National Culture Impact on Employees - Case Study Example

Multinational enterprises now operate across borders and this requires an understanding of the local cultures. The cultural environment of the country of operation is important both from the HR perspective and the customer/marketing perspective. Both Hofstede and Trompenaars have studied people in multinational enterprises and developed certain distinctive characteristics of each society. Both France and the United States are Western societies but with radically different cultures. Hofstede emphasizes that national culture has a greater impact on employees that the organizational culture. Hofstede developed four dimensions of culture, an understanding of which is important for all businesses - power distance, individualism–collectivism, masculinity–femininity, and uncertainty avoidance. Power distance Index – this measures the distribution of power within the given society. The US has a low PDI index (40) which is 27% lower than the world average (Workman, 2008). This suggests that organizations have a flatter structure and they are decentralized. Members of the society have equal powers to involve in the decision-making process. France, on the other hand scores 68 points (24% higher than the world average). France has tall hierarchical organizational structure where orders and instructions are given to the subordinates who follow them. Individualism–collectivism Index – denotes the degree to which individuals are integrated into groups. America scores are the highest in the world and France too scores higher than the world average. Thus both societies expect to look after him/her and their respective families. The collectivist societies would be integrated into cohesive groups from birth. Both the US and France having high scores on this dimension suggests that individuals in both the societies are self-reliant, although there is some variation in the degree. Masculinity–femininity – women’s values differ less among societies than men’s values. Men’s values in different societies can range from very assertive and competitive to modest and caring. France’s masculinity score is below the world average while the US scores above the world average. High masculinity scores lays emphasis on success, money and material possessions while low scores of France denote concern and care for others. Uncertainty avoidance – this is the degree to which individuals feel threatened by the society. France scores very high on this dimension which suggests they resist changes to their beliefs and institutions. The American society, on the other hand is more daring and willing to take risks, they like rapid changes and challenges. Trompenaars’ framework on organizational culture takes into account two dimensions – affective-neutral, and diffuse-specific. Specificity, according to Trompenaars includes factual, definitive approaches (Mathews et al., 2001). This could even result in bluntness in orders and decisions, and consistency of approach. Diffuseness pertains to indirect or ambiguous management styles and a highly situational approach. In diffuse relationships, there is a real and personal contact unlike a specific relationship described in a contract. France has diffuse relationships while the United States is specific in its relationships and contracts. Affectiveness-neutrality represents the nature of interactions. Affectiveness accepts and supports different points of view while neutrality strives to have consensus. France is an affective-oriented nation while USA (East) has characteristics of neutrality. People from neutral cultures control their feelings while those from affective cultures are very expressive and vocal about their feelings (Binder, 2007), as in the case of the French in the Euro Disney case. The characteristics typically are attempts at controlling and diminishing the differences between opinions. Based on the two different views and dimensions of culture, it is evident that the problems at Euro Disney arose due to lack of cultural awareness. Euro Disney has been described as the “cultural Chernobyl” because of the global culture they tried to impose. The first issue was the problem of layout of Euro Disneyland as the place it is totally American in its theme. Just because the French enjoyed the ambience and layout of Disneyland in Florida and because of the success of the same venture in Japan, is no reason to replicate it in France. The French are conservative in their approach and because of high uncertainty avoidance culture they resist challenges to their prevalent beliefs and institutions. If the French want to enjoy the American ambience, they would visit the US theme parks but back home they prefer something more French in nature. Being an affective-oriented nation, the French people tend to overreact. Both societies have individualism culture and hence it is surprising that the Americans could be so insensitive to the French culture. This is evident from the strict dress and appearance code laid down for the employees. The Disney officials wanted the same standards maintained across all its parks and a separate code could threaten the image and the long-term success of the park. The French considered this an attack on individual liberty. The French, being affective-oriented, want that different viewpoints should be accepted and supported. The French law too prohibits employers from individual and collective liberty unless the restrictions imposed are justified by the nature of the task. Most managers too, at Euro Disney were American and this created issues of power distance because the French are used to receiving instructions and acting on them. The service delivery at Euro Disney was seen as American arrogance and dilution of the French culture. Alcohol was banned at the park although the French insist on wine with their meals. Euro Disney engaged in public relations program with the residents, which was unheard of in France as businesses seldom establish good relations with the residents. The food joints were supposed to a showcase for American foods. This was considered as stifling individualism. Other service areas that Euro Disney did not pay heed to, was the resistance of French people to queue up at the entrance. Different cultures have their own definition of personal space and they do not like people getting too close to them, even if it is at the queue. The advertisements place for bids were in English which made the French businessmen feel strangers in their own country. Thus the three areas where Euro Disney made mistakes were the layout and ambience of the Park, the imposition on the dress and appearance code of the employees and the service delivery. Based on these mistakes, the company should have learned three lessons on how to deal with cultural diversity. The Americans may be successful in high management positions in their own country but to equally successful in other nations, particularly nations with cultural differences, the expatriate managers need cross-cultural training. They must be provided with an awareness of the difference and how these could impact the operations and the long-term success of the project. In cross-cultural environment the global managers must have the ability to adapt to different business environments (Barlem, 2008). They must have the attributes to respect the different beliefs and cultures, must be multi-lingual and must be able to deal with different governments. The expatriate managers undergo cultural shock and hence cross-cultural awareness and training is essential. The company should also learn that market adaptation rather than standardization is essential for maintaining competitiveness. Standardization implies that the same marketing strategy can be applied in all markets without taking into account the local factors (Zou, Andrus, Norvell, 1997). However, this implies a product-orientation, as has been evident in the case of Euro Disney. Focusing on product can turn the company way from customer preferences and needs. Standardization ignores customer needs and the focus is on reducing the product variables. Cultural differences are very important factors which McDonald’s also had to adopt (Vignali, 2001). Cultural sensitivity towards the employees is equally important. Home culture practices, norms and laws cannot be applicable in any host country. The company wanted to practice ethnocentric approach to management which is not practical in multi-cultural environments. In the ethnocentric approach the home country business practices, and cultural values are important. The headquarters try to impose their staffing approach throughout the world. Such an approach makes it difficult to balance the local demands and global priorities (Treven, 2001). It also makes it difficult to recruit qualified personnel. A geocentric approach is ideal where the company can combine the best from the headquarters and the subsidiaries and develop consistent worldwide practices. In such an approach, manager selection is based on competency rather than on nationality. It can thus been seen that cultural awareness is essential for expanding overseas. Merely having a French-speaking personnel in insufficient. Before opening overseas ventures, the company must fully understand the cultural nuances and prepare managers accordingly. It is also essential to maintain a balance of both local and expatriate staff. An ethnocentric approach to management is no more feasible in cross-cultural business environment. France and the United States, despite having western culture, differ in their cultural values and beliefs. Hofstede’s contention that national cultures play a vital role is applicable here. Cultural sensitivity can determine the success or failure of a project. Market adaptation is important, which ensures that local factors such as local customs, laws, norms and values are focused upon. Product-orientation approach was the reason that Euro Disney failed to attract the expected number of visitors on the opening day. References Barlem, B. (2008). Are Global Managers Able to Deal with Work Stress. Journal of Accounting – Business & Management. 15, 53-70 Binder, J. (2007). Trompenaars dimensions. Retrieved 9 October, 2010 from http://www.globalprojectmanagement.org/index.php?option=com_content&task=view&id=23&Itemid=32 Mathews, B.P., Ueno, A., Kekale, T., Repka, M., Pereira, Z.L., & Silva, G. (2001). European quality management practicesThe impact of national culture. International Journal of Quality & Reliability Management. 18 (7), 692-707 Treven, S. (2001). HUMAN RESOURCE MANAGEMENT IN INTERNATIONAL ORGANIZATIONS. Management. 6 (1), 177-189 Vignali, C. (2001). "McDonalds: "think global, act local" - the marketing mix". British Food Journal. 103 (2), 97-111 Workman, D. (2008). US Cultural Trade in France. Retrieved 9 October, 2010 from http://www.suite101.com/content/us-cultural-trade-in-france-a44032 Zou, S., Andrus, D.M., & Norvell, D.W. (1997). Standardization of international marketing strategy by firms from a developing country. International Marketing Review. 14 (2), 107-123. Read More