International Cross-Culture Management of BMW - Term Paper Example

Running Head: CROSS-CULTURAL ISSUES IN INTERNATIONAL BUSINESS Cross-Cultural Issues in International Business Insert Insert Grade Insert Instructor’s Name 14 December 2010 Outline Introduction BMW Company National cultures: China China’s Business culture Hofstede cultural dimensions with regard to China and Germany China and Germany graph of cultural dimensions Problems with regard to cross-cultural management Solutions How to implement the solutions Conclusion Cross-Cultural Issues in International Business Introduction Today, organizations are operating in global environment with heightened competition; that is, countries no longer depend on protected domestic market while exporting to other countries to protect jobs and generate revenue. At the same time, trade barriers have come down and countries have made significant changes to their trade policies. Understanding of culture has become important to international companies operating in different countries and thus different cultures. Therefore, this research will investigate problems associated with international cross-culture management, appropriate solutions to the problems and lastly implementation strategies for the proposed solutions. BMW Company BMW is a Germany Company, which during it recent annual general meeting (AGM) passed a resolution to put up another plant in China in collaboration with its local joint-venture partner (Asian Business 2009). As a result of putting up this new plant, BMW will become the biggest auto-Germany company to have wide presence in the Asian market which analysts have predicted will continue to grow at an increasing rate (Asian Business 2009). BMW, together with the local joint-venture partner Brilliance Automotive Holdings Ltd, predicts that they will both spent jointly about $ 836.6 million for the new venture and the timeframe when the operations are supposedly to start in the new venture is in 2012 (Asian Business 2009). According to the company’s estimate with the new plant, it is likely that the company’s production capacity in the Asian market will experience some changes in terms of increase from the current rate of 41,000 cars annually to 100,000 cars annually (Asian Business 2009). National cultures: China Cultures, in different societies, have played key role of acting as mechanisms in societies that allow for maintenance of stability in culture patterns across many generations (Hofstede 2001). Culture can be explained to be value system of any given society that majority of that society’s population share. Cultures in general affect both physical and social environment and predominant societal norms have led to the development and pattern maintenance of institutions in society with particular structures and ways of functioning (Hofstede 2001). In understanding different cultures, it has become important to study history of the particular concerned societies. For instance, Hofstede (2001) notes that, “culture as mental programming is also the crystallization of history in the minds, hearts, and hands of the present generation and origins of cultural differences when they get explained presume a comparative study of history” (Hofstede 2001, p.11). China’s culture is said to be one of the oldest in terms of civilization and it remains one of the few nations of the world that have not experienced major cultural disruption (Fu 2003). For almost 5000 years of history Chinese culture since the period of civilization to the present has been passed down to the successive generation even with the numerous changes in government that has characterized China (Fu 2003). China’s geographical location has played key role to the development and sustenance of its culture since it has acted in isolation making it have some of the unique and less ‘polluted’ culture. China culture has mainly been influenced by three major philosophies: Confucianism, Taoism, and Buddhism (Mungenast 2007). The central theme of these philosophies centers on morality where their overall teaching is that it is wrong to acquire wealth using unjust means, at the same time it is wrong to lack contentment in life, and there is interdependence of riches and disasters (Fu 2003). These philosophies have guided and influenced Chinese culture. Confucianism teachings postulate the need for rulers or those in authority to have benevolence and put much emphasis on moral development (Fu 2003). Confucianism further stresses the need for equality in treating other humans or people in any circumstance. In Chinese daily lives Confucianism has become part of a social code for behaviors to exercise where Chinese are required to have obedience to the seniors and those superior in power and at the same time to exercise paternalistic treatment of the subordinate (Fu 2003). Some of the ideologies that have come to characterize Chinese culture include loyalty and selflessness where loyalty has become paramount virtue and form of morality in Chinese society; humanity and justice; impartiality and taking neutral attitude and avoiding extremes while at the same time maintaining absolute balance; harmony and respect; lastly diligence and perseverance (Fu 2003). China’s Business culture Theodore Weinshall in his book titled ‘Societal culture and management’ note that national and organizational cultures are in many instances perceived to be important factors in determining the shape of the organization as well as the performance of the organization and even in solving problems arising in the organization (Weinshall 1993). The author stresses that management styles in China reflects combination of Chinese culture and problems that are associated with socialist economic system (Weinshall 1993). According to Colin Silverthorne, there exist five major approaches to business in Chinese cultures where Chinese culture is largely rooted in Asian cultures (Silverthorne 2005). For instance, Asian culture has a tradition of keeping organization cohesive as a dynamic group that works well together and it is often connected by family relationships (Silverthorne 2005). Most Asian cultures are largely hierarchical and reflect the collective norms of Asian cultures; it has been recommended that the dynamic-group approach works well in managing organizations in this country (Silverthorne 2005). Decision-making in most Chinese organizations tend to be passed to higher levels which sometimes results into overloading of organizational hierarchical. In general Chinese business culture has been described to be ‘high-context culture’ where there is much retrieving of information about counterparts before they can be placed in proper context. For instance with regard to meetings Chinese managers will put more emphasis on the environment the meeting is taking place, where the meeting is taking place, who is presenting the people, who is part of the team, and more (Hestflatt n.d). These aspects have led Chinese managers to go an extra mile in establishing more informal relationships such as restaurant visits, small gifts, visits in private homes, discussion about economy, political and social situation or even the art, culture and history of others cultures, information about family and other background information about the company (Hestflatt n.d). On overall China’s business reflects the national culture of the country which is more relationship-based culture. Hofstede cultural dimensions with regard to China and Germany Hofstede is famous known for his words that, “culture is more often a source of conflict than of synergy; cultural differences are a nuisance at best and often a disaster” (Hofstede n.d, p.1). According to Hofstede’s assertion, it has become apparent that international management of cross-cultures involves operating and working within competing and conflicting cultures. Numerous researches have done with regard to nation’s cultures and how they affect international management in business environment. Geert Hofstede, a social scientist from Netherlands coined five cultural dimensions that have revolutionalized the field of international management. Hofstede identified five cultural elements, which he used to study and describe cultures of different countries. The identified five cultural differences are “power-PDI, Individualism-IDV, Masculinity-MAS, Uncertainty Avoidance Index-UAI, and Long-Term Orientation-LTO” (Hofstede n.d, p.1). Power distance element express that inequality with regard to power exist in different societies where to some societies power distance is high between rulers and subjects while in other societies power distance is low (Hofstede n.d). On the other hand, individualism element posits that individualism and collectivism differ among societies. For example, individualistic societies people are self-centered only concerned with their own welfares but collectivistic society’s in-group feeling is strong and achievement is meaningful when group participation is observed (Hofstede n.d). Masculinity element is compared to feminism element, which largely describes and explains how different societies distribute gender roles (Hofstede n.d). Uncertainty Avoidance has to do with how different societies tolerate anxiety about time and future. Some societies demonstrate high uncertainty avoidance index while other societies show low index (Hofstede n.d) Lastly Long-term orientation is an element that came later after studies were conducted in China and it explains how some societies tend to be short-term oriented while others are long-term oriented (Hofstede n.d). The graphs below show that China compared to Germany has high PDI index; China is more collectivistic society while Germany is more individualistic; MAS for Germany is high compared to China and this shows that in Germany emphasis is on achievement, growth and job challenges while China emphasis is on job satisfaction, working conditions and employee participation (Mungenast 2007). Further UAI for Germany exceeds that of China and this indicate that Germany preference is for stable jobs, security and conflict avoidance. LTO for China is above that of Germany and this indicates that Chinese express strong optimism to the future than Germans (Mungenast 2007). China and Germany graph of cultural dimensions Source: Hofstede n.d. http://www.geert-hofstede.com/ In short, Chinese general business culture can be described to exhibit the following aspects: 1) people should be dependent on a leader; conflicts in any situation or circumstance should be avoided. 2) Laws are critical and should be adhered to. 3) Consensus is always the best method to adopt. 4) Group decision making is valued, group achievement and group responsibilities are highly valued. 5) Expression of emotion in any situation is accepted. 6) Emphasis in organizations tends to be on compromise. 7) Harmony and adjustment is always good and encouraged; and managers tend to be fatalistic (Aswathappa and Dash, 2007). Problems with regard to cross-cultural management Numerous problems have been identified to emanate with regard to cross-cultural management: problems with regard to differences in the value systems, this particular problem result due to the fact that cultures are different and greater degree of difference is seen in value systems, which are intertwined in cultures and translated into action. The point here is that people having different culture backgrounds approach a particular similar problem in different ways due to different orientation of different value systems (Bhattacharyya 2010). Problems with regard to preconceptions and stereotypes, stereotyping among people is essentially used to simplify and classify individual’s assumptions based upon which they derive their inferences by observing certain evidences and characteristics (Bhattacharyya 2010). With regard to cross- cultural teams, stereotyping manifests itself through people stereotyping other peoples’ qualities and capabilities in the most negative way. In most cases self-fulfilling prophecies motivate individuals to communicate with people in a particular manner that bring out the traits that others expect them to possess (Bhattacharyya 2010). Third problem has to do with individual decision-making and problem solving, in most cases people from different cultures possess different strategies or methods as to how to solve problems, which in turn create problems in the way an organization should carry out its operations (Bhattacharyya 2010). Differences in decision-making perspectives arise due to differences in educational backgrounds, work experiences, and culture-based value systems, which all lead to different approaches to a problem thus encouraging problems (Bhattacharyya 2010). Observation prevalent include team members taking decisions on their own without encouraging participation of others, others members favor participative approach, others may put much trust in rational decision making where they prefer to collect enough information and necessary resource input before arriving at decision, while others may generally have feelings to have quick-fix approach (Bhattacharyya 2010). The other problem has to do with communication, where most problems in cross-cultural teams as a result of lack, or poor quality communication. In cross-cultural groups most problems to do with communication revolves around language and non-verbal behavior (Bhattacharyya 2010). As English is the prevalent and widely spoken language it may come out that some people find it very uncomfortable to communicate or express in English instead favor the local and prevalent language to communicate in irrespective of the different background of other colleagues. At the same time non-verbal behaviors for instance gestures has been categorized as an important aspect of communication. Gestures and body languages vary across cultures. Misinterpretation of verbal and non-verbal has led to further misunderstanding between different cultural backgrounds (Bhattacharyya 2010). Solutions Adler (1997) has observed that successful cross-cultural team managers do not in essence ignore their diversity rather they manage it (cited in Hamilton 2007). As such, to effectively manage diversity, Adler suggests for the following: there is need to recognize the differences that exists in terms of cultures; electing members for their task-related abilities where it has been recommended that members need to be ‘homogenous’ in terms of ability and heterogeneous in attitudes; and there should be a common a common purpose, vision or goal that goes beyond individual differences. In addition, there should be avoidance of cultural dominance; there should be initiatives that encourage respect to everyone; and there should be seeking of high level of feedback (Hamilton 2007). Adler (1997) note that successful cross-cultural managers need to have cultural sensitivity and diplomacy; communicate in the concise way bringing satisfaction and understanding to almost everybody; ability and talent to solve cultural problems synergistically; and lastly strong negotiation skills (Hamilton 2007). London and Sessa (1999) note that, to succeed in foreign cultures, the manager needs ability to facilitate work in a diverse setting; be able to generate the perception of shared culture motivate; sustain and be able to successful facilitate cross-cultural teams. In addition, he needs to foster productive relationship between different business units of the organization having different cultures; ability to successful select and carry out evaluation of staff from different cultural backgrounds. At the same time, successful cross-cultural managers recognize cultural differences in the organization respond to the local issues and make smooth transitions between tasks and jobs that involve and include different people and spanning different cultures. This is in addition to adapting to the environment and successfully managing between extremes by collaborating and negotiating with people who possess different values and beliefs about goals and overall business behaviors (London and Sessa 1999). The author finish by noting that cross-cultural management success depends on cultural sensitivity by the manager where communication and decision-making become key strategy to success (London and Sessa 1999). How to implement the solutions Cross-cultural training has been noted as the key element in ensuring of majority of cross-cultural recommendations and requirements are fulfilled. International managers have been found to be effective in their assignment especially managing a diverse workforce after undergoing systematic cross-cultural training (Bhattacharyya 2010). Cross-cultural training can be facilitated in numerous methods such as regular briefings through circulation of reading materials, training delivered through structured lectures, and showing of films, role-plays, field trips, sensitivity training, and simulation exercises. Further, the training is enriched through departure orientation, in-country socialization, and country exit debriefing (Bhattacharyya 2010). Conclusion China offers numerous opportunities for international companies to exploit. Bit it is from rather the ‘isolationist’ culture of China that has resulted into many managers failing to succeed in the country. For BMW manager to be successful in China’s new plant there is need for the company to design effective cross-cultural management manuals that can guide the foreign managers. In general managing across cultures requires the individuals to develop and train in cultural sensitivity, have effective communication mechanisms to use across different cultures, have conflict resolution skills, possess adequate negotiation skills, ability to provide and lead realization of organization’s goals using talents that borne out of cultural diversity. Reference List Asian Business. 2009. BMW to Add Second Plant in China. The Wall Street Journal. (Online). Available from: http://online.wsj.com/article/SB10001424052748703811604574531361034879846.html (Accessed 14 December 2010). Aswathappa, K. and Dash, S., 2007. International Human Resource Management. New Delhi, Tata McGraw Hill. (Online). Available from: http://books.google.com/books?id=I0jO7dzlj24C&pg=PA29&dq=7D+cultural+dimensions+model&hl=en&ei=whH6TJLdItOC4AaI1MCvBw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCgQ6AEwAQ#v=onepage&q=7D%20cultural%20dimensions%20model&f=true (Accessed 14 December 2010). Bhattacharyya, D. K., 2010. Cross-Cultural Management. New Delhi, PHI Learning Private Limited. (Online). Available from: http://books.google.com/books?id=ETuzeheuLi8C&pg=PA104&dq=managing+across+culture:+importance+of+training&hl=en&ei=nH8HTbTPKMfGswa7-pzxDQ&sa=X&oi=book_result&ct=result&resnum=2&ved=0CC8Q6AEwAQ#v=onepage&q=managing%20across%20culture%3A%20importance%20of%20training&f=true (Accessed 14 December 2010). Fu, C., 2003. Gateway to Chinese culture. Singapore, Asiapac Books Ltd. (Online). Available from: http://books.google.com/books?id=iGodMpTMEPUC&printsec=frontcover&dq=aspects+of+China%27s+culture&hl=en&ei=iD0LTduSGcPssgaa9dziDA&sa=X&oi=book_result&ct=result&resnum=6&ved=0CD4Q6AEwBTgK#v=onepage&q&f=false (Accessed 14 December 2010). Hamilton, C., 2007. Communicating for Results: A Guide for Business and the Professionals. OH, Cengage Learning. (Online). Available from: http://books.google.com/books?id=aGc4H89o3tEC&pg=PA256&dq=how+to+manage+cross-cultural+teams+successful&hl=en&ei=_e36TOSjFoS38QOP5NCEDA&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCgQ6AEwAQ#v=onepage&q=how%20to%20manage%20cross-cultural%20teams%20successful&f=false (Accessed 14 December 2010). Hestflatt. A., N.d. Managing styles in Norway and China. Norwegian University of Science and Technology. (Online). Available from: http://docs.google.com/viewer?a=v&q=cache:Btu5-mIN6AcJ:www.2025design.no/China/Management_styles_in_Norway_and_China_%2520A_Hestflaatt_NTNU05.pdf+organizational+management+styles+in+China&hl=en&gl=ke&pid=bl&srcid=ADGEESjmE5NtTi3PtRTueYyMWnZOQyQW8kZ3766TXuVy9NTHiRkHMirKnTdVJjqdywTfPAN38g603jxNx2easg8YJ2RbZ1FOi4lKSD3670DcV_qjSEtUVTx7lSVFcWCVE1i9FkhBHJMh&sig=AHIEtbRvZ8srhnUiD5QPm-kAC8mTApNI8A (Accessed 14 December 2010). Hofstede G., 2001. Cultures consequences: comparing values, behaviors, institutions, and organizations across nations. NY, SAGE. (Online). Available from: http://books.google.com/books?id=w6z18LJ_1VsC&printsec=frontcover&dq=hofstede+cultural+dimensions&hl=en&ei=HZ_6TKm1KpGM4QbfyPHbBg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCgQ6AEwAA#v=onepage&q=hofstede%20cultural%20dimensions&f=false (Accessed 14 December 2010). Hofstede, G., N.d. Geert Hofstede Cultural Dimensions. (Online). Available from: http://www.geert-hofstede.com/ (Accessed 14 December 2010). London, M. and Sessa, V. L., 1999. Selecting International Executives: A Suggested Framework and Annotated Bibliography. Center for Creative Leadership. (Online). Available from: http://books.google.com/books?id=xjD0fJ2xQooC&pg=PA34&dq=how+to+manage+cross-cultural+teams+successful&hl=en&ei=_e36TOSjFoS38QOP5NCEDA&sa=X&oi=book_result&ct=result&resnum=5&ved=0CDgQ6AEwBA#v=onepage&q=how%20to%20manage%20cross-cultural%20teams%20successful&f=false (Accessed 14 December 2010 Mungenast, H., 2007. Chinese Business Culture. GRIN Verlag. (Online). Available from: http://books.google.com/books?id=9ouZEYT4QvcC&printsec=frontcover&dq=aspects+of+China%27s+culture&hl=en&ei=ezkLTb22B4aRswatqLnqDA&sa=X&oi=book_result&ct=result&resnum=5&ved=0CD0Q6AEwBA#v=onepage&q=aspects%20of%20China%27s%20culture&f=false (Accessed 14 December 2010). Silverthorne, C. P., 2005. Organizational psychology in cross-cultural perspective. NYU Press. (Online). Available from: http://books.google.com/books?id=5DAQkVwgKBQC&pg=PA49&dq=china%27s++management+culture&hl=en&ei=HjkLTZKJDo7Bswap2oDZDA&sa=X&oi=book_result&ct=result&resnum=4&ved=0CDYQ6AEwAw#v=onepage&q=china%27s%20%20management%20culture&f=false (Accessed 14 December 2010). Weinshall, T. D., 1993. Societal culture and management. Walter de Gruyter. (Online). Available from: http://books.google.com/books?id=hC-enxM3KjIC&pg=PA279&dq=china%27s+national+culture&hl=en&ei=1jYLTYHiBc7ssgaWipXmDA&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCoQ6AEwATgK#v=onepage&q&f=false (Accessed 14 December 2010). Read More