Tescos International Project - Case Study Example

Research on TESCO’s international project India: To assess the cultural compatibility of the partners for the strategic implementation of the projectIntroduction The main aim of this research paper is to assess TESCO’s proposed international joint venture, keeping in view the role played by cross-cultural theories and models so as to determine cultural compatibility of joint venture partners. Cross-cultural compatibility is important in any joint venture for successful strategic implementation. TESCO is United Kingdom’s (UK) leading general merchandise retailer, who has shown great interest in collaborating with Tata Group in order to open its multi-brand store in Maharashtra and Karnataka. The project is divided in segments, which briefly describe international joint venture, cross-cultural management, cultural diversity in context of India and UK, impact of cultural diversity on international firms and necessary steps for rendering joint venture successful. Joint Venture Joint venture is defined as combined effort of two different organizations to form a new commercial enterprise, which is owned jointly by both the parties. The investing companies are called co-owners of the new organization, who maintain their separate identities. The main purpose of forming a joint venture is to bring together knowledge-base, skills, technologies and workforces for a limited period in order to earn maximum profit with lesser investment. Joint venture helps two or more participants to share the total investment as well as the risk associated with market (Boersma, Buckley and Ghauri, 2003). With globalization, it has become easier for companies to access the global market easily and efficiently. Due to difference in culture, language, laws and regulatory factors, partnering with firms in the form of international joint venture is an interesting option. International joint venture provides an effective measure for entry into a new market (Ahmed and Pang, 2009). Hence, TESCO is partnering with an Indian company in order to take advantage of each other’s resources, share market related risk and gain entry into an emerging market. There are certain disadvantages of international joint ventures that lead to failure. In absence of adequate planning and strategy, a joint venture can face failure. In addition, acculturation plays a very important role among employees of both the organizations. Lack of appropriate cross-cultural management can cause disputes (Davis Wright Tremaine, 2011). The venture of Virgin mobile in India is a relevant example in context of failure of international ventures (Hennart and Zeng, 2002). Culture In order to acknowledge the importance of cross-cultural assimilation, one needs to understand meaning of the expression ‘culture’. Culture is defined as a fusion of religious and moral values, inherited beliefs, tradition, language, ethics and life style (Groseschl and Doherty, 2000). Culture is imbibed within an individual by his environment, parents and family, friends, teachers and neighbours. Culture is often identified with civilization as it entails literature, art and craft, performing arts, painting and writings and manners. Culture is a collective inheritance that conditions one’s poise and demeanour. It is a kind of external influence on an employee’s behaviour, which thereupon influences behavioural pattern of the entire organisation. Arguments presented by several authors suggest that during uncertainties, individual cultures as well as organisational culture collectively help the members to cope with the situation. Culture plays a very important role in decision making abilities of an individual. Hence, understanding culture is necessary for managers and enterprises. Managing cross-cultural diversity Globalization has an enormous impact on team formation, team productivity and workplace culture. The global market has become a source of numerous business opportunities for every enterprise. Progressive globalization in human resources has resulted in exposure of organizations to culturally diverse employees and business partners. This practice has brought in new opportunities as well as challenges (Dong and Liu, 2010). The impact of cultural diversity on organizational productivity is not clearly known, yet its presence has been observed in different fields of management. Cultural diversity is not one-dimensional; it is rather a multi-dimensional phenomenon (Kawar, 2012). It comprises languages, expressions, religions, behaviour, traditions, values and beliefs. It is because of this cross-cultural factor that multi-national companies can also be referred to as multi-cultural institutions. As multi-national companies operate in different nations, diverse cultural aspects are reflected on their operations. For a successful management, interaction among employees is important, yet it should not be influenced by cultural biasness. It is the responsibility of management to eliminate lingual, cultural and religious biasness among employees (Kottak, 2011). Despite cross-cultural difference being a reason for failure of several multi-nationals, a number of multi-nationals are functioning successfully in western countries and Middle East (Kawar, 2012). Cross-cultural theory and model Internationalisation of businesses and movement of manpower globally has made it extremely challenging to manage culturally diverse human resource. It means the managers need to oversee a pool of human beings with different work value and attitude. Various authors have framed separate cross-cultural theories and models, which are very helpful for managers for comprehending cultural aspect in organisational behaviour (Gelfand, Erez and Aycan, 2007). The most important cross-cultural theory presented, so far, is by Professor Greet Hofstede. According to him, in order to understand cultural difference across nations, it is very important to consider five dimensions of culture. He named this theory as “Five Culture Dimensions” theory (Hofstede and McCrae, 2004). The cultural dimensions are explained as: Power Distance The concept of power distance explains that to a certain degree, less influential members of an enterprise express their acceptance and willingness towards retention of power by the most influential members. As per this concept, an organisation is similar to family, where younger members (less influential) prefer their elders (most influential) to have great share of authority and power. However in some culture, emphasis is on equality; hence, no hierarchy is maintained and decision making is done at every level with involvement of all employees. Uncertainty Avoidance Uncertainty avoidance is concerned with the perspective of a society or a social group towards uncertainty and ambiguity. It determines the degree to which society can endure an unexpected circumstance. According to the author, this dimension tends to figure the impact of culture on one’s state of mind in an unpredictable scenario. Usually, uncertainty avoiding cultures follow strict norms for maintaining status quo and usually comprise emotionally driven individuals. Contrary to that, uncertainty accepting cultures are tolerant and understanding towards new developments. Individualism and collectivism There are a number of cultures that give importance to individualism, while others more inclined towards collectivism. While individualistic cultures are independent, competitive, transaction oriented; collective cultures are relationship oriented, interdependent and flexible in nature. Individualistic cultures are competitive, whereas collective cultures are collaborative in nature. Masculinity In the present era, gender biasness is rarely observed and male and female individuals are treated equally. Even so, in certain cultures, masculinity is given preference over femininity. Few cultures regard women as less competitive than men (Wood and Eagly, 2002). Long-term orientation Cultures that are inspired by short-term orientation are usually conservative in nature. They try to preserve the inheritance of past and mostly believe in short-term gain. While long-term oriented culture cultivates practicality among individuals so as to adapt to any circumstance, their main focus is on deriving long-term benefit through progressive learning (Hofstede and McCrae, 2004). Many authors advocate that cultural intelligence is quite important for an individual for fitting into a different culture (Earley and Ang, 2003). Cultural intelligence is the ability of any person to exhibit certain attributes and traits, including skills and behaviour, which is culturally synchronised with that of others (Peterson, 2004). According to Chaney and Martin (2011), various aspects of cultural intelligence comprise: Linguistic intelligence: Learning native language of the customer along with international business English proves to be helpful while communicating with a person from another culture or location. Intrapersonal intelligence: Every individual need to be well-aware of their own culture, so that they can accommodate necessary factors associated with other cultures. Interpersonal intelligence: Interpersonal intelligence helps an individual to understand other people and their expressions (Lustig, Koester and Zhuang, 2006). Cross-cultural environment in International Joint Ventures Joint venture implies creation of a new business enterprise through collaboration of two or more companies, while maintaining their separate identities intact. Joint venture merges resources, workforce and skills of two or more organisations. So, this evidently results in assimilation of different cultures. In joint venture, acculturation is considered very important as human beings are driven by their cultural factors (Chevrier, 2003). For instance, TESCO’s interest in Indian market can be converted into a successful venture only if socio-cultural needs of consumers are correctly interpreted. TESCO have to research on prevailing culture of the location of operation. It has been often observed that only those ventures with symmetrical cultures are successful. Cultural differences, if not managed properly, result in conflict and consequently failure of the venture (Jackson, 2011). In a cross-cultural environment, it is necessary for employees and partners to have mutual trust. Another important factor is communication; communication can any kind of interaction, verbal or non-verbal, provided the implied meaning is comprehensible. Clear communication often resolves minor arguments and disputes. To make a joint venture successful, every kind of cultural biasness should be removed and such a work environment should be created, where all cultures can co-exist without any resentment (Killing, 2012). Recommendations for TESCO to ensure a successful venture in India The culturally rich heritage of India makes it unique in terms of traditions, beliefs, values and inherited skills. Even so, the culture of United Kingdom and India are completely different. In UK, people are task oriented and more focused towards fulfilling responsibilities. Whereas, Indians are relationship oriented. For the latter, building and maintaining a good relation is very important, especially in business (Budhwar and Varma, 2011). Hence, TESCO must focus on customer relationship management strategies and employee engagement programs that are relationship-oriented, where even employees’ families are valued. Family is considered as essential because it is one of the important motivating factors for Indian employees, even more than monetary incentives. Since TESCO is a multi-national company, it is quite evident that employees from other parts of the world will be relocated to India. Such employees are known as expatriates, who move from their home country to a host country. Before shifting the expatriates to India, TESCO must train them by implementing methods such as, workshops, simulations, scenario analysis and direct training, which would help them understand the local language and culture (Forster, 2000). The expatriates should be given an overview of Indian culture and the operational locations. The expatriates must be provided with necessary information related to cultural taboos and social behaviour. There are a number of training methods that are usually implemented by multi-national companies for training expatriates. Some of them are experiential training, cultural awareness training, language training and attribution training (Hånberg and Österdahl, 2009). In addition, the company needs to provide necessary trainings to the host country members as well as cross-cultural training to host nationals and expatriates collectively, so that they understand intercultural differences (Littrell and Salas, 2005). Apart from this, TESCO must implement an appropriate cross-cultural management system for the purpose of monitoring behaviour of employees and resolving cultural issues, if and when they occur. Conclusion The research paper has attempted to summarize the impact of cross-cultural diversity in international joint ventures, as more and more multi-national companies are expanding their business in different countries. This has led to movement of global workforce and unification of different economies into one global economy. The paper explains various theories related to cross-cultural management, as those are necessary for managing human resources with dissimilar cultural backgrounds. In context of TESCO’s project in India, problems associated with joint ventures as well as ways to resolve them have been explained. To conclude, TESCO needs to study the Indian market and implement strategies that value cultural aspects of individuals that are involved such as, customers and employees. Reference List Ahmed, A. and Pang, Z., 2009. Corporate culture in an international joint venture. [pdf] Diva-portal. Available at: [Accessed 02 May 2014] Boersma, M. F., Buckley, P. 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