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Conditions Affecting Multinational Operations The people of the world are organized into communities and nations, each

in its own way, according to its resources and cultural heritage. There are similarities among nations, but there are also significant differences. Some nations have a market driven economy, while others have one that is centrally planned, and there are various shades of practice in between. Some are educationally and socially advanced, while others have minimum literacy and social development. And in each case the conditions of work are different attitudes, values, and expectations from participants. To help understand these differences and how they influence international organizational behavior, key social, political, and economic conditions will be examined. Social Conditions In many countries, the overiding social condition is poorly developed human resources. There are major shortages of managerial personnel, scientists, & technicians; and these deficiencies limit the ability to employ local labor productively. Needed skills must be temporarily imported from other countries, while vast training programs begin to prepare local workers. A Central American nation, for example, welcomed an electronic assembly plant to its capital city. The plant was labor intensive, so it provided many jobs to reduce the nations high unemployment rate. Wages were above community standards, working conditions were good,and that plant was environmentally clean. In addition, the valuable and tiny product that was assembled provided needed foreign exchange because it was shipped by air to assembly plants in other part of the world. Perhaps most important of all, the companys agreement with the nation provided that the company would supply a cadre of managers and technicians to train localemployees in all phases of operating the plant. Locals would gradually become supervisors, superintendents, technicians, accountants, purchasing especialists, and soon. At the end of five years the company could have no more than eigth nonlocals in the plant, including the general manager, engineers, & auditing personnel . in this manner the labor force of the nation would be upgraded. Political Conditions Political Conditions that have a significant effect on organization behavior include instability of the government, nationalistic drives, and subordinations of employers and labor to an authoritarian state. Instability spills over onto org. That wish to establish or expand operations in the host country, making them cautious about further investments. The organizational instability leaves workers insecure, and causes them to be passive & low in initiative. They may bring to the job an attitude of What will be, will be; so why try to do anything about it? In spite of instability, a nationalistic drive is strong for locals to run their country & their org. By themselves w/out interference by foreign nationals. A foreign manager simply may not be welcome. In Burma, for example, a visiting professor presented a group of trainees with a case study featuring a problem between a British shipmaster & Burmese crew. Expecting a group to discuss authority, interpersonal conflict, other behavioral issues, the professor was surprised when the class focused instead on how to train the Burmese to take control from the British master. Their reasoning that then the crew would not have to deal w/ the shipmaster any longer was a clear reflection of their nationalistic values. Organized labor in many nations is not an independent force, but it is mostly an arm of authoritarian state. In othe nations, labor is somewhat independent, but it is socialistic, class conscious, and oriented toward political action more than direct negotiation w/ organizations. Employers found that the state tends to be involved in collective bargaining & other practicesaffecting workers. In some nations, for example, employee layoffs are restricted by law and made costly by requiring dismissal pay. Even employee transfers may be restricted. The ff. Is an incident that illustrates how different employment practices among nations can cause employee-employer frictions for multinational companies. In this instance, both nations were economically developed.

Economic Conditions The most significant economic conditions in less developed nations are low per capita income, rapid inflation, & an equal distribution of wealth. In terms of income, many nations of the world exist in genuine poverty compared with the united states or Canada. For example, an average family in some nations may have to survive on less than $1000 annually. Rapid population increases coupled w/ a lack of national economic growth make it unlikely that family incomes will progress significantly. As a consequences, natives of those countries may not believe that additional effort on their part will provide associated rewards. A common economic condition in many less developed countries is inflation. Despite periodic concerns in the U.S over rising food, fuel, & housing prices, this country has enjoyed rather moderate inflation rates over the past few decades\. By contrast, some countries in South American, europe, & Middle East have suffered periods of dramatic inflations. Even residents of Soviet Union have been painfully introduced to the ravages of inflation as they attempted a transition from a controlled to a market economy. Inflation makes the economic life of workers insecure. It encourages them to spend quickly before their money loses its value, & this adds to the countrys inflationary problem. Because savings lose value rapidly, workers often do not plan for their own retirement security. They develop a dependence on the government, w/c is often incapable of responding. Social unrest is compounded by tremendous disparity in the distribution of wealth in these nations. The consequences are often varied; some workers passively accept their situation, while others aggresively protest. All these factors make it difficult to motivate employees. Despite the challenges abroad & the political & economic backlash from home country workers & consumers, some firms have moved substantial parts of their production into other countries. Some U.S businesses, for example, have set up assembly plants across there. These firms argue that local Mexican economy gains by the creation of new jobs, and the U.S economy is helped by lower production cost. This is an example of one way in w/c depressed economic conditions in other country ccan represent an opportunity for a firm. Looking at social, political, & economic conditions as a whole, we see that these conditions can impede the introduction of advanced technology & sophisticated org. Systems. They constrain the stability, security, and trained human resources that developing countries require to be more productive. The unfortunate fact is that these limiting conditions usually cannot be change rapidly, because they are to well establish & woven into the whole social fabric of a nation. Instead, they represent critical environmental conditions to w/c the managers of international operations must adapt.