How Cultural Diversity Affect the Business Performance of an Organization - Assignment Example

International Business Strategic (Essay 2) Part A Global business environment is changing drastically. Several leading organizations across the globeare trying to capitalize on the potential business operation opportunities that have been developed due to globalization. The strong degree of globalization has influenced several corporations to adopt and implement business diversification and global business expansion strategy. It is true that several corporations are adopting and implementing unique strategies to gain success from the adopted and implemented global expansion strategy. The organizations are gaining several advantages through this global business expansion strategy, such as strong customer base, high brand image, positive business and financial growth, and higher market share. Despite these advantages, the multinational organizations are facing several cultural issues in their business operation performance. It is true that the multinational organizations have to consider the cross-border activities in business operation process in order to make successful global business expansion campaign. But, cultural differences between home and host country can create several barriers that can hamper the subsidiary performances of the business organizations. Language barrier between home and host countries can be considered as a significant part of the cultural differences between two operating countries. Several multinational organizations are facing issues related workplace environment, cultural diversity and organizational communication process. This part of the essay will try to discuss that how language barrier or language differences between two countries can affect the business performance of an organization. Cultural diversity can be considered as an important aspect for an organization. Language barrier in the organizations in global market places can come under the cultural diversity issues in an organization that can affect the subsidiary performances. There are several issues that can be faced by the organizations due to language differences between home and host country. First of all, organizational communication process can be hampered due to this. Organizational communication process can be referred as the communication process between the organizational individuals and other stakeholders. Language can be considered as an important integral part of an organization’s internal communication aspect. Language is important as it helps an organization to develop effective relationship between the employees and employer, employees and other stakeholders, and employers and important stakeholders in an organization. Language barrier in an organization can be considered as the major consequences of cultural differences of people within the organization (Luo & Shenkar, 2006). It has been identified that, several multinational organizations face these types of issues in workplace that is affecting the business performances of an organization. Effective organizational communication highly depends upon the cultural diversity and language. Employee motivation can be considered as one of the important aspects for the effective business growth rate of an organization. There are several multinational organizations that effectively focus on culture and language diversity in workplace. It is true that, several multinational organizations face critical and serious challenges in host countries regarding cultural diversity and language barrier management. Different culture and language orientation can create differentiation issues, which can affect organizational workplace performance. Employee motivation can be considered as an important aspect for any organization. It has been discussed earlier that several organizations are trying to capitalize on the potential business opportunities. Cultural diversity can hamper employee motivation. The example of Apple can be considered. The management of Apple has adopted and implemented strong global expansion strategy. The organization has a strong business presence in several global market places. China can be considered as one of the most emerging and developing countries across the world. Apple has its business presence in Chinese market too. But, the organization has faced several workplace issues related cultural and language barrier. The business performance of an organization highly depends upon the employee motivation. Language barrier in an organization can create workplace dissimilarities. The Chinese employees were less motivated due to inadequate communication between the line managers and employees. The major fault of the organization was that the management of the organization has appointed line managers from another country. Language and cultural conflict between employees and line managers affected the several internal aspects of the organization. First of all, it affected the effectiveness of the organizational communication process (Vidal-Suarez & Lopez-Duarte, 2013). In addition to this, it has de-motivated the employees to perform effectively. It is known to all effective, clear and transparent communication between the employees and supervisors or line managers actually help to improve the organizational communication process. Lack of cultural and regional language adoption in the organizational process affected the business output of Apple in Chinese market. Organizational communication process includes communication between employers and consumers, employees, suppliers and government agents. Multinational organizations generally adopt two types of business operation approaches in the foreign countries. Firstly, they carry their management and entire workforce to the host country in order to take control of each and every business operation activity in the global market. Adoption and implementation of centralization actually helps the organizations to make this approach. On the other hand, it is also true that global business organization generally adopts and implements decentralization in business operation process in order to maintain effective business operation activities and approaches in the global market places. According to this decentralization, the organizations generally use regional supply chain network, employees, managers and government agents in order to maintain efficiency in business process. It actually has effective business outcome as it increases organizational communication activities between the employers and important organizational stakeholders including internal and external stakeholders. Several multinational corporations generally tend to keep entire control of the business operation activities in both parent and home countries. First of all, it is actually time and cost consuming process. On the other hand, it can affect the business performance of the organization due to several reasons. Language barrier generally de-motivate the employees to share their views and thoughts with the top level management of the organization. In addition to this, it also creates miscommunication and misunderstanding between several individuals within an organization. Several organizations generally try to hire local employees and managers in the host countries for the betterment of the organizational communication approach (Welch, Welch & Marschan-Piekkari, 2001). In-adequate cultural adoption and diversity can create serious problems in the business operation process of the organizations in the host country. Supply chain management can be considered as one of the important aspects in the business operation process of several organizations. It is highly important for several organizations in global market place to develop an effective supply chain network in order to maintain an effective business operation flow. But, in several times it has been identified that people within the supply chain network fail to fulfil the demand and needs of the organization and the management due to cultural and language barrier. It has become one of the most common issues in the host countries. Looking into these aspects, the management of the organizations in global market places generally focuses on effective market entry mode to eliminate the possibility of these factors. Each and every market entry mode has individual advantages as well as disadvantages. Therefore, it is highly important for the organizations to consider these issues before deciding a possible market entry mode in the foreign market place in order to overcome language barrier in the workplace. Language can be considered as one of the important aspects in the foreign direct investment operation of an organization. Huge language barrier can impose extreme and differentiated internal challenges to the organization. It hampers the co-ordination and co-operation between the employers and employees within an organization. Ultimately it affects the business growth rate and market share of an organization in global market place. Several leading multinational organizations based in the developing countries are eying for the emerging markets to expand their business operation activities as it helps them to gain potential competitive advantages over the competitors. It is true that demand for high quality and differentiated products and services are significantly increasing among the target customers in the emerging countries. China, Thailand, Malaysia, India, Brazil and Russia can be considered as the emerging markets. Therefore, the multinational organizations based in several developed countries, such as UK and US are trying to enter in the above mentioned emerging markets in order to maintain core competencies (Gaur & Lu, 2007). It is also helping them to increase overall global market share. The multinational organizations based on the developed countries generally face language barrier in the workplace in the host countries due to limited knowledge about the English language. Several organizations enter in the emerging market as wholly owned subsidiary. This specific entry mode generally affects the business communication process of the organizations in each and every department. The wholly owned subsidiaries generally have to develop each and every department, such as human resource department, supply chain network and other departments by their own capability through the centralized decision making and strategy development process. It actually affects the organizational communication process. In addition to this, it also affects the cultural workplace diversity as the employees based in regional areas always hesitate to share their views and thoughts with the top level management. Limited workplace integration, lack of decentralization and inadequate workplace diversity actually reduces the performance level of employees. In addition to this, it is also true that the organizations have to abide by different types of legal regulations in different countries. Therefore, it is highly difficult for an organization to avoid the issues related with language barrier without the help and association of local business partner. There are several organizations in this world, which used to search for potential partners in the host countries in order to overcome these types of issues. The effectiveness of subsidiary performance of an organization always depends upon the effective relationship between the subsidiaries and headquarters of an organization. It is highly important for an organization to follow several cultural aspects, legal regulations and business trend in the host countries in order to maintain successful business performance in global market places. Language difference can also hamper the strategy development process in the host countries. It is true that effective strategy development process always depends upon the effective stakeholder engagement process. Therefore, it is highly important for the organizations in a particular country to engage local stakeholders in the host countries in order to make effective decisions and develop effective strategies (Hinds, Neeley & Cramton, 2013). However, it is highly important for the management of the multinational organizations to overcome these issues in order to maintain their competitive edge in the global market place. Several organizations are focusing on the entry mode selection and practices in order to overcome these types of issues in the near future. The language barrier actually hampers the business performances of an organization due to several reasons. Lack of knowledge and awareness of local language actually creates difficulties for the organizations in the host country to attract the minds of the consumers as they fail in some cases to make the customers and other stakeholders understand about the business objectives, services characteristics and product characteristics. In addition to this, several organizations are trying to use the advantages of geographical distance and cross-border business communication activities. The language and cultural differences also make it difficult for the organizations to negotiate with the government agencies and supply-chain management individuals in a deal. It can create huge critical issues at the initial phase of business operation activities. Most importantly, lack of stakeholder engagement and customer acceptance can hamper the competitiveness of the organizations (Harzing & Feely, 2008). Last but not the least; it can create several external challenges for the organization as unfavourable cultural, legal and economic environment can affect the decision making and strategy development process of the organizations. Now-a-days, market research has become one of the important aspects for the multinational organizations before entering in an emerging market place to maximize revenue generation and profit making aspect. However, following recommendation plans can help the management of several multinational organizations to overcome the issues like language barrier in the host countries to gain success. First of all, it is highly important for the organizations to focus on effective business operation process and effective communication between the subsidiaries and headquarters of the organizations. Several leading multinational organizations across the globe are trying to capitalize on the potential opportunities. Business expansion in global market can be considered as one of those strategies that are becoming highly successful and fruitful for the organizations. Therefore, it is highly important as well as essential for the organizations to overcome these issues effectively to perform smoothly in global market places. The entry mode in the international market should be critically evaluated by the management of the organizations before entering into a market. There are several entry modes, such as wholly owned subsidiary, joint venture, franchising, turnkey projects etc. But, the management of the organizations should conduct an effective market research strategy to determine, which entry mode will be effective for the organization (Feely & Harzing, 2003). In addition to this, the organizations should also focus on the examination of culture and language orientation before developing any kind of strategy regarding the business operation process in the host country. Employee motivation is also a key aspect. The management of the organizations should try to hire local managers and organizational leaders who can understand the feelings, emotion, needs, and demand and language orientation of the sub-ordinates, colleagues, followers and employees within the organization. It is true that the global business environment is becoming highly competitive as well as saturated. Therefore, the organizations need to focus on these aspects quite effectively and sincerely. They need to hire people form host country and regional areas to take the advantage of geographical and cultural identity. It will automatically help the organizations to reduce the language barrier in workplaces. In terms of employee motivation, hiring line managers and supervisors from the regional areas will help the organizations to mitigate the risk of internal organizational challenges, such as workplace diversity issues. In that case, the employees and sub-ordinates within the organization will feel free to ask the questions and quarries in the regional languages quite freely and transparently. It will increase the eagerness of the employees to perform effectively and make a mark in the workplace. It will help the employees to motivate themselves for betterment of their career (Dakota, 2009). In addition to this, these specific approaches will help the headquarters of the organization in the parent country to communicate with the government agents and supply chain agencies quite effectively through regional supervisors as the regional managers, leaders and supervisors will get success in making the external stakeholders understand about the business objectives. Last but not the least; it is highly important for the organizations to consider the effectiveness of the joint venture and partnership business operation activities. Partnership business can help an organization in several ways. It is clear from the above discussion that language barrier can be created in several departments. Therefore, it is highly essential to make partnership with local firms and agencies to overcome language barrier in different departments and aspects. The organizations can gain enormous success through the business expansion activities if the organizations follow these aspects in their internationalization process. Part B Several multinational organizations generally try to enter in the foreign market place through the consideration of different types of market entry modes. It is true that wholly owned subsidiary, joint venture and franchising are the most popular and effective market entry modes that are considered by the multinational organizations while entering into the foreign market places. This part of the essay will determine the better and effective market entry mode between wholly owned subsidiary and joint venture in the presence of language barrier in an organization. Organizations in international and foreign markets generally try to take their entire control through wholly owned subsidiary foreign market entry mode. There are several advantages as well as disadvantages of this entry mode. An enterprise can take entire control over the business operation activities through this. In addition to this, the organizations can enjoy 100 percent profit sharing. Last but not the least; the organization does not have to share its revenue or profit with other organizations. But, on the other hand, there are some challenges too that can hamper the business operation process. Cultural issues and language barrier can hamper the business operation process and business performance of an organization in this specific entry mode. On the other hand, join-venture entry mode can be considered as another foreign market entry mode that actually helps the multinational organizations to enter into the foreign market with the support of a business venture in the host country (Konara and Wei, 2014). This specific market entry mode also has individual advantages as well as disadvantages. In terms of advantages, the organization can adopt the business tradition, language approach, organizational culture and other socio-cultural approaches in the business operation process. Therefore, in terms of language differences in host country and home country; it can be stated that the organizations with wholly owned subsidiary mode will get more affected comparing to the organizations with joint-venture entry mode. Several multinational organizations, such as Marriott International Hotel Chain, PepsiCo, Coca Cola, Vodafone, Tata Motors etc are following joint-venture foreign market entry mode in order to gain potential competitive advantages over the competitors in the foreign market places. It is true that several organizations in this world are trying to develop and implement unique strategies in business operation processes in order to gain potential market share growth rate. On the other hand, several other organizations are customizing their products and services through the adoption and implementation of business diversification strategy in foreign market places and business differentiation strategy to maintain their competitive edge in global market places. It is highly important for the organizations to gain potential competitive advantages through the support of other local firms. It has several benefits. First of all, this approach will help the organization to gain knowledge about the language, culture, tradition and organizational culture in the host country. Wholly owned subsidiaries in the host country can find it difficult to maintain effective business communication approach with the different departments and business networks in the host country due to the language differences. The example of Samsung can be considered in this case. Samsung can be considered as one of the leading telecommunication and electronic goods manufacturing organizations in this world. China can be considered as one of the most profitable and effective emerging markets for several business organizations. It is true that the global business environment is highly changing drastically. In several emerging markets, Samsung has gained huge popularity as well as business growth rate in global market places. But, at the initial phase; the organization has faced huge trouble in the Chinese market due to the language differences between the host and parent country (Davis, Desai & Francis, 2000). Language dissimilarities between the employees and line managers, employees and top level management, and suppliers and top level management had created workplace related issues. In addition to this, too much centralization has created difficulty for the management of Samsung to maintain employee motivation. Example of Apple also can be considered in this study. The wholly owned subsidiary also faced problems in its supply chain management process due to the language differences between suppliers and line managers. This aspect has affected the sales growth rate of the organization. As a result, the growth of smart phone market of Apple was seriously hit. On the other hand, other smart phone manufacturers gain huge success due to the effective adoption and implementation of localization process. Looking into these aspects, it can be stated that language differences in both wholly owned subsidiary and joint venture entry mode can create huge difficulty in the subsidiary business operation process. It is highly important for the organizations to maintain sustainability in the business operation process to gain success. Language barrier in the business operation process can hamper the sustainability aspect of an organization. Therefore, it is highly important for the management of the organizations to take care of the actual needs of management as well as employees of a subsidiary in the host country in order to overcome the language barrier and cultural diversity issues. In addition to this, there are several aspects that can help a multinational organization in the foreign market place to operate effectively and successfully. Gionee Mobile and Lenovo are two most developed and important electronic good manufacturing and distributing organizations across China. These two are multinational organizations. On the other hand, the example of ZTE can be considered in this case. ZTE is Arab based multinational organization that develops and distributes electronic goods and services (Lopez-Duarte & Vidal-Suarez, 2010). However, ZTE has entered in China after conducting huge and in-detailed market research and market analysis. The management of ZTE understood that they cannot get success until and unless they adopt and implement joint-venture entry mode due to the cultural and language differences among the home country and host country. Slowly and gradually, the organization has gained huge success due to the partnership with local ventures in the Chinese market. It is true that the business environment in China is becoming highly competitive as well as saturated. But, language barrier in the workplaces are becoming one of the major concerns for the organizations. Due to this reason, the organization or the management of ZTE decided to make a joint-venture with Lenovo and Gionee in order to get familiar with the language and cultural orientation. Joint-venture actually has better advantages in this situation of cultural and language barrier within the organization. A subsidiary of multinational organization consists of several departments and functions. Therefore, joint venture with local firm can help a multinational organization to use available resources of the local firm. On the other hand, the multinational organization’s subsidiary can use the existing data source, resource allocation process and supply chain or distribution network of the local business partner. It has several advantages comparing to the wholly owned subsidiary mode. First of all, it actually reduces the business operation time and cost. It eases the managerial decision making and strategy development process. In addition to this, it also reduces the business process life-cycle that can automatically reflect in the business outcome and business productivity. However, several organizations are trying to follow this joint venture market entry mode in order to overcome the cross-cultural and language barrier in the business operation process. Secondly, it helps an organization to reduce overall supply chain lead time. Existing supply chain network always provides benefit to the business performance of an organization. It actually helps to reduce inventory management time and cost. Low supply chain lead time and effective turnaround timing in the customer service management process are the major advantages of the joint-venture entry mode of an organization comparing to the wholly owned subsidiary model. On the summary of the main points and aspects, it can be stated that the organizations with the joint-venture entry mode can effectively deal with cultural issues and language barriers comparing to the organizations with the wholly owned subsidiary model. It is true that, the management of several multinational organizations need to focus on language barriers in the host countries. The adoption and implementation of joint-venture entry mode will help the management of an organization to maintain effective business process. This internationalization process can help an organization to hire regional managers, staffs and employees within the particular geographical boundary who are aware of the regional language, culture, tradition and particular organizational culture of the countries. It is true that the global business environment has changed drastically after the globalization. The emerging markets are becoming most profitable markets across the globe. However, language and cultural barriers are forcing the global multinational corporation to adopt and implement differentiated approaches. Joint venture is an effective foreign market entry mode, several leading organizations across the world are trying to follow this strategy as this helps them to invest half capital and half time comparing to other modes. On the other hand, the multinational organizations can gain huge success in this joint-venture mode comparing to the wholly owned subsidiary mode due to support of local and regional ventures. 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