Differences between China and the US Management - Essay Example

?Case Introduction Globalization that has identified international opportunities for business ventures faces a number of challenges among multinational enterprises and local organization that seeks to explore international markets. Cultural differences that include communication approaches in negotiating business contracts and marketing initiatives are examples of challenges to international ventures. This paper seeks to explore cultural differences between china and the United States. Based on a negotiation between organizations from the two countries, the paper will explore the impacts of cultural difference on achieving business initiatives across cultures. Question 1 The main characteristics of Chinese culture One of the major characteristics of Chinese culture is their emphasis in personal relationships in interactions. The Chinese are particularly keen in developing personal relationships before establishment of business relations. As a result, they normally engage in personal interactions in which people can bond and know each other before developing business relations. Chinese also believes in formal relationships in interactions. Based on social classes or positions, they appreciate acknowledgements of their social status in interactions. These features also define the Chinese lack of capacity to respond to urgencies. Besides reliance on the interpersonal relationship that needs to be enveloped before Chinese can respond to a need in negotiation, they heavily rely on past performance and potential of a party. This means that developing an initial venture with a Chinese team takes time, as the Chinese are keen in understanding a party’s past prospects. Similarly, the Chinese takes time to review and understand a party’s potential and prospects (China, n.d., p. 1). Chinese culture also involves materialistic appreciations that are intended to be reciprocated. Since they are perceived as a duty, failure to make appreciations or a move to decline a gift from a Chinese is contrary to traditions and may easily raise suspicion into conflicts. Chinese culture also tends to shy away from conflicts. (China, n.d., p. 1). Rgraf further explains the importance of reputation in Chinese culture. Putting a person’s reputation at stake through initiatives such as failing to observe social status and positions therefore negatively affects interactions in the Chinese culture (Rfrag, 2012, p. 1). The Chinese are also conservatives and authoritarian. (Pablos and Lytras, 2008, p. 201). Difference between the Chinese culture and U.S. culture The American culture is a contrast to the observations in Chinese culture. Americans are for instance informal and do not consider status while developing business relations. They lay focus on the business to be developed. American relationships are similarly informal and free from material attachments such as gifts. American culture also focuses on business relationship as opposed to personal relationships. While Chinese develop their relationships on trust and shy away from confrontations, Americans relies on contractual rules for relationships and are willing to venture into controversial issues in order to attain agreements into business developments. American culture is also characterised by instant developments with little attention to ‘long-term’ consequences and obligations (China, n.d., p. 1). Relationship between the differences and the negotiations The cultural difference between China and the United States directly hindered the negotiations. While the Americans were, time conscious and wanted to complete the deal, the Chinese needed time to socialize with the Americans for personal relations and understanding. Similarly, the American approach that relies on contractual rules rather than trust, controversial ventures as well as disregard to social structure and reputation potentially contributed to the final collapse of the negotiations by infringing Chinese culture (China, n.d., p. 1; Pablos and Lytras, 2010, p. 201). Question 2 Reasons for failure of the negotiations “Complementarity of strategies, operating policies, communication barriers, compatible management teams, and trust” are some of the fundamental factors that an organization or a party needs to consider when selecting a joint venture partner (Lane, Maznevski, Deetz and DiStefano, 2010, n.p.). Organizations however often focus on the desired objectives of a joint venture and fail to consider procedures that can lead to the objectives. Failure to consider the process for developing a joint venture therefore leads to lack of preparedness and lack of ability to predict emergence of obstacles and difficulties in handling the obstacles when they arise in negotiation processes. A consideration of the above factors in seeking a joint venture partner enables an organization to identify a suitable partner with similar objectives and a flexible culture towards compatibility. Similarly, a prior consideration of the factors allows an organization to predetermine and prepare for possible challenges in negotiating a joint venture (Lane, Maznevski, Deetz and DiStefano, 2010, n.p.). There was for instance lack of strategic complementarity in the parties’ agendas that led to a conflict about possible management strategy in event of a joint venture deal. The major controversial strategy was on financial activities of the joint venture. Motosuzhou was particularly keen on controlling the joint venture’s finances with a strict provision that the proceeds from the venture would only be used in the country and in Chinese currency. Electrowide Company would on the contrary not agree to the strategy due to Motosuzhou’s weak accounting policies. This also explains difference in operation policies that challenged development of the joint venture (Semino, n.d., p. 8, 9; Lane, Maznevski, Deetz and DiStefano, 2010, n.p.). Communication barriers, as a hindrance to negotiating business ventures and managing operations, is also directly applicable. Existence of communication barriers derails negotiations into agreements besides facilitating conflicts in management. Communication barrier particularly played a role in lack of understanding between the two parties. Based on cultural differences, communication by either party was not appreciated by the other. Ai Hwa for instance presented a gift to Tom, which Tom declined, to Hwa’s disappointment. Hwa was symbolizing good faith to Tom but Tom did not comprehend the language and possibly communicated lack of good faith in the negotiation process. Other communication barriers that possibly influenced the negotiation process involve lack of patience from the Americans and their direct approach to negotiation that included confrontation. Since these are contrary to Chinese culture, they negatively influenced the negotiation process. Lack of trust as portrayed by actions such as Tom’s rejection of Hwa’s gift and presentation of contractual rules as opposed to trust as fundamentals of the joint venture also undermined the Chinese trust towards failure to secure the joint venture (Semino, n.d., p. 8, 9; Lane, Maznevski, Deetz and DiStefano, 2010, n.p.). Question 3 Composition of Electrowide’s team The Elecrowide’s team comprises of three people, Tom, the team leader, Barb Morgan and Mark porters. Tom is a graduate in mechanical engineering with 32 years of experience at the company. He however lacks international experience, an indication that he lacks experience in multinational cultural differences. Barb, a degree holder, on the other hand has three years experience at Electrwide with international experience in international acquisitions. She is however socially unstable, a drive to her current assignment. Mark Porters is also a degree holder in finance with six years experience with the company. He is an analyst. Both Mark and Barb lost interest in interacting with the Chinese and often withdrew from interactions. Tom also often lost interest in pursuing the negotiations (Semino, n.d., p. 8, 9). The company’s choice of negotiating team The company did not make an appropriate choice for its negotiation team. Reasons The company failed achieve qualities of an effective team in its delegation. This is because the profiles of its representatives do not qualify for an effective team composition. McConnell argues that an effective team should be rich in diversity. The team members should be drawn from different departments that can effectively contribute to the objectives of the team. Similarly, a team can only be effective if it is rich in necessary experience that is needed to pursue its objectives. Good communication skills that is accommodative and flexible together with ability to develop both “formal and informal networks” also characterizes an effective team (McConnell, 2010, p. 145). The organization therefore chose an ineffective team that was not appropriate (McConnell, 2010, p. 145; Baldwin and Migneault, 1996, p. 70). Question 4 Strategic alternatives to Tom in the situation The situation in the case calls for application of “the strategy of soft bargaining” (Riegelman, 2011, p. 60). This is because features of the negotiation strategy fits the situation in which Tom and his team were in. “Agreeability, flexibility, avoidance of conflict and unpleasant exchanges” are examples of characteristics of the soft approach to negotiations (Riegelman, 2011, p. 60). Application of these traits would have conformed Tom’s team to the Chinese culture towards minimizing conflicts. The Chinese culture of appreciating parties and adoption of a soft stand in negotiation are also features of the soft negotiation strategy. The team should have also adopted initiatives that “appeal to corporation, agreement, and team play” (Riegelman, 2011, p. 60). “Tit for tat” is another alternative strategy that Tom’s team could have adopted (Riegelman, 2011, p. 60). This strategy pays back based on the other party’s initiatives. A party develops an initiative to which one respond. It allows the negotiating team to understand the other party’s needs before adopting a move that can meet the desired objectives. Another possible strategy to negotiation is “the strategy of principled bargaining” which concentrates on ‘pre-identified’ issues rather than negotiation teams. The alternative involves standards that aim at a ‘win- win’ result in a negotiation. Like the soft approach, the principled approach is characterised by “agreeability, flexibility, avoidance of conflict and unpleasant exchanges” (Riegelman, 2011, p. 60). Advice to Tom Tom should change from a hard approach to negotiation into adopting the soft strategy approach that is flexible and accommodative. This is because the strategy’s characteristics are accommodative and flexible (Riegelman, 2011, p. 60). Conclusion ‘Cross-cultural’ interactions in multinational business interactions require an understanding and potential to manage cultural differences. This is because cultural differences create barriers to communication and development of relations. In the case, the American representatives did not achieve their objectives because they lacked negotiation strategies towards bridging cultural differences. Bibliography Baldwin, D. and Migneault, R. (1996). Humanistic Management by Teamwork: An Organizational and Administrative Alternative for Academic Libraries. Englewood, CO: Libraries Unlimited China. (n.d.). “Some general differences between Chinese and American cultures.” Available from: http://www.china-nafsa.aief-usa.org/culture/differences.htm. [Accessed on 3 May 2012]. Lane, H., Maznevski, M., Deetz, J. and DiStefano, J. (2010). 6th Ed. International Management Behavior: Leading with a Global Mindset. New Jersey, NJ: John Wiley & Sons McConnell, C. (2010). 5th Ed. Umiker's Management Skills for the New Health Care Supervisor. Sudbury, MA: Jones & Bartlett Learning Pablos, P. and Lytras, M. (2008). The China Information Technology Handbook. New York, NY: Springer Rfrag. (2012). “10 major differences between China and the United Stated.” Hub Pages. Available from: http://rgraf.hubpages.com/hub/10-Major-Cultural-Differences---China-and-the-United-States. [Accessed on 03 May 2012] Riegelman, R. (2011). Na. Sudbury, MA: Jones & Bartlett Publishers Semino. (n.d.). “Guanxi in jeopardy.” Available from: http://www2.seminolestate.edu/falbritton/Honors/Cross-Cultural%20Leadership/Cases/Case%202.pdf. [Accessed on 03 March 2012] Read More