How Do Religion, Culture and Ethnicity Affect the Success or Failure of a Global Enterprise - Essay Example

HUMAN RESOURCE ESSAY By How do Religion, Culture and Ethnicity affect the Success or Failure of a Global Enterprise and what factors could affect upon the Decision making of the Global Entrepreneur? Introduction Businesses operating on a global scale have to battle with a number of internal issues that affect their normal operations and efficiency. This incorporates social, economic and political factors that determine and shape the business environment within which the business operates. S such, a global enterprise has to consider all factors global that will affect the internal operations of its company, especially those touching on quality service delivery, efficiency in operations, as well as, low costs of production. Some of the thorny issues that global entrepreneurs have to consider are religious affiliations, cultural backgrounds and ethnicity within the business surroundings. These factors can lead to either the success or failure of the business. Consequently, a proper analysis of these factors and their impact on the day-to-day operations of the business is very fundamental in making the right decision as to invest or not to invest in a given venture overseas. Project One Critical Awareness of Diversity and Equality Issues A global business battles with a number of issues that end up affecting their efficiency in operations, as well as, the team spirit and motivation of its workers. As such, before setting up a business in a foreign market, a manager has to consider some of the aspects of business operations that may affect the efficiency of the business operations, the relationships within the organizational structure, and the team or group working. Proper management of the aspects that affect or influence these conditions would lead to the effective performance of the business, hence assured profitability and wealth maximization. The biggest headache of business managers setting up subsidiaries of their multinational corporations on foreign lands is how to deal best with issues relating to diversity and equality within their host country (Otter & Wetherly 2014:318). A foreign investment company meets various cases of diversity and equality in every new country that they set up shop, which also makes it imperative for the business manager to have proper knowledge of such requirements. The aspect of diversity in Human Resource Management (HRM) recognizes that people have a number of things that are common to each other. However, this does not mean that they are the same. Each person is different in his or her own unique way, and as such, these differences should not be the basis for their discrimination. Every member of the organization has the right to equal access to employment opportunities. This further goes to stipulate that when such an individual lands a job opportunity, he or she has the right to equal pay, equal access to training, and equal access to development. As such, business managers should avail all their employees with equal opportunities despite of their differences or diversity in cultures, religion, ethnicity, or races. This incorporates proper management of diversity and inclusion (Jain 2003:215). Some of the aspects that may lead to discrimination under the banner of diversity and equality are race, gender, sex, disability, religion, culture, color, age, ex-offenders, social status, and political affiliations. If a business fails to take charge of these issues before setting up a business, it is likely to fail. This is because such discrimination would stir up animosity within the company, and as such, workers will not put their heads together for a common goal. This division would lead to disorientation of the company’s goals and objectives, which consequently leads to lack of efficiency in the performance and operations of the company. Improper management of diversity and equality also leads to breaking of business relationships, as they do not give room for development of confidentiality and trust among concerned parties. The interpersonal relationships would be insecure and nonchalant due to the absence of trust, which also makes it very difficult for workers to perform their duties as a team A business manager should undertake proper management of diversity and equality in order to ensure proper management and development of a global business. In no way should a manger let the personal differences among his or her workers affect the internal running and operations of the business, such as its efficiency, teamwork, and business relationships. The manager should come up with a way to integrate all these differences among all employees, and then inter-relate them so that they can accommodate one another and work together as a single team. All members of the organization have equal rights and privileges in the company, despite their differences and social status in the society (Punnett 2012:116). As such, in the management of diversity and equity in an organization, a global manager should know how best to deal with the differences that arise between his employees, especially those relating to their personal and private lives, such as culture, religion, and ethnicity. The best way for this manager is to develop a culture of acceptance and accommodation. This way, all people will be accepted by the organization despite their minor differences, and this will build on unity and team work within the organization. The acceptance of different cultures and other structures within employees of the firm creates trust and confidence of these employees to the organization, which in turn reflects in their increased output and productivity. A manager should therefore develop impartiality when dealing with employees from different backgrounds, and as such, not to discriminate or favor any one of them based on their features and characteristics. For an employer, the most important thing is the output and productivity of a worker, especially their efficiency brought about by non-interference on their personal details. Consequently, the adoption of this culture should enable an employer to deal adequately with issues of diversity and equity within the organization as a global operator. Diversity and equity should therefore work hand in hand in a global business setting of an enterprise. A manager should expect to meet diverse cultures, characters, and personalities from his or her employees. The manager should treat all his employees equally despite all these differentials, and this will build trust, confidence, and teamwork among employees, which in turn resonates to improved productivity within the company, and success of the multinational corporation on foreign soil Issues that can affect the Establishing of a Global Business An entrepreneur has to consider a number of factors when they consider the possibility of expanding their businesses to global heights. These factors include both internal, as well as, external factors that affect the effective running of the business, inclusive of the factors that set up or determine the market environment of the business. A business proposal or project can be very promising and lucrative. However, a poor analysis of the business environment may jeopardize the entire performance of the business considering the market will not fully accept or appreciate the business. Establishing a global enterprise is not as easy as setting up a business within the local or domestic business environment. This is because a business operating on a global scale has more issues to combat with as compared to a business operating on a domestic scale, because the investors are not aware of all the issues involved as compared to a local business (Jain 2003:215). Some of the main factors that affect the establishment of a global business include political, economic, social, technological, environmental, and legal aspects of the external business environment, i.e. The PESTEL factors affecting business environment on a global scale. However, this paper will pay close attention to issues that bring about conflicts within the organization structure, as well as, undermine the performance and efficiency of a global business in general. These factors include the political factors within the physical location of business, the socio-economic factors, and religious affiliations of the residents within the host environment, their culture and ethnicity. All these aspects of people development and management affect the performance of the business, especially the administration of all the workers and staff of the company operating in a foreign country (Otter & Wetherly 2014:318). The political environment of the host country for any global enterprise has to be welcoming, as well as, supportive for foreign investors to set up their enterprises. This is especially so in the case of politically violent countries, where the risks are very high for every investment, and thus discouraging foreigners to invest. An investor seeking to set up an overseas subsidiary should first evaluate the political environment of the country in which he or she wishes to set up shop, and determine the viability, as well as, the risks involved in setting up a business in such a political environment. Some of the aspects to consider during a scan on the political environment of the country would include political tensions, election processes, Foreign Direct Investment (FDI) policies, and government levies and subsidies. These aspects help an investor in determining the profit margin, as well as, calculating the risks involved in setting up a business in a given country (Otter & Wetherly 2014:318). The socio-economic environment within the overseas market where a business sets operations also affects the profitability of the business. The social environment within which the business operates should be conducive and supportive of the business or investment set up. For instance, it would be wrong for an investor to set up a profitable business in a foreign country in an area that does not socially embrace it, such that the business has conflicts with the social and society morals of the community within its operations. This would bring conflict of interests and the society will reject the business, thereby creating a negative image for the company or business. Consequently, this will lead to the business winding up. An economic environment should be vibrant enough to support a given business investment before an investor sets shop in a new country. This ensures wealth maximization, as well as, supernormal profits as the due returns on investments. An economy that is not supportive of investment would only bring about losses to the company, such as the high market rates of interests, bonds, inflation, and taxation. An investor should also consider other social factors, such as the religious affiliations of the country in which to set operations, their cultural norms and practices, together with their ethnic and ethnicity divisions. Some religious practices are so strong and staunch followers of these religions strictly adhere to these practices. As such, their religious beliefs and practices affect their consumption patterns, styles, and preferences. For instance, the Hindu religious customs require their women to wear sari’s, and this for a business investor in the clothing line means that the best selling boutique in a Hindu settlement would be the one dealing with sari’s of all kinds and styles. Similarly, culture and ethnicity also affect the consumption and purchasing patterns of consumers in these markets. Some cultures dictate certain practices, such as mode of dressing, cultural foods and festivals, and housing styles. An investor should evaluate all these aspects before setting up shop in a given area, and this will enable the investor to satisfy all the customers within the market to their full satisfaction (Otter & Wetherly 2014:318). Business Theory The Theory of Constraints (TOC) best explains the management of various aspects of the above factors. The theory dictates that a business manager operating on a global scale should examine and evaluate his or her business to determine its strengths and weaknesses. After making this determination, the company will then engage on working on its weakest link or loophole. This refers to the area where the company is most vulnerable in its operations. By empowering the company to perform well even its weakest of areas, a business manager ensures that the company grows both in strength and in might. This also enables the business to consolidate its market within a foreign country, as well as, command the respect and trust of its customers and other business stakeholders (Punnett 2012:116). A good example of the TOC application in a business context operating on a global scale would be the failure or lack of efficiency within an organization due to language barriers. Language barriers lead to a fall out in business operations as it hampers free flow of information from one department of the organization to the other, and to outsiders who work with the company. As such, this being the weakest link for a global business, managers have to work at ensuring they either learn the language of foreigners in order to speak their local language, and as such, facilitate proper communication between them, or to hire language interpreters to do the translation for every conversation that they have with the locals. However, the first option of managers learning the local dialect is the best approach in eradicating the language constraint affecting a business operating on a global scale. Academic Model Various academic models of business operations come into play when considering the operations of a business on the global scale. A business model enables a company to expound on its rationale in the creation, deliver, and value capturing of its goods and services within a number of market contexts such as economic, cultural, religious, as well as, social. This is like a business strategy for investors and entrepreneurs who want to expand their businesses to a global scale, and as such, facilitate the productive performance of their companies and products in foreign markets. A manager should weight every business model and select the one that best applies to his or her case, and one that would guarantee effective performance of the company in the foreign market. One of the best academic models adopted by most multinational corporations is the Bricks and Clicks model (Jain 2003:215). A manager can apply the Bricks and Clicks model in the global operations of his business through the integration of both online (clicks) and offline (bricks) presence in the running of his business. Having both an online and physical presence enables a business to reach out to a wide range of customers across the foreign country. There are those customers who will physically locate the company within their local towns and cities. On the other hand, there are those customers who will locate the business from its online presence. A suitable example of a global operator applying this model is the Wal Mart chain of stores. The store allows its customers to make online purchases for their products and services, but lets them pick up their orders at their local store, or delivers their orders at their premises within a specified time. Project Two Setting up a business in Zimbabwe is one of the hardest decisions an investor seeking to explore the riches and wealth in Africa has to battle with. Zimbabwe is a country rich in minerals of all kinds, including gold, copper, coal, diamond, platinum, and ashtite. All these minerals are available in wide locations across the country and as such very easy for minors and investors to access. The wide distribution of minerals across various parts of the country eliminates the scramble for such mines. I personally deal with gold. I am both an explorer and dealer of gold. As such, my interests in gold sent me to take a leap at the numerous gold reserves in Zimbabwe. However, I had to battle with a number of challenges in this foreign market before I could make a kill in my investments. The first business constraint that I encountered in the country was the economic status of the country, while the second most challenging hurdle was the political situation in the country (Otter & Wetherly 2014:318). Zimbabwe has the highest rate of inflation in the world. As such, it has the poorest of the world’s economies. This has led to the devaluation of its currency against other regional and world currencies. In fact, it would surprise you that people prefer payments for their goods and services made in other standard and accepted world currencies rather than the Zimbabwean Dollar. This is due to the lack of value in the local currency. The poor value of the currency makes the economic conditions in the country palatable and unfit for investments. Therefore, making a considerable profit in every business transaction is usually a tall order for most foreign investors, inclusive of the taxes and other legal fees that we have to pay before calculating our profits. Consequently, the economic status in Zimbabwe is not good enough to support the gold business that I wanted to set up. This did not deter me from undertaking my business project in Zimbabwe. On the contrary, I used the poor economic situation in Zimbabwe to my advantage by transporting my gold to South Africa for purification and marketing. This was much easier because South Africa also has huge deposits of gold, and as such, offer a high price for gold marketed there. Selling my gold from a South African market fetched me more dollars that selling it from a Zimbabwean market. On the other hand, the political status of the country does not support business growth and development. The politics of the country are under the tyranny of an 80 years old dictator who took the reigns of power since the country gained its independence. As such, the old man does not allow any democracy in the country, and a lack of it affects most businesses in the country, especially foreign ones. Most foreign investors not affiliated to the ruling ZANU-PF live in fear of execution and discrimination in the event the government brands them as foreign aids to the opposition. In fact, the president sent away, at some point, a number of major foreign investors in the country because he suspected they were supporting the opposition. These investors had to leave behind all their investments, which was a big blow to their incomes (Punnett 2012:116). As a foreign investor, I want to be impartial to the political process going on in the country, and this will give me the opportunity to trade freely without the fear of government interference in my business (Jain 2003:215). However, the other two crucial issues regarding my investment on foreign land would be diversity and equity aspects of my workforce, especially that in relation to religion, culture and ethnicity. Zimbabwe is an African country. As such, the African traditional settings consolidate most of its religious, cultural and ethnical practices. African Traditional Religious practices still hold a strong footing over the people of Zimbabwe, and as such, each ethnical community has a particular religious belief and practice that they have to watch or adhere to, even at their places of work. On the other hand, these ethnical societies have diverse dialects through which they communicate which sometimes make it difficult to give proper instructions to the workers within the organization. Cultural practices, such as mode of dressing, the type of foods, as well as, how to conduct themselves properly. This changes the work atmosphere considering they are different from each other. As a global business leader, my biggest intention is to harness all these man-power, consolidate it properly, despite its issues with diversities of cultures, religion or ethnicity, and then create a workable and friendly environment within the place of work. This requires lots of patience, tolerance, and accommodation from both the executive, as well as, other members of the organization. It would be proper to develop an organizational culture that will incorporate and accommodate the various diversities of the entire workforce, and provide proper consideration to them in terms of their culture, religious practices, and ethnical backgrounds. This is because all these aspects are equal in the footing of the organization, and as such, require equitable considerations in order to provide and efficient and workable environment at the company. Diversity and equity concepts should guide the managers in accepting, embracing and accommodating every different aspect of culture, religion, and ethnicity that the employees provide, without favor or discrimination to one over the other, such as cases of tribalism, nepotism, or ethnicity. Ethnicity takes a major stronghold in the organizational structure within the country. Zimbabwe is mostly African with 98% of the population being from the African race, while mixed and Asians take 1% leaving for the remaining less than 1% to the whites. However, the shone ethnic group occupies the largest percentage of the Africans population at 825, the Ndebele that is the second largest ethnic group at 145 while the other ethnic groups share the remaining 2%. At one point in my organization, I encountered a serious case of ethnic violation, whereby the manager in charge of operations who was a shone recruited mainly his tribesmen and shunned those from other minority tribes. Those already in the organization suffered prejudice and oppression that some quit, or faced unlawful layoffs. This created an ethnic tension within the company whereby the Shonas felt like the company belonged to them and the other tribes did not have any right to take part in the company’s operations. In the spirit of diversity and equity, I introduced a zero tolerance program in the company towards tribalism and ethnicity. This is basing on the lessons learnt from the 1994 Rwandan genocide whereby two ethnic groups massacred each other in order to have control of the country. Knowing that this ethnic strife would result into dire consequences for my organization, I introduced a zero tolerance program to ethnicity within the company, whereby anyone found discriminating, oppressing, favoring or patronizing employees of the company on ethnical grounds would get stiff penalties from the organization. Such punishment vented upon perpetrators of this new company policy would be demotion, if he or she is a senior officer, pay cut, or total dismissal from the company. In addition, the company would engage in an aggressive program to trim down the number of shone employees within the company to reduce their numbers from dominating over other employees, and hiring more from the assorted remaining tribes. This configuration of tribesmen within one organization would lead to the company working together as one. All ethnic tribes are equal, despite their percentage size within the Zimbabwean populace, and as such, they should all receive equal rights and privileges within the company without fear or favor, discrimination or oppression on the grounds of ethnicity and tribal lines, and introduce a culture of accommodation and acceptance by all. Conclusion Before setting up any foreign business, it is imperative for an entrepreneur to analyze all the factors that may lead to the success or failure of the business. An investor should not assume that the business environment in his or her local country is similar to another in a foreign country. These differences arise from differences in political and social settings, commercial practices and other economic procedures. As such, it is important to carry out an intensive investigation on these factors before determining the viability of the investment, such as religious and cultural practices, ethnicity and political situation in the host country. This will enable the manager to make the right decisions over the investment project on a global scale. Recommendation Setting up a new business in a new country could be very lucrative and profitable. However, if the business manager or entrepreneur does not consider other external factors that affect the normal performance of the business, then the business stands a high chance of failing. As such, the business manager should carry out an in-depth analysis of all factors of production, inclusive of an extensive scan of the business environment, which then enables him or her to set up the business on the right foundations. Aspects such as religion, culture, ethnicity, and other PESTEL factors affect the effective performance of a global business. It is therefore important to consider and take all these aspects into perspectives during decision-making. List of References Jain, S. (2003) Toward a Global Business Confederation: A Blueprint for Globalization, Santa Barbara: ABC-CLIO Ebook, Praeger. Otter, D. & Wetherly, P. (2014) The Business Environment: Themes and Issues in a Globalizing World, Oxford: Oxford University Press. Punnett, B. (2012) International Perspectives on Organizational Behavior and Human Resource Management, New York: M.E. Sharpe Read More