BBM(IB),IPM-Session 2.

Companies can apply one of the three different approaches to managing and staffing their subsidiaries : 1. Ethnocentric. The home country practice prevails with this approach. Headquarters from the home country makes key decisions, employees from the home country hold important jobs, and the subsidiaries follow the home country resource management practice. 2. Polycentric. Each subsidiary manages on a local basis. A local employee heads a subsidiary because headquarters managers are not considered to have adequate local knowledge. Subsidiaries usually develop human resource management practices locally.

3. Geocentric or global. The company that applies the global integrated business strategy manages and staffs employees on a global basis. For example, Electrolux (the vacuum cleaner company) has for many years attempted to recruit and develop a group of international managers from diverse countries. These people constitute a mobile base of managers who are used in a variety of facilities as the need arises.

1. Parent country national. The employees nationality is the same as the organizations. For example, a Slovenian citizen working for a Slovenian company in Macedonia. 2. Host country national. The employees nationality is the same as the location of the subsidiary. For example, a Macedonian citizen working for a Slovenian company in Macedonia. 3. Third country national. The employees nationality is neither that of the organization nor that of the location of the subsidiary. For example, an Albanian citizen working for a Slovenian company in Macedonia

Definition:

Ethnocentricity (ethnocentrism) is a belief in the

superiority of one's own ethnic group. The firm basically believes that parent-country nationals are better qualified and more trustworthy than host country nationals. Rationale and advantages: Experience curve effects derive from standardization of production. The firm produces in the home country initially and transfers its core competency to the host country under the guidance of expatriate managers. These managers have the knowledge to create value through core competencies. They also contribute to the maintenance of the corporate culture.

Problems and disadvantages: Denies advancement to host country nationals. This may breed resentment and diminish the firm's public image. Expatriate managers are expensive to maintain: they may become insular in their attitudes and be prone to cultural myopia. The latter may result in management overlooking market niche opportunities.

Definition:

Polycentricism (polycentrism) is a belief that local

people know the local environment better than outsiders. Rationale and advantages: Gives hope for profit maximization through flexibility because local managers can react quickly to market needs in the areas of pricing, production, product life cycle, and political activity. Absence of problems associated with expatriate managers including cultural myopia. Provides continuity in the management of foreign subsidiaries.

Problems and disadvantages: No synergy because there is little communication between national units. Limits experience of host nationals to their own country. Corporate headquarters may become isolated from national units and lead to lack of integration. This in turn may lead to corporate inertia.

Definition:

Geocentricity (geocentrism) is the notion that the best

people should be employed, regardless of their nationality. Rationale and advantages: Enables the firm to make best use of its human resources and builds a cadre of executives who feel comfortable working in any culture. Ethnocentric and polycentric pressures are balanced in favor of optimizing the company's operations. The ethnocentric pressure for low cost standardized operations is satisfied because enough of the right kinds of products exist in the global customer base to permit scale economies and experience curve effects. The polycentric pressure for local responsiveness is satisfied because of the need to meet the distinctive characteristics which remain in every market.

Problems and disadvantages: May be contrary to host countries' desire for the MNE to employ local citizens. Expensive to implement because of the need for considerable cross-cultural training and development.

Definition:

Regiocentricity is the variation of staffing policy

to suit particular geographic areas. Rationale and advantages: Policy varied to suit the nature of the firm's business and product strategy. Allows interaction between executives because of inter-regional transfers. Shows some sensitivity to local conditions. Provides a 'stepping stone' for a firm wishing to move from an ethnocentric or polycentric approach to a geocentric approach.

Problems and disadvantages: May produce federalism at a regional (rather than a country) basis and constrains the firm from taking a global stance. May improve career prospects at the national level, but only to the regional level: staff may never attain positions at corporation headquarters.

1. Parent country national. The employees nationality is the same as the organizations. For example, a Slovenian citizen working for a Slovenian company in Macedonia. 2. Host country national. The employees nationality is the same as the location of the subsidiary. For example, a Macedonian citizen working for a Slovenian company in Macedonia. 3. Third country national. The employees nationality is neither that of the organization nor that of the location of the subsidiary. For example, an Albanian citizen working for a Slovenian company in Macedonia

A milestone is a scheduled event signifying the completion of a major deliverable or a set of related deliverables. A milestone has zero duration and no effort -- there is no work associated with a milestone. It is a flag in the work plan to signify some other work has completed. Usually a milestone is used as a project checkpoint to validate how the project is progressing and revalidate work. Milestones are also used as high-level snapshots for management to validate the progress of the project. In many cases there is a decision to be made at a milestone.

The sequence of activities that must be completed on schedule for the entire project to be completed on schedule. This is the longest duration path through the work plan. If an activity on the critical path is delayed by one day, then entire project will be delayed by one day.

The essential technique for using CPM includes the following: A list of all activities required to complete the project (typically categorized within a work breakdown structure), The time (duration) that each activity will take to completion, and The dependencies between the activities. Using these values, CPM calculates the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are "critical" (i.e., on the longest path) and which have "total float" (i.e., can be delayed without making the project longer). This determines the shortest time possible to complete the project. Any delay of an activity on the critical path directly impacts the planned project completion date (i.e. there is no float on the critical path).

The Work Breakdown Structure (WBS) is defined by A Guide to the Project Management Body of Knowledge 3rd Edition (PMBOK Guide) as:

"A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables.

.There are three reasons to use a WBS in projects. The first is that is helps more accurately and specifically define and organize the scope of the total project. The most common way this is done is by using a hierarchical tree structure. Each level of this structure breaks the project deliverables or objectives down to more specific and measurable chunks. The second reason for using a WBS in your projects is to help with assigning responsibilities, resource allocation, monitoring the project, and controlling the project. The WBS makes the deliverables more precise and concrete so that the project team knows exactly what has to be accomplished within each deliverable. This also allows for better estimating of cost, risk, and time because you can work from the smaller tasks back up to the level of the entire project. Finally, it allows you double check all the deliverables' specifics with the stakeholders and make sure there is nothing missing or overlapping.

The Program (or Project) Evaluation and Review Technique, commonly abbreviated PERT, is a statistical tool, used in project management, that is designed to analyze and represent the tasks involved in completing a given project. First developed by the United States Navy in the 1950s, it is commonly used in conjunction with the critical path method or CPM.

The Program Evaluation and Review Technique (code-named PERT) is applied as a decision-making tool designed to save time in achieving end-objectives, and is of particular interest to those engaged in research and development programs for which time is a critical factor. The PERT takes recognition of three factors that influence successful achievement of Project objectives: time, resources, and technical performance specifications. Through an electronic computer, the PERT technique processes data representing the major, finite accomplishments (events) essential to achieve end-objectives; the inter-dependence of those events; and estimates of time and range of time necessary to complete each activity between two successive events. Such time expectations include estimates of "most likely time", "optimistic time", and "pessimistic time" for each activity.

PERT is a method to analyze the involved tasks in completing a given project, especially the time needed to complete each task, and to identify the minimum time needed to complete the total project. The concept of PERT was developed by an operations research team staffed with representatives from the Operations Research Department of Booz, Allen and Hamilton; the Evaluation Office of the Lockheed Missile Systems Division; and the Program Evaluation Branch, Special Projects Office, of the Department of the Navy.

Advantages PERT chart explicitly defines and makes visible dependencies (precedence relationships) between the WBS elements PERT facilitates identification of the critical path and makes this visible PERT facilitates identification of early start, late start, and slack for each activity, PERT provides for potentially reduced project duration due to better understanding of dependencies leading to improved overlapping of activities and tasks where feasible. The large amount of project data can be organized & presented in diagram for use in decision making

Disadvantages There can be potentially hundreds or thousands of activities and individual dependency relationships PERT is not easily scalable for smaller projects The network charts tend to be large and unwieldy requiring several pages to print and requiring special size paper The lack of a timeframe on most PERT/CPM charts makes it harder to show status although colors can help (e.g., specific color for completed nodes) When the PERT/CPM charts become unwieldy, they are no longer used to manage the project.

Although the activity-on-arrow diagram ("PERT Chart") is still used in a few places, it has generally been superseded by the activity-on-node diagram, where each activity is shown as a box or node and the arrows represent the logical relationships going from predecessor to successor as shown here in the "Activity-on-node diagram".

These results, including the drag computations, allow managers to prioritize activities for the effective management of project completion, and to shorten the planned critical path of a project by pruning critical path activities, by "fast tracking" (i.e., performing more activities in parallel), and/or by "crashing the critical path" (i.e., shortening the durations of critical path activities by adding resources).

Crash duration

"Crash duration" is a term referring to the shortest possible time for which an activity can be scheduled. It is achieved by shifting more resources towards the completion of that activity, resulting in decreased time spent and often a reduced quality of work, as the premium is set on speed. Crash duration is typically modeled as a linear relationship between cost and activity duration, however in many cases a convex function or a step function is more applicable.