Please answer the given question according to the journal article below:
Question 1.) Examine the role of external governance and its impact to the organization.
Question 2.) Describe the degree to which the organization will operate as a Centralized versus Decentralized Organization. Include a suggested organizational chart.
Journal Article: Global Considerations Paper - Kalifornia Surfboards
INTRODUCTION:
Kalifornia Surfboards has made the strategic decision to expand globally. The organization has targeted Japan as the host country for its business expansion. Kalifornia Surfboards has identified an international marketing strategy and exporting as its desired mode of entry. This paper will explore specific global considerations as the organization finalizes its business plan. Human resources management (HRM), supply change management and information technology will be addressed. In addition, research and development (R&D) along with legal and ethical challenges will be explored in an effort to maximize the organization’s success in its global business venture.
HUMAN RESOURCES MANAGEMENT (HRM) AND CULTURAL FACTORS
Human resource management (HRM) is responsible for an organization’s activities as they relate to “staffing, performance evaluation, management development, compensation, and labor relations” (Hill, 2004, p 618). These activities become more complex when entering business globally due to country differences in “labor markets, culture, legal systems and economic systems’ (Hill, 2004, p 618). Therefore, Kalifornia Surfboards will need to make strategic HRM decisions in order to be effective in Japan.
Kalifornia Surfboards has chosen an international strategy; therefore, it will utilize an ethnocentric staffing policy. “An ethnocentric staffing policy is one in which all key management positions are filled by parent-country nationals” (Hill, 2004, p 621). Because the organization will be nearly 100% Internet based, the need to hire employees will be non-existent initially, and extremely limited for the projected future. Kalifornia Surfboards does however, want to stay abreast of cultural issues related to marketing and in an effort to address these concerns, Kalifornia Surfboards may evaluate the effectiveness of hiring native Japanese employees to support the promotion and marketing efforts. By doing so, the organization will be better able to understand the needs of the local customers. Local employees would also benefit Kalifornia Surfboards since they bring valuable knowledge to the organization, which includes, understanding the language, traditions, local customs and preferences in product needs.
SUPPLY CHAIN MANAGEMENT – SCOTT
“A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers” (Ganeshan & Harrison, 1995). There are four key elements related to Kalifornia Surfboards’ supply chain.
Location – The company’s current production facilitation is in California, with two production facilities located Huntington Beach and Santa Monica. The company will maintain these two facilities with the Huntington Beach facility becoming the primary production facility for the Japan venture, based on the ability to expand this facility as needed at a much lower cost.
Production – Initially the company will focus on short boards for the Japanese market. Additional staffing will be added as needed with two additional board makers, and one additional painter/artist added immediately. All production will be completed in-house.
Inventory - The company will look to second-source materials suppliers, and focus on JIT delivery.
Transportation – The company will utilize United Parcel Service as their transportation vehicle, looking to strengthen an already positive relationship.
Kalifornia Surfboards will continue to measure and assess the effectiveness of its supply chain, determining proper amounts of personnel, materials storage, facilitation (location and size), and shipping requirements.
INFORMATION TECHNOLOGY (IT)
Information technology is an important aspect of every business. For Kalifornia Surfboards, information technology is the top priority in this Internet driven venture, and helps ensure the organization is operating as effectively and efficiently as possible. Japan is a world leader from a technological standpoint. Japan is the second largest telecommunications market in the world, totaling over $100 billion for the service sector (Kobayashi, 1997). Competing within Japan’s fast pace market will be challenging and requires intelligent, skilled professionals.
Because Kalifornia Surfboards will be Internet driven in Japan, the company will add additional focus on two fronts. First, the web site, which will be in Japanese, must be maintained to meet the needs of prospective customers. This involves ease of use, clear and understandable graphics, links to other sites kept up to date, and a clear and uncomplicated purchasing process. Kalifornia Surfboards will utilize both California and Japan based information technology professionals as consultants to provide information on efficiency and the local market standards. These professionals will help Kalifornia Surfboards stay in line with the market by keeping the web site up to date and on the cutting edge.
Secondly, the company will utilize IT to coordinate communication in terms of email, databases, inventory tracking etc., to communicate the status of operations and remedy in shortfalls that may present themselves. Because much of this will be done in two languages simultaneously, the IT will have primary responsibility for effective communications systems regardless of language.
RESEARCH & DEVELOPMENT (R&D)
Surfing in Japan is best from June to October when it is the typhoon season. Surfing in Japan is generally divided into six regions and has approximately ninety surfing sites. It is common to see swells from 6 to 8 feet. Ideal boards for the majority of the surf found in Japan is a thruster between 6’2” and 6’4”, where the average ride is short. However, a few locations may favor a longer board, as surf that may have rides as long as 50-100 meters.
Board construction will remain the same quality construction as the boards being used in Hawaii and California, which are hand-shaped from expanded polystyrene (EPS). Kalifornia Surfboards has perfected the formula for surfboard making from laminated EPS with special epoxy resin. Through various glassing schedules and stringer widths, both the weight and flex are completely adjustable resulting in a surfboard that is stronger and more alive than the old style polyurethane surfboard. An added benefit of this technique is buoyancy. The overall size of a Kalifornia Surf board is generally 2 inches shorter that most other brand boards with the same buoyancy. Kalifornia Surfboards sees this as the surfboard fabrication of the future.
LEGAL & ETHICS ISSUES
Laws in many developing countries are getting closer to the pace of multinational business. As a result, U.S. businesses often cannot rely on the same protection that they have come to expect at home and in other commercially sophisticated economies. Problems can arise with the legal system. The legal system in the country where your IP is disclosed needs to be considered as well as the governing law and jurisdiction for any agreements. While U.S. laws and governing jurisdiction may have been selected, you may nevertheless need to rely on the court systems of the foreign country to help enforce your IP rights. The more developed the legal system is the better. Kalifornia Surf can be proactive in making sure that their confidential information is disclosed, or access to confidential information provided, only on a ‘need to know’ basis within the company to minimize the risk-especially of their employees.
One of the major challenges faced by organizations is the challenge of balancing the search for competitively with ethical and responsible business operations. As companies expand their operations to various parts of the world, ethical and socially responsible business practices have become more important. Global business should seek a kind of ethics that is also global, whereby coherence among its worldwide operations is possible.
The main impact of globalization on business ethics is found in cultural differences, which reflect on various social and business morals. One of the main impacts of globalization on business ethics lies in cultural difference, which in turn, reflects on various social and business morals. As Kalifornia Surf adapt to the Japan’s standards, the company needs to remain faithful to their own standards. Ethical problems in an international sphere can take many diverse forms. One of the most common is discrimination in the work place or in the hiring of staff, by sex, race, religion or physical handicap. In some cultures, women do not have a place in the business world.
References:
Hill, C.W.L. (2005). International Business: Competing in the Global Marketplace (5th ed.). New York: McGraw Hill-Irwin.
Ganeshan, R., & Harrison, T.P. (1995). An Introduction to Supply Chain Management. Department of Management Science and Information Systems - Penn State University.
Kobayashi, Y. (1997, May 5). Information Technology Strengths and Weaknesses. Information Technology in Japan. Retrieved May 7, 2006