ExTech International Business Proposition
-
Upload
meghana-indurti -
Category
Documents
-
view
220 -
download
0
Transcript of ExTech International Business Proposition
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 1/14
ExTech
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 2/14
Introduction
Language
Financial Benefits
Workforce Characteristics
Organisational Structure
Time
Business Relationships & Etiquette
Recommendation
Bibliography
Appendices
2
3
4
5
6
7
8
10
11
13
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 3/14
ExTech’s management board have researched the
possibility of outsourcing ExTech’s manufacturing
of computer hardware. Recommending the
Philippines as the potential outsourcing location,
this report will outline the financial benefits of outsourcing to the Philippines. More importantly,
the report summarises the cultural considerations
that have been taken when choosing the Philippines
as the ideal outsourcing location for ExTech.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 4/14
Selecting the Philippines as an outsourcing location
would be financially advantageous for ExTech.
Outsourcing to the Philippines could open new sales
markets for ExTech which could contribute greatly to
it’s growth. At the same time, outsourcing will
significantly reduce manufacturing costs by lowering
overheads.
Overall, outsourcing will lower ExTech’s
production costs, therefore resulting in higher
profit margins.
Labour is considerably cheaper with the Filipino
minimum wage at £6.19 per days work (Government
Digital Service, 2012); whilst land is almost seven
times cheaper in Manila (the capital) (SourcingLine,
2012) than London (BNP Paribas, 2012).
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 5/14
There is no language barrier between the UK and the
Philippines when conducting cross border
communication and business transactions because
English is the accepted business language
(Kwintessential, 2012).
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 6/14
The Filipino attitude toward education is that it is
the main tool through which social and economic
progression is achieved.
The high level of literacy, being over 90% for both
adult men and women (UNESCO, 2012), and a keen
attitude toward furthering education provides a large
selection of skilled labour for ExTech.
Notably, Filipino women aspire to work in higher
organisational positions, whereas a larger proportionof men work in manufacturing sectors (The World
Bank Group, 2010). Importantly, the largest sector
of Filipino manufacturing is of technological
products (The World Bank Group, 2012) meaning
there is an established skilled labour force to
produce ExTech’s computer hardware.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 7/14
Due to the hierarchical organisational structurepresent in the Philippines, managers need to take into
consideration the importance given to titles
(Kwintessential, 2012).
Downward communication is common practice
(Kwintessential, 2012) and employees work within
their position boundaries, rarely questioning
management decisions. Thus, communication
between the two countries will be made easier by the
high power distance (Kwintessential, 2012) of the
Philippines (Appendix A), with ExTech needing onlyto deal with a small number of Filipino managers.
Filipino employees expect hard work to be
recognised meaning UK managers should ensure
praise is given. Moreover, confirmation of good
work will encourage the Filipino team to drive focus
on ExTech’s long-term strategic aims.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 8/14
The Philippines and the UK have very similar
business hours making it easy for UK managers
to operate in either country. Punctuality is
considered very important (Kwintessential, 2012)
and setting deadlines well in advance will allowboth the UK and Filipino employees to manage
time expectations.
The Philippines use a synchronous approach to
time (Luthans & Doh, 2012), meaning they are
able to undertake multiple activities at oncewhich is beneficial when producing a
technological product. UK managers will need to
set deadlines to allow for some leeway as the
synchronous approach considers deadlines
flexible.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 9/14
Our UK outsourcing managers should not change
unexpectedly since Filipinos thrive on interpersonal
relationships and conduct business with people, not
corporations. These managers should be trained toconsider body language when communicating.
We are dealing with a very high context culture,
which is beneficial in the long run since
negotiations will run smoother (MSU, 2012). This
provides opportunities for future expansion andgrowth for ExTech. However, this means that our
management should include individuals willing to
build personal relationships and adapt to another
culture.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 10/14
The individualism index (Appendix B) is not as
high in the Philippines as in the UK (MSU,
2012). Their attitude revolves around a
collective culture that places importance on
larger societal goals (MSU, 2012). Thisideology is an asset for ExTech because it will
provide us with employees that are loyal and
will conform to management expectations.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 11/14
The Philippines offers a lot of financial benefits,
mainly lower labour and land costs ultimately
lowering our cost of production significantly.
With no language barrier and an educated
workforce, adapting to the culture would berelatively easy. As long as we are aware of the
top down management structure and the high
power distance and can adapt our management
style to match, outsourcing should be a
seamless process.
If we adapt to the synchronous approach to time
that Filipino managers take and adhere to their
business etiquette, our endeavours to outsource
our manufacturing should be successful.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 12/14
BNP Paribas.(2012).UK Total Office Occupancy Costs January 2012.
Available:http://www.realestate.bnpparibas.co.uk/upload/docs/application/pdf/
2012-01/jan_2012_occupancy_costs_map.pdf . Last accessed 14th October 2012.
Government Digital Service. (2012). National Minimum Wage Rates. Available:https://www.gov.uk/national-minimum-wage-rates . Last accessed 14th October
2012.
Kwintessential. (2012). Intercultural Management - Philippines. Available: http://
www.kwintessential.co.uk/intercultural/management/philippines.html. Last access
1th October 2012.
Kwintessential. (2012). Philippines-Language, Culture, Customs and Etiquette.
Available: http://www.kwintessential.co.uk/resources/global-etiquette/philippines-
ountry-profile.html. Last accessed 11th October 2012.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 13/14
Luthans, F. & Doh, J. (2012) International Management : Culture, Strategy and
Behavior,(8th ed.), Boston: McGraw-Hill
Michigan State University. (2012). Philippines: Culture. Available: http://
lobaledge.msu.edu/Countries/Philippines. Last accessed 16th October 2012.
SourcingLine. (2012). Global Services & Outsourcing Locations: Philippines.
Available: http://www.sourcingline.com/outsourcing-location/philippines. Last
ccessed 14th October 2012.
The World Bank Group. (2012). Philippines | Data. Available: http://
data.worldbank.org/country/philippines#cp_wdi. Last accessed 14th October
012.
UNESCO Institute for Statistics. (2012). UIS statistics in brief. Available:
ttp://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=121&IF_Language=eng&BR_Country=6080&BR_Region=40515.
Last accessed 14th October 2012.
7/28/2019 ExTech International Business Proposition
http://slidepdf.com/reader/full/extech-international-business-proposition 14/14
0 10 20 30 40 50 60 70 80 90 100
UnitedKingdom
Philippines
Power Distance
(KWINTESSENTIAL, 2012
(KWINTESSENTIAL, 2012)
0 10 20 30 40 50 60 70 80 90 100
United Kingdom
Philippines
Individualism
(KWINTESSENTIAL, 2012