Cultural Differences in International Business - Essay Example

Table of Contents Table of Contents 1 Introduction 2 2 The Culture Construct 2 3 Cross-Cultural Marketing 5 4 Cross-Cultural Human Resource Management 7 5 Conclusion: Reflective Statement 8 5 Bibliography 11 1 Introduction Globalisation did not give rise to the phenomenon of cross-cultural/international business but it certainly facilitated it and contributed to its increase and proliferation. National firms are increasingly taking advantage of globalisation's facilitation of international business because it opens the door to highly lucrative economic and market opportunities. As profitable as engagement in international business activities are, it is a highly challenging endeavour. The reason, quite simply stated, is cultural variations. Differences between national culture function as an obstacle to various aspects of international business management, including HRM and marketing. With specific reference to HRM and marketing, this essay will examine the potential problems which a UK owned hotel, operating in China and Russia, among numerous other countries, may confront. 2 The Culture Construct In order to understand the challenges which the UK-owned hotel may confront in the management of its operations in China and Russia, it is important to begin with a clarification of the implications of the culture construct. The reason is that since culture has been identified as the source of challenges, it is necessary to know why and how it can function as a challenge to cross-cultural management for the purposes of constructively confronting and resolving these challenges. As an ever-present force of concern to all social sciences, culture represents an abstract and extremely complex construct. Attempts by scholars to define culture have resulted in countless definitions. For example, in their seminal study on culture, Kroeber and Kluckhohn (1952) identified more than 160 definitions of culture. Although there is probably no single best definition of culture, the main thread running through the numerous definitions of culture, as noted by Hall (2004) is that the construct of culture appears to have the following characteristics: Culture is not innate, but learned or inculcated. Humans learn their norms over time through their membership in a group that transmits culture from one generation to another. Culture is multidimensional and interrelated. It consists of a number of common and interdependent elements such as beliefs and attitudes, values and norms. All aspects of culture are deeply connected with one another; to change one part is to change the whole. It is the interaction of various elements of culture that results in cultural distinctiveness. Culture is shared by the members of a social group and defines the boundaries between different groups. Culture is adaptive. Culture and its values, though enduring in the short term, do change over time. Cultural meanings are not static, but constantly in motion. Culture continues to evolve through constant embellishment and adaptation to both physical and social environments. Culture includes both conscious and unconscious values, and other meaningful symbols that shape human behaviour. Cultural differences are not necessarily visible, especially to people who remain embedded in one cultural environment. It takes a prolonged stay abroad and mingling with the locals to recognize the numerous and often subtle and hidden differences in various cultures. In sum, culture provides people with a sense of identity and an understanding of appropriate behaviour within a soda1 group. It has pervasive and profound impacts on virtually all aspects of human life. For instance, Harris and Moran (2005, pp. 206-211) have identified ten important areas pertaining to human values, attitudes. and behaviours that are directly influenced by culture: Sense of self and space; Communication and language; Dress and appearance; Food and feeding habits; Time and time consciousness; Relationships; Values and norms; Beliefs and attitudes; Mental process and learning; Work habits and practices. On the basis of the foregoing overview of the implications of the culture construct, it is evident that culture influences perceptions and shapes modes of thought. Culture defines an individual's worldview and, accordingly, cultural differences imply alternate, possibly conflicting, worldviews. It is precisely because of culture's influence on individuals and the persistent reality of cultural differences, that cross-cultural marketing and HRM are potentially problematic. 3 Cross-Cultural Marketing The expansion of global mass communication, coupled with modem technology, has led to the increasing globalisation of world markets and the creation of a global consumer society (Campbell 2006). In general, consumers purchase products/service to satisfy three major consumption needs: (1) functional needs - needs for problem solving and problem prevention; (2) social needs - needs for group membership and affiliation, and (3) sensory needs - needs for novelty, variety seeking. and sensory gratification (Roth 1992;1995). The purchase of hotelier services addresses the second and third needs. It caters to the need for social identity and group affiliation while, at the same time, providing novelty, variety seeking and sensory gratification. However, these needs largely exist only in consumer cultures. China and Russia, despite their late entry into the global market, possess consumer cultures. Indeed, as a result of the tremendous economic growth and social changes during the past decade, consumer culture is rapidly spreading around the world. Marketers around the world have greatly contributed to the development of global consumer culture with their advertising messages that appeal to achievement status and physical beauty. When economic resources in terms of disposable income are limited, consumers buy goods and services to satisfy most basic, utilitarian or functional needs. As disposable income increases, consumers become more willing to spend money on products that satisfy more symbolic needs (Roth 1995). In both China and Russia, disposable income is increasing and, along with it, the power to purchase what could be categorised as luxury services; services which caters to social and sensory needs, rather than functional ones. If the hotel chain is to successfully capitalise upon the consumer culture which is taking root in both China and Russia, it has to imbed the symbols of both these national cultures into its advertising message. In other words, it cannot approach the marketing of its services in either Russia or China as it would in the United Kingdom but must consider the unique cultural characteristics of these two countries and embrace these characteristics in its advertising message. Indeed, as Scott and Batra (2003) explains, each marketing message should include a "layer" of cultural meaning so that communicates with consumers on their own terms, in their own language and using their own cultural symbols and meanings. If not, the marketing campaign runs the risk of being mis-interpreted, misunderstood and ignored, culminating in a failure to positively influence the consumer market in its favour (Scott and Batra, 2003). This means that it is imperative that the hotel chain not manage its marketing campaign or construct a marketing message which is particular to the United Kingdom or any of the other countries it operates in. Notwithstanding the fact that the prevalence of a global consumer culture facilitates the design of a global marketing campaign which can be understood by all consumers, irrespective of culture, it remains important to embed elements from the culture in question into the campaign. Hence, to avoid a potential lack of market response to its marketing campaign, it is important that the Russian campaign include Russian cultural symbols and values and the Chinese campaign the same. In this way, the hotel chain can avoid the potential of cross-cultural marketing acting as a barrier to its successful penetration of the two markets in question. 4 Cross-Cultural Human Resource Management While one cannot deny that an organisation is ultimately defined by its services and products, the value of an organisation lies in its human resources. This is especially true of the hotel industry which is distinguished from others by the intense level of interactions between organisational employees and customers. Upon consideration of the extent to which cross-cultural differences give rise to different perspectives, attitudes and actions, the imperatives of effective cross-cultural human resources management become clear. With particular reference to the UK chain, the challenges which it may confront with regards to the cross cultural management of its human resources in both China and Russia are immense. Indeed, as Norenzayan, Smith, Kim, and Nisbett (2002), culture influences cognition and accordingly, the management styles which employees are most comfortable with and to which they most positively respond. Recent cross-cultural research has established that culture is a mediating factor for the amount of information and type of general stimuli people pay attention to within the process of categorizing and making judgments (Ji, Peng, & Nisbett, 2000; Kitayama, et al,, 2003), with the implication being that the management styles to which its British employees are positively responsive to may not correlate with those to which their Russian and Chinese employees will positively respond to. For the purposes of avoiding the potential of HR mis-management, culminating in poor market performance, the hotel chain must approach the management of its Chinese employees from the perspective of the collectivist culture and its Russian employees from a masculine cultural perspective, in acknowledgement of the cultures to which they belong (House, Hanges, Javidan, Dorfman, & Gupta, 2004). Culturally-sensitive HRM will contribute to the avoidance of the cross-cultural challenges associate with the management of a foreign employee-force while positively contributing to effective and efficient, result-oriented, HRM (House, Hanges, Javidan, Dorfman, & Gupta, 2004). 5 Conclusion: Reflective Statement As indicated in the foregoing analysis, cross cultural differences have the potential to contribute to significant management challenges; challenges which have the power to limit the opportunities for market success. It is precisely because of this that the hotel chain in question must approach both its Chinese and Russian operations on their own distinct cultural terms. While this conclusion appears somewhat self-evident, arriving at it was a learning experience. Prior to undertaking this assignment, I had assumed that globalisation had led to the creation of a global consumer culture which, in itself, had largely eliminated the need for the consideration of cultural differences in international business. Certainly, I understood that cross-cultural differences still prevailed and could prove problematic for international business but I, nonetheless, assumed that it was possible for companies to remain culturally neutral by adhering to global cultural norms. This research taught me that not only was this an erroneous assumption but that if international business firms were to do so, their marketing message would, quite probably loose much of its appeal and their ability to motivate employees would be greatly reduced. In other words, I discovered that even though the evolution of a global consumer culture had significantly eased the cross-cultural management process through the creation of shared meaning, values and perceptions, it had not eliminate national culture and the power it has over individuals. Within the context of international business, cross-cultural differences are a force that business leaders and managements have to contend with. They cannot ignore it nor can they assume the possibility of adopting culturally neutral marketing campaigns and HRM strategies and paradigms. Culture is not only the predicator of the way people think, act and behave but it is the primary source of meaning. International business managers and leaders can more effectively communicate with their target consumer and market segments if they constructively utilise cultural symbols and meanings; if they address the market and consumer segments in question through references which appeal to their culturally-influenced values, worldview and needs. Similarly, the integration of culture into HRM strategies and paradigms will offer international business concerns the tools needed to more effectively motivate their employees and generate their commitment and loyalty. In other words, I learnt that if the adoption of a culturally neutral stance will contribute to the avoidance of cross-cultural conflicts and problems, the adoption of culturally-aware and sensitive marketing campaigns and HR management models will maximise the potential for success. Continuing from the above stated, researching and writing this essay introduced me, not just to the complexities of cross-cultural management but, to the impossibility of avoiding cross cultural management strategies through the adoption of culturally neutral policies. Should I gain employment with an international business firm, as I hope to upon graduation, I have no doubt that I will enter the workplace with a healthy respect for the importance of considering cross-cultural differences and paying them heed. 5 Bibliography Campbell, C. (2006) The Romantic Ethic and the Spirit of Modern Consumerism. Oxford: Basil Blackwell. Hall, E. T. (2004). Beyond Culture. NY: Anchor Books. Harris, P. R. and Moran, R.T. (2005) Managing Cultural Differences. TX: Gulf Publishing Company. House, R., Hanges, P., Javidan, M., Dorfman, P., and Gupta, V. Eds. (2004). Culture, leadership and organizations: The GLOBE study of 62 societies. London: SAGE Publications. Ji, L. J., Peng, K. P., and Nisbett, R. (2000). Culture, control and perception of relationships in the environment. Journal of Personalities and Social Psychology, 78(5), 943-955. Kitayama, S., Duffy, S., Kawamura, T., and Larsen, J. T. (2003). Perceiving an object and its context in different cultures: A cultural look at New Look. Psychological Science, 14(3), 2 10-206. Kroeber, A. L. and Kluckhohn, C. (1952). Culture: A critical review of concepts and definitions. Papers of the Peabody Museum of American Archaeology and Ethnology, 47(1), 1-223. Norezayan, A., Smith, E. E., Kim, B. J., and Nisbett, R. E. (2002). Cultural preferences for formal vs. intuitive reasoning. Cognitive Science, 26, 653-684. Roth, M. C. (1992). Depth versus breadth strategies for global brand image management, Journal of Advertising, 21 (June), 25-36. Roth, M. C. (1995). The effects of culture and socioeconomics on the performance of global brand image strategies. Journal of Marketing Research, 32(May), 163- 175. Scott, L. M. and Batra, R. (2003). Persuasive imagery: A consumer response perspective. Mahwah: Lawrence Erlbaum Associates, Publishers. Read More