Chapter 12 THE DECISION MAKING AND CONTROLLING

1. Chapter 12 THE DECISION MAKING AND CONTROLLING

2. INTERNATIONAL DECISION MAKING British are highly decentralized French tend to be centralized Germans are fairly centralized Swedes are also centralized Japanese decide by consensus

3. CENTRALIZATION Large company Homogeneous product lines Large capital investment High degree of technology DECENTRALIZATION Small company Heterogeneous product lines Small capital investment Moderate to low degree of technology FACTORS AFFECTING DECISION MAKING

4. TQM DECISIONS U.S. workers value individual recognition and praise Japanese use continuous improvement of quality Rewards and Recognition Manufacturing U.S. has greatly improved the quality of their cars Japanese prefer group rewards

5. QUALITY OLD MYTH • Quality is the responsibility of the people in the Quality Control Department • Training is costly • It is human to make mistakes • Quality improvements are made in small, continuous steps • Quality improvement takes time • Haste makes waste • Suppliers need to be price competitive

6. QUALITY NEW TRUTH • Quality is everyone’s job • Training does not cost, it saves • Total customer satisfaction is a standard that should be vigorously pursued • In improving quality, both small and large improvements are necessary • Quality does not take time, it saves time • Thoughtful speed improves quality • Suppliers need to be quality competitive

7. TYPES OF CONTROL Direct/Indirect Internal/External

8. INTERNAL dominating attitude bordering on aggressiveness towards the environment focused on self, function, one’s own group, and one’s own organization discomfort when the environment seems “out of control” or changeable Win some, lose some EXTERNAL flexible attitude, willing to compromise and keep the peace focused on others such as customers, partners, and colleagues Comfort with waves, shifts, and cycles, which are regarded as “natural” Win together, lose apart

9. Direct ControlsInvolves face-to-face or personal meetings to monitor operations Ex.) Monthly management meetings Ex.) Visits by top executives to overseas affiliates or subsidiaries Indirect ControlsUse reports and other written forms of communication to control operations Ex.) Monthly operating reports that are sent to the home office Ex.) Balance sheet, income statement, cash budgets

10. CONTROL IN U.S. MNCs Control in U.S. MNCs focuses more on the quantifiable, objective aspects of a foreign subsidiary Requires more precise plans and budgets Requires large central staffs and centralized information processing capability

11. CONTROL IN EUROPEAN MNCs Requires a high level of company-wide understanding and agreement regarding appropriate behavior Requires more decentralization of operating decisions Requires more capable expatriate managers who are willing to spend long periods of time abroad

12. CONTROLTECHNIQUES Financial Performance Quality Performance Personal Performance

13. FINANCIAL PERFORMANCE • Based on profit and return on investment • Profit= Total Revenues - Total Exp Using Financial Performance alone when controlling a subsidiary for effective performance can be misleading

14. QUALITY PERFORMANCE Taguchi Method: Brainstorming and a few experiments seek to quickly find the problem. Production problem Brainstorming session Employ Taguchi Experimental production runs Confirm results

15. PERSONAL PERFORMANCE 1. Success attracts the best people--and the best people sustain success 2. The top companies know precisely what they are looking for 3. These firms see career development as an investment, not a chore 4. Whenever possible, these companies promote from within 5. Performance is rewarded