A key value underlying the American business system is reflected in the notion of a never ending quest for improvement. The United States has always been a relatively activist society; in many walks of life, the prevailing question is can it be done better? Thus management concept reflect the belief that change is not only normal but also necessary, that nothing is scared or above improvement. In fact, the merit on which one achieves advancement is frequently tied to one’s ability to make improvements. Results are what count; if practices must change to achieve results then change is in order. In other cultures, the strength and power of those in command frequently rest not on change but on premise that the status quo demands stable structure. To suggest improvement implies that those in power have failed; for someone in a lower position to suggest change would be viewed as a threat to another’s private domain rather than as the suggestion of an alert and dynamic individual.
Perhaps most fundamental to Western management practices is the notion that competition is crucial for efficiency, improvement, and regeneration. Gordon Gekko put it most banally in the movies Wall Street Greed is good. Adam Smith in his Wealth of Nations wrote one of the most important sentences in the English language: By pursuing his own interest he frequently promotes that of the society more effectually than when he really intended to promote it. This is the invisible hand notion that justifies competitive behavior because it improves society and its organizations. Competition among salespeople (for example, sales contests) is a good thing because it promotes better individual performance and, consequently better corporate performance. When companies compete society is better off, according to this reasoning. However, managers and policy makers in other cultures often do not share this greed is good view. Cooperation is more salient, and efficiencies are attained through reduced transaction costs. These latter views are more prevalent in collective cultures such as China and Japan
Because of the diverse structures, management values, and behaviors encountered in international business, there is considerable variation in the ways business is conducted. No matter how thoroughly prepared a marketer may be when approaching a foreign market a certain amount of cultural shock occurs when differences in the contact level, communications emphasis, tempo, and formality of foreign businesses are encountered. Ethical standards differ substantially across cultures as do rituals such as sales interactions and negotiations. In most countries, the foreign trader is also likely to encounter a fairly degree of government involvement. Among the four dimensions of Hofstede’s cultural values discussed, the individualism / Collectivism Index (IDV) and Power Index (PDI) are especially relevant in examining methods of doing business cross culturally.
Authority and Decision making:
Business size, ownership, public accountability and cultural values that determines the prominence of status and position (PDI) combine to influence the authority structure of business. In high PDI countries such as Mexico and Malaysia understanding the rank and status of clients ad business partners is much more important than in more egalitarian (low PDI) societies such as Denmark and Israel. In high PDI countries subordinates are not likely to contradict bosses, but in low PDI countries they often do. Although the international businessperson is confronted with a variety of authority patterns, most are a variation of three typical patterns top level management decisions, decentralized decisions, and committee or group decisions.
Top level management decision making is generally found in those situations her family or close ownership gives absolute control to owners and where businesses are small enough to allow such centralized decision making. In many European businesses, such as those in France, decision making authority is guarded jealously by a few at the top, who exercise tight control. In other countries such as Mexico and Venezuela where a semi feudal and equals power heritage exists, management styles are characterized as autocratic and paternalistic. Decision making participation by middle management tends to be deemphasized dominant family members make decisions that tend to please the family members more than to increase productivity. This is also true for government owned companies where professional managers have to flow decisions
made by politicians, who generally lack any working knowledge about management. In Middle Eastern countries, the top man makes all decisions and prefers to deal only with other executives with decision making powers. There, one always one business wit an individual per se rather than an office or title.
As businesses grow and professional management develops, there is shift toward decentralized management decision making. Decentralized decision making allows executives at different levels of management to exercise authority over their own functions. A mentioned above, this is typical of large scale businesses with highly developed management systems such as those found in the United States. A trader in the United States is likely to be dealing with middle management and title or position generally takes precedence over the individual holding the job.