Cultural Differences and Their Effect on Strategic Planning - Case Study Example

Cultural Differences and Their Effect on Strategic Planning Introduction As a UK based consultancy firm, Telmarket has gained success in the past six years. On the international front, India and USA appear to be profitable options for the firm to explore. India is an emerging economy with great potential and the USA is a mature and developed economy with vast opportunity. Cultural differences will pose major issues in both options as they differ vastly from the British culture. It is vital that strategic implications of these differences be considered before any decisions are made. India: As Telmarket is a marketing training and consultancy firm focusing on strategic marketing planning and customer care, India would be a country with great opportunity. India is the prime destination for outsourcing of services as well as the destination of new firms. It is one of the emerging economies with great potential for the future. Although it will be a huge step for Telmarket to move into a market so diverse from the UK, the setting up and operation costs will be relatively low. India has an abundance of human resources and the environment will be conducive to success. The expansion of Telmarket into an international market such as India will have many strategic implications for the firm. Indian culture differs greatly from British culture and thus many cultural issues may emerge. Culture defines behavior, values and ambitions; and especially for businesses involved in training, culture affects every aspect of operations. The target market of Telmarket includes individuals and firms that are involved in marketing and customer care and thus the language barrier may result in problems. Hindi is the national and other languages are prevalent as well. As a UK based training firm Telmarket would impart most training in English and with relevance to English speaking customers, however if the customers of their clients are Indian it will be necessary to train them in Hindu and/or other languages as well. Thus Telmarket would have to hire trainers from India. This could turn out to be an advantage for Telmarket in the form of salaries. Pay scales in India are lower than those in the UK and to hire Indians would cost less than to bring English trainers. The strategic implication of the language barrier might be in training and hiring costs. Trainers recruited in India might not meet the requirement of the firm and may need to be sent to the UK to for further training themselves this will increase recruitment and hiring costs whereas employee salaries may remain low. Indian culture focuses on respect for the elderly, family values and traditions. Thus the way marketing is carried out in India is vastly different than in UK. Marketing planning needs to incorporate demand and supply cycles of products and services and economic implications of festivals such as diwali and eids as well as the wedding seasons, independence days and other cultural events. Most marketing in India focuses on weddings, beauty, money and family whereas in UK the focus is on money, career, beauty and sex. In India, playing on emotions is a more effective marketing strategy. A vital aspect of Indian culture that will affect the success of the company is trust. Indians will refuse to do business with a company or an individual if they do not trust them. Thus, the establishment of trust between the customers and the firm, and the employees and the firm is necessary. Trust can be established through following proper Indian customs, not being too pushy in negotiations and being respectful and polite. A cultural barrier that the firm might face is due to it being a UK based company. It might be perceived as imperialist and condescending thus it is necessary that ethnocentrism does not come into play. Any expression or hint of superiority of UK culture will affect Indians negatively and may ruin business relationships beyond repair. Communication styles and phrases must be monitored carefully as well, as UK expressions may not be favorably received in India. Indian organizations usually have a strict adherence to hierarchy and the line of authority. Dissenting opinions are not welcomed and criticism is taken personally thus it is vital to show respect to the individuals in higher level positions. In meetings, lower level managers may not speak and only the CEO or top most managers present may be involved in the discussion, which could only be due to respect. In some cases, the superiors are not in high level positions due to merit or experience but rather due to family wealth and connections thus in such cases it is difficult to expect the same level of efficiency and performance. It is also unadvisable to comment and display outrages on such instances as Indian views on nepotism are distinctly different. (Doing Business in India: A Cultural Perspective) Time is a different concept in India than in the UK. UK culture focuses on schedules, deadlines and strategies whereas in India deadlines and schedules may not be the first priority and to force them might lead to the emergence of cultural problems. Problems are not anticipated rather solved when they crop up. Punctuality is important though not vital and family responsibilities take precedence over business. Indian culture is high context as diplomacy is often preferred over direct criticism and respect comes before opinions. Thus communication may not always be clear with many issues left un-discussed. (Doing Business in India) An analysis of the Hofstede dimensions with regards to India and UK would show: Indian culture is more focused on collectivism whereas UK is more focused on individualism With relation to power distance, in India this is higher due to the caste system and value of ranks whereas in UK it is on the lower side. India and UK both lean towards masculinity in the form of competition and expansion rather than environment and harmony. Uncertainty avoidance in UK is low and higher in India as they are more risk averse. These cultural differences that Telmarket will face if it expands to India will have strategic implications. Training and consultancy are human resource based services and involve inter personal interaction. The trainers and consultants will need to be trained in Indian culture and its context and implications. If Telmarket aims to hire trainers from India, they will need to be trained in the standards and training methods of Telmarket. As Telmarket is involved in customer care, this field in India will mean entirely different methods of reaching out to and dealing with customers on the basis of language, values, and understanding. As respect and trust are two important values in Indian culture and status and caste play vital roles, Telmarket will have to ensure that these issues are covered in training and that their business style does not conflict with their customers’ style. Telmarket may have to invest more time in developing relationships and gaining trust as negotiations in India are slow paced. This might result in the need to review performance goals and objectives as a longer time frame may be required to achieve them. However, once relationships are established then Telmarket will be able to enjoy customer loyalty and positive publicity through word of mouth. India’s booming economy and promising human resource pool offers exciting opportunities to Telmarket if it expands into India. USA: The United States of America is a melting pot of many cultures and races. It is one of the biggest economies in the world and is an attractive option for Telmarket due to the similarities in culture with the UK. As a marketing training and consultancy firm Telmarket will be able to cater to the American market as most major multinationals and companies have presence in both countries. There has been an assimilation of culture and values and the relationship between UK and the USA promotes favorable business opportunities as well. A major distinction in culture that affects business greatly is the informality of the American culture as compared to the formality of British culture. Americans may dress formally for business meetings, but the use of first names, lack of protocol and overall straightforwardness is the opposite of British politeness, proper terms of address and protocol. The consequences for Telmarket of this difference would be the need for them to adapt to more informal techniques in training and their approach to organizations and individuals may need to change. Although there is an expectation of similarity between American and British culture there is a great difference in attitudes about communication, work and ambition. Although both cultures share a language, the meanings, utterances and nuances of language are vastly different. Telmarket should not expect that training and customer care would be easier due to the same language as this will not be the case. Americans tend to use sports metaphors commonly in language especially baseball which the Britons do not comprehend. Also, American culture is loud and direct whereas British culture is understated and indirect. As training is an interpersonal program, British training methods and American perceptions may differ a great deal thus cultural training will be required for consultants or American trainers could be hired. (Doke, 2004) Although both cultures value individualism, Americans may be considered loud and over-the-top and focused on expressing that individualism whereas Britons may come across as cold and aloof. Americans are risk takers and go getters whereas Britons are more cautious and analytical. In meetings, Americans focus on brain storming, and decision making whereas British meetings are more focused on information sharing and many attendees may sit quietly rather than getting involved. American meetings are aggressive and hostile at times. In UK, it is the norm to consult others before making decisions whereas Americans value autonomous decision making. American culture focuses on punctuality and that is similar to the UK work ethic. Another area where differences emerge is in the case of taking breaks and the consumption of an occasional beer or wine during those breaks. American work ethic does not allow this however, British work culture is more laid back and accepting of this behavior. American work culture is more focused and aggressive whereas British work ethic is relatively relaxed. (Business in the USA) American culture is not focused on family values or harmony but rather drive by ambition, power and money. Careers are the main focus of American lifestyle and success is judged by this yardstick. There is a focus on individuality and the America dream that opportunities are available to even the most disadvantaged class. American culture has often been criticized for its materialism whereas British culture still has claims to family values and ties. An analysis of Hofstede’s dimension with regards to the USA and UK would show: The USA and the UK both have cultures that are strongly geared towards individualism; however American culture is more individualistic than British culture. Power distance is low in both countries although UK has more reverence for rank and status. The US and UK both lean towards masculinity due to their competitive projects. Uncertainty avoidance in USA is lower than in the UK. Although UK is still on the lower side compared to other countries. USA’s culture is low context compared to UK’s as communication is loud and direct whereas British communication is understated. American managers are focused on getting results as quickly as possible and are short term oriented. Both cultures are ethnocentric, considering themselves superior to other cultures. Telmarket will need to incorporate these cultural differences in their services. As American work environments differ greatly from British environments, training and consultancy will need to be customized to deal with American issues and customers. American customers will be more direct and aggressive and would be looking for immediate solutions. American companies will be looking for marketing strategies that deliver results and improve profitability in the minimum time possible. In American culture, teamwork is transitory and workplace affiliations are uncommon thus Telmarket may have to deal with a new workplace dynamic which is more challenging and driven, which will affect organizational culture as well. Telmarket would have to make use of aggressive marketing and promotions to create a place in the American market, which will increase advertising costs. The American way is to get contracts signed rather than build relationships (which is to follow afterwards) thus Telmarket should focus on providing strategic marketing planning that is in line with the culture and on getting results rather than building relationships. With reference to customer care, it is necessary that American firms and employees are trained to provide solutions quickly and effectively and at the same time incorporate British values of politeness in the process. Telmarket may need to change the prices and services mix for its American customers by focusing it more on individualism and ambition. Telmarket may face cultural challenges in the American market but cultural training and adaptation will lead to success. Bibliography Business in the USA. (n.d.). Retrieved 11 25, 2010, from World Business Culture: http://www.worldbusinessculture.com/Business-in-The-USA.html CROSS-CULTURAL/INTERNATIONAL COMMUNICATION. (n.d.). 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