Abstract

As explained in the Daft’s Management readings recent research by the GLOBE project extends Hofstede’s assessment and offers a broader understanding for today’s managers. The GLOBE (Global Leadership and Organizational behavior Effectiveness) project used data collected from 18,000 managers in 62 countries to identify nine dimensions that explain cultural differences, including those identified by Hofstede. This paper describes the differences between Ray Betzell’s and Chiu Wai’s perspectives on the SHOU Fabrics’ ROI in terms of the GLOBE project value dimensions. It will explain which of the differences is most central to the issue at hand and why and develops a strategy for addressing the situation. It will also explain how the strategy will appease Ray’s boss back in the U.S. Lastly the specific benefits to the strategy will be laid out.

Shui Fabris

Perspectives on Shui Fabrics ROI of the Globe

Ray Betzell who is the general manager of an overseas venture with Shanghai Fabrics Industry and Rocky River Industries appears to be torn between the two companies. Though he spent many years of producing; Rocky River’s President Paul Danvers was not pleased with the company’s annual returns on investment (ROI) of 5%. Chui Wai who is a deputy general manager, believed that Shui Fabrics had a good balance for the ROI and that there was the right level of profit, “not too much and not too little.” Paul Danvers felt that the annual return should be somewhere around 20% because of the amount of years that they were in partnership. Ray Betzell and Paul Danvers discussed the production of the company and the output of that alternative methods, he also gave the option of terminating his contract with Shui or everyone coming to an agreement on how to generate better ROI.

There are differences between Ray and Chiu’s perspectives on Shui Fabrics’ ROI in terms of the Global Leadership and Organizational behavior Effectiveness (GLOBE) Project value dimensions. There is an obvious difference in infrastructures between the two companies due to the fact that they are from different countries (China and the United States). The two countries economic development is not the same either. Additionally, and perhaps the biggest difference, they both differ in their cultural orientation. Chiu’s country is more humane orientated where there is concern about job creation and they are more relationship orientated. This is indicated through the government remaining pleased with the fabric company to employ 3,000 people. Though the U.S. is now concerned with job creation, years ago the U.S. was more performance oriented. There were company desires to see better economic performance and higher prices and lacked a caring relationships with employees. This is clear as Paul Danvers expected more than 20% ROI and not content with the 5%. Danvers also displays the uncertainty avoidance dimension as he indicates pulling out of China because of the low ROI over the last ten years. Sociocultural differences have a great influence with the problem Shui is facing. Americans for some part have a strong ethnocentric arrogance where, like Paul, thinks their way would always be the best way in handling things even they are operating in a foreign country. He doesn’t seem to understand or mind the difference between the American and Chinese.

The difference that is perhaps most central to the issue is perhaps performance orientation. Though it appears that China is not big on rewarding its employees for high output production they are similar to American based companies in that they place high emphasis on performance output. It is apparent that each of their standards is high in desiring to see better economic performance for higher profits. They both no doubt desire loyalty from the employees they obviously stress performance. Both should expect profits through innovation, high standards and performance improvement. Though there no obvious points made in the readings one can believe that performance orientation is more central because the desire to maintain employees and increase ROI indicates there is some form of inspiring people around a vision.

There are strategies that can be addressed for the situation to help appease Paul. The first thought is that Paul must be reminded of the social and cultural difference of the partnership.

The other option that can be considered for manufacturing textiles in China aside from the joint venture that the American base textile corporation has is GLOBAL OUTSOURCING. They could outsource to obtain the cheapest labour and supplies than doing it in the U.S. The difference with this venture is that Rocky River Industries would not have to share costs and risks with Shui Fabrics. That would be a lesser cost on our part and all the risk will be shouldered by the other firm. The American based industry should be flexible and meet at the middle because of the cultural differences, like how Chiu Wai thinks and sees things, would always affect the working relationship with them by interpreting the culture where the organization is and developing sensitivity would avoid the costly cultural blunders as a result. It is important that both sides come to some sort of agreement and perhaps give Shui more time to generate higher profits. It is possible Shui could increase efficiency and cut costs in order to boost their profits. The American side should not take such a drastic measure and should give Shui reasonable time to become more performance orientated in the future. Licensing could be viable option. The American could license to the Chinese, so that their cost to enter foreign operations will be reduced. They will still have control; however, they may not have as much control as compared to the joint-venture. Thus, with less initial costs involved, Rocky River's expectations of 20% ROI could be achieved.

This strategy has benefits over the status quo in that it will allow the U.S. textile business to gain confidence in the foreign partner in that profits will grow. It will help Paul see the growth potential through using to provide the products and services. The strategy will allow him to see that proven record of successes in working with foreign entities and global businesses, to work with the Chinese to continue their unique relationships with the multilateral company through the manufacturing of public/private partnerships to help their business achieve its greatest success. If Paul does not follow this strategy the Chinese based company could potential become their competitor versus their partner. It would benefit the Rocky River based company to maintain its partnership because as we see throughout the news that China deficit rate is much lower than the U.S. and the potential for growth is good.

References

Daft, Richard L. (2010). Management. Mason, OH: South-Western Cengage Learning
Boone, Louis E., & Kurtz, David L. (2011). Contemporary Business. Danvers, MA: Walsworth Publishing Company