Cross cultural management - Essay Example

CROSS-CULTURAL MANAGEMENT Introduction Culture is defined as the learned or accumulated norms that are based on attitudes, values, rules or beliefs. Culture influences daily life as well as the way business is transacted in society. Cross-cultural refers to a phenomenon that concerns or is related to two or more different cultures. My essay focuses on the article "Alibaba is breaking out of China while the rest of the world tries to break in" by Michael de Waal-Montgomery appearing on The Next Web on 22nd August 2014. Alibaba is a Chinese e-commerce firm that offers business-to- business, consumer-to-consumer as well as business-to-consumer sales services. Alibaba was founded in 1999 and has risen to become one of the largest online marketplaces in both domestic and international trade. The article focuses on the role cross-cultural practices are likely to play in the success of Alibaba in the Western market as well as other markets after dominating the Chinese market. Every country has a different culture, cultural values, and beliefs. These traits are visible in society and organizations and determine how transactions are carried out. Overcoming these differences in a new business environment is important to the overall success of the business. Cross-cultural management is involved in overcoming these cultural differences. To successfully conquer the Western market, it has numerous principles to follow for success. The article points to the difference in levels of customer service in the two markets. Americans are used to the high quality of customer service thanks to firms like Apple. Asian companies making their entry into the Western markets are not able to match these levels of customer service. Moreover, the article also argues that Western shoppers concerned about the layout of Chinese websites such as Alibaba. Perhaps reflective of the Chinese business streetscape, Alibaba's online platform has a cluttered store fonts and layouts, whereas Western shoppers are more used to minimalist layouts in online platforms. It is, therefore, evident that proper techniques in cross-cultural management will determine Alibaba's success in Western — and other foreign —markets. (The Next Web, 2014) To illustrate differences between the West and China, I will use Hofstede's six cultural dimensions. Hofstede's adopts a problem-solving approach that is pragmatic in culture management. Hofstede defines culture as a "collective programming of the mind, which distinguishes the members of one category of people from another" (Hofstede, 1980). He explains that culturally-based values systems comprise six dimensions: power distance, individual collectivism, masculinity/femininity, uncertainty avoidance, long-term orientation and indulgence versus self-reliant. (Hofstedes & Hofstedes, 2005) Comparing Western countries and China using these six dimensions according to their cultural dimension scores, it is possible to draw some tentative conclusions. First, Western countries seem to be lower (United States of America 40, Canada 39, United Kingdom 35) than China (80) in power distance. In the individualism dimension, Western countries are higher (United States of America 91, Canada 80, United Kingdom) compared to China (20). Third, Western countries seem to have short-term orientation while China is considered to be long-term oriented. America scores 26 while China scores 87 on long-term orientation. In indulgence, China has a score of 24 compared to America's 68. (Hofstedes, 2005) Among the Western countries, America is in many instances investigated as a cross-cultural society partly because of the various cultures present. The United States is considered a representative of the "Western culture." Therefore, comparing the USA and China is a representation of the cultural differences between the West and China and the accompanying cross-cultural challenges. China and the USA are different in their economic systems, political systems, social values, and laws. (Weaver, 2000) First, in the power distance dimension, China scores are twice those of the USA, which indicates that Chinese society is centralized while the USA is relatively decentralized. In Hofstede's individualism dimension, the USA has a high score indicating strong individualism while China is low in individualism, an indicator of strong collectivism. Third, in masculinity, USA has a higher value than China. The scores are 62 and 66 which indicate that the USA is medium masculinity while China is medium femininity society. Fourth, China scores higher in uncertainty avoidance than the USA, which shows that Chinese people are relatively risk-avoiding while Americans are relatively risk-taking. Last, USA prefers short-term orientation while China has a preference for long-term orientation. Cultural differences affect human behavior and thinking and, therefore, business organizations in which interactions are governed by shared values. Management derives its practices from a wider society setting and therefore, in these two different societies, the management practices will differ due to the cross-cultural differences. (Hofstede, 2005) Chinese and American societies and organizations resolve conflicts in different ways. Since the Chinese society exhibits strong collectivism and medium feminine, where harmony and personal relationship are emphasized, they opt to use indirect ways to avoid conflict. In conflict, they prefer the use of authority to deal with it, or settle it in private. They prefer conflict resolution through negotiation and compromise. Individualistic and medium masculine American managers prefer facing problems directly and in the open. To resolve conflicts and differences, American managers will prefer to use techniques that involve the confrontation with rational arguments and suggested solutions. This approach is also consistent with the short-term orientation and moderately low power distance in the USA. (Smith, Peterson, Akande, Callan, & Cho 1994) Furthermore, American managers are reluctant to invest the time and effort required to enlist the help of other people to deal with conflicts or problems with another party. In contrast, the strong collectivism and uncertainty avoidance cultural values in China encourage managers to use indirect forms to influence their staff. These forms involve the assistance of a third party. Individuals' attitudes toward cooperation are likely to be influenced by the underlying values of their society. As indicated by Hofstede's cultural score the USA is strong in individualism and a medium masculine society. Americans rely on their opinions to determine their actions. They prefer to work alone and are reluctant to cooperate with others because in their cultural view cooperation is as a sign of weakness. China is a society that is strong in collectivism and medium in feminism. The Chinese depend more on group efforts to determine their behavior and actions. Institutions and loyalty to the group play a bigger role. They cooperate with colleagues and workmates to avoid risks and reduce responsibilities. Their value systems appreciate duty to the group. Pursuing individual objectives is viewed rather negatively in China. Moreover, in cooperation, Americans place greater importance on contractual guarantees than the Chinese. They believe that contracts can limit the chances of other people's actions do not interfere with their individual goals. Among the Chinese, contracts are not as highly regarded. They are more accommodating of changes and contracts can be reasonably modified according to changes. Instead, they pay more attention to personal relationships than contracts. Chinese and American managers also differ greatly in their attitudes toward risks in their decision-making. This is evidenced in the different values in uncertainty avoidance. High uncertainty avoidance scores mean that Chinese managers lack the adventurous spirit and the sense of risk. They do not make decisions where they feel the circumstances are uncertain. In most cases, they prefer to make comparatively safer and less risky decisions at the expense of the business opportunity. In contrast, low uncertainty avoidance in American managers makes them more likely to consider risks as natural. They are ready to take risks, especially regarding opening a new market and applying new technology in their organizations. Managers from an individualistic or collectivistic society prefer different levels of participation in decision-making. (Sosik and Jung, 2002)Another cultural dimension related to decision making is power distance. Individualistic societies such as American managers prefer making decisions individually or consulting their superiors instead of consulting with their colleagues. The low power distance means that they value personal equality and believe in decentralization within the organization and empowering subordinates. Chinese society is more complicated than American and Western societies. Although some researchers propose that decisions are participatory in collectivistic and high power distance countries, others think that employees in those countries are expected to accept readily decisions handed down by their supervisors. They are also expected to resist participation in decision-making because of their unquestioning attitudes and perceptions towards the authority. (Triandis & Harry, 1995) The behavior is dependent on many factors, the most important being "what kind of decisions are going to be made". A majority of Chinese managers adopt the non-participatory approach to decision-making. Final decisions are normally made by higher level superiors without consultation with their subordinates. Accompanying characteristics such as high formality, low disclosures as well as centralization are common in most companies in China. Chinese employees rarely have the chance to participate in the decision-making process in organizations. Using the above theoretical discussions based on Hofstede's six cultural dimensions, it is evident that organizational operations and management approaches differ in China and America/ the Western. For Alibaba to successfully launch operations in the West, it is important to pay attention to the above cross-cultural differences and properly design management practices that will ensure success. References Hofstede G, 1980. Culture's consequences: International differences in work-related values. Beverly Hills, CA: Sage.  Hofstede, G. (2005). Cultures and organizations: comparing values, behaviors, institutions, and organizations across nations. Thousand Oaks, Sage Publications. Hofstede, G., & Hofstede, G. J. (2005). Cultures and organizations: software of the mind. London, McGraw-Hill. Weaver, K Mark, 2000. "Attitudes toward Cooperative Strategies: A Cross-Cultural Analysis of Entrepreneurs," Journal of International Business Studies. Sosik, John and Jung Dong, 2002. "Work-group characteristics and performance in collectivistic and individualistic cultures." The Journal of Social Psychology. Washington.  Triandis, Harry C, 1995. Individualism and Collectivism The Next Web, 2014. ”Alibaba is breaking out of China while the rest of the world tries to break in” [online] accessed on 4/12/2015 available at http://thenextweb.com/asia/2014/08/22/alibaba-breaking-china-rest-world-tries-break/ Smith PB, MF Peterson, D Akande, V Callan, and NG Cho, 1994. "Organizational management in 14 countries: A comparison with Hofstede's dimensions." Read More