SCHOOL OF POSTGRADUATE STUDIES

DEPARTMENT OF EDUCATIONAL MANAGEMENT

PROGRAMME: MASTER
COURSE TITLE: Comparative Management
COURSE CODE: EDM 814
CREDIT HOURS: 3

PROGRAMME GOAL: This course is intended to provide students with understanding of

analysis of management practices in various environmental settings in order to identify the
causes of differences and similarities in organizational results or performance.
OBJECTIVES:
At the end of this course, the students should be able to:
 Understand the general overview of comparative management
 Understand the historical background and evolution of school of management
thoughts
 Understand various models/theories of comparative management
 Understand the concept of Globalization
 Understand the concept of competitive advantage and its various strategies.

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 COURSE OUTLINES
Chapter 1: OVERVIEW OF COMPARATIVE MANAGEMENT
1.1 Comparative Management
1.2 Managerial Practices
1.3 Environmental Setting
1.4 Management Functions and Comparative Management
1.5 Business Functions and Relevance to Comparative Management
1.6 The Entrepreneur
1.7 International Business
1.8 Factors That Encourage A Company to Go Multinational
1.9 Types and Forms of The Multinational Company
1.10 Factors to Be Considered Before Starting An MNC
1.11 Problems Faced by MNC Mangers
1.12 Assignments
1.13 Quizzes

Chapter 2: DEVELOPMENT OF MANAGEMENT THOUGHT OR SCHOOL OF

THOUGHT (NOT FOR THIS COURSE)
2.1 Classical School of Thought
2.2 The Behavioural School (1960s)
2.3 The Quantitative and Systems School
2.4 The Contingency Approach
2.5 Comparative Management (CPM) And Its Relationship to Schools of Thought
2.6 Assignments
2.7 Quizzes

Chapter 3: COMPARATIVE MANAGEMENT THEORIES AND MODELS

3.1 Introduction
3.2 Major Approaches In The Study Of Cpm
3.2.1 Socio-Economic Approach
3.2.2 The Ecological Approach
3.2.3 Koontz Model
3.2.4 The Behavioral Approach
3.2.5 The Eclectic Empirical Approach
3.3 Assignments
3.4 Quizzes

Chapter 4: INTERNATIONAL/COMPARATIVE MANAGEMENT IN SELECTED

COUNTRIES
4.1 Introduction
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4.2 Japan
4.3 The United States of America
4.4 Germany
4.5 India
4.6 Saudi Arabia
4.7 Assignments
4.8 Quizzes
Chapter 5: GLOBALIZATION
5.1 What Is Globalization?
5.2 Positive Effect
5.3 Negative Effect
5.4 Assignment
5.5 Quizzes
Chapter 6: COMPETITIVE ADVANTAGE
6.1 Introduction
6.2 Strategic Competitive Advantage
6.3 Sustainable Competitive Advantage
6.4 Gains of Competitive Advantage
6.5 Other Strategies for Competitive Advantage
6.6 How Do You Create A Competitive Advantage?
6.7 Assignments
6.8 Quizzes

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 CHAPTER ONE
OVERVIEW OF COMPARATIVE MANAGEMENT
1.1 COMPARATIVE MANAGEMENT
in the main, comparative management provides a forum in which managerial practices in
various environmental settings are analyzed with the objective of identifying the causes of
differences and similarities in managerial behaviour and the attendant similarities and
differences in organizational results or performances. From the above description, two terms
need further explanation, namely, managerial practices and environmental setting.

1.2 MANAGERIAL PRACTICES

Managerial practices refer to the way and manner managers perform their functional
activities of planning, organizing, coordinating, motivating and controlling. Involves
identifying the degree of efficiency and effectiveness with which these activities are
performed in the dynamic business environment of various countries the world over.

1.3 ENVIRONMENTAL SETTING

The environmental setting of a business organization refers to factors or forces (political,
cultural, socio-economic, technological, educational etc.) that affect the growth and
development of business in a locality. These factors become significant, in the sense that they
affect business results and the business has little or no control over such factors. As a
business grows, it takes wider areas and boundaries or a nation. At this point, the extent of
management required to run the affairs is domestic, however, as the business grows beyond a
point and extends to other countries the nature of the management changes too. The area of
operation becomes international environment and the nature of administration then is
described as international management. The elements of environment remain, political,
technological, economic, cultural and social but the development, complexity assumes
greater degrees and dimes

1.4 MANAGEMENT FUNCTIONS AND COMPARATIVE MANAGEMENT

Functions are what occupiers of posts are expected to do. Comparative management (CPM)-
functions are usually "pressed through the analysis of activities that are expected to be
performed during the international operations by managers. Such activities including decision
making, staffing, planning, organizing, controlling etc., which are performed in special ways
apparently different from that at the domestic level.

DECISION MAKING
Managers operating in an international environment have to choose a course of action from
given alternatives in- order to achieve the goals of the organization. In the process, conscious
recognition is given to the effects of political differences or diplomatic agreements, disparity
in natural endowments, supply of. skilled manpower for technological progress, cultural and
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religious constraints and others that make joint venture, business integration and management
possible, but complex, in different countries.

STAFFING
Staffing is the process by which international managers select train and promote both
indigenous and expatriate employees. Unique differences in cost of jiving, salary scales,
languages and currencies, quality and level of education can create problems in the
employment processes in the different countries.
ORGANISING
Organizing is the arrangement of men equipment and materials so that jobs are allocated, and
structure determined. It usually involves creating international structures that make domestic
activities merge with- that of international, practices. It may require the division of
organization by product, by grid or matrix and by geographical location.
PLANNING
Planning involves anticipation of the future of men and women and the organization and
identifying the courses of action. It involves choosing countries out of several zones that have
profitable opportunities for expansion and whose needs and development plans are
compatible with the requirements of the host country. Plans also include forecasts of risks,
such as political instability, foreign exchange and currency fluctuations, permanent nature
and type of incentives provided for attracting foreign investment and taking adequate
coverage of them. Plans in international operation may require reducing, rear of domination
of the host country by foreign nationals. There may be plans to ensure the recruitment of
adequate proportion to top management positions. It is necessary to allay the fear of
exploitation of host's resources (raw materials, minerals etc.) and repatriation of profits
without participating in local community development programmes.
DIRECTING OR LEADING
Directing involves the function of getting the members of the organization both foreign and
domestic to perform in ways to achieve the established goals. Care is required to choose the
appropriate leadership styles which differ from country to country. In some countries
autocratic rather than subordinate centered styles have been found effective. In others, the
class, position act the charisma of the leader are considered a prerequisite to effective
leadership.
COMMUNICATING
Communicating is the process through which information is circulated in the organization. At
the international operation it may involve knowledge of more than two or three languages. A
manager fluent in many languages has • more impact in influencing his workers,
psychologically. It has also been found that non-verbal communication might have more
impact than written or spoken, during negotiations, in certain cultures. The technology affects
the rate, form and efficiency and the rate of transmitting business messages within or outside
the organization and this may involve crossing •international boundaries of developed and
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developing countries. The use of telephone, telex and fax and fast hand delivered messages
are in vogue. The choice of which to employ depends on the urgency of the message, the •
cost, and level of development of the countries involved.

CONTROLLING
Controlling involves establishing standard of performance, knowing the current- performance
level and comparing it with the standard and accounting for the variance. Practicalizing this
at the international level, will require using some units of measure or units that can be
converted to measure lengths or distances, currency, or weights. Such conversion may
include changes from yards to metres, pounds to grammes, and changes in the purchasing
powers of dollars, pounds sterling, and local currencies, naira and yen etc. In effect the
measurement of the standard of performance, productivity, variance and .corrective actions
must, as much as possible, be equally understood in the same way by individuals in the
different countries. Issues concerning centralization or decentralization of control are
important and may be determined by the constraints or opportunities of the environments in
different countries

1.5 BUSINESS FUNCTIONS AND RELEVANCE TO COMPARATIVE

MANAGEMENT. Business Functions are the functional areas into which a business
operation is divided, namely, production, personnel or human resources management,
finance, and marketing, for effective management. Each unit must be planned, organized,
controlled, coordinated and its workers motivated to achieve effective performance: For a
good and complete analysis of the practices of managers in their attempts to achieve
competitive advantage in foreign markets, each of these units must be scrutinized and well
known. In order to do this, the application of elements of Strategic Management namely,
environmental scanning, diagnosis of the business, choice of strategy and the implementation
in each business functional area, is compulsory. This is because each unit forms a practicing
field for the application of management fundamentals, skills, and technology.
The analysis of differences in skills required for performing each functional managerial duty
becomes clearer and easier when treated separately for instance difference between the
salesmanship and accounting skills become obvious. Similarly, the modifications required in
both technology and management fundamentals needed for operation in different
environments become more easily identifiable and comparable. Also, the equipment and
inventory control required to work in the labour intensive assembly plants of say the Mexican
cluster might be quite different from the Japanese technology intensive affiliates assembly
plants that practice J.I.T techniques to avoid inventory cost in the United States. In effect,
using the functions of business approach, enables one to appreciate how; for example, the
concept of "controlling" can be differently interpreted to mean quality control in production,
budgetary control in accounting, financial control in finance, sales and inventory control in
marketing, and discipline in personnel administration. Each control is associated with the
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area of practical application and hence comparative analysis is easily affected. It becomes
dearer how the additive results of the effectiveness and efficiency of the individual units sum
up to the effectiveness and efficiency of the businesses individually, nationally or across
political boundaries in the case of MNCs.
But before then, it is important to discuss the role of the entrepreneur and the application of
strategic management elements in each functional unit

Management and Administration

Comparative management can be defined as the area of study dealing with differences and
similarities of managerial systems and management practices in different cultural settings. It
requires an understanding of the complexity and diversity of environmental variables and their
impact on institutions. Management, on the other hand, is the process of achieving organizational
goals by engaging in the four basic functions of management, namely, planning, organizing,
leading and controlling (David C. Martins, 2006). This definition recognizes that management is
an on-going process and activities aim at achieving set goals and objectives. Richard Daft (1999)
saw management as the attainment of organizational goals in an effective and efficient manner
through planning, organizing and controlling organizational resources.

Differences between Administration and Management

Administration is being granted enough conceptual clarification in this unit. The obvious thing is
that many people have attempted to look at the two concepts (administration and management)
as the same. However, Harry (2005) believe strongly that administration and management are
not synonymous. The word management is often used in the place of administration but some
differences still exist. The above observation is in consonance with the scientific thought in the
field which sees a dichotomy between administration and management. Furthermore, it has been
stressed that the term administration is used in the process of public sector administration, while
management is used to describe the processes in private sector administration.

In addition, it is believed that management is dynamic and business-oriented while

administration is static, emphasizing the maintenance of the status quo and non-innovation. This
distinction may look acceptable but the globalization of political and management systems have
rendered the differences insignificant. The realities emerging from these polemics is that,
administration is seen as part of management and management as part of administration. The
controversy surrounding this dichotomy between management and administration was as a result
of the translation of Fayol‘s book titled “administration” from French to English (1929) where
management was introduced to replace administration.

Scholars like Gullick and Herbert Simon share the view that management is part of
administration. To them management is one of the actions in administration. In their words,

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management activity unites controls and coordinates all other activities of a group towards the
achievement of the set objectives.

Similarities between Administration and Management

The following are the areas where administration and management are seen as similar:
a. Administration and management are distinctive academic discipline, art and science of
pursuing knowledge.
b. Both concepts are used in modern organizations. They embrace organizational activities
such as organizing, coordinating, budgeting, evaluating other organizational activities for
the achievement of the set goals.
c. Management and administration take place in every area of human endeavor. They aim at
meeting individual and organizational goals.
d. Management and administration represent global phenomenon, cutting across cultural
boundaries. They remain the buzz words in human interaction in the world of work and
business.
e. Administration and management enhances how far both human and material resources
are channeled for purposive enterprise. They enable organizations to effectively and
efficiently organize and utilize their resources for productive activities.
f. They are directed towards the enhancement and attainment of goals and objectives of
individuals and organizations.

Organization and Administration

Organization is the fundamental task in every administration. Organization is the machine for
getting things done. It is chiefly concerned with provisions, arrangements, and mobilization of
manpower which enables the administration to vary out its obligations (Sidhu, 2006).
Organization refers to the complex pattern of communication and relationships in a group of
human beings. This pattern provides each member of the group much of the information and
many of the assumptions, goals, and attitudes that enter into decision making. It also provides
them with a set of stable and comprehensive expectations as to what the other members of the
group are doing and how they will react to decisions made.

This definition is slightly different from that of Sears (2002) who refers organization as a
machine for doing the required work. It may be composed of persons, materials, ideas concepts,
symbols, rules, principles or more often than not, a combination of this machine can work
automatically. Its operation may be subject to human judgment and will. Professor Stead (2006),
stated that organization is an agency by which we achieve our goals. Based on the above
statement, we can say that organization stands for a structure, framework, system, organized
body, a set of collection, concerned with the process of regulations and facilitating work.
Organization can take the form of organization of materials, organization of human resources,
and organization of ideas and principles as discussed below:
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Organization of materials
This encapsulates organization of building, campus, grounds and accommodation. This implies
arrangement of each physical facility in such a way that each item can be most efficiently used
and no wastage takes place. Equipment will be proportional to the number of people to be
served.

Organization of Human Resources

This involves organization of human factors, board of management and workers. It is
organization and mobilization of all the persons who are legally or legitimately concerned and
interested in a firm. This includes each member contributing his best in the common activity and
collective responsibility. Organizational members have to participate in the activity in
conformity with planned purpose and well thought out procedure.

Organization of Ideas and Principles

We can also organize our ideas and principles. This embraces the art of cementing desirable
ideas and principles, such as, norms of achievement, rules and regulations, policy formulation,
and administration, and working out of innovations and institutional programmes for
improvements and reforms. Therefore, organization deals with making systematic arrangements
so that the purposes of the entire system are achieved. Good organization ensures unity of action,
efficiency, economy, optimum utilization of resources, well being and satisfaction for all, and
good results for collective goals. Without proper organization, there would be confusion, chaos,
and haphazard activity resulting into wastage of time, effort and resources.

Functions of Organization
(i) Organization is the administrative expression of the theory of administration.
(ii) Organization stands for, an organized body or system, or structure, or framework for human
undertakings.
(iii) Organization is concerned with the provision of materials, human equipment, regulations,
forms and facilities of work.
(iv) Organization provides a machine or set of machines for doing some work.
(v) Organization provides resources. Organization is that agency by which we achieve the
desired objective.
(iv) Organization defines and determines functions, programmes, and activities.
(vii) Good organization ensures unity of efforts, efficiency, goodwill, and proper use of
resources.

Functions of Administration
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Functions of administration include the following:
(i) All activities designed to make an organization to function effectively.
(ii) Administration stands for running, handling, conducting, controlling and organizing.
(iii) Administration is the process of integrating these efforts of personnel and of utilizing
appropriate materials to draw maximum benefit from available facilities.
(iv) Administration deals with the functioning and operation of the machines of the set up.
(v) Administration deals with the functioning and operations and management of resources.
Administration arises out of organizational schemes, programme, and practices.
(vi) Administration is basically concerned with the efficient execution of programmes and
activities.
(vii) Good administration ensures proper planning, direction, and evaluation.

1.6 THE ENTREPRENEUR

The entrepreneurs are people who have the ability to identify and evaluate business
opportunities or constraints; to gather the necessary resources, to take advantage of them, and
to initiate appropriate action to ensure success - Meredith, C.G.R.E. Nelson and P. A, Neck
(1991).
The entrepreneurs-referred to above are individual business people. However, when their
functions are performed in large organizations, corporate bodies, firms, companies and
governments, they are formed by Strategic Managers, and process through which they
performed the functions is described as strategic management.
In other words, in big organizations, the role of the entrepreneur is performed by Strategic
Business Unit (SBC)). The group is composed of Strategic Business Unit—managers,
Corporate partners:

FIGURE 1
ENVIRONMENT ELEMENTS OF STRATEGIC MANAGEMENT
Searching or To discover opportunities or threats
Scanning

DIAGNOSIS OF To discover strength or weakness of Business

Company or functions
Business

To consider alternative action to take

CHOICE OF
STRATEGY

Execution of decision
IMPLEMENTATION
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 From the definition and Figure 1 above, it would appear that entrepreneurs and hence
SBU teams are engaged in performing the following activities:
1. Analysis of the business environment in order to identify "business opportunities or
threats and discover the weaknesses and strengths of the business functions
(Production, Marketing, Finance and Personnel)
2. Evaluation of the extents of the opportunities, threats, strengths and weaknesses in
order to determine' how to exploit the opportunities and meet the threats;
3. Gathering data, human and materi.al resources for decisions that would enable the
utilization of the opportunities/ threats build up sustainable competitive advantage
over competitors; and
4. Planning and taking actions that would ensure success i.e. that would guarantee the
achievement of the set business, goals.

1.7 INTERNATIONAL BUSINESS

International business is the business involving activities that cross national
boundaries. It is unique and different from domestic business, because it involves
foreign transactions in different environments. It is subject to different laws and subjects
to different monetary systems. Companies which engage in this type of business are
those which because of high technology or natural endowment are able to produce a
surplus and use large quantities of (raw) materials they can obtain from other nations to
produce goods and services. They usually take advantage of international economics,
principles such as comparative advantage, which require producers to specialize in
producing goods that they can produce more cheaply than other and refrain from
producing those items they can buy more cheaply elsewhere. They also take advantage
of foreign exchange mechanism that provide rate at which the currency of a country is
exchanged for another country", or of how balance of payments is determined etc. From
this emerges international investment and finance. Later, the subsidiaries of some large
firm; grow to act as export agents to the parent company. The development of
international business goes through the formation of international companies and finally
the evolution of global comp. (MNC) in which overseas operations have departments in
finance personnel, and production in the foreign countries.
1.8 FACTORS THAT ENCOURAGE A COMPANY TO GO
MULTINATIONAL
Companies go multinational as a result of a number of factors:
1) The heavy accumulation of capital and technology and technical know-how in the
developed countries;
2) The rapid rate of communication and transportation;

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3) The rapid growth of markets in the countries where a company is chartered; and the
organization of economic communities that favor regional markets and free trade
agreements.
All the points mentioned above have encouraged the overgarment of the MNC, but do
not explain why they are in existence. MNC's are in existence to meet the need for direct
foreign investment foreign operations. This means the home country transfers funds to
other host countries, to acquire plants, warehouse offices etc., and maintain managerial
control over the operations in the host country.
A MNC may come into being as a result of a desire to source for raw materials e.g.
palm kernel, petroleum, palm produces or ores, at a cheap rate and reasonable quantity.
may also be because of a wish to expand existing markets or find new markets for a
Company’s goods.
Another reason may come as a result of desire of the MNC to beat its competitors in
sales race, to first utilize opportunities in the new culture or environment.
A government sponsored company may go multinational to gain political advantages
over other competitors.
1.9 TYPES AND FORMS OF THE MULTINATIONAL COMPANY
FORMS
There are a number of forms in which a MNC can involve itself in foreign operations.
The mode of involvement can be one of the following:
JOINT VENTURE
Joint Venture involves the sharing or ownership with others. T nis type of venture
interests developing countries. A company may join a multinational company with
foreign ownership and control, but which needs a local identification. The advantage
lies in its adaptability am flexibility to local or foreign needs. Ownership is always
shared at agreed percentages."
EXPORT OF HOME COUNTRY PRODUCTS
The country producing the goods engages experts to negotiate with foreign companies
and only trades internationally. This method is employed by a company that is
inadequately experienced in international operations. The advantage is that it minimizes
risks and cost of exporting and marketing.
MANAGEMENT CONTRACT
Management Contract is a service contract requiring no capital. A MNC provides a
country (e.g. Saudi Arabia where managerial skill is scarce) with only that service and
nothing else. The M NC is rewarded accordingly.
FRANCHISING
This is an involvement in which an individually owned (franchised) business or
company operated as though it were a part of a multinational company or group of
business (franchise) employing uniform operating procedures trademarks, patents,

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names or other valuable intangible assets. It is used more in hotels, e.g. Holiday Inn and
Hilton, Fast food - McDonald and Kentucky Fried chickens.
LICENSING
This is an arrangement under international licensing agreement in which a firm license
or grants right to a foreign firm (Licensee). The firm granting the right provides
technical information and assistance to the foreign firm which then compensates the
granting firm for the services. For example, a drug company may license foreign
companies to sell its patented products in another country, or an author grants his copy
rights to foreign publisher.
FOREIGN SUBSIDIARY
A subsidiary company is one whose controlling interest is owned by another company.
A subsidiary is almost 100 per cent owned by MNC. The MNC takes all the risks of the
foreign business operations but also has maximum managerial. control.
1.10 FACTORS TO BE CONSIDERED BEFORE STARTING A MNC
With the above forms of operation, factors to be considered before« the choice, would
include the following factors:
Risks, legal restrictions, competition and markets, foreign expertise and experience, and
the degree of managerial control.
RISKS
If the reason for the choice is to. avoid risks, then licensing and franchise are preferred.
Since the risks are assumed by licensee and franchise respectively, Joint venture shares
the risk. In management contract and exporting, capital is not required outside
the home country and thus risks are reduced. Most companies with little or no foreign
experience find less risky forms of operation attractive.
LEGAL RESTRICTION
All MNC's operate within legal structures of both home and host countries. Hence, the
MNC may have to face in home countries tax restrictions, foreign exchange control and
structural adjustment problems, while the host country may limit the amount of profit
that can be repatriated. The host country may also prohibit private ownership of
business in critical industries, and restrict operation of foreign companies. The host
country may be operating religion-based laws (e.g. Sharia in Saudi} that is unknown in-
home country
COMPETITION AND MARKET
The market size, potential and the intensity of competition from local companies
and other MNCs are crucial factors to be considered in the choice of operations of a
MNC, particularly regarding risks.
FOREIGN EXPERTISE AND EXPERIENCE
Foreign expertise and experience will likely dictate the choice between investing in
foreign subsidiary or mere export, licensing or franchise agreements.

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 MANAGERIAL CONTROL
The degree of managerial control desired by a MNC will influence the choice it will
make between a subsidiary having 100 per cent ownership and another with limited
managerial control.
1.11 PROBLEMS FACED BY MNC MANGERS
Problems of international managers are many but the major ones can be grouped into
cultural differences, lack of education and skills, currency and accounting differences,
laws and regulations, scarcity of raw materials, gender-role, custom duties, diplomatic
and political pressures.
CULTURE
The capacity to understand social and religious beliefs may pose serious problems in
countries e.g. • (Nigeria) where the belief is strong that elders are the wise ones and
should be so respected even when it concerns managerial decisions. Religious beliefs
that prohibit collection of interest on loans may not be comprehended by Western
MNCs in a Moslem state, like Saudi Arabia. MNCs may also not understand why
women in Puddah may not be allowed to work with men.
LACK OF EDUCATION AND SKILLS
In some developing countries where economy is labour intensive where technical skills
are -lacking, MNC managers may see productivity as low. In few cases where
equipment and machinery are available there may not be technical people to maintain
the equipment leading to poor capacity utilization and low production level.
CURRENCY AND ACCOUNTING SYSTEM
The currency that is used may be different and the purchasing power too, leading to
different foreign exchange rates and associated risks. Also, differences in accounting
system may lead to difficulties in comparing operations in the different countries.
LAWS AND REGULATIONS
Laws and regulations differ among cultures, governments, and political set-ups. The
Sharia laws that are used in Muslim states may be strange to the home country
(government of MNCs). Regulatory laws may be protective to the host country but
harsh to home countries of MNC managers.
SCARCITY OF RAW MATERIALS
Communication devices and other infrastructural inadequacies may make business less
profitable and to be at level MNC managers may find impossible to operate.
Political disturbances and diplomatic decisions may not favour the operations of MNC
managers.
General business practices, customs duties, and tariff imposed by government may
make national operations difficult in certain countries, in spite of Genera! Agreement on
Tariff and Trade (GAIT)
1.12 Assignments
1. Explain the relationship between management functions and comparative management
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2. Explain the relevance of business functions to comparative management
3. What are the factors that encourage a company to go multinational?
1.13 Quizzes
1. Explain briefly, the environmental setting of a business organization
2. What are the elements of strategic management?

CHAPTER TWO
DEVELOPMENT OF MANAGEMENT THOUGHT OR SCHOOL OF
THOUGHT
2.1 CLASSICAL SCHOOL OF THOUGHT
The classical school has two branches (scientific management and classical organization
theory).
Scientific management was concerned with improving/increasing productivity of the
shop and individual worker. Taylor the acclaimed father of scientific management
provided four principles for improving productivity by determining.
1) One best way of performing a task,
2) The one best way of selecting the workers that are best suited for a job;
3) The best way of educating and developing the worker,
4) The one best way of encouraging cooperation between labour and management.
Other contributors are H. Gantt, Frank and Lilian Gilbreth etc. The other branch of the
classical universal school is the classical organization theory founded by Henri Fayol.
This branch of the school believes that there exist principles that can be generally
applied to determine what managers do. Fayol's approach looks at:
i The functional activities in all organizations
ii What managers do at work using his 30 years’ experience as Managing Director
(MD) as a basis for his expertise? Fayol grouped business operation into six
activities.
1. TECHNICAL Producing goods and services
2. COMMERCIAL Buying, selling and exchanging of goods and services
3. FINANCIAL Acquiring and using capital
4. SECURTTY Protection of workers' and company's Property
5. ACCOUNTING Taking statistics of costs, profits and Loss and records
6. MANAGERIAL Planning, organizing, staffing and coordination.
The above group of activities to Fayol, are present in ail organizations whether, big or
small, political, educational or economic, cultural or religious.
PRINCIPLES OF MANAGEMENT
What activities managers engage in at work are, according to Fayol, based on fourteen
principles.
1. DIVISION OF LABOUR: Specification
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2. AUTHORITY: Position and personnel right to order and compel obedience
3. DISCIPLINE: Respect for rules and agreement
4. UNITY OF DIRECTION: one channel for directing related operations.
5. UNITY OF COMMAND: Receiving of orders from only one boss.
6. SUBORDINATION: Of Individual to general interest.
7. REMUNERATION: Fairness of compensation to workers and employers.
8. CENTRALIZATION: Extent of concentration of authority.
9. SCALAR CHAIN: Lines of authority in organization chart.
10. ORDER: Giving places for everything and everybody.
11. EQUITY: Fairness and justice to subordinates
12. STABILITY OF TENURE: Control of labour turnover
13. INITIATIVE: Ability to conceive and carry out plans
14. ESPRIT DE CORPS: Is to develop the spirit of team work or concept of "in union
there is strength".
Other members of the school are Frederick Taylor (1919) Galic and) Urwich (1937),
Koontz and Cyril O. Donnel (1968) etc.
Critics: Mintzberg (1975) one of the strong critics of the school claimed, "Fayol's
elements of management tell little about what managers do at the best they indicate
some vague objectives manager have when they work.
He further claimed the work of manager is:
"Great pace unrelenting, varied, fragmented and brief.
The manager concentrates on current specific, and adhoc issues and relies on verbal
forms of communication".
These characteristics are at variance with Fayol’s management elements (planning,
organizing controlling etc.). Other critics are Herbert Simon (1945) Ernest Dale (1959).
George Terry (1968) etc.
The classical organization theory and the principles of classical organization have been
described as more appropriate for the past than the present. They have been also
criticized as being too general for today's needs.
CONTRIBUTIONS: Irrespective of what critics say, the school has provided:
1. A body of management principles,
2. What managers do at work, and
3. Has identified management as skills that can be taught
2.2 THE BEHAVIOURAL SCHOOL (1960s)
The school was concerned with ways to improve working morale in order to increase
productivity. Major contributors of the school are
Elton Mayo (1953) Kurt Lewin (1951) Chris Argyris (1964), Rensis Likert (1967)
Douglas McGregor (1960) and Frederic Hertzberg (1996) etc.

16
Elton Mayo and the Hawthorne experiment tailed to explain productivity as a function
of illumination but discovered the importance of the informal group and the adequate
communication between the worker and management as the central issues in industrial
relations.
Kurt-Lewin's force field theory says, human behaviour (B) is a function of a person (P)
and his environment (E) or the behaviour environment (E) or the behaviour is a result of
equilibrium-l between DRIVING and RESTRAINING forces of the environment. Chris
Argyris theorized that an effective leader will help move people from a state of
immaturity (dependence) towards a state of maturity (independence).
Rensis Ukert developed a model of four systems of management which he described in
systems one through four, as:
1. Exploitive authoritatively autocratic managers
2. Benevolent authoritative by managers with little confidence in subordinates,
3. Consultive, by managers with substantial but not full, confidence in subordinates,
and
4. Participative, by managers with complete trust in subordinates.
Douglas McGregor examined the assumption about human behaviour which underlie
managerial action in his "Theory x" and "Theory Y" The traditional concept of
administration by Fayol is based on direction by management/ Douglas suggested,
Theory Y assumption in "integration" to replace direction and control.
Frederick Herzberg developed the two-factor theory to explain mo ovation at work. The
conclusion had been that job content must be enriched to increase job performance.
Contribution: The school stressed the importance of human and social factors in
industrial relations. It also identified sources of motivation and leadership
Criticism: The school over emphasized the role of leadership, and underplayed the role
of technological structure and task nature in influencing productivity.

2.3 THE QUANTITATIVE AND SYSTEMS SCHOOL

The quantitative group employed mathematical models or operations Research (OR) to
solve decisional problems. The systems approach emphasized that the activities of one
part of the organization affects the activities of every other part. The importance of
feedback in quality control and computer memory in aiding managerial decisions are
sure bits or evidence of systems contribution to management.
Contribution: The use of O.R. and the computer have increased the capacity of
managers to cope with complexity or problems and environmental influences
Criticism: The Chief limitation lies in the fact that there still are many behavioral
problems that cannot be solved using mathematical approaches
2.4 THE CONTIGENCY APPROACH

17
This approach was developed by researchers and consultants who tried to apply the
concepts of the main schools of thought to real life situations. They found there is not a
single design that is best for all situations. Solutions to problems depend on the
particular situation of environment. Contributors include:
(i) Joan Woodword (1965) who showed that organizational structure and human
relationship were a function of the existing technology.
(ii) Fiedler (1967) who theorized that leadership situation is contingent upon the
position power, the task structure and leadership member relation,
(iii) Lawrence and torch (1967) who showed that the degree of differentiation may
be contingent upon the variability of the environment.
(iv)Rosemary Stewart (1982) who found that similar Jobs may be undertaken very
differently by individual, managers not just in terms of styles but in the kind of
tasks they initiate emphasize, or neglect. Her argument has been that managerial
effectiveness is contingent upon choices managers have and the recognition of
demands and constraints implicit in the jobs.
Contributions: The approach is a product and the best amalgam of all the. other
schools. Members of the school (also called the situationalists) recommend the rejection
of "the one best way to organize under all conditions" and emphasize the consideration
of organizational members and the external pressures facing them in reaching decisions.
2.5 COMPARATIVE MANAGEMENT (CPM) AND ITS RELATIONSHIP
TO SCHOOLS OF THOUGHT
The essence of CPM is to explain how managerial activity, effectiveness and efficiency,
vary divergently between different periods of management evolution. In the 1960s,
many management practitioners and theorists produced volumes of ideas, principles,
theories and concepts in management that were unrelated, different, uncoordinated and
even controversial that some writers like Luthans 1 975) and Koontz (1961) described
the situation as “A jungle of management theories”. This can be demonstrated by the
one best way to organize as suggested by the scientific management school and the
varied bureaucratic principles of the classic organization theorists and the barrage of
theories from exponents of behavioral science
Major reasons for such confusion- originated from the fact that most of the writers were
from different locations. Fayol from France, Havard study from the US and Woodward
from Britain, were writing independently of each other’s work, and at different times.
A major function of CPM is to explain why management Practitioners think in a certain
way at a particular time and place and differently at other times. CPM noted that the
industrial revolution provided the industrial climate that required labour intensive
machinery to cope with productivity. Hence the concern of scientific management
school was with the best way to achieve productivity. Soon the employees of the young
industries were over worked with only little time for rest and recreation.

18
 Workers complained and the Human relations and the behavioral schools expressed
more concern for people than for the cask. They provided the barrage of theories and the
confusion that followed. For each emerging school, CPM provided criticisms that led to
corrective actions for management improvement. The system schools noted the need for
the inter-relatedness of units rather than the departmentalization of organization of the
universal school, while the situationalist attached conditions to achieving best designs
for best results, contrary to the one best way approach advocated by management
scientists.
With regard to the time element and planning, there was nothing systematized
procedure and process. At times there were lags between a discovery and its application
or usefulness. Fayol had identified management functions as planning, organizing
controlling as early as 1916 but the idea did not get to management mainstream in the
US until about the 1950s. He even had said "there is nothing rigid about management
before the contingency school. Part of the effect of time has been shown in the
usefulness of concepts at one time and not at another. Fayol's bureaucratic
organizational approach was good at his time when business environment was
systematic appropriate unlike what since 1960 has been the case a state of dynamic and
unpredictable business environment, where only the contingency approach management.
Hence the situationalist concept seems the latest and the accepted approach presented as
an amalgam and product of the other schools.
Finally, CPM shows the varying limitations of knowledge, skill availability and
technology, and their infrastructures on the practice of management.
Globally sponsored researchers have enhanced business schools' knowledge of
management. Technology has provided quality goods at unprecedented rates, while
communication and television have brought marketing and promotion of goods to most
house-holds in the nooks and corners of the globe.
CPM has also noted, as major flaws in the contigency approach, that the concept
covering all situations is so broad that it tells little that People do not know. It also tends
to eliminate possible existence of absolutes. See Ernest Dale (1959)
It discourages moves to discover courses of environmental difference of universal
principles because the concept relies too much on judgement of managers for the
application, of principles.
2.6 Assignments
1. Explain in full the propositions of the classical school of thought.
2. What are the contributions of the behavioural school of thought to management?
3. What is the relationship of comparative management to management school of thoughts?
2.7 Quizzes
1. Highlight the 14 principles of management as propounded by Henry Fayol.
2. Highlight the contributions of the quantitative and systems school of thought to
management
19
20
 CHAPTER THREE
COMPARATIVE MANAGEMENT THEORIES AND MODELS
3.1 INTRODUCTION
This chapter provides the major models and summary of the orientations on theoretical
frameworks which in the past three decades have been employed to advance the theory
of comparative or international management.
In the 1960s there was proliferation of different conceptual approaches to comparative
management theories. Models were designed to explain these CPM theories. A model
being a standard set for imitation or comparison provides simpler description of an
otherwise complex system. It hence became handy for use in the identification,
detection and evaluation of uniformities and differences of these theories. Because
theories are systematic groupings of interpedently concepts together significant
knowledge, they became attractive knowledge to researchers for use in conjunction with
models in the study of CPM.
GROWTH: The study of management as a discipline is a recent event. CPM's stud is
even more recent, starting about the 1960s.
3.2 MAJOR APPROACHES IN THE STUDY OF CPM
Just like there were different schools of thoughts on the study of management, so are
different conceptual approaches to the study of CPM. The different orientations and
classifications to the study of CPM are those that had been identified some twenty-five
years ago. Hans Scholl Hammer (1969) wrote about the Comparative Management.
Theory jungle and identified four different conceptual approaches namely: Socio -
economic, Ecological, Behavioural, and Eclectic-Empirical approaches.

3.2.1 SOCIO-ECONOMIC APPROACH

The starting point can be traced to the works of Harbison and Meyers (1959). They
identified the manager as a critical factor in achieving economic success. The manager
is to them, a catalyst to the interaction existing between economic and social
environments to bring about economic change. Their major hypothesis have been that
economic progress and industrialization depend on managers. They argued since it is the
manager who takes risks, handles uncertainties, plans, leads and coordinates and also
controls economic resources, exercises authority and power and leads or takes decision
for the organization, then the relative level of economic activity and achievement,
depends on the intensity of utilization of the manager, the degree of exercise of his
authority and the level of the use of the power as group members of the elite. Other
members of this school are David McClelland (1961), Everett Hageh (1962).
MERIT
The school provides analytical instruments for the study of the sociological and
economic factors that influence managerial behaviour
21
DEMERIT
i) The results have been found ambiguous ana incapable of supporting predictions,
ii) The approach does not pay equal attention to individual differences in
managerial behaviour and interfirm differences in a given culture.
iii) Discussion of environmental differences is restricted to sociological and
anthropological aspects.

3.2.2 THE ECOLOGICAL APPROACH

The pioneers of this approach are Professors Richard Farmer and Barry Kichman
(1965). The approach emphasizes the interaction between a business organization and
its environment and the opportunities and constraints this has on managerial
effectiveness. The main concepts are shown in the model

Affect

Determine

The basic hypotheses of the authors have been that: SYSTEM EFFICIENCY
1) The external constraints of the environment (educational, sociological, legal-
political and economic factors) affect both managerial effectiveness and elements
of management process.
2) Elements of management process defined as planning, organizing, staffing,
directing etc. will also affect managerial effectiveness.
3) Managerial effectiveness will in turn determine a firm's efficiency and
consequently the efficiency of the country or nation. The last point assumes that
22
 the aggregate efficiency of a nation is a summation of the individual economic
units;
3.2.3 KOONTZ MODEL
Koontz (1965) employed a more complex model to achieve more accurate results from
analyzing the universally and transferability of management fundamentals.

Koontz hypotheses have been that:

1) Organizational activities can be grouped into two; managerial or non-managerial
practices which affect each other.
2) Lither or both practices can cause enterprise effectiveness

23
3) Non-managerial activities will be affected by enterprise function science.
a. Managerial activities will be affected by management science.
4) Managerial and non-managerial practices will be affected by human and material
resources and the constraints of environment.
MERIT
Koontz model unlike other ecological models has been successfully used to explain the
universality and transferability of management practice. It identifies both constraints and
opportunities in the environment, and other factors that contribute to organizational
effectiveness.
DEMERIT
The ecological approach ignores that manages (or management) could have active
influence on the environmental constraints, instead regards an enterprise as a passive
creature of the environment.
The approach has failed to explain and define the inter-relatedness of environmental
conditions in its analysis and thus renders it empirically impossible to evaluate precisely
the impact of constraint of management practice.
3.2.4 THE BEHAVIORAL APPROACH
The scholars of this school were concerned with the study of typical behaviour pattens
and the attitudes of managers in different cultures and the manager’s interaction with
individuals and groups in their environment.
Anant Neghandi and Bernnard Estafen (1965) in their study of American Know-How in
different cultures have employed three factors;
1. Management philosophy, defined as the expressed attitude and relationship with
consumers, suppliers, distributors, government union, leaders, community, etc.
2. Managerial effectiveness expressed in terms of profitability or change in profit and
sales, employee’s morale, public image of company, etc. and
3. Managerial functions, meaning (planning, organizing, controlling, staffing,
etc.)
The main hypothesis has been that management effectiveness depends on managerial
practices and behaviour while executing management policies and practicalising its
philosophies across nation; boundaries.
Other writers are Mason, Haire Edwin Ghiselli and Lyman Porter
1969) who looked at managerial behaviour, attitudes and satisfaction in 14 countries and
concluded that there is high degree of similarities but at the same time, exist substantial
national and culture differences.
Also, Howard Perimutter (1965) and Hans ThoreIli 1966) identify three management
philosophies of MNCs. An ethnocentric management philosophy attempts to implement
the same values policies, sentiments, etc. as adopted by parent company. It hence
exhibits attitudes of superiority that are regulatory to host country.

24
 A polycentric philosophy, exhibits attitudes that recognize environmental differences
and hence shows a rather permissive attitude when in Rome, do as the Romans type of
attitude. A. Geocentric philosophy accepts that differences in culture are a reality and
that culture is not superior to each other but is just different. They exhibit co-operative
behavior.
The author's conclusion has been that both polycentric and ethnocentric management
philosophies give rise to conflict situations whereas geocentric philosophy will lead to
more desirable result

WEAKNESS
The concepts of the Behavioural approach are not comprehensive enough (e.g.
Neghandi-Estafen) and the variable/factors are arbitrarily selected. There is the danger
of over-emphasis on socio-psychological relationships.
MERIT
The variables are controllable and hence can be used for empirical investigation, to
achieve a large body of knowledge.
3.2.5 THE ECLECTIC EMPIRICAL APPROACH
The contributors using this approach are many. They employ empirical investigation in
looking at managerial attitudes and practices in various countries. The attempts are
eclectic since they have been concerned with practical the broad field of CPM and have
not come up with comprehensive CPM concept.
THEORIES OF COMPARATIVE MANAGEMENT
The Universalistic Theory of Management
The universalistic theory of management claim that the phenomena of management and
organization are subject to the same universal laws everywhere in the world. An example is the
positive relationship between the size of an organization and its degree of internal differentiation,
which has been found in, many studies. Universalistic theory posits that this relationship is valid
everywhere in the world, because it is based on fundamental characteristics of human behavior
Universalistic theory tend to predict that cross-national differences in management and
organization, in so far as they exist, will disappear in the future. A driving force for this
homogenization process is globalization. As more and more markets become subjected to world-
wide competitive pressure, less efficient ways of management and organization will give way top
best practices, regardless of the nationality of the company, management or employees. Existing
cross-national differences may be seen as temporary disequilibria, which will disappear when
obstacles to the free market are removed.

Universalistic Theories – The Contingency perspective

The contingency approach was developed by the Aston School in the 1960s. Much of the
contingency theory research studied organizational structure and for this reason is usually
referred to as structural contingency theory. This theory posits that, given similar circumstances,
25
the structure of an organization – that is, the best patterns of control, coordination and
communication – can be expected to be very much the same wherever it is located. (Hickson, et
al., 1974). The theory further posits that, if they are to be successful, organizations, must
structure in response to a series of demands or contingencies posed by then scale of operation,
usually expressed as size, the technology employed and the environment within which operations
take place.

The contingency theory states that the mechanistic structure (hierarchical, centralized, formalized
structure) fits a stable environment because a hierarchical approach is efficient for routine
operations. Given the routine nature of operations, the management at the upper level of the
hierarchy possesses sufficient knowledge and information to make decisions, and this centralized
control fosters efficiency.
In contrast, the organic structure (participatory, decentralized, unformalized structure) fits an
unstable environment and situations of high task uncertainty. A major source of task uncertainty
is innovation, much of which comes from the environment of the organization, such as
technological and market changes.

3.2.2 Strengths of Contingency Theory

The strengths of contingency theory are that the theory is straightforward and the methodology,
though complex, is highly standardized. The various dependent and independent variables are
operationalized so that they can be quantified and measured in a precise way (i.e. by size or
number of employees engaged). These strengths gave the contingency approach considerable
influence, and for a long time, it gave the approach advantage over culture, which had remained
both theoretically and methodologically unsophisticated.

Weaknesses of the Contingency Theory

The contingency approach, however, also has numerous weak points and blind spots. It has been
pointed out that, although, this theory is able to show the consistency and strength of correlation
between the two sets of variables – that is, between contingency variables such as size, or
technology and the structural features of an organization – it has never provided an adequate
explanation for this. Furthermore, the theoretical status of contingencies has remained uncertain.
For instance, are they imperatives or do they merely have the force of implications if a certain
threshold is crossed? In addition, the contingency approach only elucidates properties of formal
structure and neglected informal structure.

3.3 The Particularistic Theory of Management

The particularistic theory of management, on the other hand, predicts that cross-national
differences in management and organization will persist. The reason is that management and
organization reflect expectations and preferences that differ between countries. This theory
strongly believed that organizations and management in different countries can differ
26
fundamentally, and that different explanations are necessary for different countries. Furthermore,
particularistic interpretation of organization and management imply that history matters, as
national systems of management and organization are pat-dependent. For instance, the question
may be asked whether Japanese management and organization can be truly understood without
taking into account Japan‘s late industrialization halfway through the nineteenth century, leading
to dramatic changes in a society that still bore the characteristics of the feudal era.

3.3 Assignments
1. Explain in full, the socio-economic approach in the study of comparative management
highlighting the Merits and Demerits
2. What are the basic hypotheses of the authors of the ecological approach to the study of
comparative management?
3.4 Quizzes
1. Explain briefly, the eclectic empirical approach to study of comparative
management
2. What are the major hypotheses of the Koontz model to the study of comparative
management? Highlight the merits and demerits also

27
 CHAPTER FOUR
INTERNATIONAL/COMPARATIVE MANAGEMENT IN SELECTED
COUNTRIES
4.1 INTRODUCTION
Since Business environment is dynamic the enterprise and the analysis of its
management cannot remain static, changes therefore do occur over time in societies all
over the world. A practice that is traditional in one country today may be shared or
copied by more than four or five countries during a decade, especially if it is conducive
to profitable business.
4.2 JAPAN
The geographical and historical back grounds of Japan have not been favorable to the
business success of Japan.
Japan with a small area of about (145.870 square miles or 377,801 square kilometers)
has very poor natural and mineral endowments has restricted space area for its huge
industries.
With regard to its-historical development it has the unique expends of being the only
nation whose largest industrial cities (Hiroshima and Nagasaki) experienced the
annihilation of modern atomic bomb, of the 2nd world war. The country was militarily
and physically occupied. The post war government and business were disorganized and
messy.
Japan resumed its business activities in 1951. It was not until mid-1980s that a real'
surge in Japanese business occurred. Between 1985 and 1989, Watanabe, Susumu
(1993) claimed that Japanese overseas direct investment (ODI) increased more than
400% of the world. Its business success was a feat that attracted focus of intense
scrutiny of its business strategy, operation and management at home and abroad. Even
America countries felt compelled to be grossly involved in such studies.
A REVIEW
How the Japanese managed their business is better considered through the
administration of functions of business, namely:
(1) Production (2) Personnel (3) Marketing and (4) Finance.
PRODUCTION
Importation of technology: The major factor responsible for the growth of the
Japanese industries is technical catch-up.
Inchkawa (1983) claimed the Japanese imported technology from the highly developed
countries and applied this to their production system and process and improved upon
them. This stimulated investment had promoted rapid economic growth. They also
employ quality circle.
QUALITY CIRCLE (QC)
QC is an arrangement whereby the collective wisdom of employees are pooled together in
order to achieve quality goods, at low cost and in great volume. Japanese management is
28
 very enthusiastic about quality control. They ensure sectional managers, fore-men and
regular workers meet regularly to plan quality into their design, build quality into the
production and inspect for quality in the products. Their product are reliable and durable.
Japanese firms try to achieve “no defect production” and attempt to eliminate waste in all
the business activities through the Just-in-Time (JIT) production system.
JUST-IN-TIME (JIT) PRODUCTION SYSTEM
This system is employed in the manufacturing process and its suppliers deliver their raw
materials or components and parts to the production line just-in-time to be used or
assembled. It avoids storage and its cost, for the raw materials and assembled goods. It
also reduces production and delivery time. In general, the JIT is an attempt to eliminate
waste in all the business activities. According to Watanabee (1983) in order to make JIT
work the Japanese ensure:
i) The quality of the parts is very high and they employ team work based on flexible
task sharing
ii) Product design and production process are simplified to enlarge the scope of low-
cost automation
iii) Also, the suppliers are reliable and have dependable relationship with the producers
and
iv) In general, they are both located near the producers or steady transportation is
assured to ensure zero inventory.
PERSONNEL
Recruitment and Employment
The Japanese, employ lifelong Employment technique.
In this technique the Japanese employ their workers from new graduates and are given
employment in one enterprise till they retire while they are employed, they will have job
security, and would not be sacked even during depression. Watanabee ( 1993) claimed
Japanese firms may stick to their no-lay-off rule more firmly in developing countries.
Even at the expense of profitability, they sometimes try to maintain their work force. In
order for this to work well, emphasis is placed on training and retraining programmes to
develop the skills of the workers.

PROMOTION AND WAGE SYSTEM

In Japanese industries wage systems are based largely on seniority. Promotion takes
place at regular intervals and the basic criteria being mainly the length of time spent in
the service of the company.
The security system provides privileges for long service older employees. Executive
positions are occupied by the older serving employees. However, there is a mandatory
retirement age system most employees are retired at the age of 55 years. The wage
29
system is becoming a controversial issue, particularly in their subsidiaries abroad. Host
countries prefer that promotion be based on merit.
DECISION MAKING PROCESS
In Japanese companies, joint decision-making approach, ‘the Ringi System’ is
employed. It is also called “the Bottom-up approach” because it is an approval seeking
process where a proposal (ringisho) prepared by a lower functionary works itself up
through an organization hierarchy in a snail-paced manner (Akpala 1987). At each level,
it is examined by proper official who may if necessary, send the proposal to the initiator
for more information, then make suggestions, and indicate his approval by fixing a seal.
The proposal then passed up until it gets to the desk of the top executive. If the proposal
is approved, it is returned to the initiator for implementation. The implementation is
swift since approval of proposal is based general consensus at every level.
PETERNALISTIC MANAGEMENT
This system of management is one in which the managers express concern and takes
cognizance of workers needs. It is believed showing concern for employee’s wellbeing
and providing them their needs is essential to attaining productivity and high standard,
in the practice of this concept, Trade unions are seen as friends and not as enemies.
Managers view themselves and members of unions as members of one big family.
Hence strikes are very rare in japans enterprises.
4.3 THE UNITED STATES OF AMERICA
The United States (US) is composed of 52 states forming a Federal Republic. US is the
fourth largest country in the world. It occupies an area of about (3,679,192) square miles
or (9,529,063) square kilometers in North America. It is bounded in the North by
Canada, on the East by Atlantic Ocean, on the West by the Pacific Ocean and on the
South by Mexico and the Gulf of Mexico.
U.S is one of three super powers of the world. It is rich in nature resources, has
enormous agricultural output and highly developed industry. It is the world's second
largest petroleum producing nation with its major oil fields located in Alaska,
California, the Gulf of Mexico, Louisiana and Oklahoma. It has large iron ore deposits
in Minnesota and Michigan. Its major industry is in transportation; motor vehicles,
ships, aircraft and space equipments.
PRODUCTION
U.S. is endowed with abundant natural resources and industrious work force. The
Americans are hard working. They belief that hard work is a virtue and that persistent,
purposeful effort is necessary to achieve high goals. The American use their technology
to produce for the comfort of their people.
An emphasis is hence placed on production, in large quantity but sometimes to the
neglect of high quality. Such mass production though is accompanied by social benefits
like increased standard of living is also according to Nowotony (1964), leading to
excessive standardization and over stifling individual initiative.
30
QUALITY CONTROL
Although quality control is claimed to originate form U. S. It has not been perfected
there as in Japan. The Americans do not provide adequate service support system to
their products Hence their products suffer at international competition.
PERSONNEL
There are two areas that show the characteristics of personnel administration of US
organizations namely training and staffing.
Great importance is placed on training of workers. However, US companies abdicate the
training of new workers to the public and Rational School system. Management tends to
avoid technical training because of the cost and fear of losing graduates of such training
institutions to other companies. U.S. companies therefore experience severe shortage of
the most skilled workers.
STAFFING
The Americans believe that job applicants should be employed only because they are
the best qualified persons available. Family connections, friendship and sponsorship of
an influential person, are never considered in selection. The workers feel if you don't
like a job you can always quit. The employer also has a right to fire the non performing
employee without any guilt feeling. However, while on job the American remain loyal,
committed and dependable.
MANAGEMENT
The American tradition holds that all men are born equal. Neither noble birth, nor
advanced age, gives an individual the right to tell others what to do.
In U.S., authority is equated with hierarchical position. Top managers formulate
company policies, set objectives and issue orders. Decisions are made from the top by a
few people and passed down. Communication is mainly in writing and is top-down.
Decision making is swift but the implementation is slow since they are affected by those
who did not partake of the initial decision.
Another outstanding feature of the American administration is importance attached to
use of time for effective business. There should be an effective use of one’s own time.
Activities are scheduled with precision, unlike in Muslim culture where lateness’s. A
business activity may be ascribed to the will of Allah.
INDUSTRIAL RELATIONS
Trade unionism is strong in U.S. because employers care more about the productivity
and profit level than for employees. For them, the objective of an enterprise is
‘Maximum of Profits’.
PROMOTION
It uses the merit system as a method of advancing their workers. Length of employment
is less of importance. The merit system is based on rational appraisal of individual
performance. It is done yearly.
31
 Even though the above, are traditional and customary with U. S changes have occurred
with great modification of these practices.
4.4 GERMANY
It was rebuilt almost from scratch after the World War Il that ended 1945. Today
Germany is one of the most industrialized nations of the world, and certainly the leader
of the European economic immunity. It has become a major economic power of the
world. economy.
Contemporary writers, looking for the qualities, traits and values of Germans which earn
them the miracle transformation, have described them as neat and meticulous [Hayes
and Limprecht (1982) and hardworking, thrift and obedient to authority. Hodgetts and
Luthans (1994): Others noted that German leadership is worker centered and
authoritarian and link their prowess to attitudes of "we are in it together" imbibed during
the post-world war Il occupation.
The truth is German success is the result of their outstanding managerial capabilities
shown in the functional areas of business production, marketing and personnel (training,
development, staff and industrial relations).
PRODUCTION AND MARKETING
The German managers and manufacturers believe that the essence of production is to
provide goods and services of high quality. and value that will satisfy their consumer
wants They therefore ensure that their goods are well engineered, solid and provided
with superb after sales service. They also ensure that the goods are delivered on time.
They employ crafty management strategy that would bear their competitors in the
scramble for market share. They achieve competitive position by offering their products
for sale at low profit margin with a long span guarantee.
Another issue distinct from those mentioned is that the German possess technical
competence at all levels of the organizational hierarchy.
Workers at managerial levels must have had a masters degree in their disciplines while
their tradesmen must have attended vocational school for 3 years and passed state-set
trade exams. In effect, the German production system is manned by competent works at
all levels.
In discussing the German way of doing things Limpretchand Hayes (1982) focused on
the German attitude to work. They claimed German managers and workers insist that
"what goes out of the door of their factories be as dose to perfect as possible’. Such an
attitude had encouraged improved productivity and superior goods manufacturing that
have earned Germans worldwide reputation for quality. In effect in-built quality is the
chief tool that advertises German products.
PERSONNEL
Training and development: German managers are aware of the need to support good
quality production system with real technical competent workers who are homemade
tailored to their technical requirements through their apprenticeship programmes.
32
The apprenticeship programme: is a training-employment arrangement that receive
support from Government, unions and the industry. Under the system young people who
are 16+ years old, leave full-time school to start a three-year apprenticeship programme
While on the course they spend an average of four days a week the industry doing the
practical aspect of the job. Once a week the apprentices attend theoretical courses in a
vocation school whose curriculum is jointly planned by management, trade union
association and the state. e programme is a continuation of the basic schooling with an
emphasis on technical knowledge and job skills. It provides an adequate qualification
for youth employment. The programme has to be supplemented with additional
education to form a base for employment as a supervisor or a first line manager in
Germany. The vocational academy programme is being experimented to meet this need
by teaching managerial skills.
They significance of the apprenticeship system lies in its ability to build a work force
that is young, highly skilled, technically proficient and versed in the theoretical
principles of their professions that they can adapt easily to new technological processes.
The programme has made youth unemployment of Germans the least in the
industrialized world.

INDUSTRIAL RELATIONS
The codetermination process is a provision by law that compels that workers should be
represented in the supervisory boards and executive committees that are responsible for
decision making in large organizations in Germany. By the 1951 and 1976 acts
managers are required to negotiate at the plant level with work council/ majority of
whom are workers such deliberations are further submitted for scrutiny by supervisory
boards (Boards of directors) fifty percent of whose members are workers-elected
representatives. At least one of the employee-seats is held by an "executive" who is
expected to vote with the stock holder representatives. The Act also prescribed the
procedure for dispute settlement.
The objective is to reach decisions by consensus and avoid conflict and thus achieve
industrial peace in which workers can adapt their skills to changing technologies and
circumstances.
COLLECTIVE BARGAINING
In Germany collective bargaining takes place at the industry level. Wages, hours and
working conditions are negotiated by trade unions and employers’ organizations.
According to the Works Constitution act of 1952, agreements between works council
and management must not deal with wages or other matters normally included in
collective bargaining agreements. Strikes a e rare and may only be conducted by unions
in collective bargaining. Disputes are settled by conciliation boards. However, disputes
on the interpretation of a collective bargaining agreement are resolved by the labour
courts.
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ADMINISTRATION
The leadership style in Germany is still extensively patriotic and authoritarian. Workers’
rights are established by statutory provision. There is a general lack of delegation of
authority and work centered behaviour designed to ensure task accomplishment. Even
though changing, there is a general attitude that one can obtain most of the knowledge,
necessary for managing the enterprise only through experience. (Fassbendei, 1972).
4.5 INDIA
India is a densely populated country located in Southern Asia. It has a population of
about 875 million people and an area of 1.27 million square miles. Over 80% are Hindus
speaking Hindi language. The country was formerly a British colony but became
independent in 1947. It has a large number of educated people and English is the
official and international language of business.
Economic Development: At independence in 1947, India had an industrial base of about
700 textile mills and one iron and steel plant. The government was the key regulator,
investor and innovator employing import substitution and export promotion as strategy
to economic growth. By 1977, India became the 10 th largest industrial producer and
fourth in world food production and had $4 billion in foreign reserve. (Nambudiri and
Sayadain (1978)).
Thirteen years after, the story had changed. The government's socialistic approach -to.
economic development has not worked. The government took loan from World Bank
and aid from IMF. By 1989, the country was in a serious balance of payment problem
and a high fiscal deficit. By 1990 the foreign exchange reserve was almost totally
depleted; to worsen the situation the political situation was not stable. Two general
elections were held within three years.
BUSINESS IN INDIA
In the past, (1970s-80s), doing business in India was quite difficult. In the 1970s, lots of
red-tape barriers were created for those applying to enter India market, e.g. the U.S.
Razor blade company’s approval took 8 years [Hodgetts and Luthans 1995], the
government also required that MNCs could not hold more than 40% of ownership of
any business. In consequence, many MNCs including Coca-Cola and IBM left India.
[Adit Jain 1995].
A TURN AROUND
Prime Minister Rao administration came into office in June 1991 abolished the licensing
requirements and removed the limitation set on buiness ownership for MNCs. A fringe
investment promotion board was established in the prime minister’s office to review and
speedily approve foreign investments, applications. The new trade policy liberalized
import and export trade.
IMPACT
The effects of the change has been tremendous. There has been an in-rush of investment
into the country. IBM and Coke who left India in 1977, returned together with a host of
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multinational corporations from different sectors. Foreign investment inflows exceeded
US $4 to 5 billion per year, Addit Jain (1995).
PRODUCTION AND MARKETING AND FINANCE
From the 1970s, the Government strongly pursued the self reliance objective in
manufacturing in almost every sector of industry. Foreign investment was rarely
allowed and even importing of foreign technology for manufacturing was carefully
scrutinized. Everything that you could see around-refrigerator, television, bulbs, cars,
kitchen, appliances, cement, plants etc. are crafted with pride in India, (Adit Jain 1995).
A market from such a production suggested absence of competition in sale, and lack of
competition for quality.
However, with the new change, investment is created that brings profit and employment
and eventual economic growth.

PRODUCTIVITY
In order to achieve economic growth productivity has to be encouraged and reward
system may also have to be adjusted. The output -input ratio with due consideration for
quality and time has long been neglected in India because wages paid to workers are
low. Low productivity and absenteeism were considered as facts of life in India.
However, in the new dispensation, changes are occurring to increase the workers output
by, modifying the recruitment system that was focused on the caste system, retraining
workers and by introducing profit sharing and other incentives.
HUMAN RESOURCE MANAGEMENT
The cast system is practiced in India. It is a joint family system that encourages team
work and submissive attitude towards authority. It has been found very useful in human
resources management.
GAIN
(1) India social system
(2) Rao’s administration
(3) Weaknesses of the Indian management system
Workers are generally more recruited from the member of the same caste owning a
business. The major reason has been to have around people who could be trusted
especially in times of crisis. However, caste recruitment has been criticized as providing
a pool of people who depend on others for decision making and people who lack
initiative. Another problem related to personnel management concerns the reluctance of
women to work over-time and the fact that by constitution women use barred from night
shifts. These are possible sources of embarrassment to MNC managers who ate
liberated from such cultural practices.

LESSONS
The lessons from the India experience show:
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 a) That insulated economies cannot row i.e. countries who refuse and do not
attract foreign investment would have their business strangulated.
b) That investors need the comfort of political stability, i.e. foreign investment
wills nor goes to countries with unstable government.
c) That investor's look for markets where their business can grow.
d) Business needs minimal restrictions in the flow of service goods and capital.
e) That MNCs do not necessarily have the same ambition as Host country
governments for economic growth and can-shirt foreign investment to other
countries.
4.6 SAUDI ARABIA
INTRODUCTION
Saudi Arabia covers an area of about 86,500 sq. miles in the Middle East close to the
Arabian Desert. The weather is hot with daily temperature ranging from 100 0F to 1200F.
The Kingdom is divided into three major regions, Western, Central and Eastern
provinces. In the Western province is located-the-city of Jedda as the heart of
commercial activities. In the central province, is Riyadh the capital and the seat of
Government and the embassies of foreign countries. In the eastern province lie large
numbers of expatriates, who work in the Arabian American oil company and at
YARAMCO facilities and Jubail Industrial Complex.
About 114 million Moslem Arabs, who are mainly herdsmen and peasant farmers live
there, ironically, the per capital income is about $10,000. The country is the largest
exporter of oil in the world. It has the second largest supply of foreign exchanges and
the largest oil reserve in the world. Saudi is an Islamic State ruled by a Monarch who
combines the role of the religious leadership with that
CONSUMPTION OR EXPORT BASED ON CULTURE
All goods produced for export or consumption (import) in Saudi Arabia must meet
certain adaptation requirements that would make the goods meet the wants of the
people.
Major factors considered are the culture and climatic conditions, culture relate here to
the religious beliefs, values, norms, attitude and styles of life
Saudi Moslems do not eat pork or drink alcohol. Any business dealing in alcohol or
pork cannot be allowed to operate in Saudi. In addition, any imported products having
traces of alcohol or pork cannot sell in the kingdom. Ingredients labels or imported food
products are scrutinized to catch items that do not conform to this cardinal rule (Secil
Tuncalp 1988).
All meat products imported to Saudi must have come from animal slaughtered
according to Moslem rules. Perhaps for the same season the Saudis prefer fresh meat to
imported frozen meat. Fresh meat from New Zealand, Australia and Turkey dominate
the market. Other traits of Saudi consumer are reflected in their clothing and choice of

36
 colour. Men prefer white for clothes, red or black for caps while women use long black
robes with veiled tops.

PRODUCT INNOVATION
The weather in Saudi Arabia is very hot and humid. So, clothing whether black or white
must have thin texture. White colour is the preferred choice for cars since white colour
reflects heat.
The Kingdom has one of the largest markets for air conditioning equipments in the
world. The Japanese have adapted their export cars to the kingdom to have large cooling
systems to prevent overheating of engines as innovation to catch the competitive market.
Japanese have manufactured compass that points to Mecca, the direction for Muslims to
turn to at Prayer. Japanese have also been marketing special clocks that remind
Moslems of the five prayer times, Japanese computers now use Arabic language, British
MNCs are also marketing non-alcoholic beer.
PRICE
Because of the large market and many producers competing for market share prices of
goods are low, in addition a strong factor for the low price is that Saudi Arabia is tax
free i.e., no taxes are charged for the sale or purchase of goods conducted within the
country. Tuncal S. (1988) suggested that Japanese electronic equipment bought in Saudi
Arabia could be as much as 40% cheaper in Europe
MORALE AND VALUES
Advertisement of Tobacco smoking is prohibited, advertisement would be worded that
it does not clash with social values and believes, so allusion to sex, nudity and
propaganda of other religions are not allowed.
SAUDI PERSONNEL ADMINISTRATION
With big business in hand and large market to cater for, Saudi faces a need for a strong
work force. However, 'skilled and educated managerial Personnel are in short supply,
hence Saudi business and MNCs make use of large number in their work force.
The Saudi business men in small companies base their recruitment (of indigenes) on
affiliation friendship and right of birth. As a result of this approach to recruitment, a
manager in most cases is unable to terminate workers who are not performing well in
their positions. Companies often carry employees on their payroll who perform poorly
on their jobs.
LESSONS FROM SAUDI ARABIAN EXPERIENCE
1) Culture and in particular religious belief, is an important factor influencing the
management of business in Saudi Arabia.
2) Integration of political and religious leadership is required to rule the Saudis
successfully.

37
3) Liberal trade policy encourages competitive market, create values needed for quick
economic growth.
4) Some degree of government control through legal process is needed to guide foreign
investment needed for economic growth.

4.7 Assignments
1. Write in full about Japan’s business management styles under the following headings:
 Production
 Quality Cycle
 Just-in-time production system
 Personnel
 Promotion and wage system
 Decision making process
 Paternalistic management
2. Compare management styles of United States companies with Germany
4.8 Quizzes
1. Compare the personnel management of companies in these two countries
 Japan and United States of America
2. What are the lessons from India’s experience in comparative management?

38
 CHAPTER FIVE
GLOBALIZATION
5.1 What is Globalization?
Globalization is the process of extending social relations across world space. Such
extension arises from the movement of people, things and ideas.
Globalization describes the interplay across cultures of macro social forces. These
forces include religion, politics and economics. Globalization can erode and universalize
the characteristics of a local group. Advance in transportation and telecommunication,
infrastructure, including the rise of the internet are major factors in globalization
generating further independence of economic and cultural activities.
Since the beginning of the 20th century, the pace of globalization has intensified at a
rapid rate.
Globalization process affect and are affected by business and work organization,
economic, social-cultural resources and the natural environment.
Furthermore, the tremendous growth of population over the past several decades has
been both a primary and official globalization.
The volume of goods produced has increased twenty-seven-fold from $296 billion in
1950 to more than $8 trillion in 12.2 percent in 2009. The steepest decline since world
war II trade is again on the upswing.
As a result of efficient production, customers around the world enjoy a broader selection
of products.

Productivity and the quality of goods have increased across the globe which results in
raising incomes, creating more jobs, reducing prices and increasing worker’s earning
power. Trade can also bring about economic, political and social disruption.
Since the global economy is interconnected when large economics suffer recessions,
the effect are felt around the world, even inefficient production is the quality of goods
produces. When producing and trade decreases, jobs and business are lost.
According to Amir Z. an observer economics MS on the implementation of world
trade which is very complicated and complex. The complexity in productivity and
quality of goods is partly due to political and state boundaries trade, for example,
cultural difference, languages, currency exchange rate, estimates, ranges and
commercial law.
The positive effect of globalization in productive are positive and negative
5.2 POSITIVE EFFECT
1. World production could be improved
2. It increases the standard of living of the citizens
3. It creates job opportunities
4. It makes the world a global village where everything is integrated7More profit
can be made due to enhanced technology
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 5.3 NEGATIVE EFFECT
1. Because of the development of the foreign trade becomes freer which can inhibit
the growth of the industry
2. It can worsen the balance of payment
3. The financial sector is increasingly unstable
4. Exacerbate the process of long-term economic growth.
In conclusion, the central operating principle of production is that commercial interest
should supersede all others, we now communicate with one another through travels and
trade, transporting products around the world in hours or days. We are in a huge global
economy where something that happens in one area can have knock-on effects
worldwide. This process is called globalization.
5.4 Assignment
1. What are the challenges to Globalization for productivity and quality of goods?
5.5 Quizzes
1. Highlight the positive and negative effects of Globalization in production.

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 CHAPTER SIX
COMPETITIVE ADVANTAGE
6.1 INTRODUCTION
Competitive advantage is a condition or circumstance that puts a company in a favorable or
superior business position. Expansion is vital to maintaining a competitive advantage.
Competitive advantage is a superiority gained by an organization when it can provide the
same value as its competitors but at a lower price or can charge high prices by providing
greater value through differentiation.
Competitive advantage results from matching core competencies to opportunities

6.2 STRATEGIC COMPETITIVE ADVANTAGE

When a firm sustains profits that exceed the average for the industry, the firm is said to have
a competitive advantage over its rivals. The goal of business strategy is to achieve a
sustainable competitive advantage.
Competitive advantage can be gained by offering the consumers a greater value than
competitors such as, by offering lower prices, or providing quality services or other benefits
that justify a higher price.
Competitive advantage is the leverage that a business has over its competitors. This can be
gained by offering clients better and greater value.
Micheal Porter defined the two ways in which an organization can achieve competitive
advantage over its rivals.
1. Cost: The company seeks to be the lowest producer relative to competition. Cost
advantage results from efficiency. Efficiency is the value of input to output. Efficiency is
enhanced if holding output constant, inputs are reduced or holding input constant, output
are increased. Output can be increased by increasing units of production, decreasing
down time, etc. Economy of scale by large organization also results in greater efficiency
by reducing costs.
2. Differentiation strategy: These are responses that the firm possesses. A non-price
attribute that distinguishes the firm are superiors to its peers. It means offering a valued
variation of the physical product. However, some products do not lend itself to much
differentiation e.g. beer, notebook, paper. Some products on the other hand can be highly
differentiated e.g. appliances, restaurants, automobiles, etc.
Product differentiation can be done by manipulating many characteristics e.g. features,
performance, style, design consistency, durability, reliability, etc. Additional service after
sales can also help to differentiate a product. E.g. Mary Kay cosmetics offer skin care and
glamour cosmetics similar to those offered by many other cosmetics companies but
products are accompanied by informational, instructional training session provided by the
consultant. Dell and Gateway claim to provide excellent technical support services to
handle any glitches in their products

41
 Focus: This directs attention, narrow product lines, buyers’ segment or geographical
market. Focus will use cost and differentiation to gain advantage but only within narrow
target market.
The strongest competitive advantage is a strategy that cannot be imitated by other
companies.
6.3 SUSTAINABLE COMPETITIVE ADVANTAGE
Sustainable competitive advantage involves ensuring that the advantage is permanent as other
firms will try to catch up with the company. Sustainability occurs when the competitors are
not able to catch up or duplicate the benefits of the firm strategy. For sustainability, firm’s
generic strategy must be grounded in an attribute that meets the following criteria.
1. Valuable: Must provide value to customers
2. Rare: It is not commonplace or easily obtained
3. Inimitable: Product cannot be easily imitated or copied by competitors.
4. Non-substitutable: Consumers cannot or will not substitute with another product.

6.4 GAINS OF COMPETITIVE ADVANTAGE

1. Positioning is better than prospecting
2. Plans fail but movement don’t fail.
3. Stand on the shoulders of giants
4. Becomes a people developer
5. Creates raving fans and advocates

6.5 OTHER STRATEGIES FOR COMPETITIVE ADVANTAGE

1. Defensive strategy: It involves skipping those advantages in place and defending what
he has by keeping the advantages away from competitors.
2. Alliances: This involves entering into strategic alliance with other businesses. This
however should not lead to collision.

6.6 HOW DO YOU CREATE A COMPETITIVE ADVANTAGE?

1. Review your core strengths
2. Reduce costs
3. Focus on service
4. Focus on product or service quality
5. Differentiate your product and service
6. Form an alliance with another company.

6.7 Assignments
1. Compare, strategic competitive advantage with sustainable competitive advantage
2. Explain the main strategies that a company can employ to gain competitive advantage
6.8 Quizzes
1. What are the gains of competitive advantage to a company?
2. How does a company create competitive advantage?
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 REVIEW QUESTIONS
1. Managerial practices refer to the way and manner managers perform their functional
activities of planning, organizing, coordinating, motivating and controlling and involves
identifying the degree of efficiency and effectiveness with which these activities are
performed in the dynamic business environment of various countries. Discuss.
2. How does a strategic business unit (SBU) apply strategic management concept to
effectively run a business for success (Profit)?
3. Explain the concept of international business. What factors encourage a company to go
global?
4. There are a number of forms in which a multinational company can involve itself in
foreign operations. What are the various modes of this involvement?
5. Explain in full the factors to be considered before starting a multinational company.
6. What are the major groups that the problems faced by multinational managers can be
classified into?
7. The classical school of management thoughts has two branches. Discuss these two
branches in full.
8. The behavioural school of management thought was concerned with ways to improve
working morale in order to increase productivity. Discuss this fully.
9. The quantitative school of management thought employed mathematical model and
operational research to solve decision problems while the system approach emphasized
that the activities of one part of the organization affect activities of every other part. What
are the contributions and criticisms of this school of thought?
10. Explain the relationship of comparative management to schools of thought.
11. The socio-economic approach to the study of comparative management can be traced to
the works of Harbison and Mayer (1959), who identified manager as a crucial factor in
achieving economic success. Discuss this and highlight the merits and demerits of this
approach.
12. The ecological approach emphasizes the interaction between a business organization and
its environment and the opportunities and constraints that it has on managerial
effectiveness. Discuss the main concept of this approach and highlight the basic
hypotheses of the authors (Professor Richard Farmer and Barry Kishman)
13. Highlight the hypotheses of Koontz model and also the merits and demerits
14. Explain the behavioral approach to the study of comparative management.
15. Compare the management styles in two selected countries of the world.
16. What are the challenges to Globalization for productivity and quality of goods?
17. Micheal Porter defined the two ways in which an organization can achieve competitive
advantage over its rivals. What are these two ways?

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