National Culture, Business Culture, and Management Practices - Assignment Example

National Culture, Business Culture, and Management Practices To successfully develop an environment which fosters free enterprise and the conduct of business, it is really critical that the overall political structure of the country is developed in such a manner that it favors the business environment. There are typically two political ideologies which are deeply interconnected with the economic structure of the country i.e. capitalism and socialism. Socialism advocates the development of a political system and infrastructure which can serve as the central authority to regulate the economy and control almost every aspect of how the economy actually functions. This form of political ideology is followed in countries like China, Cuba as well as Russia with limited level of success. In case of China, where policy control is still in the hands of government, its economy was only able to grow when it actually started to loosen the control over the affairs of the economy. A second set of economic ideology however, favors the free functioning of the market and discourage the intervention from the government in the overall functioning of the markets. This form of economic structure, called capitalism, therefore emphasize upon the free functioning of the market and allow the political forces of the country to develop a political infrastructure which actually favors the free market policies. In order to understand as to how the political economic strategies of the countries effect and protect the local as well as foreign entities, it is critical that the overall political system shall be supportive of this. A good political infrastructure and policies therefore shall be viewed from the perspective of whether the political systems of the country put emphasis on the collectivitism or individualism and to what extent institutions are democratic or authoritative. Those countries where emphasis is on the development of collectivitism, it may be possible that the government takes more efforts in order to protect the local industry first and than look into the possibility of how it can support the foreign entities. This also means a political structure which is inclined towards collective ideologies can significantly create risks for the international businesses owing to the uncertainty that the regulatory environment of the country may not support them or the government may impose certain trade restrictions such as increase in tariffs and quotas which may make foreign firms less competitive. Further, if the institutions of the country are democratic in nature, there are better chances that the regulatory environment of the country will be developed in such a manner which can protect the interests of the masses. This however, may again result into the development of regulatory environment which focus on the protection of domestic businesses first and than look into the possibility of protecting the rights of foreign firms. What is also however, important to note that evidence indicate that the authoritative political structures within the country may support the foreign businesses in order to gain the support of international community as well as creating goodwill for the government at international level while at the same time attempting to create better economic opportunities for the masses within the country. (Ringov & Zollo, 2007) This question will therefore probe the above questions with special reference to China and will also attempt to make a comparison with the developed countries like US in order to make a reasonable comparison as to how the different political and economic ideologies basically protect the rights of their local as well as international firms. Individualism and Collective Ideologies Individualism focuses on the individual liberty and the place of individual in the overall society. Most of the Western societies are based upon the notion of individual liberty and freedom and therefore focus on the development of rules and regulations which can actually foster the individualism within the society. The rights, liberty and freedom of individual plays a critical role in the way society works and therefore the pursuit of the individual happiness is something which remains as the fundamental concern for the government and politics to deal with. It is important to note that for organizations to take benefit from the political environment which focus on individualism, it is important that they develop means to directly address the consumer in such society. (Zhiyi Ang, 2007) Individualism can only be fostered however in an environment which is democratic in nature and advocate the free market economics. Free market economics therefore plays a lot of importance on the individual property rights and all the rules and regulations therefore are subsequently developed in such a manner which can protect the individual property rights. Businesses working in such an environment tend to have more support from the government and their access to the market and consumers is relatively easy. However, they need to oblige the law and also act the responsible citizens in order to take care of the individual liberty and freedom of other also. For example, in countries like US which is based upon the free market economic model, individual liberty is relatively more important. Various laws and regulations are implemented in order to support the functioning of the markets on their own with little or no support from the government. Further, the rules and regulations are such that they put emphasis on the individual freedom and liberty and as such rules such as consumer protection acts, anti-trust laws etc are put into place in order to ensure that the local as well as international businesses, while earning the reasonable profit, shall also consider the rights and obligations of others also. Collectivitism however, focuses on addressing the needs of the society as a whole and suggests that the rights and needs of the society as a whole are more important than the rights of the individuals. Subsequently, the kind of legislation and policy framework which is laid down focuses on the support of those businesses which can contribute towards the achievement of societal goals. It is however, important to note that the current financial crisis in most of the developed countries of the world has made it more important for many governments to look for an approach which not preserve the individual freedom but also protect the society from the affects of the failure of the businesses. As such the recent strands of legislations are done in such a manner which advocates the fulfillment of the needs and requirements of the society as a whole rather than the individuals. (Hill, 2010) Socialist countries tend to have more collective thinking and ideologies therefore their overall political structure is built around the notion of collectivitism. For example, countries like China and Russia are basically socialist countries with strong collectivist tendencies therefore all the rules and regulations are promulgated with the single aim of benefiting the society as a whole. (Mwaura, Sutton, & Roberts, 1998). As such if some local as well as foreign businesses are not conducive for the society as a whole they may not be allowed to operate. In China, most of the businesses work under the direct control of the government because the fundamental philosophy on which the government is based focuses on the generation of strong community orientation rather than the individual pursuit of goals. It is also important to note that the both collective as well as individual ideologies also define as to how the employees and organizations will actually work. For example, in countries like Japan, work ethics requires the development of a collective psychology wherein the goals and objectives are achieved as a team and the organizations work in a manner which can foster the collectivitism. Toyota is a brilliant example of how the collective approach towards the work can actually help an organization to achieve the lean manufacturing and make it a reality. Thus apart from protecting the businesses, these both ideologies often define as to how the organizations or employees will actually work and achieve the common goals. Economic Structure As discussed above that there are two major economic structures around which most of the political and economic systems of the world are built. These two economic ideologies are two different extremes however; there is another economic structure which advocates the use of free markets alongside with the intervention from the government. The mixed economy model therefore focuses on the development of rules and regulations which not only allow the economy and markets to work on their own but also provide leverage to the government to intervene into the affairs of the market when and where needed. Almost all the countries of the world therefore either follow controlled economy or mixed economy model. In mixed economy model businesses are allowed to work on their own however, government retain the right to intervene therefore in countries like US, it is a norm that the businesses work under a given set of rules and regulations. However, in countries like China controlled economy model is in place, most of the resources belong to the government therefore there is a very little room for having the private property etc. In such an environment, it may be relatively difficult that the foreign firms can get any kind of protection from the government. There always remains the risk of nationalization of the privately owned institutions therefore the protection to the businesses is relatively more challenging to achieve. Economic structure therefore plays a key role and shall be served as the key decision for foreign firms to enter markets like China and Venezuela. Economic progress Countries like China are experiencing high economic growth rates however, despite having a market structure which is based upon central economy and collective ideologies, it is progressing. However, its progress is seen as a transition towards more market oriented policies which are allowing many international businesses to relocate to China in order to take benefit from the low cost of production. The current rate of economic growth of China is therefore baffling in the sense that it is probably the only successful economy in the world which is socialist in its basic orientation. However, despite the fact that individual property rights are not ideologically secured in countries like China, international firms are finding it a hotspot from the investment point of view and are relocating their manufacturing facilities therefore in a bid go achieve the economies of scale at faster rate. It is also important to note that the countries like China have developed a unique system of allowing the international firms to operate in the domestic market through their local partners. This means that though the access to the local markets has been granted to the international firms however, they can do so only after they partner with the local businesses. Thus much of the economic progress of the country is also based upon the fact that local firms have been able to gain technological sophistication only after working with the international firms. Costs and Risks One of the critical risks for doing business in countries like China is therefore the fact that the individual property rights are not guaranteed. As such there may not be complete protection for foreign as well as domestic firms to operate in such an environment as the risk of nationalization always remains there. Since many countries are in the state of transition and flux where subtle and important changes are taking place in terms of advancement towards free market economy as well as the democracy, such risks can gradually subsidize. Further, the foreign businesses are given the surety from the Chinese government regarding the protection of their property rights. Since in countries like China, the formation of the joint ventures with the local partners is probably the only effective way for international firms to gain access to the Chinese market, it is therefore relatively easy to assume that the risks can be manageable because of the involvement of the local businesses. Though most of the enterprises work under the control of the government however, the ease with which international firms can actually enter into the market make it less costly for the international firms to actually make a successful entry. However, their access to the local business funding is restricted and they have to arrange the funds to do the funds through borrowing from international markets. Political stability Attractiveness to operate into an environment which is politically more stable provides an added advantage to the international firms to enter into that market. Though China is a communist country however, it is politically stable and remains under firm control of the communist party of the country. Political stability of the country therefore offer an added advantage to the firms to relocate such markets as it minimizes the risks and further protects the domestic as well as international firms from failing to work as going concern organizations. Institutional support What is relatively more critical in the case of China is the fact that the Chinese government is responsive to the changing needs of doing business in international environment. During recent past it has been able to revamp its accounting system in order to ensure that it corresponds with the internationally recognized accounting standards so that the international firms find it more easier to report their transactions according to the standards which globally accepted and followed. Further the support of the State is relatively higher therefore making it easier for the international firms to actually operate with relative peace of mind. There is very low culture of offering bribes to the government officials to get through the official permissions therefore such higher level of institutional support allow the international firms to gain the added advantage of having the required regulatory support. Conclusion In order to effectively ensure that the organizations whether the domestic as well as the international get the required level of support and protection from the government and political structure of the country, it is important that the businesses must probe into some of the basic and fundamental facts about the country before making an entry into the market. Most importantly international firms have to look into the political structure of the country and whether it is based upon the individual or collective ideologies. Once this is determined, it becomes easier for the international firms specially to assess as to whether they will be able to get the required degree of protection from the government in case of any risks arising. The nature of the government i.e. democratic vs authoritative is also another important factor which needs to be explored in order to assess the importance of how the country is basically ruled. Authoritative rules in countries like China however, favor the international firms however, it is not the case always and both the domestic as well as the international firms have to access the impact of the political rule on the future prospects of the firm and how the firm can actually be affected by such rule. Finally the rate of economic progress, political stability as well as institutional support is some of the critical factors which determine as to how the firms will be protected in such economy regardless of the fact that the firm is domestic or foreign in nature. Q#2 Culture is a very unique phenomenon and the organizations have to actually take great care in studying and understanding the different cultural dynamics in order to assess the basic cultural orientation of a country before making a decision to enter the market. Assessment of the culture is also significant due to the fact that the organizations have to actually assess as to how the overall social norms and values of the culture interact with the ordinary lives of their consumers as well as employees and other stakeholders. This is essential in order to formulate the right kind of strategies so that the organizations continue to operate in new environment. The need to assess the culture is also important because of the increasing globalization of the world which opened the markets for many international organizations. The free flow of goods and services along with capital across the borders opened up new channels and as such it is important for the organizations to actually assess the unique social aspects of the market in which they are going to operate. This question will therefore explore the notion of how the national culture actually influence the business practices of the international firms and how international firms can actually develop a coherent set of principles and strategies in order to overcome the cultural obstacles which may hinder their progress in any given market. Globalization and culture Before discussing the impact of culture, it is important that a comprehensive understanding of the process of globalization is developed in order to set the right context for the discussion. “The multinational operations of many organizations have brought many managers into intimate contact with the cultures of different nations. Within the European context, the skill requirements of such managers are many and varied. Organizational expectations of such managers and the roles they fulfill also vary according to the national culture within which they are working and within which they have been managerially socialized. Each of these elements also impacts on the strategic awareness of the manager, and the competitive advantage to be derived from international co-operation.” (Sweeney & Hardaker, 1994) Globalization is not a recent phenomenon however, its importance and influence have became more vivid in recent past. Globalization is a process wherein the regional economies of the world are integrated with each other through the common sharing of political ideas, technology and other means of communication. What is critical about the forces of globalization is the fact that they have also made sweeping changes at the way traditional cultures in different economies tend to work. Due to the gradual intrusion of globalization, there is now a subtle shift in the regional and national cultures and is world is probably drifting towards sharing one unique culture which is American in its basic orientation. (Morden, 1995) Globalization is also important in the sense that it opened up the borders for new businesses to enter into the new markets. However, entry into the new markets present an element of uncertainty also and as such organizations have to look into the possibility of assessing different factors before they make an entry into any market. The assessment of culture is therefore also one of the key elements of making a successful entry into the new market because the overall national culture tends to influence the business practices of the local as well as international firms to a great extent. Globalization has made it possible for the firms to tap into the unexplored resources however international organizations have to learn how to operate in different cultures. (Morden, 1999). What is culture? Culture is a relatively complex phenomenon which comprises of the interconnected values, beliefs, morals as well as well as customs. The acquaintance of culture is important because it allow one individual to align himself with that particular culture and become part of that culture. The general understanding of the culture and its different set of values therefore is really critical for both the organizations well as the individual to understand and follow in order to behave and act in a society according to the ways that particular society operates. Values and norms are the two central concepts of the culture and indicate towards the society’s general understanding of what is right or wrong or desirable under different situations. Norms of the society however, outline the social rules which individuals have to follow in order to survive and comply with the norms of that society. What is significant is the fact that the values and norm of the society are shared values which are followed by almost every member of the society in their true spirit and indicate towards the unique aspects of the society and its culture. It is critical to note that for the flourishing of the culture, the presence of some sort of social structure is necessary. Social structure of the society therefore refers to the basic social organization of the society and how the society is actually built around different ideologies and values. There are two important building blocks of the social organization i.e. the individual group dimension as well as the social stratification. Some cultures advocate and project the individual at the center and value the individual’s freedom and liberty as the most important aspects of the culture in which individual lives. Most of the Western societies actually project the individualistic characteristics of the individuals as the most important however; countries like India and China focus more on the group dynamics as well as the formation of groups as the basic building blocks of the social organization of the society. Further the stratification of the different societies into different classes is also another important element which needs to be taken into consideration. All the societies in fact are stratified into different classes and sub-classes and the social and economic status of the individuals is based upon which strata of the society that individual belongs to. In societies like India where social and economic status matters most, individuals are ranked and given importance based on their overall wealth and social background whereas in most of the Western societies, it is relatively different. (Kelly, 2009) Class consciousness therefore is also one of the key aspects of the culture in any given society because higher the class consciousness in a given society less will be the social mobility. As such in societies such as China, brain drain hardly occurs because of the collective social consciousness of the individuals make it more critical for them to remain and confirm to a particular social stratification in the society. Religion is an important aspect of the culture as the individual’s lives and social gathering and how they behave and operate in a given society is greatly influenced by the way the society is basically influenced by the religion. Religion can also be defined in the common parameters of the set of rituals and beliefs which are sacred in nature and some time hold prominence over all other aspects of the culture in a given society. Muslim countries are heavily influenced by the religion and in some Muslim societies, the culture come second and religion takes the position of the culture itself. Similarly, the ethical system to which a particular subscribes is also driven from the religion wherein the members of the society basically have to comply with the ethical guidelines given by their religions and have to follow them in their strict sense. Almost all the major religions of the world including that of Christianity and Islam provide a complete code of ethics which govern the ordinary lives of the individuals in a given society. (Foucault & Carrette, 1999). Similarly, Buddhism and other religions also greatly influence the way individuals carry out their ordinary responsibilities in the daily life. This is critical due to the fact that organizations are considered as the complex social systems in which different social actors coordinate and interact with each other and as such the individual values and norms play critical role in the way individual behave and act in an organizational setting. Language is another important component of the culture which is used to express and communicate. Those cultures where more than one language is spoken, there is strong possibility that different sub-cultures can exist too and thus it may become difficult for the organizations to manage different cultures and subcultures in order to achieve the organizational efficiency and recognition in a given market. Countries like India where large population of the country speak different languages can pose significant challenge to the international organizations in terms of targeting a specific niche of the market. Finally, the education system whether formal or informal also plays critical role in defining the overall culture of the society. Education is also important because it defines the overall competitive advantage of the nation and set out the course of future direction for it. A better education system would ensure that the country is able to produce the required level of workforce which is able and skilled enough to meet the domestic demand as well as meet the international demand for labor too especially in current environment where the mobility of the labor force has became a norm. The above discussion outlines the basic characteristics of culture and how various components of the culture can interact with each other in order to create a unique social organization within a given economy. For international organizations, understanding of the different aspects of the culture therefore is critical to achieve the competitive advantage and successfully operate in a given market. Hofstede’s cultural dimensions The work by Hofestede is considered as the major scholarly effort in understanding how the culture relates with the work place. He developed and identified four important cultural dimensions which are critical for the organization when the operate in an international environment. (Robbins, 2009) The distance to power measure how the influential and more powerful members of the organization behave and act and how the power is actually distributed within the organization. Certain national cultures depict a culture where people expect to be treated equally whereas there are some cultures where more powerful members of the organization take preference. Similarly, individualism as well as collectivitism influence the way different members of the organization interact with each other. In culture where more emphasis is being placed on the collectivitism, organizational decisions are made in order to ensure that the decisions are made in accordance with the group dynamics. In Western countries there is more emphasis on the individualism and individuals can easily separate themselves from the group and project their own individual characteristics. Further, Hofstede also indicated the tolerance level for the males and females in the organization and how the people actually perceive the competitiveness and the quality of relationships within the organizations. International organizations working in Western countries therefore may find it easier to find employees who believe in the individual competitiveness with more emphasis on the material accumulation of wealth. However, in culture like India, employees tend to prefer to have more quality relationships and boss serves as a fatherly figure for the employees. Finally, the attitude of the cultures towards the uncertainty avoidance and risk is another critical element which set out the overall organizational strategies in a given market. In some cultures people have very strong avoidance to uncertainty whereas in some other cultures this tendency may be weak therefore the ability to take risk increases. Culture and organizations As discussed above that the globalization has opened up many international borders for the firms and international mangers now have to interact with a complex set of cultural dimensions of the market in which they operate, it has become important that the organizations must develop a general understanding of the culture of the nation or economy in which they operate. (Gibson, 1994) It is also important to note that the organizations have their own unique culture too and it is assumed that the employees of the organization shall develop a common understanding of how the organization works and what values and beliefs organization shares. (Bhaskaran & Sukumaran, 2007) It is therefore important that the organizational culture must share some of the aspects of the local and national culture in order to successfully develop business practices which can outline the competitive advantage for the country. It has been argued that the different social institutions and norms in a given society affect the organizational strategies and objectives and it becomes important for the organizations to actually develop the required level of flexibility to adapt to the changing cultural needs. For example, McDonald is considered as one of the finest examples of how successfully organizations can actually develop their understanding of the culture and revise their organizational strategies in order to successfully operate in that market. McDonald do not offer wine or pork in Muslim countries whereas in India it does not offer meals which are based on the cow meat in order to comply with the religious values of the societies in which it operates. Organizations are also increasingly become aware of the value of the religion in the lives of their employees and offer them holidays on their days of religious importance. For example, in Muslim countries, international organizations remain closed on the occasions of religious celebrations. As such there is a growing understanding being developed by international organizations to accommodate the different and diversified cultural and religious values in their organizational culture. (Black, 1999) The extent of dominancy of culture on the organizational culture The above discussion indicates that the national culture definitely influences the organizational culture in different ways it is really unclear as to what extent national culture affects the organizational culture. This question becomes more complicated when the process of globalization is also reviewed in terms of its impact on the regional cultures and how it is changing the way regional cultures tend to operate. it is therefore argued that the culture is more dynamic and can change with the changes in the economic status of a nation. As the economic progress becomes more and more rapid the existing culture of the nations start to become redundant and being replaced by the global culture which is more westernized in its basic orientation. As such the economic progress as well as the globalization is two of the most potent forces of bringing in the cultural change in any country. It is however, important for the organizations to carefully review different dynamics of culture before making an attempt to enter into the market. Most obvious reasons as to why the firms basically fail to perform in international markets are due to their inability to practically and rationally evaluate the national culture of their host nations and than subsequently develop the strategies which suit such culture. In order to gain wider understanding of the culture and its dynamics it is important that the organizations must employ the cross culture employees in order to better develop their understanding of the different dynamics of the culture. Failure to develop a better understanding of the national culture may result into the costly failures for the organizations to effectively enter and operate into completely alien foreign markets. Bibliography Bhaskaran, S., & Sukumaran, N. (2007). National culture, business culture and management practices: consequential relationships? 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