International Intercultural Management - Assignment Example

International Intercultural Management Table of Contents Introduction 3 2. Culture in international management – the case of Saudi Arabia 3 2.1 Culture – definition 4 2.2 Culture within organization – theories 4 2.3 Culture in the context of international management 7 2.4 Culture and international management – the case of Saudi Arabia 9 3. Conclusion 11 References 11 Appendix 13 1. Introduction The increase of competition in all industries worldwide has affected organizational practices in firms of all sizes; in order to compete their rivals organizations have tried to introduce policies that will offer them competitive advantage, a target, which is not always achieved. The existence of factors, the role of which in organizational performance is not standardized, seems to be the key reason for the above outcome. Culture is one of these factors; its involvement in the organizational operations has various forms and consequences, a fact, which is highlighted in the literature published in the particular field. Current paper focuses on the examination of culture as a factor influencing the international management practices of organizations; emphasis is given on culture and its interaction with management in Saudi Arabia firms. It is proved that culture has an impact on the management practices of Saudi Arabia firms, but the level of this impact is not particular high, due to the existence of other factors that also affect the management practices used in firms across the specific country. 2. Culture in international management – the case of Saudi Arabia In order to understand the role of culture in developing particular management practices in Saudi Arabia it would be necessary primarily to define culture, as a concept related to the organizational environment. Reference should be also made to the theories of culture – at the level that they indicate the potential elements of culture and its impact on the organizational strategies. Then, the interaction between culture and management in Saudi Arabia would be more easily understood. 2.1 Culture – definition Culture is a concept related to a wide range of activities. Within organizations, the term culture is used in order to reflect the priorities of the firm, from an ethical perspective, as promoted through its daily operations. In accordance with Ahlstrom et al. (2009, p.36) ‘culture is the acquired knowledge people use to interpret experience and actions’. From a similar approach, Schein (2010) notes that culture has three different levels: ‘a) artifacts, i.e. processes and objects that are visible and easy to understood, b) espoused beliefs and values, i.e. ideas, goals and values and c) basic underlying assumptions, meaning the unconscious beliefs and values’ (Schein 2010, p.24). In the context of the organization, culture, as a concept, can be differentiated; the aspects of culture in modern organizations are reflected in the theories presented in the next section. 2.2 Culture within organization – theories In the context of the organizational environment, culture is of critical importance. In fact organizations which do not pay attention at cultural differences may suffer severe damages (Ahlstrom et al. 2009, p.36) – referring to the case that misunderstandings of a firm’s leader in regard to specific cultural differences lead other firms or individuals to ask for compensation for the damage they have suffered (Ahlstrom et al. 2009, p.36). Moreover, the inability of managers of international firms to understand the culture of the target market can cause damages to the firm’s brand name in the particular country (Ahlstrom et al. 2009, p.36). On the other hand, Mead (2005) notes that the role of culture in the development of business strategies is not always decisive - reference is made to the existence of contradictory views regarding the value of culture as an element of the organization. In accordance with Mead (2005) the importance or not of culture within each organization is depended on the following two facts: a) the conditions in the organizational environment, meaning the internal and the external environment, in which a particular event has taken place – referring to the case that an organizational activity or an event developed within the organization and which is related to the culture – organizational or social – is set under evaluation, b) the scope under which the interpretation of this event is attempted, meaning the role of the professional who is asked to evaluate the specific event (Mead 2005, p.3). Within organizations, culture may takes various forms, aiming to serve the organizational needs; this fact is reflected in the case of mission culture, a concept which is used in order to highlight the need for emphasizing ‘on the achievement of organizational goals’ (Daft 2009, p.383). Three are the most known theories of culture, as used by organizations worldwide: a) the iceberg theory of culture – developed by Hall in 1950s, b) the onion model of Hofstede and c) the Trompenaas theory on culture, known as the layers of culture theory (De Anca et al. 2007). The above theories could be explained as follows: a) the iceberg theory of culture is based on the proposition that ‘culture is consisted from both internal (unconscious) and external (visible) elements’ (De Anca 2007, p.85); b) the onion model of Hofstede; this theory is also based on the proposition that culture is consisted from levels; certain of them are less visible and others are more visible (De Anca 2007, p.85); c) the Trompenaas theory of culture refers to the existence in culture of three different levels – as this theory is described by Schein (2010), see in the previous section. Another aspect of culture is presented through the study of Becker (2000); in accordance with the above study, the culture is used in order to highlight specific ethical and moral values that need to be taken into consideration by the managers of firms operating in all industries. In the context of the international market, the above role of culture becomes more important – reflecting the need of multinational firms to align their strategies in host countries with the local culture and ethics (Becker 2000, p.14). In order to develop effective organizational strategies, a firm’s strategic planners need to identify the cultural needs of each particular organizational plan – meaning the elements of culture which are expected to influence the particular plan. The assessment of culture, as part of the organizational strategic planning is presented in Graph 1, Appendix. In the specific graph it is made clear that assessment of culture, as a factor influencing the structure and the content of organizational strategies, need to incorporate the following phases: a) definition of the culture – i.e. identification of the elements of the cultural environment which are involved in a particular organizational activity, b) audit of the culture, meaning the examination of the level at which culture is expected to influence one or more organizational plans, c) development of culture plan, i.e. to introduce a plan referring to the methods used for the alignment of the organizational strategies with the characteristics of the organization’s cultural environment and c) implementation of the culture plan, meaning the incorporation of the particular plan in the organizational strategies. Another potential form of culture is presented in graph 2 (Appendix); through the particular graph, culture is equalized with the corporate risk management. 2.3 Culture in the context of international management As already noted above, culture does not always affect the organizational performance; or at least, its impact on the organization is differentiated under specific terms. Towards this direction, it is noted that an international manager who is involved in the evaluation of culture as a factor influencing the activities of the organization in the international market, is likely to face the following issues: a) under which circumstances culture can affect the organizational strategies and operations? b) Under which terms increased emphasis should be given on culture – compared to other elements of the organization and c) how the analysis of culture could help to address particular organizational problems (Mead 2005, p.4)? Regarding the effects of culture on the international management practices of a multinational organizations Dowling et al. (2008) note that under the influence of the national culture, the subsidiaries of multinational firms need to take measures in advance in order to ensure ‘national responsiveness’ (Dowling et al. 2008, p.31). The specific strategy allows multinational firms to increase their competitiveness towards their rivals – referring especially to other multinational corporations, which have also established a subsidiary in the particular country. A potential strategic tool for increasing national competitiveness – and improve market position in the host country – is the development of strategic alliances with a local firm (Dowling et al. 2008, p.31). One of the most important issues regarding the management of culture in the international market is the following one: in the context of the international business operations, the management of culture becomes a challenging task; for this reason, the particular activity need to be assigned to individuals which are appropriately skilled – meaning that they are able to understand the culture and the ethics of the host country and promote the most appropriate strategies for supporting the growth of their organization in the foreign market (Becker 2000). Another aspect of culture as an organizational element involving in the firm’s international activities is the following one: because of the importance of culture for the success of multinationals’ operations in the host countries, expatriates are used in order to ensure that the strategies of multinationals in the target market will be appropriately aligned with the local culture (Becker 2000, p.31-32). In this context, the role of expatriates in the incorporation of foreign cultural characteristics in the firm’s strategies in regard to the host country is considered as critical. In accordance with Punnett (2009) the importance of culture in international management is reflected to a series of organizational practices; these practices prove, as Punnett (2009) notes that the cultural environment in which a firm operates can strongly affect the structure and the content of organizational activities: a) when having to establish its subsidiary in a foreign country, a firm needs to proceed to negotiations with ‘the host country’s constituencies’ (Punnett 2009, p.48); for developing this activity successfully negotiators need to be aware of the culture of the host country involved (Punnett 2009, p.48); from this point of view, culture – referring to the national culture in this case – becomes critical for the successful entrance of a multinational in the target market, b) in order to survive in the international market firms tend to develop strategic alliances; however, the successful cooperation of firms participating in this scheme requires that these firms are aware of the culture of the other firms-members of the alliance (Punnett 2009, p.48); in the above case, the term culture refers to the culture of the organization – which, however, is likely to be influenced by the national culture, meaning the culture of the country where the particular firm has the center of its activities, c) culture can influence the performance of expatriates; referring to the culture of the host country in which expatriates have to work trying to align the organizational strategies with the local culture and ethics (Punnett 2009, p.48), d) also, key organizational activities, like ‘accounting and marketing may different significantly from one place to another’ (Punnett, 2009, p.48); in this context also, culture is proved to have a significant impact on the organizational performance. 2.4 Culture and international management – the case of Saudi Arabia In Saudi Arabia, as also in other countries worldwide, culture has an important role in the form and the content of management decisions. In fact, the review of the management practices of the firms operating in the particular country, as these strategies are highlighted in the relevant literature, has led to the assumption that in Saudi Arabia the influence of culture in management practices is more intensive compared to other countries in the international community. The strong cultural characteristics of the specific country seem to be responsible for the above outcome. The key role of culture in the management decisions and practices of firms in Saudi Arabia is analytically described below. Emphasis is given on the overall framework of the interaction between culture and management in Saudi Arabia but also on the practices of managers in Saudi Arabian firms regarding the increase of motivation of employees of different cultural background. The relationship between culture and management in Saudi Arabia is developed within the same framework as in most firms internationally; at this point, the issues referring to the culture and the international management, as described above, would be also applied on Saudi Arabian firms. However, there are also certain differentiations, in regard to the specific issue, that need to be highlighted: in the research developed by Briscoe et al. (2008) it was proved that culture does not affect international management practices of Saudi Arabian firms at the same level as in Western firms. Moreover, Shoult (2006) noted that foreign firms operating in Saudi Arabia have to align their practices with the local culture; otherwise, they will not be able to communicate effective with local consumers. A similar approach regarding culture and international management in Saudi Arabia is included in the study of Long (2005).The above researcher states that the operation of businesses in Saudi Arabia is, unavoidably, affected by the local market ethics – which promotes the development of family-owned firms and the use of Islamic laws in all social and economic activities (Long 2005). At the same time, Ali (2008) emphasizes on the following characteristics of Arabians, as managers: a) they are like ‘to take comments personally’ (Ali 2008, p.133) which means it is not easy for complaints to be developed in regard to their firm’s operations or performance, b) they tend to show that they are aware of all issues regarding their activities; however, in many cases, this is not absolute; it may be just a comment referring to one or more activities; in other words, it may be an issue of lack of effective communication so that the actual aspects of a problem are highlighted and addressed, c) they are likely to be highly committed to their promises; this means that they are not expected to let their business partners uncovered in case of severe organizational problems; also, the above fact leads to the assumption that Arab managers can achieve the targets they set, being concentrated on their target (Ali 2008, p.133). On the other hand, Misra (2009) notes that the rapid economic development of Saudi Arabia has contributed in the country’s significant growth – especially in the business sector. In this context, foreign firms that are interested in entering the particular market would be given the necessary support, as contributors in the further growth of the local market. 3. Conclusion The role of culture in the international management practices of firms worldwide is based on certain theories – as presented above. However, in certain cases, like in the case of Saudi Arabia, the level of the involvement of culture in international management practices is not standardized. In any case, the cultural characteristics of the Arabian market, as highlighted above, should be taken into consideration by foreign firms, which are interested in entering the particular market. As for the Arab firms, these are likely to be affected by the local culture, in regard to their international management decisions; however, the rapid growth of the local market may be a barrier for the high involvement of culture in international management decisions; rather, the influence from the foreign firms’ practices – on which the development of Arab market has been based is still strong. References Ahlstrom, D., Bruton, G. 2009. International Management: Strategy and Culture in the Emerging World. Belmont: Cengage Learning Ali, A. 2008. Business and management environment in Saudi Arabia: challenges and opportunities for multinational corporations. Oxon: Taylor & Francis Becker, K. 2000. Culture and international business. London: Routledge Briscoe, D., Schuler, R., Claus, L. 2008. International Human Resource Management. Oxon: Taylor & Francis Daft, R. 2009. Organization Theory and Design. Belmont: Cengage Learning De Anca, C., Vega, A. 2007. Managing diversity in the global organization: creating new business values. Hampshire: Palgrave Macmillan Dowling, P., Festing, M., Engle, A. 2008. International human resource management: managing people in a multinational context. Belmont: Cengage Learning Gill, R. 2006. Theory and practice of leadership. London: SAGE Herbrechter, S. 2004. Post-theory, culture, criticism. New York: Rodopi Long, D. 2005. Culture and customs of Saudi Arabia.Westport: Greenwood Publishing Group Mead, R. 2005. International management: cross-cultural dimensions. Oxford: Wiley-Blackwell, 2005 Misra, S. 2009.International Business: Text And Cases. New Delhi: PHI Learning Onkvisit, S., Shaw, J. 2008. International marketing: strategy and theory. Oxon: Taylor & Francis Punnett, B. 2009. International Perspectives on Organizational Behavior and Human Resource Management. New York: M.E. Sharpe Schein, E. 2010. Organizational Culture and Leadership. Hoboken: John Wiley and Sons Shoult, A. 2006. Doing business with Saudi Arabia. London: GMB Publishing Appendix Graph 1 – Defining organizational culture (Source: http://sheilamargolis.com/wp-content/uploads/2010/01/culture-of-distinction-program-cycle.png) Graph 2 – Corporate culture – as interacts with risk management (Source: http://www.openpages.com/blog/wp-content/uploads/PwC_corp-culture.jpg) Read More