Cross Culture Management - Home Furniture Ltd - Case Study Example

Cross Culture Management Contents Cross Culture Management Contents 2 Introduction 3 Discussion 3 Relevance of Cross Cultural Management in the Company 3 Impact of Culture on the Organization 6 Policy Recommendations 8 Conclusion 8 References 10 Introduction The company Home Furniture Ltd. was set up in the tear 1970. The company’s headquarters are located in Finland. The company specializes in manufacturing of affordable furniture which has gained a huge publicity among families and youngsters with a small budget. The company initially concentrated only in the European countries but later it went into an expansion mode and diversified its business to other regions such as Asia, Arab, and North America. The stores of the organization follow an independent approach with regard to their sales policy and there are huge differences with respect to marketing policies and type of products that are sold by the stores. The company manufactures on a very large scale and thus it enjoys the advantage of economies of scale. The organization allows its consumers to assemble their products with regard to logistics. These factors result in low costs for storage of products and also reduce the cost of labour for the organization. The company Home Furniture Ltd. faced certain problems with regard to its expansion programme. In the US, performance based pay is generally followed with regard to rewarding employees whereas the mother company Home Furniture Ltd. focuses on other areas of managing employee relations such as employee participation through work councils. Discussion Relevance of Cross Cultural Management in the Company The top management of the organization intends to develop a culture which is recognized as strong globally. But the implementation of such a policy with respect to culture has proved to be very difficult for the organization. The subsidiary companies that are located in the Asian countries tend to follow a different approach with regard to recruitment. In this regard, it is very important to state that the local management of the company is mostly recruited from the local subsidiaries of the organization. Moreover there tend to be a huge difference with regard to employment conditions and the role of employees across various countries where the organization has operations (Hofstede, 2001, p. 59). The discussion of problems between top management and local management is often found to have a lack of understanding of the common problems. The culture of an organization is largely determined by the workplace environment that is formulated by interactions between an organization and its employees. It consists of weaknesses, strengths, education, life experiences, and upbringing of the employees of an organization. The leaders of an organization play an important part in defining the culture through their leadership abilities and actions. The actions of individuals are largely determined by their culture. It has been assumed by Hofstede that there is an existence of national culture component in the wider culture which comprises both sub-national and global constituents (Ferdinand, 2002, p. 53). National culture is said to be implicit, systematically causal, core, territorially unique, and shared. Hence it is of utmost importance for Home Furniture Ltd. to know the national cultures in a better way that the organization has chosen to deal with. It should be the first step of the learning process for the organization and its employees. The CEO of Home Furniture Ltd needs to make a serious effort in this regard to know the national cultures in a better way of countries that the organization has chosen to enter into. This is considered to be very important as there are huge differences in the governance structures that are found in different countries. The existence of board crises, market globalization, and investor activism increasingly calls for reforms in the international corporate governance. Hence it is very important in this regard to understand the variance of structures of corporate governance across countries. Hofstede identified five important dimensions of national culture such as power distance, uncertainty avoidance, individualism, long and short term orientation, and masculinity. Power distance is concerned with how the less powerful individuals in organizations accept the fact that power is distributed in an unequal way. Uncertainty avoidance deals with the tolerance of the society regarding ambiguity and uncertainty (Keller, 1993, p. 79). It indicates the role of culture in the feeling of comfort or discomfort by people in an unstructured situation. Individualism refers to those factors which determine whether people are working as a unit or that they are only concerned about their own motives and interests (Harzing et al., 2011, p. 39). Masculinity is another important factor which is concerned about the distribution of emotional roles between genders and it is considered to be a fundamental issue in the modern society. A large number of solutions can be found if this issue is addressed in a proper manner. The management of the cross cultural factors includes development of services and products, interaction with foreign partners, selection of distributors operating in the foreign market and other partners, structuring ventures related to international business, interaction with foreign consumers, preparation for exhibitions and fairs in the overseas market, and also designing materials related to promotion and marketing. The CEO of Home Furniture Ltd must be aware of the organizational culture of China which is considered to have a high power distance. The organizational structure of Home Furniture Ltd in this regard must be centralized whereas in countries with a low power culture, the company should resort to a decentralized organizational structure. The CEO of the company should make sure that the purchase of products by the company should be from such suppliers who have ethical and fair labour practices as the company must demonstrate its corporate social responsibilities towards its employees, environment, suppliers, government, and community at large. The company must focus on the implementation of a culture which promotes equal opportunity, diversity, and also creativity in every aspect of its business (Kirtiş, 2001, p. 36). The company must place a high degree of importance on management of human resources in a positive way so as to retain key employees. Effective human resource management also contributes a great deal towards safety and health factors, development and training across cultures, reward and also the role that should be adopted by a major multinational organization in this regard. The CEO of the company should analyze the impacts of culture on the morale of employees and also focus on the relationships that exist between performance and cultures (Hofstede and Hofstede, 2005, p. 46). The CEO of Home Furniture Ltd should try to find a way regarding the efficient use of national culture to make sound decisions that will benefit the company in the long run. A better alignment between cultural contexts and management practices can provide the company with tangible business benefits. The company can increase its profitability by the use of participative management in countries with low power distance cultures (Wainwright, 1994, p. 73). But participative management may not give the company good results in countries with high power distance cultures. The company may also utilize quick fixes to improve its profitability in short term oriented cultures but the utilization of the same in long term oriented cultures may not yield good results for the company. The company can follow performance related pay and promotion policies in a culture that is masculine in nature to improve its profitability. But it must be aware of the fact that the use of the same policies in cultures which are considered feminine may not yield profitable results for the company. Impact of Culture on the Organization The impact of corporate and professional culture acquires more importance as people tend to adapt to a profession and also workplace. Companies tend to have a set of values, norms, and beliefs that are considered to be distinct and this separates it from other organizations. These differences are sometimes considered to be as distinct as the national culture (Armstrong, 2006, p. 35). If any multinational company want to maintain a competitive advantage over its competitors in any international domain, the adoption of an organizational culture which suits the national culture of the country in which the company plans to operate is of utmost importance. This reflects that the behaviours and leadership styles that are adopted by an organization are culture bound. The CEO of Home Furniture Ltd should have a sound knowledge of the applications of culture with regard to international business. In this regard it must also be stated that the managers at Home Furniture Ltd should undergo continuous training sessions with respect to culture to improve their people management techniques and observational skills (Dartey-Baah, 2011, pp. 12-15). Culture plays a dominant role by influencing attitudes, values, and behaviours of individuals living in a society. The culture that is followed in an organization largely reflects its unique way of doing business. Moreover the organizational culture that is followed in an organization is influenced in a great way by the individuals that form the organization. Values, beliefs, and norms are considered as those behaviour patterns that are socially transmitted and it is in this context that culture has been considered more as a source of conflict rather than of synergy. The conflict between individuals belonging to different cultures mostly takes place due to this interaction of different cultures (Schuler and Jackson, 1996, p. 57). In this regard the organisational cultures of multinational companies should conform to their respective cultural orientations and this in a large way determines the failure or success of multinational businesses in the global environment. Culture is considered as the central aspect to manage global dynamics of workforce. Culture has been divided into two overlapping groups such as national culture and organizational culture. These cultures play an important role in influencing organizations and also in the management of global workforce. National cultures are said to have a considerable impact on leadership styles and strategic decisions of an organization (Hofstede, 1980, p. 71). A multinational company like Home Furniture Ltd must have varying operating practices across locations to improve their performance on a global basis. The organization Home Furniture Ltd must be very sincere in its effort to learn the target culture which will help the company in building respect and trust in the target market. In doing so, the company is establishing the foundations for productive as well as open relationships with other countries. Policy Recommendations Multinational companies like Home Furniture Ltd find themselves engrossed in different cultures from that of their parent country and therefore they have to deal with various culture orientations. The success of multinational companies largely depends on their ability to handle efficiently the different culture orientations. Businesses cannot survive without the existence of culture and so it is of utmost importance that multinational corporations handle such factors in an efficient way (Hofstede, 1980, p. 61). The company Home Furniture Ltd must know the national cultures in a better way that the organization has chosen to deal with. This implies that there must be a consensus among members of the organization and that the decisions must be largely agreed upon by all members of the organization. This will ensure that there is teamwork among members of the organization to achieve the goals of the enterprise. The main purpose of organizational culture is to ensure that there is a uniform way of working in the organization so as to minimise the impacts of conflicts that arise due to cultural differences. Conclusion Each country has a culture of its own with values and norms that differ in a large way with respect to other countries. Managers of multinational companies should make a serious effort in this regard to adapt to the leadership behaviour that is found in the host country. The work force of the organization Home Furniture Ltd should be trained so as to increase the intercultural efficiency at all levels of the organization. It should also try to maintain an inclusive environment of working where people from various fields feel recognized and respected. Leadership role plays an important part in intercultural effectiveness of an organization. The role of leaders is considered significant in influencing safe behaviour in employees. The leaders of the organization must demonstrate planned interventions if there is any deviation from the agreed norms of the organization. They must in this regard take necessary corrective action to ensure that the organization does not deviate from its main purpose. References Armstrong. M., 2006. Handbook of Human Resource Management Practice (10th ed.). London: Kogan Page. Dartey-Baah, K., 2011. The impact of national cultures on corporate cultures in organisations. Academic Leadership Journal, Vol. 9(1), pp. 12-15. Ferdinand, A., 2002. Structural Equation Modeling dalam Penelitian Manajement, Edisi 2. Semarang: BP Undip. Harzing et al., 2011. International Human Resource Management (3rd ed.). London: Sage Publications. Hofstede, G. and Hofstede, J., 2005. Cultures and organisations: software of the mind (Revised and expanded 2nd ed.). New York: McGraw-Hill. Hofstede, G., 1980. Culture’s Consequences. International Differences in Work-Related Values. A Bridged Edition. 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