Part 2
Cases

Case 1A–Joint Venture #1: The Corning-Vitro Divorce

This case analyzes the business venture and subsequent breakup of Corning Glass Works, and American company, and Vitro, a Mexican firm.

Suggested Questions for Class Discussion

1. Did Vitro and Corning do enough research before engaging in a joint venture?

2. Was it wise to start with such a large venture?

3. Could some of the problems have been mitigated through cultural training during the joint venture?

4. Was two and one half years long enough to try to make the joint venture work? Was it too long?

5. What can the two companies do to prevent such situations from occurring in the future?

Case 1B–Joint Venture #2: The Volvo-Renault Marriage

This case presents an overview of the successful alliance between two automobile makers, Volvo and Renault.

Suggested questions for class discussion:

1. How does this case differ from the situation presented in Case 1, the Corning/Vitro joint venture?

2. Did the “chemistry” between the two top executives contribute to the overall success of the venture?

3. Did not having a provision in the agreement for dissolving the relationship contribute to its success?

4. Did the purchase of each other’s stock help ensure success?

Case 2–Moto Coming to America

This case gives a detailed account of the “courtship” that occurred between an American company (Allmack) and a Japanese company (KKD) before an agreement was finally signed.

Case Questions

1. What was Moto’s purpose and agenda for the first meeting with Crowell? How does he try to implement his agenda?

Although not specifically stated in the text, it appears that Moto intended for his first meeting with Crowell to be a “getting to know each other” session, during which they could find some commonality. Hence, the reason for choosing a gift that had a connection to the hilly, snowy places where both men grew up.

2. What happened to introduce “noise” in the communication from Moto to Crowell, and then from Crowell to Moto?

Multiple issues affected the communication between Moto and Crowell. For instance, Crowell’s lack of understanding (even after 1 1/2 years of negotiation) of Japanese customs and the significance of business cards and gifts; Crowell’s bragging; Crowell’s lack of interest in anything personal about Moto; Moto’s desire to talk about the history of the companies.

3. What was the significance of the doll? What went wrong?

The doll was suppose to symbolize commonality between the two men. Crowell didn’t understand the significance of the gift, and Moto missed an opportunity to explain by remaining quiet after the gift was opened.

4. Why did Crowell’s remarks about Allmack threaten a loss of face from Moto’s perspective?

It is unclear why Crowell’s remarks threatened a loss of face, unless bragging about Allmack implied that it was better than KKD.

5. How did Moto feel about Kubushevsky’s behavior early on? How did that relationship change?

Early in the relationship, Kbushevsky’s behavior appeared to be aloof, rude, and dismissive. He was amiable and polite, but never intimate, he flatly refused an offer to go drinking after work, and he was reluctant to provide Moto with documented information on potential suppliers. The relationship changed during a trip to a bar, during which Kubushevsky drank enough to lose his inhibitions and speak about his first wife and two children.

Supplemental Information

Students cannot fully understand the significance of events in this case without understanding some of the basics of Japanese culture. It may be helpful to point out some of the following before students read the case:

a) The business card. In Japan, the very first thing that happens in a business meeting is an exchange of business cards, which establishes the seniority of the people in the meeting.

Business cards are presented and received with both hands. The card should face the recipient so he/she can read it. Cards should be handled carefully and respectfully, as if you were handling the person. Cards should be read carefully, even if you do not understand a word (not reading it implies that one is not important). Do not play, fidget, or write on the card. Placing the card in your pocket or wallet is considered extremely disrespectful.

For the Japanese, this is the preferred order of information on a business card:

Your company Your department in the company Your position Your last name (first names are not important) Your address or telephone number

b) A proper introduction. A proper introduction, whether formal or informal, is critical for the Japanese because it establishes the status or place of each person, which in turn establishes the hierarchy, so everyone knows how to behave. The highest ranking person is introduced first, followed by everyone else in status order. It is always best to have someone else introduce you (in person) for the first time.

Even in a verbal introduction, your company name is said first. The company that you work for can give instant status. For example, greater respect may be shown to a junior executive from IBM than to vice president from a smaller, less well known company. Your company is who you represent and the greater picture is more important than the individual.

In Japan, your position amongst others is critical. Most often, a person is referred to or addressed by their title as opposed to their name, such as "Mr. President." This is a sign of respect that extends beyond the business circle to others, such as teachers or doctors. Always use the person's last name, including "Mr" or "Mrs" or the Japanese version San, especially in letters or documentation.

c) Silence. In Japan, silence is as important as speaking. It is a designated moment to understand what has just been communicated and to formulate a well thought out response. In the West, silence is considered an awkward moment and we try to fill it with words. Breaking the silence can make you appear insincere.

d) Facial gestures. The Japanese consider it rude to overtly express emotions in public. The "Poker Face" is used to cover up negative emotions as well as a shield to protect privacy. Smiles are often used to conceal embarrassment, pain, or anguish.

e) Eye contact is often a Western signal for confidence or sincerity. The Japanese frequently consider direct and constant eye contact a rude gesture that means defiance or challenge. The Japanese may shift their eyes or look down to show respect.

f) Touching. In the beginning, it is best to refrain from all forms of physical contact, such as a pat on the back or a hug. The Japanese do not show signs of affection or emotion in public.

g) Showing respect to objects. Material objects or items from someone should be shown just as much respect as the person. Business cards are not folded, written on, or fiddled with. A guest's coat is not thrown over a chair, but is hung up carefully.

At a traditional Japanese restaurant or home, the guest's shoes are placed together and turned around so that the guest can easily put his or her shoes back on when leaving. Furniture is used properly; you do not lean on a desk or sit on a table.

h) Gifts. Once a gift is given, the Japanese are sure to return with a "thank-you" gift called an O-kaeshi. This is an industry in itself as O-kaeshi are given at events such as weddings, funerals, births, illnesses, etc. Usually, the value of the O-kaeshi is half the value of the giver's gift. It is important to not be too lavish as the receiver will be obliged to return at least half your gift's value back to you.

Gifts are always wrapped in paper, or at least in a fashionable box or container. Gifts are presented and received with a sense of humility and respect. The gift is given using both hands and is presented with a bow. It is customary to say something like "This is just a small thing" or "This is just a box of chocolates."

Receive the gift with both hands and a bow. Traditionally, gifts are not opened at the time they are received, but as a Westerner you might want or be expected to open the gift. It is best to ask if you may open it. If given permission, open it carefully and respectfully.

The wrapping paper on a gift that has been graciously presented is not crumpled up insignificantly; rather, it is gently folded and the ribbon often retied around the paper or placed carefully on top of the wrapping paper.

Case 3–José Ignacio López De Arriortúa

This case presents an overview of the successful alliance between two automobile makers, Volvo and Renault.

Case Questions:

1. Is it possible to become too dependent on Tier 1 suppliers?

This is a critical thinking question; answers will vary by student. Whatever the student decides should be backed up with solid reasons and reasoning.

2. Should Tier 2 suppliers be integrated into the plant as a next step?

Again, this is a critical thinking question. Students need to consider such things as whether adding second tier suppliers would give the company greater bargaining power by increasing competition, if it would cause disruption to the current process, and when/where/how second tier suppliers would be integrated into the process.

3. What effect will the partnering with suppliers have on the potential for unionization within the plant?

This is a critical thinking question. From a worker standpoint, a union might make sense if the various companies offered substantially different pay and benefits and workers wanted standardization or improvements. However, the workers with the highest pay or best benefits might be reluctant to join a union and risk losing ground. The union itself might be reluctant to enter a situation in which they would have to deal with multiple companies under a single roof.

4. Could the Resende plant be the embodiment of Plant X develop by Lopez, the same man who advocated confrontational supplier management, priced-based competition, multiple bidding—the ideals of José Ignacio López de Arriortúa?

This is a critical thinking question; answers will vary by student.

Sample answer: On one hand, it does not seem likely that a man with Lopez’s reputation and history could put together such a cooperative effort. On the other hand, maybe his whole career had been a ploy to end up exactly where he was. By the time he left GM, the company’s relationship with its suppliers was shattered and the company crippled. Further, he had caused some suppliers to drop GM as a customer, so they would be eager for new business opportunities. Or, perhaps, Lopez saw the error of his ways and did a complete about face.

Case 4–AgroAraucania

This is the story of a growing agricultural company in Chile that has high turnover and low morale. It explains the research that went into the problem, the methods that upper management used to try to improve the situation, and the success and failure of each.

Suggested questions for class discussion:

1. Should upper management have been more familiar and comfortable with the concepts behind TQM before presenting it at the meeting?

2. Would getting feedback on the presentation from a small group of workers and managers before presenting it to the entire company have been a good idea?

3. Would clearer expectations and instructions have helped the group make the decision on uniforms faster?

4. What would have helped the committee come to a decision that the employees actually wanted?

5. Was this too much change at once?

Part 2
Exercises

Exercise 1–Bribery in International Business

This purpose of this exercise is to discuss issues related to ethical behavior in international business dealings. The exercise is performed in groups of four to six members and can be completed in one class period.

• Students read mini-cases and then decide what action should be taken in each one.

• Assign one or two mini-cases to each group, making sure that at least two groups work on the same cases.

• Have the groups come up with a solution that everyone in the group agrees with.

• Compare the case solutions at the end of the session, and have groups explain why they came up with the solution that they did.

Exercise 2–Babel Interpersonal Communication

This exercise is designed to:

• Examine language barriers.

• Demonstrate the anxieties and frustrations that may be felt when communicating under difficult circumstances.

• Illustrate the impact of nonverbal communication when verbal communication is ineffective and/or restricted.

The exercise is performed by an unlimited number of equal-sized groups of four, six, or eight members each and requires approximately one class period. Needed supplies include a pencil, paper, and blindfold for each participant.

The specific steps in the exercise (and suggested variations) can be found on pages 323 and 324.

Internet Exercise 1–Cross-Cultural Negotiation 101: Some Tips

This is an individual exercise designed to help students learn how to negotiate price reductions from international vendors.

• This is an individual exercise that requires about one hour to complete.

• Students will need an Internet connection and a search engine.

Part 2: Reading 1
The Hidden Challenge of Cross-Border Negotiations

This reading explores the cultural differences that can influence business negotiations in significant and unexpected ways. In some cases, it’s a matter of ignorance or disrespect. In others it is more subtle, arising from deep-seated cultural tendencies that influence how people interact. An equally treacherous aspect to cross-border negotiations is the negotiation process.

Key Points–Map the Players and The Process

1. In any negotiation, you are always interacting with individuals, but your real purpose is to influence a larger organization, representing a diverse set of interests.

2. Applying “home” views of corporate governance and decision making to international deals can seriously hinder the negotiation process.

3. To break down the decision-making process into constituent parts, ask: Who are the players? Who decides what? What are the informal influences that can make or break a deal?

Who are the Players?

1. In the U.S., extra players (beyond those representing the two companies) who may influence the deal include the SEC, the Federal Trade Commission, and the Justice Department, among others.

2. Abroad, the extra players are different and less obvious. For instance, workers’ unions and local party officials.

3. All parties bring their own interests to the bargaining table, as well as varying abilities to block or foster negotiations.

Who Decides What?

1. Even if you know who’s playing, a failure to understand each player’s role, and who owns which decisions, can be very costly.

2. Cultural assumptions can sometimes make it very difficult to recognize or acknowledge who has formal decision rights.

3. Understanding both formal decision rights and cultural assumptions in less familiar settings can be vital.

What Are The Informal Influences That Can Make or Break a Deal?

1. Many countries have webs of influence that are more powerful than the actual parties making the deal, even though those webs don’t have the formal standing of, say, government agencies.

2. These webs of influence can be industrial groups (Japan), insurance companies (Germany), powerful families (Italy), or the local mafia or other protection rackets (Russia).

3. U.S. companies (and other companies from cultures with strong legal systems) frequently underestimate the power of informal influences because they assume that foreign legal systems will enforce formal contracts just as they are at home.

4. Successful cross-border negotiators begin by discarding home-market presumptions and developing a clear map of the players who are likely to influence the formal and informal decision process.

Key Points–Adapt Your Approach

1. While you are negotiating with people, you are typically seeking to influence the outcome of an organizational process.

2. The organizational process can look different in different cultures, which may call for radically different negotiation strategies and tactics.

3. Organizational processes tend to take one of three forms: top down, consensus, and multistage coalition building.

Top Down

1. In a top-down process, you will deal with a “real boss,” a top-down authority who won’t delegate in any meaningful way and will ultimately make a unilateral decision.

2. The most effective negotiators avoid making deals with relatively powerless agents who function as important messengers or emissaries, but do not have powers in their own right.

3. In some cultures, even if the boss delegates authority, going directly to the top can be more effective.

4. Even in one-party, relatively authoritarian countries, deals at the top may not translate into action on the ground.

Consensus

1. If top-down authority is at one end of the decision-making spectrum, then consensus is at the other end.

2. The consensus process can have many variations, and is especially common in Asia.

3. The need for consensus among players on the other side affects negotiating strategy:

a) Consensus cultures often focus on relationships rather than deals, so the involved parties may want to take considerable time to learn about you and forge a relationship before talking about the deal. (This lengthy timetable can be very frustrating to teams from decisive, top-down cultures.)

b) Consensus processes often go hand-in-hand with near-inexhaustible demands for information.

c) Design your approach to help your proponents on the other side convert the doubters.

d) You may need to shift your focus away from the bargaining table to interact extensively and informally with the other side as it tries to reach a position internally.

e) In Japan, the negotiating table is not the place for changing minds.

f) Adjust your own expectations, and that of your organization, about how long the negotiating process will take.

4. A slow, painstaking negotiation process can lead to a decision that has more staying power. Plus, actual implementation may occur more quickly than with a top-down agreement.

5. Do not allow yourself to be blindsided by the need for consensus; it may take more time, relationship building, and information than expected.

Coalition Building

1. Decision processes don’t always come in pure forms, such as top-down or consensus; they may be less defined and require the agreement of a sufficient subset of players–a “winning coalition” that can effectively pressure, sidestep, or override dissenters.

2. Navigating such coalitions requires an understanding of the likely interests and options of the players who will be needed as allies or who may try to form a blocking entity.

3. Governance processes often drive these coalitions.

Conclusion

Cultural allegiances are often more complicated than they appear. While national culture can tell you a lot about the person sitting across the table from you, every individual represents a number of cultures, each of which can affect negotiation style.

Take time to map out the governance and decision-making processes, which can take devilishly unexpected forms across borders. Then, design your strategy and tactics so that you’re reaching the right people, with the right arguments, in a way that allows maximum impact on the process in order to achieve a sustainable deal.

Part 2: Reading 2
The Multicultural Organization

This reading delves into three types of organizational structures: monolithic, plural, and multicultural. It evaluates the strengths and weaknesses of each and provides recommendations for migrating from one structure to another.

Key Points–Introduction

1. A combination of workforce demographic trends and increasing globalization of businesses has placed the management of cultural differences on the agenda of most corporate leaders.

2. Potential benefits of diversity include better decision making, higher creativity and innovation, greater success in marketing to foreign and ethnic minority communities, and better distribution of economic opportunity.

3. Cultural differences can increase costs through higher turnover rates, interpersonal conflict, and communication breakdowns.

4. The term “multicultural” refers to the degree to which an organization values diversity and is willing to utilize and encourage it.

Key Points–Conceptual Framework

1. Milton Gordon argues that there are seven dimensions along which the integration of persons from different ethnic backgrounds into a host country should be analyzed:

1) Form of acculturation.

2) Degree of structural assimilation.

3) Degree of intergroup marriage.

4) Degree of prejudice.

5) Degree of discrimination.

6) Degree of identification with the dominant group of the host society.

7) Degree of intergroup conflict, especially over the balance of power.

2. Acculturation is the method by which cultural differences between the dominant (host) culture and any minority culture groups are resolved or treated.

3. The most prominent methods of resolving cultural differences are:

a) Assimilation: A unilateral process by which minority culture members adopt the norms and values of the dominant group.

b) Pluralism: A process by which both minority and majority culture members adopt some norms of the other group.

c) Cultural separatism: There is little adaptation on either side.

4. Pluralism also means that minority culture members are encouraged to enact behaviors from their alternative culture as well as from the majority culture.

5. Acculturation is concerned with the cultural (norms of behavior) aspect of integration with diverse groups, as opposed to simply their physical presence in the same location.

6. Structural integration refers to the presence of persons from different cultural groups in a single organization.

7. It is common in American companies for gaps of 15 to 30 percentage points to exist between the proportion of minority members in the firm’s overall labor force and their proportion at middle and higher levels of management.

8. Even within levels of an organization, individual workgroups may still be highly segregated.

9. The informal integration dimension recognizes that important, work-related contacts are often made outside or normal working hours through social activities and organizations. It also looks at the levels of inclusion of minority-culture members in lunch and dinner meetings, golf and other athletic outings, and social clubs frequented by organization leaders.

10. Cultural bias has two components: prejudice and discrimination.

11. Prejudice refers to negative attitudes toward an organization member based on his/her culture group identity.

12. Discrimination, which may be either personal or institutional, refers to observable adverse behavior for the same reason.

13. Prejudice may occur among dominant-culture members as well as among minority-culture members.

14. The practical impact of prejudice by majority-culture members is greater than that of minority-culture members because of their greater decision-making power.

15. Organizational identification refers to the extend to which a person identifies with, and considers him- or herself a member of, an organization.

16. Levels of organizational identification have historically been lower in the U.S. than in other countries, and recent downsizing and de-layering have reduced organizational identification even further.

17. Intergroup conflict refers to levels of culture-based tension and interpersonal friction.

18. Communication and cohesiveness may decline as members of groups become dissimilar.

Key Points–Types of Organizations

1. There are three organization types: monolithic, plural, and multicultural.

2. Exhibit 2 presents the differences and similarities among these organizations.

The Monolithic Organization

1. In a monolithic organization, structural integration is minimal and the organization is highly monogamous.

2. In the U.S., the monolithic organization is characterized by a substantial white male majority, with few women and minority men in management jobs.

3. These organizations feature high levels of occupational segregation, with women and racioethnic minority men concentrated in low-status jobs, such as secretary and maintenance.

4. Women, racioethnic minority men, and foreign nationals who do enter the organization must adopt the existing organizational norms framed by the white male majority as a matter of organizational survival.

5. Ethnocentrism and other prejudices cause little, if any, adoption of minority-culture norms by majority group members.

6. The exclusionary practices of the dominant culture also apply to informal activities.

7. Severe limitations on career opportunities for minority-culture members creates alienation and limits the extent to which they can identify with the organization.

8. Intergroup conflict based on culture-group identity is minimized by the relative homogeneity of the workforce.

9. Monolithic organization structures can also occur in organizations that are not dominated by white males, such as minority-owned businesses, predominantly black or Hispanic colleges, and foreign companies operating in the U.S.

10. In the ‘60s and ’70, large U.S. organizations began to transition away from this organizational model, due to societal forces such as the civil-rights and feminist movements.

The Plural Organization

1. The plural organization has a more heterogeneous membership than the monolithic organization and takes steps to be more inclusive of persons from cultural backgrounds that differ from the dominant group.

2. These steps include hiring and promotion policies that give preference to persons fro m minority-culture groups, manager training on equal opportunity issues, and audits of compensation systems to ensure against discrimination against minority group members.

3. The plural organization achieves a much higher level of structural integration than the monolithic organization.

4. The problem of skewed integration across functions, levels, and work groups, typical in the monolithic organization, is also present in the plural organization.

5. The plural organization is also characterized by some integration of minority-group members into the informal network, substantial reductions in discrimination, and some modernization of prejudicial attitudes.

6. The plural organization represents a marked improvement over the monolithic organization in effective management of employees of different racioethnic, gender, and nationality backgrounds.

7. During the 1980s, resentment toward this approach among white males began to surface. This backlash effect, coupled with the increased number of minorities in the organization, often creates greater intergroup conflict in the plural organization than was present in the monolithic organization.

8. Failing to address cultural aspects of integration is a major shortcoming of the plural organization form.

Key Points–The Multicultural Organization

1. Sales and Mirvis ague that an organization which simply contains many different groups is a plural organization; an organization is multicultural only if the organization values this diversity.

2. The multicultural organization is characterized by: a) Pluralism. b) Full structural integration. c) Full integration of the informal networks. d) No gap in organizational identification based on cultural identity group.

Creating the Multicultural Organization

1. Organizations that hold onto the monolithic model often cite geographic or size factors as isolating their organization from the pressures of change. Others maintain that the monolithic organization is still viable because American white males will continue to be the single largest gender/race identity group in the U.S. for many years to come.

2. Gross underutilization of human resources and failure to capitalize on the opportunities of workforce diversity represent unaffordable economic costs.

3. The majority of managers today are in plural organizations, and many are convinced that the multicultural model is the way of the future.

Creating Pluralism

1. The two most popular types of training and orientation programs are: awareness and skill building.

2. Awareness training generally includes information on workforce demographics, the meaning of diversity, and exercises to get participants thinking about relevant issues and raising their own self-awareness.

3. Skill-building training provides more specific information on cultural norms of different groups and how they may affect work behavior. Such training promotes reciprocal learning and acceptance between groups by improving understanding of the cultural mix of the organization.

4. A study of 75 Canadian consultants found that people exposed to even the most rudimentary form of training on cultural diversity are significantly more likely to recognize the impact of cultural diversity on work behavior and to identify the potential advantages of cultural heterogeneity in organizations.

5. Valuing and managing diversity training represents a crucial first step for organization change efforts.

6. Language training is important for companies hiring American Asians, Hispanics, and foreign national.

7. The most direct and effective way to promote the influence of minority-culture norms on organizational decision making is to insure and accept minority-group input at all organizational levels.

8. The importance of diversity to the organization should be mentioned in statements of mission and strategy. By doing this, organizations foster the mind-set that increased diversity is an opportunity, not a problem.

9. Providing specially composed minority advisory groups with direct access to the most senior executives of the company can increase the influence of minority-group members on organizational culture and policy.

10. A more complex but powerful tool for promoting change toward pluralism is the development of flexible, highly tolerant climates that encourage diverse approaches to problems.

Creating Full Structural Integration

1. Education efforts: The objective of creating an organization where there is no correlation between one’s culture-identity group and one’s job status implies that minority-group members are well represented in all levels, in all functions, and in all work groups.

2. Affirmative action: The author feels that affirmative action programs will continue to be the primary affirmative action into the foreseeable future.

3. Career development: A number of companies have initiated special career development efforts for minority personnel.

4. Revamping reward systems: Ensuring that the organization’s performance appraisal and reward systems reinforce the importance of effective diversity management is an essential tool for creating structural integration.

5. Benefits and work schedules: Structural integration of women, Hispanics, and blacks is facilitated by changes in human resource policies and benefit plans that make it easier for employees to balance work and family role demands.

Creating Integration in Informal Networks

1. Mentoring and social events. One tool for including minorities in the informal networks of organizations is company-initiated mentoring programs that target minorities.

2. Racioethnic minorities report significantly less access to mentors than whites.

3. A second technique for facilitating informal network integration is company-sponsored social events.

4. Support Groups: In many companies, minority groups have formed their own professional associations and organizations to promote information exchange and social support.

5. Many believe that these groups harm integration by fostering a “we-versus-them” mentality and reducing incentives for minorities to seek inclusion in informal activities of majority-group members.

6. Integration into formal networks is at best a long-term process and there is widespread skepticism among minorities as to its eventual achievement.

7. Creating a bias-free organization. Equal opportunity seminars, focus groups, bias-reduction training, research, and task forces are methods that organizations have found useful in reducing culture-group bias and discrimination.

8. Unlike prejudice, discrimination is a behavior and therefore more amenable to direct control or influence by the organization.

9. Equal opportunity seminars include sexual harassment workshops, training on civil rights legislation, and workshops on sexism and racism.

10. Focus groups are an on-going mechanism to explicitly examine attitudes, beliefs, and feelings about culture-group differences and their effects at work.

11. A breakthrough will be achieved for many organizations simply by bringing discussion about group differences out in the open.

12. Bias-reduction training is another technique for reducing bias through training specifically designed to create attitude change.

13. Bias-reduction training often features exercises that expose stereotypes of various groups which are prevalent but rarely made explicit and may be subconscious.

14. Leveraging internal research. A powerful tool for reducing discrimination and (to a lesser extent) prejudice, is to conduct and act on internal research on employment experience by cultural group.

15. Task forces: A final tool for creating bias-free organizations is to form task forces that monitor organizational policy and practices for evidence of unfairness..

Minimizing Intergroup Conflict

1. A certain amount of interpersonal conflict is inevitable and perhaps even healthy in organizations.

2. Conflict becomes destructive when it is excessive, not well managed, or rooted in struggles for power rather than the differentiation of ideas.

3. Survey feedback is probably the most effective tool for avoiding intergroup conflict. It provides the double benefit of a knowledge base for planning change, and leverage to win employee commitment to implement the needed changes.

4. Conflict-resolution training, which utilizes such techniques as mediation and superordinate goals, is also a tool for minimizing intergroup conflict.

5. Conflict resolution is a skill made more crucial by the greater diversity of the workforce in the ‘90s.

Conclusion

Increased diversity presents challenges to business leaders who must maximize the opportunities that it presents while minimizing its costs. To accomplish this, organizations must be transformed from monolithic or plural organizations to a multicultural model, which is characterized by pluralism, full integration of minority-culture members (both formally and informally), an absence of prejudice and discrimination, and low levels of intergroup conflict.

Part 2: Reading 3
Building an Effective Global Business Team

This reading describes a number of things that can cause a global team to fail and how to overcome these difficulties.

Key Points–Introduction

1. Every global company’s competitive advantage depends on its ability to coordinate critical resources and information that are spread across different geographical locations.

2. A global business team is a cross-border team of individuals of different nationalities, working in different cultures, businesses, and functions, who come together to coordinate some aspect of the multinational operation on a global basis.

3. The global business team is an organizations most effective tool when trying to integrate dispersed operations.

4. In a study of 70 global teams, 82 percent fell short of their intended goals.

5. Organizations must understand the obstacles that global business teams confront and then take concrete steps to avoid those pitfalls.

Key Points–Why Global Business Teams Fail

1. Both domestic and global teams are plagued by many of the same problems–misalignment of individual team members’ goals, a lack of the necessary knowledge and skills, and lack of clarity.

2. Global business teams face additional challenges resulting from differences in geography, language, and culture.

3. Teams fail when they are unable to cultivate trust among their members or when they cannot break down communication barriers.

Key Points–The Inability to Cultivate Trust Among Team Members

1. Trust is critical to the success of global business teams in that it encourages cooperation and minimizes unproductive conflict.

2. Without mutual trust, team members may shy away from revealing their true beliefs; or if they do express their viewpoints, they may not be “heard.”

3. Three important factors determine how much trust people feel are: individual characteristics, quality of communication, and the broader institutional context.

4. Research shows that people trust one another more when they share similarities, communicate frequently, and operate in a common cultural context that imposes tough sanctions for behaving in an untrustworthy manner.

5. When global business teams fail, it is often because the team process did not emphasize cultivating trust.

Key Points–Hindrances to Communication

Geographical Barriers

1. With members in different countries, separated by time zones and conflicting schedules, arranging team meetings can pose logistical challenges.

2. Technology should be a compliment to, not a substitute for, team meetings. Face-to-face meetings foster familiarity and trust.

3. Activities such as brainstorming require unstructured, free-form interaction over an extended period. This type of activity is not suited for virtual meetings.

Language Barriers

1. If language barriers are not adequately addressed, the likelihood of creating an atmosphere conducive to candid sharing of different viewpoints, and hence conducive to achieving creative solutions, is greatly diminished.

2. Even in the case of global teams whose members speak the same language, differences in semantics, accents, tone, pitch, and dialects can be impediments. For example, the phrase “table a motion” means to postpone discussion in the U.S. but let’s discuss the issue right away in the United Kingdom.

Cultural Barriers

1. Members of global business teams typically come from diverse cultures and may bring different values, norms, assumptions, and patterns of behavior to the group.

2. Unless the differences are explicitly addressed, the cohesiveness of the group is likely to suffer and impede effectiveness.

Key Points–Defining the Team Charter

1. In order to overcome the unique challenges confronting global business teams and create a high-performing, effective unit, executives must carefully craft the team’s charter, composition, and process.

2. Structuring the team charter is particularly critical to success.

Is the Charter Defined Correctly?

1. A global business team must explicitly discuss the team’s agenda and ensure that it is defined clearly and correctly.

Is the Charter Framed Correctly?

1. Issues can be framed in multiple ways, and different framing of the same problem can produce different outcomes.

2. It is generally best to frame the team’s charter in terms of the company’s position in relation to the external marketplace instead of emphasizing internal dynamics.

Is the Charter Clearly Understood?

1. When teams have frequent face-to-face meetings, they are able to iron out ambiguities in the team charter. If they meet less often, the charter must be crystal clear so that tasks can be delegated effectively.

2. It is imperative that members understand the specifics of the charter: in particular, the scope of the project, the expected deliverables, and the timeline.

Key Points–Choosing Team Members

1. When choosing team members, three issues are of particular importance: How do you balance diversity within the team? How big or small should the team be? Who should occupy positions of leadership?

Key Points–The Question of Diversity

1. There are at least three reasons why global business teams have high levels of diversity:

a) Members come from diverse cultural and national backgrounds.

b) Members generally represent subsidiaries whose agendas may not be congruent.

c) Members often represent different functional units, so their priorities and perspectives may differ.

2. Cognitive diversity refers to differences in the substantive content of how members perceive the team’s challenges and opportunities, options to be evaluated, and optimal course of action.

3. Because no single team member can ever have a monopoly on wisdom, cognitive diversity is almost always a source of strength.

4. Divergent perspectives foster creativity and a more comprehensive search for (and assessment of) options. However, the team must be able to integrate the perspectives and come to a single solution.

5. Ethical diversity, by contrast, refers to differences in language as well as culture-driven norms of behavior.

6. Behavioral diversity is best regarded as a necessary evil: something that no global business team can avoid, but the effect of which the team must attempt to minimize through language training and cultural sensitization.

Key Points–The Ideal Team Size

1. The optimal size of a global business team is one that can ensure the required knowledge and skill base with the smallest number of people.

2. Very large teams become cumbersome and dysfunctional, making it difficult to foster broad participation, bring out diverse viewpoints, or get the meaningful action.

3. An effective solution is to establish a core team and supplement it as needed.

Key Points–The Selection of Team Leadership

1. Structuring the leadership of a global business team involves critical decisions about three roles: the team leader, external coach, and internal sponsor.

Choosing an Effective Team Leader

1. Effective leaders must manage the organizational, linguistic, cultural, and physical distances that separate members, create severe communication barriers, impede the development of trust, and contribute to the misalignment of members’ goals.

2. Team leaders are likely to be those with the biggest stake in the outcome of the project.

3. Important qualities for a team leader include: credibility resulting from a proven track record; conflict-resolution and integration skills; expertise in process management, including diagnosing problems, assessing situations, and generating and evaluating options.

Determining the Need for an External Coach

1. An external coach serves as an ad hoc member of the team and is an expert in process rather than content.

2. The more complex and challenging the process to be managed, the greater the need for, and the value added by, an external coach.

3. The need for such a coach is likely to be particularly high when the process-management task is complex and the process-management skills of the team leader are inadequate.

Selecting a GBT Sponsor

1. The sponsor of a GBT is typically a senior-level executive who has a strong interest in the success of the team.

2. Sponsor responsibilities include: clarifying and interpreting the charter; clarifying performance expectations and deliverables; providing ongoing guidelines, input, and support; facilitating access to resources; managing political roadblocks on behalf of the team; being an intellectual sounding board on content; reviewing team progress; holding the team accountable.

Key Points–Managing Team Process

1. Without skillfully managing process, the team is likely to fail in accomplishing its objectives.

2. The primary goals of an effective team process are to facilitate open and rich communication among the team members and to cultivate a culture of trust.

Overcoming Communication Barriers

1. Language and Culture: Companies need to invest in language education and cross-cultural training because it reduces the need for third-party mediators, such as translators, and thus fosters more direct, spontaneous, and free-form communication.

2. A better understanding of team members’ different cultures can improve the richness of communication: people pick up on the signals in verbal and nonverbal communication more effectively and accurately.

3. Agreeing on Norms of Behavior: Establishing ground rules that reflect desired norms of behavior can serve as a powerful self-policing mechanism to overcome communication barriers, enrich the content of team discussions, and keep the team operating as an integrated whole.

Adopting Data-Driven Decisions

1. In the absence of facts, people often resort to opinions.

2. Discussions based largely on opinion can degenerate into personal attacks.

3. If opinions are accompanied by factual data, conflicting ideas can be evaluated more objectively.

4. Fact-based discussions encourage team members to be more forthcoming in sharing their viewpoints, even if their views are at odds with the prevailing wisdom.

5. Developing Alternatives to Enrich the Debate: Two well-known formal mechanisms, dialectical inquiry and devil’s advocate, are aimed at uncovering alternatives.

6. In a dialectical inquiry, for every potential solution, the team is instructed to develop a full-fledged counterapproach based on different assumptions; then a debate ensues on the merits of the plan and the counter-plan.

7. In the devil’s advocate approach, the team critiques a potential solution, but doesn’t necessarily develop a full-blown counter-approach.

8. Both methods can benefit the process and the outcome of team discussions by giving creative license to members to express different views.

9. Rotating Meeting Locations: Rotating the team meetings to different parts of the world is another mechanism that can enrich the cognitive base of the team and also legitimize the expression of divergent viewpoints.

Cultivating a Culture of Trust

1. Scheduling Face-Face Meetings: This is the richest form of communication.

2. It is critical that the first few meetings of a global business team occur face-to-face.

3. Rotating and Diffusing Team Leadership: Rotating and diffusing team leadership across countries allows managers in different subsidiaries to gain an appreciation for cross-border coordination and learn to iron out conflicts en route to achieving their objectives.

4. Diffusion of team leadership creates mutual interdependencies across countries.

5. Mutual dependencies does not eliminate all conflicts, but it minimizes politicking and the more destructive types of conflicts.

6. Linking Rewards to Team Performance: Linking rewards to team performance encourages members to resolve conflicts and reach effective solutions.

7. Building Social Capital: At any given time, a global enterprise will have many teams working on different cross-border coordination issues. Therefore, it makes sense for the company to undertake corporate-wide initiatives to create interpersonal familiarity and trust among key managers of different subsidiaries.

Key Points–Global Business Teams Can Succeed

1. Global business teams are spread throughout multinational corporations; managing them effectively and steering them toward their intended goals is not easy.

2. Barriers to communication and to cultivating trust routinely sabotage the most well-intentioned team.

3. By making the right choices for the team’s charter, composition, and process, global teams can overcome the problems and efficiently achieve their ends.

4. When a team consists of members with distinct knowledge and skills from different subsidiaries in different countries, the potential for cognitive diversity is high.

5. Intellectual diversity almost always brings with it some degree of interpersonal incompatibility and communication difficulty.