Cross-Culture Management: the Case of General Electric in India - Assignment Example

Cross-Culture Management: The Case of General Electric in India Introduction and Background: The Organisation and Key Aspects of its Management Structure 1.1. Introduction & Background General Electric (GE) was generally considered as one of the most successful organisations in the world. Throughout the company’s history, it has been linked to almost uninterrupted growth and stable profitability (Grant 2004). GE was the outcome of the merger of Thomas Edison’s Electric Light Company with the Thomas Houston Company in 1892 (ibid, p. 336). Its enterprise was rooted in developing the patents of Edison pertaining to the generation and distribution of electricity, electric motors, and light bulbs. At some point in the twentieth century it developed into not just the most diversified and largest company in the United States, but a ‘model of management—a laboratory studied by business schools and raided by other companies seeking skilled executives’ (Grant 2004, 337). Under the leadership of Jack Welch the reputation of GE improved. Fortune magazine declared the company as the ‘most admired company’ in America in 2001, and the Financial Times recognised it as the ‘world’s most respected company’ for four successive years (Grant 2004, 337). General Electric is not only one of the largest corporations in the world; it is also the most diverse. The capability of GE to flourish as a widely diversified company was one of the marvels of the corporate world (Dobson, Starkey & Richards 2004). Diversified organisations, since the 1990s, had been negatively affected by the ‘conglomerate discount’, or the ‘capital markets had capitalised their earnings at lower multiples than for single-business companies’ (Grant 2004, 338). The single available way out was to restructure or disintegrate. For GE this did not arise; the notable financial performance of GE was in a sense that it had never experienced pressure to develop individual enterprises or break up itself entirely. 1.2. Company Structure As underlined by Jeffrey Immelt, the current CEO of GE, it was the combination of various enterprises with their distinct cyclical features that enabled GE to maintain the growth of its earnings (Grant 2004): We have four strong, powerful long cycle businesses: Power, Medical, Engines, and Transportation. These businesses are strong, number one, with multiple levers to grow earnings through technology and services (ibid, p. 337). *source: Grant 2004, p. 339 Nevertheless, for all the stress on the corresponding performance features of the various businesses of GE, it was also evident that there were marked distinctions in terms of profitability and growth (Grant 2004). The adjustments in the portfolio revolutionised GE’s product-market reputation and enhanced its growth opportunity. Nevertheless, to achieve this opportunity needed restructuring the management processes and management approach in order to produce motivation and purpose (Chandra 2002). Realising this required reforms to the structure of GE. Under the leadership of Welch, the company abolished a number of management layers and many administrative positions. Specifically, Welch broke up the sectors of GE, obliging the leaders of the 13 enterprises of GE to report directly to the executive officer (Grant 2004). The CEO’s office was enlarged, and a Corporate Executive Council (CEC) was formed to open a forum for the business-level senior corporate officers and leaders of GE (Grant 2004). Decision making was transferred to the operating departments. That is the final goal. 2. Cultural Context 2.1. Organisational culture Under Jack Welch, the capabilities GE cherished most were efficiency, cost-cutting, and deal-making. The most important was uninterrupted growth. That attitude contributed to the stable growth and profit of GE over a number of decades (Mullins 2007). Now in an enormously distinct business context, Immelt is overhauling the culture of GE. He said he fears two things: that the company will become lacklustre, and the senior officers may behave like weaklings. He fears that the fixation with bottom-line outcomes will make the top people hesitant to take risks (Grant 2004). Hence he is driving for a cultural transformation. He is on a task to revolutionise the process-oriented organisation into an innovative entity, steering growth through creativity. In empowering his new strategies, Immelt is reforming numerous of the established practices and values. Outsiders are allowed to occupy the highest positions- a deviation from the traditional ‘promote-from-within’ rules (Grant 2004, 338). GE has employed almost 2,000 new individuals in marketing and sales alone. And there is a drive for further global labour force to complement the sectors where in GE works (ibid, p. 338). Immelt is generating the need to produce the ‘needed’ insights a main concern. In genuine GE model, he is setting up a scalable and quantifiable for generating recommendations for new ventures (Chandra 2002). For a long-established organisation, inclined in the gradual processes of Six Sigma, these transformations appear daunting. Now the pressures are for enhancement of strong points in areas that are difficult to assess (ibid, p. 93)—customer service, strategy, and creativity. 2.2. Wider cultural context GE is an American company which has a branch in India. The quite distinct culture of India significantly affects the performance of GE in the country. GE, like most Americans, regards logical reasoning to be the single means to reach conclusions. On the other hand, Indians perceive logical reasoning as one of the four types of methods of creating conclusions, all of which are similarly legitimate (Hofstede 2005). Inopportunely, for GE, quite numerous distinct and concurrently sound processes for making a decision can lead to decisions that appear, and are, quite irrational (Chandra 2002). It is vital to understand that whether a resolution is rational is not the issue. The issue is whether the resolution is logical from the perspective of Indians. To make it more perplexing, while the institutional recall of India may be long, numerous Indians have a remarkably short ‘decision’ (Hofstede 2005) recall. Section 3. Theoretical Background A number of evident issues cut across the organisational management profile of GE. One of the major issues is the apparent interpretation that culture is expressed in different forms. Cultural features could be assessed at the societal, regional, or national level. However, studies seem to stress national cultural features over other distinct features. This particular concern involves studies that take into account both regional and national embodiments of culture. Remarkably, Mitchell and colleagues (as cited in Grant 2004), in an investigation of entrepreneurial cognition, discovered that capitalists across eleven societies have a similar ‘culture’ of private enterprise that is different from the values of non-entrepreneurs. Another issue is that culture is understood in distinct forms. As the study of Hayton and colleagues (as cited in Rößiger 2009) shows, a lot of behavioural investigations apply the Hofstede’s idea of national culture. According to the cultural theories of Hofstede, Trompenaars, and others, scholars carried out many studies in different contents. This essay will only focus on the relevance in cross-cultural setting and leadership since it is more connected to GE’s organisational structure and culture. Numerous studies are comparative research derived from two or more regions or societies. The rationale is that countries studied are distinct in cultural dimensions and the connection between behaviours and dimensions are investigated. Although the cultural theories of Hofstede and Trompenaar are regarded as having significant effects in later cultural scholars, it still needs consideration of the weaknesses and limitation of these cultural theories when using the theories in examining information in particular settings. The situation of GE in India is quite common and shows individuals’ particularly the global expatriates’ reservoir of intercultural understanding which identified as the capability of experiencing and distinguishing important cultural differences. The cultural theories of Trompenaars, Shwartz, and Hofstede can be applied to assess the cultural differences between GE (Westerners) and India. The cultural theories are the conceptual foundation of intercultural understanding and the principle to sensitivity and assessing intercultural understanding. Hofstede particularly studied India and his findings will be very useful to GE. According to Hofstede (2005), India has a very high Power Distance Index (PDI) which suggests a high level of wealth and power inequality. This situation is not essentially challenged by the people, but instead recognised by the people as a cultural ideology (Chandra 2002). The Long Term Orientation (LTO) of India is also very high. It indicates that the Indian culture is cost-conscious and determined (Hofstede 2005). The higher India scores in this cultural dimension, the bigger the gap between importance of women and men; it could also produce a more self-confident and competitive female population, even though not greater than that of the male population (Chandra 2002). The lowest ranking cultural dimension of India is Uncertainty Avoidance (UAI). This suggests that the culture may be more accepting of formless situations and insights (Hofstede 2005). The population may have very few policies with which to try to regulate every unforeseen and unknown event. All of these findings have major implications on GE’s organisational culture and structure. Section 4. Fitness for Purpose Fitness for purpose implies goods or services being appropriate to the specific purpose that their purchaser or user needed them for (Peters & Waterman 2004). It is only relevant if the seller is aware of the purpose—or if it is evident from the situation. Basically, fitness for purpose denotes the standard that should be satisfied by a seller (Mullins 2007). In general, when a customer reveals to a seller the specific reason for which the products are purchased, there is an unspoken condition that the products are logically appropriate for that purpose--- the desires, needs, or requirements of the customer. Section 5. Critical Reflection Welch responded determinedly to illustrations of GE as a corporation. However in order for the organisation to be ‘greater than the sum of its parts’, it should exploit its product and diversity to enhance performance within each enterprise (Grant 2004, 341). The solution to converting diversity into potential, according to Welch, was the smooth transfer of learning practices within GE. Yet, to realise this required eradicating—or at least making somewhat open—the internal limitations of GE, as well as enlarging permeability to outside learning (ibid, p. 341). Hence, the organisational structure and culture is definitely a ‘fitness for purpose’. GE should be boundary-less where in both internal and external barriers become unclear. In this situation, suppliers are not viewed and treated as outsiders. They are considered trusted allies in the overall business performance (Handy 1993). Customers’ idea of their requirements and the company’s perspective become parallel and every attempt of every individual in the organisation is concentrated on gratifying those demands (Dobson & Starkey 1993). The boundary-less organisation hazes the separation between internal operations; it acknowledges no differences between ‘foreign’ and ‘national’ functions; and it eliminates or disregards group categorisations such as ‘hourly’, ‘salaried’, and ‘management’ which hampers unity (Grant 2004, 342). ‘Opening’ GE entailed reforms in behaviours, attitudes, and structures that would allow integrated diversity. Section 6. Recommendations Developing organisational culture has become a requirement in the current business world. Individuals want to be employed in an organisation where they can be fulfilled and have a balanced work and life. GE, in order to be successful in India, should critically take into account Hofstede’s findings. According to Hofstede, employees in high PDI countries, such as India, have a tendency to recognise centralised power. Hence, the top management of GE should reconsider its practices and try incorporating a practice of ‘telling them what to do’. In terms of individualism, India also ranks high. This implies that Indians pursue independence and would want to perceive their identity as rooted in the self rather than the companies they are employed in (Chandra 2002). This fact can affect the employer-employee relationship within GE to the point that the employee begin to view the relationship from a utilitarian and calculative point of view. The management of GE should then consider juggling between work and life. Certainly, issues of work-life balance are more important and need prompt consideration. Also, since India is highly masculine, GE should rethink its decisions to put female employees as superiors of their male colleagues. And lastly, countries that have a high rank in UAI, such as India, feel intimidated by uncertainty. Relying on their capability to tolerate uncertainty, people react in different ways to deal with the uncertainty in a situation. Likewise, societies have different strategies to handle ambiguity. Unforeseen or unknown circumstances may be counterbalanced by risk-avoiding practices through rigid rules and regulations, security and safety mechanisms. Religion and ideology may also give GE an edge in India and place an importance on total reality than the comparative nature of reality. Hofstede also discovered that individuals from ambiguity-avoiding countries more expressive. These ‘soft’ factors should not be overlooked by the top management of GE as in can contribute to the creation of employee motivation and empowerment. Bibliography Bennett, R (1997) Organisational Behaviour. London: Pitman  Chandra, A (2002) India Business: Finding Opportunities in this Big Emerging Market. New York: Paramount Market Publication. Dobson, P, K Starkey & J Richards (2004) Strategic Management: issues and cases. Oxford: Blackwell  Dobson, P & K Starkey (1993) The Strategic Management Blueprint. Oxford: Blackwell  Eyre, EC & R Pettinger (1999) Mastering Basic Management. Basingstoke: Macmillan  Grant, R. (2004) General Electric: Life After Jack. GCT 16, pp. 336- 352. Handy, C (1993) Understanding Organisations. London: Penguin  Hofstede, G (2005) Cultures & Organisations: Intercultural Cooperation & its Importance for Survival: Software of the Mind. London: McGraw-Hill  Mead, R (2005) International Management: Cross Cultural Dimensions. Oxford: Blackwell (also available electronically)  Mullins, L (2007) Management & Organisational Behaviour. Harlow: Financial Times/Prentice Hall (2005 edition also available electronically)  Peters, TJ & RH Waterman (2004) In Search of Excellence: Lessons from America’s Best-Run Companies. London: Profile  Rößiger, J (2009) India as Destination for Western Retailers: Opportunities, Challenges and Strategic Decisions. Germany: Diplomica Verlag. Stewart, R (1997) The Reality of Management. Oxford: Butterworth Heinemann  8-10 Read More