Сomparative analysis of cross-cultural awareness and foreign economic relations of Great Britain and the Netherlands

Assessment and analysis of the degree of the UK integration in the global space. Comparison of selected countries on key indicators of the level of international integration. Impact of cross-cultural characteristics of countries to the management style.

Рубрика Менеджмент и трудовые отношения
Вид курсовая работа
Язык английский
Дата добавления 26.11.2014
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It is important to note that, through a quirk of fate or historical accident, the Anglo-Germanic bloc from the 18th century onwards began to regard itself as superior in efficiency, both in commerce and ability to rule, than other cultural categories. This conviction of superiority, with its accompanying drive, may have had its roots in cold climate competence and energy, Protestant reforming zeal or German thoroughness. It certainly blossomed subsequent to the English Industrial Revolution, the rapid development of British and American manufacturing (fuelled by abundance of coal) and the continuous existence of democratic institutions in the Anglo and Nordic communities. However this may be, the linear-active “powers” leading up to and after the two world wars, emerged with de facto world leadership based on military might and, even more significantly, over 50% of global GDP.

This sense of pre-eminence, particularly in the English-speaking world, but also shared in no small measure by Germans, Dutch, Swiss and Nordics, has not yet subsided. The BRIC quartet are showing rapid gains in manufacturing, technology, financial muscle, access to commodities, and market share (China the star performer), but Western complacency has not yet been eroded. There is still a lingering notion among the linear-active countries that our systems of governance, our concepts of justice, our attitude to human rights, our intellectually vibrant societies, our cocktail of work and leisure, our right to lead and instruct others, our business methods and our ability to maintain our levels of production and high living standards are viable in the future. We may be right about everything but the last two or three. We are content with our way of life and world view. We feel we have got it right, the others not yet.

Kluckhohn and Strodtbeck's Model of Culture

Kluckholn and Strodtbeck (1961) identified six dimensions of culture.

The nature of people

What do people assume about the basic nature and beliefs about other people? In particular, others may be considered to be good, bad or have some combination.

'Good' here is in the traditional sense of being socially oriented. A bad person is thus considered selfish. How you think about other people in this way will have significant effect on how you respond to them. It also affects how you think about yourself.

The relationship with nature

What do people think about nature and their responsibilities and rights around it?

The UK believes that we should live in harmony with nature, preserving and supporting it. Others (and perhaps a majority now) see nature as our servant and supplier. This view allows us to plunder it without concern. In other parts of life this translates into the use of all kinds or resource and whether it is used up or sustained.

Duty towards others

What duty do we have towards others? Should we be act first to support others or can we just focus only on ourselves? Considering the group first supports society, but it also is limiting on the freedom of the individual. It also raises the question about who chooses what is right for the group.

Mode of activity

What is the primary mode of activity in an organization or society? In the UK there is a focus on 'being', where who you are is more important than what you do. Other societies are very action oriented and status comes from what has been achieved rather than an ascribed status.

Privacy of space

How is space treated in a society? Who owns it? What rights do people have to occupy it?

In Great Britain space is owned by individuals and privacy is important. Meetings are held behind closed doors and are by invitation only. The alternative is open ownership, where people can go where they please and meetings are open to all who want to attend.

Temporal orientation

Which is more important: past, present or future? UK focuses on the past, ancestors and traditionalism. Others are focused on the hedonism of today, whilst still others plan carefully for the future.

2.2 Advice on doing business in the UK

The United Kingdom (UK) is comprised of four countries: England, Scotland, Wales, and Northern Ireland. It is important not only to be aware of these geographical distinctions but also the strong sense of identity and nationalism felt by the populations of these four countries.

The terms 'English' and 'British' are not interchangeable. 'British' denotes someone who is from England, Scotland, Wales or Northern Ireland. 'English' refers to people from England. People from Scotland are referred to as 'Scots'. People from England are not likely to take offence at being called “English”, whereas a Welsh, Scots, or Northern Irish person will.

Cultural Diversity

Formerly a very homogenous society, since World War II, Britain has become increasingly diverse as it has accommodated large immigrant populations. The mixture of ethnic groups and cultures make it difficult to define British as looking or acting in one particular manner. People may sound British and retain the cultural heritage of their forefathers while others may become more British than someone who can trace his/her lineage to the 5th century. The fact that the nation's favourite dish is now a curry sums up the cultural mish-mash that is modern day Britain.

Doing business in the UK

The British are rather formal. Many from the older generation still prefer to work with people and companies they know or who are known to their associates. Younger businesspeople do not need long-standing personal relationships before they do business with people and do not require an intermediary to make business introductions. Nonetheless, networking and relationship building are often key to long-term business success.

Rank is respected and businesspeople prefer to deal with people at their level. If at all possible, include an elder statesman on your team as he/she will present the aura of authority that is necessary to good business relationships in many companies.

British communication styles

The British have an interesting mix of communication styles encompassing both understatement and direct communication. Many older businesspeople or those from the 'upper class' rely heavily upon formal use of established protocol. Most British are masters of understatement and do not use effusive language. If anything, they have a marked tendency to qualify their statements with such as 'perhaps' or 'it could be'. When communicating with people they see as equal to themselves in rank or class, the British are direct, but modest. If communicating with someone they know well, their style may be more informal, although they will still be reserved.

Business meetings

Punctuality is a very British trait. It is especially important in business situations. In most cases, the people you are meeting will be on time. Always call if you will be even 5 minutes later than agreed. If you are kept waiting a few minutes, do not make an issue of it.

How meetings are conducted is often determined by the composition of people attending. If everyone is at the same level, there is generally a free flow of ideas and opinions. If there is a senior ranking person in the room, that person will do most of the speaking. In general, meetings will be rather formal and always have a clearly defined purpose, which may include an agenda. There will be a brief amount of small talk before getting down to the business at hand. If you make a presentation, avoid making exaggerated claims. Make certain your presentation and any materials provided appear professional and well thought out. Be prepared to back up your claims with facts and figures. The British rely on facts, rather than emotions, to make decisions. Maintain eye contact and a few feet of personal space. After a meeting, send a letter summarising what was decided and the next steps to be taken.

Basic British Etiquette Tips:

Business Dress

* Business attire is conservative.

* Men should wear a dark coloured, conservative business suit.

* Women should wear either a business suit or a conservative dress.


* Shake hands with everyone at a meeting upon arrival.

* Maintain eye contact during the greeting.


* Only medical doctors and the clergy use their professional or academic titles in business.

* Most people use the courtesy titles or Mr, Mrs or Miss and their surname. (Mr and Mrs are words in the United Kingdom and do not require a period after them as they are not abbreviations.)

* If someone has been knighted, they are called 'Sir' followed by their first and surnames or 'Sir' followed simply by their first name.

* Wait until invited before moving to a first-name basis. People under the age of 35 may make this move more rapidly than older British.

Business Cards

* Business cards are exchanged at the initial introduction without formal ritual.

* The business card may be put away with only a cursory glance.

Business Gifts

* Business gift giving is not part of the business culture.

* If you choose to give a gift, make certain it is small and tasteful.

* Good gifts include desk accessories, a paperweight with your company logo, or a book about your home country.

* Inviting someone out for a meal can be viewed as a gift.

2.3 Cultural profile of Netherlands

Hofstede's Cultural Dimensions model.

If we explore the Dutch culture through the lens of the 5-D Model, we can get a good overview of the deep drivers of Dutch culture relative to other world cultures.

Power distance

This dimension deals with the fact that all individuals in societies are not equal - it expresses the attitude of the culture towards these inequalities amongst us.

Power distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.

The Netherlands scores low on this dimension (score of 38) which means that the following characterises the Dutch style: Being independent, hierarchy for convenience only, equal rights, superiors accessible, coaching leader, management facilitates and empowers. Power is decentralized and managers count on the experience of their team members. Employees expect to be consulted. Control is disliked and attitude towards managers are informal and on first name basis. Communication is direct and participative.


The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether peopleґs self-image is defined in terms of “I” or “We”.

In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to `in groups' that take care of them in exchange for loyalty.

The Netherlands, with a score of 80 is an Individualistic society. This means there is a high preference for a loosely-knit social framework in which individuals are expected to take care of themselves and their immediate families only. In individualistic societies offence causes guilt and a loss of self-esteem, the employer/employee relationship is a contract based on mutual advantage, hiring and promotion decisions are supposed to be based on merit only, management is the management of individuals.

Masculinity / Femininity

A high score (masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field - a value system that starts in school and continues throughout organisational behaviour.

A low score (feminine) on the dimension means that the dominant values in society are caring for others and quality of life. A feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the best (masculine) or liking what you do (feminine).

The Netherlands scores 14 on this dimension and is therefore a feminine society. In feminine countries it is important to keep the life/work balance and you make sure that all are included. An effective manager is supportive to his/her people, and decision making is achieved through involvement. Managers strive for consensus and people value equality, solidarity and quality in their working lives. Conflicts are resolved by compromise and negotiation and Dutch are known for their long discussions until consensus has been reached.

Uncertainty avoidance

The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the UAI score.

The Netherlands scores 53 on this dimension and thus exhibits a preference for avoiding uncertainty. Countries exhibiting high uncertainty avoidance maintain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour and ideas. In these cultures there is an emotional need for rules (even if the rules never seem to work) time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation.

Long term orientation

The long term orientation dimension is closely related to the teachings of Confucius and can be interpreted as dealing with society's search for virtue, the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view.

The Dutch score 44, making it a short term orientation culture. Societies with a short-term orientation generally exhibit great respect for traditions, a relatively small propensity to save, strong social pressure to “keep up with the Joneses”, impatience for achieving quick results, and a strong concern with establishing the Truth i.e. normative. Western societies are typically found at the short-term end of this dimension, as are the countries of the Middle East.

Hall's Cultural Dimensions model

Netherlands are low-context culture with special features:

• Overtly displays meanings through direct communication forms.

• Values individualism.

• Tends to develop transitory personal relationship.

• Emphasizes linear logic.

• Values direct verbal interaction and is less able to read nonverbal expressions.

• Tends to use "logic" to present ideas.

• Tends to emphasize highly structured messages, give details, and place great stress on words and technical signs.

Netherlands is a monochronic culture. That's not to say that everyone is wired that way -- far from it. But life, work and society are organized according to monochronic principles. Activities are structured and scheduled in a linear fashion, based on clarity of purpose, efficiency of execution and economic progress. Logic, order, punctuality and productivity define the mindset in which being and knowing serve doing and having.

The Dutch people are more territorial than others with greater concern for ownership. They seek to mark out the areas which are theirs and perhaps having boundary wars with neighbors.

This happens right down to desk-level, where co-workers may do battle over a piece of paper which overlaps from one person's area to another. At national level, many wars have been fought over boundaries.

Territoriality also extends to anything that is 'mine' and ownership concerns extend to material things. Security thus becomes a subject of great concern for people with a high need for ownership.

R.Lewis's Model of Culture

According to Lewis model Netherlands is close to linear active culture. It means that individuals are typically logical thinkers, who like to stick to the facts. They are swayed primarily by written words verses spoken opinions or hearsay. If it isn't written down or documented, it may be difficult for them to find it true. When tasked with projects, they often plan ahead and take on each aspect step by step. Polite, yet direct, these individuals often listen just as much as they talk. But also Netherlands has some threats of multi active culture. Multi-active cultures are generally warm, emotional and talkative. These people put a larger emphasis on feelings compared to other cultural groups and may favor these emotions over facts when arguing. To this degree, spoken word is very important to them. They are often very people-oriented and tend to believe things based on what they're told by the people they trust. They can be described as a lively group who do many things at once, planning their priorities not according to time schedule but to relative thrill.

Kluckhohn and Strodtbeck's Model of Culture

Kluckholn and Strodtbeck (1961) identified six dimensions of culture.

Everyone knows the grand Dutch tolerance, which , sometimes , is embodied in things that are considered unacceptable in other countries , such as coffee shops , where anyone can buy soft drugs , gay marriage , or euthanasia . But why in this case , the country does not fall into the abyss of crime and anarchy ?

All the matter is that all of these in Holland out of the ordinary phenomena governed by rules and laws. From the Dutch law trying to achieve a balance , softening confrontation and maintaining freedom of the individual , thinking and lifestyle.

What unites the Dutch?

• commitment to family life;

• punctuality and accuracy;

• tolerance;

• accumulation of funds;

• openness;

• politeness;

• emancipation;

• education

The relationship with nature

Relationship to nature can be considered one of the best examples of the double standard by which Dutch society lives. On the one hand, the Dutch export mountain clogs. On the other hand, they are incredibly annoying stereotype of foreigners for the Netherlands as a country of the same wooden clogs and windmills.

Duty towards others

Not accepted in Dutch society to be excluded and closed from the outside world . People who spend a lot of time alone and tend to hide from the familiar details of his private life, to arouse suspicion . In the Netherlands, most people boldly show society their emotions , aspirations and inner state. Even while living in their own home , they feel like the palm, because they can not hide anything from neighbors and relatives. On transparency as national poverty even speaks Dutch architecture buildings - here every house big wide windows flaunt Filter Housing and interior local owner does not imply the use of blinds and curtains - all on display.

Mode of activity

Dutch attitude to activity mode indicator very freely. They owe nothing to nobody . They do just what they want.

Privacy of space

In the Netherlands, private ownership of land does not exist, but in this country agricultural production function very effectively, and the yield of grain and livestock productivity are the highest in Europe.

Temporal orientation

Almost all Dutch live for today. They do not remember the past and do not think about the future.

2.4 Advice on doing business in the Netherlands

Holland economically stable , long time and is the center of international trade - a place of business activity of many international companies . Geographical location of the country on the European continent also creates favorable conditions for travel in leading European cities : Paris, London , Berlin and Brussels are from her only an hour flight.

Why the Netherlands ?

Today it is a developed industrial country with high-tech intensive farming export-oriented . Therefore, the traditional interest for Russian entrepreneurs is exported from Holland various foods , flowers and beer. However, a variety of electronic technology , perfumes , medicines , industrial and agricultural equipment Holland also have a solid reputation , and despite the relatively high prices , are in steady demand .

In the last 2-3 years , Russian entrepreneurs actively organized in the Netherlands own production ( primarily high-tech ) , as well as marketing and distribution centers . The latter provide free access to the largest trans-European trading companies based in Belgium and Luxembourg financial centers . Buy Dutch real estate firm opens and then obtain a residence permit .

After five years of legal residence in the country of the investor has the right to obtain citizenship .

However, Netherlands - is primarily attractive and solid holding jurisdiction with existing treaties on avoidance of double taxation concluded with many countries . Tax legislation provides holding companies registered in the country , the following advantages:

• tax- exempt income from equity investments in subsidiaries and dividend withholding (applies to EU countries );

• tax on interest at source will be charged ;

• royalty tax withholding will be charged ;

• extensive network of treaties for the avoidance of double taxation;

• opportunity to consolidate a group of companies for tax purposes ( so-called Fiscal Unit).

Dutch companies are successfully engaged in the management of Russian assets ( the most famous example - Dutch Pyaterochka Holding NV, which wholly share in operating units of the " Roundabout ").

Dutch law does not provide any specific rules regulating the activities of foreign investors. Equally absent and any specific restrictions on them . Dutch participation in the newly established enterprises , whether they own property or office , is not mandatory. In addition, any foreign company established under the laws of his country, can freely engage in business in the Netherlands through personal Dutch branch . Individual entrepreneurs and foreign companies can enter into a partnership or business relationship with Dutch companies or individual entrepreneurs .

The discreet charm of the Dutch holdings

Holland is difficult to attribute to offshore areas : corporate income tax - 35 % , income tax can be up to 60%. At the same time, some features of the taxation of the Dutch holding companies , as well as an extensive system of tax treaty between the Netherlands and other countries allow businessmen to build various schemes that optimize financial flows of large holdings .

In particular this applies to optimize the taxation of dividends (and other income from equity ) transferred subsidiaries to the parent Dutch . From the tax-exempt dividends accrued in favor of Dutch companies or companies - residents of the EU. How to achieve this ?

If the subsidiary is not a resident of the EU, for the exemption from taxation is necessary to :

• Dutch company owned stake ( participate) , the size of which is not less than 5 % of the nominal issued and paid-up capital of the subsidiary. By the way, in some cases, the Dutch Ministry of Finance special decision qualifies as a participation in the mastery of the Dutch legal entities not holding stake and share in partnership subsidiary , etc. With respect to this norm correspond Russia JSC and JSC , to a lesser extent , LLC ( with regard to the latter, in 1995, the Dutch Ministry of Finance confirmed by special resolution that the Russian TOO this rule applies . Ltd. Since the form - legal successor LLP , the rate applies to the Company );

• companies whose shares are owned by a Dutch holding company, did not apply to the so-called cash-box companies ( property of such companies consists mainly of highly liquid assets , such as bank deposits ) .

If the subsidiary - a resident of the EU, for the exemption from taxation is necessary to :

• Dutch holding company owned not less than twenty five percent of the share capital of the subsidiary ;

• subsidiary ( at home ) not subject to any special tax regime.

Another advantage of the Dutch holdings : according to the law of the country in the payment of the Dutch company loan interest or royalties of the non-resident tax is not charged or charged at a reduced rate (2-7 %). Now the Netherlands has concluded more than sixty treaties on avoidance of double taxation with foreign states . So , now is an agreement between Russia and the Netherlands from 12.16.96 "On the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and property ."

Tax optimization schemes in the international holding company with the help of the Dutch company could be next.

Company A leading trading business in one of the European countries with a fairly high level of taxation. Optimization goal - as efficiently as possible for the owner regularly translate financial results of Company A in its offshore company B. For this businessman registers in Holland company C. So, the company provides a loan of C, which in turn produces a similar loan European company A. Then with the necessary frequency businessman Company A pays interest on the loan Dutch company S. pay interest tax at A are not subject , in addition, their sum And can reduce taxable income. Further, the Dutch company C will pay interest on the loan offshore company B. As a result virtually no part of the profits tax A European company is legally in offshore . It should be noted also that a similar scheme can be implemented in practice and with a license agreement.

To check the availability of tax optimization entrepreneur can make a request to the Dutch tax authorities . The request should contain information about the company, as well as a group of companies of which it is part . Important condition for confirmation of tax exemption - the so-called demand "thin capitalization" : at least 15 % of the cost of participation in the foreign company must be paid by the Dutch holding company of its own funds.

Dutch investment in real estate

In addition to successful investing , buying real estate in the Netherlands for a Russian businessman - is the ability to obtain a residence permit in the country to increase the prestige in the eyes of European business partners and banks (which allows the use of various mortgage instruments and commodity loans ) .

Real Estate in Holland for the past 30 years has grown steadily in price (up to 5 % per year) . Income from the sale of an individual estate is not taxed . The rate of profit in property letting ( as a percentage of the total value of real estate in the year) is 12 % - for houses and apartments , 8-10 % - for offices , 9.8 % - for shops and shopping centers, 9 - 11% - for industrial buildings . For business , this means opening his own company and office in the country, which is the center of world trade, direct contacts with manufacturers and suppliers .

Average price of a city apartment area of 50-100 square meters is 56-90 thousand dollars. In small towns , the figure is 15-20% lower in the major Dutch cities ( Amsterdam, Rotterdam , The Hague ) - 10-50 % higher. Two-or three-storey townhouse of 120-200 square meters will cost 90-120 thousand dollars.

Russian investor must take into account that the value of the Dutch real estate affected by the following factors :

• location ( ceteris paribus more expensive and attractive for investment property would be in the prestigious Amsterdam, Utrecht, the student , the port of Rotterdam , the informal capital of Holland, The Hague , in the seaside resort of Scheveningen , in the border with Germany Venlo and Eindhoven in the industrialized and so d );

• year of construction of the building and its technical condition , the material from which the house is built , etc.;

• possible return of the object in the case of putting it into rentals.

After buying an apartment owner can get under her pledge loan to 42-58 thousand dollars or rent . Realtor services firm will cost the buyer in 1.5-2.2 % of the purchase price of the object. Tax on real estate acquisition by 6% . Notary fees and expenses of paperwork - 0.7-1.5 %. If an investor decides to get credit for the purchased property , the realtor will request up to 1% of the loan amount . Bank fee for opening a mortgage of 1.5% of the loan amount .

2.5 Comparison of cultural profiles of the UK and Netherlands

Hofstede's Cultural Dimensions model.

Common: middle rate of power distance and high level of individualism.

Differences: the UK has higher level of masculinity, uncertainty avoidance and long term orientation in contrast to Netherlands.

Hall's Cultural Dimensions model

Netherlands and the UK have the same Hall's Cultural Dimensions: low-context, monochronism, high person territoriality.

R.Lewis's Model of Culture

The UK is very close to linear active culture as Netherlands but the second one “absorbs” some features of multi active cultures.

Kluckhohn and Strodtbeck's Model of Culture

The relationship with nature: the UK and Netherlands, two little countries, are forced to remember and carry about nature, develop eco-projects.

Duty towards others: British personal life is more closed than Dutch, British people are more reserved.

Mode of activity: Dutch do just what they want. And for British people the concept of debt is very important.

Privacy of space: in the Netherlands, private ownership of land does not exist, and in Britain privet farming is very extended.

Temporal orientation: almost all Dutch live for today, and British remember the past and think about future.

3. Comparison of forms of business management in selected countries at the UK and the Netherlands

Bartlett and Ghoshal model

Bartlett and Ghoshal (1991) identified four distinct types of multinational corporations (MNCs), which are depicted in the image at the end of this article. These four types can be seen to illustrate, which strategic outlook MNCs have towards managing their subsidiaries, and how these MNCs balance the potential needs of global integration and global differentiation. Each MNC should ideally choose the strategic model that satisfies the needs of the environment, and chose the strategic model that will secure global competitiveness. The choice of a specific strategic model should be made through an evaluation of, which forces pushes the MNC towards global integration, global differentiation or both. The strategic choice should ideally fit the pressures of the environment, where MNCs should try to build the strategic capabilities wanted by e.g. consumers. To evaluate these forces and pressures for either global integration or differentiation, MNCs could evaluate their business with the forces found in the I-R framework (Integration - Responsiveness framework) put forward by Prahalad and Doz (1987). This framework tries to give managers hints to, which factors might push the MNC towards greater responsiveness and differentiation of e.g. products or services, and hints to which forces may push the MNC towards greater integration of the MNC. Pressures for global integration could e.g. signal the importance of economies of scale, uniform product offerings, uniform shopping offerings etc. Bartlett and Ghoshal (1991) added a third force to this framework: "forces for world-wide innovation". This force can be seen as the pressure a MNC faces in levering the dispersed capabilities for innovation within the MNC. MNCs that do not need innovation from its foreign companies or subsidiaries to be competitive, will most likely not be as inclined to allow autonomous decision-making and innovation in its subsidiaries. Innovation will oftentimes solely be developed at home, where this innovation and knowledge is sought dispersed to the subsidiaries and companies around the world. However, MNCs that require local innovation to remain competitive, will most likely demonstrate a greater deal of autonomous decision-making in its subsidiaries and companies. New ideas, innovation and knowledge are sought developed within each individual subsidiary, or likewise sought dispersed to the entire network of the MNC. Below, each strategic model will be elaborated further, where the design of the MNC in each strategic model will be shortly described.

Multidomestic (Low pressure for integration - high pressure for differentiation)

This strategy is based on responsiveness to local market demands. The structure of the MNC will be a portfolio of rather autonomous national companies containing their entire value chain. The innovation and knowledge developed at these national companies will most likely stay there, and will most likely not be dispersed to other companies within the MNC.

International (Low pressure for integration - low pressure for differentiation)

This strategy is based on home country expertise. The majority of the value chain will be maintained at the headquarter. The control of technologies used for e.g. production and general management systems will be structured and developed at home. The development of knowledge and innovation will stream from the home organization to the subsidiaries.

Global (High pressure for integration - low pressure for differentiation)

This strategy is heavily based on scale economies. The subsidiaries of the MNC are rather weak and a full value chain will only exist at home. The subsidiaries are tightly coupled to the home organization, and are heavily dependent on resources and know-how from the home organization. Innovation and development will be created at home, and later diffused to remaining subsidiaries.

Transnational (High pressure for integration - High pressure for differentiation)

This strategy tries to maximize both responsiveness and integration, where knowledge and innovation is sought developed and dispersed within the entire network. The MNC is regarded as a network, and each subsidiary is given responsibility compared to its capabilities and strategic mission. The MNC is controlled by the movement of people within the MNC that may facilitate the mutual development and dispersion of innovation and knowledge.

3.1 Analyze of British Petroleum plc

BP plc formerly known as British Petroleum, is a British energycompany / multinational oil company ("oil major") with headquarters in London, England, UK. The company is amongst the largest private sector energy corporations in the world, and one of the six "supermajors" (vertically integrated private sector oil exploration, natural gas, and petroleumproduct marketing companies).

Business model

Through its business model BP aims to create value across the hydrocarbon value chain. This starts with exploration and ends with the supply of energy and other products fundamental to everyday life. BP provides customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving, and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging. These projects and operations help to generate employment, investment and tax revenues in countries and communities around the world. At each stage of the hydrocarbon value chain there are opportunities to create value - both through the successful execution of activities that are core to oil industry, and through the application of distinctive strengths and capabilities in performing those activities.

Organizational structure

BP is vertically integrated company. In microeconomics and management, the term vertical integration describes a style of growth and management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation.

Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called avertical monopoly. BP and national adopt a vertically integrated structure. This means that it is active along the entire supply chain from locating deposits, drilling and extracting crude oil, transporting it around the world, refining it into petroleum products such as petrol/gasoline, to distributing the fuel to company-owned retail stations, for sale to consumers. There are internal and external society-wide gains and losses stemming from vertical integration. They will differ according to the state of technology in the industries involved, roughly corresponding to the stages of the industry lifecycle.

Static technology

This is the simplest case, where the gains and losses have been studied extensively.

Internal gains

* Lower transaction costs

* Synchronization of supply and demand along the chain of products

* Lower uncertainty and higher investment

* Ability to monopolize market throughout the chain by market foreclosure

* Strategic independence (especially if important inputs are rare or highly volatile in price, such as REM)

Internal losses

* Higher coordination costs

* Higher monetary and organizational costs of switching to other suppliers/buyers

* Weaker motivation for good performance at the start of the supply chain since sales are guaranteed and poor quality may be blended into other inputs at later manufacturing stages

Benefits to society

* Better opportunities for investment growth through reduced uncertainty

* Local companies are better positioned against foreign competition

Losses to society

* Monopolization of markets

* Rigid organizational structure, having much the same shortcomings as the socialist economy

BP employs nearly 86,000 people, including 14,700 service station staff in Europe and Asia (as at 31 December 2012). The majority of employees are located in the US and Europe. The qualities and abilities of employees have a powerful effect on ability to compete and meet commitments to investors and the wider world. BP provides a range of professional development programmes and training to help employees develop their skills and capabilities. BP has two main business segments: Upstream and Downstream.

The structure of the company

The structure of the company BP has 3 business units, 22 functional divisions and 4 regional divisions.

Business units of the company:

Exploration and production of oil and gas (BP Exploration and Production, including exploration, development and extraction of oil and natural gas production, preparation and transportation of raw materials via pipelines;

Processing and marketing (BP Refining and Marketing), under which the supplies and sales of oil, as well as the production and sale of oil products, including aromatics and ацетилы;

Gas, electricity and renewable energy sources (BP Gas, Power and Renewables), including the marketing and sale of natural gas, liquid condensate and liquefied natural gas (LNG)transportation of LNG and регазификацию and Alternative Energy (BP Alternative Energy).

Functional units provide the work of the three business units and are designed to give coherence of the BP, effective risk management and achieve savings through consolidation of business. Engineering and research works carried out within the group, technological support to all business units. The head of each regional division is responsible for the coherence of business units and functional divisions of the group and BP in its region.

Direct management of the business units is performed by the higher management of the company. The company works with a number of companies not included in the group BP, joint ventures (JV), the majority of those - unincorporated. Other joint venture TNK-BP, are separate companies with their own boards of Directors and management processes, and BP is their shareholder.

Strategy of the company

The company works on the basis of five-year and annual plans of strategic development, pursue 3 main objectives:

Stimulate growth by achieving concrete results, especially in the part of profit by investing in volumes provided long-term growth.

Increase in the dividend per share as part of our policy.

Return to shareholders free cash remaining after reinvestment in the business and payment of dividends.

Product and geographical borders of BP.


The main activity of the company for production and exploration resources are concentrated in Algeria, Angola and Egypt. In this area the company is represented mainly in the form of joint ventures with local companies.

In other African countries, the company carries out sales of oil, gas and lubricants, as well as recycling of oil products.


Extraction and exploration in this region is concentrated in China, Indonesia, Vietnam and Pakistan. Significant capacities of chemical production are China, the Philippines, South Korea and Malaysia. The company holds leading positions of liquefied natural gas in China through a number of joint ventures.

In India, the plant is a subsidiary of the company BP Solar» producing solar panels.

In this area the company is actively developing sales of oils and petroleum products. Basic sales are made by China and India.


Mining and exploration company focused in Australia. A production subsidiary of BP Solar.» Marketing activities of the company focused on Australia and New Zealand.


The center of all the shopping, legal, financial and a number of other core functions of the company is located in London, in the UK, where the headquarters of BP. In the UK, there were three main research departments of the company.

The activities of exploration and production in Europe is carried out by the company in the North sea (as in the UK and Norway, and the Netherlands.

The company owns a 50% joint venture TNK-BP, which is one of the leading Russian oil company and is among the ten largest private oil companies in the world in terms of oil production.

BP is involved in several projects for the exploration and production of oil in Azerbaijan, and also plays a leading role in the project pipeline «Baku-Tbilisi-Ceyhan. 12 October 2005 in Gardabani in the East of Georgia, held a solemn opening of the export oil pipeline Baku -- Tbilisi-Ceyhan oil pipeline. The total length of the pipeline is 1 770 thousand km, and capacity of the pipeline is 50 million tons of oil per year.

The company's refining and sales distributed throughout Europe, and BP owns or has a participation in the capital of 9 refining plants in the region. Endpoints of the company's sales are presented in a number of European countries. In Germany, BP operates under the brand name «Aral». The company sells oil, lubricants and other products refining oil inEurope, both consumers and organizations.

In the region is one of the production facilities of the subsidiary BP Solar (Spain), and is located several petrochemical plants.

North America

Group of companies BP is the biggest producer of oil and gas and one of the largest distributors of gas in the US. BP is the largest non-U.S. company whose shares are traded on the new York stock exchange. Division of BP Alternative Energy has a center in Houston and the production of solar panels in the United States.

In Canada, the company focuses on the production of natural gas and derived compounds. At present the possibility of creating a joint venture for realization of the project of the North American gas pipeline. Exploration and production are also the main activity of the company in Trinidad and Tobago, where the company is the largest local producer.

South America

The main activity of BP in Colombia and Venezuela is the exploration and production. In Brazil, the company has a joint venture in the field of chemistry and a number of projects on the use of solar energy. In other countries in South America the activity of the company is focused on the sale of oil, grease and oil products.

Manufacturing and sales geography of the BP.

The company's interests in exploration and production of hydrocarbons are presented in 25 countries of the world.

Capacity recycling in 2005 were 2400 thousand barrels per day. The company has leading positions in fast-growing industries as production of aromatic compounds and acetyls. BP is actively strengthening its marketing and manufacturing positions on the markets of Asia.

One of the characteristic features is the active use by the company capacities recycling on the territory of the country of sale.

Below shows the location of the company's production capacities in the world.

3.2Analyze of Phillips

Philips story begins in 1891 when Gerard Philips and his father Frederick Phillips founded the company Philips & Co in Eindhoven , Netherlands. Several years later, in 1895 , Brother Gerard , Anton Phillips, proved his talent of the great merchant , strengthening the position of the young company in the global market : Philips two years later became one of the world's largest producers of bulbs . Began in Europe Industrial Revolution triggered the creation of the first research laboratory of Philips, which opened in 1914. The company begins to present its first innovative projects in the field of radio and X-ray technology. In subsequent years, the company makes a lot of scientific discoveries , continuing to add to the list of his inventions and trying to improve people's daily lives .

Business model

With primary emphasis on developments in the field of health and well-being, improving quality of life, we are working as a professional and consumer markets in three related areas: health care, lighting solutions and consumer products. Our products demonstrates the innovative potential of the campaign, which, analyzing the needs of consumers, based on these conceptual technologies and systems that enhance the quality of their lives.

The company is a concern (includes electronics, medical equipment, lighting equipment). Phillips has a two-tier management structure consisting of a Board of Directors and the Supervisory Board, which monitors the activities of the Board of Directors.

Board of directors

Executive management of the company Philips is entrusted to the Board under the chairmanship of President / CEO . The Board consists of at least three members (currently six) . Board members have collective rights and responsibilities. They are responsible for the overall direction of the company , the implementation of strategies and policies and achieve the goals.

Committee collective leadership

The Committee consists of the collective leadership of the Board of Directors , heads of business units and key managers. Committee members are selected by the Supervisory Board . The main task of the Committee is to monitor the observance of business standards and the implementation of common policies.

Supervisory board

The Supervisory Board supervises the policy of the executive management ( Board of Directors ) and the general state of affairs of the Company and affiliates, and advises the executive management for the above-named issues.

Head of Philips in Russia , CIS and Central Asia since November 1, 2010 is Arjan De Yongste

Mission - making life better through innovative technology.

Vision for the future - Philips is committed to making the world a better and preserve the environment through the use of innovative technologies. Our goal - to improve the welfare of 2025 3 billion people around the world . Our company is happy to accept into their ranks those who are willing to assist us in achieving these goals. Together we will achieve excellent results for our customers and employees and shareholders.

Ethical behavior:

• Desire to win

• Responsible approach to work

• Teamwork for success

Product and geographical borders of BP.

Philips is the world leader in the design and manufacture of medical devices , lighting systems and consumer products.

Phillips is the world's largest manufacturer of equipment for home health care, ranking the first place in the markets of monitoring systems , automated external defibrillators , ultrasonic systems Heart conditions' diagnosis , X-ray equipment for the studies of the cardiovascular system .

Phillips - № 1 in the market of electric lamps in Europe, Latin America and Asia Pacific and number two in this segment of the North American market . Philips is a market leader in automotive lamps in Europe, Latin America, Japan and Asia Pacific .

Phillips is the first in the world market for electric shavers and men's personal care products.

Philips - one of the leading producers of flat panel TVs in the world.

Royal Philips shares listed on the New York Stock Exchange (NYSE: PHG) and Exchange Euronext Amsterdam (AEX: PHI).

n 2008, Philips said 110 years in the Russian grand event Simplicity Event in Red Square. History of Philips in Russia began in 1898, when the first contract was for the supply of coal - light candles for the Winter Palace in St. Petersburg .

In May 2010, Philips and NIPK "Electron" Creating announced " innovative partnership full cycle" for the development and production of medical equipment vysotehnologichnogo . The company became the first world producer with complete production cycle and development (R & D) in the territory of Russia . It is planned that in the three-year term to 51 % of the development and production will be carried out on the territory of Russia , it's not only vehicles but also high-tech components .

Since the company's latest technology and inventions have become for us a tool that helps make everyday life better and more comfortable . " Sense and Simplicity " - this principle lies at the heart of more than 55,000 patents , 33,000 trademark registrations and 49,000 design projects Philips.

Whatever may have been technologically challenging our design , the shaver to complex systems of urban lighting , people should be easy and convenient to use them . Work on the consumer goods market means for us to embody the concept of simple and reasonable solutions to specific products that surround us every day .

To date, the company has established long-term partnerships with leading medical institutions in Moscow and regions . Advantages unique to the Russian magnetic resonance scanner Achieva 3T TX enjoy in " Russian Cardiology Research and Production Complex " of the Ministry of Health and Social Development of the Russian Federation. Young patients Institute of Emergency Children 's Surgery and Traumatology gladly pass the examination on the latest MRI module Ambient Experience, which allows you to de-stress complex diagnostic procedures . The best examples of modern diagnostic equipment companies help to those skilled in the Scientific Center of Cardiovascular Surgery them . Bakulev RAMS, Moscow Regional Research Clinical Institute and a hundred other medical institutions .

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