r Mindset Mindtrapr Covernance

-. The Oreanization of the Future ., . Entrepreneurship can be Taught

I Old Photos of Manila Conmercer Good, Cheap, and Fast Products

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PLDTKEEPINC IOU IN IOUCH

VOL, VIII, NO, 2 Intemet Address: tam@aim.edu.ph

THEAIANI\4ANAGER

APRIL/MAY I995

COVDR STONY NDSBANOH

Are Stock Prices Random or Not?by Prolessor Errol B. Perez, AIMDoes technical analysis really work'

BOOK NEVIEW

First Things First

20

by Proltssor Enrico C. Angtuncl, AIMStephen Covey's fourth generation oI time management.

Asian Mind Game 30by H.B. Srpiyo, SWA SembadaAn Asian writes about Asians for the Western mind.

BUSINDSS AND THN ANTS

Negotiation Strategies for Joint Ventures 6by Professor Emanuel V . Soriano, AIMCountervailing controls are a must to prepare fornegotiations, especially in cross-border partnerships.

MANAGDMDITIT IJPIIATDS

Kaizenby Professor Rene T . Domingo , AJMCan you deliver a consisttint QCD mix? TQcompanies deliver on all three.

Entrepreneurshipby Professor Quintin C . Tsn , AIMEntrepreneurs can be taught.

Developmentby Sindhu Khullar, Visiting FellowSindhu Khullar defines "Govgrnance."

HRDby Professor Mario Antonio C. Lopez, AIMScientific to humanistic to competitive management.

BUSINDSS NXVIDW

The Organization of the Future

T242

76

JZ

br1 Professor Gabino A. Mendozs, AIMEiite tioops and temporary workers.

Green Pastures: It Pays to Think Green 40br1 Prsfp,.<61 Brnjamin C. Bagadion. AIMliow to deploy an environment policy for Profit.

Mntage Photo CollectionGeronimo De los REes, Chnirman, Catamy PropertiesA rare look at Manila business, circa 1880 to 1930.

TAX SI,'RVDY

AFTAby Prolessor Mari Kondo, AIM

OPINIONS

Misguided Moralityby Darid A. Heenan

Think About ItProfessor lesus C. Gallegos lr., AIM

Money Mattersby Professor Victor S. Limlingan, AIM

43

,,^

47

49

50

J+

38

Prbltuh.r Felipe B. AlfonsoCcPrbllsher & Edltor.tn{hlef Ricardo A Limftdoalrte Publlshe. & .{drer.ktng DlterlorDelia C. Cutierrez[lnr.or. Operrrlons & (lrcuhdon Millie C. Ferrer

n€earch and Prodrcllor Amv G. EspirituAdrerlklng Aslsrtnr Van€ssa M. iaballasClrcrlaalon Airkt nt Crace A. CasibangPublkhl4lBosrd ReneT. DoninSo, JesusG. Gallegos,

Jr.. Ricardo A. Lim, VictorS Limlingan, Eduardo A. Morato.

THF AsrAN MANAcER A Publication ot the Asian lnstitute ofMrnagement and ihc Fcde.anon o1 the Asi.h lnsnhrl€ oiManrg.mcnt Alumni Asso.iations

Copvright@ 1995 by The Asian Mtn.8.r All riShlsreervedReproduction rn anJ nanner in 1!hol.or in Parl in English orother l.htLnS€s prohibited The Asian \'lana8er, rs publishedbi monthlf b), the Asian Institutc oi M.nagement Editori.rltrnd Advertislng O1fice: Asian institut. .i Management,lu8cnio La)per foundahon, Jokph R M.Micking CamPus,lzil Paseo de Rorrs, Makiti, Metro Manil., PhiliPPines. Tell(632) 8e2 40 ll 25;892 04 35'.13, Far: (632) 817 92 10 Photog.nphs so!r..d blthe AIM LibnrfPintcd bv Times frinte.sfte Ltd, SinSnPoreThe Asinn M.n.EefMITA (P) 24419/91

I55N 0l lr'-77q)

THE AsrAN MANAGER . APRIL-MAY 1995

ITTDIIIIATfOIAL MDDITIRDPtrDSDNTAAIVI: OI'f I'DS

[on{raorg!Prm.h Ch._\], Paci6.AsiaMedii, l3A,36l 361Lockha.l Road, Wan.hai, Hong Kon8. Fat. (85 2)8f45980SlnSrIoFt lcddy Tnn, Pam Media turvi.es I'tc Lld 83AEasl Coast R@d, Tay Buan (;unn 5hopping Centre, SingaPor.15,12 Fax (65),r40 8760. Indonal.: Rama Slnm.t, Mana8er,Circlc Comnunications,Il.Bansla xl A/5, Jaka.ta 12720,lldonesia Fa\ (62 21) 792090, 797378,1. M.lar!la!ConnreNB, AdvertlsinS Repr.*nlalne, Medi.plus lM) Sdn Bhd.,3JA, Jalan SS20/10 Dnmanera Kim,.r74O0 Pelaling lnvn,S€l.ngor Malaysii lrdll Srb-Contln.na. Mdl'. SouthAsra (P) Ltd, Apa.tment 1A, Abhi-Anil Ahas, KantiPaih_lamal, Krthmandu, Nepal Telex 2606 MEDRFP N P, Fax. (97l) 227336. Psklsa.n: S I Silnhlddin,ChietE\eculire,INS

ComnrunicitbnsLld,6/F, PnnorrnnCentrc,FalimaJinnahRd, Karachi, Palistnn Far (92 21) 56li 2271 Xoe.. Y KChu!, First McdraS€.vicesCorP.ration, CPO 8ox 79r9,Ssul,Kor.a Tele\ FM5!*ORP K 29137, Fax (02) 738 7970 JrpmtHideo Nakavama, Nakiynmn Media Int€matbn.l Inc , FonkAoyama 705,2-221 1 Mrnami Aoyami, Mnrato ku, Tokyo I07,

,npin Fat. (03)3479 6130 Thtll.nd.Dr AnthonySharma,Managing Dnedor, Tlh RePr*ntativ. Ltd ,867/58 Pomr.v@Sukhun t5oi101,P.akanongBnnglok102t'0,Thailand Fax.(66 2) 331 9303. Unlaed Llngdom: Brian TaPlinAsaxiatcs,32 Fishery R€d, EornDor. Hcnd HemPst€ad, Hcrrs HPIlND,U.k Fr x (0412) 246 03,1 FrDes StaPhan. de R€musat,Managrng Dir{irt, REM Internatbn.l, 2'r bis rue C.llieni,95160 Montmorency Franc . . Fax (331)393q6341

Design b_! PMF & AssNiit.s

fl tuck in a Manila traffic

\ ja . t t ' re other day, I\./ could not help but no-tice the plate number of the carin front of me: UAB-310 orsomething. I had the urge toimpute some significance inthat plate number The greatIndian mathematician Rama-nujan had parsed Londontaxicab numbers for exoticprime number combinations.Ramanujan wasa pure geniuswho could twirl the concept ofinfinity like child's play; I waslooking for something infi-nitely more down-to-earth,

Manila license platesin theseventies started out with"NAA-000." The governmentdoled these out in order untilall 67 6,000 "N" combinationswere exhausted on new carregistrations. InFerdinandMarcos's time gasoline and carprices ballooned, and peoplestopped buying new autos.The "Ns" stayed around for awhile as the Philippine eco-nomy stagnated. When CoryAquino came to power thenext sequence of "P" licenseplates started flying in. WithFidel Ramos's new economicprograms, the change seemedto accelerate. We whippedthrough the "Ts"

in less than oneyear, and now Iam gridJockedbehind a brandnew Honda Ac-cord with a "U"

plate, (What ismore gal l ingthan the trafficjam is that I havea not-so-shinyToyota Corollawith an early "P"

that people were "happy"

and.., prosperous. Well, thisis not Nobel Prize matedal,but it will do.

What other prosperity in-d icators have economistsused, short of measuring GDPand price indexes and bal-ances of payments? Ameri-cans have correlated the re-sults of their Super Bowl to

Economists have meas-ured heml ines as s igns ofwealth. The theory goes; theshorter the skirts, the happiertheir wearers and admirers are(?), because they have higherincomes, and therefore willhave greater propensities tospend; long skirts, the oppo-site reigns. This was provenby the "Flapper" years in

nese cars. In Japan, count thenumber of Amer ican cars,Lincolns or Corvettes, and thesameconclusion is true, for thejapanese like to have Ameri-can stafus symbols. Purina haserected a "Puppy Chow" dogfood factory outside Manila.The companv hopes, I sur-mise, that Filipinos will feedthelr pets more expensiveprocessed food, rather thantable scraps. InSingapore andHong Kong, both prosperousci t ies, personal ce l lu larphones are de rigeur, and arebecoming more commonplacein Bangkok, Jakarta, and Ma-nila. More conspicuous con-sumption, and more expendi-tures for heretofore post-ponable decisions.

Check the fabr ic andcolors people wear-yellowsilk, for power and prosper-ity, red and darker coloredpolyester for the opposite.Measure the lengths ofqueues at department storecashiers, and the number ofshiny vs. dull shopping bagsthe customers carry around.For me, food is anunbeatableindicator: I measure the ratioof shaved ice to ice cream inmv hslo-halo or rced kacang,which indicates how grandshopkeepers feel in their will-ingness to add more qualityto their desserts.

Ah, prosper i ty has i tsdrawbacks. It has taken metwo hours to write this article,about thetime it takes to travelthe 16-kilometer round tripbetween my home and AIMduring rush hour. Manila'straffic will soon be as bad asBangkok's. "Life is not thatbad after all," I sigh in poeticjustice, as the shiny new "U"

HondaAccord creeps along atthe same rate as my ownclunker

Pnf. Rickv A. Lo tcach$.s lT andMana:lentrnt Cononun icatiorl fol th.EDP awl MBM programs.

plate. ) I imagine Manileiiostook about three yeals to passthe "Ps." From that simplebenchmark I concluded thatour prosperity grew at threetimes this year the rate of pre-vious years, that people hadmoney to spend on new cars,

4

however, the National Confer-ence had won an inordinatenumber of titles, America'seconomy had gone into reces-sion (and the stockmarket hadcrashed in the meantime), soout the window this theorygoes.

Purina hopesthat Filipinoswillfeed theirpets more ex-

and notpensive food,

stock market per-formance. If theNational FootballConference wins,the theory states,then bull marketswill ensue; if theAmerican Footballside wins, the bearstakeover In the be-ginning the theoryworked well. Forthe last ten years,

America, of short skirts andfree-f lowing extravagance.When the Depression hit in1929 ladies lengthened theirhemlines until theirankles. InWorld War II the skirts gotshorter, and culminated in thesixties, when "micro-mini"

skirts were the rage. Thestudies stop after that period,because French designerswere gumming up the colle-lation bydesigning all sorts ofhemlines, with blatant disre-gard for economic theory.

Here are some other"quickand dirty" indicatorc ofwealth: Count the number ofBMWs and Mercedes Benzeson any ASEAN country 'sroad, in proportion to Japa-

tablescraps.

.rmTnn'on

. Economists hazte measuret

APRrL-MAY 1995 . THE AsrAN MANAGER

I

DECT. The new wave in personal communications'

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ilffiiD€ct rt work at home

haand in the city.

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lwant:S e r v i n g t h e

G e n e r a t i o nP t i b r C d n u n c o o n s r s c , P O . B o x 3 O O 2 o , B u i l d i n ! C E C 2 l l , S 6 m J E i n d h o Y e n T h . N . d F h n d r T . t + l l ' O 7 5 s a 0 l F a ' l I l 0 7 9 3 7 l t

PHITIPS

, !):', . 1

BY PROFESSOR EI , Ia IuTT V. SoRIANo

. Financing andrTechnologv and productir.itV irrprovemcnr

On a caselo-case basis, one or two otthese components w ould be more impor-tant than ihe othcrs to the local conpantr

The viervpoint of the foreign companvaddresses other kev arcas:

. Penetration of localor regional mar-ket and protection of market share

. Establishment ol a nanufacturingba'e rr hich pro\ iJe. cert,t in ,tJr',rniage-(e.g.,labor, land, ancl other cost

Elements of Control Loca l Comoany Fo re iqn Comoanv

Ownership aDomestic marketing aExport marketingl,4anufacturing aTechnology & researchKey people (except treasurer) aTreasur6rDomestic pricingExport pricingOuali ty controlSuppliers ( imported raw materials)Hir ing/f ir ing staffNew investmentsD iv i den dsVarious credit l ines (foreigni

a Refers to party in substantial control.

aa

aaa

a

a

a

aoaa

aa

a

Negotiation Strategiesfor Joint Ventures

he scarcity of raw materials, thethrust for sustainable develop,ment, the formation of the North

American Free Trade Area (NAFTA),WTO-GATT, APEC, and the Asean FreeTrade Area (AFTA)-all underscore thephenomenon of interdependence and theneed for healthv l inlage. among orgrni-zatlons.

How do we promote these healthvl in lage. . o r ' r r in -w in re la t ionsh ip ' )

Joint ventures betrveen local and for-eign partners have been the response tointerdependence. Some experiences havebeen successful; others have failed. As theforce for interdcpendence builds up, theneed for mutualiv beneficial joint ven-tures would also build up. This is trr.re forcountdes in Asia. Thus, managers in thesecount es ought to develop skills to ne-gotiate maturelv and effectivelv so thevcan forge sustained joint venturcs.

lcnture SlakeholdersWe must consider three basic points

of vieu':. The Point of r,'iew of the local com

Pany. The point of view of the foreign

company andr The point of view of the host gov-

ernment and the government of the for-elgn partner.

Two of the threc interacting points ofvierv are shown belolr'. These viervpoints

6

mustbe considered in theirentirety rvhennegotiating a joint venture.

The viewpoint of a local company hasmany aspects:

. Access to patents or manufactur-ing rightsr Use of trademarks. Additional management expertrseas and ryhen needed. Adyice on trends and stvles asrvell as a product deveiopment. Access to foreign marketing chan-nels

APR]I,.M,\Y I995 . THE ASlA\ \ , 'ANACEIt

considerations) and. Access to raw materialsThe foreign company's interest should

be seen in the light of certain considera-tions. First, the foreign company must notbe looked upon as a "big brother," or acharitable institution. Second, unless pro-hibited by law, the foreign company usu-ally prefers a majority equity position inthe joint venture. Third, the foreign com-pany puts a premium on minimizingrisks: early payback projects, minimumexposure to foreign exchange risks, andnon-cash contributions such as patentsand trademarks, rather than direct invest-ments.

In unstable political situations, the for-eign company looks to a joint venture asprotection against sudden changes in thehost government's policies, e.9., nation-alization.

The government's viewpoint is no lessimportant. Usually, governments look forimplications of joint ventures on:

o Promotion of socio-economicprogress

. Technology transfero Balance of payment effects' Employment generation. Collection of taxes. Competitiveness of the country

and. Responsible use of the natural andother scarce resources.A favorable balance of payment

would be welcomed by a host govern-ment. Other plus points from the govern-ment's perspective are training for localmanpowet substantial local content of theproduct, and transfer of appropriate tech-nology.

One must reconcile these viewpointswhen establishing a joint venture. It is safeto assume that the government's view-point is fixed over a longer time. Thus,flexibility in negotiation must come fromthe prospective partners in terms of will-ingness to modify their viewpoints withinthe tolerable limits. It is to this process ofinfluencing each other's point ofview thatthe rest of this paper is addressed.

Win-win and controlA viable joint venture must have two

basic elements, without which it cannotbe established on a long-term basis. First,nll parties to n joint aenture must t'eel a senseot' net gain. Second, the tie-up ffiust hnoe a

THT AsIqN MANAGER . APRIL-MAY 1995

system ot' clunteraailing clntrll.Negotiating and establishing a joint

venture is not a"zero-sum" game i.e., onegaining at the expense of the other. A re-lationship based on zero-sum may workin the short run but will be untenable inthe long run. One party may agree tem-porarily simply because it is forced intothe relationship, but looks to the daywhen the relationship will end.

A balanced system of countervailingcontrols makes possible a continuingsense of net gain on the part of the jointventure partners, Ownership control is akey of the relationship. There is a broadrange of other elements to the relation-ship: marketing control, manufacturingcontrol, control of technology and re-search, key people, pric-ing, quality, control ofsuppliers, hiring and fir-ing of staff, decisions onnew investments, anddecisions on dividends.

Thus, even i f oneparty has 95% owner-ship of the joint venturebut the other party has100% control over ex-port marketing activi-ties, countervailing con-trol is said to exist. Simi-larly, one party may con-trol quality specifica-t ions as wel l as newtechnology and re-search; the other partymay control access toraw materials. Again,

parties enter into it with a high degree ofmaturity. Maturity comes with familiar-ity and experience in the negotiation proc-ess: namely, posture, flexibility, negotia-tion rules, influence, and the negotiatorsthemselves.

Negotiation PostureThe first key approach to negotiation

is adopting a good negotiation posture.There are five types of postures:

o Cooperationo Conflictr Containmentr Power relationship and. AccommodationIdeally, the cooperative posture is the

most desirable for both parties to adopt.Negotiation in the co-operative mode pro-ceeds on the basiswhere both partiesshare mutual areas ofinterest and are willingto work together to-wards giving effectiveattention to these areasof mutual concern.

Negotiation underthe conflict posture isthe most undesirable.It is done under condi-tions where one partyis forced to accept a re-lationship because ofcircumstances that aretemporarily out of con-trol and looks forward

The foreigneomparymast not belooked uponas a "big

brothen" oru ehuritubleinstitution.

countervailing control exists. Thus, givena range of elements of the relationship, ifone party is in control of a set of elementsor shares control with the other party and,on the other hand, the other party is incontrol of the remaining set of elements,countervailing control is said to exist.

The countervailing control system ina joint venture may, therefore, look likewhat is shown in Table 1. The arrange-ments in Thble 1 are what parties negoti-ate over when setting up a joint venture.Subsequently, during periodic reviews ofthe agreement, the parties strive to modifor strengthen the relationship in order topreserve that sense of net gain that par-ties to the joint ventures must have if therelationship is to remain viable. Negotia-tions will not bear good fruit unless the

to the time when thejoint venture will no longer be necessary,

Negotiation under the containmentposture is where one party tries to getinto a dominant position and the otherstrives to counter this by keeping theother within certain boundaries.

Negotiations in the power posture de-velops a relationship on the basis of whohas effective power to influence the otherparty's position.

Negotiation under the accommoda-tion posture develops a relationship onthe basis of giving in with respect to mi-nor points but holding firm with respectto certain organizational priorities.

FlexibtlityAn important precaution to guard

against in negotiations is to avoid all-or-

nothing or take-it-or-leave-it situations. Itis conhary to human nature. This mindsetmust be canied over from the negotiat-ing table to the joint-venture operation asit is implemented by the local companyand its foreign counterpart. In a negotia-tions between an American comoanv anda Philippine cornpany, talks sta;ted withvery high tension because the Americanpanel used the "take it or leave it" ap-proach. The American panel felt the ap-proach was honest and up-front. Theywanted todeliver a message: they hadnohidden agenda. However, psychologi-cally, the Philippine panel wanted to feelthat the American panel had given in onsome points. This not being possiblg thetalks were discontinued. Both compa-nies' positions were really compatible,but the negotiating postures were so farapad. This is a case where telling thetruth up-front didn't seem to work.

Unwrltten rulesol negotlatlon

The objective of effective negotia-tions is to avoid the unintended break-off. Implicit in this objective is the as-sumption that sincere, mature negoha-tors want a mutually beneficial agree-ment, if it is possible to reach. Towardthis end, rules are necessary:

o The initiation rule. The demand rule. The agenda rule. The tentative agreement rule. The deadline rule ando The termination ruleThe initiation rule suggests ihat ne-

gotiations be started or higgered by aneutral signal or person. This is neededso that one party may not be forced to pre-maturely show his hand and give an im-pression of weakness. Starting negotia-tions is both a threat and a source of oo-portunities to both parties. Therefore, itshould be started by rneans of a muhr-ally safe signal.

The demand rule suggests that theparty making the first offer is expected toask for its maximum advantase but witha lot of room to fall back when necessary.It also suggests that the party receivingthe first offer is expected to give a coun-ter-offer that is ideal for them. Both of-fers, however, should not be ridiculouslyunrealistic. The rationale for this rule isto prevent an unintended break-off. Ne-

8

gotiating points, if they are crucial, requirea lot of hornework, study, and research.They have consequences on other nego-tiating points. Therefore, bringing up newpoints by surprise causes irritation.

The agenda rule suggesis that the veryoptimistic first offer and the relativelypessimistic counter-offer sets the agendafor negotiation. lt sets the Iimits for nego-tiation. Preferably, no further negotiatingpoint should be inhoduced. The ration-ale for this rule is to prevent an unin-tended break-off.

The tentative agreement rule sug-gests that as the negotiation progresses,agreements on various points are tenta-tive until agreement on all points has been

reached. This rule preserves the flexibil-ity of both parties and helps avoid take-it-or-leave-it situations.

The deadline rule is intended to purpressure on the negotiating parties. Thisis important because other alternativeshave to be explored if no agreement canbe reached. Moreover, the negotiationmay be overtaken by unforseen andunfavorable developrnents beyond theconhol of both oarties.* : .lhe ternunatlon rule suggests that ne-gotiations end when agreement on allpoints has been reached.

The foregoing rules are unwritten.However, they help inject maturity andrationality in the negotiation process.Oftenhmes negotiations break, even if a

mutually beneficial agreement is possi-ble, because these rules arenot followed.

Inlluenelng each othertl'lewpolnt

A rich menu of tactics is available fornegotiations. The process of influencingthe other's point of view is described inFigure 1. Figure 1 shows the local com-pany As and the foreign company B'spositions before negotiations start. Bothcompanies, however, have certain mini-mum positions unknown to the other. Thenegotiation progresses as A influences Bto reduce its aspirations, and vice versa.Through this mutual influencing process,the parties attempt to reach a minimum

point, the "Zone of Agreernent " orZOA, a mutually agreeable point toboth parties where they still feel asense of net gain. It is in avoiding apremature break-off at points abovethe ZOAthat mature negotiation mlesare useful.

How does one party inJ:luence theother's point of view?

Certain negotiahng tactics may beused by both parties provided they areused within the context of the rulesdiscussed earlier If used judiciously,these tactics will enable both partiesto inlluence each other's point of view'

. Sharing information

. Persuading and rationalizingo Coercing (i.e., limiting possible

outcomes). Using sign language. "Trading horses" ando Committing graduallySharing information is used to ex-

press one's preference as well as discoverthe other's preferences without actuallymaking an offer or a commitment. Newinformation tends to affect one's assess-ment of the situation. Thus, for A or B, itrnay influence them to move towardZOA.

Persuading and rationalizing is usedto actively change the other's preferencesas well as affect the other's level ot ex-pectations. Using Figure 2, persuasionand rationalization is an active effort tomake A & B travel to the ZOA. Studies,credible research, and feasibility studiesare useful in persuading and rahonaliz-mg.

Coercing is a tactic where one partylimits the possible altematives without

APRIL-MAY 1995 . Tt{E ASIAN MANAGER

Idealpositionfor A

Idealpositionfor B

A-+ZoA<--B

Fig. 1

Zone ofAgreemenr (ZOA I

AcovIPLE-TE coURSE oN HoWTo BEA.,COMPLEAT MANAGEP'

REDISCOVERING A MANAGEMENT CLASSIC :THE T ITTAE IESS WRIT INGS OF PROF. GABY MENDOZA

BY ROBERT O. WRIGHT

Professor Mendoza (who almost fell prey to a heart attackhims€lo re(ounts what Lee Iaccoca has to say| "l'm constantlyamazed by the number of pmple who can't s€em to controltheir own schedules. Over the years, l've had many executivescome to me and say with pride: Boy, last year I worked so hardthat I didn't take any vacation.' It's actually nothing to be proudof. I always feel like responding:'You dummy. You mean to tellme that you can take responsibility for an $80 million projectand you can't plan two week out of the year to go off withyour family and have some fun?'

'"You can't let a corporation tum into a labor camp. Hardwork is essential. But therds also a time for rest and relaxation,for going to see your kid in the school play or at a swim meet.And if you don't do those things while the kids are young, there'sno wav to make it uD later on-"

HOW TO GET A COPY OF THE BOOKProfessor Mendoza's book was laun.hed a fe\,r years ago, but the lessons

and stories remain timeless and valuable to any prcfessional manager or ex-ecutive. THE ASIAN MANAGER is making available a special limited edition(hardbound, goldstamped and autographed by Professor Mendoza himself)of Managemenl The Asian Wry as a sewice to you- You can have the bookpersonalized and goldstamped with your initials on the book's cover. Foronly US$7 (or equivalent convertible local curency, use prevailing exchangerates) you can have all this. Pleasecall THE ASIAN MANACER, telephone f32-892{435-43 or fax your order to f,32-817-9240 Attni Vannessa Jaballas. Or sendyour check or credit.ard details to The Asian Manager Bookshelf, G/F AIMBldg., 123 Paseo de Roxas, Makati, Metrc Manila, Philippines. Or clip andsend the coupon below:

l- -;;;;"

_-.;; ;, *,, ;;;; IMonagenefi me Asioti lvdy at US$37 per copy. I undeNtand thatthis speaial edition collector's item will be sent to me signed andautographed by the author and gold stamped with m), initials /-/- on the cover (Please add US$7.00 for handling and cou-ier delivery outside Metro Manila, Philippines).

Enclosed is my check for US$_ (checks in Philippine pesos andother ASEAN currencies acceptable).

Please charge my iniemational credit card:Visa Amex Mastercard Diners Others

(ph.specify)

Recently I came across this collection of Professor GabyMendoza's writings in thebook, Managetnenl me Asintl WIV. Istarted reading a few pages and ended upreading two thirdsofit. I couldn't put it downl lt's a iruly enjoyable read. It's alsobound to become a collector's item.

GOLDEN NUGGETS OF MANAGEMENT WISDOMAnyone who reads Mdrasemtnl The Asian Way, will benefit

from Prof, Mendoza's decades of expedence as president anddean of the Asian Institute of Management and as a manage-menl con.ultdnt lo the region . most e\, el lent compdnie\.

For e\ample you l l get insights on how to. replicate the ways of Asia's most successful managers. *por d ' !.allmdn ' bu.ine,\ opponunit). understand the thinking and management styles of suc

cessful CEOs. manage time, monet people better. approach strategic mana8ement ("the biggest bang theory")

You'll also learn. how nodern managers can apply Cenghis Khan's strategies to today's

business wars (ala Sun Tzu's Tle Art ofWar). how to understand the MarketingConcept and make moneyby apply-

ing the simple principles as shown by the Russian and Singaporeaneramples

. how io keep close to customers and avoid bankruptcy

. how to become a responsible corporate citizen. how Hongkong, Taiwan, and Singapore used rnanagement develop'

ment strategies to get where they are-Asia's powerhouse economies. You'll also leam how honesw, and keeping your values is good business.

There are 68 management vignettes {written between 1986-1991)all toldin candid, simple ianguage. And as Prcf. Mendoza remarks, they can be read"Western style, systemafically, arrow straight, from cover to cover..Or theAsian way, starting from the ba.k, or the middle, or where you will, andpicking and choosin& as you would dimsum on a lazy aftemoon, whateverstrikes your fancy."

A GOOD BOOK, LIKE A GOOD MOVIE, SHOULD MAKEYOU THINK ABOUT YOUR OWN LIFE.

ProfessorMendoza'sbite size vi8nettes of thedilemmas, issues,challengesand opportunities thai today'sAsian manageEfacewill make you thinkaboutvour own life as a manager. He uses examples ofreal people, including somet'ell known and admired professional managers, from Washington Sycip toLee lacocca.

One of my favorites is how Prof. Mendoza deals with the issue of"workaholism" in the chapter "What's It All About?" He starts..."We, themodern managers of the developing countries of Southeast Asia are the workaholics of our societies. We immerse ourselves in our work, are held in thrallbv it. We are obsessed with it, possessed by it. And because of it, we sufferfrom ulcers and high blood pressure, fall prey to strokes and heart attacks,and more often than not, wind up with broken marriages and shattered.scattered families. But we endure all these, we perdure, we persist in ourpursuit of "the bitch goddess, success." We truly are penerse oeahrres, wemanagers. ..Why do we do it? Why do we punish ourselves so? Our answersto these questions are many and varied.... (Read the explanation and aboutthe ironv of it all in thebook.)

( ard ! L\p. dare ._ Signarure.

Delivery

Name: Positionl

Fax:

Fax your order to 632-817-9240 Attn: Vannessa Jaballas. Or send your check orcredit card details to The Asian Manager Bookhelf, G/ F AIM Bldg., 123 Pas€odeRoxas, Makati,Metro Manila, Philippines. .P(jM4e5

PRoF. GABY MENDozA

creating an all-or-nothing situation. Us-ing one's influence to make a demand ofthe other party illegal--e.g., by getting amunicipal ordinance passed prohibitingcertainbusiness practices-is anexampleof coercion.

Sign language is used when one partywants to offer a concession but, at thesame time, wants to protect itself againsta possible rejection. An example of signlanguage is when A requests B to agree

that one party, say A, takes certain irevo-cable incremental steps which may leadto a certain irrevocable final result in or-der to show B, gradually, that it will notreconsider its position with respect to acertain point where there is a deadlock.This process is illustrated in Figure 2.

This tactic helps to resolve the di-lemma of one party telling the truth, andthe other not believing.

As shown in Figure 2, position I rep-

role was to be a real hard bargainer andpush mattem to the point of break off totest the resolve of the Philippine panel.However, to maintain flexibility, espe-cially if they wanted negotiations to goon, they wouJd go through the motionsof "hing" or "sending home" the "err-

ing" panel member who "rnisbehaved"

during the negotiations.When this zone is reached and the

panels reach an agreement, thepa-nelist'sroles change. They must now become al-lies in "selling" the agreement to their re-spective constih-rencies. The negotiatorsnow cooperate without weakening tireirpositions, so that ihe agreement is ac-cepted by those they represent. This isnecessary even if they have been givenfull authority to bind in their respectedcompanies.

Interdependence is an irreversiblephenomenon. Consequently, healt\ jointventures are needed in large numbers.Managers and leaders must have negoti-ating skills, and they must use mature ne-gotiations involving an awareness of rulesand skills in using tactics to arrive at mu-tually beneficial agreements.

Prof. Eflanuel V. Soria o is a full-Litne Prcfessor 0t NM.His ateas ol ififercst i ma agetnent eduuliofi coater 0broad nnSe of subiecls in busi css admi istntion andpublic nanagefient .

Bibliography

Here is the suggested reading list ofProf. Sorinno:

Coffin, Royce A., "T/re Negotiator,"Bames and Noble Books, 1973.

Fisher, Roger and Ury, William,"Getting To Yes" Penguin Books,1988.

March, Robert M."The " lapaneseNegotiator Subtlety and Strategy Be-Vond Western Logic" TokyoKodansha International 1990.

Schelling, Thomas C. "The Strat-egy of Conflict" Harvard Univer-sity, 1960.

"Conflict Management a d Negotia-tron," Philippine Values Digest,Vol. V No.4, 1993.

Ury, William "Getting Past No"Business Books Limited 1991.

on a point B has been vigorously object-ing to in earlier sessions and then, all of asudden, instead of objecting, B iust says,"let us discuss some other matter first andget back to that later" Wthout actuallysaying so, B has in fact given a conces-sion-that B is willing to discuss the pos-sibility later. A should be sensitive to cuessuch as this.

tading horses can be useful at times.Jhis means that A should be ready totrade baJgaining points with B in ex-change for a concession. Here one partydiscovers what is important to the other'Trading horses" is where the parties canconcede to a point important to theoiher-but perhaps unimportant to them-selves-in exchange for a similargesture.

One panel, a foreign group, offered thePhilippine panel the position of ViceChairman because they were committedto give the chairmanship to another for-eign partner The Philippine panel de-clined because their candidate for Charr-man felt it would diminish his prestigein the business community. The foreignpanel offered to have two Co-chairper-sons. This move broke the impasse.

Committing gradually is another ef-fective way of influencing the other'spoint of view. It serves as a signal whichis sent to indicate thata pointis nolongernegotiable. Essentially, this tactic means

'10

resents the start of the nesotiation and adeadlock develops. At poiition 2, as a re-sult of some patial impasse, A starts ne-gotiation with another company as aftedge. This should be interpreted by B asa signal of As unwillingness or inabilityto give concessions. If this point is notabsolutely cmcial to B's positiory B shouldconsider giving in for a trading horse, orjust giving in. If B wants to probe fur-ther-risking a possible breakoff-B maymake some effort to insist. A may thenmake another irrevocable move to Posi-tion 3. Unless B gives in, Position 4 be-comes inevitable.

The man on the spotOne final point is important: the role

of the negotiator, i.e.,the person or panelrepresenting the local company and thepanel representing the foreign company.During negotiations, one must rememberthat negotiators represent a set of con-stituents, key people such as stockhold-ers, top management. In ihis sense, thenegotiator is a delegate until the Zone ofAgreement is reached.

On a tactical level, some panels willuse "good guy, bad guy" ploys. During anegotiation betwe€n a Japanese and aPhilippine company, the Japanese panelassigned one of their members to play arole unknown to the Philippine panel: the

1o

Deadlockdevelops.

A starts A has tentativenegotiation agreementwithwith another another company.company.

A breaksoff talkswith B.

Fig.2

APRrL-MAY 1995 . THE AsrAN MANAGER

UITATISllon-0noa8y formlla

$IYIT$. C|lIIDITI|lN$, PRllTEGTS.

a l

*$i.

BY PROFESSOR RENE T. DoMINCo

(Pick Two Onlv)

Ouality

Tb .sta.y in business it i,s impofinntfor on/'(:on.peny to nmintain theQCD lxtlance ond lmrmtnql'of it.$final output.

Good, Chedp,and Fastproduct or serv ice can be

thought of as having three di-mensions: qualiry cost, and de-

livery, or QCD.lroduct quality is the ,rtt bute dc-

sired by buyers and gives the product itsprimary value and usefulness to them.Specif ications, tolerances,dimensions,durabilitv reliability,features, and va-riety are examples ofquality indicators.

Cost, the second dimension, refersto the cost of producing and deliveringthe product to customers; it has an im-pactonanother cost:the cost to thebuy-ersor the "price" they pay forthegoods.Cost affects the marketabilitv of theproduct and the profitabilitv of theproducer High price is often a con-sequence of inefficiencies, low pro-ductivity, and high cost ofproduc-ing the product.

Delivery involves bringing theftnished good. or service5lo the cu'-tomer at the right time, at thc rightquantity oramount, at the fight placeDelivery performance includesservice levels, product availability,and order processing time.

These three dimensions-QCD-are l ike the three legs o[ stool onwhich the customer would sit. Aproblem in at least one of themmeans l) there will be no product2) there will be no buyer One can-

not be sacrificed for the sake of the othertwo dimensions. Buvers want a three-di-mensional product-not just two, andsurely not one. They want a good qualityproduct at the dght cost, and at the right

time and quantity. All are

F ig . 1

Delivery

equally important tobuyers. Agood qual-itv reasonably-priced product which isdelivered Iate is for practical purposesuseless to the customer and is unsalable.A quality product which is promptly de-liveretl but is outrageously priced becausei l . manufac tur ing c ls t i s s im i la r ly ou t ra -geous cannot be sold. The low competi-t ive price and on-time delivery of anvmerchandise cannot offset its lackofqual'ity and cannot change the decision of thecustomer to reject it. To stay in business,therefore, itis important forany companyto maintain the QCD balance and har-monv of its final output, be it a manufac-tured product or a service.

QOII interaetionThe QCD mission ofproduction man-

agementis not an easv task. The three fac-ton are seldom at acceptable oroptimum

levels simultaneously. Thev are alwavsin a state of flux one factor will be

much more problematical or criticalthan the other trvo at any one time.The production manager is oftensubjected to tremendous pressure

from inside and outside the con-panv to conect and control justthc runawav element. Unfortu-nateiy, he cannot simply jugglethe three and do sone trade-offs, for they are mutually inter-dependent on each othcr. Some

Cost

12 AfRrL M,\\ 1995 . THr A5IAN MANA|.,I .R

trade-offs or single factor adiustmentsmay be tolerable in the short term; manyare dangerous and may worsen the prob-lem by causing unexpected, undesirablechanges in the other two factors.

Let us look at some of the "expected"

repercussions of trade-off, "band-aid"

solutions:. A measure to solve a persistent qual-

ity problem may be the inhoduction ofnew technology and automation whichmay increase processing cost. Product de-livery may be delayed if installation takestoo long.

.The strong pressure from manage-ment to cut costs may lead to the employ-ment of less skilled, cheaper labor and/or the substihrtion of inferior, cheaper rawmaterials, both ofwhich may cause qual-ity and delivery problems later on.

.The unbearable pressure to rush thedelivery of promised goods may temptthe production manager to hasten, short-en, if not omit, some critical, usually bot-tleneck, operations or processes, resultingin serious quality problems at the end ofthe line. Since the cosi of the resultingscrap and defects is spread out over thegood ones, manufacturing cost likewiseincreases. Quality and after-sales serviceproblems await the production managerwho tries to solve delivery problems byshipping old, unreliable inventory orstocK.

Total Quallty ManogementTotal Quality Management (TQM) de-

fines "Quality" as "what the customerssays it is" or "what the customer wants."This quality (Big Q) is very much differ-ent from the conventional quality (smallq) or generic quality. Generic quality sim-ply refers to product quality-the dghtspecifications,dimensions, feahrres, color,reliabiliiy, and varieiy. Big Q Quality in-cludes product quality, pricg and deliv-ery What most customers want is not Fsta high quality product, but one they couldhaveat a low price and delivered on timeor earlier. "Low price" could mean rea-sonable or competitive. In a manner ofsaying, what the customer wants ls"good, cheap, and fast." Having a highquality product does not make a companya TQM practitioner, if the price is high oruncompetitive and/ordeliveryis alwayslate.

The QCD (quality, cost, delivery)

THE ASIAN MANAGER . APRIL-MAY 1995

model, with all its iterahons as shown rnFig. 2 (QCD Performance Mat x), is auseful framework to find out where onecompany is sihrated in the TQM processor journey. It will also help the companybenchmark with competitors with refer-ence to the Quality (Big Q).

Goodr expenslve, and lastOne of the most common manage-

ment styles is the "Cost Plus" approachcharacterized by a high quality productdelivered on time or readily available, butsold at a high price. The conventional wis-dom here is that if the customer wantshigh quality and fast service, he shouldbe willing and able to pay extra or a pre-

they are purchasing. The truth is that theyare paying for the inefficiencies and ex-cessive margins of the seller

Good, aheap, and slowThe third model or "Sold Ou(' phe-

nomenon is comrnonly seen in very popu-lar products that are high quality, lowpriced, but nowhere to be found by thefrustrated consumer The item, or its mostsaleable model, is almost always out ofstock. The queue or reservation list, orwaiting line is eternally long and maytake months to serve. The seller does notmhd the long lines and the customers lostin the queug since the cash register keepson ringing.

mium for them. A vast majodty of com-panies are micromanaged this way:"Charge the customer for everything heasks for!"

Good r expenslve, and slowThe second model for uncompeti-

tiveness is the "Snob" approach: premiumqualiiy, high price, and long deliverywaiting period. The logic here, to bothproducers and target customers, is that ahigh quality product, usually a luxuryitem, will have a "snob appeal" if the priceis exorbitant and waiting time longenough to give an aura of being "hard toget," "handcrafted" or "customized,""not available to common people." Thereality however is that the processes maybe too wasteful and inefficient or theprofit margins too high; customers maythink that they are paying extra or wait-ing extra for extra value to the product

Badr cheap and lastThe next type is the "Commodity"

product that has mediocre quality, lowprice, and is readily available. Consum-ers buy these products because they arenecessities usually provided by numer-ous suppliers. The market is very pncesensitive, but not particular about qual-ity and service, which are basically thesame from all suppliers. No one supplierstands out from the rest. The industry ineffect lures the customers into loweringtheir quality standards and expectation.

Bad, eqrenslver and slowThe quality nightmare or "Hopeless"

case occurs when the customer gets ex-actly what he does not want: bad qualityproducts, expensive, and late. The onlyreason customers have the patience andcomposure to get these is that there is onlyone supplier (monopoly) or the whole in-

OUALITY COST"COST PLUS""SNOB"

"SOLDOLN"

"COMMODITY"

"HOPELESS"

,'VVORLD CLASS"

HIGH

HIGH

HIGH

LOW

LOW

HIGH

HIGH

HIGH

LOW

LOW

HIGH

LOW

FAST

SLOW

SLOW

FAST

SLOW

FAST

Fig. 2

dustry has the same mediocre perform-ance. "Bad, expensive, and slow" compa-nies are sure to self destruct.

Good, cheap, and fastTQM companies consistently show

"World Class" performance by comingout wilh high quality, low pricedoroducts delivered fast-the uni-versal expectation of any customeron any product or service any-where. TQM has shown that"good, cheap, fast" is not only pos-sible, doable, bui also a "must" forsurvival in very competitive mar-kets. TQM companies do not com-promise any of the QCD element

Manfwttgittwing"

o/rylmfb0/,tryv|+.nw.tdpuftAudsdeEnHy0d

fosmarylnil-bfursil.te filn}aliura;

for the another All efforts and sys-tems are focused into deliveringthe QCD expectations of custom-ers all the time at the same time.TQM cor4panies do not advertise,as one restaurant did,"GOOD,CHEAP, AND FAST," and then fol-lows up with a disclairner "Pick

Two Only."Present efforts to improve qrs-

tomer satisfaction and service areoften myopic and tend to focus onone QCD element or "Pick oneonly" approach. Quality improve-ment programs and projects oftenfocus on quality (small q) orproduct/process qualit, withlittle or no effort to cut costs(wastes) and cycle timesimultaneously. "Rightsizing,""downsizing" and other cost-cut-ting initiatives fail in that they fo-cus solely on cost, specifically laborcosts, while sacrificing quality, de-livery and employee morale in thep r o c e s s . M e a n w h i l e , c u r r e n t

14

"reengineering" efforts are heavily biasedtowards cyde time reduction and speed-ing up delivery or customer order procesving time. Many "reengineering" initiativesput little emphasis on improvement ofproduct and service quality (small q), andfocus on capital-intensive information

technology (IT) solutions that may cllnvecosts up. TQM combines and coordinatesall improvement efforts into one that willrebound into the same bottom line: cus-tomer satisfaction with QCD.PrcfRe e T. Domiqo teachrs operations manigenent,total qualitV tno@gefienl, q antitatire atulysis,sen)-ice delioery, and ntkageltlefil itlfomlatiorl systems.

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Corporate Entrepreneurs,Like Business Entrepreneurs,

ho are the entrepreneurs?Why are they admired? Canonly a few become entrepre-

neurs? Are they born or are they made?Can enhepreneurship be taught?

People commonly believe that entre-preneurs are non-conformists, opportu-nity-seekers, risk-takers, and anyone whostarts their own business ventures. An-other common beliefis entrepreneurs areborn, not made.

Entrepreneurs are admired world-wide because the visible ones are highlysuccessful. They are recognized for thenew products, new processes and waysof doing things, new business systems,and new business ventures they intro-duce. They are honored for their contd-bution to industry and their concern forsociety. Moreovet they are envied fortheir independence, not having to workfor a "boss" other than themselves.

Entrepreneurs emerge in all societies.They come from different walks of life.Nowadays, younger people are becom-ing successful business entrepreneurs,and itis also said that thre€ times as manywomen than men start new ventures.But notions about them continue toabound, such as "one only learns entre-preneurship through the school of hard-knocks," and that the surest way of tobe an entrepreneur is to have an MBA.

Tt is true that entrepreneurs acquire

1 6

Are Mademuch experiential learning inbackyards, garages, kitchensand places they are actively in-volved in transforming ideasinto products. Many largecorporations today can tracetheir beginnings to a solitaryproduct, fashioned by an en-trepreneut to satisfy a specificneed.

At the same time we mustremember that entrepreneursdeveloped products, not busi-ness enterprises. Entrepre-

BY PROFESSoR QUINTIN G. TAN

Threetimesas manyutomenthan menstart neu,uentures.

criminal when resources arewasted, loans are not paid,people are laid off, and theirfamilies dislocated. Businessand management have to belearned well. Long-estab-lished and large corporationshave expedenced setbacks inrecent t imes and have re-sorted to down-sizing, re-trenching, and closing plantsand operations. Yet, all ofthem know business very

neurship is not business and entrepre-neurs are not necessarily businessmen.Entrepreneurs are distinguished for theircreative and innovative skills, but may re-quire management skills.

Entrepreneurial skills and attitudescan be learned. Still, while business andmanagement skills are now standard inbusiness schools, these same schools in-appropriately offer entrepreneurship asa course on "How toStart a Business Ven-fure."

People should not be lured to goinginto business unprepared. Business is notfor everybody -not for those who merelywant togo into it, orthosewho know howto manufacture a useful product, orthosewho may inherit a business. We know thatworldwide, eight out of every ten newbusinesses, fail. Business failures can be

well. What fhey lack is a senseof creativity to revive the business-en-trepreneurship. Corporate entrepreneurs,or Tntrapreneurs, dre whdt corpordtionsnow aspire to have within their organi-zations.

Developing enhepreneurial spiritanda sense of personal achievement can beattributed to three essential and interre-la ted fac to r . : l ) Env i ronment ,2 ) Eco-nomic Relationships, and 3) Experience.

These factors may provideinsights onwhy Asia is the fastest growing region inthe world, why Japan is now the thirdr iches t count ry in te rms o f CNP percapita, and why some business corpora-tions continue to grow "Entrepreneurs"

are the answen to these questions.

f,nvironmentAn environment conducive to devel-

APRIL-MAY 1995 . THE ASIAN MANAGER

oping entrepreneurs is characterized by:a) freedom topursue and transfer ideas;b) presence of an open market where in-dividuals can express their ideas in aninfinite variety of products; c) minimumrestrictions from authorities that allowthe pursuit of an interest, with availablesupport from the community; and d) ac-cess to materials and technologies forproduct development.

One such environment is the infor-mal sector, or the underground economy,which has often been referred to as the"Seedbed of Entrepreneurship." Here le-gal economic activities are unreportedand unregistered, and therefore untaxed.The informal sector's climate permits in-novation and tolerates mistakes. Varietyis a norm, and standards do not detercreativity.

Many well-known entrepreneurs de-veloped their talents in the informal sec-tor. Some started as livelihood operationsand progressed into small bu;inesses,then blossomed into large corporations-some we know today.

The informal sector is growing indeveloped countries and is actually thelargest, private, market-oriented sector inAsian economies in terms of labor em-ployment and output. The informal sec-tor may constitute as much as 50% ofAsia's GDP, and over 50% of its employ-ment. Many of Pakistan's major exportsare produced in the informal sector. It isestimated that 54% of the labor force inIndonesia.is employed in the informalsector. Iapan's underground economy isestimated at9% of GNP, and is growingrapidly. This sector contributed at least42Vo to the Philippines GDP for 1993.

Operations in the underground eco-nomy are mostly family- or community-based. A recent study indicated that halfof all Filipino households have self-op-erated businesses. Every home-basedproduct may differ even in some respectsfrom those produced by other house-holds, and this uniqueness may appeal tosets of loyal customers.

With success these small operationsgrow. The entrepreneurs hire more peo-ple to run their firms. And sooner or later,they may lose control of the business tothe professionals. Growth is oftentimesaccompanied by order which reducesflexibility and invites bureaucracy. Manycorporations that hit this stage of growth

THE ASIAN MANAGER o Apnrr-May 1995

lose not only the entrepreneut but alsotheir enhepreneurial spirit. By design, theenvironment of many corporations re-strict creativity and discourage employeeinitiatives, by rigid rules and policies thatgovern individual actions. Corporate cul-tures tend to enforce uniformitv in pat-

terns of thought and behavior, raiher thanencourage individual interests.

Some organizations that have man-aged to nourish among their employeesthe entrepreneur ia l sp i r i t , or"intrapreneurship," include Motorola,Texas Instruments, Matsushita, andAmerican Express have features similarto the underground economy. Empower-ing employees, delayering managementlevels in corporations, and fosteringunmanaged teams duplicate the situationentrepreneurs in the undergroundeconomy find themselves in-no bossesor supervisors. Cooperation and unity areachieved by attempts to simulate the fam-ily and the community where operationsare reduced into smaller units. Workplansand targets are decided at the lowest lev-els.

Deonomie relationshipsMany successful entrepreneurs start-

ed with limited experience and resourcesto develop the products or projects forwhich they are now recognized for. Asidefrom their personal efforts, the supportgiven them, particularly process technol-ogy, tools and equipment, m?terial in-puts, and financial support, has allowedentrepreneurs to dedicate substantivetime to pursuing their ideas. Not unusualis the backing a "sponsor" or "guarantor"

may give in opening doors or providingreferrals for clearing thg way. This rolehas been played by spouses, relatives, su-periors, or friends, ot in the case of im-migrants, clan leaders. The ability to so-licit help from others seems to be a qual-ity all entrepreneurs have learned to ac-quire.

Networking is important to entrepre-neurs, who learn much from each net-work participant. Entrepreneurs alsolearn to develop skills in listening, respectfor others, and appreciation for helpgiven. Most importantly, they learn neverto betray others' trust. More than a com-petitive spirit, entrepreneurship imbibesa sense of cooperation.

One relationship that requires close

cooperation is when one's total produc-tion output is committed to another com-pany for marketing. The marketing firm,on the other hand, is entirely dependenton this supplier for its sales. This inter-dependency is the underlying principlein subcontracting systems.

This interdependent relationship isnow widely practiced in Japan, where99.5% of all the firms are small and me-dium-sized. A large firm, on the average,may have as many as 13,000 primary, sec-ondary, and tertiary independently-owned subcontracting firms. Potentially,that is 13,000 entrepreneurs with the spe-cialization and flexibility to innovate anddevelop new products/ new processes,and new combinations of materials thattranslate into new features or productmodels. Most of the subcontractors in Ja-pan are in production, and they develophigh specialization in their fields. Thisconcept of collaborative effort has been

Enheprcneurt

Imrn to deaelop

slcills in listening,

reqteetfor otherc,

and apprwiation

for getting help.

adapted in many different ways. In theUnited States, they call this the "confed-

eration of small firms," a practice gain-ing wider acceptance.

A broader concept of subcontractingis practiced by Benetton of Italy, whichsubcontracts its production, finance, andmarketing functions to independent pro-ducers, financiers, and marketing agents.This collaborative and interdependentscheme has been adapted fuither byASEA Brown Boveri, which views as"subcontracting" its entire business toeach of its 1,300 independently-ownedcompanies. Each company is involved inproduction, finance, and marketing as anASEA Brown Boveri company, yet is partof the whole corporation. Key to the sta-

1 n

bility of relationships is the trustworthi-ness of each party.

Dntrepreneurial experienceExperience is an acquired learning by

applying a specific knowledge to practice.One may never become an entrepreneurwithout hands-on experience. Substan-tive learning is increased, and self-esteemenhanced, when new insights and discov-eries are gained by selfJearning. This ex-perience can be acquired in any workarea: in factories, in homes, or in the field,and becomes entrepreneurial when ideasare transformed in an innovative way.

Many contemporary successful entre-preneurs developed an idea into a prod-uct that somebodyneeded. The high qual-ity characteristics and specifications of theproduct are a result of knowing exactlythe consumers and their needs, and pro-ducing accordingly.

The innovative ideas of entrepreneursmay have stemmed from a problem, aninterest, a challenge, or an opportunitythey encountered. Their strongest moti-vation is to address a particular need of aspecific user or beneficiary, oftentimesthemselves.

Through actual experience, the entre-preneur develops process learning skillsof observation, analysis, interpretation,and association. Active learning is a co-operative and humbling act. Simplicity,openness, and honesty with themselvesare traits that distinguish successful en-treprenegrs from others.

Other entrepreneurial skills, traits,and attitudes are acquired in protot)?ing,a series of product experiments until asatisfactory result is reached. Each suc-ceeding trial is an improvement over theprevious one; each improvement is an in-cremental success, and a series of incre-mental successes develops confidence inthe individual. The confidence exuded bythose who have successfully mastered aprocess or produced a product has oftenbeen interpreted as courage or as a risk-taking trait.

A new business venture can provideentrepreneurial opportunities. The lim-ited experience and resources of businesspeople compel them to be resourceful,creative, and enterprising. The saying that"Necessity is the mother of invention"likewise applies to entrepreneurs.

Self-satisfaction for entrepreneurs

18

comes from knowing that their productis acceptable and serves its purposethrough market testing. The enterpriseusually starts when orders for the prod-uct are received and growth comes whenmore people ask about it. Often, productacceptance, more than profits, is the jus-tification for growth.

But growth in market demand maynecessitate getting outside assistance,and this requires organizational skills.The entrepreneurs mustIearn how to hire, train, andreta in workers, most ofwhom are working for thefirst t ime. A sense of re-sponsib i l i ty to prov idetheir workers a stable in-come to support their fami-lies puts pressure on entre-preneurs to keep their op-erations viable. For manyentrepreneurs,.their socialconcern is awakened.

3M and Fuji XeroxCorporat ions need

intrepreneurs to propeltheir growth. Fortunately,there are now models ofsuccesses. Successful oneshave developed the envi-

{rcm

Innouatiueidms stem

or an

entnepneneura

reaches $5 M, the promoter becomesproduct managet at $20 M, S(he) be-comes department managers and at $75M becomes division managers. Productchampions have a chance to managetheir own product as if it were their ownbusiness. 7) 25% rule stresses that 25Vaof sales must come from products intro-duced within the last five years.

At Fuji Xerox, employees have achance of becoming President of their

own companies. Anemployee with an ac-ceptable product idea isfreed from his/her re-sponsib i l i t ies and issupPorted to developthe product. Once de-veloped, the employeeis trained in businessand management, thengiven equity. S(he) thenbecomes "President" ofthe company to pro-duce and market theproduct.

Chinese, Vietnam-ese, and Korean immi-grants often find allthese three factors,-en-vironment, economic re-lationships, and experi-

a prcblem"an intercst"a ehallenge,

opportunw

ronment, enhanced relationships inter-nally, as well as networked externally par-ticularly with customers, and encouragedtheir employees to gain entiepreneurialexperience within the corporation. TheMinnesota Mining and Manufacturing(3M) Corporation of St. Paul in the USAand Fuji Xerox of Japan are notable ex-amples.

At 3M, intrapreneurship is encour-aged among their employees. To cite anumber of policies: 1.) 75Vo rule - whereemployees may use 75Vo of their workweek in pursuit of interests outside theirprimary assignment;2) Internal selling -

anyone with a product idea can carry itaround the 42 divisions and seek sup-port 3) Genesis grants - gives up to$50,000 to carry the project beyond theidea stage; 4) Sponsor - A senior officialis assigned to facil i tate access to re-sources; 5) Action team - the promotermay recruit members from technical,manufacturing, or sales divisions to helpdesign and develop the product; 6) man-agement ladder - when sales of products

eneounted.

ence-present in communities estab-lished by their countrymen in foreigncountries. The growing number of Chi-nese shops, Vietnamese restaurants, andKorean supermarkets in the US attest tothe development of the entrepreneurialprocess among these immigrants.

Entrepreneurs can be made. Entrepre-neurial knowledge and skills can now beconceptualized, simulated in an activeprocess of learning, and taught in a for-mal classroom.This does not exempt,however, would-be entrepreneurs fromactually experiencing the thrill of runningtheir own business. This cannot be expe-rienced in a classroom.

Honot trustworthiness, cooperative-ness, and willingness to share what onehas with others are the traits and attitudesthat entrepreneurs will ultimately learnto become successful.

Prof . Quintin G. Tan holds the Canadian Profes-sorial Chair of Business Management. He is cur-rently inaolaed in the deaelopment of a course onentrepreneurship.

APRIL.MAY 1995 . THT AsIAN MANAGER

The Asian Instihrte of Management is promoting the de-velopment of entrepreneurs and intrapreneurs among ourgraduate students. Efforts directed towards this goal involveAIM collaboration with the business sector for student to ac-quire hands-on experience through the integrated applicationsproject (lAP), action consultancy (internship and apprentice-ship) walkabout, management research report (MRR) ventures,and field exercises. The new design involves 30% of the two-year Master in Business Management (MBM) program to bespent in acquiring experiential leaming. We would appreci-ate any assistance you may wish to share with us to achievethis soal.

thir r.t.uuy attempts to identify who among the AIMalumni are now ENTREPRENEURS or cornorate INTRA-J'Ef.NlUBt Tlp:r alunni luvr gff Jhjnt jn ronrlon; lhr/are innovato$ who discover new products or services, createdemand or find new markets and bring enterprise productiv-iry sales and profits to higher levels of performance becauseof ingenious strategies,schemes, products or services. The onlydifference is that the entrepreneurs run their own businesswhile intrapreneurs innovate within the corporate structure.

To help build our information base on AIM entrepreneursand inftapreneurs, may we request you to answer the follow-ing questions?

Name

Company

AIM Class/Batch

Position in Company

Years of work experience

What is the nature of your business? (Service? Manufactur-ing? frading? Financing?)Who is your immediate customer? (End consumer? Dstribu-tor? Industrial Producer?)

Describe briefly the innovations or creative interuentionswhich you have introduced to the market or to your organi-zation that raised enterprise performance levels significantly?

Did the innovation or creative intervention involve (check theappropriate boxes)

innovation in product design or service feature?creative change in production systems?creation oI demand or finding new markets?creative change in marketing system?discovery or intervention of new products ora new service which was not yet in the market?creative change in financial and conhol systems?creative change in organizational and administrativesystems?innovation in loSistics management?

5. What motivated you to become an entrepreneur or intrepre-neur?

How did you gauge your success as an entrepreneur orintrapreneur?

Very successful? Successful?Somewhat successful? Still trying to be successful?

By what c teria did you rate your self? (Cite specific per-formance indicators.)

No1. Are you an entrepreneur?

Intrapreneur?Both?

If your answer is no to all of the above, please do not continue filling up the questionnaire.

2. When did you set up your entrepreneurial enterprise?

Or, when did you first experience inhapreneurin8?

3. What industry is your enterprise or intrapreneurial activityin?

Will you be willing to participate in AIM's entrepreneur-ship development prograrn as an advisor, mentor or coachtoAIM students and graduates who are interested in becom-ing entrepreneun or intrapreneurs?

Yes No

Are you interested in documenting your enhepreneuring orintrapreneuring through our cdsewriting pro8ram?

7.

Please f ax your aflslt)ers to: Prcf . Quintin G. Tan, Fax No. (632) 817-9240.

THE ASIAN MANAGER . APRIL-MAY 1995't9

Bv Prorusson Ennor B. Penrz

Are Stock Prices RandomorNot?

Editor's note: In the last issue of THEAsrAN MANAGER Pro f . George Tanwrote an article on Technical Analvsis.One of the underlying assumptions inTechnical Analysis is that stock pricesreflect all factors in the market-eco-nomic news, fundamenta l oer fo rm-ance of the companv, market makersand t rad ing vo lume, buyer emot ion-the so-called Efficient Markets theory.The Ell iot Wave principles states nev-ertheless that despite this assumptton.stock prices, over time, tend to followrepeating wave-like patterns, and thatone can predict with reasonable accu-racv subsequent movements of thesepattern$ In this article Prof. Errol B.Perez uses statistical tests to prove thistheory. and the debate rages on.

tock p ces appear to be predictableased on historical price series analy-

sis, and specific rule-based exhopol-ation. In computing retums, howevetprice changes plus any cash dividendsduring a specific period are necessary andsufficient requiremenls. The random walkftypotftesis holds that price changes are es-sentially serially independent of eachother, whether immediate or lagged.Trends basically do not become consist-ently exploitable because price changes areundpredictable in any consistent fashion,even if the prices do appear predictable.Academics call this an empirical question,

and the random walk hlpothesis is emr-nently testable, as they say. This article teststhat proposition.

The dalaWe used daily price data of San Miguel

Corporation "A," a common stock, from thePhilippine Stock Exchange from July 1, 1994to November 29,1994, covering 106 days ofhading. (see Table 1)

The modelThe test which emanates from the ran-

dom walk hypothesis:Z , = 2 , , + a ,

when Zr = price at time tZ ,= price at one period before

time tar = an error term which is random,

and therefore not consisiently predictable.Under this model, the price one period

from now is simply the last observed price.The error term is random, so its expectedvalue is zero. The last observed price, there-fore, is the best forecast price for the nextperiod.

The rationale for all this is anchored ona bigger hypothesis, called Efficient MarketsHypothesis. News relative to the stock areconstantly monitored, so that the price veryquickly reflects all information, except in-sider information, for an indeterminateamount of time which varies from marketto market. Setting aside insider informationfor the lime being, the change in the pricebetween the current and previous period is

really the random error term, i.e.,(2 , -2 , , ) = a ,The stock price change series is there-

fore really nothing but a series of independent random events. lt also becomesobvious that the stock price series is a se-ries of first differences. By inference, there-fore, the Efficient Markets Hypothesrsposes serious misgivings relative to theusefulness, on a consistent basis, of tech-nical analysis.

lDala analysisWe first examine the behavior of the

data without doing any first differencingas noted above by the random walkmodel.

Figure I represents the behavior of SanMiguel Corporation "A" stock, based onclosing prices. Prices are plotted acrosstime in terms of number of cumulative ob-servations. Actual prices vary significantlyfrom the computed avercge of 97.427359,with the following statistics in Table 2.

Figurc 1 appean to say that due tovolatility (also evident in Table 2,) the ac-tual period-tlp€riod averages are non-sta-tionary If the price average ofSan Miguel"A" is nonstationary a meaningful test ofthe random walk hypothesis would re-quire a differencing operation. Theration-ale is that with a price series placed on afirst differenced basis, a direct test of theindependence of the error terms may bedone. The objective is to drive the periodto period averaBe to close to zero, so that

APRIL-MAY 1995 . THE ASIAN MANAGER

if first differencing does not result in a sta-tionaryaverage, then a second differencingusually works. Of course the loss of de-grees of freedom should also be a concem.

To confirm further the presence of anonstationary average for San Miguel"A,"the autocorrelation and partial auto-correlation functions are examined. Bothfunctions should show no obvious pattemssuch as a slowdecay tozeroor other sharppattems if the price series are lagged. Ifthere are obvious patterns then the datawould be differenced and again both func-tions examined. The results are shown inFigure 2. Additionally Figure 2 indicates aBox-Pierce statistic which is far above thechi-square cut-off of I 24.0 at the 95 % level,which means that the nonstationary aver-age produces an autocorrelation whichpermeates the entire data set. There doesappear to be a need to perform a first dif-ference (at least) on the prices. Otherwise,we may casually assume that rehlrns aswell as prices may simply be exhapolatedon the basis of some pattem.

But to be rigorous about our point, anautoregressive model of order 1 is fittedto Table 1, given by Table 3.

Earlier, we said that Z,= 2,., + a,and that (2,-2,,) = a,.

An equivalent notation is (1-B) Z, = a,The coefficient of B is the coefficient

of the autoregressive model AR (1),so that

(1- .95433028) Z, = a,.The stationarity condition re-

quires the .AR(1 ) coefficient to be lessthan 1.0 at a statistically significantlevel.

To test, we compute the t-statis-tic:

t = .9543302-1 ,0.0298746

where the denominator is theStandard Error of the AR(1)coeffficient in Table 3.

t = -1 .5287167 .This value is Iess than the cut-

off t value of 1.64 at 95%, and there-fore does not indicate significance.Since the AR (1) coefficient is notsignificantly different from 1.0, theprice series is not stationary in theaveraSe.

Uslng dlffereneed dataIf we take Z, - Z,-r we obtain a

new set of data, which is presented

THE ASIAN MANACER . APRIL-MAY 1995

as Table 4. Figure 3 shows the autocor-relation and partial autocorrelation func-tions based on Table 4. There are no pat-terns which are significant, i.e. fallingoutside of the boundaries of5% with theBox-Pierce statistic low and not statisti-cally significant.

Figure 4 shows the first differencedplot of the San Miguel Corporation A.The average is close to zero with the firctdifferences fluctuating around it. This isindicative of independence in the dataseries. Table 5 presents summary statis-tics of the first.

lf the first differences are seen fromthe perspective of returns on the stock,and seeing that thefirst differences are ba-

sically uncorrelated, then we may hypoth-esize that price changes, and thereforereturns, are not amenable to consistente\tropoldtion based on patterns. This isnot an act of pattem drawing, but one ofcorrelations. Table 6 presents the corre-lation between adjacent differenced data.

The conelation between SMCAD vs,SMCAD-1 is very low and the t-statisticsis well below the cut-off of 1.64 for a 957aconfidence level.

On the other hand, if we computethe period returns on the stock as givenby Table 7 and using the return for-mula SMCAP = SMCAP - SMCAP ,,

SMCAP,.rand their conelations, we have Table 8.

The Effie.ient Markets llypothesis posesserious misgiuings relqtiue to the usefulness,on a eo;nsistent hasis, t$ teehnieal analysis.

) ! \1 \ \ (A

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21

Again, the correlation between adjacentrctums on San Miguel A is very low, andthe t-statistic is not significant at the 95%level.

This is a first test of the proposition thatif stock prices are related to each other, thenthe future returns may be consistentlyforecastable. Or are we really interested inthe price changes? But if price chalges areessentially independent, arc not the futurerehrms also independent? Does it malesense to study pattems, or does a simple,last-observed-price-equals-best-f orecast-price give befter value vis a vis stock Ietum peformance? In future articles weshall continue the inquiry

Prof. Enol B. Percz is a tnenber of core faculty ol theMaster in Managemenl Prcglam.

lLblo 2S""l)|e llr"g., 1{SNunlu of obses.dons, 106

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22 APRIL-MAY,1995 . THE ASIAN MANAGER

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24 AIRIL-MAY 1995 . THE ASIAN MANACER

Genonimo "Gnnn"

J" lo. Rngn., Jn is CLoin-on of Gofn*o,1

Busines. DonL, o I ' igh-ln.hnoloqq pon[ in Gnn"nol Tnio, Couiln,

torlh of Monilo. h" olro o*n. lhn Flo*nn Fon- ;n Togogloq,

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ponlion of plroto, of N4onilo'. commepc€ in o fo"gollnn nno. (Vo,

con se€ lhn.o-plntn Ji.plog in Goln*oq Business Donk.) G"nn Jn lo, l lngn, demon-

,lnoln. thol Brsinns, pnopln nn"J nol tn.on."nnnJ onlq wilh onqonizolion-bri lJinq onJ

pnofi lr; lhng onn ol.o ocliue polron. of th" ontr.

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THE ASIAN MANAGER . APRIL-MAY I995

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26 APRIL,MAY 1995 . THE ASI,\].,J MANACER

Gi"l f".', 1,.[., l.eotus p",.uin.n

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l"Ji.,r J"*. tl'" Posiq oiu"" ["n',, tl " """11 ""J ol D'..t" J" E.p.n.

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THE ASIAN MANACER . ATRIL-MAY I995 27

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28

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APRIL'MAY 1995 . THF ASIAN MANAGER

l . l r "1 | . " " rL , . t , , , t o f t . , Jb f , , -CLnln'' 1.,' C*.- Do"lo,,, cincc lglO1,.^ i . , , , ,1, , .1, . . ' ' . . . ' , , . , | " .1 ' l , t -r"" \y".lJ !y,," ll.

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THEAsrAN MANACER . AIR|L-MA\ lqq5 29

r , l l o understand the

I Asians bet ter , espe-Ic ia l ly those you deal

with in business, you have toknow the principles they liveby," says the author of thisbook emphatically. Why? Be-cause these principles arefounded onAsian religion, be-liefs, and traditions, and arealmost always reflected inAsian business practice.

The Asians in The AsianMind Came are the Chinese,Japanese, and Koreans. Al-though this book is written forWesteme$, author Chin-NingChu's ideas also apply to In-donesian business, big andsmall. The problems of Indo-nesians with Japanese partnenstem from their insufficientknowledge of Japanese busi-ness practices, which are mani-festations of Japanese life prin-ciples. The same is true with theChinese and Koreans, whosehaditions often cause businesscomplications. While they are"Asians," they still experienceculture shock in their dealingswith Indonesians.

To bridge this culturalgap, one must know the his-tor ies of these countr ies.Chin-Ning Chu describes theteachings of Confucius andSun Tzu, ind their applica-tion to Chinese life from theemperors to Chairman Maotn Dpno , t h ro<ant

The book also profiles Ja-pan from the Shogun Toku-gawa up to Post World War II.The cleanliness ofJapanese fac-tories manifests the Shinto re-ligious teaching of physicalwell-being, which comes fromConfucius and Buddha Zen.

One factor that promotesbetter business ties is amaL abond based on trust and affec-tion. Although prospectivepartners may offer lowerprices, the Japanese are disin-clined to choose partners theydo not know. SWA got ac-cepted by the Editor-in<hiefof

30

Nikei Shimbun in Tokvothrough the help of a journil-ist of the paper in Jakarta.Doors to Kyodo and NipponHosho Kyoku (NHK) wereopened wider through the in-tercession of JETRO.

"l wasable to establish a relationshipwith a Japanese buyer throughthe help of a Japanese profes-sor who was assigned in Ban-dung," said Runi Palar, whosetrade name, Runa Bali, is nowa recognized name in theJapa-nese silver craft industry.

knees." It was an incrediblefeat. To the samurais, the Rea-gan visit meant that:

1. Japan had become a na-tion to reckon with.

2. They "thought" the tu-ture through Ronald Reagan.His successor, George Bush,was expected to adopt Rea-gan's policy to put a premiumon American-Japanese hade re-lations.

3. US politicians in the cowroftheir careen, can only do busi-ness with Japan-Jike Ronald

plained that two ceramicvaseshe received were broken, anddemanded compensation. "l

packed them myself. I checkedthem over and over," the busi-nessman insisted. He neverthe-less faxed that he would im-mediately transfer $100 to hisbuyer's Tokyo bank. "What

happened next sulprised me,"the businessman said. Thebuyer apologized ; it was a testof the Indonesian partner's loy-alty.

Korean culture, mean-while, blends ancient China'sinfluence, Japanese energy, andnationalistic sentiment in thepeople's search for identity.Korea occupies the secondhighest slot after Japan inAsia's economic grid, even ifKorea only began industrializ-ing ten years after Taiwan andfifteen years after its maiorcompetitot Japan. AlthoughKorea is faced with problems,particularly its conflict withNorth Korea, its economy hasremained vigorous.

Korea gotthe best from thet rad i t ions and cu l tu re o fChina and Japan. The Kore-ans are very much like theChinese, who are more open,and unlike theJapanese, whoare reserved and always waryOn theother hand due to con-tinuous foreign influence inKorea cenfuries, the Koreansare generally short-temperedand prone to anger, thoughthey do calm down easily.They are jealous, obstinate,conversant, and enjoy humorThese traits make the Koreansthe "lrish of Asia."

This book, presented insimple language, is a mustfor people intending to dobusiness with the Chinese,

Japanese, Koreans, and Tai-wanese

Hans ts. Supiya is tfu Seniat Manag|�tgtbr of SWA Smhadn Mngnzifit , Itldo

Tra slnliol: Ettily Cru., UP DqarlmentofLntgaivrcs.

The Shogun Tokugawasamurais lost their hold whenEmperor Meiji ascended thethrone. Now, the samurais areback as workers, managers,and execrrtives. These samuraishave made Japan one of themost powerful nations today,and their business strategiesand techniques have becomeinstitutions.

One example of samuraiacumen was to get former USPresident Ronald Reagan tospeak before Tokyo business-men. The ex-president of thecountry that defeated Japan inWorld War II came on "bended

Reagar-after they reiire.. If you read the book Tle,la

pan Thnf Can Srrq Mr, you willfind Chin-Ning's article enti-tled "Morita and Ishiwara."According to Chin, the book-which has caused a stir inAmerica-is really intendedfor Japanese businessmen.Akio Morita's co-authorshipof this book was removed, per-haps to appease Sony in theland of Uncle Sam.

Keeping promises is kev toa successful relationship withJapanese. An Indonesian ce-ramics exporterwas in a fix be-cause his Japanese buyer com-

e Asian

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EMENT UPPETN:"

Good Governanceverybody is talking about governance. All of a sudden a singletheme dominates all conferences,

seminars and policy dialogues. The lat-est in Development appears to be Gov-ernance.

Governance is the value-neutral termwhich expresses many abiding concernsof management experts, economists andpolitical scientists. In the past it has goneunder the name ofmanagement ofdevel-opment, institutional arrangements, roleof the state and, occasionally, honest-to-goodness government, especially in theway it exercises power and authodty.

The Eighties saw many failed struc-tural adjustment programs initiated bymultilateral funding agencies, generaldeclines i4 GDP, and falling standards inthe quality of life. It therefore became nec-essary to find a vocabulary to explainthese happenings without ascribingblame to corruption, mismanagement,and the pitfalls of authoritarianism. Goodgovernance-or lack of it-seemed to sayit all.

Recently, the Third ADB Conferenceon Development Economics in Manilaopened with a think piece on the curentbestseller-Coaerucrce-by the doven ofDevelopment Economists, Paul Streeten.Given the variety of prisms from whichthe issue is presently being addressed, itis hardly surprising that the paper pre-sented at the Conference lacked a sharpfocus. However, it managed to cdpture inits broad sweep the several intenelatedstrands of the current discourse aroundit. Some of thes€ are:

32

(;or'crn nce enconrpasses re-lation. between government, civil 5oci-ett the private prcfit seeking sectot thefamily, and the individual citizen, "inso-

far as these relations bear on governing asociety."

There are nodemoeraeieswhich are notmarket eeonomies,

But there areseueral marketeconomies uhiehare notdemoeraeies.

(lovernance in<.ludes lhe ele-rnents of dr:rnocracr, good gor-ernment , and dcre lopment . Agreat deal of empirical research has goneinto establishing a link between forms ofgovernments, economic growth and de-velopment. The findings of these diverseresearch studies areinconclusive in estab-lishing any such link. The only incontro-vertible fact which emerges is that thereareqq democracies which are p! marketeconomies, But there arc several marketeconomies which are lqldemocracie..

By SrNouu Kuul lan

Notable amongst these are "the EastAsian miracles" which owe theirachieve-ments to uncompromisingly authoritar-ian regimes. On the other hand, CostaRica, Malaysia, and Venezuela have per-formed well economically while retain-ing their democratic forms of govern-ment. Howevet the research findings donote that human development, with rm-proved health and education, as well ashigher incomes, leads "sooner or later toan irresistible call for freedom," as is clearfrom the experience of much of EasternEurope today.

Governanre involves strongarrd oflen expanded slale inler-rerrl iorr. State minimalism i5 categori-cally rejected; the role of the state is rede-fined to includeaction to ensure thatmar-kets function efficiently and effectively.Developing country governments haveover e\tended themselve: by interveningin areas which are best left to the market.For example, in India, state owned enter-prises made bread and steel, ran luxuryhotels and airlines, and exercised controlon all industrial activity until the processofeconomic reform started in 1991. How-ever, after freeing these sectors of controls,itdoes notnecessarily follow that govern-ments should retreat from functionswhich rest squarely in their domain. Onthe contrary, redirecting, redefining, andreorienting the functions of govemmentsis high on the govemance agenda. Thisincludes intervention not only in the so-cial sectors but also in areas such as capi-tal marketsbecause in many cases the en-

APRII--MAY 1995 . THE ASIAN MANAGER

vironment in which they function arecharacterized by lack of access to essen-tial information regarding credit qualityand risk profile of the corporate and fi-nancial sector and inadequate legal safe-guards to ensure protection to investors.In tune with this perspective, Thailandand lndonesia have strengthened theirregulatory and rating agencies and HongKong has reformed its regulatory struc-tures.

(,lovernance includes produc-ing, prov id ing ' and f inarrc inggoods and services. The conven-tional wisdom is that the state must regu-late the supply of public "bads" and en-sure the provision ofpublic goods.ln ad-dition, the state must provide infrastruc-ture and invest in human resource de-velopment in a way that efficiency andproductivity are optimized. In perform-ing each of these functions the public andprivate sector must work together Japanand Korea are good examples of produc-tive and efficient public-private coopera-tion.

Good governanc€ resas on aheprinciples of predi<'tabilitv andthe rule of lau; accounlabilily;openness and transparenr:y. Theprocesses which embody these principlesdre decentralization and its variant:, i.edeconcentration, delegation, devolution;liberalization and its variants,i.e. stabi-lization and ad,ustment; and deregula-tion. It is now widely recognized that lib-eralization macroeconomic adjustmentand participatory development througha process of decentralization are closelylinked. The intensification of the struc-turalreform effort in the Philippines since1986 is paying dividends in the form ofaccelerated growth. Atthe same time, thisreform isbacked by a significant push to-

wards decenhalization through the enact-ment of the Local Government Code 1991.Poland and Romania are other exampleswhere similar efforts are under way afterdecades of tight centralized controls.However, a cautionary note is soundedon oversimplification of these principles

The attemptbv multilateralinstitutionssuch as the IMFandthe Workl Bankto espousethe eause otgood goaernanceE Seen ov

goaernmentsas an attempl toimpose politicaleonditions,

into what Professor Streeten in anothercontext, characlerized as "premahrre cry:-tallization of fl awed orthodoxies."

The nohon of good govemdnce evokesstrong reactions. In particular, develop-ing country govemments view this as anintrusion on their sovereignty. The insh-tutional base and practice of governance,especially in Asia, lends itself to a varietyof approaches leading to the same goal,namely, improvement of the quality of lifeand standard of l iving of the people.Therefore, the attempt by multilateral in-stitutions such as the IMF and the World

Bank to espouse the cause of good gov-ernance is seen by counhy/governmentsas an attempt to impose political condi-tionalities.

The hidden agenda, if any, to strait-jacket all counhies and culhrres into a sin-gle economic-cum-political model is to beviewed with justifiable suspicion in aunipolar world over. But to jettison theconcept on account of its political over-tones is like throwing away the baby withthe bath water.

The basic premise is to accept thatthere need not be a single monolithicmodel of good governance. The designof institutions and styles of governmentare country specific and culhrre specific.But, a strong legal framework, efficientand effective regulatory agencies, as wellas transparent decision making processesare the bulwarks of sound public man-a8ement whether in Asia, Africa or inEastern Europe. Reforms in processesand procedures of government are re-quired to create or strengthen capacityin public agencies. Such reforms need tocover areas such as public expenditurereviews to improve public investmentprogramming and budgetmaking, im-provements in management of govern-ment owned and controlled companiesand civil service reforms to include cost-containment measures and HRD to en-hance the skills and productivity of theimplementing arm of govemment pro-grams. Indeed, the logical corollary to al-lowing markets to work is to have gov-emments that work.

Si dh Kh llar is from thc ci)il seroice in India uith 20

lears oltn|orki g expelience in the arcas af HRD, trade,and development . She has tnntd h Dettelopme t Econo-miesal Boston U ircrsily and h Public Admi islntionol llt knnd! School of Couernmenl , Hanard Unfi)er-sit!. At Fres t she is a Visiting Fellow al lhe NM-Policy

..LITTLE ELSE Is REQUIRED To CARRYA STATE TO THE HIGHEST DE.

GREE OF OPULENCE FROM THE LO\TEST BARBARIANISM. BUT PEACE.

EASY TAXES, AND A TOLERABLE ADMINISTRATION OF IUSTICE...''ttt.t's Arlau Snith: Art lnquiry irrto tlrc.\oture ontl ()tuses of the ll'eulth of Nations.

THE ASIAN MANAGER . APRIL.MAY 1995 33

From Corporate Autouaq to Corporate Democracy:

ASEAN HRD's Biggest ChallengeJ\ emocratic management prod uces

I fsuperior and ercellent businessI-l organizations. We must do a bet-ter iob of understanding the dynamics ofour national and corporate cultures thatslow the change from traditional hierar-chies to democratic teams; and then do-ing therightthings tojudiciously and lesspainfully speed up the hansformation.

"Democratic" does not mean the oneman-one vote, rule-by+he-majority formsdescribed in political science. "Demo-

cratic" means management styles thathave the essential features of democracy,including but not limited to the follow-ing:

1. Members have the right, and areable, to make intelligent choices and de-cisions;

2. Based on relevant information theyhave unhindered access to; and,

3. The ability to select and implementtheir chosen alternatives without predis-posing conditions or duress.

No one consciously hires morons andidiots. We all say we hire only the best;that our employees are our partners; thatwe give them good pay and benefits; andthat we give employees all the chances togrow and develop. Company credos andvalues statements proclaim these. Havingsaid that, we all see gaps between pro-nouncement and actual performance.

Seientific and hurnanistie man-agement

In the early 1900s Frederick W Taylorgave us "scientific management." Its phi-losophy, tools, and techniques helped

By Pnorrsson Manro Anroruro C. LorEz

make theUnited States an industrialpow-erhouse. Germany and Japan used thesame techniques to rebuild after WorldWar Il. Taylorism's track record is prodi-gious.

Taylor's ideas, formed during the riseof America's mass production machine,evolved when workers n'ere illiterateand poor. Workers came to the UnitedStates carying with them either their Eu-ropean agrarian traditions or their first

-

Frederick Ti\t'lor'sttieu.:s sho;-^ tlmlhe u:as n?rt(r e

factort' u:orker.

--

painful experiences with European indus-tdalization. New World industrialrstswere copies of their European predeces-sors, and the relationship: between fac-to ry owners and workers wereadversarial.

Taylor, a devout Quaker, had astrongly Puritan work ethic. Lazinessmeant " handing your mind over to thedevil." Akey value ofTaylorwas his vrewof work, its division and conscientiousexecution, but the crucial elements per-tarn to horl ht: r,ieiued u,orkers tersus mun-agdls. Robert Levering quotes GordonForward, president of Chaparral Steel,saying, "Most companies assume youshould checL your brains every morningat the factory door"

Taylor's views reflected a Cartesnnworld view the world as a knowableand u l t imd te ly cont ro l lab le mach ine-and the elitist elements of several earlierphilosophies. They also showed that hewas never a factory worker. He believedthat all work could be broken into com-ponent parts, and redesigned towardsgreater efficiency. He tookAdam Smith'sspecializdtion the full distance. reducingeach task to its simplest form. And srncethat was all a worker did, he should bevery good at it. Taylordid notunderstandpeople very well.

Taylor's disciples pursued his prrncr-ples. The Gilberths developed motionstudies which others elaborated ulti-mately to that very useful tool, Meth-ods-Time-Measurement (MTM). But any-one who has worked in a mass produc-tion factory knows that drudgery andboredom areMTM's long-term cost, evenwith work rotation. Workers develop cop-ing mechanisms, which did notmean bet-ter work. They were among the phenom-ena that Elton Mdyo and his disciples inthe "humanistic school" tried to remedy.

The worst elements of "scientific man-agement" are neither over-specializationnor drudgerv The harm is inflicted mostby the assumptions about workers andmanagers. Taylor himself wrote, "One

type of man is needed to plan ahead anentirely different type to execute thework." For Taylor there is an elite giftedwith the brains and the "right attitudes"who are qualified to manage; and a groupwhose disposition and lesser endow-ments qualify them only for manual

APRIL-MAY 1995 . THE AsrA\ MANACER

work, executing the orders of the manag-ers . Vavo and h is d i5c ip le . d id no t d ica-gree with the essence of Taylor's views.The major difference between the two

schools was the form of maniPulationthey chose to subject workers to-Taylorwith material carrots and sticks, Mayo byplaying on their most basic and immedi-ate needs.

For half a century these ideas havebeen the bedrock ofmanagement educa-tion, integrated as "basic truths" in thecurrent psychology and sociology ofwork. It is best represented by the pyra-midical Table of Organizations:

The breakdown came when Japaneroded American indushial dominance.A whole series ofbooks onJapanese man-agement and excellent management werewritten. These works broke our old mod-els of the kind of management that pro-duced g loba l l y compet i t i ve o rgan izd-tions. They say incremental changes willnot rvork, that we need a reconstructron.But we need to tear down before we canrebuild. Of course, we shouldn't throweverything out. There are many usefulcomponents in the old model. When someof the basic components of the old areproperly integrated with new elements,they contribute positively. The questionis, which elements do we retain to inte-grate with which new elements and inwhat manner?

Reworking has been hard. The foun-dations ofour old beliefs run deep. Theseare the elements that have melded withaspects of Asian culture and socio-eco-

HUflXItubtftmgswer@

fuofuSsdffi

nomic realities thathave con-tdbuted to the persistence ofwhat many have k indlycalled "traditional" or "feu-

dalistic" elementsinASEANsociet ies in genera l andASEAN companies in par-ticular.

Several common culturalthemes among Asian cul-tures influence managerialth ink ing. Whi le many ofthese elements are undergo-ing irreversible changes, theyhave been slowing the proc-ess while causing problems,extracting a price in low mo-rale and industrial strife. Theimpacts vary, and whilethey are exhibited decreas-ingly in daily behavior, they

-

ht lJnhasathc boss isKepala,hcad: thehcad is heldhigh.

Workers areKaki-tangan,fect andhands; thefcet undhand.s gcl

the ways we divide func-tions and vest values onthese functions.

ln Bahasa Melavu andBahasa Indonesia. the ha-ditional word for boss orleader is kepnlr-head.The head is where thebrain is. Thebrain thinks.It interprets stimuli; de-rives information fromdata; and crafts decisionsfrom information. It con-ceptualizes action stepsand decides how thesewill be carried out. Thedecisions and actionsthen are hansmitted tothe rest of the body for ex-ecutron.

MlHood&ffiEr

are still formally expressed as sustainingvalues of different societies. Two are es-pecially importantand are the most com-monly encountered.

The first is a sJcirl il iernrch y we associ-ate with Confucianism but has counter-parts inallAsian haditional societies. Theorder ofGod, King, Father, Husband, andFriend in Chinese societies have counter-parts in Malay and Indonesian societies,including Brunei and the Philippines forethnolinguistic and historical reasons,and in IndoChinese and in Thai societies.After World War II Kings were replacedby less venerated but equally lmperious,if benevolent, Governments.

There are loyalties and courtesies thatour societies still expect us to give God,King, and Government. As societies weprofess our obedience to and revere theSupreme Being. The Almighty's blessingskept a ruler in power, because peopleobey the anointed King. Governments le-gitimize themselves similarly by invok-ing, "Vox populi, vox Dei." They cite thatprinciple when their proposed measuresare popularly approved. The implicationis that their actions areblessed and these,and they, must be followed.

The second persistent cultural formwhich more clearly reflects the elitist ele-ment are ffu words we use to designateleaders and managers on one hand, andemployees and workers on the other.Consider the words we use when refer-ring to bosses and their workers. Thewords are important because they reflect

In these two relatedlanguages, workers are kaki-tangan, feetand hands-brawn. They give data to thebrain, but their major function is to ex-ecute the brain's orders. The feet andhands get dirty. Thebrain inside the headis held high, ensconched in the protectivearmor of the hardest, most tightly fittedbones in the body.

While there are newet less emotion-ally laden words now the emotions asso-ciated with the old words may not havebeen neutralized. In fact, the new wordsused in Indonesia, anak bush-ftuitfll]child, have undertones of paternalism.The nnak, child, mus thave a bapak, whichhas two meanings, "father" and "protec-

tot" both denoting a superior posihon.The dependency is mutual but it is clearwho normally dominates. larental wis-dom and unselfish caring, and the fool-hardiness of children, are the stuff of in-ternational hit songs like FreddyAguilar's Anak.

"Scientific management" and Asiantraditions strongly reinforce each otherCenhal authority in "scientific manage-ment" blends with preordained hierarchy.When educational attainment became an-other measure for one's preparedness tomanage, the more odious form of wealth-based social position was replaced by theformally educated elite whose social po-sitions were directly proportional to thenumber of academic abbreviations aftertheir names. These are reasons why de-spite our exposure to and enchantmentwith new trends in managing people thai

F i g . 1

THE ASIAN MANAGER . APRIL-MAY 1995

many Asian managers still remain au-thoritarian and paternalistic.

Shifring tldesSeveral developments have shaken

scientific management and the system ofbeliefs that buttressed it. These include:

1. A change to the view of the worldas a continuously evolving biological or-ganism rather than the Cartesian ma-chine.

2. Abetter understanding of man as apsycho-biological organism with a brarncapable of many modes of functioning;

3. An increasing knowledge of ouruniverse with a deeper and more com-plete understanding of how we ought toreldte amonS ourselves and to our envi-ronment; and,

4. A reawakening to our other dimen-sions that weceased attending to, e.g., ourspirituality and psycho-emotional duali-tres.

The first wave of changes broughtabout by these and other forces stimulatea second waveofchanges which are typi-cally more difficult to anticipate. The sec-ond wave brings on the third, and thefourth, and so on.

We also know that these waves ofchanges feed back toand often change the

.lnternationalization ofc0mpsl|tlon.0eregulation.The matumtion of rnarkets.The incroasing spsed oflechnological development

original forces that brought them about.And it is only now that we have becomemore conscious of our need to give thesedynamics more attention and understandthem asbest wecan so wecan proactivelydeal with them.

The environment boils with compe-tition. Only the hardiest, most adaptive,and agile companies with the greateststamina will survive. These characteris-tics are developed and nurtured con-sciously.

Harvard's John P Kotter identifiedfour environmentdl and four organiza-tional changes that managers must dealwith effectively. These forces shown infigure 2 are forcing us to rethink our defi-nitions of managing and leading.

Kotter cites internationalization ofcompetition, deregulation, the maturationof markets, and the increasing speed oftechnological developmentas the four en-vironmental forces. The four corporatechanges are growth of firms, product di-vers i f i ca t ion , in te rna t iona l e rpans ion ,and the increased use of sophisticatedtechnologies. He concludes that betterleadership is needed to steer companresthrough these dangerous times. In fact,there has been much searching for neworganization forms and new leadership

styles for the 21st Cen-tury. Jan Carlzon, MaxDePree, Clay Carr, andD. Quinn Mills havewritten excellent bookson participatory leader-ship, support for frontline initiatives, teamsand clusters.

Source Arrlrur D L rt e Manaqemenr Fev ew l99i

F i g . 3

ene, headded changes inglobal lifestyles,the resurgence of biology as a frameworkand the rise of bio-technology as the tech-nology of the future, and the emergenceof woman power.

Feather identif ied 35 C-forces (C-Clobal) grouped into four categones:social motivations affecting the satisfyingof psychological drives; technological in-novations creating the information-richleisure society; economic modernizatronand redishibution planetary riches; and,political reformation and the restructur-ing of political power

Sally Helgensen and Alice G. Sargentin their books suggest the use of morefeminine/matemal managerial styles andvalues. Many leadership and effectivemanagerial behavior models we havebeen using for decades-including the"grid" (Mouton & Blake), "situational

leadership" (Blanchard & Hershey), and"normative leadership" (Vroom & Yetton,Vroom & lago)-actually incorporatetraits mentioned by Helgensen andSargent.

The behaviors we call maternal/femi-nine include qualities ofbeing nurturing,being less directiveand authoritarian andbeing mgre participatory and inquiring,and being more emotionally involved,caring, helping, and being more con-cerned with getting the team workingwell together than asserting personalpower. But towards what ends are we todo all this refocusing on democraticmanagerial forms? To what use are wegoing to harness the powers liberated bythis model of management?

APRrL-MAY 1995 . THE AsrAN MANAGER

Fig. 2The Ghrnging Busincsr and lta Con3equences

fol dre Leader3hip ;actor

Environm;ntal Changes 0rganizational Changes

+Increasing competit ive intensityin most Industres

. + .Increasrng neeo t0r cnanqe:lowar0a higher level of perfomance le.9.,m0re productivity, more innovation,new approaches to marketing anddistr ibution)

+Leadership is need€d in moreand more jobs

.GroMh of fims

. Product diversilication

. International expansion

. The increased use ofsophist icated technologies

+Increasrng cornplexityof mosti ims

. +Incfeasrnq 0rnrcu ty 0tmaking chanqes in anetfic ent and etfective way

Providing etfect ive leadershipis increasingly dit f icult

Naisbitt, Aburdene,and Feather have under-scored kotter with theirown lists of changes. InMegafrends Naisbitt list-ed shifts from hierar-chies to networks ofteams in organizations;from representative de-mocracy to partlcrpatorydemocracy; and fromthe hesitant use of tech-nology to its enthusiasticvo lun tary adapta t ionwith increases in theneed for human contact.In Megntrends 2000, co-authored with Aburd-

+ +The leadership factor has become stgni l 'canl ly more rmportant

The Leadefshrp Facro fEyJohn P Kot te r Harvard Bus ness Schoo l

HIGH PERFOBI\4ANCE BUSINESS

36

Comlrcl.ltlve fllnessTowartls delighting lur custlmers, our

reason for existence, by continuously meeling and improaing upon agreed requirntents!would be John MacDonald's and JohnPigott's reply. The customer is king. Andwhile our customers are both the reasonand the source of the means of our cor-porate life and growth on one hand, onthe other it is our employees who are ourmajor resources in serving the customersdirectly or indirectly. They are ourfrontliners in the service delivery chan.They are the firct to sense first to sensecustomer's responses.

The relationship between high levelsof cusromer satisfaction and the dedica-

F i g . 5

The Five Principles of Mars

l. 0lalily The consumer is ourboss, qlra iiy is ourwork, andvalue for money is ourgoa.

Z Beipomitilily As lnd viduah, we demand totalrcsponsibrlityfromourselves; asassociates,wesuppon the responsiblties of others

3, l[0tuality A mutual beielil s a shared befetil;asharedbenefi iwl endure.

4, E licioncy We use €sources toth€ Iu lest waslenothifg, and do of y what we caf do best

5. freedom We needfreedom to shape ouriutureiwereed p.oit to.eman free

tion to work of employees who see satis-faction and pride in their work is mostgraphically illushated in a popular ArthurD. Little Group diagram. The top has sat-

isfied repeat customers,and the bottom has hap-py and dedicated em-ployees. While ADLsays nothing about de-mocratic managementinthe diagram, they willagree that it is a keycontributor to that satis-faction and pride.

Competitive fitnessis the ability to antici-pate and promptly re-spond toevolvingneedsand desires of our mar-kets. Jan Carlzon makesan excellent case for em-powerment of the front-line in his book, Mo-ments of Truth. He con-tends that the market'sperception of the com-pany depends on "the

one thousand momentsof truth" where custom-ers meet the companyface to face through em-ployees, mostly rank &file frontliners. ClayCarr echoes Carlzoneloquently when hesays that custome$ ben-efit the most when "our

people are committed tothe company and to do-ing their jobs compe-tently." This happenswhen self-managementprovides them the con-trol and responsibility,

the challenge to show theirbest while co-operatingwith others, and produce some-thing they can be proud of.

The credo of Johnson & Johnson andthe values statement of Mars Candy Cor-poration show how the pdmacy of cus-tomer satisfaction has helped the twocompanies attdin dnd maintain the posi-tions of excellence in lheir respective in-dustries. By taking care of the custometthe employee, and the community first,these companies have made more moneyfor their shareholders and havegained fi-

Ml Fh md0dierfrotdimrsfrurdixs SryewisontliddolhmpnTWilorryrsdd

m/m

F i g . 6

nancial strength to have greater freedom.The new viewpoint requires that we

reposition our old diagrams to properlyreflect not only the pdmacy of the cus-tomet but to better put the functions ofthe various people in chain morein synchwith the new thinking.

The top and middle manager's jobsare to give frontliners the needed re-sources to supply the customerc the con-tinuous delight MacDonald and Pigottspoke of. They are now facilitators andmarshals of resources towards address-ing market requirements in proactiveways.

Edito6's nole: In the next i.sue of TAMProf. Lopez will addres. how tho HRDproto$ionals can adapt to thes6 lhifttin mrnagement thinking,

Prcf. Mntto A tonioG.I.aWzislhe Pililinas ShrllCar-pardtion Ploftssar of Plblit Ailmi islratiorland Assisl-anl Detin for the Execulilre Del,aolittldtt Prognnt. Hiscurrenl inbrests are nfi agetial de1)elapmoll, depelop-menl mnn|lene l, cross-culhtll.l mnnagem t, atdpraject deltlopnenl n d managentnl.

F i g . 4

The John3on & Johnson Credo

Our Credo

We believe o!r lilst responsibility s to the doctors, nurses and pat ents,to rnothers and fathers, and to all others who use our products and services.

n rne€ting their needs everything we do must be of high qualityWe must constantly strive to reduce o!r costs

in order to maintain r€asonable prcescustomers'0rders must be servced prompty and accufately.

Our suppliers and distributors mLst have an opportun 1yto make a fair proft

We are responsible to our employeesthe rn€n and wornen who work with !s througholl lhe wofld

Everyone mLst be cons dered as an indiv dlal.We must respecttheir dignity and recogn re their merit

They must have a sense of sec!r i ty in the r jobsCompensation m!st be fair and adequate.

and working cofditions clean, orderly and saieErnployees must leelfree to make suggestions and complaintslhere m!st be equalopponun tyior employment, deve oprnent

and advancernent for those q!alified.We must provide competent management, and their actions must be jLrst

and ethical.

We are respons ble to th€ comrnLrnities 1n which we live and workand to the world comrnunity as we i

We rnust be Oood-c tDens support good wo*s and charitiesand bear our fa r share of taxes.

We rnust encourage civic improvements and better health and educationWe m!st mainta n in good orderthe prcperty we are privileged to !se

protecting the env ronment and natura resources.

Ourf nal resp0nsibi l i ty s to our slockho ders.Busrness must make a sound protrt .

We must exper ment with new deas.Research must be carried on, innoval ve programs deve op€d

and mistakes paid iorNew eqLripment must be purchased, new fac I t es prov ded

and new products launchedR€serves must be created to provide for adverse times

When we operate according to these principles,the stockholders shou d realize a fair return

THE AslAN MANAGER . APRIL-MA\ 1995

I

Dusf'� 3f

INESS RTVIEW

had to lav-off rvorkers but also k) close cn-tire plants d0u n.

. Caterpillar, in orcler to fight off com-peiit ion from Komatsu, cut its work forcebv 319i and thercby raised thc producti\.itv ol those that rernained from gllE6,000pcr man to $2M per man.

. IBV. in o rJL r t , ' -u r \ i rL . h , l J t l E , i r t 'up its fondlv ht' ld poiicv of l i fetime em,plovment.

Bv being rvilling to cut their manpo$,ercosts io thc bone, a lot of American com-panics have regained their competit iveness. Thc car companies for eramplc hat,ere-u,on m,rrkei share in thc'U.S. from thcimlor l . C ' ,mpu tL ' r ( "mpan i r * l r l i . C , , rnpaq, Apple, and IBM have macle substan-

We should prepare

with workers who aretemporaries,part-timers,consuftants,contrad workers,and very few, if any,permanent workers.

BY PROFESSOR CAtsINo A. MENDoZA

t ial inroads inb the Japanese microcom-pulcr market. The World Economjc Fo-rurn based in Su'itzerland announctd re-cent lv tha t in 1993 th t 'U .S. had ihe\\ 'orld's most competit ive economy. Ja-pan, u'hich traiied Singapore, $,as onlythe thircl most competit ive.

This nerv-found American competi-t iveness has not come rvithout a cost.There ustd to be an unspoken agreementth.ri in exchange for a reasonable assur-.rnce of a permanentjob, olsecuritr' of ien-uro . enr l lo ree . r rou l t l g r le ( ( 'mpdn c \their lovaltv, commitmenl, and the exercise ot sonc inii iative. The rvaves of lav-, , [ [ r dor r ' r r . i z inq . . r igh t - ' rz rngr . ra t iun , i l -izings, deJaverings, restruciurings, and re-

enrinccrin5. pror, ' leLlbr thcrccent reccssion har,e Ieft this age-old psvcho-logical contract tattered and torn. Companics norr ha\re to find a new basis for,a ner{ reason rvhv employees should( , ,mmi r to th t -m the i r l . rva l tv . rnd rn r -ti,rt i!c. Tl i- iruni. th,tt \ h,tt con)p,rnie.had to do in ordcr b be globallv com-petit i\,e-trim their rvorkforcc thusmaking their remaining workers morcproJuc l i vc r r a . a l ,o thc cau.e o f the i rlosinga competit ive eclge, namelv, em-plovee lovaltv and commiiment.

Thc urgencv oi the search for a neucovenant cannot be ovcr-emphasized:in a globallv competitive uorld, u'orkerparticipation has increasinglv becomea prerequisitt' for success. In the frenzv, ' i ihc -e . r rch .omc rn te re . t inB i ! ie , i .have been tossed up to beexamincd and,rnalvzed. There is thc suggestion, for

AIRIL M.\) 1995 . TI I i . A5IA\ N4A\ACER

The Orgarrvaf,on of the Futurehigh intensitv carthquake hasat least one virtue. lt rclentlesslv, unerringlv scp.irates the

good f rom the bad. The poor ly con-. t ruc teJ roaJ- . b r rJ te . . rnL I b r r i ld ing , -rupture, crack and crunble. A temblorimp l ;c . rbh rc r r ' r l . l l )e r t , i r r i l h in : the inferior material, thc sloppv work, the un-prolcssiorral attitucles, and perhaps, evenihe corrupt greed that rvmt into it. Thcweli built constructions ride out trcmorsunscathed. Like ihe Roman roads of old,thev endure ail the frantic quivering andquaking unshaken. Thev perdure.

The lvorld hasjust l eathered a reces-sion that has infl icted on busincss thesane havoc u.hat earthquakt's do to cir,'iln'orks. lt has erposecl thc far.rlis jn-

hcrcnt in our companies' organiza-tional structures. I i has unco\'eredour misconccptions about the natureof cmplovment. lt has revealed theconsecluences, in terms of motivationand commitment, that these mis-takes have led to. I i compcls us tore-think our philosophv on organi-zation and our policies on cmplov-mcnf.

The past recession obliged someof the rvorld's iargest, most sophis-ticated companies b recluce theirmanp0rver c0mplcments, to elimi-nate the f,rt fronl their organizationsboth in the United States as rveil ,rsin the rest of the ivorld I 'here theiro!erseas opcrations are situated.

r Ccneral Motors, in order to rc-gain competitivcness, has not onlv

3E

for a"jobless" world,one peopled mostlY

example, from an English managementguru tCharles Handy, author of fte,4geol Unreason antl The Age of Paratlox\ thatwe should prepare for a "jobless" world,one peopled mostly with workers whoare temporades, part-timers, consultants,contract workers, and very few, if any,permanent workers at specific jobs, An-othersuggestion is that companies "buy"

the loyalty and the creativity of theirworkers by offering them training whichwill not only develop their skillsfor their present employment butalso expand their competencies toenhance their future employabil-ity.

The most valuable upshot ofthese suggestions is that they re-mind us that our ideas oforgani-zation and employment derivemainly from a classical Westernarchetype: a monolithic, hierar-chical organization manned bypermanent workers, very egali-tarian, non-discriminating, demo-cratic. They also recall to mindthat there are other prototypicalorganizations. Take the Japanesemodel for example. It is verymuch unlike the Western demo-cratic model.Itis, in fact, elitist. Itfavon th€ talented few, the minor-ity to whom lifetime employmentis offered.

Contrary to popular impression, only28% of the Japanese workforce are partof the permanent, lifetime employmentsystem. These chosen few constitute theelite ofthe labor force. Theyhave the criti-cal skills and competencies that their com-panies need to pursue their long-run strat-egies. Because theyareassured of lifetimeemployment, they can devote all their en-ergies, their initiative, their creativity tosolving the company's problems and ex-ploiting its opportunities. The companythus has their life-long loyalty.

All the rest of the work-force eitherwork as temporary seasonal, or part-timeworkers or belong to supplier or sewicecompanies that constitute the rest of themain company's keiretsu. They are con-sidered expendable during downturns inthe economy because they do not brjngstrategic competencies to the company.

Some Western firms have adopted theelitist model of organization. Nike, theathletic shoe company, for example, does

THE ASIAN MANAGER . APRIL-MAY 1995

only the strategic functions within thecompany: product design, process desigrymarketing, information and financialmanaBement. All the other work. particu-larly those that require a lot oflow skilledworkers, it farms out to independent sup-pliers. These conhactors whom itcancon-venient ly drop dur ing a downturn insales do the manufacturing, distribution,advertising and promotions. This net-work kind of organization, very similar

to the Japanese keiretsu, is as flexible asan accordion. It pampers thosewho havethe critical competencies needed by thecompany to retain its competitive edge.It carelessly uses and callously discardsthose whose skills are easily duplicable.

During the recent recession the West-ern press was full of predictions that theJapanese would give up their practice oflifetime employment. The din grewlouderas the Yen strengthened against thedollar and eventually broke through the100 barrier The Japanese reply was firmand unequivocal. Keizo Yamaji of CanonInc. said, "One way to gauge the trueabilities of management is whether theycan restrucfure a company without lay-offs. I don't respect a manager who sud-denly finds expendable workers." In thesame vein, Norio Ohga, Sony's musicalpresident remarked, "We simply cannotfire people. It would only conhibute tothe worsening ofthe economy, and we re-ally can't afford that." Toyoo Gyohten,

president of the Bank ofTokyo, confirmeda wide-spread feeling, "No matter whathappens, we in Japan do not believe themarket should be a jungle. If profitmaximization becomes our only motive,we will run out of control." Last Octobetwith the recession showing signs of com-ing to an end, Fortune magazine finallyconcluded, "No,

Japan Inc. likely won'twater down its allegiance toemployees..."What was left unsaid, however, was that

the logic of Japanese orgamza-tions differed from that of theAmericans' as apples to or-anges. After a life-time ofanalyzing their own demo-cratic organizations, the busi-ness journalists of the Westwere poorly prepared to con-front the reality ofJapan's elit-ist organizations. The reces-sion-induced adjustments thatthey predicted were takingplace but beneath the surface-among the expendables, thesuppliers, and the contrac-tors-and not in the core com-panies where the life-time em-ployment system was firmlyentrenched.

Deciding what kinds ofor-ganizations we should buildand what employment policieswe should adopt to carry out

our strategic plans and to forge our com-panies into world-competitive weaponsofdevelopment, are not easy decisions tomake. As beneficiaries of a Western edu-cation and inheritors of the Anglo-Saxonsystem of labor laws, most of us South-east Asians are emotionally pulled andIegally pushed towards preferring the"classical" organization which democrah-cally grants permanent employment toall...at least until the next recession. Onthe other hand the flexibility and theprac-ticality of the elitist organization are ren-dered uninviting by its cold-bloodedly ra-tional approach to human relations.

The decision is as difficult as thechoices the victims of Mount Pinatubohave had to make as scalding rivers ofvolcanic lahar thundered downthe slopestowards their farms and their homes. Butmake it, we must.

P/of. Gabitlo A. Me1ldoza, is lhe hstitute's K.T.Li Professot in Internalionnl Matngemetil.

As beneficiaries ofstern education

the Anglo-Saxonsystem of labor laws,

masf,Sau|iileastkhnsare enotionaw pulldand legally pushedtowar& prefeningthe'classiiml"argankdion.

'i

By PRoFESSoR BENJAMTN C. BeceoroN 1R.

longer product lifetime, lesser packagingand recyclability, etc. havebecome impor-tant selling points.

Redesigning for pollution pre-renliort can be cost-effeclive. AnOECD survey of over 000 French environ-ment technology projects has found that6% saved money on raw materials, 65%conserved water, and 8% cut energy use.Of 45 clean technology projects in theNetherlands, 20 saved money; the othersdidn't affect costs one way or another.Similar examples in developing countriesabound. Del Monte Philippines, for exam-ple, reduced its wastewater volume by1,000 gallons a minute when it introducedrvaste control programs in its pineappleprocessing plant. The company realizedover Pl.2 M in annual savings by using re-cycled materials in its operations.

Indeed, waste means unnecessary ex-pense. On one hand, waste means exces-sive use of tesources such as energy andwater. On the other, waste generatescosts-costs for collecting and handling,treating and disposing.

EnYironmenaal consciousrressnrakei for a round ('.)rporaae im-age. The public is becoming increasinglyintolerant of production with dehimen-taleffects to theenvironment or arewaste-ful and polluting. A company with a"green" reputation has a more favorable

public image. Effofts at hiding poor en-vironmental practices is costly and inef-lec t i ve w i th the inc reased v ig i lance.backed by better funding, of environ-mentally conscious individuals andgroups ruch as NCOs. and cit izens'ini-tiatives.

Sarl:tions awail polluling andwasleful firms as more counlrir.sle$slate the lougher reslriclionson pollulion and resource use. [nmany countries. companies are beingmade to rectify damage done to the en-v i ronment in the pas t , such as c lean ingup land contaminated by pollutants andtoxins. These mean more costs, includ-ing legal costs. Among recent examplesare Shell (Britain). which was fined 1 Mpounds for polluting the river Mersey,and Wheeling Pittsburgh Steel (USA),

which paid $ 1.6 M for violating anti-pol-lution laws according to Sheet.

Tcchrrologv in environmcntalproae€lion, an offshoot of en-hanted enrironmental conscious-rress worldwide, has crealed anrarkea, and cu r ren l l l - o f fe rslroundless op;xrrtunities for mak-ing monev. According to SaburoKawai, inthe same conference, manycompdnies have strucl gold developingand selling green technologyr sewage-treatment plants, solar cells, pollutron

APRrL-MAY 1995 . THE AsrAN MANAGER

Green Pastures:It Pays to Think Green

here are compel l ing reasonsfor business to adopt ecologicalprinciples and policies.

llnvirorrnrerrlal proteclion of-fers opportunilies for profils. Thedramatic rise in people's awareness ol en-vironmental issues in recent years hasspawned a market for environment-friendly products. A growing number ofconsumers are considering the effects ofa product on the environment when mal-ing purchase decisions, even if they paymore. or go a longer n ay. Tn lgo2, the glo-bal market for environmentally soundproducts and services was worth US$200B, according to estimates by the OECD,and is growing an average 5.5% a year

MarkStreet, in his presentation at theA. ia -Pac i f i c Con lerence on merg ingBusiness and the Environment, cited aclassic success story in ecomarketing,British Polvthene. [n the course of ex-ploring the possibility of recycling lowdensity polyethylene to make new prod-ucts, it stumbled, after three years and€2M of research costs, on a new prod-uct: a shopping bag made of recycledplastic. Being the only firm producingthe ecofriendly bags, British Polythenecornered the market and amassed salesand profits which transformed it from acommon plastic manufacture to one ofthe industry leaders. lndeed. pro-envi-ronment features of products such as

40

control equipment, low emission powerplants, and ecofriendly manufacturingprocesses. The business opportunities canbe categorized as follows: firstly, thosedealing with environmental degradationin both its preventive and curative as-pects, and secondly, those dealing withthe creation of a better human environ-ment.

Lucas Delattre writes in the GuardianWeekly that Germany is well ahead of thepack in the world market for "green"

products. It accounts for 277o of the totalmarket, compared with the US' 76Vo and

Japan's 13%. Some DM 6 B has been in-vested in "clean" equipment in Germanyin the past decade. A network of 1,500small and medium-sized companies servethe anti-pollution requirements of indus-tries such as in the reduction of emissionsof sulphur dioxide, nitrogen and heavymetal dust. Half of these were set uD inthe past decade.

Ecologically cons(iious compa-nies attract gtreater opportunitiesfor expansion. Investigating of the en-vironmental profile of a company is be-coming more common in corporate takeo-vers, mergers, and IPOs. Moreover, somemajor insurance companies require cer-tain environmental data or features priorto coverage. The possibility of liabilitiesthat could incur costs or damage the com-pany's reputation is not encouraging. TheFleet Factors case in the US. 1990. offers alesson for banks around the world to bewary of the environmental profile of acompany.. Fleet lent money out to a cli-ent firm and took land as collateral. Whenthe client defaulted, Fleet foreclosed andtried to sell the land. They discovered thatthe Iand was contaminated with hazard-ous waste. Fleet was subsequently or-dered by government to clean up thewaste and shoulder the costs for thecleanup, according to Street.

Holistic ManagementHow can business manage the envi-

ronment to its advantage?The environment is a complex system

of highly interconnected parts. A changein one component of the total complexaffects the entire system. Hence, meas-ures intended to protect the environmentshould be planned as holistic, multi-fac-eted concepts. Unid imensional , e .9. ,

THE ASIAN MANAGER . APRIL-MAY 1995

purely technological, measures to solveenvironmental problems lead in rare casesto success, and mostly to a dead end.

At the core of a holistic approach toenvironmental problems is an environ-mental management system which in-cludes measures for environment reha-bilitation, support of authorities, environ-mental monitoring, environmental edu-cation for personnel, and conduct of eco-friendly production and trade practices.

An environmental management sys-tem requires a firm to set up an environ-mental policy. The policy must be rel-evant to the firm's business activities andthe effects of these to the environment. Itmust describe which of the company ac-tivities are covered by the system. Onceformulated, the policy must be commu-nicated and implemented throughout thecompany as well as made available to thepublic.

The implementation of the systemnecessarily implies organizational adjust-ments. The firm must have staff who canimplement policy, examine and track en-vironmental problems, take action tosolve these problems, and act in emer-gency situations. In Germany, legislationhas institutionalized the post of an envi-ronmental officer, in charge of implement-ing environmental policy. In other coun-tries, there is an emerging trend to changethe office and function of the CEO, to thatof a CEEO, or chief executive and envi-ronmental officer.

Likewise, the firm must have environ-mentally-oriented personnel. Towardthis, there should be opportunities for thestaff not only to increase their awarenessof the environment but also to channelsuggestions for environmental policiesand procedures. Further, the staff shouldbe motivated to work in an environmen-tally oriented atmosphere.

The company must also understandits effects on the environment, by exam-ining three key areas: first, communica-tions from people with an interest in itsenvironmental effects. These includecostumers or the general public, local au-thorities, pressure groups, staff, statutorybodies, and investors. Second, the actualor potential environmental issues relatingto business activities, including possiblecontamination of land, emissions to aiq,discharges to water and other wastes, useof resources, and other effects such as

noise, smell, dust and the appearance ofthe building, among others. These dataare gathered and kept in an environmen-tal effects evaluation and register system.Third, legislation, policies, and codes orpractices relating to the environment.These data can be systematically storedand accessed through a register of legis-lative, regulatory and other policy re-quirements.

Audit your practieesThese three sets of information form

the basis of a firm's statement of environ-mental objectives and targets at all levelsin the organization. The objectives andtargets are contained in an environmen-tal management program which showsthe following: a)how the firm intends toachieve its objectives and targets; b) thestaff responsible for the various tasks; andc) the resources needed. The plan is keptin order to allow monitoring of the envi-ronmental management system-whe-ther it is being followed, effective, orachieved.

The program and the records of itsimplementation provide the basis for anenvironmental management audit, theprocess by which a firm checks the sound-ness of its environmental managementsystem. The audit checks whether actionscomply the its firm's environmental plansand whether the results meet targets andobjectives. Hence, the audit analyzes re-source use, waste generation, health andsafety, and a host of environmental prob-Iems in every aspect of the business-manufacturing, supply, research and de-velopment, design, packaging and impacton the community.

The audit is a way of finding out whatthe company is doing right so it can buildon it, and what it is doing wrong so it canbe corrected. It is likewise a tool for com-paring the short-term cost of correctivemeasures against long-term gains.

Indifference to the environment canbe costly..It is not only a bottom line is-sue. It can mean the difference betweenthe success or failure of a company, andthe survival or extinction of the humanrace.

Prof . Benjamin C. Bagadion,lr. is a member of theDeaelopment Management Program Core Faculty.He teaches o course on enaironment deaelopmentand management in the Master in DeaelopmentManagement (MDM) progrnm.

A 1

T-tor the past 25 years

fi management literatureI conectly pointed outth€ greater importance of Ef-feciiveness-Doing the RightThings-over Efficimcy-Doing Things Right. Yet in thefield of man's scarcest re-source-time, three genera-tions ofbooks upon books ontime management had focusedon "working harder, smarter,and faster" How ironic thatthey continued to emphasizeefficienry.

The Checklist Generation.The Appoinhnent Book Gen-eration. The Planner and Or-ganizer Generation. These gm-erations have led us to gettingmore in less time. Yet why isthere a lingering absence of in-ner peace. a feeling that ondsquality of life has not im-goved?

Dnter thc louthgpneradon

We need a better way, onethat retains the strengths of theprevious generations, elimi-nates their weaknesses, andcreates quality-of-life results.In Filsf lfttn8s Frlst Stephen S.Covey help us focus on qualityof life by designing a fourquadrar\t time managementmatrix shown below.

Quadrant I represenb ac-iivities that are both "utent

and imporhnt " suchas emer-gmcy situatiors and deadlines.They quickly point out thatmany activities get into this

quadrant due to procastina-tion, lack of planning/direc-tioIl or the temporary thdll ofovercoming crisis sihrations.

Quadrant II is "important

but not ugent." This includesactivities that would improveour quality of lifq but we finddifficulty allocating time for.Developing meaningful rela-tionships, for example, fall inthis category. Time spent herewill in due time shrink ourQuadnnt I.

Quadrant III includes ac-

Quadnnt II? The best place tolook is Quadrant IIL

Developlng our owrrmf,trlx

Before we construct ourown Time Management Ma-hix, we must take stock ol our-selves. Our mahix requiresan anchor upon: a) ft:lfillingthe four human needs to live,to love, to leam, and to leave alegacy and capihlizing on theircombined capacities balance,synergy and "the fire within"

among these roles;4. Creating a decision-mak-

ing framework for the cornhgweek that eliminates QuadrantIII to give way to Quadrant II;

5. Exercising Integrity in themoment of choice; and

6. Evaluating the past week.

The bect and thebrlghtadt ln the filo$r

Having had the privilege ofreading beforehand Covey'sThe Seoen Habits ol Highly Et'-fectioe People and Principle-Caiercd kaduship,I can read-ily conclude that First ThingsFirsf is the best of them all.Written in plain language,Covey rehrms us to the basics"What am I living my life for?"and in a non-condescendingway instructs us step by stephow to get to where we wantto be, and to have a genuinequality of life.

Management principlesand techniques are applied tolife itself. We manage life, notconhol it.

It is a Why book. I(s aneasy read, but a painfii one aswell. Be prepared to reexam-ine what you believe in, whatprinciples you follow, whatyour philosophy in life is, andwhat you consider to be qual-ity-of-life. It exposes the false-hood of modernday hang-upson "quick fix approaches, coFton candy plea-sures attachedto the Urgency Addiction, andpopcom solutions."

ItisaHowbook. This is nota book for bedtime reading butone for doing and for genuinereflechng. Invest time, yourheart and soul your mind, andyour total being when you takethe iourney that the book pro-vides. This is a ioumey to abetter, more fulfilled You.

Ptof. Enrico C. Angtuaco is a memberofthe corc laculty Df the Mistet in Man-agement (MM) Program. He speciolizesin statistics,quaflLitatioe analysis,ma -agement games,probleft 0t1d decisionanalyses, and cotllpuf et arylicaliofis.

tivities that arc "ugmt but notimportanf to us. Perhaps im-portant to someone else, ormay iust appear to be irnpor-tant. Thus, the name: "the

phantom quadrant."Quadnnt IV contains ac-

tivities which in reality are notworth doing. They are rnerely"tirne wasters."

Where then dowefind thetime to do the activities in

to energize us; b) Searchingand incorporating the "true

north" life principles: Needtime tb develop and grow,Cause and Effect, etc.; and c)Understanding, developing,and fuily utilizing the four hu-man endowments- Self-awareness, Conscience,lnde-pendent Will, and CreativeImagination-that truly leadus toward the "hue north."

Having established whowe are and what we would liketo be, we now take a joumeythat requires a healy investingof the self. The process in-.cludes:

1. Cornecting one's anchorwith Vision and Mission;

2. Identifying one's variouslife roles;

3. Selecting Quadrant II,the "important but noturgenf'goals in each role and establish-ing balance and synergy

IMPOBTANCE.URGENCY MATRIXNot

z

I{dsos.Pressino Probloms{€rdlin€-drivonproiocts, nettirg6,propraotioos

t l. Prepantion. Pieveilion.Pl.nning. Rel.tionship building. True rccreation I. Empowarment

fll. h0nuplions, sono phono crlk.So$o ndl, sofio npoft. Sora ftrtinls. M,ny pmimrb. po$ino naftls. M&y Pqulr .clivirs

tv. TriYia, busyrvo*.Jonk mail. Som! phone calls. Iim€ wlstors. -Escapg" oclivites

a APRIL-MAY 1995 . THE ASIAN MANAGER

The Asian Manager Fax Suraey

Name (optional)

Nationality

l, lVhere does your companv source parts and components no* ?(Please indicate percentage mix---c.g. Japan-l0%; Philippines40%; Asean-sO%)

Local (Philippines)NIE's (Taiwan, HK Korea)

% Asean (lncl. Sineapore)-%US/North Ame ca

qalar�at\

vo9o

%EUOthers

sourcing ofparts and components for your products2. Five vears from now (by Year 2000), how will thelook like? (Please indicate percentase mix)

Local (Philippines)NIE's (Taiwan, HK, Korea)EUOthers

% Asean (lncl. Singapore)% US/North America%Japan%

%7aEA

3. Where does vour company

Local (Philippines)

sell/markel rour producls now? (Please indicate percentage mix)

NIE's (Taiwan, HK, Korea)EUOthers

_% Asean (Incl. Singapore)-%US/North America

7"%qa%]apan

EA

4. l'ive vears from norr', what do you think vour markea will knk like? (Please indicate percentage mix)

Local (Philippines)NIE's (Taiwan, HK, Korea)EUOthers

7o Asean (lncl. Singapore)% US/North Anerica

_%-%

valoJapat7a

5. a. llas your compony ever imporled paras/componenls ulilizing C[PT-AF'TA?Yes No Do not know

b. llas your companyYes

ever exported products utilizing CEPT-AFTA?L \ O Do not know

c. When vour compan! tries to import/export utilizing CEPT-AITA, what problems do you encounter?Pls. specify.

6. May we ask aboul your plans for ahe fulure (bv the Year 2000)? Please check appropriate space.

Will expand operations in your countryWill relocate to otherASEAN CountriesNone of the above

Will expand operations in ASEANWill expand outside of ASEAN

7. lvhat management issues do vou think ahat AIM should address 1o the Asian Managers regarding AI"TA?

Please f ax your answerc to: Prof . Mai Kondo, Fax No. (632) 817-9240.

THE AsrAN MANAGER . APRrL-MAY 1995

Don't miss the plane, AIM grads !

AIM is plotting a course to network all of the alamni numberingover 22,000 in 58 different countries. If you want to be on thatflight,

be sure to accomplish the form below and FAX back immediately.

- - - - - - - ' t

ATTENTION: ALuMN! RELAroNs oFFrcEFax No: (63-21 A17924O

Name of Passenger

Nickname Birthdate

Program(s) / Year

Marital StatusHome Address

Home Phone

Company

Position Dept./Division

Business Address

Tel. No. Fax No.

Industry ProductAny News? (personal or career)

ffi#�"mp,#Eugenio L6pez Foufdation

IT'S TruE AIM AruuxlPnOTITED FRoM SHTnEDBUSTNESS OppoRTur\rTrES

Dear AIM Alumni,

I see so much strength in AIM-its Alumni, its Boards and its Faculty, yet we're not even scratching the surface to usethis strength-a strength others would give their right arm for.

Let me not bore you with how Asia is growing. You know Asians are beginning to trade with Asians as never before,

and every western company wants a foothold in our neck of the woods.

But few have a network they can tap into. \[hom do they see when in KL or Taipei? Vhere can they get some real

information in Manila? How can they meet a potential JV partner inJakafta? \ilho can they acquire or merge with? Whom

do they trust and where best to buy services from?

A Filipino friend wanted to sell parts of a sugar mill to foreign buyers; preferably Indonesian; another friend wanted

to explore the feasibility of starting a CD-ROM drive factory in Asia. The list goes on and on...businessmen wanting to buy

or sell or invest, and needing an introduction.

AIM's alumni is sitting on center court with its nerwork-and we are not capitalizing on it. Isn't it about time we did?There is away. The first step is to start a Business Opportunities section in Tm Asnn MrulecrR. And we're

starting one right now-this very next issue. It's simple, Send us the product or service you'd like to introduce to other

alumni. \fle'll put it in this new Business Opportunities section, If you need a partner or want to select among distribu-

tors in another country, or want to simply buy or sell, let us know. We even encourage "jobs wanted" and "jobs needed"

information. Ve'll be contacting major recruitment agencies to report what's availableout there.

To make it easy for you, we've included some sample ads on the reverse side. The basic introductory rate is US$55

f.orhalf a column inch (approximately 57 mmby I2.5 mm) and US$95 for a full column inch (57 mm by 25 mm).

Let's make this classified Business Oppornrnities section in Tm Asnn MrulecrR a success! Send me your copy

material-whatever it is you want to buy, sell, trade or invest in or broker. \[e'll billyou later.

P,S,Do look at a sample page overleaf, and send us details of your products or service today.

Sincerely,

L-

YOUR AIM - VISA CREDIT CARD. Apply for a local or international AlN,4 VISAcredit card and benefit from having theprestigious VISA card. Be an AlN,4 So-cial lnvestor! A percentage of al yourAllvl VISA purchases wil l go to the devel-opment of a wor d class, electronic Al[,4Information Center that you can use. Call8924011 ext 3441275 and ask for Vina.

FREE SPRINT FONCARD. Biggest sav-ings on in te rna t iona l ca ls when youtravel. Get it now for freel Limited timeo'1er. Ask for app icalion fo.m v a pager141 258765 and leave your name andphone or fax number Or cal 843'3118and ask for Bern e

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TOTAL OUALITY SURVEYS. Organizea survey in your company to measuretheex le r t /o rec t ron lo lQ ma^ r fes la t ion .Contact me for a SPSS-based statisticalmultivariate analvsis. Prof. Purba Rao -892401 1

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WE WANT TO BUY YOUR ASSOCIA-TION OR CLUB DIRECTORIES. 1995 D -rectory of Purchasing l\,4anagers, RotaryClubs, etc. Original or photocopy okay.f,4ake nice n easy money. Please call843-31 18 and ask for N ck or leave nameand phone EC 141-258-765.

CORPORATE GIFTS, PREMIUMS, PRO.MOTIONAL GIVE-AWAYS. Disk holders,mugs, caps, fshirts, bags etc Great sav-ngs. Call 865-682 or Fax 895 6973 Attn:N4argot L nsangan.

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"HOWTO WORK A 4-HOUR DAY" LIVEA MORE FULFILLING LIFE by wor\irgess hours but accomplishing more. Writeyour name, address , phone and faxnumber and fax to 893-3341.

SPECIAL TAILOR-MADE BUSINESS DI-RECTORIES FOR SALE. Do you want toreach your market directly? You can havea directory of yo.ur target market printedout on mailing label form, hardcopy, ordisk (e.g Ctos. residents o[ erclLsivevil lages etc.) Fax your order at 895-6973or ca l 843-3118 and ask fo r N ick o rBern ie .

"HOWTO INCREASE YOUR CHANCESOF WINNING IN THE LOTTERY." Aspecial report and study of winners in theUS state lotteries where the Phil ippine loftery is based Special t ips. Interestingstories great for speeches, cocktailparty talk, or if you really want to increaseyour chances of winning in the lotteryl Toget your copy now send a check ormoney order for P77 payable to Wind-ward International Corp. l\.4CPO Box 2759N,4akati 1267, l\.4etro N.4anila. lvloney BackGuarantee.

aLU[[r-PtoFESSOn$ESSAGES

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CANYON WOODS 300 sqm at P4700.Great view of Taal Lakel Call 893 3107/721-4473.

ROYALE TAGAYTAY MEMBERSHIPSHARES for sale. Save P37.000 off regu-lar price. EC 141-128-765, Atdy

HOUSES IN THE UNCONGESTEDSOUTH European style houses for justP1 M at the brand new La l\.4area (devel-oped by N.4B Vil lar, Inc.) Get a free infor-mation kit Fax us at 895-6973.

MINDANAO PROPERTIES (1) 3 ,111s q . m . a l o n g N a t i o n a l H i g h w a y t oCagayan de Oro City fronting l l igan Bay.(2) 4.5 hectares inside l l igan City near Na-tional Steel Corp. Clean tit les. ContactTess del Rosario, AlN,4 892-4011 est 323.

lousE Fon nE[l

BAGUIO. House fo r ren t (o r sa le ) inBaguio City. 5 rooms; separate toilet andbath; two dining rooms, sprawling gar-den. Call 892-4011 ext. 323.

ALABANG. Brand new house in AyalaA abang. availabre August 1. 1995. Fourbedrooms, den, swrmming poo l . Te l -ephone line. ldeal for EXPATS Call 892-401 1 ext 323.

rnavEl a[D vacallo[s

THE ASIAN MANAGERSUBSCRIPTIONS. Buikava lable. Save moneyand ask for l\,4 l l ie Ferrer.

GREETINGS! To anyone I have ever hadthe priv lage of teaching: I hope you arein f ne health, economrcally successtul,and on good terms with your local incometax authorit ies. am sti l l alive too. Bestwishes. Bing Azanza.

EXPEGTATI FATTENS

FREE GIFT for your expectant wifel Sendname and address of your pregnant wifeor someone who you know is pregnantand she'l l receive a free gift. Fax yourwife s or friend's name 895-6973 or call843-31 18 (l\.4alu).

REDUCE YOUR STRESS...TAKE AVACATION! At,.. BORACAY

SAND CASTLES BORACAY. Beach-kont. spacious bungalows. Tha; reslaurant, Lounge area and Cafe Bar, water-sports facil i t ies and adventure tourTelefax Manila: (632) 823-27 25Telefax Boracay: (632) 892-0357

CORPORATEsubscriptions

Cal 892-4011

Want to advertise in the AIM Exchange? Contact Vanessa Jaballas at 8924011 ext.355

46 APRrL-MAY 1995 . THE AshN MANAGER

merica's strategistsare at sixes and sevens. At issue: horv to

chart the United States'moralcompass. Repeatcdlli rve in-teNene in a hosi 0f nations-Bosn ia , Rwanda, Somal ia ,Haiti-to redress gravc hu-man suffering. To date, our re-sponses have been uneven,r,ithout any clear-cut guideIines for engagement.

There are also mixecl sig-nals on the trade front. Firstthe Clinton administrationexerted high handcd tacticsu'ith China. To the chargin ofmanv l ibera ls , the Whi teHouse Iatcr recanted its hardline, electing to delink tradefrom human rights. In doingso, the Pres ident pu rsuedthe"cons t ruc t ive engage-ment" logic of the Bush ad-ministration-arguing thatmore, not less, foreign tradewas the best lvay to promotehuman r igh ts . No doubt ,Washington's about-face rvastempered by the r.recd forBeijing's support in defusingNorth Korea's nuclear ambi-t ions , in reconc i l ing theSpratly IsJandsdispute, and inaddressing the fate of HongKong. But President Clinton'sstops and starts confoundedmany nonetheless.

In another rvidelv publi-c ized inc ident , the Whi teHouse delivered three sepa-rate appeals for clemencv tothe Singaporean governmenton behalfofMichael P Fav the'18-year

old American con-victed ofvandalism. The four-

month sentence, rvhich in-cluded four l 'hacks to thebackside, rvas, in Mr. Clinton'srvords, "a mistake." Yet manyAmericans, in their vearningfor lau' and orcler, endorsedSingapore's solution and be-moaned the Presiclcnt's re-sponse in fact, three out offour Americans l iving in thestedle but crime-ftee cilv,statehailecl the court's decision.

To confuse matters further,

Krvan Yel', non' Singapore'ssenior minister, hat'ing scn'ecl31 vears as prime minisitr, ad-nonished the Clinton admin-istration for its "missi0nar\)

messiarric zt'al" anrl l larnedthe United Staies that it could"find itself all alone in the Pa-cific."

In a posi-Cold lvar \\ orld,Wa sh ing ton can no longerblindlv trumpct humanitarianvirtues or pious principles anci

r' ..{:.,

must addrcss its consistent at-tempts to es tab l i sh a h ighmoral tone. For example, l'ctook an aggressive posturc inChina, n'hile ignoring similar

prob lems e lsc rvhere . The\{hitc House rvas disgrace,fullv siltnt on Turker', clcspiteiis rvell-cl0cumenierl hisk)ryof torturing ancl cletaining itsKurd ish rl inoritv. Similarhithrcc najor recipients of U.S.mi l i ta rv p r0 tcc t ion Sor . r thKore,r, Saudi Arabia, ancl Ku-\\'ait hale reprcssecl peaceiul opposition parties with nocrit icism from !\hshington.

Bep orrd peaee

Besidt's thtst inconsisten-cies, thcre is the rnort'scriouscharse of hvpocdtical postur-ing. Manv foreigntrs u'onderh()!r thL. Lrnited States can ut-te r i t s sa nc t in ]on iou s p ro-nounccn]ents on humanitar-ian issues rvith all 0f its diff i-culties,rt homc. When outsid-ers lt l lok.it the Urited Stat!.s,they clo not sce solutions tothornv human problems, butinstcaci behold a societv iornapart by yiolent crime, fail ingschools, rveak families, and increasing i l lcgit imacv. High-profi lc shootings, acts of ran-dom violcnce,and courtroomdramas capturc internationalheacll irres. Thanks to satell i tetclc'r'ision, elob,rl images fJasho l Tonva Hard ing , JoeyButtafuoco, the l lobbits, theMenenclez brothtrs, and O.J.S impson. Shou ld u 'e sur -priscd that manv ioreignersask: On rvhat moral groundscan thc United States offer ad-\,icc k) the rest of thc world?

Richarci Nixon, .rrguablvth t dean o f fo re ien po l i cv

severa i la rgc Pac i f i c Bas incountries*Japan. China, Ma-laysia, and Australia chas-tised the White House for itsmora l i s t i c meed l ing . Lee

Irr u pusl-(\tlrl IIitr trorlrl.l'Ltt.s h i n g'I o n ru t r r r t o | ( )n g'(, r b I i r u I l.t' trt u r r pe Ilumtun i luriurt t:irl ttr'.s or. pi(ilt.s \tr.fu tr.iple.s.

THE ASI,\ \ MA\ A.I I? . APRIL-MA\ ]995 17

T'o manJr f-[.5. multinationals,big hrotherism is usrong- headecl.

These firms refuse to impose U.S. laboryenuironmental, or human rights standards

on their ouerseas operations.

among our post-World War IIpresidents , may have said itbest. In his final book, BEondPeace, he warned Americansthat "other nations couldthreaten to isolate us unlesswe do more to improve livingconditions in Detroit, Har-lem,and south central LosAn-geles."

Ihenoh ethias

Business, for its part, isequally confused about its rolein providing moral leadership.As part of the shareholderrevolution, U.S. based activistsare exertin8 Pressure onAmerican multinationals tofight the good fight abroad.This year, shareholders arevoting on various ethical is-sues ranging from Unocal's in-vestments in Burma toAT&T'smaquilndoles operations inMexico, from bans against to-bacco companies in the ThirdWorld to corporate divest-ment from Haiti.

Yet many U.S. multina-tionals argue that the wayother countries conduct theirbusiness is none of our busi-ness. To them, big brotherism

48

is wrong-headed. Rather thanpractice "cultural imperial-ism," these firms refuse to im-pose U.S. labot environmen-tal, or human rights standardson their overseas operations.

Conversely, a growingnumber of altruistic MNCsfeel obliged to adopt the samekinds of laws and ethical prac-tices abroad that are normback home. Anything less, intheir view, cheapens the forceof democratic capitalism. Aleading spokesman under theU.S. constitution."

Human Rights Watch, aprominent rights group urgesAmerica's employers to adopta voluntary but uniform codeof conduct-agreeing not touse products made by prisonworkers, to discourage politi-cal indoctrination in the work-place, and to encourage theirexecutives to discuss rightsabuses with local govern-ments Yet, most firms preferto develop their own stand-ards. For example, LeviStrauss & Co.'s "Guidelines

for Country Selection" pro-hibit the company from usingor selling products made byGulag labor, underage work-

ers, or in unsafe or unhealthywork settings. In the last twoyears, the apParel maker hassuspended sourcing fromChina, Burma, and Peru be-cause of their persistent hu-man-rights violations.

Reebok Intemational, Wal-Mart Stores, Dayton Hudson,Motorola, and Walt Disneyfol low simi lar guidel ines."The issue is not whether U,S.businesses should be over-seas, but how they oPerateoverseas//' says Dough Cahn,Reebok's human-rights direc-tor. "It's about U.S. companiesstanding up for a set of prin-.ciples." Nevertheless, the de-bate over "which principles"continues to confound manyin the executive suite.

Looking ahead

In the closing years of thetwentieth century, the UnitedStates is recognizing the lim-its of superpower status. Weare discovering that attemPt-ing to exert Westem ideas oncountries whose cultural Pref-erences lie elsewhere is likepushing a string. Hence, anynotions of high-minded ideal-

ism must be tempered withhardheaded pragmatism.

Whether in business orgovernment, we should selectour moral initiatives carefully,on a case-by-case basis. "Since

societies and situations diffet"says National Security Advi-sor Anthony Lake. "we mustperceive in each case the mosteffective strategy to achievethe greatest results."

This is not to suggest thatAmerica's business and gov-ernment leaders should back-pedal on social injustices/ norput profits ahead of principles."If there is to be moral leader-ship in the world, it will haveto be provided by the UnitedStates, " says Andrew BardSchmooklen, author of TheParable of kibes: The Problem ot'Power in Socinl Eaolutiorn. In theyears ahead, moral interven-tion will require clearer crite-ria-coupled with a greatercommitment to fix our short-comings at home. .l

Daoid A. Heenan , a frequent contributorto Business Strategy, is a Trustee of theEstate of lames Campbell in Honolulu,Hawaii. Reprint ed by permission from theauthor.

APRIL-MAY 1995 . TUEASIAN MANAGER

n 1982, I made a study onthe dressed chicken mar-ket, together with a "quick

and dirty" survey on the mar-ket potential of chicken prod-ucts in the fastfood market.The results of the dressedchicken study simply vali-dated cunent knowledge, butthe/nsf/ood survey results sur-prised everybody, because themarket potential for fastfoodchicken products was extraor-dinarily high.

After an uneventful pres-entation of the dressed chick-en part of the studt I excit-edly proposed setting up afastfood chain that offeredvarious chicken sandwichconcoct ions and chickensnacks, and hamburger andhotdog sandwiches to cater tocustomers preferring morevariety. If proven successful,the downstream benefits tothe dressed chicken industrywere tremendous. No deal.The study proponent was al-ready a successful dressedchicken operator, and thefastfood feature of the studywas included simply to projectthe demand of chicken.

Years later McDonald'sIaunched its highly success-ful "McChicken" sandwich,followed closely by the"Chunky" chicken sandwichand popular "ChickenJoy" ofJo l l ibee. McDonald 's thenintroduced"Chicken McNug-gets" and chickenmeal, whileShakey's came out with its"Chick n' Chips" and PizzaHut with its "Szechuan chick-en" pizza. Fastfood chainslikeWendy's, Tropical Hut, Smok-ey's, Burger Machine, Ken-fucky, and newcomer Carl's Jrsoon were offering their chick-en sandwich versions. Lechonmanok (grilled. chicken) be-came a craze in the mid-80s,and the Andok's and Baliwagchains capitalized on this. Re-cent years saw the emergenceof alfchicken houses such as

Pollo Loco and Chicken Baco-lod, not to mention the mar-ket resurgence of the genera-tions-old Max Fried Chickenchain. Anytime now, the Ken-ny Rogers, Texas, and Pop-eye's chicken restaurants willmake their debuts.

The present verdict? In theP 4 B Philippine fast-foodmarket, the leading productin terms of market share ischicken.

What happened in 1982?The study proponent's mind-setwas only on dressed chick-

nomic situation prevailing inthe Philippines. Apparently,the management problemsexisting now are preventingtop executives from seeingbeyond their difficulties. Thismindset is one of turf protec-tion, or the maintenance ofmarket share; very reactive,with only faint signs of pro-activity.

To their credit, however,once I had hammered out a 6-7% economic growth rate sce-nario and the totally differentplayingfields it can create, the

P150,000/sqm. Finally, Asia'sbiggest real estate deal-FortBonifacio- of P 38 B (USg 1.6B) was considered by manyFilipino businessmen as toohigh a price. Cive it just oneyear, and should the Philip-pines grow at 6-7% now andat higher rates in the years tocome, the pro jec t shou ldprove to be a bonanza. We seehere aga in the mindset -mindtrap of the present atwork.

Proactivity means goingbeyond the present. It needs avisualizing of situations undermore probable assumptions,then deciding under thoseconditions. Is there a risk? Inbusiness, there are alwaysrisks. Although strategic andproactive decisions may meangoing out on a Iimb, just keepin mind that the limb is wherethe fruit is. If proper planningis done and the execution ofthese plans are given atten-tion, the limb can be made tobe as thick as the trunk andrisk is highly minimized. Onthe other hand, planning forthe fufure under present con-ditions creates a l imb thinenough to break should com-petit ion adopt an agressiveand proactive stance.

Speaking of hees, there isa song that goes "Rock-a-bye

baby, on the heetop. When thewind blows, the cradle wil lrock." The winds of changeare sweeping the world, par-ticularly Asia. If businessmenare too engrossed over thepresent and do not adjust fastenough to emerging changesand ride on its crest to see or

-even create future changes,the cradle-to-grave conceptmay literally be actualized.

Prof. lesLts G. Gfllltgos,lr. is lhe SanMigutl Corporntion Prot'essor 0t I ter dti'nflL Entrrlri! Delelapfitnl nl th(Asinn lnstihLtt olMnnngtwnt, u,ltrc hehas h:e

n hlllime prot'.ssot t'or the pasl17 rlenr;j. Hc is alsa thc Ch1tl n atdPrtsidtlll of tfu Asian Co s lttng andTramirtgCrouT,.

en, their "bread and butter"product l ine. Chicken sand-wiches and snacks were yearsahead of their time and werenot part of the formula forsuccess. Ironically, the propo-nent has now entered thefastfood market, over a decadeafter the idea wasbroached tothem, with chicken as themain product.

In numerous strategy for-mulation workshops I haveconducted, the mindset mind-trap paradigm of present suc-cess formulae frequently sur-faced. Worse, the assumptionssupporting this thinking werebased on another mindtrap ofthe present: the current eco-

executives in these workshopsimmediately switched from apessimist ic and react ivemind-set to one that was op-timistic and proactive. Realestate exarnples helped in thisswitching of mindsets, suchas what used to be P600/sqm(in an exclusive subdivision)became P6,000/sqm as soonas the economy improved.Wi|Jl. 6-7% growth rate pros-pects at present, this sameP6000/sqm area recently be-came Pl5,000/sqm in ayear's time. What was soldfor what was considered topbucks then in Makati's finan-cial district for P72,000/sqmtwo years ago now sells for

THE AsrAN MANACER . ApRrL-MAy 1995

ver since the MexicanCrisis, n'hen thc Mexi-can pcso and the Mexi

can Stock Erchange (Bolsa)

declined bv more ih,rn fi l ivpcr cent in raJue, the emer€i-jng market countrits of Asiahave stronglv and in our opin-ion rightlv argucd that thevare n0 t "another Mex ico . "Thev mcan that their economies are no t " the sameIVIexico" in terms 0f tradedeficits, short-tcrm foreignborrowings, and polit ical in-stabiliiv

We argue that thcir causewould be beiter servecl if thevfocused on the ManagementFactor in the Mexican Crisis.Cont ra rv to the preva i l ingview thnt ihc Nlcxican Crisisarose ()ut of the economic con-d i t ions o f the M er icaneconomy and could havc bccnavoided, we argue otherrvise.

In fact the Mexican Crisisdid not arise out of the eco-nomic condiiions or cven tireeconomic policies ol the Vexican governmcnt. These eco-nomic cond i t ions and eco-nomic policies remain basi-callv sound dt'spite the crisis.I lather the crisis could havebeen avoidccl if not for the er-rors in management of thc

-

'l'he FinaneetrIinislers of,lsion utuntriesmust be the moslprudenl und moslrepont;ihb of men.

Mer ican F inance Min is ie r .Based on nt.rvs rcports as rvellas from talks r^,'ith a visitingprofessor who is con\,ersantrvith the inner rvorkings of theMex ican government , wchavcpicced together the seriesol managemcnt errors com-

50

-,q.$:.r

mitted by ihe Mexican gor.e rnncnt espec ia l l v the F i -nance Minister.

7. The Mexicqn 1teso, uulikeAsion cwrencies,utns fixedby theCe ttql Bark.lt is usuallv de-valucd drastically cvcry sixvears . Th is deva lua t ion isdone bv the outgoing FinanceMinisier so that the incomingFinance Minister and incom-ing President are spared thepublic blarne. In this case, theincoming F inance Min is te r

serves. But tht' Mexican Finance Ministet in a shorv of"machisrno," decided to cle-value u ithor.rt the neccssarvntoneLtry reserves.

3. Moreo\,et to protcct for-cign investors rvho alrearlyinvestc'd in Mcxico and sol.ould lose in a cievaiuation,the comnon practice is for iheFinance Minister to inform theinvestors of the impendingdevaluation so that ihcy couldat least minimized their iosses.

trading itt Metican bonrls(tesobonos) or inresting inMcxicsn stocks (Telefones deMefico) to at least explairr theactions of the Mexican gor.ernment. Treasurers of privatecompanits routinclv do so asthese brokers are like a herdofclcphants. When thev siampede, they cmsh elervthing inihtir r,ake. The Mexican Finance Minister chose t0 throwa firebomb in their midst.

lVhat is cvcn more amaz-ing about these blunders istha t thev \ \ 'e re commi t tedover a period of onlv 17 daysfrom his formal takeover to hisuuceremonious f i r ing bv apanic-stricken Prcsident. Onseconc l thought , i f N ickLeeson, t r Bar ings t rader ,couJcl singlehandedly destroya ventrablc Brit ish merchantbank over a shori period oftrvo l 'eeks, a Finance Ministct eYen one with less ma-chismo and more prudence,can destrov a vibrant economvbv a single act.

Based on tire foregoing, wervould therefore .rdVise thatthe best \\ 'aV to prevent thcVerican Crisis from adverselyatfecting ihe Asian economiesis b strcss that Finance Minis te rs o r Secre tar ies o f theAsian countries must be themost p ruc lcn t and mostrcponsible of men. While be-ing rveli versed in economics,thev must also be highlv ef'fectir,e rnanagers rvho care-fullv implement rvell-thoughtou t economic dcve lopmentplans. Thev must cautiouslvcraft contingent programs todealwith all eventualities, andmust already have been suc-cessful in managing ihe sud-den crises that unfortunatelvno\r crupt unexpectedlv inthis global economy.Pr1) l f l l l / , r r J . L l l i : : r t l is th. Lt rl r , r , , i , r t i ) , l i )df inr f , , i Errr l r l .s i Mf i,r{f rr,,J1. I /f t'.1 itli:fs i,r rrnrt.trrrt, fir , r , r11. l , ! l l ! l r r ts ut .1 i tu l | \ t n ld t lubl t lf r ' /J , r r ' ! . 11 f , .nrr t , l1 ' . i rn, f l r r r , rJ i l , ri.,rj,Jl1 l..f .i ilrf D.r.l.lrrr' t,\tnrn{., t t r t Pni lh i l I t tDMl)) l tu l t l ln .

\. PROFESSOR VICTOR S., LIMLINGAN

clecided to do the dc'valuing(after all, the Mexicans coinedlhe ierm 'tnacho").

2. To furthershon,his "ma-

chismo," tlrc Mexican FinarrceMirister decided to deualuetttithout the necessary back-upreser"es, The kev to success-fullv devaluing a currencv isthe abil ity to say that ive dcr,alue bv 12'i l and onlv bvl2"r. If rve cannot b.rck this r.rptht'n thc pcso bccomcs subjcctt0 attack bv the speculators.The speculators can be de-terred onlv bv a massive showof fo rce , i . r . . monetarv re -

In thc particular case of thisFinance Minister, he assurtdthc foreign business commu-nitv that thcrcl 'ould be. Naturallr', tolrer the dexaluationu,as nntounced the foreigt in-ustors lelt betrayed. Moreo-ver, thev could now no lonp;crrelv on his $'ord that the de-valuation n oultl onh'be 12li.

'1. Har,i lg antagonized theforeign business communitvin Mexicir, tlrc Finnnce Minis-ter then assured thc detasto-tio of the Mericqn ecouontrlby refusirtg to talk to the for-eign bond ond stock brokers

APRrr- MAY 1995 . Tr{E AsrA\ MAN^CER

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