Module 11: Management Decision-Making and Control
1. Contingency Strategies and the Strategic
Evaluation and Control Process
As we have learned in this course, decision-making involves choosing among alternatives.
As globalization becomes more pervasive, this is becoming more relevant for the
international manager to use as a common business practice. One critical decision an
international manager must make is that of deciding on an effective strategy to work
within a specific culture.
Luthans and Doh (2018) pointed to the following indicators that decision-making practices
vary from country to country:
•
•
•
•
French managers tend to spend ample time on searching for and evaluating
alternatives.
German managers focus more on productivity and quality of goods and services
than on managing subordinates.
Swedes focus much more on quality of work life and the importance of the
individual in the organization.
Japanese managers employ a long-term focus, making heavy use of a decisionmaking process called ringisei, which is a Japanese term that means “decision
making by consensus” (p. 394).
Since different cultures approach decision-making in different ways, it is necessary to
have a strategy or mechanism that brings these decisions to the same point. Direct
mechanisms that provide the basis for the overall guidance and management of foreign
operations include the design of appropriate structures. Such decisions proactively set
the stage for operations to meet goals, rather than troubleshooting deviations or
problems after they have occurred.
Decision-making and controlling are two vital and often interlinked functions of
international management.
Controlling is the “process of evaluating results in relation to plans or objectives and
deciding what action, if any, to take” (Luthans & Doh, 2018, p. 398). Management control
helps align employee actions with corporate objectives. Multinational corporations (MNCs)
employ various control mechanisms to coordinate units worldwide in order to meet global
organizational objectives. Process controls specify desirable employee behavior and
include centralization and standardization to ensure that employees adhere to specified
processes. Some countries tend to use more centralized decision-making than others so
that more decisions are made at the top of the MNC than are delegated to the subsidiaries
and operating levels (Sageder & Feldbauer-Durstmuller, 2018).
Look through this chart to learn more about types of control (Luthans & Doh, 2018).
Type of Control
Application
Internal Control
MNC focuses on the things it does best.
External Control
Management wants to ensure that there is a market for the goals and
services being offered.
Direct Control
Face-to-face meetings are used for the purpose of monitoring
operations.
Indirect Control
Reports and other written forms of communication are used to control
operations.
An additional component of controlling involves evaluation results in relation to
objectives, then taking action to correct deviations. MNCs can control their overseas
operations in several ways:
•
•
•
•
•
Combining direct and indirect controls
Using heavily quantifiable methods
Using qualitative approaches
Using decentralized approaches
Using increased centralization.
After appropriate control measures are decided and implemented in a firm, evaluation
must take place. Dereksy (2017) indicated a major problem in the evaluation of the
performance of foreign affiliates is the tendency by headquarters managers to judge
subsidiary managers as if all of the evaluation data were comparable across countries.
Unfortunately, many variables can make the evaluation information appear differently
between countries. One way to ensure more meaningful performance measures is to
adjust the financial statements to reflect the uncontrollable variables peculiar to each
country where the subsidiary is located. Another way is to provide meaningful, long-term
performance standards to take into account other nonfinancial measures.
Watch this video to learn more about the basic mechanisms of controlling an organization.
https://youtu.be/qMS95M6RBW4
This video explores the components of organizational control.
The premise of organizational control is that action aligns with standards. Click through
these tabs to learn more about types of control models (Gregg, 2018).
Feedback Control Model:
•
•
•
•
•
•
•
It regulates the organization’s activities.
It uses feedback to determine whether performance meets established standards.
Key steps are establish standards, measure performance, compare performance
to standards, and make corrections.
Standards of performance should be clearly defined so employees know what they
need to do.
Formal reports can be used to measure/quantify performance and should reflect
the standards set by the company.
Completed activities are compared to performance standards.
Adjustments are made as necessary to ensure alignment to performance
standards.
Balanced Scorecard Model:
•
•
•
•
•
It compares financial measures with operational measures, linking to success
factors.
Financial performance focuses on how the organization’s activities contribute to
improving short- and long-term financial performance.
Customer service includes indicators that measure information such as customer
retention and satisfaction.
Business processes focus on production and operating statistics.
Organizational capacity for learning and growth involves how well resources and
human capital are being managed for the company’s future.
Managers should record, analyze, and discuss these various metrics to determine how
well the organization is achieving its strategic goals.
2. Decision-Making Process and Challenges in a
Global Organization
Luthans and Doh (2018) indicated that there are a number of factors affecting decisionmaking authority for international firms and managers. One factor reflects either the
retention of authority or the delegation of authority to a subsidiary. One major influence
in this decision is the organizational structure that was initially set up for the subsidiary.
This week’s discussion requires you to use the stages of the decision-making process
outlined in Chapter 11 of the text and apply them to the case study of Google in China
(Case 3.1).
Stages of Decision-Making
1. Problem Perception: What do the stakeholders view as the problem?
2. Problem Identification: What steps can be taken to identify a problem or a
decision to be made?
3. Problem Formulation: What factors and variables contribute to the problem?
4. Search for Alternatives: What options are needed to solve the problem or make
the decision?
5. Evaluation of Alternatives: What is the means to measure alternatives and
weigh the outcomes?
6. Choice of Alternative: After considering all possibilities, what is the best choice?
7. Start of Operation: How can the chosen method be used to solve the problem?
8. Implementation: How can the plan be put into motion?
9. Control: Based on an evaluation of the results, is there any action to take?
Another influence in the decision-making process is the size of the company. Larger
companies tend to encourage centralization, while smaller firms tend to encourage
decentralization of the subsidiary decision-making process.
Watch this video to learn more about the decision-making process and how to organize
choices in a clear way.
https://youtu.be/5a0Fe3AchAI
This video reviews steps to take when making a decision.
While the decision-making process is linear, looping back is common and consists of the
phases a manager will need to make effective decisions.
References
Deresky, H. (2017). International management. (9th ed.). Hoboken, NJ: Pearson Education,
Inc.
Luthans, F., & Doh, J. P. (2018). International management: Culture, strategy, and
behavior (10th ed.). New York, NY: McGraw-Hill Education.
Sageder, M., & Feldbauer-Durstmüller, B. (2018). Management control in multinational
companies: A systematic literature review. Review of Managerial Science, 1-44.
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Chapter 11
Management Decision and Control
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Learning Objectives
• Provide comparative examples of decision
making in different countries
• Present some of the major factors affecting
the degree of decision-making authority
given to overseas units
• Compare and contrast direct controls with
indirect controls
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Learning Objectives (continued)
• Describe some of the major differences in
the ways that MNCs control operations
• Discuss some of the specific performance
measures that are used to control
international operations
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Global Online Retail: Amazon versus
Alibaba
• Competitive strategies
– Alibaba is a conglomerate, whereas Amazon
specializes in business-to-consumer sales
– Alibaba acts as a facilitator for third-party sellers,
whereas Amazon acts as a direct merchant itself
• Geographic positioning of both companies
affects their potential future growths
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Managerial Decision-Making Processes
• Involves choosing a course of action among
alternatives
• Often linear but looping back is common
• Degree of managerial involvement depends
on the:
– Structure of the subsidiaries
– Locus of decision making
• Can be centralized or decentralized
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Figure 11.1 - Decision-Making Process
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Table 11.1 - Factors That Influence Centralization or
Decentralization of Decision Making in Subsidiary Operations
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Cultural Differences in Decision Making
• How managers view time in the decisionmaking process
– French managers tend to spend ample time on
searching for and evaluating alternatives
– Danish managers want to act first and take
advantage of opportunities
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Cultural Differences in Decision Making
(continued 1)
• Germans and Scandinavian countries both
have codetermination
– Codetermination: Legal system that requires
workers and their managers to discuss major
decisions
– Germans tend to be fairly centralized, autocratic,
and hierarchical
– Swedes focus more on quality of work life and the
importance of the individual in the organization
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Cultural Differences in Decision Making
(continued 2)
• Japanese are different from Europeans though
they employ a long-term focus
– Use the following decision-making processes:
• Ringisei: Decision making by consensus
• Tatemae: Doing the right thing according to the norm
• Honne: What one really wants to do
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Research Findings on Decision Making
• Swedish teams
– Higher team orientation, flatter organizational
hierarchies, and open-minded and informal work
attitudes
– Transparent and less formal decision making
• German teams
– Willing to accept a changed or unpopular decision
and have clearer responsibilities for the individual
– Faster in decision making as it is largely dominated
by the decision authority of an expert in the field
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Total Quality Management (TQM)
• Organizational strategy and accompanying
techniques that result in the delivery of highquality products or services to customers
• Critical to achieve world-class competitiveness
• Has a big impact in the manufacturing area
– Employs concurrent engineering or interfunctional
teams to develop new products
• Used by MNCs to tailor their output to
customer needs
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Total Quality Management Techniques
• Employee empowerment
– Empowerment: Gives individuals and teams the
resources, information, and authority needed to
develop ideas and effectively implement them
• Rewards and recognition
– Merit pay, discretionary bonuses, pay-for-skills
and knowledge plans, plaques, and public
recognition
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Total Quality Management Techniques
(continued)
• Ongoing training
– Takes a wide variety of forms
• Ranges from statistical quality control to team meetings
designed to generate ideas for streamlining operations
and eliminating waste
– Objective is to apply kaizen, which is a Japanese
term for continuous improvement
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Decisions to Attack the Competition
• Examples
– Ford Motor Company’s decision to challenge other
automakers and to be a major player in
developing markets, such as Asia and Africa
– Audi company's decision to target younger
professionals in established markets
– BMW company's decision to focus on providing
more options and personalization for consumers
– Mercedes company's decision to go for a lowestcost strategy
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ISO 9000 Certification
• Indirectly related to TQM
– To ensure quality products and services
• Examines design, process control, purchasing,
service, inspection and testing, and training
• Necessary prerequisite to doing business in
the EU
• Screening criterion for getting business in the
U.S. and around the globe
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Decision Making and Controlling
• Interlinked functions
• Controlling
– Process of evaluating results in relation to plans or
objectives and deciding what action, if any, to take
– Types of control
• Internal and external control
• Direct and indirect controls
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Figure 11.2 - Models of PC Manufacturing Traditional Model
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Figure 11.2 - Models of PC Manufacturing Direct Sales Model
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Figure 11.2 - Models of PC Manufacturing Hybrid Model
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Control Problems
• Conflict between the objectives of the
overseas operation and the MNC
• Disagreement in the objectives of joint
venture partners and corporate management
• Variance in the degree of experience and
competence in planning among managers
• Basic philosophic disagreements in the
objectives and polices of international
operations due to cultural differences
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Internal and external control
• Internal control - Focuses on the things that
an MNC does best
• External control - Ensures that there is a
market for the goods and services that it is
offering
– By finding out what the customers want and be
prepared to respond appropriately
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Table 11.3 - Impact of Internal- and ExternalOriented Cultures on the Control Process
Source: Adapted from Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture: Understanding
Diversity in Global Business, 2nd ed. (New York: McGraw-Hill, 1998), pp. 160–161.
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Direct and Indirect controls
• Direct controls - Use face-to-face or personal
meetings for monitoring operations
– Example - Top executives visit overseas affiliates to
learn of problems and challenges
• Indirect controls - Use reports and other
written forms of communication to control
operations
– Example - Monthly operating reports
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Financial Statements Required from
Subsidiaries for Indirect Controls
• Statements prepared to meet the national
accounting standards and procedures
prescribed by the host country
• Statements prepared to comply with the
accounting principles and standards required
by the home country
• Statements prepared to meet the financial
consolidation requirements of the home
country
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Approaches to Control
• Major differences among countries
– Great Britain
• Financial records were sophisticated and heavily
emphasized
• Top management tended to focus on major problem
areas and not involve in specific matters of control
• Control was used for general guidance than for
surveillance
• Operating units had a large amount of marketing
autonomy
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Approaches to Control (continued)
– Germany
• Managers employed very detailed control and focused
attention on all variances
• Managers placed heavy control on production and
stressed operational efficiency
– France
• Managers employed control systems closer to that of
Germans than to the British
• Control was used more for surveillance than guidance
and was centrally administered
• Less systematic and sophisticated system
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Approaches to Control: U.S. Firms
versus European Firms
• U.S. firms
– Measure quantifiable,
objective aspects
– Need precise plans
and budgets in
generating standards
for comparison
• European firms
– Measure qualitative
aspects
– Need high levels of
knowledge about
appropriate behavior
in supporting the
goals of the firms
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Approaches to Control: U.S. Firms
versus European Firms (continued)
– Need large central
staffs and centralized
information-processing
capability
– Require less
decentralization of
operating decision
making
– Favor long vertical
spans between parent
and subsidiary firms
– Need capable
expatriate managers
willing to spend time
abroad
– Require more
decentralization of
operating decision
making
– Favor short vertical
spans between parent
and subsidiary firms
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Performance Measures for Control:
Financial Performance
• Measured by profit and loss and return on
investment
– Profit is an important part of ROI calculation
• Amount of profit is directly related to how well or
poorly a unit is judged to perform
– Can be affected by fluctuations in currency value
• If a country devalues its currency, subsidiary export
sales will increase
• If a country revalues its currency, export sales will
decline
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Performance Measures for Control:
Quality Performance
• Quality control (QC) - Major function of
production and operations management
– Achieved through quality circles
• Quality control circle (QCC): Group of workers who
meet on a regular basis to discuss ways of improving
the quality of work
• Example
– Reasons why Japanese goods are of high quality
• Minimal worker error, effective use QCCs, use of early
warning systems, use of training overkill, and use of
cutting edge technology
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Performance Measures for Control:
Personnel Performance
• Common approach is the periodic appraisal of
work performance
• Variations are found across countries in:
– Methods used in evaluations
– How the control actually is conducted
– How rewards and monitoring of performance are
handled
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Performance Measures for Control:
Personnel Performance (continued)
• Assessment centers: Identifies individuals
with the potential to be selected for or
promoted to higher-level positions
– Involve the following simulation exercises:
• In-basket exercises that require managerial attention
• Committee exercises that require candidates to work as
a team in making decisions
• Business decision exercises that make participants
compete in the same market
• Preparation of business plans and letter-writing
exercises
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World’s Most Admired Firms
• Common themes based on the analysis from
the consultants at the Hay Group
– Top managers take their mission statements
seriously and expect everyone else to do the same
– Success attracts the best people, and the best
people sustain success
– Top companies know precisely what they are
looking for
– Firms see career development as an investment,
not a chore
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World’s Most Admired Firms (continued)
– Whenever possible, these companies promote
from within
– Performance is rewarded
– Firms are genuinely interested in what their
employees think, and they measure work
satisfaction often and thoroughly
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Be the International Management
Consultant
• If you were a foreign investor, would you want
to invest in a consumer electronics company
in Japan?
– Does the fact that the company has had past
problems requiring government intervention
affect your initial decision?
– How does it impact your decision that you would
be competing with a government-backed
company during the bid process?
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Review and Discuss
1. A British computer firm is acquiring a smaller
competitor located in Frankfurt
– What are two likely differences in the way these
two firms carry out the decision-making process?
• How could these differences create a problem for the
acquiring firm?
– Give an example in each case
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Review and Discuss (continued 1)
2. Which cultures are more likely to focus on
external controls?
– Which cultures would consider direct controls
more important than indirect controls?
3. How would you explain a company’s decision
to use centralized decision-making process
and decentralized control process,
considering the two are so interconnected?
– Provide an industry example of where this may
occur
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Review and Discuss (continued 2)
4. How are U.S. multinationals trying to
introduce total quality management into
their operations? Give two examples
5. Would a U.S. MNC doing business in
Germany find it easier to introduce TQM
concepts into German operations, or would
there be more receptivity to them back in the
United States? Why?
– What if the U.S. multinational were introducing
these ideas into a Japanese subsidiary?
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Review and Discuss (continued 3)
6. In what ways could an accelerated decisionmaking process harm a company?
– Using Figure 11–1, which stage(s) do you think
would be most in danger of being overlooked?
7. A company does a personnel performance
evaluation by reviewing the financial
decisions the management has made,
specifically focusing on ROI
– How is this approach beneficial to the company?
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Review and Discuss (continued 4)
– Which aspects could the company be neglecting?
– Which cultures are most likely to employ this
method?
– Which cultures would avoid this tactic?
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Discussion ( 1 )
The immediate problems Google two-faced was the serious criticism within the U.S after they
determined to befit the Chinese government in censoring data. Google’s stocks plummeted and
protestors stood outside of their headquarters hard to please Google not censor data. The future
effects of Google’s call to befit censorship are that they become accomplices to China’s harsh laws.
Chinese individuals can still be jailed for exposing human rights problems and expressing their right
to speech, online. This doesn’t align with Google’s locution “Don’t be evil.” It might still have a negative
impact on Google within the U.S and that they might see their stocks still decrease.
Prior to the launch of Google.cn, Google ought to have taken into thought the ethical dilemma that
comes with China’s government censorship laws. thereupon being aforementioned, they should have
brought attention to themselves by asking queries like, “If we have a tendency to dogo ahead with
China’s censorship laws, however, might it hurt the corporate?” or “How could it create the company
better?” and weigh out the results of each.
In my opinion, I think Google was being “evil.” The growth and also the “future financial benefits” got
the simplest of them. Solon believes that his company’s actions were unethical, however, he believes
that not expanding in the least and motion Google down would fare worse. In my opinion, I believe
that having all the data is best than having as a result of you ne'er known what the opposite aspect of
the fabric might hold. It might initially be seen as a truth, however, flip-up as a lie. I think that Google
was acting “evil.” I feel that the corporate ought to not have allowed the censorship of its search
engines.
I do believe that Google acted unethically. Google has its own standards and its own set of rules and
simply going against them says plenty regarding the corporate. Google ought to not have censored
any of its data as a result of it goes against our human rights. The ethical rule isn't adequate once
creating moral selections as a result of Google’s guidelines within the U.S. (the host culture) is
abundant totally different than those of China.
I trust this statement. each country is totally different in its own approach, thus so as to expand your
business in a very foreign country you can you'll you may either need to make a case for your laws
and persuade them to follow otherwise you will need to adapt your business to their pointers ina
approach that may not damage your company’s name or economic stability.
Google ought to have a gathering with the Chinese government to debate all the self-made prospects
that the web site might have in China. If China decides to say no the chance, then Google ought to
simply decline to try and do business with them.
References:
• O'Rourke, James & With, Iv & Assistants, Research & Harris, Brynn & Ogilvy, Allison.
(2011). Google's Entry into the Chinese Market: A Lesson in Government Censorship and
Corporate Reputation. Journal of Organizational Behavior Education. 4.
• https://www.technologyreview.com/2018/12/19/138307/how-google-took-on-china-and-lost/
Discussion ( 2 )
Globalization of business is almost a must for companies for continuity. Nowadays, organizations with a global
presence and operating in different cultures are not exceptional anymore but rather are the norm (Luthans & Doh,
2021). However, many companies struggle to open a business in Chine because the Chinese prefer to deal with
Chinese companies and because there are many governmental and regulations restrictions on international
companies' foreign investment. One of them is Google (Sun, 2018).
By applying the decision-making process, an analysis of Google's problem in China will be introduced. Stage 1: the
perception of the problem is Google tried to enter the Chinese market by offering its service in Chinese-language
format, but they got blocked because of Chinese regulation and policies violations claims. Stage 2 and 3: the
problem identification and formulation is China trying to control the content and monitor its citizen, which is against
Google policy. Stage 4: Google's alternatives are cooperating with the Chinese government or keeping its promise
and policy with its Chinese users. Stages 5 and 6: when Google evaluated the alternatives, it found that it can
cooperate with China by blocking some websites and content in addition to alerting users that are being censored
and also promised not to maintain any services that involved personal or confidential data.
Stage 7 and 8: Google started to implement its decision by creating an actual service in China with the domain
google.cn and received a license in 2007. Stage 9: after many attacks against human rights activists and filing
lawsuits against Google in the States, it decided to stop censoring, but it could not bypass the Chinese restrictions,
which decreased its market share from one third to one percent. Google also tried to redirect its users' traffic to other
servers like Hon Kong, but still, the service was not working properly (Stevens et al., 2016).
References
Luthans, F., & Doh, J. P. (2021). International management: Culture, strategy, and behavior. New York, NY:
McGraw-Hill Education.
Stevens, C. E., Xie, E., & Peng, M. W. (2016). Toward a legitimacy‐based view of political risk: The case of Google
and Yahoo in China. Strategic management journal, 37(5), 945-963.
Sun, H. (2018). Foreign investment and economic development in China: 1979-1996. Routledge.
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