The world has been turned into a small global village and firms find themselves in a business environment where they cannot ignore the need to go global. According to Mietusch (2010), many organizations have experienced massive success by exploiting opportunities presented in the new markets. However, one issue that has been affecting the ability of firms to operate successfully in the global market is the cultural variation.
Despite the integration that has taken place due to improved communication and transport infrastructure, different societies have varying cultural practices and values that make them unique. Many international organizations find it challenging to manage employees with varying cultural variations. An organization such as Coca Cola has overseas branches almost in every continent in the world. In each continent, they have to deal with various cultural beliefs and practices of their employees and customers.
The ability of these international organizations succeed is always based on the ability of their leaders to understand and appreciate this diversity. However, it may not be easy to understand this diversity, especially at the top management level. This causes the problem of developing organizational culture. According to Rosinski (2003), an organization is as good as its organization culture that defines the activities of its employees irrespective of their geographical location.
Firms like Apple Inc and Coca Cola have been very successful because of their organizational culture. The problem that these multinational organizations face is that the organizational culture that works well in the United States may not be appropriate for its employees in Japan. This research paper will analyze cultural variation across international organizations, and how firms try to manage the diversity.
Different Definitions of Culture
It is important to start by defining culture in order to determine its relevance to international organizations. Mietusch (2010) defines culture as “The quality in a person or society that arises from a concern for what is regarded as excellent in arts, letters, manners, and scholarly pursuits.” It is important to note that this definition gives emphasis to the fact that culture is the quality that an individual or a society gives to specific items or issues in the society.
The definition further notes that this quality is shaped by the concern for excellence in various issues in the society. This means that this culture is closely shaped by what other members of the society consider to be of high value to them.
Rosinski (2003) defines culture as “The behaviors and beliefs characteristic of a particular social, ethnic, or age group.” This scholar defines culture from a behavioral and beliefs perspective. The definition holds that culture is defined by an individual or society’s behavior or beliefs based on their age group, social and ethnic composition.
The two definitions of culture are in agreement of the fact that culture is shaped by what society or a specific group of people views as valuable. Difference in environmental, social, political, and economic settings in different parts of the world makes people place different values on different issues. For example, in the United States, people value all forms of human rights because other basic needs such as food shelter and clothing have been met.
This may not be true of a developing nation like Southern Sudan. In such developing nations, the need for basic needs makes other forms of human rights such as the right for expression very secondary. This makes them value some things that other people from developed nations do not consider to be of any value. Such differences would be reflected in the diversity of cultural practices and beliefs.
Organizational culture refers to practices and beliefs set by an organization to define the approach and behavior that employees are expected to embrace when addressing different issues. Organizational culture is always developed based on the organization’s goals, the type of employees, and the nature of the environment. The culture helps the management to predict the response that employees may take when a new system is introduced.
It also helps determine the time that would be taken to complete specific projects. The work of the management unit is made easier because it can predict the level of output of the employees and how they are likely to approach various tasks. It is also used by the management to ensure that employees are constantly motivated in their various areas of operation.
International organizations have had a challenge in developing a universal organizational culture that should be respected by all members irrespective of the geographic locations. It means that the top management of such organizations may not be able to benefit from such improved management systems.
Different National Culture Frameworks
Cultural frameworks refer to the tradition, myths, symbols, and value systems that are common in a particular society (Adler & Gundersen 2008). Different societies may have different national culture frameworks that are unique to the society. Some societies, such as the United States, have different cultural frameworks because of the variety of members of its society. The cultural framework for the Whites is Different from that of the Blacks, Hispanics, or the Indian Americans.
According to Rosinski (2003), international organizations largely depend on the national culture framework to develop its own organizational culture framework. This means that there is a need to understand the national culture framework in different countries that a firm operates in, before developing an organizational culture. It also means that an organizational culture that was developed in Germany may not be effectively applied in South Korea.
Firms such as Coca Cola and Apple have a big role of understanding different national culture frameworks that are relevant to their fields of business. Each country must be treated as unique as possible in order to have the true image of the cultural beliefs.
The Japanese and Americans
Apple Inc should realize that Japanese are people who have a hardworking culture that makes them more willing to work for longer hours than any other group in the world. More relaxed organizational behavior that is common in the United States may, therefore, not be very appropriate in Japan.
Similarly, it is important this firm to realize that Americans are very creative individuals, but very sensitive on issues that relate to human rights. Restrictive organizational cultures that infringe into individual’s privacy may not be appropriate for this society. They need their space to explore on their creativity and lead their independent lives without any form of interference from the employer.
The Germans and Russians
The Germans, on the other hand are perfectionists (Sorrentino & Yamaguchi 2008). When dealing with employees from this nation, it is important to understand this fact. It is important to understand and give massive attention to details of any given product. On the other hand, the Russians are sentimental individuals.
When dealing with them, it would be necessary to appreciate the fact that this group of people may not take excessive criticism positively. The culture embraced by the firm in this nation should avoid cases where employees or workers may feel despised or discriminated against by the management or other members of the organization.
The North Koreans
North Koreans are manipulative individuals who may not hesitate to take advantage of their peers or superiors whenever an opportunity avails itself (Mietusch 2010). They consider corruption as a normal social practice that one engages in whenever there is a necessity. When Coca Cola gets into this market, it may be forced to understand the internal forces in order to retain its global image while adapting to the national culture in this country.
Developing organizational culture frameworks based on national culture frameworks
Understanding individual country’s national culture will help define the organizational culture that should be used in that particular country. According to Craighead and Nemeroff (2004), in the currently globalized society, firms cannot afford to embrace a universal organizational culture. International organizations must appreciate the diversity that exists in the global world.
They must develop flexible structures that can enable them enter different markets without experiencing difficulty that is associated with the diversity in cultural frameworks. As mentioned before, each nation must be treated as unique as possible. It may even be necessary to identify specific groups within a society that may have different cultural frameworks that may affect an organization directly or indirectly.
For instance, it was mentioned that the African Americans have slightly different cultural frameworks from the Whites despite the fact that the two groups have cohabited in this country for hundreds of years. Rosinski (2003) advises that it would be necessary to factor in such issues of diversity as much as it may be relevant.
International Mergers and Acquisitions
International mergers and acquisitions have become common in the current business environment as firms struggle to expand their operations beyond their national borders. According to Rosinski (2003), international mergers and acquisitions have been seen as the best way of managing cultural diversity in different countries when a firm is planning to shift to a new market in a different country.
Choosing a successful firm in the country of interest makes it easy for a firm to enter a new market without the struggle of having to conduct massive research in order to understand the diversities of such a market. There are a number of mergers and acquisitions that have been considered very successful.
With its headquarters in London, Vodafone may best illustrate the benefits of mergers and acquisition as a way of entering different markets around the world. The company adopted the culture of acquisition and mergers in early 2001, and it has maintained that trend to date. In July 2001, it acquired Eircell a large communication firm in Ireland.
In December 2001, it formed a merger with Denmark’s TDC Mobil. In 2002, it formed partnership with Safaricom to enable it enter the East African market. In 2011, it acquired Bluefish Communication Ltd, while the acquisition of Cable & Wireless Worldwide was made in 2012. The company bought the German’s Kabel Deutschland in 2013.
The telecommunication industry is very dynamic, and Vodafone realized that making direct entry into these markets may be disastrous. The approach of mergers and acquisition was considered appropriate because it enabled the firm to enter the international markets through firms that were successful in those markets. Kabel Deutschland was a very successful telecommunication firm in Germany.
Vodafone saw an opportunity to expand into this market, but instead of getting into the market as Vodafone, it bought this reputable Germany firm. The strategy not only helps eliminate the hustle of understanding the culture in Germany, but also reduces the level of competition in the market.
Instead of Kabel Deutschland offering competition to Vodafone in this market, it offered it all its competitive strengths. Many other firms have successfully used mergers and acquisition as the means of entering new markets. There are various other successful mergers such as that between GTE and Bell Atlantic, Qwest and US West, Procter & Gamble and Gillette, and Citicorp and Travelers Group. These mergers have been instrumental in enabling these firms enter these different markets with ease.
Different Integration Mechanisms
International organizations have considered using different integration approaches and mechanisms to manage the cultural diversity that exists in the global markets. According to Rosinski (2003), different firms have used different approaches to integrate different cultures into a large and harmonious culture in their system.
Some firms prefer using the diversified cultural approach in different nations. In this mechanism, the top management only issues strategic plans to their branches in different parts of the world. It is the responsibility of the management in different countries to develop a national culture for their firms that are in line with the societal culture of the host country. This way, it becomes easy to operate with a culture that is understood and accepted by the local community.
Another approach that is common is the use of acquisitions in order to understand the culture of a new market. In this strategy, a firm would purchase a similar firm in the market of interest and retain its organizational culture (Adler & Gundersen 2008). The parent firm will help in understanding such a culture as a way of understanding the national culture of the society. A few organizations prefer universal approach to integration.
This involves developing a central organizational culture that must be embraced in all the branches in various countries with limited allowance for change. In this mechanism, the management in the overseas countries will be expected to make the local workforce to understand the universal organizational culture of the firm. This may even involve subjecting them to some form of learning before they can be absorbed into the workforce.
Although this approach may help the central management to easily control all the employees in various countries, critics have held that the approach is inappropriate for various reasons. The firm will be forced to incur massive training costs. When such employees are lost to the competitors, the investments made on them shall also be lost.
The approach also fails to realize that although the employees may be trained to understand the organizational culture, it may not be possible to change the culture of the society. For this reason, the new culture that the employees learn may be of minimal importance when it comes to practicing.
Justification of the Integration mechanism(s) chosen by national partners on the basis of their value orientation
Vodafone has always preferred using acquisition as a way of entering new markets and understanding the culture of different nations. This approach is one of the best mechanisms that firms should use when planning to get into new markets and achieve a high level of cultural integration. It is a cheap way of achieving integration because the parent firm will not incur the cost of training employees to understand a new culture.
The culture will be easily acceptable not only among the employees, but also within the larger society. The approach will also earn the parent firm a positive reputation because it will be viewed as a firm that embraces diversity and has respect to different cultural beliefs and practices. This admiration will strengthen its brand, which will make it achieve a strong competitive environment.
Conclusion and Recommendation
Cultural variations have been a major challenge for the international organizations to operate successfully in the global market. The cultural practices that are common in the United States are very different from what is practiced in Japan, Germany, Korea, or Britain. It forces these firms to find mechanisms of integrating different cultures in order to achieve harmony in their organizational culture.
While some firms prefer a universal organizational culture irrespective of the culture in the host countries, many others have embraced a devolved approach to managing diversity. Each approach has its advantages and disadvantages that should be put into consideration by the relevant authorities in the firm. It may be important to consider the following recommendations when dealing with the issue of cultural diversity.
- Firms should embrace cultural diversity in their systems by developing a dynamic culture that is tolerant to different cultural practices in the society.
- When considering entering new markets, mergers and acquisitions offer the best opportunity for firms to get integrated into new cultures in different countries.
- Firms should avoid a universal approach when dealing with cultures in different nations. Overseas branches should be given the mandate to develop a culture that reflects that in the host country.
- The management should strive to embrace a culture that will not only be acceptable to their employees, but also to other members of the society.
- It may be necessary to use Lewis model of culture to understand cultural practices in different regions.
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