Introduction
Volkswagen (VW) and Suzuki announced about their cooperation in 2009. Volkswagen purchased 19.9% stake of Suzuki while the Japanese carmaker purchased 1.5% stake of the German company (Deresky 2014). This led to the increase of the companies’ shares costs. The companies also announced about their cooperation in the technological sphere. Suzuki was eager to get Volkswagen’s larger vehicles technologies, while VW needed small-car technologies employed at Suzuki. VW wanted to enter Indian market with the help of Suzuki’s technology and production/distribution networks. However, in 2011, the companies announced about termination of their cooperation due to cultural and management issues.
International Strategies Used
Both organisations tried to cope with the aftermaths of the financial crisis and secure their position in the market as well as enter new markets. Suzuki chose strategic alliance as the most appropriate international strategy. The company needed assistance if the sphere of technology. Of course, another goal was to enter new markets. Volkswagen is famous for its ability to create joint venture and utilise direct investment (Deresky 2014). When it comes to cooperation with Suzuki, VW chose strategic alliance as well, but it is rather a first step. Of course, the German carmaker needed technological collaboration as it struggled with its projects concerning small-cars. The company also wanted to enter Indian market and Suzuki’s distribution and production facilities could be of paramount importance for VW. However, Volkswagen’s choice is not as clear as the one of Suzuki. The company acquired significant amount of shares, which enabled it to affect Suzuki’s decisions (at least, in the long run).
Advantages and Disadvantages
Strategic alliance could be beneficial for both companies. Thus, the advantage of this type of internalization is that the companies obtain the necessary technological assistance needed for both organisations for their development and expansion. The image and capacities of the two companies could also improve significantly during effective collaboration. However, there could be certain disadvantages as well. The two companies are competitors and the alliance can be employed as a way to take advantage of the partner. The size of the companies suggests that VW could be the company that could take advantage of Suzuki. At the same time, direct investment (which was partially used by Volkswagen) could pose more threats to Suzuki that could be eventually acquired by VW.
Cultural Differences
Hofstede defined following major dimensions of culture: power distance, uncertainty avoidance, individualism versus collectivism and masculinity versus femininity, long-term versus short-term orientation (McSweeney 2002). Analysis of these dimensions may unveil similarities and differences between German and Japanese cultures. As far as power distance is concerned, the two cultures are quite similar. McSweeney (2002) states that the individual who has more power (experience, authority and so on) is always in front of the rest of the group. Thus, leaders of the group always come first. It is necessary to add that this is the similarity between the two cultures.
It is possible to start with the dimension of the long-term versus short-term dimension as the two cultures only slightly differ in this respect. Thus, for Japanese people, long-term goals as well as long-term relationships are very important (McSweeney 2002). When it comes to German business people, they are also considering long-term goals but the major focus is still made on short-term goals and achievements. As for uncertainty avoidance, German people are more eager to avoid any uncertainty. It is noteworthy that both Japanese and German people are very punctual (McSweeney 2002). Nonetheless, for German people agreements are final and certain. While for Japanese people, some agreements may be reconsidered and changed. It is also acceptable for Japanese people to have an extensive small talk during meetings. German people prefer focusing on the matter without any small talks. Hence, it is possible to note that Japanese are more uncertainty tolerable than Germans are. When it comes to dimension of collectivism and individualism, the two cultures are also very different. Germans are more individualistic. German top managers are willing to make decisions on their own. However, Japanese top managers consider the issue and consult with other employees. It is possible to note that decisions are made collectively. Finally, as far as the dimension of femininity versus masculinity is concerned, German culture is masculine and Japanese is more feminine. Thus, Japanese people are more caring and they are paying more attention to other people’s feelings. For instance, Japanese people give their cards with their both hands and it is necessary to take the card with both hands, too (McSweeney 2002). More so, it is essential to study the card carefully instead of simply putting the card to the pocket. In German, etiquette is less mindful of such things.
Criticism
Hofstede suggested his approach to evaluate cultures and understand them better. His approach has become one of the most influential strategies. Nonetheless, it has also attracted a lot of criticism. One of major arguments against Hofstede’s theory is that it is not as viable and statistically justified as it seems. McSweeney (2002) stresses that even though the research is based on considerable amount of statistical data, it is also grounded on erroneous assumptions. Thus, McSweeney (2002) notes that Hofstede assumed that all inhabitants of certain territory share certain culture. However, he did not take into account numerous subcultures that could affect people. Notably, the vast majority of participants were employees of IBM, which cannot be seen as diverse population since people shared certain characteristics (education, experience). Importantly, these employees were chosen in accordance with the company’s corporate culture. Therefore, the research’s population is far from being diverse.
More so, the researcher did not use even number of questionnaire taken from different countries to come to his conclusions. McSweeney (2002) notes that questionnaires from 40 (not 66 as reported) were utilised to characterise national cultures. For instance, the number of participants from European countries and Japan was more than 1000 while fewer than 200 people from Asia, Middle East and Latin America took part in the study. Clearly, assumptions based on such insignificant number of participants cannot be statistically justified. Another argument is that the research is too generalised as Hofstede used a statistical average rather than particular ideas of individuals. Clearly, such generalisation could lead to significant deviations.
It is also important to add that Hofstede’s assumption that questioning employees of a single multinational will enable him to detect purely national cultural differences. However, Hofstede ignores (or misinterprets) the fact that organizational and occupational cultures also affect people and it is impossible to separate one of the three cultures. Finally, Hofstede’s assumptions can hardly be seen as viable in the contemporary multinational world where different cultures interact and affect each other so people living in one country may be influenced by many cultures.
Reference List
Deresky, H 2014, International management: managing across borders and cultures, texts and cases, Prentice Hall, Upper Saddle River, NJ.
McSweeney, B 2002, ‘Hofstede’s model of national cultural differences and their consequences: a triumph of faith – a failure of analysis’, Human Relations, vol. 55, no. 1, pp. 89-118.