XXVI. Managing in a Foreign Country

First of all, an American manager will most likely have to deal with an intense cultural shock upon arriving in their new country. All the rules will have changed, from how to get coffee in the morning to getting a report submitted on time! This cultural shock will express itself in feelings of confusion, disorientation and emotional upheaval. Once the manager deals with his or her internal disruptions, the new situation can be addressed.

A. Different People, Different Rules

Depending on the country the manager is sent to, even the way people communicate may be at odds with what would be considered "normal" in the United States. The manager has to realize that now he or she is working under a different set of conditions for both personal and business relationships.

The most common mistake an American manager makes is to assume that an American firm's subsidiary is just a piece of America transplanted in foreign soil. Nothing can be further from the truth. The calm stable civil environment the manger is accustomed to may now be 4000 miles away! The highly formalized and functional governmental bureaucracy the manager understands may be replaced by a chaotic and seemingly incomprehensible morass of conflicting regulations all written in a foreign tongue, which the manager doesn't speak!

Governments in foreign countries may have either been stable for centuries or only last a year. Deals made may be broken arbitrarily to meet political or personal ends. Roads and other transportation systems may be spotty and subject to destruction by the weather. Local phone service may be shut off at 10pm. Spare parts for equipment may have to be received from thousands of miles away.

Managers should assume nothing in these new environments. Each day is a learning experience when the manager is open to change. While it may seem that operating in a foreign country is too difficult to manage, the managers who survive and thrive will be superior leaders when they return to the home country. Managers who stayed at home can never match their experiences.

B. Loss of Control

Expatriate managers may feel a loss of control in their foreign assignments. Economic conditions may radically effect the performance of the organization. The inflation rate might destroy what otherwise would have been a remarkable profit period. International currency exchange rates can quickly turn a loss into a profit and vice versa. The tax structure might radically change and make your organization no longer viable.

The infrastructure might collapse. A bridge washed out may keep vital materials from the plant, causing the workers to be idled. The firm might be nationalized. A building might be blown up by terrorists. The banks might close. Food supplies might be cut off. All the aspects of a modern economy that the manager took for granted (like there always being butter at the local store when you want it) are suddenly called into question.

To put this in perspective, situations like this happen in America all the time, but the redundancy built into our economy hides the impact. If a dairy goes out of business, other dairies will take up the slack. In a foreign country, that may have been the only dairy that existed. The manager had better get used to the idea of dry toast for breakfast!

C. Ethical Differences

In America there are certain business practices which are expressly forbidden both by law and custom. This is not true in other countries. Some countries are more accepting of bribery, stealing industrial secrets, or theft from the organization.

In countries where bribes to officials are commonplace, American managers who refuse to pay on moral grounds may find themselves without necessary licenses and permits.

Contracts are vital to American business and are almost sacred documents that are undertaken after careful consideration. Other countries may not share this concern. The manager who assumes the deal is done when the contract is signed may be in for a rude awakening.

In corporate America, it is unethical for an employee to steal ideas or clients from a former employer. This ethical constraint may not exist in the country the manager is working in. Employees may stay long enough to gain the work skills and then leave to open a competing organization!

In poor countries where hunger and poverty are only a footstep away, there are few ethical constraints. This is especially true of ethical constraints between a worker and a faceless organization; workers may steal materials and ideas to try to make a little extra money. If the choice is honesty or life, most people will choose life every time.


Copyright Information
Title: Managing In Foreign Countries (Lecture Notes)
Author: John Anderson  (Instructor)
University: National University
Course: MGT 409C- Principles of Management and Organization
Date: June 1, 2002 (Received)

Certain materials herein are included under the fair use exemption of the U.S. Copyright law and have been prepared according to the educational multimedia fair use guidelines and are restricted from further use. This work may be protected by further copyright, reproduction and distribution (in violation of United States Copyright Law).