International Joint Venture for Kellogg Company - Case Study Example

International Joint Venture for Kellogg Company and Wilmar International Limited Culture plays an important role in determining the success of a business, most especially if such a business is operating internationally. Therefore, culture is definitely an important factor in determining the success of an international business (Gannon, 2004:21). The operation of an international joint venture takes the form of two distinct business organization coming together to form a collaborated entity, where the two organizations can share the stakes of the organization starting with 50:50 share to any other ratio they might deem suitable. Therefore, the formation of an international joint venture does not only raise the issue of the cultural conflict between the business and the community where the business operates, but also a cultural conflict between the cultures of the two organizations that have come together to establish the international joint venture (Cardon, 2008:19). The formation of an international joint venture creates a hybrid organization that is run based on two distinct cultures of the parent organizations. Therefore harmonizing the different organizational cultures of the two parent organizations forming the joint venture into one culture that defines the business entity formed is a major challenge that the management of an international joint venture must face (Morrison, 2009:47). On the other hand, streamlining the culture of the international joint venture established by the two distinct organizations to fit into the culture of the foreign or international community that the joint venture seeks to serve is another major challenge that the management of the international joint venture must face (Cardon, 2008:20). Thus, the success of an international joint venture is based on the ability of the management to harmonize the cultures of the two parent organizations into a hybrid culture for the joint venture, and then incorporating the customs, traditions and cultures of the community that the joint venture seeks to serve into the business vision, mission, strategy and practices. Kellogg Company and Wilmar International Limited established an international joint venture in China in 2012, which sought to serve the Chinese community with breakfast cereals and snacks (Kellogg Company, 2012:n.p.). The joint venture that was established between Kellogg and Wilmar was launched in China on Sept. 24, 2012, where the two food processing companies entered into an agreement to share the stakes of the new joint venture at a 50:50 ratio (Kellogg Company, 2012:n.p.). The newly formed joint venture , under the name of Yihai Kerry Kellogg Foods Company Ltd, ventured into the manufacturing, distribution and sale of Savoy snacks, cereals and snacks to the Chinese community (Kellogg Company, 2012:n.p.). The international joint venture between the two multinational companies has been established on the basis of the food experience and reputation held by Kellogg Company on the one hand, and the extensive infrastructure held by Wilmar Company on the other hand (Kellogg Company, 2012:n.p.). In this respect, Kellogg Company was expected to contribute its portfolio of globally recognized cereal and breakfast snack brands, while also contributing its wealth of experience in the manufacture of the cereals and snacks (Kellogg Company, 2012:n.p.). On the other hand, Wilmar Company, which holds a wealth of experience in both the Chinese and the wider Asian market, was set to contribute its wide distribution channels and the extensive supply chain network in the supply and distribution of the globally popular Kellogg brands (Kellogg Company, 2012:n.p.). This way, the two companies complemented each other in the creation of an international business empire that would combine the advantages of the two global companies to offer efficient cereal and snacks delivery to the Chinese community. The operation of an international joint venture in China is a daunting task for many business organizations. This is because, China, as opposed to any of the western countries or other countries from different regions in the world, has a deep-rooted business culture that is interwoven with its traditions and customs (Boontanapibul, 2010:61). Therefore, it is essential that a business seeking to serve in the Chinese market must fully understand the Chinese traditions, customs and ritualistic cultures. These cultural practices cannot be separated from the business environment, if a business organization is to succeed in serving this market. The culture of family and community is a very strong aspect of the Chinese culture, when compared to the Western individualism culture (Boontanapibul, 2010:54). Therefore, while negotiating for business deals between Kellogg and its Wilmar counterpart, the community and family culture must play an important role in defining the work ethics of the newly formed joint venture. This is because; the Chinese society values the family and community association to a larger extent, such that the business decisions made are also based on this culture. The Chinese workforce will place the family and also the needs of the community before their individual needs, such that if the work pattern conflicts with the family or the community needs, the Chinese workforce might not prioritize the work responsibilities. Therefore, it is essential for the international joint venture serving in China to ensure that its work practices, ethics and responsibilities are in harmony with the Chinese family and gender roles culture, for the workforce to be fully productive (Hofstede, 2001:33). All the business and the work decisions are centered on the family values, which is a traditional concept that was developed by the Confucian traditional and still persists in the modern day China. The Confucian concept stresses on the importance of the family as the prototypical model of how the society should be organized (Yuan, 2012:7). This concept therefore develops the Chinese culture of inequality between people, where there are certain people that can play certain roles, in which others must not engage. This conflicts sharply with the western culture of equality, where the whole workforce is deemed equal regardless of the roles played by the individuals within the organization (Morrison, 2009:53). Thus, in China, the workforce is not likely to be highly independent in decision making, since the hierarchical culture still plays an important role in shaping the work environment. Therefore, the management of an international joint venture is likely to play an increasingly bigger role in defining the direction, practices and mode of operation of the business, compared to the Western work environment. The western working culture is characterized by employees taking initiative to improve on the work practices as the employees may independently deem necessary. Another cultural issue that is likely to face the Kellogg and Wilmar international joint venture in China is the issue of luxury versus the essentials of life, where the Chinese culture is that of working to meet the essentials of life as opposed to the luxury culture of the West (Guan, 2008:17). In this respect, it is not difficult to find the Chinese working environment concentrating on more hours of work and little vacation and off duties, as opposed to the USA and Western culture of work, where leave, off-duty and short hours of work form the fundamental factors that define the suitability of a workplace for the western workforce (Beamer & Varner, 2009:45). Therefore, the international joint venture is likely to face the conflict of balancing between hard and long working-hour culture of the Chinese workforce with the legal requirements for the conducive work environment in China. The Chinese economy is in the most profound stage of transition into a global economic giant, which requires that the country should work extra hard to sustain the momentum of transitioning the Chinese economy into a global giant that it has proven to become (Guan, 2008:29). The nation needs to prioritize feeding its over one billion people, and thus any aspect of laxity in the work environment or the focus on luxuries for the workforce or the organization will not be taken kindly in China, despite the fact that this is the working culture of the USA and the West. Further, there is a widely held misconception that China is a monolingual and single-culture society where a monologue cultural adoption will suit the whole of the Chinese community. However, this notion may result in a business operating in China to fail miserably, due to the fact that China is a multicultural society that consists of over 15 language and cultural groups, all of which value different customs and traditions (Boontanapibul, 2010:72). Therefore, it is imperative that the international joint venture operating in China must distinguish between these multiple language and cultural groups, understand the cultural practices, customs and traditions unique to each group, and thus articulate the business practices to meet the uniqueness of each group (Boontanapibul, 2010:77). The major difference between these cultural groups is that; while all of them are able to write and read in Chinese, they may not be able to communicate effectively in the same language. Consequently, there is a need to understand the basics of communication for each of the diverse cultural and linguistic groups (Cardon, 2008:22). Culture is a concept that is linguistically and dialectically transferred, which then means that each of the over 15 linguistically diverse cultural groups in China will present different cultural biases (Boontanapibul, 2010:72). Thus, the area where the international joint venture operates is an important consideration that needs to be made, such that the unique dialectical and cultural customs, practices and behaviors need to be incorporated in the workplace operations are reflected. Dual culture is yet the other major issue that the international joint venture operating in China must be prepared to face. While the culture in the Chinese Capital of Beijing, as well as the other major Chinese cities is modernized and thus reflective of the western or globalized culture, the culture in the Chinese rural areas is barely exposed to other global cultures (Guan, 2008:31). This puts China in the rank of the most challenging business environment, owing to the fact that a business operating in China must be prepared reflect both the global and the rural Chinese culture simultaneously. However, the Chinese traditional rural culture is much closed, such that permeating it with diverse cultural practices is a difficult task. The food culture is primarily a custom that does not change in the Chinese rural areas, meaning that it would not be easy to permeate the region with the western foods (Boontanapibul, 2010:63). Despite the fact that generally, the Chinese culture of hospitality and friendliness is widespread throughout China, there are certain aspects of politics, religion and personal belief that must be left out, if the generosity of the Chinese people towards the foreign culture are to be sustained (Yuan, 2012:10). This therefore requires that the international joint venture serving in China must strictly adhere to both the political and religious outlook of the workforce and also the community which it serves, to avoid conflicts that might develop a hostile business environment for the joint venture. Additionally, in order to achieve the success of permeating the Chinese culture with other cultural foods, it is required that some temporary yet very fundamental compromises must be made by the joint venture management, so that the overall outlook of the joint venture is a family and community serving enterprise, as opposed to being an enterprise that focuses on meeting the individualist tastes in foods (Boontanapibul, 2010:64). It could be important for the joint venture to sustain a food culture that could also meet the diverse tastes of individuals since the food tastes are different, especially in the Chinese capital where the culture is largely westernized and globalized. However, the focus should be different for the rural society. The international joint venture must therefore develop strategies to cope with the limitation in individualistic independencies in food tastes, for the sake of reflecting the wider family and communal food interests, if the business has to succeed in China (Cardon, 2008:35). The gender diversity also needs to be incorporated as an important aspect of the international food joint venture operating in China; due to the fact that the appearance of women in China matters equally as does the food they consume (Yuan, 2012:12). Thus, certain adjustments in the nature of the food products supplied by the food joint venture must be primarily targeted at suiting the tastes of the Chinese women, whose definition of beauty is thin and slim body shape (Guan, 2008:33). The food culture of the international joint venture requires reflecting this value and attitude, so that it can be interpreted as a business culture that is oriented to both gender needs. Maintaining face is yet another important cultural aspect of the Chinese tradition, which requires that no one should be insulted, shamed or disgraced (Boontanapibul, 2010:51). Thus, for an international joint venture that seeks to serve China with a different food culture, it is important that all aspects of the business reflects the status of the people seeking to be served, and seeks to protect their image. Even at the point where the negotiations do not seem to be fruitful, it is important to allow the Chinese side of the negotiation to bring the negotiation to an end, in a manner that will not leave the delegation embraced, but rather sustain their image and ensure that the face of kindness and generosity culture of China is maintained (Cardon, 2008:23). Further, the business negotiations require being undertaken in such a manner that the image and status of the negotiators on the other side remains protected, even if the deal might not be sealed. This simply means that the western culture should not be applied in a manner that demeans the Chinese culture, food tradition or practices. Simply put therefore, the introduction of the cereals and snacks that the international joint venture between Kellogg and Wilmar seeks to offer, should not be seen as an attempt to replace the Chinese cultural foods (Guan, 2008:26). Rather, the introduction of the food brands by the joint venture should be done in such a way that it seems to complement the already available Chinese snacks and breakfast food with the cereals and snacks. This can be achieved through introducing other new brands that reflect the Chinese culture of food, as opposed to selling only the Kellogg’s and Wilmar foods that are representative of foreign cultures. The Chinese culture is very sensitive to the food packaging and presentation, especially in regard to the honor of the Chinese traditions and beliefs in food service honor (Yuan, 2012:8). Therefore, it is not only the nature of the food, but also the mode of design of the food packaging and presentation that matters for the international food joint venture between Kellogg and Wilmar that is serving the Chinese market. The mode of serving of food can represent either honor or dishonor, and it is imperative that the food joint venture should present its food brands as portraying honor to the Chinese culture and beliefs (Boontanapibul, 2010:67). In this respect, the concept of cross-cultural management of the joint venture is essential, so that it can enable a broader understanding of the food presentation culture and beliefs of the Chinese people, which should then be incorporated into the joint venture food presentation design (Cardon, 2008:36). Cross-cultural management is also important to ensure that the joint venture will integrate both the traditional western culture of the Kellogg Company foods with the traditional Chinese cultural food knowledge of the Chinese managers, making it possible to produce a food presentation and design culture that will suit the Chinese context. References Beamer, L. & Varner, I. (2009). Intercultural communication in the global workplace (4th ed.). Dalian: Dongbei University of Finance & Economics Press. Boontanapibul, C. (2010). Doing Business in China: Cultural Factors, Start-up Concerns, and Professional Development. Bangkok University. Cardon, P. W. (2008). A model of face practices in Chinese business culture: Implications for Western businesspersons. Thunderbird International Business Review, 51 (1), 19-36. Dicken, P. (2010). Global Shift: Mapping the Changing Contours of the World Economy. SAGE. Gannon, M. J. (2004). Understanding global cultures: Metaphorical journeys through 28 nations, clusters of nations, and continents. Thousand Oaks [u.a.: Sage Publ. Guan, X. (2008). Face and facework in well-meaning clashes: How Americans manage face threatening acts in intercultural communication. ProQuest. Hofstede, G. (2001). Cultures consequences: Comparing values, behaviors, institutions and organizations across nations. Thousand Oaks, Calif. [u.a.: Sage Publ. Kellogg Company. (2012, September 24). Kellogg Company And Wilmar International Limited Announce China Joint Venture. Kellogg Company News Release. Web. December 10, 2014. < http://newsroom.kelloggcompany.com/2012-09-24-Kellogg-Company-And-Wilmar-International-Limited-Announce-China-Joint-Venture> Morrison, J. (2009). International business: Challenges in a changing world. Basingstoke [England: Palgrave Macmillan. Yuan, W. (2012). Intercultural communication and conflict between American and Chinese colleagues in China-based multinational organizations. New York State Communication Association. 1-19. Read More