Cultural Differences and People Management - Essay Example

? Cultural Differences and People Management Introduction Globalization of markets and the increase in internationalization of organizations are issues that have come to the core of business and management especially over the last two decades. However, their consideration for firms that desire to remain competitive in the long run is influenced by a series of factors. In as much as companies put emphasis on the significance of economic, political, and their technological competencies of individual management practices in the global business environment, it is equally important to understand the cultural features of the host country and their significance on business and management practices. Understanding the culture of host country and consideration of cultural differences is important for companies in the international arena. The importance of cultural importance has been widely studies and research on it indicates that possessing a sound knowledge of the culture of markets in which businesses operate is of paramount significance. The Importance of cultural differences At the international level, have a good understanding of the cultural differences between the global market and the national level is critical in building long-term relationships and achieving business success. For example, in majority of Asian cultures, operating business is not limited to the confines of working hours, but rather can be extended to blend into social situations such as meals where opportunities are exploited to build bonds, making understanding and appreciation of the local culture an essential factor (Morrison, 2006). Cultural differences also play a significant role in determining the type of entry mode to be adopted by a company that is thinking of venturing into international markets. An example given by Morrison (2006) that can be cited as an area where the importance is clearly defined is in joint ventures where cooperation and trust is key to maintaining long-term business success. It is important for firms that going into joint ventures in the international market to critically analyze the culture of host country and come up with ways of blending the culture of different locations into a distinctive corporate culture in order to augment the sense of corporate identity. However, international managers need to appreciate that this comes with considerable challenges especially when strong national cultures clash in the case of global mergers (Morrison, 2006). In order for strategic alliances between firms in a different cultural setting to remain successful, it is important to maintain consistent corporation that ensures risks associated with opportunistic behaviours are minimized. Therefore, there is need to develop a higher level of trust between joint ventures, and cultural difference can be effectively used a measure of the different levels of trust between among countries. For example, it has been argued that masculinity can negatively impact joint venture projects, and individualism seems to have negative effects on the voluntary joint management of a firm, depending on the national cultural setting that a company operates under (Lee et al., 2011). In addition, the cultural difference of countries can be an important factor in determining the type of wholly owned subsidiary investment to be considered by international organizations. For example, a greater level of difference in culture necessitates that firms have stronger business controls, and firms operating in such markets are more likely to prefer wholly owned subsidiary as a way of entering into international markets. Therefore, the cultural difference increases the benefits of a company by acquiring n existing firm in the new foreign market since the organization entering the market has the opportunity of learning the different norms and routines unique to the host country from the acquired subsidiary. This plays a significant role in maintaining the success of the company as it ensures that firms make sound managerial decisions that are devoid of conflict with the prevailing national cultures. Understanding of the cultural differences also helps in minimizing risks and costs for effective coordination of management in the different culture. The examples above, therefore, are a clear illustration that the ability of businesses to remain competitive in and sustain long term relationships is significantly dependent on the managements’ sensitivity to differences in language, value systems and norms of practices between their individual firms and the host countries. Other studies that have been carried out also indicate that cultural differences resulting from national, organizational and professional cultures impact in the overall operations of international alliances (Pothukuchi et al., 2002). The authors point out that the differences in national cultures can have considerable impact on the decision making of international firms, the leadership styles that are adopted by individual organizations, and human resource management practices, factors which directly influence the general performance of companies in acquisition and deployment of resources. Moreover, companies that are venturing into international markets are faced with major challenges regarding business structures, where some cultures have more rigid organizational structures and hierarchy such as German firms in comparison to American ones. The rigidity of German organizational structures makes decision making more burdensome, therefore managers need to understand and modify their management styles to conform to the German cultural differences when venturing into this market. Other challenges experienced by firms which show that cultural differences are important in business management originate from differences I technical emphasis and timelines. These challenges can be all attributed to cultural differences between different market environments, resulting in significant differences in management and business practices. Conclusion Cultural differences among countries play a significant role in the international arena and greatly influence the business management and leadership practices that are adopted by different firms. When a multinational enterprise considers to venture into new markets, the cultural distance based on cultural differences determines the appropriate method of entry that individual firm will adopt. When analyzing the importance of cultural differences, it is important to note that business customs within a particular country are an extension of the country’s cultural values and practices which in essence determines a firm’s management practices. There are many similarities in business customs among countries, however, if the cultural differences that exist are not properly analyzed and taken into consideration for effective adjustment, numerous problems may emerge especially in management of the overall business and the employees. In appreciating the cultural differences does not necessarily imply that a manager or a businessperson changes their customs to conform to the local ones, but rather it implies being aware of the differences and adeptly accommodating those differences that might lead to problems and misunderstanding into the company’s management. References Lee , C., Bang, Ho-Yeol, H, Jong, W., Lee, J. Young, K, Young, H.Y 2011. An analysis of cultural impact on international business performance via foreign market entry mode: case of South Korean MNCs. Journal of Management & Marketing Research. 7, 1-8. Morrison, J. 2006. The international business environment: global and local marketplaces in a changing world. Basingstoke , Palgrave Macmillan. Pothukuchi, V., Damanpour, F., Choi, J., Chen, C. C., & Ho Park, S. 2002. National and Organizational Culture Differences and International Joint Venture Performance. Journal of International Business Studies. 33, 243-265. Read More