Culture and Ethics in Business - Essay Example

GLOBAL MANAGEMENT: A Case Study on Molson Coors Student Name 314711 Culture and Ethics in Business 500 Date Introduction A mutual accord in the international business literature is that business has increasingly become more globalized. Nonetheless, it is not only businesses that have become more globalized but also people who have become more global, (Friedman and Liu 2008). As a result of increased globalization, cultural diversity is a common phenomenon in organizations. The implication of such a phenomenon is that managers are increasingly supervising employees from different cultural backgrounds, beliefs and attitudes than themselves, (Steers, Nardon and Sanchez-Runde 2013). Such is the case for Molson Coors. Molson Coors found itself in a challenging situation where its cultural values markedly differed with those of Starbev, a Czech Republic based firm. According to Bruce Kennedy (2014), Molson Coors corporate social responsibility policy was grounded on its Canadian and USA values and cultural norms. These values and norms were markedly different from those of Starbev, its joint venture partner. The latter’s cultural values and norms were shaped by the Czech Republican culture and values. This essay evaluates the article by Bruce Kennedy; ‘when corporate cultures clash: defining company values across borders,’ (Appendix 1). The essay identifies a number of challenges that were faced by Molson Coors as a result of its decision to enter into a joint venture with Starbev, a Czech Republic based company. Challenges Facing Global Managers Hamilton, Knouse and Hill (2008) identify three alternatives that organizations may have whenever they face ethical values and cultural norms conflicts. These include following the firm’s own values to the latter, adopting the host country’s values and business practices and abandoning operations in the host country. Organizations should endeavor to integrate their ethical values and business operation practices with universal ethical principles as well as with local cultural norms and business practices for success. Firms have a responsibility to respect the host country’s cultural legitimacy for following particular business practices. Firms that adapt their business practices to those of the host culture are likely to encounter low costs of introducing new practices. Moreover, incorporating host country values is a source of leverage to the firm since respect of local ethical values and practices enhance the reputation of the firm as one that respects, values and promotes the welfare of the local society and its values and cultural norms, (Hill et al. 2006). Another challenge is brought about by the fact that the concerns of customers in developed countries are different from the concerns of the customers in developing ones, (Bruce 2014). This variation necessitates the need for companies operating in both environments to strike a balance and manage any conflicting situation appropriately and with caution. Cultural variations negates the notion of a one size fits all approach, more so in international operations. The ideal approach is to allow a company’s operations to be molded by the interacting local forces within or outside the confines of the foreign subsidiary. Furthermore, other challenges arise due to the existence of varying moral and ethical obligations that are expected from companies in different cultural backgrounds. The challenges of different moral obligations across cultures arises due to differing perceptions and opinions regards distinguishing what is a morally right or appropriate decision or behavior from that that is morally wrong or inappropriate. Morality is concerned with value judgments that differ markedly across culturally diverse groups, (Bucker and Potsma 2010). Behavior that is normally acceptable in one culture may be unacceptable in another culture. One case of value clashes was the case of Coca-Cola’s CSR sponsorship program of providing thousands of soccer balls annually to various football teams across communities globally, (Bruce 2014). However, because Indian manufacturers have been known to use child labour in production of hand-stitched soccer balls, Coca-Cola was forced to establish a Pre-Certification System for soccer balls it intended to purchase too support its sponsorship program. This case is a classic example of how companies can let the environment in which they operate to shape their operations to avoid perilous conflicts that can be detrimental to the success of their operations. Another gray area for companies with operations across multiple cultures includes the issue of employees’ freedom of association underpinned by the right to form and join trade unions. In some countries, employees are banned from forming or joining trade unions whereas in others it is an acceptable practice. As such, managers need to be cognizant of this fact and put in place mechanisms that are beneficial to both the company and the employees. Organizational Environments that Demand Better Understanding by Global Managers One environmental factor that manager need to understand in international operations is the issue of the notable rise of team-based work structures in contemporary organizations. There has been a shift in organizational work structures from individualized to team-based work structures. Such a shift has substantial implications for managers as their roles accordingly shift from managing individuals to managing groups. The effectiveness of teams depends on team cohesiveness and mangers need to be well versed and conversant with the mechanisms that foster team cohesiveness, (Wendt, Euwema and vanEmmerik, 2009). Managers need to understand how the host country, as well as the home country social culture and ethical values affect team cohesiveness and performance. Moreover, they should be cognizant of how their leadership behavior is likely to impact on organizational outcomes. Cultural Environments that Demand Better Understanding by Global Managers With the ever increasing number of firms engaging in international business operations, cultural decision making has become an issue of necessity. Firms and particularly managers need to take into consideration the issues of cultural differences as well as variations in law and ethics to be successful. Cultural value systems are also closely linked to the understanding of moral or ethical issues and expectations regarding moral behavior, (Martin et al. 2009). In addition, cultural differences explain the existence of different perceptions of what constitutes effective leadership, For instance, most people from individualistic cultures have a preference for managers who take control of situations, whist majority of individuals from collectivistic cultures have a preference for consultative managers. It is nevertheless imperative to note that individuals can significantly differ in their behavior within individual cultures, not just between cultures. Situational Environments that Need Better Understanding by Global Managers Beliefs about leadership systematically differ depending on one’s cultural background, (Resick et al. 2006). Different cultural norms and ethical values generate differing expectations of what constitutes an acceptable or unacceptable leader behavior in any particular circumstance. Such different expectations place restraints on the types of leader behaviors and characteristics that subordinates will regard as appropriate and desirable. As Steers, Nardon and Sanchez-Runde argue (2013), if managerial intuitions can vary across cultures, so will the expectations of subordinates regards the appropriate managerial roles. Consequently, what individuals regard as effective managerial behavior will vary across different cultures. Another area in which a manager needs to develop a good understanding is on cross-cultural ethical conflicts, (Teymouri 2005). Cross-cultural-ethical conflicts arise whenever a company’s business practices contrast those of the foreign country’s practices in which it has set up operations. Wood et al. (2006) proposes that firms caught in a situation of conflicting ethical values should establish ways that are capable of accommodating the legitimate differences of the host countries. Molson Coors has managed to establish mechanisms that enable it to address situations of cultural conflicts. This scenario is particularly enhanced by the fact that Molson Coors had had extensive experience in operating across multiple cultures with operations across various countries. For instance, its ‘Beer Print’ tool enabled it to evaluate the impacts of its operations on the people and environment. In addition, its ‘Our Beer’ guided its organizational behavior. Incorporating ethical considerations into a company’s practices is desirable since in most instances, legal requirements and policies are not advocate ethical behavior, as they do not forbid all instances of unethical behavior. As a consequence, it is possible that some laws may allow or even oblige companies to engage in unethical behavior. It is not adequate to comply with legal and social rules in order to avoid sanctions; firms should instead focus on incorporating integrity into their decisions and operations by committing to ethical conduct, (Hamilton, Knouse and Hill 2008). Global Management Sills for Effective Management Managers need to acquire and exhibit a number of skills and competences in order to be effective in the present business environment. Such skills include multicultural competence, cultural intelligence, ethical leadership and cross-cultural communication. Cultural intelligence refers to the skills and competencies that allow an individual to adapt to new cultural contexts. Cultural intelligence fosters an individual’s ability to operate effectively in a foreign cultural setting, (Friedman and Liu 2008). Cultural intelligence enables a manager to develop multicultural competence skills. Such skills enhance their ability to recognize and activate a certain behavior that is consistent with the cultural norms and values of the society in which he finds him/herself. This way of behavior is what Friedman and Liu (2008) refer to as cultural adaptability. Ethical leadership skills refer to the ability of a person to lead in a way that is cognizant of the rights and dignity of others. Ethical leadership is underpinned by integrity, altruism, collective motivation as well as encouragement, (Martin et al. 2009). Integrity refers to the ability of an individual to distinguish between ethical and unethical behaviors in a particular situation as well as the willingness to exhibit that particular behavior in spite of external pressures, (Teymouri 2005). Altruism refers to the ability to serve exhibit behavior and make decisions that promote the greater good of everyone. Conclusion As a result of increased globalization, cultural diversity is a common phenomenon in organizations. The implication of such a phenomenon is that managers are increasingly supervising employees from different cultural backgrounds, beliefs and attitudes than themselves. Managers who want to be successful in such an environment must think outside their national and geographic borders. Cultural intelligence has become an integral skill requirement for all global leaders. They must be aware of varying cultural and ethnic values among the groups or individuals they manage. The managers should be able to establish a multicultural relationship with all stakeholders for them to succeed. Companies that fail to recognize the variations in ethical values as well as cultural norms are at a disadvantage. Clashing of two or more cultures has the potential to bring about complicated scenarios for managers. Managers should make efforts to understand the local culture of the people in which they are operating. 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