Business 101: Principles of Management

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Every manager focuses on five different aspects of management. These aspects are common knowledge and when used together, they help to create an effective manager. This lesson will address those areas and integrate them into international business.

Ingredients in Management

Have you ever baked a cake? If you have, you will know that there are certain types and amounts of ingredients that go into the cake so it will turn out correctly. Too much of one ingredient or not enough of another, and your cake could turn out more like a door stop than a tasty treat. The same holds true when we look at managerial functions in international organizations. What ingredients you have and how you add them to the mixture will determine your success.

For a person to be an effective manager, they will have to take the ingredients they would normally use here in the U.S. and change them a little to make them work in an international setting. The ingredients, if you will, are:

• Planning: Developing and implementing strategy for the organization to function
• Organizing: Ensuring the company has all the right people and parts, in the right place, at the right time
• Staffing: Hiring, training and developing personnel
• Controlling: Making sure the steps of your plan and the results of your work are monitored
• Leading: Supplying a vision to the personnel in the organization

You see, these are all key aspects of being a manager, but they take on a very different flavor when we put them in an international context, for a variety of reasons.

Planning

For a manager to be effective, he or she has to have a plan. They simply cannot come into work every day and determine what needs to be done that day. Rather, they need to have a plan for managing and growing their department or company over time. In an international setting, planning takes on a different feel because the manager has to take into account all the different aspects present in an international environment. They have to understand aspects such as:

• How taxes are handled in a foreign country and how that impacts their business
• The employment or staffing requirements and laws per country
• The amounts of money that can be put into and taken out of the company, based on laws present in that country
• Regulatory issues that would impact what the company can do should they want to expand

As you can see, these are not much different than what we would experience in the U.S., but they need to be understood from the aspect of the international country you are in. For example, many countries have foreign direct investment laws - laws that regulate, among other things, how much profit can be taken out of the company and sent back to the corporate office in the U.S. If you are operating within just the U.S., this is not an issue, but in international settings, it's a very real issue.

Organizing

Picture this. You walk into a room, and it's your job to get everyone seated before a lecture is to begin. Now picture that each one of the people in the room speaks a language other than your language. You have to organize and get them into their seats before the speaker comes out. Can you imagine how difficult it would be?

This is the primary challenge when looking at organizations from an international perspective. People might interpret what you are saying differently because they do not fully understand you due to language barriers. Now take this example and multiply it by having to run an organization in Europe. You would have to organize individuals who do not speak your language but who also do not speak each other's language. The challenges here are fairly apparent, and it's something a manager has to learn to overcome to work in a foreign setting. Remember, we are not talking about only the languages but also how the translation is interpreted.

Staffing

Obviously, a manager wants to find the best person he or she can for the job. In the U.S., we have familiar, understood rules for hiring people via background checks and the interview process. In foreign markets, those rules are totally different. For example, in Germany, if you have a sales representative who handles a market for you, and you want to let that person go, you must pay that person the commissions earned in that territory for a year after you let them go. The German courts look at it as that person developed that market and is entitled to that money. Thus, you have replaced a person who was not performing and have to pay the new person, but you also have to pay the person you let go for a year. This is a very different aspect to staffing that we would not experience in the U.S.

Compound tricky laws with different holiday schedules, religious beliefs and accepted work ethics, and a manager in a foreign market really has a lot to think through when it comes to staffing.

Controlling

How do you put together a puzzle? Do you organize the pieces into inside pieces and border pieces and then start by putting together the border? This is an example of organizing the information you have in order to understand it better. What would you do if the puzzle was different than a traditional puzzle? Let's say that instead of the traditional smooth border, the puzzle has no border at all. It would be more difficult to distinguish the inside pieces from the border pieces. This is kind of what it's like for the international manager. They have to work with unfamiliar information and try to organize it so they can put everything together. In an international setting, the 'puzzle pieces' do not look as familiar, and it's not as easy to control the process because you are unaware of all the nuances of how they work or fit together. So, organizing in a foreign setting is challenging to say the least.

All the aspects we have talked about so far have to be controlled. We have talked about how each has their own set of rules when it comes to an international situation - thus, controlling them is a big challenge. There will be different laws, rules, formal norms and informal norms that will come into play that a manager has to understand or learn. Banking will be different, accounting statements will be different and labor laws will be different. A manager will use all of these tools to control his or her operations, and they will be totally different than what we are used to here in the U.S.

Leading

Finally, we have leading. In this case, the main challenge is the interpretation of the words and actions used, as well as bridging cultural barriers. For example, in many South American markets, it is acceptable to be late for meetings or work. These cultures are not as time bound as we are. So, if a manager wants to lead his production team to be on time and work hard, he or she will be leading into a black hole. The culture simply will not accept it. Thus, a manager has to totally adapt his or her leadership style to the market conditions and accepted norms to have any chance of leading.

Lesson Summary

International managers take on the same challenges as U.S. managers; there is just a different spin on it, mostly due to laws and culture.

• Planning: A manager must understand the laws present and the information at hand to be able to plan effectively.
• Organizing: Once they understand the information and laws, they need to be able to get all the pieces working together to get the desired outcome.
• Staffing: Culture and language barriers play a large role here, as well as laws and accepted norms.
• Controlling: International managers have to be able to understand how all the information they get in an international setting is to be interpreted in order to be successful.
• Leading: Language and culture again play a large part in this aspect. A good manager will need to adjust his or her leadership style to the culture at hand to have any chance of success.

In the end, while many of the aspects are the same as what we face in the U.S., they have totally different forms to them. It is a shape, if you will, that is recognizable yet different due to it coming from a foreign market. To quote Dorothy from the Wizard of Oz, 'We're not in Kansas anymore, Toto.'