From Local to Global - Cross-Cultural Adaptation at Ainsley Accouterments - Case Study Example

From local to global: Cross-cultural adaptation at Ainsley Accountrements Compiled by Department of Advancements in technology have rendered today’s world a global village. Information communications technologies for instance have made it possible to transact business from any corner of the world with much ease. The technological developments coupled with escalating costs of doing business have forced much business to go international in search for cheap labour and ready market. In this case study Ainsley Accountrements owned by Jane Jones was forced to think internationally following declining business in Australia as a result of the 2008 global financial crisis. The company’s international expansion into China faces a number of challenges in the initial months which almost make the Australian manger Robert give up. The care therefore highlights why it is very important to understand challenges that businesses have to face when establishing international operations and how to overcome them. A very important factor of consideration of any business expanding into any international territory is the host countries culture. In order to break even with suppliers in a foreign country as for this case it is very crucial to understand the cultural aspects that moderate negotiations in the new territory. Even consumers identify with promotional messages they resonate well with. Economic systems, regulatory requirements, financial systems and consumer behaviour may also be different from what is present in the home country (Goh and Sullivan, 2010). Establishing an international business therefore requires a thorough prior feasibility study to understand the various aspects of doing business in the foreign nation of interests. In the case study, Jane Jones had a rear opportunity to easily get contacts in China who assisted in the process of purchasing an already existing factory but then overlooked important elements. She did not stay in China enough to understand and created a rapport with would be suppliers, cultural aspects affecting business in China and orient Robert on the same before deploying him. Establishing international operations can therefore be faced with various challenges that range from regulatory obstacles, differences in financial systems, heavy initial capital requirements, and cultural aspects to simple things as lack of mastery of important negotiation skills in the host country. These factors if not taken care of can affect business very adversely. In the case study for instance, Quang points out to Robert that one reason why the quality of leather they received was not good was because Robert was not maintaining a close contact with suppliers. Language also as simple as it may look is a very important factor that may cause a challenge to a business establishing international operations. It merges in the case that designs given from Australia were written in English yet the people acting on them back in China did not understand the language hence the poor quality of the initial batch of shoes produced. Therefore, despite having enough capital, labour and location international business challenges can arise from very simple issues that are likely to be overlooked in the planning stages. Robert as the being Australian and send to China by Jane Jones to oversee the production stages is faced with a number of cross-cultural and these problems significantly hurt the business. Firstly, on assuming his new office in China, Robert needed to have taken considerable amount of time to interact with every stakeholder from the employers to the suppliers so as to understand how business in China. This would also have given him an opportunity create a working rapport with employees and suppliers so as to get the best support since in China apparently personalised relationships greatly influence negotiations. By engaging with everyone, Robert would also have had an opportunity understand the factors likely to hinder his success as the manager and plan in advance on how to overcome the challenges anticipated. Unfortunately he just arrived in China and went straight to business in his office liaising a lot with head office with little contact with employees to understand their concerns. The lack of close contact with employees is responsible for problems that faced the company in the initial stages with respect to poor quality leather supplies and low quality initial batch of products. Negotiations in China are affected by culture significantly which may not be the case back home in Australia. Robert appeared not to be interested in attending business banquets with suppliers and this was a very critical mistake on his part. In country like China where close relations greatly influence negotiations as most people prefer doing business with people they trust, Robert needed to fast appreciate the role of culture and adapt as quickly as possible in order to ensure not only business success but also his success as a manage (Wu, 2008). The result of his failure on this end was poor supplies of leathers as suppliers gave the best quality of materials to people who at least made an effort at building relationships with them. Another aspect of culture presenting a problem to Robert in China is language, he did not take time to know whether his employees were proficient enough in English to be able to understand designs brought from the headquarters in Australia. Since workers did not understand the designs drawn in English the quality of products was extremely unimpressive. Another aspect of culture giving Robert a problem in the case study is maintaining a close relationship with employees. He has only held one adhoc meeting with employees in which they asked him to establish a factory canteen. He agreed to the request but did not even implement it. Close relationships are part and parcel of the Chinese culture and as manager on an international assignment needed to have understood this. In Australia things may be different and allow management by giving directions from the office but the same may not be applicable on cultural considerations. The result of this lapse on his part of the overseer of local productions gave rise to discontent among employees, low morale and lack of trust. To overcome this challenge Robert needed to quickly learn the Chinese culture and its influence to business and adapt appropriately. In order to solve the language issues, the company needs to look for more workers who are proficient in English or find a way of having the designs drawn in Chinese Language. Adapting and getting along with people in a new environment can also be very difficult on a personal level especially when new in a foreign country and left on your own. The biggest problem Sharon is faced with in China is incompatibility with the new cultures and this has caused her a great deal of stress. That she doesn’t have a job and at the same time has not friends in China yet the husband has to leave her in the apartment alone as he goes to work is a very difficult experience on her part. Being along in the house with neighbours who hardly know English makes it even harder for her to fit and make new friends as she doesn’t understand what is going around her. She can’t go out with friends and enjoy fresh air in the parks as was the case back home and as such she is left only with dinners which are more or less official and shopping yet she doesn’t know what most of the stuff she is buying are. These challenges which mostly stem from culture are making it very difficult for Sharon to enjoy her life in the new environment to the extent that she wishes shouldn’t have come. To minimise these challenges facing Sharon Robert ought to find her friends who can take her around and teach her the language and Chinese culture she can start enjoying her stay. Getting her a job will be more effective in removing her thoughts from home hence she will start feeling comfortable as she slowly learns the cultures. In conclusion the case study is a good depiction the cultural challenges that can face a business trying to establish oversees operations. Language, level of relationships, trust and how to negotiate are some of the aspects of culture which may affect local people’s perceptions about a new foreign business. It is therefore very important for companies going international to take a considerable amount of time and understand national cultures in their countries so as to have a sooth launch of their oversee operations. Had Jones stayed in China staid longer in China to understand how culture affects business in China she would have may be anticipated some of the challenges and put in place measures to overcome them in advance. Also Robert as the manager in charge of local operations on a foreign mission should have taken time understand the local culture and more importantly should have forged friendships with employees who would have assisted with some of this information. The situation can only be salvaged if Robert would become more flexible and follow the advice given by Quan who is a local and experienced in the industry. They should understand traditions are very important in Chinese Culture and learn how to balance between business and local autonomy in order to enjoy the goodwill of Chinese employees, suppliers and business partners. Reference List. 1. Anthony Goh and Matthew Sullivan (2010) The 5 Biggest Challenges Business Face When They Expand to China. Business Insider. Available at: http://www.businessinsider.com/the-five-biggest-practical-challenges-for-foreign-smes-in-the-chinese-market-2010-12 2. Kurt Heisinger (2009). Essential of Managerial Accounting. Cengage Learning. Available at: https://books.google.co.ke/books?id=Lkdgf943DNYC&pg=PA408&lpg=PA408&dq=challenges+businesses+face+when+establishing+international+operations&source=bl&ots=3ewA5xO3Eg&sig=-gArhtvZjDTfUKVQ0FdSL8HqQXI&hl=en&sa=X&ei=gxQHVcT5JYLsap_XgfAH&ved=0CDEQ6AEwAw#v=onepage&q=challenges%20businesses%20face%20when%20establishing%20international%20operations&f=false 3. Gupta Abhishek (2013) International Business Environment: Challenges and Changes. Research Journal of Management Sciences: Vol 2(11), 34-38. Available at: http://www.isca.in/IJMS/Archive/v2/i11/5.ISCA-RJMS-2013-072.pdf 4. Jianlian Wu (2008) An Analysis of Business Challenges Faced By Foreign Multinationals Operating the Chinese Market. International Journal of Business and Management: Vol. 3(12). Available at: http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CEAQFjAG&url=http%3A%2F%2Fwww.ccsenet.org%2Fjournal%2Findex.php%2Fijbm%2Farticle%2Fdownload%2F776%2F751&ei=gxQHVcT5JYLsap_XgfAH&usg=AFQjCNF7OQoIqq42KzQ0zv6pP1HCz50sTQ&bvm=bv.88198703,d.d2s 5. Madura, J. (2006). International Financial Management, 8th edition. Cengage Learning. 6. Mead, R. (2005). International Management: Cross-cultural Dimensions, 3rd edition. Wiley-Blackwell 7. 8. Pankaj Ghemawat (2007) Managing Differences: The Central Challenge of Global Strategy. Available at: https://hbr.org/2007/03/managing-differences-the-central-challenge-of-global-strategy Read More