The significance
for having an understanding of different cultures has been higher in the 21st
century than at any other point in the history of the world (United Nations,
2010). This has especially been as a result of the growing wave of
globalization that has seen a majority of the businesses targeting significant growth
targeting new markets in order to cope with the high market rivalry in the
domestic markets (Tesco, 2011). As businesses seek to establish their
operations in other economies, it becomes necessary that they look into ways of
ensuring the success of their foreign subsidiaries. The understanding of
culture or the lack of it may determine to what extent the business may prove
successful with the businesses that tend to exhibit great understanding of the cultures
within which they operate generally tending to record better performances
(United Nations, 2010). The 21st century can be said to be the
period when the move towards globalization has gained significant popularity
with a significant disappearance of international barriers that would hitherto
restrict the movement of products and factors of production across national
boundaries (Durham and Kellner, 2005). This period has also been characterized
by the development of a global culture due to the influence of multinationals
whose operations span across many countries in the world. However, cultural
differences continue to persist and businesses are faced with the options of
realigning their business operations to cultural perspectives of the societies
in their immediate external environment.
Culture affects
how people behave and how they perceive the events around them. This implies
that a similar action taken in different cultural settings may produce
different results due to the influence of culture. The cultural influence
affects organizations both within the organizations and with their interactions
with their customers and the external environment. The behaviour, perceptions
and expectations of employees are mainly a function of their beliefs as a
result of their continuous interaction with the society and the cultures around
them (Fatehi, 1996). For effectiveness, organizations must ensure that the
productivity levels of these employees are very high and the employees are
highly motivated to strive towards the achievement of the organizational goals
(Fatehi, 1996). Motivation of employees would be difficult to achieve without a
good knowledge of their cultural background especially where such employees
come from cultures that are not known for explicit and open communication. The
cultural perspectives also determine how customers and other stakeholders view
businesses and what expectations they have of the same. Where a business is
seen to operate in total disregard of the cultures around them, the public
sentiment tends to be negative and this affects its market performance
significantly. Societies tend to be supportive of businesses that seem to
embrace their ways of living while shunning the ones that are seen to exalt
their home cultures more than the hosting societies’ cultures (Hofstede and
Hofstede, 2005). Any misinterpretations of the cultural practices of the
societies in which businesses operate may similarly be faced with an
unreceptive society which may in turn affect their market performance.
Businesses must therefore make an effort to not only respect the cultures in
their hosting environments but also ensure that such cultures are analysed
judiciously and interpreted accurately.
2.0 Culture
and the success of business
Culture has
broadly been described as a people’s way of life as evidenced by their values,
beliefs, perceptions, language, religion and other aspects (Hofstede and
Hofstede, 2005). Cultural values are not innate: they are acquired through an
individual’s interaction with the society around them. This element is perhaps
responsible for the development of a global culture in many metropolitan
centres where people learn to do things in a new way hence embracing values
that were hitherto foreign to them.
The main
elements of culture are material culture, aesthetics, religion, education,
language, social organisation, and attitudes and values (Gannon, 2007).
Material culture is comprised of artefacts, tools, and technology. Aspects such as transportation, communication
and power are some of the considerations that a business must take into account
when launching operations in a foreign culture. One of the business operations
to be affected significantly by material culture is marketing where aspects
such as media availability and distribution come into play. Whereas analysts
tend to discourage the introduction of elements of material culture into a
society, experiences by various multinationals have proven that such
introductions may in fact prove useful in due course (Gannon, 2007). For instance,
refrigerated transport was almost unheard of in many developing countries
before global conglomerates dealing in food processing made inroads into such
countries making the practice rather popular.
Language is also
another important element of culture. It is the basic means of communication in
almost all cultures and it is therefore critically important that any foreigner
wishing to have any meaningful interactions with a society learn the language
used by its members (Bloom, Milkovich and Mitra, 2000). Language is mostly in
oral and written forms where it is used in writing or in spoken form. However,
it is important to also consider various elements of body language which in
many cases have the effect significantly altering the meaning of the spoken
word. A total concentration on the spoken word may therefore lead to a
situation where the intended meaning of the speaker is not captured.
Organisations must ensure a good interpretation of their communications into
the foreign languages in a manner that conveys the intended meaning. It is also
important to take into account that different languages have different
structures (Bloom, Milkovich and Mitra, 2000). Any attempt to engage in direct
translation may therefore result in failed communication. The meaning of the
communiqués should be the central focus of any translation.
Aesthetics refer
to the perceptions of beauty, good taste and fun and is mainly exhibited in a
cultural appreciation of form and colour, arts, music, dancing and drama
(Hofstede and Hofstede, 2005). Every culture has a set of what it considers
good and beautiful and they also tend to attach different meanings to colour.
For instance, whereas the black suit may be the image of a serious and
result-oriented executive in the UK, the same may traditionally be frowned upon
in the Asian countries as black may be interpreted to mean doom. However, the
evolution of a global culture as far as the dress code is concerned has been
rapid with most cultures exhibiting a fair amount of acceptance for the
western-styled executive wear (United Nations, 2010).
Education
systems vary across many cultures. Even though there seems to be a growing
popularity for formal education on a global level, different cultures have
different levels of emphasis on the importance of formal education as opposed
to other informal methods such as apprenticeship (Hofstede and Hofstede, 2005).
This is also informed by the availability of resources and the ability of the
average population to access such facilities. For instance, the percentage of
people accessing formal education in the UK is at least double the percentage
in China and many of the developing countries (United Nations, 2010). In the
UK, organisations tend to prefer hiring individuals who are already skilled in
the desired fields while in some Asian countries such as China, emphasis seems
to be on the individual with the proviso that any necessary skills could be
learned while at work. This difference informs the recruitment processes as
will be discussed in the next section.
Religion is also
a crucial element of culture that potentially affects business operations. In
societies that are largely dominated by one religion, it is important that the
business executives ensure that their operations are not perceived as offensive
to such a religion (De Mooij, 2005). This is especially common when it comes to
the range of products on offer, the choice of advertisement messages, and to a
certain extent, the business operation hours. For instance, in a Hindu society,
beef products may be frowned upon and an organisation seen to aggressively
produce and market such products may be deemed to be offensive to the society
(De Mooij, 2005). The same would apply in the case of pork products where a
business operates in a Muslim dominated society. In many Muslim dominated
societies, the business hours tend to be significantly different from those in
the West. For instance, ample allocations would need to be made to allow for
prayers at different intervals in the day with Fridays being dedicated to
prayers. Any insistence on maintaining the schedules of the parent company may
be deemed to be offensive to the society. Other aspects of religion that may be
of significance to business include: the role of the different genders, the occurrence
of religious holidays which may at times be nationalised hence disallowing
business operations, consumption patterns, and others (De Mooij, 2005).
Attitudes and
values tend to have a great significance in business. Attitudes in many cases
relate to economic activities while values may in many cases have their
foundation in the religion (Wiedman and Siebels, 2007). Perceptions on
materialism, luxury, wealth, and others are of relevance in this case.
Marketing campaigns should therefore reflect on messages that do not conflict
significantly with the prevailing societal values. For instance, many societies
tend to frown upon the use of sexually explicit images when making
advertisements due to their potential to erode the societies’ moral values especially
among the children. Similarly, Buddhist societies may not be very receptive to
marketing campaigns placing undue emphasis on the accumulation of wealth and
personal gratification. Until recently, the Chinese government had been
restricting the presence of marketing campaigns that were seen to divert the
attention of their citizens from their cultural value of frugal spending
(Wiedman and Siebels, 2007). This had of course made it quite difficult for
producers of luxury products to penetrate the market. However, with the
increased opening up of the market, the legal restrictions have largely been
withdrawn even though a larger proportion of the society continues to frown
upon such marketing initiatives.
Culture affects
business operations significantly. Societal values which are a reflection of
their culture largely determine the expectations that such societies and in
turn affect how successful the businesses can become (Datamonitor, 2011). The
food and the energy sectors in the UK can be said to some of the sectors with
the highest level of experience as far as the multiplicity of cultures is
concerned. Many of the largest players in these sectors have ventured into the
international markets where they are subjected to many cultures that prompt
them to modify their practices to ensure success in the foreign subsidiaries
(Corialis Research, 2010). The desire to ensure that each of the subsidiaries
operate in line with their specific circumstances calls for the adoption of an
appropriate organisational structure as is the case with Tesco stores and Bp
oil and gas. Of particular interest are the differences in the practices of Chinese
subsidiaries in the retail and energy sectors (e.g. BP China and the Tesco
subsidiaries in China) as compared to the practices of their parent companies
in the UK. The organisational structures of these two global giants is such
that the subsidiaries have a semi-autonomous status where each subsidiary is at
liberty to modify its operations to suit its unique circumstances as dictated
by the cultures of their hosting economies (Corialis Research, 2010). The
parent companies only get involved with the determination of the broader
strategies while the implementation and the formation of operational strategies
are left entirely to the executives at the subsidiary level. The same applies
to recruitment where the parent companies only influence the recruitment of the
top subsidiary executives for the purposes of protecting their investments
(Corialis Research, 2010). These executives are then charged with the
responsibility of running their subsidiaries which they do with minimal
interference. This type of organisational structure is useful in enabling the
subsidiaries to embrace strategies that suit their unique circumstances.
The recent oil
crisis in the gulf region exposed a difference of attitudes between the UK and
the Chinese societies. Whereas BP in the UK was hard pressed to explain its
operations and explain the precautionary measures to ensure that such mishaps
do not recur, their Chinese counterparts faced dismal pressure in comparison (Arnott,
2011). This brings out a basic element of the societies of the two cultures. In
the UK, individuals embrace the responsibility to ensure that corporate organisations
uphold the law and remain socially responsible in their policies and actions
(Hofstede and Hofstede, 2005). This is due to their appreciation of the fact
that the government may not adequately be in a position to take note of all
activities of the organisations around them. Moreover, the UK population has
been aware of the inefficiencies in government which in many cases relate to
regulatory capture that render the various agencies unable to execute their
mandate fully. As such, the society takes the initiative to ensure that
organisations live up to expectations. On the other hand, the Chinese tend to
leave regulation almost entirely to their government (Luo, 2008). Their
government is largely viewed as the protector of public interest and therefore
expected to ensure their welfare is catered for. This view is mainly viewed
through the eye of their cultural view which is traditionally communist. This
difference of opinions is evident in the approach taken towards accountability
and social responsibility. This ability is also a function of the level of
literacy among the population (United Nations, 2010). With the UK population
being more literate, they demand more accountability and transparency in
operations of the businesses. Businesses therefore provide more information to
the public and engage extensively in social responsibility initiatives. The
situation in China is different with CSR taking the back seat in many cases:
except where such initiatives are taken in partnership with the government
through its various agencies (Luo, 2008).
The product
range on offer in the Chinese subsidiaries has increasingly been similar to the
ones in the UK especially in the retail subsector. This has been due to the
diminishing negative attitude towards the West. However, supermarkets are still
forced to stock more Chinese products to ensure that they are not viewed as
chauvinistic foreigners. The Chinese are known to be a proud people who take
pride in their own (Luo, 2008). Any attempt to exclude Chinese products would
spell doom for any retailer. The energy products tend to be similar across the
board. However, branding of the products by BP China for China based products
is done in Chinese.
The approach to
marketing has also been modified somewhat. The bulk of the retail campaigns in
the UK emphasising personal gratification with a focus on stimulating customers
to want to consume more and more (De Mooij, 2005). The approach in China takes
a different view with the main focus being on finding utility in the products
to satisfy the prevailing needs (De Mooij, 2005). Even though the effect of the
messages may be the same, this difference draws attention to the fact that the
Chinese are traditionally frugal spenders and strategic marketers would not
want to appear as if they were out to challenge this philosophical view point.
Cultural
viewpoints of the societies also determine the manner in which management
relates to employees and other management practices. This happens on a number
of facets. The first mainly relates to the general conduct of the managers
towards the employees. This has much to do with whether the society embraces a
hierarchical culture or not. The power distance in the UK is much lower as
compared to that in China (Barett, et al, 2004). The practice in many UK
companies is such that managers at all levels operate an open door policy where
an employee at any level is free to walk in and discuss their concerns or share
ideas without any fear (Hofstede and Hofstede, 2005). Communication between the
managers and their subordinates is also quite informal with the main emphasis
being on the message and not necessarily in the manner in which such a message
is passed. On the other hand, the Chinese tend to hold their leaders in high
esteem and are in many cases not free to casually discuss issues with them
(Luo, 2008). To accommodate this cultural aspect, while trying to minimise any
loss of creativity due to inadequate communication from the subordinates, BP
China has modified its open door policy where an information sharing platform
has been established at different levels of the organisations (BP, 2011). The
supervisors at each level are then expected to communicate any special concerns
to the subsequent management levels. The same difference exists when it comes
to the extent to which businesses engage junior employees in the decision
making. The Tesco executives and managers at various levels in the UK are known
to seek views from their subordinates before making any decisions with
far-reaching implications (Datamonitor, 2011). This is reflective of the
attitude of the employees who are keen to make their contributions on which
direction their organisations should take and an appreciation of their unique
abilities which they reckon their bosses may not have. The case is different
among the Chinese who expect their managers to have all the relevant knowledge
necessary to make various management decisions. Similar consultations would
bear little result and the consultations therefore involve the senior levels of
management. Subordinates mainly implement the directions of their seniors.
Every society wishes to see their own
colleagues getting the opportunities to work in the organisations operating in
their localities. The recruitment processes must however be in line with the
expectations of such societies. Traditionally, employment opportunities in
China would mainly be through recommendation where the existing employees would
recommend people known to them for employment (Luo, 2008). However, this practice
has proven unsustainable as it tends to deny organisations the opportunity to
recruit top talent. Even among the Chinese, a strong opposition exists to this
tradition since it only tended to exclude a certain class of poor but talented
individuals (Luo, 2008). The recruitment practices China for the companies
mentioned are therefore largely similar to those in the parent companies.
Differences however exist when it comes to the sharing of responsibilities.
Whereas the UK based branches tend to emphasise individual responsibility,
their Chinese counterparts tend to assign responsibilities to groups (Brown,
2007). This is a reflection of the strong tendencies towards individualism and
collectivism for the UK and China respectively (Durham and Kellner, 2005). The
Chinese subsidiaries have their staff grouped into working teams whose results
are credited to all team members with only a few elements being attributable to
the individuals.
The approach taken to negotiations is also
somewhat different. When the parent company follows the conventional
negotiation practices where everything is discussed on the table with
prospective partners, the BP China executives tend to concentrate on building
‘relationships’ with the government officials who are the main negotiating
partners for the company (Hoovers, 2011). The same applies to Tesco and other
food chains which must engage in negotiation for a number of reasons which
include the establishment of joint ventures, securing stable supply chains,
franchising agreements and others (Tesco, 2011).
The question
that must be asked in this context is: why the emphasis for understanding
cultures by businesses? A number of reasons can be established for this.
Firstly, understanding culture and modifying the practices of a business to
suit it earns the business the approval of the society and this leads to a
situation where the business is perceived positively (Holt, 2004). This
provides the business with a number of advantages. To start with, this approval
often translates to increased sales. Customers are known to be more receptive
to products from organisations which they perceive in positive light (Holt,
2004). The second advantage relates to the ability of the business to attract
top talent into its pool of employees. Having talented employees is the aim of
any business as such skilled staff often turns out being a source of
competitive advantage to the organisation in question (Bloom, Milkovich and Mitra,
2000). Innovations of products and business processes that win the approval of
customers can only be done by a skilled and talented work force. The positive
perception of an organisation by the society also enables them to raise capital
with relative ease (De Mooij, 2005). Investors would generally be more
supportive of organisations which are seen as responsible and commanding the
approval of their host societies. Such organisations would therefore be at an
advantage due to its ability to raise funds to pursue arising opportunities.
Culture and
business operation are closely enter-twined. The understanding of the culture
in which the business operates helps ensure that the business performs to
expectation. This is because such an understanding followed by a realignment of
the business practices helps portray a business as respectful of the society
and largely responsible hence gaining the approval of such a society. This
approval certainly translates into higher revenues as customers become more
supportive of such organisations. The company also maintains the ability to
sustain a competitive advantage due to its ability to attract top talent from
the market. The understanding of cultures is therefore a crucial key to success
in business.
For more theory and case studies on: http://expertresearchers.blogspot.com/
For more theory and case studies on: http://expertresearchers.blogspot.com/
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