impacts a company in a variety of ways and, in particular, can have effects on HR policies and practices, leadership styles, managerial values, and the manner in which teams perform. Differences in national culture are visible to all of us. They are brought to us via our televisions, films, magazines, the Internet, and so forth. Travel amplifies this sense of difference; food, customs, language, housing, public spaces—all these everyday things may have to be thought about when seen through others’ eyes. We are also gaining more knowledge about different cultures through the globalization of markets, competition and the movement of people around the world. Popular media sends a message that we are all now living in a ‘global village’ in which we all buy the same products and watch the same programs on digital televisions, listen to the same music and see the same films. We are, in effect, all converging, becoming one group. On the other hand, world events show a different reality, with a movement towards divergence, especially in the area of world politics, which expose a diverse set of beliefs, customs, and values. From a management perspective, the need to take cultural differences into account is shown in the growth of mergers and acquisitions and multi-national enterprises. References Tate, C. (2015, 03.17). How to Recognize and Manage Different Work StylesLinks to an external site.. Retrieved from https://www.fastcompany.com/3043600/3-ways-to-promote-a-different-kind-of-diversity-in-the-workplace Trapp, R. (2014, June 30). Why successful leaders acknowledge cultural differencesLinks to an external site.. Retrieved from http://www.forbes.com/sites/rogertrapp/2014/06/30/why-successful-leaders-acknowledge-cultural-differences/#684b8904455a 11/10/23, 2:39 PM Print https://content.uagc.edu/print/Thomas.5874.18.1?sections=nav_44,nav_45,nav_46,nav_47,nav_48,nav_49,nav_50,nav_51,nav_52&content=all&clie… 1/27 Introduction M&As have become an increasingly popular alternative to green�ield investment for achieving international diversi�ication and growth. In 2010, cross-border M&As increased by 37% to $341 billion1 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn1) while international green�ield projects fell both in number and in value.2 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn2) The driver of this activity is of course the reduction of boundaries resulting from globalization discussed in Chapter 1 coupled with an increase in global competition. In today’s competitive environment, target �irms can no longer be acquired and left as independent operations but must be integrated in order capture their added value. However, it is the inability to effectively integrate that is the major cause of the unspectacular performance of the majority of M&As.3 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn3) And the failure of M&As can often be attributed to problems of integrating the different cultures and workforces of the combined �irms.4 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn4) In this chapter, we discuss the HRM challenges associated with international M&As and then go on to discuss the related issues in international joint ventures and other types of international collaborative alliances. https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn1 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn1 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn2 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn3 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn3 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn4 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn4 11/10/23, 2:39 PM Print https://content.uagc.edu/print/Thomas.5874.18.1?sections=nav_44,nav_45,nav_46,nav_47,nav_48,nav_49,nav_50,nav_51,nav_52&content=all&clie… 2/27 5.1ReasonsforM&As From a legal perspective, a merger occurs when two companies join together to create a new entity, while in an acquisition one company acquires suf�icient shares to gain control of the other. These ventures may be structured one way or the other for accounting, tax, or public relations purposes. However, there are actually very few mergers among equals. As indicated in the case that opened this chapter, once the agreement is signed, most mergers look very much like acquisitions with one organization the dominant partner. There are a number of reasons that �irms engage in international M&As, including response to political or economic conditions, diversifying risk, vertical integration, and reducing costs. Two of the main reasons for M&As are to achieve competitive size or to increase market share by adding brands or distribution channels.5(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn5)While larger �irms aim to gain market power by acquiring companies in areas where they are not represented (as in the case of Bancoverde), smaller �irms may try to leverage their niche competencies through cross- border deals. In this way, M&As allow a much more rapid response to the pressure of global competition than does a green�ield investment. In some industries, the key motive for an acquisition is access to talented people with the value of the deal calculated accordingly. For example, when the semiconductor �irm Broadcom bought chipmaker SiByte it was reported to have paid $18 million per engineer.6 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn6)Alternatively, the key factor in many M&As is cost cutting and workforce reduction, which may be as dif�icult in some countries as is retaining engineers in Silicon Valley.7(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn7)International mergers and acquisitions occur for both strategic and tactical reasons, while some are the result of corporate egos. Box5.1(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_45#box5.1) provides some recent examples. Box5.1M&AStrategies MarketDominance Banks and insurance companies in Scandinavia are merging across the region to create Nordic �inancial institutions, such as Nordea and SEB, in order to achieve economies of scale and control distribution channels. GeographicExpansion Brewing companies, such as Kirin, Heineken, and Interbrew, are using acquisitions to extend their geographic reach and global market share. LeveragingCompetence Foreign companies, such as GE and Axa, have made large-scale acquisitions in the �inancial industry in Japan to leverage their competence in new product development, credit risk evaluation, and debt management. ResourceAcquisition In the petroleum industry �irms such as BP and Exxon acquire existing companies with proven oil reserves as a more cost-effective way to grow than through oil exploration. CapabilityAcquisition https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn5 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn6 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn6 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_53#fn7 https://content.uagc.edu/books/Thomas.5874.18.1/sections/nav_45#box5.1 11/10/23, 2:39 PM Print https://content.uagc.edu/print/Thomas.5874.18.1?sections=nav_44,nav_45,nav_46,nav_47,nav_48,nav_49,nav_50,nav_51,nav_52&content=all&clie… 3/27 As the market shifted from voice to data transmission, European wireless makers, such as Nokia and Ericsson, acquired small start-up companies with competence in emerging data communication technologies. AdjustingtoCompetition Companies are sometimes forced into acquisitions in order to counter the acquisitions strategies of their competitors. For example Matsushita launched a series of ultimately disastrous acquisitions in Hollywood after Sony acquired Columbia Pictures. ExecutiveArrogance While most companies launch acquisitions for sound strategic reasons, there are also cases, regardless of what the press release says, in which the logic of an M&A seems to make no sense beyond the CEO’s desire to run a bigger company. Source: Adapted from Evans, Pucik, & Barsoux (2002). 11/10/23, 2:39 PM Print https://content.uagc.edu/print/Thomas.5874.18.1?sections=nav_44,nav_45,nav_46,nav_47,nav_48,nav_49,nav_50,nav_51,nav_52&content=all&clie… 4/27 5.2M&ASuccessandFailure Some M&As are successful, some have little effect on the performance of the acquiring �irm, and some are spectacular failures, such as the much publicized Daimler-Chrysler merger.8 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn8)While estimates of M&A success vary, it has generally been the case that the majority of them do not create value for the acquiring �irm, and a signi�icant number actually reduce value.9 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn9)A 1999 survey by KPMG found that 17% of deals had added value to the combined company, 30% produced no discernible difference, and 53% actually destroyed value.10(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn10)More recent research has suggested more positive results, indicating that companies may be getting better at M&A, but by all accounts failures outnumber successes.11 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn11) There are many potential causes for the failure of the combined company to achieve its goals, but they fall into four categories. These are lackofasharedvision,lossofkeyassets,hightransitioncosts, and lack ofcultural�it. First, an M&A can fail because there is a difference in the vision of what the two parties want to achieve in the combined �irm. Sometimes for the sake of making the deal, these differences are glossed over and only become a problem in the post-merger integration phase (discussed ahead). Second, the M&A can fail because assets that were key to achieving the potential value of the combined �irm are lost. These assets can be tangible—as in the case of the international division employees who left Bancoverde, described in the vignette that opened this chapter. Or they can be intangible, such as relationships with suppliers, government, or the local community; if the new organization is perceived as insensitive these relationships may be damaged. These concerns can be even greater in cross-border M&As because of different legal and regulatory environments, accounting standards, and employment systems.12(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn12)International differences also contribute to the next general reason for M&A failure—high transition costs. Linking the new entities can be dif�icult across national contexts and can also incur higher coordination costs because of geographic distance. And managers can be so consumed with overcoming these coordination problems that they become distracted from the original goals of the M&A. Finally, the integration of organizational cultures, human resource systems, managerial views, and other aspects of organizational life can lead to severe organizational con�lict.13(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_53#fn13)The signi�icant cultural mismatch between Daimler and Chrysler and the inattention to people-related dimensions is