Comparative and International Business - Literature review Example

COMPARATIVE AND INTERNATIONAL BUSINESS Table of Contents Table of Contents 2 Article 3 Post Change with Reorganising 3 Post 2: Alternative Strategy and Influence on Business 4 Article 2: 5 Post 1: Culture Shock in Culturally Diverse Environment 5 Post 2: Influence of Culture Shock 6 Reference List 9 Article 1: Post 1: Change with Reorganising Change is the fuel for growth in the modern-day scenario. May it be planning, operations, promotion, products and services or any other aspects of life, change can be observed playing a dominant role. In the words of Teece (2012), the process of evolution itself means change at its root which shows its importance. The change that took place in the family empire of Li, however, is one form of change which few dare to make. An absolute restructuring of a historical big business empire is a possibility few are ready to take. The announcement made by the future heir to the throne of Li’s empire, Victor Li about the restructuring of their business shook many banks and investors. As clarified by Victor Li, the primary objective of this restricting the business to core was to release the value which has been locked in within the business network. One of the largest family businesses of South Korea raised many speculations about this move regarding the implementation of reorganising in a family business and its authority on the power of the family. Business restructuring is not that uncommon in the contemporary scenario and the idea of rearranging the process for better future is also appreciated. In case of Li ka Shing’s, the commotion occurred mainly because of the business culture of the market. In Asia, most of the business firms reflect a tangled structure wherein the heads for decision making are many. Furthermore, the concept of reorganising is also very rare which increased the shock for the shareholders. According to Whitley (2007), restructuring a business for reducing the complicacies related to the stakeholders and the management of the firm is a knotty process mainly because of the tight relation to the financial conditions of the business. On the other hand, the rate of success in business restructuring is also something which cannot be estimated in a near accurate manner making it more difficult for the organisations to settle on the phase of reorganising. Even when firms have a simple singular operational process and one management body, restructuring of the business is a risky affair. Often, firms tend to misunderstand reorganising with business expansion processes such as alliance or mergers. However, Tylecote and Visintin (2007) mentioned that business firms utilise mergers and alliances are common alternatives to reorganising. The primary concern here is to reduce the financial and operational risks without changing their objectives. In context of the Li’s, the reorganising has been considered as a calculated step and hence the accuracy of their planning is yet to be seen. Post 2: Alternative Strategy and Influence on Business Li Ka-Shing’s business is one of the largest family run businesses in the South Korean market with strong positions in global brands such as Samsung. The decision of reorganising the company into two parts was recently announced by its heir Victor Li. Li justified that the restructuring will help the company in releasing its untapped value and result in better positioning and control over the resources of the organisation. One of the most essential contributions of the business restructuring as mentioned by Pisano and Shih (2009) is that business houses can identify the existing gaps in the operational and planning process and realign their organisational objectives with the market trends. Nevertheless, the risks associated with the procedure of restructuring are also grave in nature. While in some cases, reorganising tends to shake the trust of the shareholders and investors, in others the performance of the company suffers as internal stakeholders are not able to adapt to the changes. Tylecote and Visintin (2007) stated that reorganising does create an uncomfortable scenario of employees of a firm as their management process changes. Thus, the influence of restructuring can be also devastating for a firm if all the factors are not included in the planning of the process. Considering the risks associated with the process of reorganising firms often like to take an alternative approach for enhancing the scope of the business. Systems such as mergers, alliances, divestures, bankruptcy and liquidation are widespread in this respect. Based on the strong business network of Li’s empire, alliances and mergers can be one of the most profitable options in lieu of reorganising. Teece (2012) stated that alliances are amongst the most common forms of organisational restructuring and development. A busienss can augment their reserves, build up a new market area and also concentrate on exploitation of the market possibilities by forming an alliance. However, the ratio of success in alliance is almost similar to that of the ratio of reorganising. Historical evidences suggest many big brand names that have not been able to successfully perform an alliance and hence suffered major setbacks in terms of internal and external business management. It has been mentioned that the ultimate aim of implementing a reorganising or alliance concept within the business is to create more value for the business and its stakeholders. So far, the conditions look favourable for Li’s but their ability to control and manage the change will influence the outcome of the reorganising process Article 2: Post 1: Culture Shock in Culturally Diverse Environment Concepts such as globalisation are playing the dominant role in the process of developing the scope of business houses in various markets. The alterations and modifications in the business management processes are becoming common phenomena in the corporate sector, in order to meet the hyped expectations of the stakeholders. While customers are always considered to be the most important stakeholder group of a firm, employees have also started to make their mark. Many big business houses are trying to engage themselves with an employee centric business process where fulfilling the employee needs will result in better performance and fulfilment of customer expectations. One of the most apparent disputes for the business houses that came out of the above mentioned advantages is the cultural diversity within their workforce as well as their consumer base. As noted in the article regarding the working condition for foreign employees in Berlin, the environment and culture of the state is making it difficult for the employees to retain themselves in the technological hub of Europe. This process in academic terms is known as culture shock. Ghemawat (2007) reflected the increasing amount of culture shock among employees as a result of increased multinational operations of business houses. The expatriates are not able to merge within the new and unfamiliar environment mainly because of different expectations and perceptions regarding the country. Maniar and Bennett (2007) observed that often markets with high performances in corporate sector are considered to have a friendly social environment which increases the pain of the employees when they land in the place and face the challenges in real life. Ghemawat (2001) pointed out that organisations train their employees mostly in respect to adjust their living in the society, whereas, other important and basic factors such as the regulatory policies and law of the place are often ignored. Germany is renowned for being a leader of the technological industry for organisations and employees alike. This attracts the employees towards the country but the basic aspects of the nation such as language, regulations, laws, etc are complex in nature, which makes it difficult for the people to adjust with the place and hence they retract and consider other options. As far as Germany is considered, it is becoming extremely difficult for start-up or existing players in the market to attract talent from aboard mainly because of the culture shock faced by the employees in the nation. Companies and their employees must mull over the notion of culture shock bit more acutely for guarantying sustainable association between employers and employees. Post 2: Influence of Culture Shock According to Bate (2008) the concept of culture shock is often misunderstood in the corporate sphere. Most of the employers and employees think that culture shock takes place only when an employee is being shifted to another nation where the culture and environment are unfamiliar. However, culture shock can exist within the same country where the cultures of the states differ from each other. An apt example of this is India. Being a secular country, India is a focal point of numerous cultures and all the states highlights a different life style and their individual culture. This makes it difficult even for local people to adjust with the lifestyle of new work places. In perspective of the given article, it was noted that business houses are putting in effort for helping the employees in adapting to the unfamiliar surroundings by providing them fundamental facilities such as office rented place to stay, transportation, means of entertainment, etc. All these factors also add to the hidden cost of managing the culture shock. One of the most basic aspects of introducing the employees in a new environment is to train them regarding the lifestyle of the people of new work place which is mostly missing in case of many organisations. Clifford (2007) noted that culture shock is one of the most dominating factors hampering the employer-employee relationship. Not only does it reduce the ability of the employees to perform up to their potential, but it also reduces the ability of the organisation to establish itself as an employee centric firm. Clifford (2007) noted that, often it has been observed that employees develop a perception of the new work place mostly based on word-of-mouth communication. However, as experiences of different individuals and groups vary, the perception formed by the employee also varies far off from the reality, creating problems for the firms in training processes and also for the workforce to acclimatize to the work culture. As per the studies of Denison, Haaland and Goelzer (2007) training and development of employees are considered to be the single most useful process for managing cultural shock. However, the substance of the training section requires to be designed fittingly for guarantying the needed results. Beginning from the historical significance of the place to the civil and social laws, all should be taught to the employees so that they can develop an appropriate perception. It is essential for business houses to ensure that the employees are focussed on their work and are able to acclimatize with the situations faced with. Reference List Bate, S., 2008. Strategies for Cultural Change. 4th ed. Oxford: Butterworth Heinemann. Clifford, J., 2007. The Predicament of Culture. 5th ed. London: Harvard University Press. Denison, D., Haaland, S. and Goelzer, P., 2007. Corporate culture and organizational effectiveness: Is Asia different from the rest of the world?, Organizational Dynamics, 33(1), pp. 98-109. Ghemawat, P., 2001. Distance still matters. Harvard business review, 79(8), pp.137-147. Ghemawat, P., 2007. Why the world isnt flat. Foreign policy, pp.54-60. Maniar, N., and Bennett, E., 2007. Designing a mobile game to reduce culture shock. In Proceedings of the international conference on Advances in computer entertainment technology (pp. 252-253). ACM. Pisano, G. P., and Shih, W. C., 2009. Restoring American Competitiveness. Harvard business review, 87(7/8), pp.114-125. Teece, D. J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of Management Studies, 49(8), pp. 1395-1401. Tylecote, A., and Visintin, F., 2007. Corporate governance, finance and the technological advantage of nations. New York: Routledge. Whitley, R., 2007. Business systems and organizational capabilities: The institutional structuring of competitive competences. OUP Catalogue. Read More