Trying to Do Business in Mexico - Case Study Example

? Case Study – Trying To Do Business in Mexico, Gringo Style Overview of the Case This case comprehensively examines the presence of cultural issues in management that are often observable in scenarios where foreign managers are assigned the responsibility of successfully commencing business operations in a country that they are largely unfamiliar with. The scope of the case primarily targets Ted Dorman, who has been assigned the designation of a plant manager at a newly established American-Mexican joint venture titled, SterMexicana, located in the city of Guadalajara. As plant manager, Ted’s superiors in the United States expect him to fulfill certain corporate objectives during the course of his two-year assignment. These objectives primarily focus on enhancing the cost-efficiency of the company by reducing labor costs. Upon his arrival to Mexico with his family, Ted is greeted by his assistant plant manager and cultural mentor, Manuel and he promises Ted that the plant would become operational within two weeks. Eventually, the operations at the plant commence five weeks after the scheduled date which causes Ted to lose his trust in Manuel while, Manuel considers him too insensitive and impatient. As tensions between Ted and Manuel continue to grow, the efficiency levels at the plant continue to drop. Believing in the idea that cultural issues share no association with efficiency, Ted proposes three recommendations to address the problem including the dismissal of low performing workers and the implementation of an incentive-based pay system and a participative approach to decision-making. When the proposed schemes do not yield desired results, Ted realizes that Manuel did not fire five of the workers that should have been dismissed, and as a result of the differences in the labor laws of Mexico and US, the workers that were dismissed would be entitled to a severance pay. Feeling frustrated, Ted contemplates his future at the company and thinks that perhaps his criticisms of Mexican culture were indeed valid. 2. Discussion Questions 2.1 What mistakes did Ted make in his management of SterMexicana? The most fundamental mistake that Ted made in his management of SterMexicana is related with his convenient assumption and misguided belief that falsely led him to believe that his managerial expertise would transfer successfully to Mexico without the emergence of any significant issues. Therefore, during his time as the plant manager of the firm, Ted failed to acknowledge the cultural dimension of management in the formulation of appropriate strategies to address business problems, in his dealings with the company’s suppliers, and also in the decision-making process. For example, when Manuel showed interest in introducing Ted to the culture of Mexico, his reluctance in doing so was evident by his impatience to discuss more significant matters that were related to the business. By refusing to understand the dimensions of the country’s national culture, Ted ultimately developed recommendations and strategies which could not yield ideal results for the business. This observation corresponds with the analysis of Newman and Nollen who state that the financial performance of an organization is dependent upon the extent to which the management practices of a firm are in congruence with the national culture (753). When Ted did not demonstrate an interest in Manuel’s discussions of Mexican culture he was in fact ignoring valuable information that could have helped him in achieving his goals and formulating strategies for reducing SterMexicana’s labor costs. As suggested by Marchese in comparison with a highly individualistic U.S culture, the culture of Mexico is characterized by the presence of collectivism which is an aspect that emphasizes upon the significance of maintaining and valuing social relationships as members of a group (131). Ted’s implementation of a flexible working hours plan contradicted with this element of Mexico’s national culture because employees continued to favor their family matters over working for more hours in order to gain financial benefits. Another mistake that was made by Ted was that he did not familiarize himself with the labor laws of Mexico as a result of which he was unaware of the requirement of creating a severance package for the employees. 2.2 Is Manuel responsible for any of the difficulties presented in the case? It is evident that as Ted’s Mexican counterpart and cultural mentor, Manuel did not effectively play either of his roles. As an assistant plant manager, Manuel’s job responsibilities encompassed assisting Ted through the process of the launch of SterMexicana. However, as a subordinate Manuel failed to inform Ted about current issues and problems such as the delay in work permits that led to the subsequent postponement of plant operations and increased the financial burden of the firm. Moreover, Manuel’s insubordination is depicted by the fact that he did not dismiss five of the employees who were not performing their duties effectively. As an assistant manager, Manuel should also have informed Ted regarding the labor laws of Mexico to guide his future actions; however, he chose not to do so. According to Atkinson, Crawford and Ward, managers can effectively utilize culture to establish a control mechanism within the organization (695). In contrast with national culture, this element is associated with the development of organizational culture which is defined by the workers’ attitudes and behaviors towards key areas of business activity and operations. As a cultural mentor, Manuel’s discussions with Ted were largely focused on an assessment of the national culture of Mexico and a complete ignorance of the firm’s organizational culture. Atkinson, Crawford and Ward assert that the organizational culture informs a manager regarding the employees’ attitudes towards planning procedures and managerial practices (695). However, Ted’s unawareness on this matter led him to believe that a flexible working plan would succeed in the organization. Even though, Manuel was upset over Ted’s decision he failed to convince his superior and guide him towards a better alternative that could have been the difference between the success and failure of Ted’s strategies for improvement. 2.3 What should Ted do now to correct the situation? The relationship between culture and management practices is highly complex and multidimensional therefore, it is unfavorable for managers to assume that tested managerial policies of a particular nation can be successfully transmitted to another culture (George, Kuye and Onokala 18). In this scenario, Ted should launch a systematic framework to solve current issues by identifying the nature of the Mexican employment relations system so that its principles can be harmonized with the American foundations of managing labor relations matters. This recommendation essentially highlights the significance of finding a commonality between American and Mexican views of management. Ted should continue to maintain his incentive-based pay system for it has increased the performance of workers who are motivated by financial gains and benefits. However, the flexible working plan should be discarded because its ineffectiveness is suggestive of the Mexican cultural component of collectivism. Mexican workers value family bonds and social relationships therefore, it is unlikely that any non-financial incentives would encourage them to work longer hours. At the same time, Ted should ensure that the participative management scheme which was previously proposed but not implemented at SterMexicana is executed. The study conducted by Pelled and Hill, which focused on assessing the impact of applying participative management techniques on fifty-four manufacturing firms located in the North of Mexico found that the execution of such practices coincided with higher employee performance and lower rates of turnover (197). This research therefore, outlines the possibility of the success of participative management practices in a firm such as SterMexicana as it is also a production facility where worker performance needs to be enhanced in order to reduce labor costs. Works Cited Atkinson, Roger, Lynn Crawford, and Stephen Ward. "Fundamental uncertainties in projects and the scope of project management." International journal of project management 24.8 (2006): 687-698. George, O. J., Kuye, O. L., & Onokala, U. C. Culture and Management Practices are Siamese Twins: The Case of Employee Relations Practice in Nigeria (Cadbury Nigeria Plc) and the United Kingdom. Marchese, Marc C. "Matching management practices to national culture in India, Mexico, Poland, and the US." The Academy of Management Executive15.2 (2001): 130-132. Newman, Karen L., and Stanley D. Nollen. "Culture and congruence: The fit between management practices and national culture." Journal of international business studies (1996): 753-779. Pelled, Lisa Hope, and Kenneth D. Hill. "Participative management in Northern Mexico: a study of maquiladoras." International Journal of Human Resource Management 8.2 (1997): 197-212. Read More