I am a 3rd year student
taking Finance and have chosen to take this course as one of my electives due
to the immense value I expect to gain from it. This due to the fact that I have
observed that as businesses grow and expand into new countries, they employees
and managers are often faced with the challenge of effective communication and
management due to the prevailing cultural differences between these countries
and the domestic contexts. The Finance functions of most organisations often
require constant communication will all the sections of the organisations as it
serves the entire organisation as well as external stakeholders. It therefore
requires more that just the financial expertise: the creation of understanding
among the players being served by the function is just as crucial as the
application of sound financial principles. As a prospective business executive,
I expect that this course would adequately equip me to approach such
differences in a manner that would ensure the success of the communication
process and the business operations at large.
The reflections on this aspect of
cross-cultural management is drawn from the negotiation process that enabled
Acqua International to acquire the enter the Chinese market through the
partnership between Pacific Acqua International (a subsidiary of Acqua) and a
Chinese conglomerate Tak Foy and Company through the creation of a joint
venture called Haoyu China Limited. This joint venture was primarily aimed at
supplying water to an urban town. While executing a water treatment contract,
the company discovered an impending water crisis occasioned by the municipality’s
inability to make urgent construction of the requisite facilities hence
prompting them to favour the idea of outsourcing its water provision services. The
outstanding issues included the negotiation on the prices and the mode of
tariff revision among others. The success of the negotiation process is
credited to the approach taken by the company which took into consideration the
cultural contexts in which the municipality’s authority were operating.
To start with, the company avoided
potential areas of conflict in its approach in the initial stages of
negotiation and instead concentrated on non critical elements that could be
quickly be agreed upon. This was to avoid having the municipal lose interest in
the negotiation process in case there was failure to agree on the critical
elements. The non critical element was aimed at creating some wins that would
potentially balance any losses to be borne in the negotiation process thereby
ensuring the negotiation was concluded successfully. The negotiations accordingly
started with agreement on the demand and the mode of ensuring demand levels
were sustained before agreeing on the tariff adjustment formula and finally the
shareholding structure which was already agreed upon as the joint venture was
already in operation in China. Negotiations on the divisive tariff rates only
came after agreement was apparent.
This case underscores the importance of
understanding other people’s cultural contexts prior to entering into an
agreement. As opposed to the Western view where partnerships are strictly
business agreements that stipulate obligations and duties of each partner, the
Chinese view the negotiating process as the process of creating a new
relationship. This informs their preference for an approach that first highlights
areas of concurrence before getting into potentially divisive areas. The
inability or the lack of willingness to understand the Chinese people has often
been one of the reasons for the failure of many business negotiations involving
locals and foreigners. Moreover, the general level of suspicion by the Chinese
makes it difficult for organisations to negotiate successfully without first
dedicating their efforts to display their genuineness in the negotiation
process.
The other major cultural difference
between the Chinese and their Western counterparts is found in their perception
to time. European executives prefer engaging in straight to the point talks and
do not fancy lengthy negotiations that focus on issues other than the core
subject of the negotiation. This attitude is often viewed with a lot of
suspicion by the Chinese who view the perceived hastiness as an attempt to
conceal some vital information or as a display of lack of interest in the
matter. The Chinese also expect lengthy discussions that are often conducted
outside the purview of formality and usually characterised by intensive
consensus building efforts. The formal meetings are therefore meant to merely
confirm what has already been agreed upon informally. Their European counterparts
on the hand prefer formal negotiations with little informal interactions. This
is often interpreted as lack of interest and is known to lead to lack of
success in the negotiating process. My view is that the clear understanding on
the negotiation styles across the two cultures is often the key to any
successful negotiation.
Another crucial element that
distinguishes the Chinese from their Western counterparts is their attitude
towards knowing the partners with whom they wish to work. While the West only emphasises
information that is relevant to the partnership such as financial position and
history of performance of past contracts, the Chinese prefer to know the
individuals constituting the organisations in greater depth. They insist on
knowing the personal philosophies of such individuals and are generally
interested in details that may not be of direct consequence to the business
negotiation process. In other words, China is a high context society. This
knowledge also includes the composition of an organisation’s staff which helps
them gauge the attitude that a foreign organisation has towards their own
people. In conclusion, this case helps me draw a number of lessons as far as
cross cultural negotiations are concerned. Firstly, it is important to form one’s
strategy after due consideration of the other party’s cultural background; and
secondly, it is crucial to approach all negotiation process with patience in
order to avoid breakdowns occasioned by misunderstandings. This challenges my
earlier assumption that one could define a set of practices that could be
imposed on other peoples based on the superiority of such practices. The study
enabled me to appreciate the fact that people value their culture and would be
very reluctant to drop them in favour of what would be perceived as superior
cultural practices.
In identifying how culture affects
organisations, I will consider the management and operational practices of
Tesco plc which is based in the UK. The cultural perceptions in the UK shall
therefore be of utmost relevance. Tesco plc UK operates in a democratic
environment where the cultural practices of the population are principally
founded on democracy. This has influenced the manner in which the top
executives make decisions in the organisation where the decisions are made
after wide consultations with the members of the teams. The culture in the UK
is also reasonably individualistic. While not undermining the importance of
teamwork, Tesco’s work structures are organised in such a way that each
individual’s achievement can easily be picked out and individual recognition given
to the deserving team member. For instance, the CEO is individually held
responsible for the overall performance of the organisation and is rewarded
using a scheme that underscores his achievement. Such practices are replicated
down the ladder with each employee held responsible for the performance of
their responsibility areas. A store manager would therefore be individually
responsible for ensuring high sales in the particular store and the
remuneration of the sales staff under him would similarly be pegged on their
individual success rates. A good example was the recent restructuring where the
individuals deemed to be responsible were dismissed as opposed to having the
entire teams dismissed.
In my opinion, organisations must of
necessity operate in conformity with the values dictated by the cultures in
which they operate. For instance, Tesco is recognised for the high level of
discipline and time consciousness of their staff members. This is in line with
the prevailing UK culture which is largely monochromatic. The UK communities
take the view that time is money and that it should be used as conservatively
as possible. Punctuality is therefore a remarkable attribute in the British
culture. The ability of the UK populations to embrace other cultures is also
significant. However, this only influences their practices marginally as the UK
populations are known to be highly conservative. This perhaps explains the
constancy with which Tesco plc has approached its internal operations with
there being evidence of a fair amount of difficulty whenever any fundamental
changes were sought to be introduced. The movement of the UK towards being a
feminine culture has is also evident in Tesco where equal rights are granted to
men and women alike where the predominant criteria is the potential of the
individuals in question. The power distance in the UK can be said to be low.
Here, individuals gain recognition from their achievements and not from their
position. This attitude is prevalent at Tesco where the management freely
interacts with their juniors through the maintenance of the open door policy
and through consultations on what decisions the organisation should take in
given circumstances.
The mode of communication is also
greatly influenced by the national practices where communication tends to be
direct and clear. This is as opposed to other cultural backgrounds where
communications carry with them a fair amount of inferences where the parties
are required to draw meaning by reading in between the lines. This is seen in
the interactions between the staff members where communication is often direct
and in many cases done in writing to avoid the risk of misinterpretation. In
conclusion, the studies have helped broaden my understanding on the influence
of national cultures on organisations. Prevailing cultural contexts shape the
organisation structure and the nature of communication and relations between
the members of the organisation. This challenges my earlier perception that
organisations had the capacity to ignore the cultural practices around them and
simply formulate their own unique set of values that serve their purpose. Where
such values are in conflict with the wider cultural values, such efforts are
likely to fail in light of the knowledge acquired through these studies.
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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