Tesco and Tata Group - Cultural Compatibility, Solutions, and Impacts on Strategic Problems - Term Paper Example

Tesco in India Table of Contents 0.Introduction 3 2.0. Discussion 3 2 Cultural Difference amid UK and India 4 2.2. Cultural Compatibility of Tesco and Tata Group 5 2.3. Critically Appraises Different Solutions/Impacts to a Strategic Problem 6 3.0. Conclusion 7 References 9 Bibliography 12 1.0. Introduction The changing face of the contemporary business over the last few decades due to the progression of technology and the aspect of internationalisation has minimised the national and international barriers to business expansion worldwide (Kennerley & Neely, 2003). In similar regard, the rise of the competition mid the integration of global business environment has also worked towards the transformation of the business world in a comprehensive manner. These aspects further ensures that companies will need emerge with diverse and effective strategies in order to establish themselves amid the potential customers and able to ensure a competitive advantage over the competitors in the global marketplace (Ivanko, 2013). The impact of the changing business world can also be seen in the expansion strategies of the companies when they seek to enter the unexplored business markets. In order to enter into new territory for business, companies will need to be conscious about the influencing factors such as social, political, cultural and economic condition of the place in order to devise plans of the business accordingly (Martin, 2008). This particular understanding will help the company to ensure that they are able to operate in accordance to the business environment of the place they are intending to operate. This can be better comprehended from the example of Tesco and its entrance in the Indian market. 2.0. Discussion Notably, Tesco is one of the biggest operators in the retail sector of the world. It has its operations widely established in the UK and other parts of the world. The company is known for providing high quality products and services to the customers and has a commendable operational experience in the global business environment. However, the company is aware of the aspect that in order to establish its operations all over the world, the company will need to target some of the emerging markets of the world which will provide growth and sustainability prospects for the company. In this regard, the company intends to enter into the Indian retail market to explore the untapped benefits of Indian Retail market. The company has applied to the foreign investment board of the nation with regard to its plan for investing $110 million in the Indian market. The company further plans to enter the Indian market with a joint venture with the Tata Group (BBC, 2013). However, owing to various differences amid the culture of the UK and Tesco with that of India and Tata respectively, certain problems is deemed to emerge which are highlighted theoretically hereunder. 2.1. Cultural Difference amid UK and India Cultural difference is consider as a major challenges that companies deal with while executing their policies of territorial expansion (Cordes & et. al., 2010). As depicted above, companies will need to deal with several strategic problems while entering into new territory. Though the problems of territorial expansion can be in the form of cultural issues, political issues and environmental issues, but the aspect of cultural differences can be considered to have radical impact on its proposed plan to open a joint venture in India (Bowie, n.d.). In this context, the study of Twarowska & Kąkol (2013) will be vital to consider. The study depicted that barrier to international trade has been minimised extensively in the recent times but there are others challenges that prevail for companies while executing their strategies of business expansion in the global market. As per the study, the foremost problems of modern day business expansion in new territory are the cultural issues that act as a constraint to the success of the business in foreign market. It is believe that a particular strategy which is effective in one culture might not necessarily be effective in the other. This causes problems for companies as they need to develop diverse set of strategies depending on the cultural significance of a place (Twarowska & Kąkol, 2013). Again, the study of Kozami (2002) also provides an in-depth understanding on the challenges of cross cultural management in business expansion. The study affirms that when companies enter into a new territory with their operations they need to adopt a particular strategy which mainly include the approach of joint venturing. This aspect also ensures several strategic problems for business units. Since corporate culture along with beliefs and values of two companies tend to differ in nature, the aspect of the effectiveness of the strategic management of the aligned group is quite uncertain in nature to say the least. This aspect also depicts cross cultural issues in territorial expansion of business (Peleckis, 2013; Kozami, 2002). When Tesco enters the Indian market with its operations, it might also need to deal with certain challenges of cross cultural management owing to cultural difference amid UK (Present operational hub of Tesco) and India. According to the study of Madan (2004) there are several languages that are being spoken in Indian culture which further impacts the business operations of foreign companies. This is because of the aspect that companies find it difficult to frame their strategies especially in regard to marketing as they need to increase awareness amid the people that are diverse in terms of language. This will also be a challenge for Tesco as in the culture of UK, as English is used as the primary language of communicating with the customers. Again another difference in culture amid the Indian and the UK is the presence of large number of different ethnic groups in India in oppose to UK which has quite minimal number in this regard. This diversified culture in the Indian society will also probably ensure difference in perceptions and buying behaviour. This will also impact the operations of Tesco in India as they will need to manage or develop their strategies on the basis of perception and behaviour of large groups of ethics that exists in the Indian culture. The difference amid the culture of the two nations can also be comprehended from the study of Geert Hofstede who clearly depicts cultural differences amid the two countries. The model of Geert Hofstede depicts the presence of several key differences amid the cultures of the two nations. It has been noted that in term of the prevalence of inequality in the society (power distance) India scores higher in comparison to the UK. In this regard, Tesco will find it challenging to frame its business strategies in India. However, the culture of UK scores higher than India with regard to the domain of individualism, masculinity and indulgence which also depicts major difference amid the culture (The Hofstede Centre, n.d.). These differences will certainly impact the cross-cultural management of Tesco when they operate in the Indian market as they need to emerge with diverse strategies as oppose to its strategies undertaken in the UK market. 2.2. Cultural Compatibility of Tesco and Tata Group Notably, as per the proposal, Tesco is expected to enter the Indian market through joint venture with Tata Group. In this regard, it will be crucial to mention that there is certain difference between Tata group and Tesco in terms of management techniques, employees approach and cultural diversity amid others. The joint venture between Tata and Tesco will not only mean the alignment of two businesses, but also means the alliance of two work cultures as well (Farkas & Avny, n.d.). It is believed that cultures in the workplace of the organizations influence the behaviour of the people working together to achieve the common organisation’s goals (Deloitte, n.d.). This aspect further depicts that the employees in the workplace of Tesco and the workplace of Tata might also differ with one another. This will impact the compatibility of the two cultures when they operate in alignment in the Indian market. It is also believed that different companies have different values ad work ethics in the workplace cultures which further forms the core identity of the business. This values and ethics demonstrated at the workplace of the business further determine the position of the business in the global platform (The Open University, 2014; Kawar, 2012). Contextually, it can be depicted that there is also a difference amid the management approach and workplace values of Tesco with that the core values and ethics of Tata group operating in the Indian market. The core value and work cultures of Tesco mainly intend to ensure that the company is able to work in consideration with the betterment of the stakeholders and the society altogether. The company also value working together as a group to attain the goals and objectives of the business (Tesco, 2014). On the others hand, the work culture of Tata group differs considerably in comparison to Tesco. The company ensures utmost creativity in the workplace amid the employees so that diverse and innovative results could be obtained. The company also believe in providing high quality services to the customers as they are the ultimate lifeline of the business. The company maintains a professional environment in the workplace with the establishment of strict guidelines (Tata Global Beverages, 2014). These aspect shows that both the companies has their own way of conducting the business which might again act as a factor of collision when the two player operate jointly in the Indian market. This also affects the cultural compatibility of the two players. 2.3. Critically Appraises Different Solutions/Impacts to a Strategic Problem From the above discussion certain imperative problems can be determined amid the Indian culture and the UK culture which will further result in challenges for the Tesco when they enter the Indian market with regard to aspect of cross-cultural management. However, there are certain solutions which the company might adopt in order to deal with the challenges of cross cultural management while opening a joint venture in India. One of the key strategic problems for Tesco in the UK market will be the large number of ethnic races within the Indian culture and the society (Nagar & Mishra, 2012). Contextually, the company will need to follow certain steps to ensure proper cross cultural management. The first solution that the company might consider in this regard will be to analyse the culture dimensions of the Indian market in a comprehensive manner. This will allow the company to strategize its moves in the market and ensure sustainable operations for the business in the coming years. The company will also need to target a particular dimension of the Indian culture and operate accordingly to deal with the implications of the same. This means that the company will need to set a particular target market and target customers and comprehend their cultural implications to operate the business smoothly. Again, it has also been analysed that the cultural difference amid Tesco and Tata (joint venture partner) might also impact the cross cultural management of the aligned company in the Indian market. In this context too the management of Tesco will need to work in alignment with Tata by considering the values and ethics of the parent company as well as Tata in a collective manner. The company will also need to manage the diversity of the workforce formed as per the alignment of the two and seek to obtain positive results from the same (Primecz & et. al., 2011; Madaan, 2009). These approaches might act as solutions for the strategic problem of cross cultural management in the company’s operations in the Indian market. 3.0. Conclusion From the overall analysis of the paper it can be comprehended that expanding business operations to a new territory is not an easy tasks for the companies in the present day context. These challenges mainly emerge owing to the difference in business and work culture of two countries which further impact the effectiveness of common strategies of the companies that seeks for global expansion. Contextually, the example of the expansion of Tesco in the Indian market through joint venturing with Tata group will be vital to depict. Tesco is expected to face certain challenges on part of its cross cultural management as the company will need to deal with the large ethnic races in India which is quite different as compared to that of the UK market. Again, the company might also need to deal with challenges in the domain of joint venturing with Tata as both the company differs in terms of core values and business management approaches. Hence, it can be concluded that the aspect of cross cultural management is indeed quite crucial in global expansion. References BBC, 2013. Tesco to Open Multi-Brand Stores in India. Home. [Online] Available at: http://www.bbc.com/news/world-asia-india-25417261 [Accessed April 23, 2014]. Bowie, A., No Date. The Effect of Culture on Business Relationships. Home. [Online] Available at: http://www.neumann.edu/academics/divisions/business/journal/review_08/bowie.pdf [Accessed April 23, 2014]. Cordes, C. & et. al., 2010. How corporate cultures coevolve with the business environment: The case of firm growth crises and industry evolution. Journal of Economic Behaviour & Organization, Vol. 76, pp. 465-480. Deloitte, No Date. Cultural Issues In Mergers And Acquisitions. . Home. [Online] Available at: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_consulting_CulturalIssuesinMA_010710.pdf [Accessed April 23, 2014]. Farkas, F. & Avny, G., No Date. Cross-Cultural Issues of International Joint Ventures: A Viewpoint from Israel. Home. [Online] Available at: http://kgk.uni-obuda.hu/sites/default/files/Farkas.Ferenc.pdf [Accessed April 23, 2014]. Ivanko, S., 2013. Modern Theory of Organization. University Of Ljubljana, pp. 1-209 Kawar, T. I., 2012. Cross-cultural Differences in Management. International Journal of Business and Social Science, Vol. 3, No. 6, pp. 105-111. Kozami, A., 2002. Business Policy and Strategic Management,2e. Tata McGraw-Hill Education. Kennerley, M. & Neely, A., 2003. Measuring Performance in a Changing Business Environment. International Journal of Operations & Production Management, Vol. 23, No. 2, pp. 213-229. Madan, G. R., 2004. India and the West: A Cultural Contrast. Mittal Publications. Madaan, K. V. S., 2009. Fundamentals of Retailing. Tata McGraw-Hill Education. Martin, J., 2008. Human Resource Management. SAGE. Peleckis, K., 2013. International Business Negotiations: Culture, Dimensions, Context. International Journal of Business, Humanities and Technology, Vol. 3, No. 7, pp. 91-99. Primecz, H. & et. al., 2011. Cross-Cultural Management in Practice: Culture and Negotiated Meanings. Edward Elgar Publishing. Nagar, L. & Mishra, R., 2012. Cross Cultural Challenges While Doing Business in India. Journal of Research In Commerce & Management, Vol. 2, No. 9, pp. 108-115. The Hofstede Centre, No Date. United Kingdom in Comparison to India. Home. [Online] Available at: http://geert-hofstede.com/united-kingdom.html [Accessed April 23, 2014]. The Open University, 2014. An Introduction to Business Cultures. Home. [Online] Available at: http://www.open.edu/openlearn/money-management/management/business-studies/introduction-business-cultures/content-section-0 [Accessed April 23, 2014]. Tata Global Beverages, 2014. Our Culture. Home. [Online] Available at: http://www.tataglobalbeverages.com/about-us/our-culture [Accessed April 23, 2014]. Tesco, 2014. Core Purpose and Values. Home. [Online] Available at: http://www.tescoplc.com/index.asp?pageid=10 [Accessed April 23, 2014]. Twarowska, K. & Kąkol, M., 2013. International Business Strategy - Reasons and Forms of Expansion into Foreign Markets. International Conference, pp. 1005-1011. Bibliography Ingram, T. N. & et. al., 2012. Sales Management: Analysis and Decision Making. M.E. Sharpe. Jones, D. C. & Kato, T., 2005. The Effects of Employee Involvement on Firm Performance: Evidence from an Econometric Case Study. William Davidson Institute, pp. 1-40. Khattak, M. A. & et. al., 2012. Employee Involvement and Participation At Work: A Case Study Of OTCL After Privatization. International Journal of Academic Research in Business and Social Sciences, Vol. 2, No. 6, pp. 469-476. Paul, J., 2008. International Marketing: Text and Cases. Tata McGraw-Hill Education. Tonge, R. & et. al., No Date. Police and Performance Related Pay: An Exploratory Study of Rewarding Individual Performance in the Police Service. Journal of Finance and Management in Public Services, Vol. 8, No. 1, pp. 21-33. Read More