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International Trade & Business - Essay Example

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How come those companies, who have been doing business internationally for decades suddenly, fail And how come that companies who wouldn't have had a chance 25 years ago suddenly become a global success
There might be many reasons, but they all have something to do with culture, and dealing with cultural diversity successfully in international corporations has become a critical success factor…
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International Trade & Business
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Download file to see previous pages In most Asian countries it is opposite. In that respect most Europeans are much closer to the Asians than to the Americans.
A company might need to establish an overseas organization, which is much different from what they are used to. An Indian company which might want to establish a branch in Scandinavia will never succeed with a hierarchical organization because the Scandinavians are very autonomous, egalitarians and demand a high degree of individual freedom. We have seen a lot of examples where northern European companies have failed in India because they didn't change the organization and management style to apply to the Indian norms and values. A project-based organization just doesn't work in India.
Let's say a British Company has become very successful in Britain by rewarding its top performing employees with incentives and promotions. In India they replicate this successful motivation and reward system - and it doesn't work. Sales drop and the employees are leaving the company.
When something works in one culture, but not in another we define it as cultural friction. For international companies to become successful they should locate and minimize the cultural frictions. This is not an easy task, because it can be hidden in so many places and it requires a lot of intercultural skills and the right tools to deal with these frictions.
The frictions arise because there is a conflict between the national and the corporate culture of an international company. Very often we experience, that senior management who is responsible for the global operation is focused on financial performance and making sure that everybody (employees) globally apply to the same rules within the same organizational setup. This is only natural and most of the global operating companies are very proud of their corporate culture. The only problem is that it suppresses the national cultures of the employees, which unfortunately leads to cultural friction, which inevitable leads to poorer corporate performance due to demotivated employees and inefficiency.
An area of great interest is motivation. I spend a fair portion of my time discussing motivation and reward with executives in multinational companies. Motivation and reward is so closely linked to our national cultures and multinational companies ought to review their strategies in these areas very carefully for the following reasons:
If they don't and they (continue to) motivate and reward their staff globally in the same unified way - they will in the best case waste a lot of money, and in the worst case harm their business seriously.
A lot of money can be saved at the same time as employee satisfaction and operational performance increases.
Let's take an American IT consulting company as example. They have several locations in US, Europe and Asia. It is company policy that all managers and staff directly related to sales have at 20% of their salary as a bonus dependent on the quarterly sales.
This makes sense in the US, because Americans in general are motivated by money and by individual recognition. However this is not universally true. To many Asians and Europeans money is nice, but it is not the ...Download file to see next pagesRead More
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