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Question 3 (LO1C)
a. Jo Barnes and Monsieur Hulot are both managers of Port Philip Pharmaceuticals are based in two different countries. Jo Barnes is an Australian international manager who oversees the operation in France under the management of Monsieur Hulot, a French national. Describe and compare how each of these managers deals separately with the management issue that is affecting the operation of Port Philip Pharmaceuticals.
Port Philip Pharmaceuticals (PB) is a renowned Australian company and Jo Barnes is the international Manager of this company. This company has several agencies around the world. Jo Barnes is a qualified pharmacist and her expertise lies in chemical processing. She is working with the company for 10 years. In order to deal with the management issues, she maintains a good communication skills with the local level managers via email. As a part of dealing with management issues, she tours in different countries to meet the branch agencies of Port Philip Pharmaceuticals (Johanson & Mattsson, 2015). Her way of dealing the management issues can be termed as “Australian way of management”. She is a typical modern Australian woman and handles her job with confidence, individualism, and independence.
M. Hulot is also a manager of Port Philip Pharmaceuticals (PB) and he is managing the agency of PB that is in France. He is a French professional and believes in promoting collaboration, solidarity, and initiative within their organization. Being a French person, he is very dedicated to his own culture and he does not have much faith in the Australian way of management. His dealing with the international management issues is very similar to the way by which French handles their local businesses. He is very particular in making good deals for the company. He prefers to maintain a dominant position in every deal he makes on behalf of the company. His way of dealing management issues is completely different from the “Australian way of management”. Being French personnel, he maintains his politeness while negotiating business deals for the company.
b. One of the challenges of international business in different countries is the different forces of the international environment that impact the role of management of multinational organizations. Evaluate any international forces that influenced the operation of Port Philip Pharmaceuticals in their operation and its management in France.
There is a huge difference of culture and language between Australia and France. Australian believes in individualism initiative and independence. They just love to do their own work by themselves. These characteristics are reflected in the working process of Jo Barnes while she handles the international management issues.
On the other hand, the French believe in following the command, maintaining the hierarchy and also in a co-operative teamwork. They have great honor for their group and always prefer to maintain dominant position while perusing a business negotiation. These characteristics are reflected in the working process of Monsieur Hulotwhile he negotiates the international management issues on behalf of the company.
Thus the difference in culture and language can be identified as an international force that is affecting the handling of business operations of Port Philip Pharmaceuticals. The French and Australians have a different way of processing a job and communicating with the international managers of the multinational company. This is the source of all kind of conflict and issues that is badly affecting the international business operations of PB. Because of these differences, Monsieur Hulot is finding it difficult to follow the process and requirements of the Australian headquarter. There is a difference in the way the financial statements are understood in France and Australia (Njoku, Ihugba & Odii, 2014). Besides Australian maintain all of their important communications via email and French prefer formal communication procedure where proper honor should be given to a person as per the hierarchy. All these factors are leading to misunderstanding and conflicts and hindering the international business operations of Port Philip Pharmaceuticals.
c. A multinational company like Port Philip Pharmaceuticals deals with many constituents. Evaluate the management approach of Jo Barnes in dealing with her constituents in the Philippines and in France.
The approaches that are applied by Jo Barnes to manage the constituents in the Philippines and in France are quite different. Jo Barnes is well aware that Filipinos prefer to enjoy the power and their society accepts status differences. Here it is expected that a subordinate should pay proper respect to his superior. After considering these cultural facts Jo Barnes suggested that partnership should be the best approach for Port Philip Pharmaceuticals to hold the international agency in the Philippines. Though Jo Barnes was well accepted by the Filipino employees of Port Philip Pharmaceuticals and they attentively listened to her every instruction, but still, she is doubtful that her every instruction may not be implemented as Filipino employees may not like her dominance (Sarasvathy et al. 2014). However, language is not an issue in this country as most of the Filipinos are good in understanding and speaking English.
However, the situation is completely different in France where French are proud of their own culture and language and most of them do not either understand or speak English. While working in France Jo Barnes quickly realized that she has to change her individualistic approach towards her French colleague to fulfill her assigned work in France. So she brought politeness in her communication with the colleagues and started to praise them for every good work they have done for the company. French people believe in maintaining high power distances and they also treat their subordinates with dignity (Meyer, Mudambi & Narula, 2011). They also prefer to be praised for their abilities, understanding, and skills. Thus with the changing approach, Jo Barnes managed to get huge cooperation and brainstorming ideas from her French colleagues. Thus her French colleagues are now ready for training and to learn new things and also to deliver full cooperation to the assignments of Jo Barnes
Question 6 (L02C)
a) Explain ONE (1) benefit and ONE (1) risk that Yahoo! Can get from its local joint venture partner with Beijing Founder Electronic to deal with Chinese government. (2.5 marks each, a total of 5 marks)
Joint ventures have potential benefit while operating their business in foreign countries. Operating business in a different country has to abide by the laws and regulations of that particular country along with the expenses and taxes. If a joint venture is a place with a local business organization, it might help in dealing with many laws and legislations of that particular country (Shi et al.,2014).
In the present case, the Chinese government may be more inclined on various tax waivers and waivers in customs charges. Due to the joint venture, the Chinese government may promote using Yahoo inc, the official internet site as a search engine and various other purposes. This helps in the rapid growth of the industry.
Joint ventures involve many risk factors. Building a stable business relationship among partners requires considerable time and effort. The most prominent risk includes different cultural and leadership styles among different countries. Every country has its own way of function and with that, the business rules changes. In this case, China being a foreign company, the rules will be different for the local investors. Their leadership style and way of doing business may also differ (Cavusgil et al.,2014).
If such a situation arises where a difference in decision among partners occur and the partners seek the involvement of government, the government may choose to side with its local company than the global one. In such cases, the partners may not provide sufficient support to the business and Yahoo may suffer huge losses in such a scenario.
b) How does a strategic alliance differ from a joint venture? Explain ONE (1) advantage and ONE (1) disadvantage of such alliances. (5 marks)
Joint ventures and strategic alliances are both legally binding partnerships, which allow companies to benefit from each other’s strengths. However, both of them differ with each other financially and legally.
A joint venture is a contractual agreement between two or more business partners that come together for accomplishing a business task. In a joint venture, all the companies invest in a new company that is jointly owned by all the parties (Beamish, 2013).
On the other hand, a strategic alliance is a formal relationship that is legally binding the companies together. There the common goal is to do business together. However, it provides the companies with the chance to remain as independent business organizations. In a strategic alliance, the companies have access to each other’s technologies, trademarks, and assets but do not involve the creation of a new company (Li et al., 2016).
Joint venture: In Joint Ventures, partners share profits as well as risks and costs.
Strategic alliance: companies usually undertake strategic alliances to explore a new market, product or strategy that they are unable to pursue on their own.
Joint venture:Sometimes in joint ventures, the strategies of different companies may differ from each other, which in future causes dispute among partners.
Strategic alliance: Strategic alliances come with their own set of inherent difficulties. The foremost cause of these disadvantages may be the fact that the parties involved must rely on each other in every business decision they take. In case any of the parties find conflicts of interest or have hidden agendas, then they project may suffer from failing entirely. Collateral damage may result in such cases in the form of negative alliance and may cause the derailment of the project.
a)Evaluate the management strategy used by Brandon in order to finalize the deal of the Yokohama parts with Mr. Kumatsu and how it led to the success of failure of the deal. (10 marks)
Management strategies involve implementing different strategies in order to achieve certain goals. For finalizing deals with different parties, leaders or managers who are heading a project implement various strategies together or a particular strategy separately (Clarke, 2016).
In the present case scenario, an electronic manager of an American Satellite manufacturer was trying to crack a deal with the Japanese executive Mr. Kumutsu, a Japanese parts distributor of Yokohama. For this purpose, he implemented the strategy of negotiation, as Mr. Kumutsu was proving difficult to come to a common point where both the parties could agree. However, the deal failed to finalize and Mr. Kelly failed to draw a contract between the parties.
For doing negotiation, which can lead to a successful deal, it is necessary to prepare the facts and terms of negotiation. The next step is to exchange all the information available regarding the project among partners. If in a scenario, if any of the parties is not inclined to come to a common ground, it is necessary to propose such terms that may attract the opposing party to rethink the deal. The proposal must be made in such a way that it is beneficial to both the parties. The negotiated term should meet the need of both the parties. The buyer must purchase products at a reasonable price and the seller or distributor must provide products at a price that suffice their profit margin (Ting & Toomey, 2015). However, in many cases that fail to occur. In a competitive market sometimes, buyers call multiple sellers and distributors to the table and ask them to offer their best possible terms. In such cases, though the buyers may benefit from having a deal with lower price, the seller may suffer due to offering too low a price to stay in the market. This is harmful in general because in such cases the quality of the product suffers, as the distributor will provide a substandard product to keep profits (Perreault, Kida & David Piercey, 2016).
Brandon Kelly in this scenario tried to present a deal with a common ground for both the parties where both the parties can meet halfway and build up a contract. The terms he offered might not have been suitable for Mr. Kumutsu and the deal failed. There might be various reasons for failures, however, the most prominent one must have been the price that Mr. Kelly tried to negotiate with Mr. Kumutsu.
b.)Design an effective management strategy for Brandon to successfully achieve a good international dealing with their company’s suppliers in Japan.
Mr. Brandon has to consider the fact that the old negotiation will not work anymore in a changed situation where Mr. Kamatsu has joined as a new Japanese executive. In this changing situation, changes should be brought in the parks that he was used to enjoying previously. It is essential that Mr. Brandon should understand the situation properly and then take an appropriate decision. For a proper understanding of the situation, he should hold an analysis of the new situation and then should formulate appropriate negotiating strategy to fulfill the requirement of the situation. It can be expected that while proceeding in this way Mr. Brandon will be able to offer the best deal to Mr. Kamatsu from which both of the dealing companies will be benefitted.
Beamish, P. (2013). Multinational Joint Ventures in Developing Countries (RLE International Business). Routledge.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
Clarke, C. J. M. (2016). Negotiation as an education management skill.
Johanson, J., & Mattsson, L. G. (2015). Internationalisation in industrial systems—a network approach. In Knowledge, Networks and Power (pp. 111-132). Palgrave Macmillan UK.
Li, X., Roberts, J., Yan, Y., & Tan, H. (2016). Management of cultural differences under various forms of China–UK higher education strategic alliances. Studies in Higher Education, 41(4), 774-798.
Meyer, K. E., Mudambi, R., & Narula, R. (2011). Multinational enterprises and local contexts: The opportunities and challenges of multiple embeddedness. Journal of Management Studies, 48(2), 235-252.
Njoku, A. C., Ihugba, O. A., & Odii, A. (2014). Theoretical analysis of entrepreneurship challenges and prospects in Nigeria. International Letters of Social and Humanistic Sciences, (16), 21-34.
Perreault, S., Kida, T., & David Piercey, M. (2016). The Relative Effectiveness of Simultaneous versus Sequential Negotiation Strategies in Auditor?Client Negotiations. Contemporary Accounting Research.
Sarasvathy, S., Kumar, K., York, J. G., & Bhagavatula, S. (2014). An effectual approach to international entrepreneurship: overlaps, challenges, and provocative possibilities. Entrepreneurship Theory and Practice, 38(1), 71-93.
Shi, W. S., Sun, S. L., Pinkham, B. C., & Peng, M. W. (2014). Domestic alliance network to attract foreign partners: Evidence from international joint ventures in China. Journal of International Business Studies, 45(3), 338-362.
Ting?Toomey, S. (2015). Identity negotiation theory. The International Encyclopedia of Interpersonal Communication.