Culture Clash in the Boardroom - Case Study Example

Culture Clash in the Boardroom Name Course: Tutor: Institution: Culture Clash in the Boardroom In any organization and at any level, decision making is a very critical component that can either lead to growth or the collapse of any companies in the world. Decision making comes with ethical aspects where they differ from company to the other. Ethical conflicts are widespread to foreign companies and businesses operating in China and failure to identify these conflicts, represents denial or obfuscation. In most of the cases, the best approach to deal with such conflicts is trying to avoid them and in addition, setting guidelines and principles for the managers at all levels of management within an organization / company. In addition, other approaches of avoiding some of the more conflicts as that witnessed in the Liu Jienping Culture Clash in the Boardroom case study is addressing them at the time a company/business makes a decision about whether to go into China or not. Conventionally, doing this will prevent some of the ethical conflicts that could have arose if no precaution measures could have been taken initially. It is important to note that prevention is better than cure and thus dealing with unexpected events and uncertainties while making decisions or rather taking an action is very crucial and thus avoidance of such which may later result to ethical conflicts. This in addition requires thinking critically which helps one to be a step forth of such situations that may result to ethical conflicts through analyzing situations critically (Wakayama, Shintaku and Amano 2012, 109 – 113) In such a case, some of the questions that need be addressed include; What is done by our local competitors to get hold and maintain customer base in business? What is likely to be done by our joint-venture partner if we have to make a firm choice between sales and ethics? Are foreign businesses held to a greater ethical standards in our industry than local companies? What is the take of our customers when we do this better? Do they only care about prices? As a Company, can we turn our more ethical behavior into viable business advantage? (Paine 2010, 103 – 108) The above questions seems somehow tactical though in many growing industries, these questions can define whether a venture will emerge successfully or fail and thus are very crucial. Having a good cognizance of what is going on around you, your company and the business environment will keep the management on their toes basing on the decisions that have to be made. However, in a venture, the above questions seemingly becomes moot and thus in most of the cases, a Company is left to establish whether it draws the line between ethics and sales. Looking back on the decisions made and the actions taken as a manager is very important in that it is an aspect of critical thinking that finally comes with diverse benefits. Managers therefore need precisely non-negotiable principles on aspects ranging from safety of the workers to kickbacks to infractions of the employee and further a guarantee from the business that loss of sales for ethical reasons will not count against sales budget and targets. This helps the managers and/or the decision makers in a company to understand the intentions of such decisions, actions and outcomes and further being able to see how it could be done better in future. This simply connotes that in China, ethics can cost money. In approaching such a problem, the best approach is to budget for them internally and count them on the ledger mainly as a long-term investment in corporate reputation. If engaging in a business ethically is likely to put a company into permanent losses, it would sound better to cut some of those loses and run. It is worth noting that higher performer sales manager’s ethics can be overlooked and/or corrected by retraining from human resources as some assume but in real sense, this is probably not the case. An employee who is willing to play loose with ethical concerns, who is tolerated by his management will come to believe that his/her performance will offer him/her protection from meaningful punishment for his ethical gaps. Ethics does not come from training; integrity is the integral aspect as far as hiring of employees is of concern as well as based on performance. In areas like China, where good performers are always in short supply, the temptation to look back and/or to believe that in a way, the corporate culture will alter/change a person’s trait can be hugely overwhelming. Not unless you are preparing to get rid of your top most performers for moral lapses, you are creating an environment for ethical transgression. (Chua 2012, 27 – 33) Liu is torn in between because he really does not know what to do in this case scenario. In this case, it seems somehow difficult in devising an appropriate operations strategy that would be successful in Chinese market. It is worth noting that in a market, competitors will use even the most dubious business practices for instance offering kickbacks in order to outdo their competitors in many aspects of their operations. Some questions may arise in this case of Liu; I.) Should we follow the way of our competitors so as to try in outdoing them? II.) Will we really get our services if we don’t do what our competitors are doing? III.) On what actual ethical base should I make decisions affecting the operation of the company? IV.) How will the decision made affect the company in regards to improving the company as well as the effects it will have? V.) On what bases should I prioritize different values and/or interests? VI.) How will we prepare and respond to the pressures on our salespeople? From the case study, we get to learn a number of lessons that Liu as a decision maker, should be ready to heed to. For instance, there are two main lessons that we can derive from the case study. One, there is no room for the compromise on ethics and secondly, formulating standardized approaches helps in outperforming the competitors in any market place (Johnson 2011, 47 – 50) Reflecting on ethics, it is true that we may tend to lose some customers as a result of failure to give some kickbacks but despite this, it is worth noting that ethics is also good for business operations. Upholding recognizable ethical aspects in any company and/or organization ensures best service delivery and thus retention of the clients which consequently drives the competitors on the edges. For instance, we can note from the case study where a client asked the Shenzhen branch for a 10% kickback and because of the ethical issues that compounded the company, the branch manager declined and said, “we are now wholly owned by TNT, a Fortune 500 company and we will never offer kickbacks whatsoever,” The client responded, “At last, I’ve found a company that refuses to give kickbacks,” and finally placed an order totaling to millions of yuan. This in actual sense connotes that the customer was impressed by how the management of the company was operating and this gives the client trust that this is actually best place to be (Porter 2008, 78 – 93) For this case, Almond should wholly put its focus on acquisition of target clients. Once you focus on a target client, then the probability of winning and retaining them is very high. These target clients may include large international firms that mainly share the values of Almond. In addition, they need not go for companies that mainly insist on commissions and kickbacks because once they go for these companies, then the most probable outcome is that they will obviously ask for commissions and kickbacks and in the long-run, Almond will lose them (Stalk and Michael 2011, 25 – 27) The second lesson that Liu should learn is the importance of standardizing processes in countering competition. For instance, Liu was absolutely correct in fighting for higher safety standards which is meant to drive the competitors away. Almond has emerged successful in large part because they were able to implement processes that had long been utilized in United States and Europe though comparatively uncommon in China. For instance, minimal domestic road transportation companies assures on timely delivery. Consequently, they are able to accomplish that because they embraced time standards for each step in their process which mainly include loading, client notification among others (Campbell, Whitehead and Finkelstein 2009, 60 – 66) Looking back on the decisions made and/or the actions that you took, then it should be a stepping foundation to help you mend the mess and make a good decision for the benefit of the company as a going concern. This is an aspect of a critical thinking that brings forth many benefits in that it helps you understand your intentions, actions and outcomes and be able to see how it could be performed better next time. For instance, Almond needs to lead the way by setting the standards for ethics and safety. An organization may accomplish short-term successes whereby it bows to hidden rules though in the long-term, it will likely fail. For example, the business environment in China is very diverse from what it was thirty years ago and the evolution is still in process. In the next like ten years, it is expected that there will be more development and regulations of new criteria for performing business in China and in-fact, it will hugely pay to be ahead of such a curve. Dynamism in this case is inevitable and therefore, Almond should set pace of standardized safety and ethics within the business environment in China (Bach and Allen 2010, 41 – 48) In order to counter this particular conflict, Liu needs to identify other areas that he can compromise with. For instance, if the joint venture products are meant for export, the High German standards therefore need be upheld. On the other hand, if the products are meant for domestic scale consumption only, controls and guidelines that comply with Chinese law may suit. In addition, if SAP is highly priced, the joint venture can implement cost effective software but if only it is compatible and in line with the Global Almond system. To be precise, both parties in this debate are right by standing by their side. The Chinese needs to uphold their firm stand and should not be burdened for their pursuit of profit and on the other side, the German need not be burdened and faulted for standing up for their own values too. It is worth noting that both values and profit matter in this case and therefore, the most important aspect is to find a solution that compromises neither the profit nor the values (Porter 2008, 78 – 93) Joint ventures are not as easy as we may think and therefore, they need to be set up appropriately right from the commencement and proper control measures taken too. We find out that there is enormous mistrust and misunderstanding that have emerged in the Chongqing venture and can be avoided through establishment of a reasonable expectations of the future investment and return early on. The ethical playing field is not level and therefore, playing unethically purposely because our competitors are doing it is clearly not an acceptable defense. A joint venture is as good as a foreign company when it ventures a viable target but operating in a joint venture is mainly not possible to offer a much cover particularly where the brand on the joint venture includes name of the foreign enterprise. Liu holds a noble role as the president of Almond China. He holds a position that requires him to deliver as an interpreter and a liaison for the two sides. Liu can therefore help both parties to the joint venture to be able to clearly understand their difference in opinions. Liu being a Chinese national, he needs to explicitly explain to the Schulman what is behind the Chinese side’s thinking, while at the same time, making it clear to the Chinese what causes insistence on German practices by the headquarters (Chua 2012, 27 – 33) Open-mindedness is an aspect that should be emulated by the foreign managers and the Chinese. The problems emanating from these two parties will not be dealt with if everyone focuses on what his side is targeting to gain. In this case, both parties should come up with a common stand which will be best for the venture as a whole, over the long-term. In China, the business environment is changing alarmingly whereby a large number of Chinese companies have already started standardizing production processes. However, many of these companies still have believes that standardization is of less importance as far as safety is of concern. However, noting on Liu’s connotation, only a single mishap can really undo a company. In this regard, there is enormous pressure on companies to put into consideration safety concerns as well as environmental protection. In this regard, I tend to think that Companies like Almond are best suit to adopt higher standards than the Chinese law mandates. This is because, in the long – run, the cost associated will be much bigger if the problem persists and becomes serious. Environmental protection is a necessity in China and it is worth noting that without adhering to safety protocols economic success in China cannot be sustained (Johnson 2011, 47 – 50) Issues relating to ethics should be treated with equal measures. In China, foreign companies have three choices whereby they can engage in what domestic companies do, they can firmly adhere to western rules or finally, they can circumnavigate the gray regions by offering different typical kickbacks. The above three choices takes place in China purposely because there are no precise laws and rules regarding bribery. In making decisions which route to engage in, the joint ventures are required to enforce higher standards among themselves. As a result of the 2008 financial crisis, surveillance in regards to foreign listed companies has since become firmer and stricter and China has put much attention in relation to business ethics just like most other countries. In this regard, Liu must come to a realization that Chongqing venture does not gain short – term advantages at the expense of its long-term repute (Wakayama, Shintaku and Amano 2012, 109 – 113) To make a step forth, Liu is required to assist in clear communication among the parties concerned. Emanating from diversified cultures, these parties have distinct approaches to work and cooperation. The Chines hold on “emotion, reason and law,” while on the other side, Europeans tend to hold on “law, reason and emotions.” The Chinese are too much business oriented and they create relationships by getting to know one another’ families, just but an example. Europeans have believes that work relationships are enormously restrained to work. This is because, neither side have a knowhow of how to relate commendably with the other. Therefore, Liu can advise the Germans to establish personal trust with the Chinese counterparts prior to talking about the motive for the standards. Each concerned party needs to communicate in such a manner that makes the other feel sense of comfort and respect in a bid to establish and create a well-functioning relationship. In this case, Liu needs to make a strategic view and a reasoned approach on how he will address both sides. 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