IBT.PRE FINALS in currency markets.

MODULE 8: The International Monetary System The Floating Currency Exchange Rate System
and Financial Forces - In 1971 President Nixon announced that the United States
would not exchange gold for the paper dollars held by
The International Monetary System: A Brief History foreign central banks, relieving the dollar of much of its
The international monetary system consists of role as a stabilizer for the international monetary system
institutions, agreements, rules, and processes that allow for
- The Jamaica Agreement that established the rules for
the payments, currency exchange, and cross-border
the floating system was both worked out and accepted by
movements of capital required for international transactions.
IMF members after the fact, in 1976. It allows for flexible
THE GOLD STANDARD exchange rates among IMF members, while condoning
central bank operations in the money markets to smooth
Based on its scarcity and easily assessed level of out volatile periods
purity, gold has been trusted since ancient times as a way for
people to store, exchange, and measure value. CURRENT CURRENCY ARRANGEMENTS

In 1717, Sir Isaac Newton, the great mathematician The IMF now recognizes eight types of currency exchange
and master of the English mint, established the price of gold in arrangements, extended from an initial three.
terms of British currency at 3 pounds, 17 shillings, 10.5 pence
Exchange arrangement with no separate legal tender: One
per ounce, putting England on the Gold Standard. Until then, country adopts the currency of another, or a group of countries
Britain had used the silver standard, as did China, Spain, and adopt a common currency.
India
Currency board arrangement: A currency board arrangement
THE BRETTON WOODS SYSTEM commits the country’s government to holding foreign reserves of a
specific currency in an amount equal to its domestic currency
- The 1944 discussions among 44 Allied nations at Bretton
supply and exchange the two at a fixed rate.
Woods (NH) to plan for post–World War II monetary
arrangements reached a consensus that stable exchange Conventional fixed-peg arrangement: A fixed-peg or fixed-rate
rates were desirable but that experience might dictate relationship allows a currency’s exchange rates with one or a
adjustments. basket of currencies to fluctuate around a fixed rate within a narrow
- In establishing the International Monetary Fund (IMF), they band of less than 1 percent.
also set up the new Bretton Woods System, also called Stabilized arrangement: Pegged exchange rate within a
the Gold Exchange Standard and the Fixed-Rate horizontal band: In a different peg arrangement, exchange rate
System. This historic agreement served as the basis of the fluctuations greater than 1 percent are allowed.
international monetary system from 1945 to 1971.
Crawling peg: In a crawling peg strategy, a currency is readjusted
- Bretton Woods set up fixed exchange rates among periodically at a fixed, preannounced rate or in response to changes
member nations’ currencies, with par value based on gold in indicators.
and the U.S. dollar, which was valued at $35 per ounce of
gold. Crawling band: A crawling band readjusts the country’s currency
to maintain fluctuation margins around a central rate.

Managed floating: In a managed float the currency fluctuates,

- Reserves are funds held by a nation’s central bank or while the country’s monetary authority actively intervenes on the
treasury and used to back its liabilities; they can include exchange market without specifying or making public its goals and
various hard currencies (Japanese yen, U.S. dollar, British targets.
pound sterling, EU euro) and gold. They are often called
central reserves Free floating exchange rates: Free floating exchange rates rely
on the market. Governments may intervene, but to moderate the
rate of change rather than to establish the currency’s level.
- The SDR 1969 (Special Drawing Reserve) is a virtual THE BANK FOR INTERNATIONAL SETTLEMENTS
currency with no tangible, physical presence; its value is
based on a trade-weighted basket of four currencies: the The Bank for International Settlements (BIS) is an
euro, the Japanese yen, pound sterling, and the U.S. dollar. international organization of central banks that exists to build
cooperation in order to foster monetary and financial stability.
THE CENTRAL RESERVE/NATIONAL CURRENCY
CONFLICT Financial Forces: Fluctuating Currency Values

Every member of the IMF keeps a Reserve Account, FLUCTUATING CURRENCY VALUES – In a post–Bretton
a bit like a savings account, with holdings the country can draw Woods monetary system, freely floating currencies fluctuate
on when needed to finance trade or investments or to intervene against each other. At times, central banks intervene in the
 foreign exchange markets by buying and selling large amounts the nominal interest rate minus the expected rate of
of a currency in order to affect the supply and demand of that inflation.
particular currency.
 International Fisher Effect, says that the interest rate
WHY FOREIGN CURRENCY EXCHANGE OCCURS differentials for any two currencies will reflect the
expected change in their exchange rates.
 Vehicle Currency is a currency that is used for
international trade or investment.  Purchasing Power Parity (PPP) – Is the amount of
adjustment that must be made in the exchange rates for
 Intervention Currency is one that is used by central two currencies in order for them to have equivalent
banks to intervene in the foreign currency exchange purchasing power
markets. Often the intervention involves buying up
domestic currency to reduce its supply in the market, and EXCHANGE RATE FORECASTING
thereby strengthen it.
 Efficient Market Approach assumes that current prices
EXCHANGE RATE QUOTATIONS AND THE FX MARKET fully reflect all available relevant information. This
assumption also suggests that forward exchange rates
 The Reciprocal Currency is a currency that is quoted as are the best possible predictor of future spot rates,
dollars per unit of currency instead of in units of currency per because they will have taken into account all the available
dollar. information.

 The exchange rate for a purchase or trade for delivery within  Random walk hypothesis, which holds that because the
two business days is known as the Spot Rate. factors that influence prices are unpredictable, stock
market prices evolve much like a random walk, turning
 There is also a Forward Currency Market that allows here and there without a controlling logic, so that the best
managers to lock in contracts to purchase currencies at known predictor of tomorrow’s prices is today’s prices.
rates, for delivery in the future.
 Fundamental Approach to exchange rate prediction
 The Forward Rate is the exchange rate, the cost today, of a looks at the underlying forces that help determine
commitment to buy or sell an agreed amount of a currency at a exchange rates and develops various econometric models
fixed future date, usually 30, 60, 90, or 180 days from now. to capture them and their correct relationships.

 The Bid Price is the highest-priced buy order currently in the  Technical Analysis, looks at history and then, assuming
market. that what was past will be future, projects these trends
forward.
 Ask Price is the lowest-priced sell order currently in the
market. CURRENCY EXCHANGE CONTROLS

CAUSES OF EXCHANGE RATE MOVEMENT A government has the power and authority to limit the
amount of its currency that can be exchanged for another
 Monetary Policies control the amount of money in currency in any given transaction.
circulation, whether it is growing, and, if so, at what pace.
 Convertible Currencies can be exchanged for other
 Fiscal Policies address the collecting and spending of currencies without restrictions.
money by the government.
 Nonconvertible, its value is arbitrarily fixed, typically at a
 Parity Relationships describe equivalencies, and two of rate higher than its value in the free market, and the
these relationships, interest rate parity and purchasing government imposes exchange controls to limit or prohibit
power parity, are fundamental to our further consideration the legal use of its currency in international transactions.
of exchange rates.
TAXATION
 Law Of One Price, which states that in an efficient
While taxation is a legal force, it is also a financial
market, like products will have like prices. If price
factor whose impact is significant. If a corporation can achieve
differences exist, the process of
a lower tax burden than its competitors have, it can lower
 Arbitrage—simultaneous buying and selling to make a prices to its customers or generate higher revenue with which
profit with no risk—will quickly close any gaps and the to pay higher wages and dividends.
markets will be back at equilibrium.
Value-added tax (VAT) is a tax charged on the
value add.
 The economic explanation of When the law of one price is
applied to interest rates, it suggests that interest rates INFLATION AND INTEREST RATES
vary this relationship, which results in interest rate parity,
is known as the Fisher effect. Inflation is a sustained increase in prices. Some
economists hold that it is caused by demand’s exceeding
 Fisher Effect – states that the real interest rate will be supply, while others view the cause to be an increase in the
 money supply. need to develop and implement appropriate responses to
any changes in key environmental forces such as
BALANCE OF PAYMENTS competitors’ actions and changes in government taxes
and regulations
The Balance Of Payments (BOP) is a record of a
country’s transactions with the rest of the world. So it actually STEP 2: Analyze Corporate Controllable Variables
tracks the flows of capital in and out of the country
- The managers of the various functional areas will either
o BOP Accounts – are recorded in double-entry bookkeeping form. personally submit reports on their units or provide input to
Each international transaction is an exchange of assets with a debit a planning staff that will prepare a report for the strategy
and a credit side. planning committee

- A value chain is a set of interlinked activities that adds

value to the final product or service.
o Deficits and Surpluses in BOP Accounts – The BOP current
account and capital account add up to the total account. A deficit in - A value chain analysis is an assessment conducted on
the current account is always accompanied by an equal surplus in the chain of interlinked activities of an organization or set
the capital account, and vice versa. of interconnected organizations, intended to determine
where and to what extent value is added to the final
MODULE 9: INTERNATIONAL COMPETITIVE product or service.
STRATEGY
KNOWLEDGE AS A CONTROLLABLE CORPORATE
What Is International Strategy, and Why Is It Necessary? RESOURCE

International Strategy is a plan that guides the way Knowledge Management refers to the practices
firms make fundamental choices about developing and that organization and their managers use for identifying,
deploying scarce resources internationally, including what creating, acquiring, developing, dispersing, and exploiting
products or services to offer, which markets to enter, and ways competitively valuable knowledge.
to compete.
Much valuable knowledge is TACIT, which means
The purpose of having an international strategy is to that it is known well by the individual but is difficult to express
enable a company to achieve and maintain a unique and verbally or document in text or figures.
valuable competitive position both within a nation and globally,
generating higher rates of profit than its competitors—an ability EXPLICIT, codified knowledge and then making this
that has been termed Competitive Advantage. knowledge quickly and effectively accessible to other
employees who need it.
Why Plan Globally?
STEP 3: Define The Corporate Mission, Vision, And
Strategic Planning is the process by which an organization Values Statements
determines where it is going in the future, how it will get there,
and how it will assess whether and to what extent it has - The mission statement is a broad statement that
achieved its goals. defines the purpose for a company’s existence,
including its business, objectives, and approach for
The Process of Global Strategic Planning reaching those objectives.
The process of strategic planning provides a formal
- A vision statement is a description of the company’s
structure in which managers address the following steps:
desired future position, of what it hopes to accomplish if it
1. analyze the company’s external environments, can acquire the necessary competencies and successfully
implement its strategy.
2. analyze the company’s internal environment,
- In contrast, a Values Statement is intended to be a clear,
3. define the company’s business and mission concise description of the fundamental values, beliefs, and
priorities expected of the organization’s members,
4. set corporate objectives
reflecting how they are to behave with each other and with
5. quantify goals the company’s customers, suppliers, and other members
of the global community.
6. formulate strategies, and
STEP 4: Set Corporate Objectives
7. make tactical plans.
- Objectives direct the firm’s course of action, maintain it
STEP 1: Analyze Domestic, International, And Foreign within the boundaries of the stated mission and vision, and
Environments ensure its continuing existence.

- An environmental scanning process is useful for

STEP 5: Quantify The Objectives
continuous gathering of information, but managers also
- To develop a strategy for reaching its objectives, a sold but also serves as the basis for planning in the other
company must quantify them. But despite most top functional areas.
managers’ preference for verifiable objectives, they
frequently do have non-quantifiable or directional goals. - Budgets are an itemized projection of revenues and
expenses for a future time period.
STEP 6: Formulate The Competitive Strategies
- Competitive Strategies are action plans to enable FACILITATION TOOLS FOR IMPLEMENTING
organizations to reach their objectives. STRATEGIC PLANS

- Home Replication Strategy – Companies pursuing a - Policies are broad guidelines issued by upper
home replication strategy typically centralize product management for the purpose of assisting lower-level
development functions in their home country. After they managers in handling recurring problems.
develop differentiated products in the home market, they
often transfer them to foreign markets to capture - Procedures are guides that specify the way certain tasks
additional value. or activities will be carried out, thereby ensuring uniform
action on the part of all corporate members.
- Multidomestic Strategy – A multidomestic strategy is
effective when pressure to adapt products or services for PERFORMANCE MEASURES
local markets is strong. Decision making tends to be more
- measures of the company’s success in obtaining and
decentralized, to allow the company to modify its products
applying the required resources, such as financial,
and respond quickly to changes in local competition and
technological, and human resources
demand.
- measures of the effectiveness of the company’s
- Global Strategy – A global strategy works when a employees, within and across the firm’s international
company faces strong pressures for reducing costs and network of operations, in performing their assigned jobs;
limited pressure to adapt products for local markets.
Strategy and decision making are typically centralized at - measures of the company’s progress toward achieving its
headquarters, and the company tends to offer mission, vision, and objectives and doing so in a manner
standardized products and services. consistent with the company’s stated values.

- Transnational Strategy – A company that confronts Kinds of Strategic Plans

simultaneous pressures for cost-effectiveness and local
adaptation, and that can gain competitive advantage from TIME HORIZON
responding to both, may adopt a transnational strategy.
- the time horizon will vary according to the age of the firm
- Standardization and Planning in Strategy and the stability of its market.
Formulation – While the preceding discussion addressed METHODS OF PLANNING
basic strategic alternatives at a business or corporate
level, not all activities of an organization confront the - Top-down planning is a planning process that begins at
same mix of globalization and localization pressures. the highest level in the organization and continues
downward.
Using Scenarios in Strategy Formulation
- Bottom-up planning operates in the opposite manner,
SCENARIOS, which are multiple, plausible stories for
since it is a planning process that begins at the lowest
probable futures.
level in the organization and continues upward.
Contingency Planning as Part of Strategy Formulation - Iterative planning consists of repetition of the bottom-
CONTINGENCY PLANS are plans for the best- or up or top-down planning process until all differences have
worst-case scenarios or for critical events that could have a been reconciled.
severe impact on the firm.
WHO DOES STRATEGIC PLANNING?
STEP 7: Prepare Tactical Plans - Top management, at the urging of strategy consultants,
- Because strategic plans are fairly broad, tactical (also is assigning strategic planning to teams of line and staff
called operational) plans are a requisite for spelling out in managers from different business, geographic, and
detail how the objectives will be reached. functional areas, much as it has already done with process
improvement and quality improvement.
Strategic Plan Features and Implementation Facilitators
HOW STRATEGIC PLANNING IS DONE
SALES FORECASTS AND BUDGETS
- Top managers of many companies have come to realize
- The Sales Forecast, which is a prediction of future sales there is no point in making new detailed five-year
performance, not only provides managers with an forecasts when international crises are exploding their
estimate of the revenue to be received and the units to be earlier ones.
CONTENTS OF THE PLAN so on)
- They need an approach to strategic planning that HYBRID ORGANIZATIONAL STRUCTURES
effectively incorporates a long-term perspective to
decision-making and resource allocation decisions. - A hybrid organization is a structure organized by more
than one dimension at the top level.

- The top level is a mixture of the organizational forms

MODULE 10: ORGANIZATIONAL DESIGN AND described above, and the lower levels may or may not be.
CONTROL
MATRIX ORGANIZATIONS
How Does Organizational Design Impact International
Companies? - The Matrix Organization is an organizational structure
composed of one or more super imposed organizational
Organizational Design is a process that determines structures in an attempt to mesh product, regional,
how a company should be organized to ensure its worldwide functional, and other expertise.
business activities are integrated in an efficient and effective
manner. MATRIX OVERLAY

What elements need to be considered when designing - The Matrix Overlay is an organization in which top-level
the structure of an IC? There are four: divisions are required to heed input from a staff composed
of experts of another organizational dimension in an
1. Product and technical expertise for the company’s attempt to avoid the double-reporting difficulty of a matrix
different businesses. organization but still mesh two or more dimensions

2. Geographic Expertise on the countries and regions in STRATEGIC BUSINESS UNITS

which the company operates.
- Strategic Business Units (SBUs), self-contained
3. Customer Expertise to gauge the similarity of client business entities, each with a clearly defined market,
groups, industries, market segments, or population groups specific competitors, the ability to carry out its business
that transcend the boundaries of individual countries or mission, and a size appropriate for control by a single
regions. manager

4. Functional Expertise in the company’s value chain CURRENT ORGANIZATIONAL TRENDS

activities.
- The rapidly changing business environment caused by
increased global competition, a growing customer
preference for custom-made rather than mass-produced
Evolution of International Company Structure products, and faster technological change is pressuring
companies to step up their search for organizational
INTERNATIONAL DIVISION STRUCTURE forms that enable them to act more quickly, reduce costs,
and improve the quality of product offerings.
- An International Division is a division in the organization
that is at the same level as the domestic division and is - REENGINEERING – Involves redesigning organizational
responsible for all non-home-country activities. structure, hierarchy, business systems, and processes in
order to improve organizational efficiency.

- VIRTUAL CORPORATION – also called a network

INTERNATIONAL PRODUCT STRUCTURE
corporation or a modular corporation, is an
- An international product structure represents a return to organization that coordinates economic activity to deliver
pre export department times in that the domestic product value to customers using resources outside the traditional
division is given responsibility for global line and staff boundaries of the organization.
operations.
- HORIZONTAL CORPORATION – A horizontal
GEOGRAPHIC REGION STRUCTURE corporation is a form of organization characterized by
lateral decision processes, horizontal networks, and a
- Firms in which geographic regions are the primary basis strong corporate-wide business philosophy.
for organizing their operations put the responsibility for all
activities under geographic area managers who report REQUIREMENTS FOR THE FUTURE OF INTERNATIONAL
directly to the chief executive officer. COMPANIES
GLOBAL FUNCTIONAL STRUCTURE - Managers in many ICs can expect to make greater use of
the dynamic network structure that breaks down the
- In this type of organization, those reporting to the CEO major functions of the firm into smaller companies
might be the senior executives responsible for each coordinated by a downsized headquarters organization.
functional area (production, marketing, finance, and
 - An extremely important consideration for parent-company
management is that the management of its subsidiaries
Where Decisions Are Made in Wholly Owned be motivated and loyal. If all the big decisions are made, or
Subsidiaries are perceived to be made, at the IC headquarters, the
managers of subsidiaries can lose incentive and prestige
- SUBSIDIARIES are companies controlled by other with their employees and community. These managers
companies (known as parent companies) through may grow hostile and disloyal.
ownership of enough voting stock to elect a majority of
the voting members on the company’s board of directors. Where Decisions Are Made in Joint Ventures and
Subsidiaries Less Than 100 Percent Owned
- AFFILIATES are companies controlled by other
companies, but less-than-majority owners may exercise A joint venture may be a corporate entity whose
control by a variety of means, both those involving stock ownership is shared between an IC and local owners, a
ownership and those involving non-ownership corporate entity owned by two or more companies foreign to
mechanisms. the area where the joint venture is located, or one company
working on a project of limited duration (such as constructing
a dam) in cooperation with one or more other companies.
STANDARDIZATION OF THE COMPANY’S PRODUCTS LOSS OF FREEDOM AND FLEXIBILITY
AND EQUIPMENT
- If shareholders outside the IC have control of the affiliate,
- Some large global manufacturers of consumer products, they can block any IC headquarters’ efforts.
such as Procter and Gamble (P&G) and Colgate, are
developing products that are standardized from the outset - Even if outside shareholders are a minority and cannot
for global or regional markets. In these situations, the directly control the affiliate, they can bring legal or political
affiliates have to follow company policy. Of course, pressures on the IC to prevent it from diminishing the
representatives of the affiliates may have an opportunity affiliate’s profitability for the IC’s benefit.
to contribute to the design of the product, which is
typically introduced first in the home market CONTROL CAN BE HAD EVEN WITH LIMITED OR NO
OWNERSHIP
COMPETENCE OF SUBSIDIARY MANAGEMENT AND
- With less than 50 percent of the voting stock and even
HEADQUARTERS’ RELIANCE ON IT
with no voting stock, an IC can exercise control over a
- The extent to which an IC relies on subsidiary subsidiary’s decisions and activities. Some methods of
management to make decisions can depend on how well maintaining control are:
the executives know company policies and each other, on
- Drawing up a management contract
whether headquarters management thinks it understands
host country conditions, on the distance between the - Retaining control of the finances
home country and the host country, and on how big and
how old the parent company is. Let’s briefly look at each of - Retaining control of the technology
these factors.
- Putting people from the IC in important executive
SIZE AND AGE OF THE IC positions

- The longer a company has been an IC, the more likely it is REPORTING
to have a number of experienced executives who know
company policies and have worked at headquarters and in For decision making and control of organizational
the field. resources to be effective, all operating units of an IC must
provide headquarters with timely, accurate, and complete
HEADQUARTERS’ WILLINGNESS TO BENEFIT THE reports, including (1) financial, (2) technological, (3) market
ENTERPRISE AT THE SUBSIDIARY’S EXPENSE opportunity, and (4) political and economic reports.

- An IC may decide to move factors of production from one FINANCIAL REPORTING

country to another, or to expand in one country instead of
- A surplus of funds in one subsidiary often is retained there
another. In addition to the cost, availability, and skill levels
for investment or contingencies. On the other hand, such a
of labor, other possible reasons for such a move include
surplus might be more useful at the parent company, in
corporate tax rates, market conditions, currency
which case, the parent would pay the subsidiary a dividend.
fluctuation, and political instability.
TECHNOLOGICAL REPORTING
- New technology is constantly being developed, and when
- TRANSFER PRICING –
Pricing established for
it happens locally, the subsidiary or affiliated company is
transactions between members of the same enterprise.
likely to learn about it before IC headquarters, hundreds or
THE SUBSIDIARY’S FRUSTRATION WITH ITS LIMITED thousands of miles away.
POWER
REPORTING ABOUT MARKET OPPORTUNITIES What Competencies Are Required for Effective Global
Leadership?
- The affiliates in various countries may spot new or
growing markets for some product of the enterprise. This Research conducted by Aperian Global, a consulting
could be profitable all around, as the IC sells more of the company whose goal is to open the world for its clients,
product while the affiliate earns sales commissions. identified five abilities returning expatriates thought necessary
for a successful global leadership assignment. These are the
POLITICAL AND ECONOMIC REPORTING ability to:
- Democracies have replaced dictatorships, one dictator has
 See Differences, a self-awareness in cultural contexts.
replaced another, countries have broken apart or
Leadership patterns are shaped by culture, and other ways
reunited—changes have occurred on almost every
to get things done exist.
continent.
 Make connections because in the global environment,
relationships are a prerequisite for getting things done.
MODULE 11: GLOBAL LEADERSHIP ISSUES AND “Results through relationships” is a key observation.
PRACTICES  Adjust, a kind of “frame-shifting” that requires cognitive
flexibility to see differences and adjust behavior quickly.
The Global Mind-set
 Integrate and lead change, a complex ability to adjust
- is a “pre-requisite for global industry dominance.” Global
to some local practices while selling other practices into
mind-set is defined as a view “that combines an openness
the local environment, a combination of adapting and
to and awareness of diversity across cultures and markets
questioning the status quo.
with a propensity and ability to synthesize across this
diversity.”  Localize, an ability to develop local talent.
Global Leadership: What It Is and Why It Matters Management scholar Henry Mintzberg and others have
identified a range of roles that a global leader may need to take,
- the way the individual uses power to influence, the context
including:
of the leadership situation, and a combination of these
 Monitor—scanning environments, seeking information,
approaches. monitoring different units of
- LEADERSHIP – the behaviors and processes required for  the company.
 Spokesperson—advocating and representing the
organizing a group of people in order to achieve a
company, communicating with different levels of internal
common purpose or goal.
and external stakeholders.
HOW GLOBAL LEADERSHIP DIFFERS FROM DOMESTIC  Liaison—networking, coordinating, spanning internal and
external boundaries.
LEADERSHIP
 Leader—motivating and coaching individuals and teams,
- MULTIPLICITY – which refers to the geometric growth building and maintaining corporate culture.
in the volume and nature of issues global leaders deal with;  Negotiator—making deals, managing conflict.
 Innovator—seizing opportunities, generating new ideas,
- promoting a vision for the company.
 Decision maker—troubleshooting, making decisions.
- INTERDEPENDENCE – which recognizes that although  Change agent—taking action, developing and
dispersed geographically, the different units of the implementing change plans.
company are systematically linked to each other and
increasingly dependent on external organizations; BUSINESS COMPETENCIES

 Vision and Strategic Thinking – Intellectual

intelligence, able to deal with complexity,
- AMBIGUITY – which refers to the challenge of dealing oscillation between details and big picture,
with information that lacks clarity and incorporates both environmental scanning, frame shifting
quantitative and qualitative dimensions, hindering the  Business Savvy – Business acumen, results
understanding of cause-an
orientation, global capitalist, technical savvy,
- effect relationships and the effectiveness of subsequent finding creative solutions, third-way solutions
problem-solving efforts;  Managing Communities – Customer orientation,
stakeholder orientation, building partnerships
and alliances, influence stakeholders, build
community, boundary spanning
- DYNAMISM – which recognizes that the international
 Organizational Savvy – Total organizational
system itself is constantly changing.
acumen, designing and aligning, architecting,
managing a budget on a world-wide basis
 Leading Change – Catalyst for strategic change,
 catalyst for cultural change, lead change intercultural behavior and global managerial skills. It
addresses competencies in 16 areas, categorized within
perception management, relationship management,
PEOPLE COMPETENCIES and self-management.
 Cross-Cultural Communication –
Communication skills, culture bridger, cultural  Global Executive Leadership Inventory (GELI) – Is
interest and sensitivity, cultural understanding, a 360-degree feedback approach for identifying
leadership competencies and gaps.
mindful communication, cultural self-awareness
 Interpersonal Skills – Emotional intelligence, MODELS FOR DEVELOPING GLOBAL LEADERS
influencing, urgent listening, relationship
interest, social flexibility, results through The Global Leadership Expertise Development (GLED)
relationships Model
 Valuing People – Skilled people reading,
understand actors, cultural acumen, respectful - A model designed for developing the expertise of global
modernizer, respect for others, pragmatic trust leaders
 Empowering Others – Being able to empower - This transformational process consists of the set of
others, energizing, rewarding and feedback, experiences, interpersonal encounters, decisions, and
connective teaching, sharing leadership challenges related to the global leader’s expertise, and it
 Teaming Skills – Team building, multicultural is thought to be the primary cause of the different levels
teaming, managerial ability, with an emphasis on of global leadership expertise we observe among leaders
teamwork and interpersonal skill with global responsibilities.

The “Right Stuff” Model

SELF COMPETENCIES
- The “right stuff” model focuses on developing global
 Resilience – Stress and emotional resilience, leaders that have the “right stuff” in terms of what they
resourceful, optimistic, energetic, self- have learned and what they are able to do as leaders.
confidence, personal management, life balance
 Character – Integrity, maturity, exhibit character, TOOLS AND TECHNIQUES FOR DEVELOPING GLOBAL
honesty, conscientiousness, self identity, core LEADERSHIP SKILLS
values and flexibility, make ethical decisions,
tenacity - Recognize first that it is a nonlinear process that may
include all sorts of diverse experiences. Differences in
 Inquisitiveness – Inquisitiveness, curiosity and
personal backgrounds and attributes, as well as in the
learning, aggressive insight, openmindedness,
companies and their contexts, suggest that development
openness to experience, inviting the unexpected,
efforts need to be individualized.
non-judgmentalness, confident humility,
motivation to learn (also mistakes) Leading Global Teams
 Flexibility – Thinking agility, authentic flexibility,
open-minded and flexible in thought and tactics, GLOBAL TEAMS – are characterized by high levels of
interest flexibility, tolerance for ambiguity, diversity, geographic dispersion, and virtual rather than face-to-
embrace duality face interaction.
 Global Mind-set – Global mind-set
cosmopolitanism, cognitive complexity, thinking - LEADING TEAMS – Leading teams in almost any
context includes three main activities: establishing the
globally
team, coaching team members, and setting team norms.

COMPLEXITY FOR TEAMS IN THE GLOBAL CONTEXT

ASSESSING GLOBAL LEADERSHIP COMPETENCIES
- The three specific conditions identified in the
 Cross-Cultural Adaptability Inventory (CCAI) – Is a
tool for self-assessment of cross-cultural adaptability. It
international context that contribute to
can be used to assess an individual’s capability to adjust globalization’s complexity are increased multiplicity,
to a new culture and to design a training program to increased interdependence, and increased ambiguity.
enhance success in relocating to another culture. We look at these forces a bit more closely to
understand the complexity that global team leaders
 Intercultural Development Inventory (IDI) – face.
Identifies the competencies associated with intercultural
sensitivity, and it often is used to assess ability to GLOBAL TEAM LEADERSHIP AND CULTURE
modify cultural perspective and to adapt behavior to
different cultural contexts. - Global team leaders have to address the basic conditions
of team performance— organization, social processes, and
 Global Competencies Inventory (GCI) assesses task processes—as well as the issues that accompany an
personality predispositions linked with effective international context.
VIRTUAL AND GEOGRAPHICALLY DISPERSED TEAMS
- Many global teams are geographically dispersed and
communicate through technology. Leading a team whose
members are on different continents and in different time
zones, and who connect through technology such as
texting, e-mail, or video-conferencing, creates unique
leadership challenges. Virtual communication, even with
video content, lacks the richness of face-to-face
communication

PERFORMANCE MANAGEMENT IN GLOBAL TEAMS

- SOCIAL LOAFING – tendency of some people to put

forth less effort when they are members of a group.

Leading Global Change

Jim Clawson believes change is the central part of

leadership. He writes that leadership has three elements: “(1)
seeing what needs to be done; (2) understanding all the
underlying forces at play in the situation; and (3) having the
courage to initiate actions to make things bet.

CHANGE MODELS

- Unfreezing – requires overcoming inertia and preparing

people for change, including dealing with defense
mechanisms against the proposed change. At this point,
there is stress, tension, and recognition of the need for
change.

- Moving – proposed behaviors into practice, a period

often characterized by confusion.

- Re-freezing – Is the final stage, when the new behaviors

are either accepted and institutionalized or rejected.

CHANGE AND CULTURE

- These include cultural traits that govern our tolerance of
ambiguity, power distance, attitude toward planning,
communication styles, and flexibility.