Domestic laws Essay
Laws within each national culture need to be considered. Domestic laws will almost certainly in some way vary from one culture to another. This therefore can make it sufficiently difficult for multinational firms to operate. Many countries have restrictions on what can or can’t be traded. They can also have restrictions on where it is traded. A English bomb making factory is very unlikely to be able to supply its goods to the middle east. Certain animal trading within England is banned.
A good example of governments choosing with whom to trade with would be the united states of america who have banned all trade with North Korea, Vietnam and cuba among several others. A lot of these bans have occurred for political reasons as in this case due to the Vietnam War. However this can prove very hard on organisations as this limits potential export sales for organisations within the nation as well as the nation who has been barred. A recent example of the effects of a nation undergoing this would be Britain.
During 2001 Britain suffered greatly with disease among its beef life stock with it contracting BSE. Once the disease became out of control the export of beef was banned
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Organisations need to take into account the laws within each nation and analysis how it would affect them in terms of limitations of sales or the allowance of flexibility to operate within the firm. For example certain governments are much stricter when regulating how much waste can be provided or how it is disposed of. This would need to be taken into consideration in terms of chemical development firms or any firm dealing with hazardous material.
Now that we understand what is contained within a national culture and how it affects organisations we can look at what kind of tools are used to help aid organisations in their bid to determine between each culture and help them make correct decisions before potentially entering with its organisation. As we have just discussed a national culture includes such things as values, religion, political and so forth. However in order for organisations to understand and measure culture we need to look at research done by Geert Hoftstede. He looks at culture as being intangible and difficult to learn and he sees it imperative that international businesses comprehend the significance of the local cultures and deal with them effectively.
To help organisations Geert Hofstede therefore researched 116,000 IBM employees in 40 different countries. From this research he concluded that there were four dimensions that identified effects of national culture and how they ranked among the 40 countries. These different dimensions were as follows: (1) Power distance (2) Uncertainty Avoidance (3) Individualism vs collectivism (4) Masculinity vs Femininity Each of these factors can have clear affects for organisations considering entry into a nation. Let’s consider each of the dimensions and how they affect and aid decision for organisations.
Power distance shows the distance between inequality in power among organisations, institution and how much people expect equality in power. In terms of organisation this is related in the level of power distance between the centralisation of authority and autocratic leadership. When a society has a make up of uneven power and it is rooted into the mental programming then it is possible for organisations to operate successfully with this culture with high power distance between its workers and its management. However when a company from a country (Sweden) with low power distance goes into a country with high power distance it can cause several problems with how potential staff may adapt to the style of the multinational firm.
The firm must consider whether its style of management can adapt with the culture they are entering or whether a change of company style is needed to perform to its maximum potential within the chosen culture. As we can see in table below power distance varies greatly between countries. Here we see Sweden, Germany, and Costa Rica as having low power distance compared to that of say Mexico, India and France.
This enables organisations to therefore understand the possible company structures and power distances within the selected culture.Uncertainty avoidance however shows the means by which members of society feel uncomfortable with uncertainty and ambiguity. High uncertainty avoidance within a culture would mean that the society concerned would see the future as uncertain and unpredictable therefore increasing natural nervousness, emotionality and aggressiveness toward an unpredictable situation. These kind of societies can be termed as strong uncertainty avoidance societies (Managing organisations Hosenfeld, Wilson)
It is important within these societies that the institutions within try and create security and avoid any risk. In a low uncertainty avoidance society however accept uncertainty as something not to worry about, something that a culture can live with. Within this style of culture opinions different from their own would be considered with tolerance. Potential risks will be considered much more easily and followed through much easier as well. This kind of society is classed as ‘weak uncertainty avoidance’
Again this can affect organisations especially within their home land. Depending on the type of national that the company is within it can greatly affect how decisions are made within that organisation. It is more likely that a problem would be within a Japanese or German firm would be viewed much more differently than a problem in a Swedish company. Japanese companies more so than German are usually very reliant on low risk and uncertainty. You could class these cultures as liking their organisations to be well oiled machines. Any uncertainty will cause great nervousness and emotion. A country such as Sweden will however take the problem much more in its stride and will solve issues more calmly.
Individualism Vs Collectivism refers to the relation between an individual and his or her fellow individuals.(Managing Organisations Hosenfeld, Wilson) This again varies greatly between cultures. Looking at the table above we can see at one end of the scale that the U.S.A have a society of individuals that are very loosely fitted. Everybody within this society are supposed to take care of their own interests and maybe the interests of very close family or friends. This has been able to be achieved in cultures such as the U.S due to the sheer amount of freedom given to individuals within the society. However we can also see that cultures such as Taiwan, Mexico, Costa Rica have very close societies.
These individuals usually work together within their groups to provide protection and up hold beliefs. In an ideal world the latter is how an organisation would like to have its staff however in most cases it is very hard for companies to bring together a unit of workers with the same objectives and goals. Once a company is established it is much harder to get complete collectivism within that unit.
An example would be the makers of the computer series Championship Manager in 1990 two brothers came together with the same goal to achieve the best possible management simulation product. Over the past few years this has been achieved however now that the management series has expanded they have had to find the staff that want the same goal and that are able to work within the team(Eidos.com). The same can be said with Boots the Chemist, Jesse Boot the creator has long since died but the company continually tries to meet his goals with getting together the correct collectivism team.
A collectivism society would also expect to cared for more by its organisations than that of a less collective society. It is common place in some cultures for the organisation to provide health care, pensions, social clubs. However in countries such as Britain we have seen a great decline in this kind of organisation in the past 50 years, Boots the Chemist decline in this being another very good example. Basically a company needs to consider what a culture may expect from it. A U.S company going into Pakistan offering no care for its workers would be against the culture and provide a very bad impression among its workers who would usually expect and rely upon it
Masculinity Vs Feminity brings forward the issue of the division of roles between the sexes in that society. Every society has male and females it is just a matter of what the society in which they are in considers to be relevant to each sex. A typical task for a woman in one culture could be considered unusual in another. A company would have to consider the roles in which it engages females within the country it operates. Fire women in traditional cultures such as India would not be considered desirable or acceptable. As in these cultures women are expect to take the more caring roles of house wife.
In Britain it is an accepted career for a female to be in the fire service. Hoftstede has therefore named cultures with high social sex role division as masculine and those with relativity small division as feminine. Also masculine societies usually have the stereotypical showing off, performing; making lots of money and the thinking of big is beautiful with the public hero being the achiever. Very similar to that of U.S culture for example. Feminine society on the other hand tends to put relationships before money and quality of life before achievements. The public usually back the underdog or anti hero.
The consideration here for organisations is that they will need to consider their style within the culture they are in. Masculine cultures such as Japan, Germany, U.S will expect a successful organisation to have a little style be a very big money maker and have eventful promotional events and high publicity. Similar to that of CocaCola or Microsoft. Feminine culture will not take kindly to an organisations with loud outspoken views or in your face attitudes. Organisations will have to consider how they promote their firm and how they are likely to fit into a more feminine culture. The vice versa can be said of a feminine organisation going into a masculine culture.
National culture is certainly a topic that has cause a stir among managers and theorists for many years. We have seen researchers argue over whether it is convergence or divergence. The convergence view takes the opinion that the context of business operates independently of national culture and predominates over it. However the divergence view gives primacy to the differentiating effects of national culture (managing organisations Hosenfeld, Wilson)) Although both views have support we see that throughout the essay in my view the evidence seems to support the notion that national culture effects the way organisations work rather than the notion of all organisations becoming alike and then not considering national culture as a affect.
We can see that there are many factors within national culture that affect the way an organisation operates within different societies. We have seen the example of where McDonalds have had to change not only their marketing communication within Asian culture but they have also had to change the type of product they sold to the hindu culture to ensure success. This certainty states that some sort of adaptation needs to take place within organisations.
Organisations basically need to consider all the factors of national culture before implying entry into another culture. Looking at the four dimensions by Hoftstede would certainly be advantageous as it gives key concepts of culture across a wide range of cultures. Organisations also need to take in account legal context, political context, language and so forth of each culture as this also has great influence on an organisation.