Group Business - Qantas Airways - Case Study Example

Group Business Report Introduction Qantas Airways was formed in November 1920 as Queensland and Northern Territory Aerial Services Limited (Qantas 2011) and is one of Australia’s strongest brands and world leading long distance airlines. Qantas Airways provides air transportation through a global network of 142 destinations spanning 44 countries from Australia to Asia Pacific, Southern Africa, Europe and America (Qantas 2011). Qantas Airways caters for the international destinations market with subsidiaries Qantas Link and Jetstar Airways catering for regional and domestic destinations. Qantas employs an estimated 36,000 employees as of 2011 with about 92% based in the home country Australia. Qantas is headed by the Board of Directors under their Chairman who is seconded by the Chief Executive Officer and other non executive directors. The Executive Committee consists of officers in charge of various divisions of Qantas such as the Chief Financial Officer, Group Executive of Qantas Airlines Customer and Marketing and Executive Manager Strategy (Qantas 2011). Jetstar Pacific Airlines is a 27 percent owned subsidiary of Qantas based in Ho Chi Minh City, Vietnam. Jetstar Pacific is a low cost airline catering for domestic and international flights. Jetstar Pacific has an estimated 2,000 employees in Vietnam. The company is headed by the Chairman of the Board of Directors and a CEO who heads the Executive Committee (Qantas 2011). This report will analyze critical cross-cultural issues in setting up Jetstar as a subsidiary of Qantas Airways in Vietnam. The report will compare and contrast Australia (the home country) and Vietnam’s (the host country) leadership and management styles using Hofstede’s five dimensions of national culture. The report will then provide recommendations on which aspects of the leadership and management style of Qantas need to be adapted for Jetstar in Vietnam as the host country. Comparison and Contrast of Leadership and Management Styles in Australia and Vietnam The leadership and management styles at Qantas and Jetstar largely reflect Australian and Vietnamese national cultures. Hofstede (1980: 2001) identified five dimensions of national culture that can be used for cross-cultural comparison and contrast of leadership and management styles in Australia and Vietnam. These dimensions include; power distance, individualism, uncertainty avoidance, long –term orientation and masculinity (Hofstede 1980). Power Distance Power distance is essentially, the degree of inequality that exists and is accepted particularly with regards to the unequal distribution power. In Australia, the power distance is lower and Australians have a general egalitarian sense of equity. Equal rights are upheld in many organizations, Qantas included. Management in Australian organizations are participative in nature and managers welcome the involvement of employees (Hofstede, 2011b). Leadership and management in Australian organizations is thus participative and collaborative rather than instructional and employees in Australia also expect to be consulted in major decision making processes as well as in other processes important to the organization such as any changes to the management structure or strategy (Mead 2004; Bennet et al 2000). In contrast, the power distance in Vietnam is comparatively higher than that in Australia. As Hofstede (2001) explains, individuals in high power distance cultures are more tolerant of inequality in distribution of power and tend to perceive differences between subordinates and superiors as naturally ordered believing that the latter are entitled to special privileges. Therefore, unlike in the more egalitarian Australia, Vietnam is more hierarchical and leadership and management styles in Vietnam are more authoritarian and less democratic with employees holding their managers or superiors in high regard (Hofstede 2011b: Hoang 2008: Mead 2004). In fact, consultation with subordinates is unusual and at times even considered appropriate in Vietnamese culture. Titles, formalities, status and face (reputation) are of utmost importance and disagreement with superiors in Vietnam is unacceptable (Mead 2004). Individualism Another dimension proposed by Hofstede is individualism. This refers to whether members in the society views things in terms of “I” or “We.” While in comparison Australia is a more liberal and individualistic society, Engholm (1995) notes that Vietnamese are also more individualistic and aggressive as compared to other Asian cultures. Mead notes that in individualistic cultures such as Australia, individual rights and achievements are respected and individual decisions valued above group decisions. In contrast, in collectivist societies such as Vietnam, group interests prevail over individual interests (Mead 2004: Hofstede 2011b). The implication for management styles is that in Vietnam, managers have to consider group interests such as overall pay rise as opposed to performance based pay for several employees. There are tight social frameworks and self functioning communities in Vietnamese society where members are expected to “protect” each other hence singling out individuals for performance appraisal, whether positive or negative, is met with resistance (Hoang 2008). However, Mead notes a paradox in that Australians embrace team effort and do not believe in singling out individuals while in Vietnam decisions are made and transmitted vertically downwards through the organization’s hierarchy for implementation where individual employees are held to account (Mead 2004). Masculinity Masculinity is another cultural dimension proposed by Hofstede (1980: 2001) which refers to the extent in which a society is driven by success, achievement and competition. This is a value system that emphasises more on achievements than quality of life. Australian culture is more masculine and leaders and managers at Qantas have prided in taking responsibility for the company’s good streak of performance and thriving on the recognition of milestones such as being named the world’s safest airline (Qantas 2011). In Australia, performance is judged by results in terms of profitability and growth and this breeds competition (Hofstede 2011). However, Vietnam has a more feminine value system that emphasizes family and community values in terms of achieving a higher quality of life (Hoang 2008). Managers in Vietnam would thus be judged by their ability to realize social improvements. For example, Jetstar’s success would be viewed more in terms of contribution to society through availing affordable flights and having a visible impact through corporate social responsibility programs. Uncertainty Avoidance Uncertainty avoidance, another dimension proposed by Hofstede, essentially refers to the extent to which people of a culture value stability or risk or tolerate ambiguity (Evans et al 1989: Mead 2004). Australia’s culture is one characterized by low uncertainty avoidance. The implication is that managers are more willing to take risks and effect more radical changes since Australian businesses have a high tolerance for risk and readily accept change (Mead 2004). Innovation is encouraged and failure is seen as part of learning. In contrast, Vietnam has been characterized as having moderate uncertainty avoidance. The implication for management styles is that in Vietnam, employees and managers are wary of deviant behaviour and prefer job stability by adhering to formal rules. Change is also difficult to accept especially if it does not serve the wider interests of the group (Hoang 2008). Long versus short term orientation Hofstede’s last dimension is long versus short term orientation. This refers to the temporal orientation towards life. Australia is a short term oriented culture, focused on fulfilling goals and social obligations, saving face and reciprocating gifts and favours (Hofstede 2001: Mead 2004). Therefore, managers’ performance is continuously monitored on a quarterly basis in terms of profitability and individuals are spurred to produce quick results. In contrast, Vietnamese culture has been characterized as having both long term and short term orientations with the former more prominent. They are thrifty-saving for the future, perseverant and longer term thinking in terms of results and observing established order (Hofstede 2011b). However, they also embrace elements of their past and present in terms of traditions and values (Hoang 2011). Therefore, managers have to be careful in introducing changes to the organization. Conclusion Gert Hofstede’s five dimensions of national culture are useful in comparing and contrasting the leadership and management styles in Australia (the home country of Qantas) and Vietnam (the host country of Jetstar). Using Hofstede’s five dimensions; power distance, individualism, uncertainty avoidance, long –term orientation and masculinity, there are several identifiable aspects of management styles practiced in Australia by companies such as Qantas which should be adapted to suit the cultural environment of their low cost subsidiary in Vietnam. For instance, while Australia has a lower power distance or is a more egalitarian society that values and promotes equal rights, participative and collaborative leadership and consultation between subordinates and superiors within the workplace, Vietnamese culture has a higher power distance where great emphasis is placed on clearly defined and authoritative leadership where managers are expected to provide strong leadership. Therefore, the management of Jetstar should adapt to local cultural expectations and minimise consultation with employees as is characteristic of Qantas in Australia. Vietnam is also a more collectivist society, has more feminine values than Australia, has moderate certainty avoidance and a longer term orientation than Australia. Subsequently, this report identifies several recommendations which enable the management of Jetstar better adapt their leadership and management styles to be compatible with the host country’s (Vietnam’s) cultural expectations. Recommendations In view of the cross-cultural comparison conducted between the home country (Australia) and the host country (Vietnam), there are several aspects of leadership and management styles that need to be adapted for Qantas in Vietnam. 1. Jetstar management should to the extent possible limit consultation with lower level staff and employees and instead rely on a few local experts to make authoritative decisions. 2. Jetstar management should institute a formal workplace culture which emphasizes on clearly outlining the roles played by every employee in the organization and their appropriate titles and positions in the organizational hierarchy through a code of conduct (Evans et al 1989). 3. Jetstar should introduce and implement collective group-based as opposed to individual performance appraisal and pay or bonus systems to motivate their employees. 4. Jetstar management should prioritize highlighting corporate social responsibility projects that focus on initiatives such as health and education in their media announcements or press releases as opposed to quarterly profit margins and/or forecasts. 5. Jetstar management should institute and implement a policy of organic organizational change. (Evans et al 1989). References Hofstede, G. (2012). National Culture: Australia. Retrieved on March 25, 2012 from < http://geert-hofstede.com/australia.html> Hofstede, G. (2012). National Culture: Vietnam. Retrieved on March 25, 2012 from < http://geert-hofstede.com/vietnam.html> Hofstede, G. (1980). Cultural consequences: International differences in work- related values. CA: Sage. Hofstede, G. (2001). Culture’s Consequences: comparing values, behaviors, institutions, and organizations across nations. Michigan: SAGE. Bennett, R., et al (2000). “Cross-cultural training: A critical step in ensuring the success of international assignments. Human Resource Management, 39(2), pp. 239-250. Evans, W. A., Han, K. C. and Sculli, D. (1989). ‘A Cross-cultural Comparison of Managerial Styles’, Journal of Management Development, 8(3), 5-13. Engholm, C. (1995). Doing Business in the new Vietnam. California: Prentice Hall. Mead, R. (2004). International Management: Cross-Cultural Dimensions. Cambridge, MA: Blackwell. Hoang, H. (2008). Culture and management: A study of Vietnamese cultural influences on management style. (Doctoral Dissertation). Retrieved from Proquest/UMI (Accession Order No. 3297920). Qantas (2011). Annual Report 2011. Retrived on March 25, 2012 from < www.qantas.com.au/infodetail/about/.../2011AnnualReport.pdf> Read More