Cultural Compatibility: Tescos Proposed International Joint Venture in India - Case Study Example

Cultural Compatibility: Tesco’s Proposed International Joint Venture in India Due to globalization, there has been the introduction of joint ventures all over the world by different companies. However, different practices of business management and processes frequently are different across the nation and regional boundaries. In one culture, the managerial behaviour may be acceptable, while in another, the same behaviour is unacceptable or counterproductive (Evans, Hau, and Sculli, 1989). While managers find themselves working is in different cultures, there is a need to get to know and understand these different cultures in order for them to have a successful business (Gopalan, and Thomson, 2003). In this research paper, the importance of analysing the issue of culture compatibility of partners for strategic implementation in the project of Tesco’s joint venture in India will be examined and analysed. The company has a plan of investing $110 million to partner with the Tata group firm which is to open retail stores. One can say that an international joint venture is a strategic alliance that is formed between two or more companies in different states (Franko, 1971). The strategic alliance can either be a short or long term, depending on the partners. It is used to carry out different activities that include manufacturing, distribution, product development and marketing. When carrying out a business activity, there is a range of cultural elements that managers need to be considered while forming an international joint venture, these are language, customs, and religious beliefs, attitudes and norms of the society. Cross-cultural management depicts the behaviour of employees in organizations all over the world. It is used in describing and comparing organizational behaviour of different companies across countries and cultures (Bass, and Avolion, 1994). Hence, Tesco’s managers being aware of cross cultures or the Indian cultures and so as the Indians counterparts, they increase their self awareness, assist them in reducing ignorance, guide their behaviour, become committed to equality and understanding of each other while working with fellow employees and customers. Furthermore, for a successful international joint venture manager of the foreign parent organization, who in this case is Tesco Company, need to understand the local in the host country that may require different organizational structure. It is because the expected synergies normally depend on the establishment of procedures and structures that cover both cultures in a balanced manner (Triandis, 2004). When a firm that has established a joint venture in a foreign country does not culturally sensitive adapt to advertising, marketing, services and importantly products offered, will not be successful in selling to the foreign customers. The relation that would be created between Tesco and the Indian customers will be influenced by the social and cultural norms of India. While holding a face-to-face meeting, the language and behaviour of the Tesco managers and employees and their mutual understanding of the two parties will determine or influence the efficiency and effectiveness of communication in the meeting. There is an influence on how well multicultural workplaces carry out activities and operate at all organizational levels. Depending on where the company has evolved and the culture and subculture that it encompasses, the firm tends to have unlike organizational and decision-making practices (Hoecklin, 1994). Therefore, for Tesco to build a successful relationship, alliance and partnership with the Tata group, there is a requirement to have an understanding of each other’s organizational differences. It involves the relationship of employees at work with their employers, labour relation with each other and decision-making structure. When a company like Tesco is setting up its branches in India, its global managers need to understand that the Indian culture influences the behaviour and preferences of the potential clients and customers. Hence, for them to be able to make successful sales of their products in India, the managers need to adapt to the products and services that meet customers’ needs (Taras and Steel, 2005). If the company makes any alteration in their marketing, product features, providing services or after sales services they will be partially be led by cultural differences (Dunning, 1993). When the managers fail to fit the cultural practices of this particular group, it will result in making marketing mistakes and causing an embarrassing communication mistake that becomes a marketing folklore. Therefore, it is of much importance for Tesco to take serious the aspect of culture and institutional difference while they enter into the Indian market since it can greatly affect the firm’s future. Its notable that there here is a language barrier between the UK people and the Indians, whereby the UK people speak English while the Hindi is the official language in India. The various strategic management processes that are affected by cultural norms of India should be considered. Martin, Frost, and ONeill argue that (2004), in formulating a strategy, the management need to conduct environmental scanning, implement and evaluate the strategy. All these elements are developed in relation to the current cultural environment. Tesco should identify its organizational culture that will fit with the Indian culture. According to Denison (1998), corporate values are of much importance to a business in a multicultural environment for it to be successful. These values help in distinguishing firms from each other according to Deal and Kennedy (2000) and, are characterized by explicit philosophy, communicating values and sharing of values at all levels. The firm need to consider the risk involved in its activities and the time needed for the company and its employees know how their decisions or strategies have been successful. The culture model consists of eight different factors that govern a firm as it enters an international joint venture. Different cultures have unique perceptions of time, which is in relation to the environment they are in, their history, and their general practices. According to Hall and Hall, the two prominent time systems of unique significance to management are monochronic and polychronic (1980). In monochronic, individuals like to make a schedule for carrying out their daily life activities where they will do one activity at a time. While the company is focusing on time orientation as a factor of culture which is the past, present and future. On the other hand, polychronic cultures are where the individual focus in doing several activities at the same time. In the business, profit is the major indicator of a successful business, however, in some cultures it is not so much about accumulating profits, but having a good pleasant working environment (Mead, 1998). The company will only encourage competition if it is operating in a free market. These are all the cultural variations that may affect Tesco in India when it is implementing its strategy. Just like UK people, Indians also appreciate social and business hierarchies and show much respect to their seniors. Culture assists managers in understanding how an organization works and must determine a good leadership style (Alvesson, 2004). The challenge that the Tesco managers would face having effective leadership quality is that they must be able to influence individuals from the Indian culture. In accordance with the UK culture, leadership is seen as an interpersonal task whereby an individual makes sure that things are done accordingly. For Tesco managers to lead effectively, they need to find a balance between rational, non-rational and goal oriented behaviour among the company’s employees as explained by Richard, Carlos, and Luciara (2010). The five cultural dimensions that Hofstede introduced in order to be able to differentiate one culture from another were power/distance, individualism, masculinity, uncertainty/avoidance index and long-term orientation (Hofstede, 2006). Power/distance is divided into high or low PD, whereby high PD shows that the society accepts unequal distribution of power while low PD means that the distribution of power among people is the same. The members of such a society view themselves as equals. Individualism is the ties that people in the community have among themselves (Workman, 2001). Countries that have a high IDV do not have interpersonal connection and share responsibilities very little while the one with a low IDV will have strong interpersonal connection. Tesco managers need to be aware of this challenge that may arise in India. However, the Indian communities have a low IDV. Masculinity refers to the way society views the male and female role in relation to their traditions and values. Hofstede argues that high MAS are found in countries that expect the man to provide everything for the family, while low MAS countries the role are simply not clear (2006). According to McGregor X and Y theory, a manager is required to remain task oriented in order to ensure effective performance for the company and the relationship oriented to assure complete satisfaction among subordinates (Sahin, 2012). Hence, this will greatly affect the implementation of the strategy for the Tesco Company in making sure that its leadership is effective in the new culture. For leadership style behaviour, it is important for the leaders know how they will interact and deal with their subordinate and their potential consumers. Shin argues that theory X manager focuses in producing results and has little interest in the issues concerning his or her employees may it be their morale (2012). Such manager has a pessimistic assumption that humans do not like working and will do all they can to avoid it. The manager holds responsibility for the activities carried out in the organization, but if there happen to be failures, he or she blames the subordinates. Theory Y argues that the manager will let subordinates take part in decision making and solving of organizational problems (Chevrier, 2003). These kinds of managers take advantage of their creativity when solving problems, thus leading the organization to success. Theory Y managers can fit very well in a diverse culture, where the involvement of every employee in decision making and problem solving can help in understanding each other better. The contingency theory depicts that leadership effectiveness is developed by interacting between the style of the leader and how favourable the working environment is (Jay, 1973). It is in relation to the change of workplace, when it is favourable for carrying out business activities smoothly. According to Jay (1973), such environment is characterized by leader, task-structure which is the goals, function and guidelines that the workers need to know and position power that is the power that a group or leader holds. Focusing on the contingency theory in order to understand how Tesco can successfully fit in the Indian business culture, the leaders should try to understand how favourable the business environment is, and how to deal with it. Furthermore, doing this will enable the leaders to relate well with the environment after a good study and interaction with the environment that may include customers, government, economic status and cultural values (Kotter, and Heskett, 1992). According to Ouchi (1981), the attitude and the subordinates’ responsibility are examined by theory Z, where in some countries it is believed that they are disciplined and are morally obligated to work hard. They create a close relationship with their work colleagues and will continue to work hard as long as the management continues to give support to them and respects their traditions. In this theory, the existence of management is to make sure that the employee acquires all the knowledge needed concerning the company operation through training and get skills that can be applied throughout the organization. The theory focuses less on management and motivation of employees and more about the attitude and the responsibility of the employees (Ouchi, 1981). Therefore, this theory would help Tesco Company in creating a good relationship with the Indians who will come to work in the company. It will enable the company to recruit royal employees who will be capable of working in any department. Tesco management need to understand that a manager with native culture may be unable to influence employees’ of different cultural background. Thus, Tesco managers must try to adapt their leadership styles to the anticipations in India and her culture. In UK managers have a competitive team while, in India, they have competitive family, UK managers’ focuses on performance while Indians focus on personal loyalty and UK share power in the leadership position while Indians do little power sharing (Swierczek, 1991). However, global leadership dimensions are seen as positive contributors of effective leadership all over the world (Lewis, 2002). These global cultural dimensions are the ones that Tesco Company needs to adapt as it ventures in India because they help in predicting which type of leadership will probably work well and which place. They include charismatic, team oriented, participative, human oriented, and self-protective leadership. Different cultures can generate similar perceptions of leadership, even if the contexts within which leadership is affected are very different (Goffee and Jones, 1996). In the submission, managers need to develop tools and working methods so that they can develop ample competence in a cross-cultural circumstance to turn multifariousness into a competitive advantage (West, and Graham, 2004). It means that managers should be ready to cope with diversity, adapt and use the intercultural situation to the organization’s advantage. The most important factor to consider in cross-culture is communication. Language barrier as mentioned earlier can cause very tragic results to the company. Therefore, Tesco Company will have to find ways of understanding the Indians or learn through interacting with them. List of References Alvesson M., (2004). Organizational culture and discourse, In: D. Grant, C. Hardy, C. Oswick and L. Putnam (Eds.), Handbook of Organizational Discourse. Thousand Oaks, CA: Sage. Bass, B. and Avolion, B., (1994). Improving Organizational Effectiveness, Thousand Oaks, CA: Sage Publications Deal T. E. and Kennedy, A. A. 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