The Relevance of Cross-Cultural Management in International Business - Coursework Example

VАLUАTЕ THЕ RЕLЕVАNСЕ ОF СRОSS СULTURАL MАNАGЕMЕNT IN INTЕRNАTIОNАL BUSINЕSS name course tutor date Future of cross-cultural management Most of companies continue to flourish due to adaption of cross-cultural management. Many researchers agree that adapting a universal way of managing multinational companies is meaningless. Different countries have different cultures and therefore managers should attach themselves to certain cultural context to share certain worldviews. The future of cross-cultural management looks bright with most of researchers engaging in research work in the topic. Some of their helpful findings indicate that national culture influences about 25-50% of national attitude, which is important in marketing in business organizations(Chevrier, 2003). Through research and development, the future of multinational companies is bright especially through rapid innovations and development of science and technology, which has helped in marketing. Development in IT has helped most of multinationals to reach the rest of the world with their products and services by a click of a button in the computers. Reasons for failure of Joint Ventures Nearly 70% of joint ventures fail due to various reasons according to Deborah Spranger, 2004. Some of the reasons include inadequate planning which leads to most companies failing due to stiff competition in the market. Such companies do not have plans for expectations neither do they have plans of protecting their shareholders contributions in the companies(Deborah L. Spranger, 2004). Another reason why joint ventures fail is due to inadequate capitalization. This problem normally arises due to fixed and poor estimation of funds and resources required by the venture. Lack of proper leadership has also contributed to multinationals failure. Due to different interest of joint members in the company, most leaders face difficulties in satisfying all the interest of the shareholders at the expense of the company. This leads to suffering of the company hence the failure. Lack of commitment is also another reason as to why joint ventures fail. Most of companies engage in joint ventures with the aim of attaining quick profits. When the profit is not attained, most of the companies tend to laxative on the objectives of the business and this leads to failure. A cultural and ideological difference is another reason for continued failure of joint ventures. Companies must ensure that before engaging in joint ventures, their targets, aims, and objectives should meet the cultural values of the target market. If companies manage to avoid the above-prescribedproblems, they will emerge joint ventures champions. Why companies ignore cross-cultural management Most companies ignore cross-cultural management for various reasons. Some companies are afraid of the complexity engaged with multinational management especially due to diverse cultures. There is also the problem of trade unions, which have different demands as per their host countries. Political interference and demands by host countries forces most of multinationals out of business. Due to such complexities and additional internal environment interference of the business, most managers avoid cross-cultural management. For this reason, it is very difficult for a company to survive in a business without understanding cross-cultural management. Before engaging in any business activity, one must conduct a feasibility test, which includes having a clear understanding of the cross-cultural values about the target market. Lacking the knowledge of cross –cultural understanding of the target market is the first step of failure in any business venture. Adapting to host countries recruitment and selection Human resource management is a key factor in ensuring success of any business organization. The department in most organizations is aimed at employing qualified staff, training them to be maximum producers, rewarding their efforts while building good economic and social relationships. Our example is McDonalds Company a fast food multinational that believes in adapting to host countries during recruitment and training. Singapore is considered one of the friendliest countries for fast food companies. McDonald Company has enjoyed prosperity in the fast food industry stating a good environment in terms of government policies in Singapore. The two companies must therefore adapt to the host country method of selection and recruitment as a way of abiding to the trade union rules and government policies. Examples of Companies with Cultural diversity and the importance of cultural Diversity As already, mentioned cultural diversity adds a lot of value to businesses due to integration. Joint ventures enjoy from cultural diversity in many forms that leads to increased profits. Examples of companies that have employed cultural diversity in their systems include McDonalds Company. Fast food companies are all over the world with McDonalds being the leading bestselling fast food company in the world. The company serves over 47 million people every day and has employed 12% of teenage people in the United States (Erica, 2010). The company has various branches all over the world capitalizing in Asian countries, which have the highest population rates in the world. In order for fast food companies to become global, there is need for training which cannot be similar in all fast food companies globally. Coca Cola Company and Pepsi are other examples of multinationals that engage in cultural diversity especially as a method of marketing their products. It is also important to note that the two companies have been in battle for supremacy for quite a long time. Mobile phone producing companies such as Samsung and Apple engage in cultural diversity in order to avert competition that has led to legal battles in the court. Cultural diversity is aimed at capturing and winning the market share. Google Incorporation is also another company that enjoys the real value of cultural diversity. The company has branches in virtually all the countries in the world. They also provide services as per the designated languages of their host companies. The company is now the leading provider of internet services with the largest search engine. Hofstede’s and Trompenaar's dimensions in multinationals The multinationals mentioned above uses the Trompenaar’s dimension since they are concerned with results. The companies continue to look for practical solutions for their companies. Trompenaar’s list US and UK companies in this category(Trompenaars, 1997). The multinationals also obey their hierarchy, which is useful in management. The companies change their management hierarchy to adapt to the host countries cultures and needs. The companies also adapt power-oriented approach where power comes from the top to the bottom. Companies such as Google, Samsung, and Apple use their staff as their investors. The companies use the views of the staff in coming up with new models which aims at becoming unique and convincingly winning many customers. Hofstede deals with organizational behavior in relation to the national culture(Hofstede, 2001). The above stated examples obey the dimension of individualism vs. collectivism according to Hofstede. These companies are engaged in community work in addition to respecting individual rights in their companies. The companies also provide clear direction on how to share power. However, this power is not shared equally. McDonald Company makes efficient use of masculine vs. feminist. The company employs 12% of teenagers in the US of which females form the highest percentage. EPG framework and management orientations in international business Howard V. Perlmutter introduced this model in 1969. EPG dimension stands for Ethnocentrism, Polycentrism, and Geocentrism(Perlmutter, 1969). This models aims at helping companies to understand their specific focus in the business. Using the model firms can careful analyze which is beneficial to the company. Ethnocentrism is mainly bas on ethnicity in the home country. Themain function of ethnocentrism is financing industrial products for the developing countries. Polycentricism dwells on political orientation of the business on the host country. The main function of polycentrism is marketing consumer goods. Geocentrism deals with geography. Its focus is global orientation in research and development. International staffing and expatriates Human resource is entitled with recruiting and employing the right kind of staff with high skills and qualifications. The resource manager has the mandate of employing staff with good organizational culture. The employee’s requirements include ability to show style, belief, and value according to the firm’s cultural values. International businesses adapt EPG framework in recruiting their staff. Through ethnocentrism, it means managers should recruit important staff to important positions based parent country. In fact, the parent country should have the advantage of holding all the important positions. Polycentric approach of recruitment requires international managers to employ host countries nationals to subsidiary positions in the business. The Geocentric approach used in multinational is not biased since it seeks for any qualified personnel for the key job in the organization. Before an expatriate goes to an international duty, he/she should first have a good idea of what the business entail. The person should also be well equipped with ideas on how to overcome the expected challenges. Relevant examples of success and failures of companies Several countries have used expatriate methods of staffing and have enjoyed success in their business. For example, Colgate Palmolive is a company that uses geocentric approach in recruiting its staff. The company has been operating for more than 50 years and has branches in more than 170 countries. It is important to notice that 60% of their staff isexpatriates, whichdo not come from the parent country US(Wang, 2009). Amazingly, their executives are fluent in more than two international languages, whichhelp in marketing especially in international forums. Hindustan Lever Limited is a company that uses polycentric approach in recruitment. The company is an Indian subsidiary of Unilever Company. The US managers engage in establishing the business but later hands it over to the Indians to continue with operations. Ethnocentric approach of staffing was widely used by Philips New York and Matsushita(York, 2008). Bibliography Chevrier, S. (2003). Cross-Cultural management in multinational project groups. Journal of World Business, 38, 141-149. Deborah L. Spranger. (2004, Janaury 23). Why Joint Ventures Fail. Retrieved 2013, from Saul Ewing: http://www.saul.com/publications-articles-142.html Erica, M. &. (2010). Human Resource Management in McDonalds. Human Resource Management in McDonalds, 1-2. Hofstede, G. (2001). Culture’s Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations. Thousand Oaks, CA: Sage Publications. Perlmutter, H. (1969). The Tortuous Evolution of Multinational Enterprises. Columbia Journal of World Business , (1): 9–18. Trompenaars, F. a.-T. (1997). Riding the Waves of Culture: Understanding Diversity in Global Business. London: Nicholas Brearly Publishing. Wang, C. (2009). Cross-Cultural Management Brainstorm. Modern Economic Information, Vol 1, 1-2. York, K. (2008). Applied Human Reosurce Management. Strategic Issues and Experimental Exercises, 4-5. Read More