Dealing with Cultural Impacts on Communication - Essay Example

Dealing With Cultural Impacts on Communication Table of Contents Table of Contents 2 A Brief Background on the IKEA 3 Introduction 4 Theoretical Framework 5 Going Global as a Theoretical Framework 5 Culture Differences as an Issue Impeding IKEA’s Entry into the Spanish Market 6 Cultural Dimensions that Affect Performance of a Firm 7 Conclusion and Recommendation 12 References 13 A Brief Background on the IKEA IKEA Group is a global retailer dealing with Swedish designed home furniture and accessories (Lim, Pirsiavash, & Torralba, 2013). Today, the company has established its food label. IKEA understands that in the current market, success is greatly dependent on producing goods and offering services that have good value for money. The company produces goods that have an impeccable design, good quality, and function and sells them at a considerably low price. In the mid-2000s, IKEA was the global leader in the ‘flat-pack’ furniture business (Cayton, 2006). At the time, the company was generating revenue that amount to over 21.5 billion euros per year during which time it had the biggest market share in the UK (Wei & Zhou, 2007). Currently, IKEA operates around 301 stores in over 35 countries. Most of the stores are in Europe, Asia, North America, and Australia. This billion dollar company was founded in 1943 by Mr. Ingvar Kamprad (Edvardsson & Enquist, 2008). It is owned by Stichging INKGA group although the company is partly controlled by the founder’s family. INKGA group is a charitable foundation registered in the Netherlands. The company’s main competitors include Argos, Asda, Next, Debenhams, Tesco, and John Lewis (Moon, 2004). Introduction There exist many ways through which companies can gain a competitive advantage over other companies. With the current economic uncertainties in the market, it is critical that companies get to engage in activities that will ensure their continued success in the market. Since economies from different part of the world are failing, one thing to do to ensure that a business is not affected and can stand the test of turmoil is to spread risks. In other words, most companies are not putting their eggs in the same basket. This means they are promoting their brand through establishing stores in as many countries as possible. One of these companies, and one that this paper will be discussing in detail is IKEA. As put by Porter, sustainable competitive advantage is one of the most sought after things by companies today (Porter, 2008). It requires that a company ensures that its level of profits are maintained if at all the company aims to be sustainable. As stated by Christopher (2012), “the most profitable competitor in any industry sector tends to be the lowest-cost producer or the supplier providing a product with the greatest perceived differentiated values.” This is, however, affected by important factors such as culture as will be discussed below. The issue of communication is an important issue when it comes to the operation of a firm. In essence, it requires good communication when it comes to any success of a company. There are various issues that affect how smooth communication in a company should be. For those that operate in international markets, cultural issues are the most prominent. As has been the case of IKEA, communication has proved to be imperative an issue as far as the establishment of a new store in a different country is concerned. This paper will use IKEA to explore the impact of cultural differences in communication and performance of an organization. Theoretical Framework This study did use primary data in conducting the research. The reason is that first-hand information is crucial in understanding of the two different cultures. Still, secondary data was used to come up with an exhaustive paper. The sources use are related journals to back one perspective in the theoretical framework. Every piece of information on the paper comes from published journals. Apart from that, the data used was crosschecked with other existing research to ensure that it is credible and valid. Several people have developed theoretical frameworks in a bid to offer explanations to the way businesses that have gone global can ensure that they operate smoothly and can stay sustainable. For the case of this research paper, IKEA is an international organization that has stores operating in over fifteen different countries. Since the country wants to operate in nation different from where it was founded, it is crucial that the owners of the business know whatever they are walking themselves into in terms of different cultural beliefs. This is because such beliefs affect how people respond to goods in the market. This framework works well in explaining how the IKEA should consider entering the Spanish market better than other profit and value driven theoretical framework would work. The reason is because what affects the entry to the market is more of culture limitations than anything else. Going Global as a Theoretical Framework How a company does business with another country considering both have different norms is important in understanding how a company does fair in the international market. In the case of IKEA, it is imperative to know how it operates as that way, the company can be in a position to establish healthy relationships with people in the host market and, therefore, realize profits. The main problem with most countries that decide to make their operations International is that they ignore acting ‘local’ whenever they go ‘global’. IKEA is one company that believes it is critical to act local while going global. This framework will be essential in establishing a good work environment for IKEA. Culture Differences as an Issue Impeding IKEA’s Entry into the Spanish Market Culture, as had been mentioned earlier, is an important part of the success of any business. For IKEA to achieve the level of success it has attained today, and, in fact, maintain that level, culture is one thing that has to be put into quite some perspective. Aristotle is one of the scholars who did study the differences between people in terms of their cultures and drew very interesting differences (Vaisey, 2008). He described that people who lived in warm temperatures were more intelligent that those who lived in cold areas. Nonetheless, they are less heroic than those who live in cold environments. Since his simplistic description of people’s cultures, other scholars have come up with different theories and models in regard to different cultures. Such differences are noticeable (or not) in family cultures, company cultures, national cultures, and functional cultures that are sales versus marketing of an enterprise. The global environment is growing exponentially. It requires that corporations and multinational organizations consider the ever-increasing global environment differences and cultural difference becoming daily concerns that need to be addressed if at all the multinational organization are to carry on with their operations (Moran, Harris, & Moran, 2011). The company in this discussion is clearly a fast-growing multinational that is expanding operations in the international market. The company sells products along with its culture. Its blue and yellow image has become a recognizable trademark in the countries it operates in. To be able to maintain sales and stand up to the competition in the market, IKEA considers paying attention to the cultures of the countries it has established markets in. This is notable in how the company prioritizes on employing employees from that foreign market as it understands that it is one of the best things to use more people from the local market. The reason is simple, employing the locals gives the market a feeling that they are a part of the community and that the company does value them. It also boosts sales as the employees understand better how to deal with people in the local market as they are part of the society. While the company has to ensure that it considers the culture and the custom of the local people, it still has to establish its presence in the area through bringing their own values with them. To be able to do this, the company has to understand the different cross-cultural theories that Geert Hofstede, Edward T. Hall, and Fons Trompenaars developed. With this due diligence phase of cultural analysis in place, strategies that help in approaching the different cultures have to be developed and implemented. The basis of the essay is to discuss some of the cross-cultural approaches, while keeping IKEA’s cross-cultural management of operations in Spain. This will act as the paper’s fundamental measure of the theory that the company has put in practice. Cultural Dimensions that Affect Performance of a Firm The discussion will be guided by several dimensions developed by scholars mentioned above. The theory that will go first is Hofstede’s. The reason for discussing the theory first is that it relates to the others. Hofstede (2011) looks at four dimensions namely power distance, masculinity versus femininity, individualism versus collectivism, and uncertainty avoidance. The analysis of nations is done through the administration of questionnaires and interviewing the people and, then, the countries are ranked based on their scores. The score is determined as low, medium, and high or any other variation that falls between any two of the three scores. Hofstede had maintained that to have proper and valid findings; it is crucial to have a constant organizational culture and then study such standards in different nations. Power distance, as in the case of IKEA and any other company, is how any given society deals with inequality. In this case, if a country recorded a high Power Distance Index (PDI), it shows that the state or the community supports differences among the citizens (Ho, Wang, & Vitell, 2012). This inequality is notable among employees. On the other hand, states with low score have its citizens enjoy parity. High PD areas have select privileged power holders, acceptance of inequality, a need for hierarchy, and extremely high dependence among the employees. In such a society, change does not come quickly expect for the case of a revolution as there is heavy turnover, entrenchment of power holders, and acceptance of others. Unfortunately, even the leaders that replace those removed from power maintain the status quo. Low PD cultures, on the other hand, have a hierarchy for the case of convenience. Such cultures have equal rights for everyone, superiors are more accessible, and there is remarkably small dependence needs among the people while compared to the high PD cultures. Changes that occur in such areas only occur as a result of evolution. All countries that IKEA operates in have Sweden with the lowest PD score (at 31. Spain, on the other hand, sat at 57 which is the highest PD. Something else that is worth mentioning in regard to PD is the fact that leadership styles are crucial as they relate directly to PD scores. The first style of leadership, “tells”, is found where the PDI scores in the culture are very high. In such areas, leaders make decisions and then announce the decisions to their subordinates. The “sells” type of leadership is found in cultures where the PDI is mid to high where the leaders make decisions and then try to convince the subordinates that they are the right ones. Mid to low PDI cultures have the “consult” style of leadership and the leaders consult their subordinates before making any decisions. Areas such as Sweden have the “delegate” mode of administration (Bock, 2012). Individualistic societies are said to be the “I” cultures which are self-centred people who care less about other people but themselves. Again, Spain records very high levels of individualism. In case of masculinity, Sweden scores the least meaning that gender parity in the area is respected. The main difference between masculine societies and feminine societies is that the fore is centred on high earning potential and recognition. They also place high emphasis on the opportunity for advancement is coupled with the feeling of challenge and accomplishment. The opposite of these qualities relate to the socialization as known to the world. This socialization demands that feminine societies have values such as the quality of life, caring for others, and solidarity are those qualities only found in women (Brownmiller, 2013). For this reason, women are focused on healthy relationships, and they will, therefore, seek good working relationships with their supervisors. They will also seek cooperation with peers, job security, and, of course, live in a desirable area. Spain and Sweden record very many differences in this area (de Sivatte & Guadamillas, 2012). The most important part of taking such difference into considerations and, in fact, the reasons why they matter is that they affect attempts to motivate employees. The last dimension, uncertainty and avoidance, relates to trust where those countries that score highest in the area reflect the lowest trust (Li et al., 2004). These cultures tend to enjoy seeking consensus, avoid failure, are fearful of conflict, tend to exhibit high anxiety levels and stress. Such areas have people who are prone to displaying their emotions in public. In those areas where the culture of the people is non-expressive are more willing to take risks and believe that conflicts are a fair play. They appear stress-free and relaxed. In such areas, the people are prone to drinking too much so that they can be able to express their emotions. This issue affected IKEA’s informality and unconventional solutions in that the Spanish were less willing to accept them. This forced IKEA to introduction more structure so as to meet the new Spanish employees’ natural inclination. Dealing with the issue required the company to recruit a Spanish HR manager who would better understand what was expected. The cultural beliefs of different people are critical in running any business. In Arab countries, the people believe that, to feel the connected to whomever they are talking to, those talking should be at a distance where they can feel each other’s breath and sometimes their saliva (Endrass, 2013). These non-verbal cues are crucial in running a successful business. In Spain and Scandinavian countries, people feel relaxed and willing to talk if they have about a meter or more between them. If either of the persons edges closer to the other, then the other person’s steps back a little and there occurs a misunderstanding. It is likely that one feels that they are being ignored. In some areas, that is, international space is more important than in others. While this may seem quite subtle, buy it affected how IKEA operated. To deal with the communication ‘barrier’, the company seeks to employ local people as they understand what is expected of them. Something that is of importance to the paper, and an issue that IKEA was concerned with, is how it would deal with the differences in the cultures of the different people. To be able to address the issue was crucial in restoring the confidence the customers have on the firm. With time, the understanding IKEA developed on the functioning of the communities in terms of their cultural inclination helped address the problem. Something else that IKEA had to deal with was the concept of time for the two main cultures. High context cultures are said to be polychromic. In other words, they are known to do more than one thing at a time and are less concerned with being prompt. Such behavior allows them to transact more but fail to keep a schedule. This culture tolerated missing of meetings as long as the person stated that they were in another (Lear, 2012). Probably they were not. The low context cultures are known to be monochromic. They typically finish one thing before moving on to the next. They are the very opposite of the high context so they are prompt and break time in small parts so as they can achieve efficiency. Spain, again, seems to be inclined to the polychromic side and are, therefore, the least concerned with schedule and keeping time (Adams & van Eerde, 2010). IKEA exhibited an informal and loose method regarding structure but are more time-conscious as they are monochromic. This discussion shows quite some limitations that existed when IKEA was moving to the Spanish market. The firm’s Swedish culture, nonetheless, helped the company significantly with the move. While there are numerous cultural differences between the two societies, the consensus-seeking Swedish culture allowed for an easier transition. A good example of this is the adoption of the more structured management approach. From the start, IKEA set out to establish a smooth transfer of culture from the Swedish and the Spanish to the Swedish managers so that the operation of the firm would be high in both countries. Conclusion and Recommendation The paper has outlined how differences in the culture of a people affect a successful establishment of a firm in a foreign country. To be able to address the problem, a company should put its culture and the local culture of the people at the forefront. This way, it becomes possible to sell the company and to have it become a success. In response to the situation IKEA is facing, and in order to make sure that the profitability of the firm is not limited to areas where culture of the people is ‘favourable’, the company can consider setting seminars that can foster the two sides’ discussions. This can help address frustrations that eventually cause personnel turnover. 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