Joint Venture with X-Tech (Sweden) and Y-Tech (Albania) - Assignment Example

 MEMO Date: 2009 To: Relevant management staff From: Research consultant CC: CEO of Z-Tech (UK) Topic: Joint venture with X-Tech (Sweden) and Y-Tech (Albania) Executive summary As you may well know, Z-Tech is considering a joint operation with two multinational firms. One of these firms, X-Tech, is based in Sweden; the other, Y-Tech, is based in Albania. Z-Tech managers are going to need to realize cultural differences that exist between the UK, Sweden, and Albania, in order to better segue into this joint venture. We at Z-Tech do not want to seem to be arrogant, by simply exporting our own business culture of the UK to these extra-national operations, expecting our partners to conform to our own national habits and attitudes. Therefore, a culturally sensitive and intelligent paradigm is sought. This memorandum outlines various principles of cross-cultural management, while also carrying out some cultural profiling of the two countries we are meeting, in comparison to our country. The main goal is to educate and guide Z-Tech managers, who will soon become expatriate managers, and who will need to avoid obstacles such as expatriate failure through culture shock, by improving their respective cultural intelligence (CQ). After positing these cross-cultural management paradigms to achieve optimal success for Z-Tech, the current memorandum concludes with specific recommendations. Introduction Z-Tech faces a future prospect of a successful joint venture with Albanian and Swedish companies. However, conflict must be avoided in order to optimize results and create a win-win situation. A major organizational challenge that needs to be overcome, is conflict. Conflict occurs when members of a group or team cannot reach an agreement through common negotiation. There are many causes of conflict in the organizational environment. Conflict is negative, and effective communication embraces an aspect of positive sharing of information that reflects upon both the sender and the receiver. Only by truly communicating our plans, needs, and desires can we garner effective results. These results are often the result of a decision-making process, which is closely linked to patterns of effective communication and structural organizational theory. The importance of positive and practical decision-making cannot be over-stressed in the organizational environment. In the case of intercultural concepts, the vision or guiding principle or goal of Z-Tech should be looked at in an inclusive way. That is, the concept is inclusive to the culture in this construction, and bears communication across cultural barriers and boundaries to a greater understanding of the positive side of communication. Focusing on the positive side of communication represents a serious step that Z-Tech managers can take towards cultural intelligence. Multicultural signifies a respect for diversity and individuality in the organizational environment, rather than a platform that is based on assimilation or the unitary non-acceptance of cultures other than one’s own. Organizational culture is more about the shared vision of individuals within a certain organizational environment, which is often supported by the environment itself. To simply export one’s own business culture, leads one to be exposed to the danger of appearing arrogant when dealing with other, less familiar cultures. The last thing that Z-Tech wants to do is appear to be a culturally hegemonic company, in either Sweden or Albania. Cross cultural management Cross-cultural management is very important to consider, and Z-Tech managers are going to need to avoid the risks of expatriate failures in the joint venture. One study on the subject suggests that the link between the existence of global teams and the perfomance of an international company, “is indirect: global teams help to develop intercutural competencies; they, in turn, contribute to performance. Intercultural interaction among the employees of a company, especially within global teams, provides the highest learning outcomes” (Bartel, 2006). In other words, the results back up a theory of teamwork which has people forming teams based on positive models of communication. As mentioned above, cultural intelligence (CQ) can be directly related to effective communication. The more intelligent the manager is in regards to accepting foreign norms and adapting their communication styles to these norms, the more effective the business relationship will be. The business situation in which Z-Tech finds itself, on one front, may be one in which a manager is unfamiliar with Swedish communication styles being more reserved than they are used to. “In Stockholm, her co workers are friendly but more distant. Rana is used to speaking with her whole body, using her arms to emphasize her points, and showing emotions through her facial expressions… her boss never just comes out and says, great job” (Beamer and Varner, 2008). This source shows how both verbal and non verbal differences in language and culture can significantly impact movement towards global expansion of a company. But these differences also highlight the need for global research into markets like Sweden, as a company whatever the industry that enters a foreign market like Sweden (or Albania) unprepared and unversed in its language, regulations, union procedures, common reimbursement plans, and culture faces many potential difficulties and obstacles. “Punctuality is important when doing business and also for social engagements. Never be late. If you must be late for any reason it is absolutely crucial to phone and let someone know. Being late is seen as poor etiquette and will reflect badly on you.” (Doing, 2008). This latter statement may apply anywhere, but not all cultures are equally punctual. Therefore, it is perhaps most culturally intelligent for Z-Tech managers in Sweden, to adapt themselves to local customs and habits regarding punctuality. Parts of Swedish business culture may be familiar with other parts being more challenging. “Swedish communication style is direct and open. This can come across as abrupt but is not meant to be so. When conversing, be sure to listen intently to anyone speaking and not to interrupt. Turns are taken to offer opinions. When doing business in Sweden, think conservative” (Doing, 2008). Beamer and Varner focus on non verbal communication in this environment. “The interpretation of non verbal signals is complicated further by the fact that within a culture not all people use the same signals. Men and women often use different non verbal language. Men in western cultures tend to be more outspoken than women are” (Beamer and Varner, 2008). Of course, there are exceptions to every rule. However, since all companies are basically coming from western cultures, there are perhaps more similarities than differences, in this regard of cultural intelligence. Munter’s article looks more concretely at cross cultural communication from a general and psychological perspective, and while it mentions Sweden in passing, primarily focuses on management concepts. “A realistic goal in one culture may not be so in another. One way to get at what might be realistic is to analyze what psychologists call the locus of control. People in some cultures tend to believe in internal control over destiny… people in other culture believe in external control over destiny” (Munter, 1993) This article also highlights how there are many different ways that a corporation can organize in international business communication. They can organize their management and internal structure to focus on different aspects of their product or environment. choosing the right organizational communication and teamwork structures is important for an expanding business. A corporation could organize by function. This means that Z-Tech could divide its management staff according to the job they have to do. This is an efficient way of organizing and is very common in western circles. A second method of organization could be by geography. In this pattern, the corporation would divide its management staff and place them in charge of certain geographical areas, hopefully adequately trained to communicate in a cross-cultural manner. “According to Hofstede, Anglo cultures are the most individualistic, with the United States ranking as the most individualistic of all. On the other hand various South American cultures are collectivist: identity is based in the social system, not the individual” (Munter, 1993). Since Sweden is both western and socialist influenced, one may expect a mix of collectivism and individualism. Doing business in Sweden will be different from the UK, and the manager in this country will need to develop cultural skills for effective management. Swedes like to establish relationships on an informal level; “However, private and business lives are very much segregated so this informality does not equal intimacy. When doing business in Sweden, expect to address a person by his/her first name.  Swedes tend to stay farther apart when conversing than many other countries” (Doing, 2008). By communicating effectively and using the same language to work towards the same unifying goal, a cross-cultural team will be able to increase its thinking- and decision-making power and become more powerful, rather than being a group of management and employee factions who are unable to work as a team because the managers can’t motivate the employees because of poor and ineffective communication. The result of this miscommunication, in many cases, is a situation in which conflict, instead of being lessened, is actually heightened between firms that should be working together, in a joint venture, to maximize profitability. Some managers at Z-Tech may be against the plan to move to Sweden because they think that it will decrease productivity and lead to a downturn in motivation. This is a very important point, because it has been demonstrated that collective decisions are more effective in implementation than individual decisions in terms of communication’s importance. This is another benefit of making creative decisions in management through utilizing teamwork and listening to the managers’ feedback. Yet another benefit is that the unity that binds the group together will further ideas of equal participation. There are plenty of people who are content to be a team member, but effective leadership and effective teamwork patterns can help ensure that everyone involves becomes a real team player. “Communication is a powerful catalyst for establishing and sustaining trust, the emotional state that is shared by highly committed workers and leaders” (Mayfield and Mayfield, p. 93). Having respect for other cultures is not just something theoretical: it takes dedication and training, and a sense of curiosity combined with an awareness that one’s own culture is not universal. A certain amount of humility and willingness to learn and try new things is vital to the process. This humility can also be added to the recipe for cultural intelligence. Z-Tech managers will also have to make adjustments to life in Albania, as well as Sweden. Business attire in Albania may be slightly more formal than in the UK overall, but one has to watch out for exceptions to every rule. In the UK during the last twenty years or so, there has been a sort of revolution in business attire that has made it much more casual. In fact the whole idea of business casual is now considered de rigeur in the UK. People even wear casual outfits to work. And companies are less likely today in the UK to have a strict dress code that includes a hair code. Of course there are exceptions to the rule, as mentioned above, but today in the UK, khakis and an oxford shirt with no tie, are now acceptable in places where a full suit, tie, and hat, was once the only way to go. This change has come more slowly to Albania, so the UK manager in Albania may not be used to a business attire that is expected to go above the level of the khakis and oxford and go back to what may have been the status quo before things got so casual. Therefore, the UK manager in Albania on business would probably want to dress to impress, in terms of erring on the side of being too formal, rather than being too casual, regarding business attire. In any country or culture, it is a wise idea to keep appointments and be punctual oneself. One cannot really go wrong in this manner, because if the culture is lax about appointments, the worst thing that can happen is that the individual has to wait a little while. In Albania, the individual would be dealing with a different dynamic in dealing with appointments and punctuality. In terms of temporal concerns, the Z-Tech manager would have to become used to many appointments being broken rather casually, and then remade, without this being considered derogatory or unusual. For example, if the individual in Albania was to be meeting a client at two in the afternoon for a lunch conference, and the client did not show for forty-five minutes, but later arrived and said that an old acquaintance had called him and delayed his departure, the UK manager in Albania would have to be inclined not to take offense, and continue with the meeting as if nothing unusual had happened (which, to him, it hadn’t). Also, Albanian workers tend to be more vocal about their liberties and more inclined to forget appointments if their demands are not met, generally. This is not necessarily meant as an insult, so it shouldn’t be taken this way. Again, the factor of adaptation is important to culturally sensitive and intelligent communication. Negotiating in Albania is a long and involved process, and the Z-Tech manager in Albania must be realistic about their expectations. There may be a tendency to expect negotiation to take not a long time, or to not go over the same points repeatedly. However, this can be expected in Albanian negotiation. Also, probably the most important non verbal gesture that can be used in these negotiation situations, the nod or shake of the head, is reversed in Albania. “Moving the head from side to side indicates “yes;” nodding up and down, “no.” This is just the opposite of traditional American practice” (Travel, 2007). Whether it’s in Albania or anywhere else, though, negotiation is about solving conflict. The importance of positive and practical decision-making cannot be over-stressed. In their everyday lives, individuals are faced with a multitude of decisions every day; life as they know it would not exist without these complex decisions. This is the same, no matter what country. Conflicts can be best resolved in a relaxed atmosphere in which people feel comfortable talking. As mentioned, the whole process of negotiation in Albania may take longer than the UK manager is used to, and they may be frustrated by a lot of repetition in the process. In other words, one negotiation session may end, and then the next session may actually be a repeat. The Z-Tech manager shouldn’t voice frustration at this; it is normal. Just because something seems strange to a UK national within a foreign culture, does not mean that the expatriate manager cannot become accustomed to it. After a period of culture shock, comes a period of acclimation and adaptation. Z-Tech managers must strive to reach this next level of awareness. The basic rules of politeness and focusing on the guest is a part of entertaining that one can’t really go wrong about, no matter what the country. Albanian entertaining, as elsewhere, is focused on keeping the guest happy, and is also focused on the part of the guest to show respect to the host. This is often seen in Albania in terms of the polite offer of the guest to pay for drinks or dinner, which the guest must then accept the host’s refusal to accept this offer. “If staying with locals and heading out for a drink, offer to pay to impress and show respect for your host, even though they almost always refuse… food has a Turkish influence, Albanian dishes include shish kebabs, called shishqebap, meat and onion stew, called çonlek” (Culture, 2007). This shows a mixture of Turkish and Eastern European influence. As in other places, business is often smoothed by entertaining. Meetings about contracts and the like often break down into disagreement, but can be salvaged by everyone going out and having a nice meal and some drinks, and then going back to work. Relative to culture, this is a fairly common prescription for successful communication. Recommendations The Z-Tech expatriate manager, whether they are sent to X-Tech in Sweden or Y-Tech in Albania, needs to now that not learning about cultures where a business may be operating is culturally obtuse. As a consultant, I would make adaptation a key component to the individual in Sweden or Albania’s success in these countries within the attendant business culture. However, there are some facets of business culture which are universal and would require little adaptation, such as a positive and customer-centric attitude and a causal and relaxed manner that inspires calmness and confidence in others. But when a group of managers gets too fascinated by their own authority to see that they are working within a community of individuals who may have equally valuable contributions to make regarding the decision-making process, there will be no cross-cultural communication. Management is not the lone representative of a business; it is bigger than that- there are lessons to be learned and given from and by everyone involved. A cohesive business is a successful one, and a company can only be cohesive when all levels of employees believe that they can speak up and make a difference. The more people who can get involved in the process, the more it will be an accurate reflection of the company and community’s true set of standards and complementary goals. Therefore, it is the primary recommendation of this consultation, to both Z-Tech managers and to executives, that expatriate managers in Albania and Sweden must be able to respond to culturally sensitive and intelligent communication, based on finding and emphasizing shared goals. Munter advocates the stance that the organization stands a better chance of being successful if its managers are familiar with the languages and customs of other cultures. Managers must also be able to derive facts about the global economy, rather than opinions or suppositions. From this perspective, globalization makes very little difference in the determinants of overall national income, “and redistribution has not been from labor to capital but rather from less skilled labor to more skilled. International trade has played a minor role in this redistribution. The focus in the debate should be on the facts - not the pronouncements of so-called experts” (Munter, 1993). In addition, these facts should be able to be utilized by managers in a way that is effective to the performance of the organization. Managers also need to know that, while international trade is hardly a new idea in economics, over the past fifteen years or so, “concerns about globalization have captured the imagination of the public - or perhaps I should say have captured the imagination of policy intellectuals, the small but influential minority that largely defines the conventional wisdom of the moment” (Munter, 1993). This goes back to the issue of establishing facts. In comparison with some of the other above articles, this point of recommendation is somewhat more subjective and polemical in its stance, but it does still focus on intercultural communication and its effects on international negotiations. Even if a study tends to favor polemics over rationality, it can still stick to a central issue and provide insight. Whether or not an international expansion or joint venture is party to the rules of success and failure on a pattern of individualized risk or whether it is a matter of intercultural competency issues is a question that has polarized many thinkers into two oppositional camps; a balance can be sought between the two extremes by recognizing that there are many different situations in which a business can succeed or fail that are circumstantial and would be unchanged no matter what the planning structure. There are many businesses that have had intercultural competency but have not been able to expand internationally successfully. And there are also changes in the external business environment that Z-Tech, its partners, and its stakeholders will not be able to control. This is a natural facet of the external market. But by maximizing cultural intelligence, Z-Tech’s expatriate managers in Albania and Sweden, will be able to maximize their potential for communicating positively. Understanding difference is certainly important, but understanding similarities is also arguably something of vital importance that our CEO and other leaders at Z-Tech must consider. While any introductory exposition of an international culture into which a company is expanding through joint venture, is necessarily based on a particular perspective to some degree, it is also important to find a starting place for understanding how communications may be facilitated. Z-Tech managers will be best served if they learn to balance generalities they may have about Sweden and Albania, with individual observations and learning experiences within the respective cultures. In other words, although many managers will go into the expatriate experience with preconceived notions and stereotypes, it is only those managers who are able to question these stereotypes, who will succeed in the long term. REFERENCE Bartel-Radic, A (2006). Intercultural learning in global teams. 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