Approaches for Windmill to Adopt to Succeed - Case Study Example

Case Study on Windmill Introduction Globalization has enabled multinationals with large economies of scales to enter into new cross border markets. Companies from western economies such as the United States, the United Kingdom and Netherlands have opened operations in emerging markets in Asia and Africa. Such a move provides significant opportunity to businesses to expand their operations and increase market control. Globalization has been attributed to the growth of most companies such as Samsung, Toyota and Apple whose operations has transcended geographical barriers (Camara, 2010). Despite the opportunities created by globalization, businesses are faced with the need to understand the challenges that they may face. For example, variation in the socioeconomic, political and cultural environment affects the operations of most companies. Most countries have different cultures, which affect the nature of business operations and marketing practices. To succeed in a new environment, a business must understand the cultural variations that may affect its operation and success (Joy & Poonamallee, 2013). Companies from the west operate in a liberal political and religious environment as compared to their colleagues from predominantly Islamic countries in the Middle East and other parts of Asia. Netherlands, for example, operates in a different cultural environment as compared to Indonesia, a predominantly Islamic country where business practices are influenced by religion. In this paper, a cultural evaluation of Netherlands will be conducted in relation to Indonesia to enable the management of Windmill Apps make a decision on its future investment plans. Netherlands sociocultural environment Culture is defined as a set of behaviors or beliefs, which are shared by people who live within a specific environment and influenced, by historical and social development. In most instances, culture is influenced by religion and other beliefs shared by people living within a country. Culture significantly influences the success of new foreign companies like Windmill Apps, which intend to enter into the Netherlands market. Netherlands is predominantly made of two distinct cultures known as the Ramstad and the non-Ramstad cultures, which are differentiated by their geographical locations. As company that will begin its operations with companies based in the urban centers in Netherlands, Windmill Apps need to understand the culture of the Randstads (Wintle, 2000). Majority urban centers in Netherlands have been considered a safe haven for ethnic minorities in Europe due to the level of racial and ethnic tolerance. The Jewish presence in the country is also significant due to the influx that occurred during the 17th century. As a result, Netherlands is among the few countries in the globe with a cross-cultural system, which embraces religious and cultural diversity brought about by the different ethnic organizations in the country. Netherlands is tolerant to difference and is considered highly receptive to foreign influences and policies as compared to other countries in Western Europe and Scandinavian countries (Camara, 2010). Netherlands sociopolitical environment Sociopolitical environment influences the success of international organization as it affects the nature of foreign policies in the country. Netherlands has been considered as one of the most neutral countries as compared to other countries in Europe as far as international political relations are concerned. However, the country has entered into different treaties including the transatlantic relations, the European Union, international development and ratified various international laws. Since the end of World War II, Netherlands has also entered into other international organizations such as the united nation, NATO and the European Union (Wintle, 2000). Holland economy is open and is affected by other global relations that it has ratified which has enabled multinationals from different parts of the globe to begin operations in the country easily. Though important for international business organization, the neutral sociopolitical environment of Netherlands has provided a free environment for drug barons to operate. Policy on issues such as recreational drugs, prostitution, homosexuality, abortion and euthanasia is more liberal as compared to other countries across the globe (Verma & Singh, 2010). This is a completely different environment when compared to Indonesia, a country that is predominantly governed by sharia laws and based on an Islamic culture. In Indonesia, abortion, homosexuality and prostitution are strictly prohibited based on the provisions of sharia laws. Such variation will significantly affect the operations of windmills apps in Netherlands, as the female manager will have to content with a more liberal and open sociopolitical environment (Verma & Singh, 2010). Economic situation of Netherlands The economic performance of Netherlands is significant in the success of windmill apps as it will increase the number of consultants for the business. Over the past 20 years, Netherlands economy has witnessed significant growth based on the country’s per capita income. Commercial service sector has contributed for over half of the country’s GDP in the last ten years, a situation that puts windmills apps at a better position to advance its growth and customer base. The country’s economic outlook has also become more international as compared to the past when the country had few international laws and agreements ratified. Table one below shows various economic parameters of Netherlands over the last six years, a demonstration of the level of growth that has been witnessed (Wintle, 2000). 2007 2008 2009 2010 2011 2012 % volume change Gross domestic product (GDP)  3.9 1.8 -3.7 1.6 1.0 -1.0 Imports of goods and services 5.6 2.3 -7.1 10.2 3.6 3.1 Exports of goods and services 6.4 2.0 -7.7 11.2 3.9 3.3 Household consumption 1.8 1.3 -2.1 0.3 -1.0 -1.4 Government consumption  3.5 2.8 5.0 0.7 0.1 0.0 Investments  5.5 4.5 -12.0 -7.2 5.7 -4.6 Hofstede analysis of Indonesia and Netherlands According to Hostede’s power distance and cross culture theory, Netherlands and Indonesia have number differences that an international organization must understand before beginning its operations. According to Hofstede, the power distance in different countries is reflective of the culture and should be understood by businesses, which intend to enter into such economies. In Indonesia, the government plays a primary role in developing policies and laws, which define the sociopolitical situation of the country and the business environment. The government has an independent concept of culture and this influences the policies that are introduced at different levels of decision-making (Wintle, 2000). Inequality in wealth distribution is also common in Indonesia and this is encouraged by the cultural heritage of the country at any given point. On individualism and collectivism, Indonesians are more inclined to collectivism and all actions are influenced by the traditional and religious beliefs. The country has also incorporated its belief in God, tolerance, humanity and the expansion of the democratic rule in the country (Kinkyo, Hamori & Matsubayashi, 2012). The five principles envisage the collectivism approach to culture according to Hofstede theory, a situation that influences the success of various foreign organizations in the country. On masculinity and femininity according to Hofstede theory, Indonesia ranks among the countries, which give equal opportunities to all genders irrespective of religion. Indonesia is more compassionate and tender towards all genders as compared to other cultures. On long term and short-term orientation, Indonesia is more oriented towards long term as opposed to short term as witnessed in other parts of Asia and Middle East (Nankyung, 2014). The understanding of different cultural settings and societal considerations within different cultures require a deep understanding of the cultural dimension in different global arenas. Societal values, beliefs and practices differ significantly and this affects the human resource management approaches adopted by domestic as well as international organizations. According to research done by Hofstede in the early 80s, the cultural dimensions within the society affects the power distance created and this affects the human resource management approaches adopted by different organizations (Chin, 2011). Our societies have differing social hierarchy and status, which have significant impacts on the human resource practices adopted. A multinational organization must thus seek to understand the power distance and social hierarchies within the new international markets before developing an approach that can suit the region. The terms developed by Hofstede and his research team members have been extensively used within the global management context to highlight the need for understanding the cultural value dimensions that exists (Waard, 2012). Understanding of cultural dimensions has been demonstrated to help international human resource managers to understand the sources of miscommunication and cultural conflicts that can arise within this context. Hofstede highlighted the need for international human resource managers to understand the different cross-cultural dimensions that exists. Within the dimensions of power distance, there exist two sets of cultures that significantly affect the success of an organization in the international market. Cultures adopt either individualism or collectivism cultural dimension approach and this is influenced by either the existence of capitalist or socialist ideals within them. The expansion of Samsung operations to international markets such as the United States resulted into the merger of two culturally identical regions. Individualism concentrates on the use of individual skills, power and knowledge in the development of a plan or the implementation of a policy (Chin, 2011). Cultures that practice individualism cannot comfortably embrace the principles of teamwork that is covered within the dimensions of collectivism. It is thus essential for international human resource managers to understand the individualism and collectivism cultures that exist within the cross-cultural areas of operation before adopted a framework for employee cooperation and teamwork. From a country with a low score of individualism, Samsung moved into regions that had little recognition for collectivism and teamwork. To blend with the different cultural dimensions in the global market, Samsung international human resource practices seeks to embrace the internal practice while integrating it with domestic cultural dimension. This has enabled the company to eliminate the incidences of cultural conflicts related to individual and teamwork related roles as captured with the Indonesian cultural dimension (Waard, 2012). A high power distance score, a multinational has high level of management and employee inequality within its ranks, which significantly affects the communication approaches adopted by the organization. The success of companies in the Netherlands despite the differences in the power distances can be attributed to the adoption of better international human resource management practices. Cultures with low power levels have high interaction between the employees at different management levels thus making communication effective. In this culture, lateral and vertical communication is enhanced and the management’s ability to address different issues raised by the employees is enhanced (Tipton, 2009). Cross cultural environment management challenges Managing employees in a cross-cultural environment like Netherlands and Indonesia presents significant challenges to organisations across the globe. Such a situation will present significant challenges to windmill apps due to the cultural differences of the two countries as a whole (Chin, 2011). Communication Cross-cultural communication remains the major challenge to multinationals operating in a diverse environment like Netherlands. Managers across the world are finding it difficult to communicate effectively due to language and cultural barriers. As a manager from Indonesia, she will face a number of challenges communicating with the Dutch workforce (Haghirian, 2012). Decision Making Apart from communication, decision making in multinationals operating in cross-cultural environments are faced with decision-making challenges. In a cross-cultural environment, various stakeholders must be involved in decision-making and this prolongs the process of policy formulation and implementation. Most multinationals are forced out of business due to the bureaucracies facing the process of decision-making and policy formulation (Tipton, 2009). Conclusion Netherlands and Indonesia have divergent socio-political, economic and cultural environments, which affects the success of multinationals companies. As a company based in Indonesia, windmill apps should expect to meet various challenges, which will derail the implementation of its program. To succeed, the company must adopt the following approaches: Involve the locals in the development of decisions and strategies Understand the business environment in Netherlands and embrace a liberal environment Interact more frequently with other multinationals operating in the country to understand the challenges that they have faced and the approaches they have developed to solve these issues. References Camara, S., 2010, The Intersection of Politics, Gender and Culture, Conference Papers -- International Studies Association, p. 1. Chin, F., 2011. Asian Economic and Political Developments, New York: Nova Science Publishers. Haghirian, P., 2012. Successful Cross-Cultural Management: A Guide for International Managers, [New York, N.Y.]: Business Expert Press. Joy, S, & Poonamallee, L., 2013. Cross-Cultural Teaching in Globalized Management Classrooms: Time to Move From Functionalist to Postcolonial Approaches?’ Academy Of Management Learning & Education, 12(3), pp. 396-413. Kinkyo, T, Hamori, S, & Matsubayashi, Y., 2012. Global Linkages and Economic Rebalancing In East Asia, Singapore: World Scientific Publishing Company. Nankyung, C., 2014. Local Political Elites in Indonesia: "Risers" and "Holdovers", SOJOURN: Journal of Social Issues in Southeast Asia, 29(2), pp. 364-407. Tipton, F., 2009. Modelling National Identities and Cultural Change, International Journal of Cross Cultural Management, 9(2), p. 145. Verma, S, & Singh, P., 2010. Organizing and Managing In the Era of Globalization, New Delhi, India: Response Books. Waard, M 2012, Imagining Global Amsterdam: History, Culture, and Geography in a World City, Amsterdam: Amsterdam University Press. Wintle, M.Y., 2000. An Economic and Social History of the Netherlands, 1800-1920: Demographic, Economic, and Social Transition, Cambridge: Cambridge University Press. Read More