Cross Culture Issues in International Business - Essay Example

? CROSS CULTURE ISSUES IN INTERNATIONAL BUSINESS Introduction The paper is about the challenges and difficultiesIKEA has to face in china. These problems are basically because of the vast cultural differences between Sweden and Chinese culture. The major cultural differences between china and Sweden are the: high vs. low power distance, individualism vs. collectivism, masculinity vs. femininity and uncertainty avoidance vs. uncertainty acceptance. As a member of advisory group I arranged an interview with three group of people; managers, Chinese co-workers and expatriate co-workers. Each group has slightly different opinion. The main step for business growth IKEA took is to hire non Chinese managers and Chinese co-workers. The cross culture issues in international business Influence of cultural differences between china and Europe on IKEA IKEA is an international company owned by non-governmental organization. IKEA is the abbreviation of Ingvar Kamprad Elmtaryd Agunnaryd. each term in its abbreviation has its own history. Ingvar Kamprad is the Swedish 17 year's old man who founded this company in 1943. this man was grown up in Elmtaryd and his home parish is in Agunnaryd. it is the world's largest retailer that designs and sell knock-down or flat pack furniture, home appliances and accessories. IKEA also launched a family mobile (Aug 8, 2008), a virtual mobile network running on T-mobiles. IKEA is known as one of the best company which does a lot for the third world. It built an image for the low price furniture but for the Chinese customers the case was opposite when IKEA opened the first store in Shanghai, China (1998). Most of the Chinese likes to visit IKEA store but they mostly of them just wandered there and only few can by the items because of high prices. IKEA tried to low down their price but still their product became luxury for the Chinese customers. In the beginning IKEA had to face many challenges. For success in business it is much necessary to understand the cultural values of the country where you are setting your business. For IKEA, to achieve the strategy goal in china means to understand the culture and socio-economic conditions of china. In terms of culture and business practices, economical and political changes in china IKEA suffered with many ups and downs. The main issue for IKEA is to understand the environment and cultural difference which influence the Chinese customer's behavior. Hofstede's Cultural dimensions Geert Hofstede had done the influential work to demonstrate the cultural differences. He identified five major dimensions along which cultural values vary: high vs. low power distance, individualism vs. collectivism, masculinity vs. femininity, and uncertainty avoidance vs. uncertainty acceptance and short-term vs. long-term orientation. Difference between china and Sweden culture In china culture dominant values in society are masculine. Caring of others and the quality of people and life are not so important but the importance is given to the assertiveness, acquisition of money and things. In china society muscularity, assertiveness and challenges are preferred over co-operation and good working relationship. Another important cultural trait of china is the high power distance. This means that the distance between subordinates and superiors in china is relatively high then west. We can consider it as a shape of narrow triangle in which the mangers placed on the apex while subordinates on the base. The management is not so common or in practice. This high power distance is basically roots from the imperial tradition in china. Until 1911, the emperors were given so high value that extremely they were called the sons of god. This resulted as an unequal relationship in the society. The subordinates are restricted to obey and owe their superiors in exchange for protection and consideration (Sriramesh, vercic, 2003, p 26). The local government institutions in china are powerful and mostly they operate on discretion. This is the main difference in managing business between china and western countries. The two major differences china has with west is the high power difference and low individualism (Hofstede, 2001, p 205). Any multinational company whishing to establish in china has to face many challenges and some times fails because of another main reason that is Guanxi, meaning relationships. Guanxi becomes another important business tool. In china legal system there is lack of structure that makes legal interpretation a subjective process. The personal interpretation of law results Guanxi. Guanxi is cultivated a substitute for reliable government and an established rule of law (Gulati, Lee, 2004, p 120). So any multinational company has to face this unlawful tradition in china and finally facing hurdles for its business growth. Masculinity vs. femininity is another important issue in a society and somewhat for the business growth in any country. It refers to the difference between roles of genders in the society. China is the feminine country while Sweden is the masculine. In china long term orientation is another trait of tradition. The associated vales of long term orientation are the thrift and perseverance. While in Sweden there is short term orientation. There is a respect for tradition, fulfilling social obligations and protecting one's face in short term orientation. In Sweden there was a high level of institutional collectivism. At the end of 20th century, the in-group collectivism took the place of institutional collectivism, whereas in china, a trend towards more individualism in general is apparent. There is no importance of in-group collectivism or institutional collectivism. That’s why in china culture there is a problem for industrialism where as Sweden culture can easily adopt it. This causes a difference in growth rate in china and Sweden. This cultural gap between china and Sweden initially raised many challenges fir IKEA to build its business in china. To analyze the cultural gap and to draw the conclusions there in need to have a proven framework and primary and secondary data to compare and contrast with the framework. As a member of advisory group, I arrange a set of interview questions to deeply analyze the cultural gap. For this purpose I preferred to choose the Trompenaar's seven fundamental dimensions of culture and Hofstede's dimension of culture. This choice is made because both are the studies of contrasting ways. Trompenaar's and Hampden-Turner's research approach was to expose respondent to situations with irreconcilable alternative solutions (Todeva, 1999, p 5) while Hofstede measure values instead of attitude and preferences (Hofstede, 1983, p77). In many social sciences study is based on the primary and secondary data. It is hard to find the secondary data for the specific issues related to IKEA culture so primary data was collected in form of interview questions while secondary data was used liberally to aid primary data with already known information. To collect primary data, over multiple choices a free flow format was chosen. Now for the primary data it interviewed from some mangers, Chinese co-workers and expatriate co-workers. The questions were designed in ways that they are remained unanswered. Efforts are made to avoid the assumed, biased and double barreled questions. Main objective is to allow the respondent, as much as possible liberty and flexibility to answer. Primary data was collected by taking interviews. Few questions are seemed to be sensitive and to get maximum response the step is taken to make the whole process anonymous. First the respondent was made well understood about the case. Sufficient time was given to the respondent so that they can answer the question easily in relaxed way. The first question I prefer to ask is about the cultural difference between china, Sweden and IKEA. Each category came up with the different opinion. According to manager's opinion: the main difference is the one related to people's behavior. These are basically with respect to hygiene, general respect for rules and politeness. These basic rules make peoples of china much more different from Swedish. Another main difference is the language. The china culture emphasizes on power & prestige. If you are a manger, it means that you have absolute power to rule over your workers. You can decide each and every thing. No restrictions no rules and no laws you need to obey. Your workers are strictly restricted to obey you. It doesn't mean that Chinese workers have not their own mind. They can think what have to do or what not but they are restricted to obey their managers whether they want to do or not. But in western culture as a manager you have to convince and guide your workers. You have to answer some one for your work. This raises a friendly communication between workers and manager. There is also a big difference in china people want to earn more and more without caring for their culture but in Sweden people prefer to take care of culture over money. When I asked the same question from the Chinese co-workers then they answered same but slight different from the managers. The common thing is that people are not daring to speak up. Respect, humbleness, and diligent power of speak necessary to them. Humility is another factor which make Chinese different from the other country. Chinese always tries to be modest in every thing without caring Confucianism, Buddhist and Taoism. Generally china culture is traditional, humble and conservative opposite to western culture that is open, and creative also aggressive in some respects. Now when I asked the same question from expatriate co-workers then they answered in the sense that Chinese have strong national spirit and have proud. They are also curious without hesitating over it. Another thing is the division of class. The Shanghainese middle class have no respect for the simple co-workers. Simple co-workers have not equal rights but in Sweden all have equal rights. The Chinese are disciplined and hard working workers. They are also not concerned about quality and good detailed job. The second question I asked is about the regional culture. I truly want to know about the similarities between Chinese religious culture and that of Swedish one. According to managers opinion the religious culture of Shanghais is same to that of America. It is all about in the favor and survival of strongest. The IKEA culture is to work hard and emphasize on work. Chinese co-workers answered the same question as the religious culture of china is quite diverse, flexible and dynamic. The expatriate co-workers say that the Shanghainese people talk very much of themselves. No respect for other ones like smaller co-workers. The secondary data was collected from the research work related to IKEA, text books, journals and web sites. It is necessary that data collected should be from authentic and reliable source. Once the data was collected then compile it all in a collective form. To analyze its content the primary data is placed in empirical form the secondary data has been used during analysis and reflection. Then the collective work was used to analyze the framework and gap. There are many good answers for any question so the main thing is to analyze the findings. There are many beneficial traits in china culture that are general in whole Chinese's society. One of them is the national culture of china. It is very humble and conservative in general. The western culture is more open, creative and aggressive in general. The national culture of china is suitable for the business growth is china. Once any multinational company makes its strategies compatible with china traditions then their success is a fact in china. The main step IKEA took to strengthen its business growth is that they mostly place non-Chinese managers and Chinese co-workers for the free and friendly work environment. References Anderson Margaret L, Taylor Howard Francis, sociology: understanding a diverse society, Cengage Learning, 2005. FAQ, IKEA.com, 2011-04-24. Valsine Jane, culture and human development: an introduction, SAGE, 2000. Yuling Pane, politeness in Chinese face-to-face interaction, Greenwood Publishing Group, 2000. Read More