General Motors Expatriation Failure in the Middle East - Case Study Example

General Motors (GM) Expatriation Failure in the Middle East Name: Registration No: Course Code: Date of Submission: TABLE OF CONTENTS Executive Summary 3 Introduction 3 Expatriate 4 Reasons for Expatriate Success in General Motors 5 Development of cross cultural skills 5 Anticipation of difficulties 5 Recognizing that customers purchase similar product for varied reasons in various countries 6 Avoiding the Standardization trap 6 Proper promotion 6 Reasons for the Initial Expatriate Failure in General Motors 6 Family Stress 6 Cultural inflexibility 7 Poor market research 7 How culture impacts project manager 7 Recommendations and Conclusion 8 References 10 Executive Summary The General Motors Company, the GM, is an American multinational company which has its headquarters in Detroit, Michigan. This is a company that first found stability at home before going global thus involving in expatriation. The GM decided to set up a branch in the Middle East thus decided also to introduce new brands of cars to the Middle East consumers.At first the venture was slow but ultimately it was successful1. There exist various challenges of expatriation that the company initially faced thus hindered operations but after adapting in the new market they stabilized and sale increased. The GM Middle East has its headquarters located in Dubai. Some of the vehicles they deal in are award winning vehicles such as the Chevrolet, Cadillac and GMC vehicles. Some of the countries that the GM operates in include Iraq, Yemen and Levant2. It was observed that the company faced huge expatriation problems that were inform of the products offered as well as expatriation on the side of its Human resource. Some of the employees sent from the USA to work in the Middle East faced challenges such as culture shock, rejection, family stress, cultural difference and many other and while some gave up and returned back home, some learned to adapt thus contributed to the success of GM Company in the Middle East3. This paper discusses some of the reasons for the initial failure and the ultimate success of the General Motors Expatriation. Introduction Commercially, as market constraints throughout the world continue to soften, it has become very common for businesses to turn to new foreign markets. So as to expand globally, an employee may normally be required to operate around the world far from the home country, and turn to be a possible competitive edge for the success of firms operating in an international marketplace4. Such wide assignments are often very demanding for the personnel engaged, and unfortunately, occurrences of employees failing to attain the goals of the sending organization are rather common and can bring about astonishing losses for the firm. Irrespective of puzzling tasks and high rate of failure linked with global assignments, international corporations are still displaying no indication of giving up on sending expatriates to work in foreign countries due to the possible high profits from the overseas businesses5. Subsequently, employees are still volunteering to take on global tasks for the advantages brought about by the wide experience. Suppose firms enter international markets, the techniques that proved to be successful in the domestic arena may not be operative in foreign ventures. For this reason it is significant for firms requiring taking advantage of global markets to be conscious of what contributes to the success of expatriate assignments. The rates of expatriate failure being at 40% shows that it is important to be aware of these factors and a lot of attention is required by any firm that is willing to tap in foreign markets. Expatriate The word expatriate means “an employee who is sent by his/her firm in one country to manage operations in another country”, and for this reason, organizations can send their own workers from their home countries to a host nation6. There exist various challenges as well as opportunities within the modern global business environment that brings about the need for expatriates. A good instance from the 21st century is the “china-phenomenon” where firms in China depended skilled workers from other nations with an aim of overcoming the deficiency of incompetent workforce. Other tactical reasons may comprise conveying organizational culture to foreign subsidiary, developing global skills improving functional as well as coordination needs of control and transferring knowledge. For the reasons that the expatriates are always carrying with them grand expectations from the organizations, and also expatriate arrangements subsequently enhances both the organization as well as the employee it is therefore significant to have a successful operation, instead of ending in a failure7. Various studies apply the term expatriate adjustment to imply to a process by which an expatriate finally comes to find comfort with new surrounding therefore adapting to it. The ability of expatriates to adjust is more than merely an issue of psychological security within a foreign country, however also a weighty assistant to the accomplishment of international assignments. All expatriates are not always able to attain the program goals due to the complexity in the nature of expatriate assignments. Reasons for Expatriate Success in General Motors Development of cross cultural skills These skills proved very important for General Motors and the stakeholders that were involved. The capacity to work with others from various cultures is a major skill that brought success for expatriate process; however this is a kind of competence that is hardly ever adequately defined9. Being a proficient communicator is significant for any job, but it was specifically for GM expatriates. As much as learning of the new language was a good platform to start in enhancing intercultural communication skills, it is important to note that it was not completely efficient. Cross cultural proficiency also came into play in styles of management. In the Middle East, expatriates soon found out that participative style of management was not normally the best method to apply. Anticipation of difficulties It was always important for the GM expatriates in the Middle East to expect challenges. This in itself provided the right mind of dealing with and going through challenges. It was acknowledged that underestimation of the pressure the assignment was to bring forth was not good10. It was important to appreciate that some locations were easier to adapt in more than others. However, irrespective of the location, the GM expats venture to the Middle East markets impacted family relations. The encouraging thing: they mostly adjusted for the better. An extra effort was needed in order to establish excitement in regard to the move and being positive. Recognizing that customers purchase similar product for varied reasons in various countries Reliant on the cultural context, the General Motors expatriate venture acknowledged that customers may have diverse purpose for a similar product; this hugely impacted how the promotion and advertisement activities were conducted1. For example by that time sports car were only recognized as so in the US and other areas and not in the Middle East thus they had to provide tailor made products for the Middle East consumers. Avoiding the Standardization trap The mistake General Motors avoided, but is always predominant in most individuals and companies that go overseas, is contemplating that the business model that brought about success at home can merely be applied at a different geographical location. The GM saw the need to formulate a tailor made business model in order to enhance success. Proper promotion As much as the General Motors was going to promote the cars offered it was significant to realize that the right promotion technique was a necessity2. Promotion techniques applied by GM was always considerate of the cultures of the locals thus market sensitivity was enhanced. Reasons for the Initial Expatriate Failure in General Motors Family Stress A large number of the General Motors expatriates were excited and at the same time challenged to their new ventures. They were required to devote a lot of hours at work for the reason that they were under pressure to settle in the new culture and their general task was normally bigger than what they had gone through before3. Most of the GM expatriates decided to travel to the new destination without the families, just like most expatriates do, what followed was that depression and stress factored in and led to disruption of concentration from the task ahead. Family stress proved to be very harmful to the GM business venture in the Middle East. It caused psychological instability and this to some extent led to partial failure of this venture which required full attention. Cultural inflexibility Most of those individuals who set out to new oversea markets to set up new businesses or introduce new products always suffer culture shock. Given that this is an oversea assignment, they are bound to find new cultures and traditions which if they do not quickly adapt to they there chances of survival is slim4. Adaptation in new cultures does not easily come by because there are multitudes of variables that need to be taken into consideration. Taking for instant, one has to learn the language of the locals in order to communicate with them. Language barrier is big problem as without the right communication even if the products are superior to those of the competitors, failure is imminent. Poor market research Market research is an important aspect for process of expatriation. In the General Motors case, it can be said that the use of insufficient information as a result of incomprehensive research led to the initial stagger in expatriation. There is no way that a poorly conducted research was going to produce right information5. It was critical that the right research methods be applied and adequate amount of funding be done. Different levels of research needed various kind of financing depending on what type of data was needed. It is important to note that a poorly funded research is destined to fail in the production of adequate data and information. How culture impacts project manager Assignments carried out at the international level such as introduction of a new product in a foreign country end in a flop due to difficult tasks as well as challenges faced in host countries. Expatriates ought to possess sturdy tolerance and awareness for comfort with risk, greater flexibility, cultural differences, adaptability, a global perspective and a drive for a new adventure and experience. A number of the globe’s expatriate candidates considering international ventures such as the one discussed in this paper lack particular knowledge in regard to what is involved in the venture prior to their decision making6. A number of them are braced to deal with personal and cultural adjustments; however they are not alerted to the scenarios of expatriate depression and stress when things fail to proceed as planned. For this reason, expatriate candidates ought to explore and study about the new market whether or not it appears to the appropriate job, right location and the suitable time before their departure for the new venture which in this case is introducing a new product in an oversea country or market. Various studies have found that western project managers operating within the Asian geographical regions come across many challenges like cultural difference that they may not to deal with in their home nations. Such studies indicate that culture influence management of projects like this and this impacts the effectiveness of the operation7. As cultural variations increases throughout various geographical blocks, it brings with it significant difficulty for project managers having to deal with all these details. Suppose the specific cultural challenges are not handled instantly and in an appropriate manner, they can end up bringing about the failure of the new project. Therefore, it is critical for individual companies who want to introduce their products abroad to realize that such differences in culture do exist and thus they should be ready to operate in a way that would improve such differences. Without the right exposure, the surroundings would lessen culture proficiency, diminish adjustment, augment culture shock and thus amplify the possibility of international expatriate venture failure. Even though adjustments are a key part of international business failure, expatriates ought to learn to relate with the new overseas market. They have to brace themselves for the likelihood of discrimination as well as rejection through cultural experiences8. These likelihoods of discrimination as well as rejection are turning to be risky and challenging g as the pool of varied expatriate employment are mounting, exhibiting the changing nature of the taskforce and growing international mobility of business ventures. Subsequently, discrepancy in relation to compensation between locals and expatriates within Multinational companies also lead o problems. This discrepancy is most prominent in the notable gap between the countries which are developed. Recommendations and Conclusion Many new products always fail in new international markets due to many reasons. Many individuals and companies are always so charmed with their new product ideas that they make the mistake of failing to carry out their research or even ignore the findings of their research. Many times the marketing strategy does not convey the right message. Successful launching of products in a new oversea market depends heavily on research as well as finding solutions to upfront issues. Market research is the most significant. Lack of the necessary information may really hamper the process of launching new product in unknown markets. Market research performs more than just fact finding as it provides crucial data and information. It identifies the needs and wants of the market, distribution channels, motivation to purchase, decision makers, pricing and product features. All these are critical to decision process. With sufficient research in place, challenges that are related to culture can be drastically reduced as research can guide one on the best way forward of dealing with cultural issues. Through adequate exploration one is able to find the facts about the population characteristics and their way of life, the beliefs and traditions thus will have the capacity to be sensitive when introducing a product. There exist various reasons that lead to failure in international ventures like the introduction of a new product in a host country which does not take part in its manufacture. Some of the reasons for international assignments coming to an end in a way considered premature include culture shock, lack of cross cultural training, and the ongoing lack of training, family problems, stressing on technical qualifications and relieving an employee considered to be difficult. Various expatriates are subsequently reluctant to involve themselves in extensive assignments. You find that suppose a new product is introduce in a foreign country, patience and dedication is a necessity as it will take a long time for the product to stabilize. Concerns to individual danger, political insecurity, disruptions to children’s schooling and spousal employments have consequently intensified. Managers of multinational companies ought not to merely train the personnel they commit abroad but also they must train their families in cultural norms, native languages in addition to social behaviors in order to avoid culture shock and thus enhance flawless integration to the new country. They must recognize that families of the international expatriates play an important role in their success or failure. Development and training programs for the international ventures should establish the goals for the training together with its contents as an initial step. The next step should be asking questions in regard to what training media, strategies and techniques to apply. In other terms, it is a necessity for a multinational company to talk about the career prospects of expatiates prior to expatriation in order for the expatriates to clearly appreciate and acknowledge the direction of their training and development program. Subsequently, the managers of Multinational Companies are required to provide expatriates with sufficient information of the host country in regard to what their cultures are, what their religion says and also their legal and political environment. For a new product to be introduced successfully in a new country there is need for the Human Resource aspect of the assignment to be given a priority because it is only through this that success can be anticipated. References 1. Bickers, Robert A. Settlers and expatriates: Britons over the seas. Oxford: Oxford University Press.2010. 2. Campbell, Dennis, and Christian T. Campbell. Legal aspects of doing business in the Middle East. Huntington, NY: Juris. 2011. 3. Fawzy, Samiha. Globalization and firm competitiveness in the Middle East and North Africa region. Washington, DC: World Bank. 2002. 4. Fernandez, Bina, and Marina De Regt. Migrant domestic workers in the Middle East: the home and the world. 2014. 5. Green, Nancy L., and François Weil. Citizenship and those who leave the politics of emigration and expatriation. Urbana: University of Illinois Press. 2007. 6. Hertog, Steffen, GiacomoLuciani, and Marc Valeri. Business politics in the Middle East. London: Hurst & Company. 2013. 7. International Business Publications, USA. Middle East and Arabic Countries Company Law Handbook.Intl Business Pubns USA.2007. 8. Jones, Stephanie, and Sheena Graham. Cases on sustainable human resources management in the Middle East and Asia. 2015. 9. Mariano, Stefania, Mirghani Mohamed, and Qadir Mohiuddin. The role of expatriates in MNCs knowledge mobilization. Bingley, UK: Emerald. 2011. 10. Peng, Mike W. Global business. Mason, OH: South Western Cengage Learning. 2011. Sengupta, Satarupa. At home and not: citizenship and expatriation in U.S. women's fiction, 1868-2004. 2010. Read More