International business environments
International business environments are rapidly changing and “the cause of yesterday’s success may be the cause of tomorrow’s failure” (Kim, 1999). Every country or region has a specific culture which is due to similarities in religion, language, beliefs and values. This could result in a “cultural challenge for international management” caused due to varying cultural features of different countries (Harris and Moran, 1996). Managing people from distinct cultures requires knowledge of their distinct value systems, traditions and the manner in which they perceive goals and strive to achieve them.
These differences could lead to specific problems in a local or regional (host) companies in which strategic policies are drafted by the management of the parent company without considering the specific local or regional culture of the people. In the globalized world, the customer shares a central position which necessitates the understanding and prioritizing of local markets. It is therefore vital for managements of multinational corporations to understand the varied cultures within which firms choose to operate and function.
Products and services in addition to management styles need to be adapted to suit the needs of the society and culture of the specific place. Since culture provides “a sense of belonging” to people
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Culture can be explained as a specific way in which groups, tribes or a collection of people from nations or regions live and function according to particular behaviors and attitudes which have been passed on from generation to generation by social institutions including families, educational systems, governments and business entities. Culture includes several aspects which shape human behavior such as “conscious and unconscious values, ideas, attitudes and symbols” which make every culture distinct from the others (Kim, 1999).
Cultures in similar geographical locations or regions have “unique cultural heritages” which shapes values and directly influences the manner in which business is conducted in particular regions (Kim, 1999). Researchers have studied that this regional or national variance in cultures and communities dramatically impacts several core business issues such as “goals of the firm, attitudes towards risk, dealings with employees, and the ability to curtail unprofitable operations” (Kim, 1999). Culture is the “collective programming of the mind which distinguishes the members of one human group from another.
Culture, in this sense, includes systems of values; and values are among the building blocks of culture” (Hofstede, 1984). It can therefore be affirmed that a culture is specific to any particular group and influences the behaviour of the members of the group. Culture is behaviour which is passed down from generation to generation and includes a system of values, beliefs and behaviours. If the culture of a particular group can be understood, it becomes easy to predict the behaviour and preferences of that particular group or culture.
Cultures are generally particular to one specific group or native belonging to a country and it is pre supposed that Australians, Chinese, Indians or Nigerians are distinguished on the basis of their distinct national cultures. However, cultures may be national and local. For instance, in a country like India, the national culture will embody the beliefs and traditions of all Indians, however, there may be different local cultures functioning alongside the national culture.
Another example of a national culture with several subcultures is Nigeria, which has more than hundred ethnic groups. This obviously affects the level of relevance to the decision making process and if the culture of a country or ethnic group can be understood, it is possible to predict the behaviour of that specific culture or community. Every country or region has a specific culture which is due to similarities in religion, language, beliefs and values.
This could result in a “cultural challenge for international management” caused due to varying cultural features of different countries (Harris and Moran, 1996). Managing people from distinct cultures requires knowledge of their distinct value systems, traditions and the manner in which they perceive goals and strive to achieve them. These differences could lead to specific problems in a local or regional (host) companies in which strategic policies are drafted by the management of the parent company without considering the specific local or regional culture of the people.
This paper aims to analyse the importance of the regional or cultural dimension in the success of organizations through personal history and experiences of Australian culture in order to develop the reflective ability to question, critique and evaluate individual values, assumptions and beliefs in relation to the Australian cultural values, assumptions and beliefs. Experience As a human resource manager in a company in Thailand, I was given the task of managing a project.
The policies and programs of this company were flexible with regard to change and communication, implying that the organization did not believe in the policy of permanent retention of employees. I was aware that permanent employees deliver stable and steady performance. However, since the company policies supported change, I was required to change my employees continuously until the completion of the project. Another reason why the company preferred employee change is due to the different projects which necessitated different characteristics and requirements from employees.
Thus, I was responsible for recruiting employees suitable to the particular project. The company displayed complete flexibility in their employee change plan and employees were changed if the customers were dissatisfied with the staff and did not find them suitable for the company welfare and progress. Research confirms that focus on client’s needs and requirements enables employees to better understand their work which has a positive impact on customer satisfaction (Trahant, 2008). “Putting the customer first” is a common company policy in business, and many organizations has a strong focus on customer satisfaction (Trahant, 2008).
Additionally, the Thailand Company in placed great importance to informal rather than formal communication due to the belief that formal processes of communication impede rapid responses. As such, the employees of the company were not required to report to supervisors, rather to any person they wanted to as long as the communication was speedy and relevant to the company process. For instance, an employee in the marketing department could report directly to the project manager and it was not considered necessary for the marketing employee to report to the marketing manager.
I gained experience working at the Thailand Company headquarters for about a period of five years following which the company decided to expand its business to Australia and offered me the position of a Human Resource Manager at the Australian branch. Since I did not posses knowledge and experience regarding the Australian culture, I discussed with the company CEO and voiced my concerns. However, the CEO confirmed that the company policies would be suitable for a variety of cultures and cultural differences should not be a cause of worry to me.
As such, I began to operate the company with policies similar to the Thailand environment. Unfortunately, my previous experiences did not prove productive in the culture of Australia and there were numerous conflicts at work. The main reasons of conflict were: ? Each supervisor felt uncomfortable when their subsidiary report information without inform them first. ? When I confronted the employees in public, they felt offended. ? The relationship between company and employees began to deteriorate which resulted in less productivity and customer satisfaction.
Analysis Businesses need to function in accordance with these cultures in order to succeed which is the reason why it is becoming increasingly important for multinational companies to trade effectively by becoming “culturally sensitive and globally minded” (Kim, 1999). I had expressed my apprehension of problems which could surface due to cultural differences and policies of the company; however, the CEO has brushed aside all my doubts and confirmed that there would be no such problems since the company policies would be adaptable to any culture or community.
My doubts were confirmed because people differ in their thoughts, attitudes, behaviours and beliefs and this has a vital impact on the manner in which organizations need to function in distinct scenarios. Research indicates that management techniques used in one nation by management teams could be the reason for success in a particular country but these techniques are “not portable” necessitating a desperate need for “cultural-specific training” in multinational companies (Kim, 1999).
Therefore it is vital for multinational businesses to “think globally and act locally” by applying and implementing business tactics depending on the culture of the country or region in which the business is placed, rather than the culture of the parent company. Global leadership entails the capability of effective functioning in a global environments and being respectful of cultural diversity. When dealing with different cultures, companies and managers need to be aware of several aspects which could have a crucial impact on the success or failure of the business. These factors include (Harris and Moran, 1996):
? Cross cultural communication entails the need to recognize self image and role in addition to personal values and expectations which are accustomed to the culture in which one operates ? Cultural Sensitivity entails the assimilation of the general culture based on organizational and personal experiences ? Acculturation entails effective adjustment and adaptation to specific cultures, in foreign lands or to a minority culture within one’s country. ? Cultural Influences on management practices entail the understanding that management philosophies are developed rooted in a particular culture due to which they may fail to transfer to another
? Effective Intercultural Performance entails the application of knowledge of cultural theory and insight to particular cross cultural organizations and situations which can have a positive impact on the performance and outcome of people. ? Changing International Business Activities entails the management of interdependent business activities globally and culturally or regionally. ? Cultural Synergy refers to the distinctions between people from different cultures and communities and how the similarities can be integrated to enrich the working system of the organization.
? Work Culture refers to the application of the general traits of the people of a particular culture of cultures to learn the dynamics of their styles of functioning at a particular time and place. ? Global Culture refers to the crucial knowledge and understanding that human culture is universal and a unique global culture is evolving with certain specific characteristics or features. Multinational corporations face the challenge of globally integrating their policies and programs while ensuring that these are adapted locally and regionally.
This requires a culturally synergistic approach to international human resource management which can be achieved by exploring the cultural diversity of the place (Hoecklin, 1995) and applying the process model of problem solving (Schein, 1999). The synergistic approach to problem solving entails three crucial in solving the problem which include the description of the situation, the cultural interpretation of the situation and the development of new solutions which are culturally creative Adler’s (1997).
It is important for managers to first define the problem which needs to be solved following which they undertake the vital task of interpreting the situation and analyzing the patterns which explain the cultural behavior. The final step involves the development of culturally creative solutions which facilitate the effectiveness and productivity of the product and the organization. In keeping with this theory, it would be required of me and the company management to draft suitable policies and programs which would be suitable and appropriate for the culture and community of Australian employees.
Schein’s problem solving model (1999) entails the formulation of a problem and generating proposals for action followed by the proposed solutions and testing proposals. The second cycle follows which includes planning of action, implementing the steps for action and the evaluation of the outcomes. However, in order to understand the needs and perceptions of people of a particular nation or region, and go about the course of planning and implementation of strategies, it is first important to understand the culture of that place.
Geert Hofstede (1980) studied and analyzed the behaviors of multinational organization staff in forty countries and formulated four dimensions on which to base the culture on a country. These dimensions include Power Distance, Uncertainty Avoidance, Individualism and Masculinity and are useful for human resource professionals to study the culture of a specific nation to implement appropriate practices for that specific culture and community (Firoz, Ahmad & Kim, 2002).
Power Distance is referred to the extent to which the less powerful members of a particular society accept the fact that power should be distributed unequally which results in unequal relationships between parents-children, teacher-student, politician-public etc. this inequality will also reflect in business corporations since it is the basis of the boss-employee relationship (Firoz, Ahmad & Kim, 2002). Uncertainty avoidance refers to the extent to which people try their best to avoid certain situations in which the outcomes or expectations are not clearly stated (Firoz, Ahmad & Kim, 2002).
People of specific cultures rank high on uncertainty avoidance and would tend to work with prefer working with people they know for instance, friends and acquaintances rather than strangers (Gannon, 2001). Individualism refers to the belief that the self comes first Griffin and Pustay (1998) and people from high individualistic cultures prefer to place their personal interests above those of families and friends (Griffin and Pustay, 1998). On the other hand, collectivist cultures place family and friends ahead of the self. America is an individualistic society while Asian countries like China and India are collectivist.
Masculinity or Goal Orientation as opposed to feminity refers to the aggressive and materialistic behaviors of humans. Finally, Long-term orientation as opposed to short term work outlook refers to the perceptions and attitude of the people on their work, life and other important aspects of society (Firoz, Ahmad & Kim, 2002). Asian cultures such as the Indians and Chinese tend to regard long term future orientations and place value on hard work, sincerity and dedications s opposed to certain other cultures which focus on the past and present (Griffin and Pustay, 1998).
Conclusion Thus, there are several national and regional factors which impact the strategies of multinational corporations which is why the regional dimension is becoming extremely important. Multinational companies are required to “think global and act local” by integrating the specific cultural practices of the country in which they choose to function, as this is deciding factor in determining the success or failure of a businesses as can be seen from the two case studies.
Therefore, organizations are required to be aware of these cultural and other factors which would impact companies and play a vital role in the costs and productivity of the business. My company had failed to take into account all the cultural factors which would impact several aspects including labor practices, cultural biases and all other crucial attributes which play a fundamental role in the productivity and success of business. The company now needs to draft a new policy and programs in accordance with the cultural needs, requirements and expectations of the employees in Australia.
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