Cross-Cultural Issues Faced By the Airbus Consortium - Essay Example

?Cross-Cultural Management Table of Contents Introduction 4 Overview of the Airbus Consortium 5 Cross-Cultural Issues Faced By the Airbus Consortium 6 GLOBE Project and its Dimensions 9 Uncertainty Avoidance 10 Power Distance 10 In-Group Collectivism 10 Institutional Collectivism 11 Gender Egalitarianism 11 Assertiveness 12 Future Oriented 12 Performance Orientation 12 Humane Orientation 14 GLOBE Project Clusters and Lessons that Need to be Considered by Airbus Consortium and Other Companies Embarking on International Projects 14 Anglo Cluster 15 Germanic Europe Cluster 16 Middle East Cluster 16 Latin America Cluster 16 Latin Europe Cluster 17 Southern Asia Cluster and Sub-Sahara Africa Cluster 17 Nordic Europe Cluster 17 Eastern Europe Cluster 18 Confucian Asia Cluster 18 Conclusion 19 References 20 Bibliography 22 Introduction The process of globalisation has created significant opportunities for international business organisations to explore the business prospects beyond their nationalized borders. However, it has also brought in certain major challenges for these organisations to succeed in the global arena. There are various determinants for international business that restrict the organisational capabilities to avail opportunities internationally. One of the major determinants that many experts have considered is the cross-cultural aspects of the international business. Cultural differences are often very difficult to observe and measure while failure to understand the culture may have intensified effects on the business organisation that can reduce the business performance (Ghemawat & Reiche, 2011). The poor understanding of cross culture has a radical influence on the business process as well as on the management as it may increase the propensity towards committing business blunders. Notably, the success or the failure of business greatly relies on the performance of human resources within organisations. Consequently, the limitation of certain understandings such language, business etiquette, norms and values by the human resources in an organisation at international level has often collapsed many business organisations (The Culturosity Group, LLC, 2004) Overview of the Airbus Consortium Airbus is a subsidiary company of Netherlands based European Aeronautic Defense and Space Company (EADS) with its headquarter located in Toulouse, France and the ingenuity of major European countries including France, Spain, Germany and the United Kingdom is combined to create a giant company to compete with other major companies such as Boeing of the United States. The consortium is a key manufacturer of military airlifters as well as commercial jetliners, continuously involved since previous 40 years (Airbus S.A.S., 2012). Airbus operates globally and creates value for its widespread customers and shareholders. The company employs more than 55,000 personnel from in excess of 100 nationalities around the world. The company’s operations greatly rely on industrial cooperation as well as on partnership with world’s a few of the major companies. The company has more than 1500 suppliers spread over 30 countries. Its success is attributed to a mix of ideas, vision and knowledge such as a combination of diverse cultures in its work process. The company with its global presence and expanding business operations has now become an international family (Airbus S. A. S., 2012). Source: (Observatory of Sustainability in Aviation, 2012) Cross-Cultural Issues Faced By the Airbus Consortium Airbus consortium is a multi-national company which has workforce from all around the world. However, the company has always been cautious and has respected diversity and business ethics within the organisation. The company continuously strives to seek opportunities in order to reap the benefits provided by culturally diverse workforce committed towards accomplishing the organisational goals. The company with its multi-culture team ensures that it is efficient to understand the various needs of its diverse customers, stakeholders and suppliers present all around the world. It can be considered that Airbus is one of the most culturally diverse companies in the world. The company values the cultural mix, and shares experiences and knowledge towards developing expertise along with stimulating workplace environment. Diversity within the company is not limited to nationality and culture only, it also values diversity in gender, generations and ensures that fair employment opportunities are provided irrespective of employees nationality, cultural background, gender and experience among others (Airbus S. A. S., 2012). Over the years, the company has also faced certain problems relating to cultural diversity within the organisation. For instance, the A380 super jumbo was delivered almost two years later than it was actually delivered to its customers. The major reason behind the delay was considered to be the cultural difference faced by the company between French and German employees (Observatory of Sustainability in Aviation, 2012). The company has confronted with substantial impact of cross-culture differences on its overall business performance and transnational dealings. The cross-culture differences that have been observed ultimately have reduced the productivity of the company to a certain extent along with its competitive advantages. The cross-culture differences that have existed within the organisation have brought in certain major differences in terms of management style and ways of communication. An intercultural survey conducted at EADS revealed that employees of different nationalities within the organisation have different perceptions against others’ culture. It was ascertained that French personnel within the organisation were paternalist, close to their network, respectful towards their hierarchy and preferably more centralised in terms of decision making. At the same time, it was also recognised that French personnel were less formal with respect to communication and decision making while on the other hand, German personnel were ascertained to be more organized and very precise in terms of hierarchy and formality. In addition to this, German personnel were found to prefer collective decision making as well as they were focussed towards attainment of short-term efficiency. Almost all the variables were opposed to those of French personnel. Similarly, British personnel within the organisation were primarily focused on financial priorities and were much inclined towards accomplishing organisational goals. However, the communication style that they followed was indirect, unclear and could not be easily understand. The British personnel in the organisation were down to earth, pragmatic and used to apply practical solutions while making decisions. Subsequently, Spanish personnel were relaxed, open, creative, and flexible and a good team worker but were suffering from inferiority complex (Observatory of Sustainability in Aviation, 2012). To a great extent, these perceptions were based on stereotyped notion rather than any empirical basis. The cultural perceptions among the personnel in the organisation compelled people to react in a particular way which significantly hampered the reputation as well as productivity of the organisation. The cultural differences deterred the organisation from achieving the organisational goals. It was the cultural aspects that prohibited people in the organisation to work as a single team. Eventually, the cross-culture differences within the organisation led the company towards poor corporate governance and inefficiency in its productivity. The tension that emerged within the organisation concerning French and German employees significantly hurt the reputation of the company and dented its competitive advantages over its major competitors like Boeing. The market of the company also radically suffered and it was taken over by a few of the foreign competitors such as Boeing. The company was not able to integrate the efforts of various employees together and was getting increasingly drifted from its goals and objectives (Airbus S. A. S., 2012). GLOBE Project and its Dimensions GLOBE an acronym for “Global Leadership and Organisational Effectiveness” is a research project that includes 62 nations and over 170 social scientists as well as management scholars worldwide. Globe project involves the pragmatic series of national cultures in order to show societal cultures influence on the kind of leadership acceptable by people within a particular culture. The primary goals of GLOBE are to analyse culturally diverse leadership and to critically create empirically enacted theories that describe and envisage likely impact of a particular cultural variable on the leadership effectiveness as well as organisational cultures and societies (Mansour & et. al., 2005). GLOBE defines the culture as “shared motives, values, beliefs, identify and interpretations or meaning of significant events that result from common experiences of members, of collectives and care transmitted across age generations” (Mansour & et. al., 2005). GLOBE has developed nine dimensions in order to compare societal cultures around the world. These dimension includes, (1) Power Distance, (2) In-group Collectivism, (3) Institutional Collectivism, (4) Uncertainty Avoidance, (5) Gender Egalitarian, (6) Assertiveness, (7) Future Oriented, (8) Performance Orientation and (9) Humane Orientation (Peng, 2008). The brief explanations of these dimensions in relation to Airbus consortium has been provided below: Uncertainty Avoidance Uncertainty avoidance is the extent to which the members within the organisation constantly focus on avoiding and eliminating uncertainties by adopting certain social norms and practices of culture in order to avoid future unpredictability. The stereotyped perceptions of one culture towards another culture in the organisation have prevented Airbus from attaining and sustaining high quality and quantity of products. Moreover, the differences in values and beliefs among the personnel have made the various organisational policies and practices ineffective in avoiding uncertainties (Observatory of Sustainability in Aviation, 2012). Power Distance Power distance is the degree that signifies extent to which members in the organisation support and agree with unequal distribution of power. Airbus consortium has been the victim of egotism. The senior managers and executives within the organisation were more indulged in gaining power especially in between French and German executives (Observatory of Sustainability in Aviation, 2012). In-Group Collectivism In-group collectivism is the extent to which individuals tend to convey loyalty, pride and cohesiveness in the organisation. Airbus is committed to integrate the efforts of various personnel and divert their valuable efforts towards the accomplishment of the organisational goals but the ‘economic patriotism’ has significantly influenced the performance of the organisation. The employees in the organisation were drifted away from the core objectives of the organisation and endeavoured towards proving the superiority of their own culture and country (Observatory of Sustainability in Aviation, 2012). Institutional Collectivism Institutional collectivism represents the degree to which an organisation rewards collective efforts of the members of the organisation. Airbus considers every employee to be a valuable resource and respects their values and beliefs. The organisation also attributes the cultural mix present in the organisation as the major factor behind its success. Furthermore, the company holds non-discriminatory policies towards its employees and ensures that every employee in the organisation is fairly treated in terms of promotion, pay scale, training and other vital employee related aspects irrespective of their nationality and culture (Observatory of Sustainability in Aviation, 2012). Gender Egalitarianism Gender egalitarianism is the initiative taken by an organisation to minimise gender discrimination. Airbus firmly rejects any type of gender based discriminations at any level within the organisation. It values diversity in terms of gender, generation and nationality and provides employees with equal opportunities without considering the discrimination factor (Observatory of Sustainability in Aviation, 2012). Assertiveness Assertiveness is the degree to which the members in the organisation are assertive, aggressive and confrontational in relation to social relationship. Airbus consortium is a global company that operates internationally. Over the last few years, cultural differences among the major participants such as French and German personnel have resulted in confrontational situation within the organisation that has severely affected the production efficiency of the organisation (Observatory of Sustainability in Aviation, 2012). Future Oriented It is the degree to which individuals or members are engaged in future oriented activities such as planning and investing in future. Airbus consortium has been confined to resolve its ongoing cultural conflicts and have been demonstrating little concern about its future related activities (Observatory of Sustainability in Aviation, 2012). Performance Orientation Performance orientation is the degree to which organisations recognize the performance of employees and reward them for their outstanding performance. Airbus consortium however has failed over the years to recognize employees based on their performance, at the same time the employees have often been engaged in favouritism on the basis of nationality (Observatory of Sustainability in Aviation, 2012). Humane Orientation This dimension concentrates on participative decision making process along with recognizing and rewarding employees for their sincere contributions. Subsequently, Airbus has adopted policies that strive to achieve participative decision making process but it has not been able to practically rely on participative decision making (Observatory of Sustainability in Aviation, 2012). GLOBE Project Clusters and Lessons that Need to be Considered by Airbus Consortium and Other Companies Embarking on International Projects The cultural similarities also exist among various countries across the world. GLOBE project has grouped countries together in clusters in order to explore similar cultures. The GLOBE project identifies ten major clusters which include Anglo cluster, Middle East cluster, Germanic Europe cluster, Latin America cluster, Latin Europe cluster, Southern Asia cluster, Nordic Europe cluster, Eastern Europe cluster, Confucian Asia cluster and Sub-Sahara Africa cluster (Hoppe, 2007). The countries grouped according to their cultural similarities are presented below in pictorial form: Source: (Hoppe, 2007) It is necessary for Airbus and other companies that desire to embark of international projects to consider cross-culture aspects of the business and adopt leadership style and state policies that are much relevant to the cultural cluster in which it operates. Anglo Cluster The Anglo cluster is the widely spread culture throughout the world. The Anglo culture cluster represents the world’s most economically developed and powerful group across the world. These cultural cluster scores relatively high in performance orientation while other dimensions are in mid range. It requires Airbus to take up performance oriented leadership style while operating in the countries of this cluster (Ashkanasy & et. al., 2002). Germanic Europe Cluster The Germanic Europe cultural cluster focuses more on assertiveness, performance orientation future orientation and uncertainty avoidance. Airbus, interested to take advantages of its employees in archiving greater productivity, needs to apply participative leadership style (Chhoker & et. al., 2012). Middle East Cluster According to GLOBE project, Middle East cultural cluster values the efforts of team as a single unit and relies less on the principle of Gender Egalitarianism. However, Airbus makes no discrimination on the basis of gender and provides equal opportunities for both male and female within the organisation. At the same time, it will be favourable for Airbus to depend less on female workers while conducting its business in Middle East (Chhoker & et. al., 2012). Latin America Cluster The Latin American cultural cluster signifies high in terms in-group collectivism where as the cluster focuses little on future orientation, uncertainty avoidance and performance orientation. Airbus consortium’s culture is less impacted with the Latin American culture. It is worth mentioning that Airbus has to focus more on establishing cordial relationship with employees for its successful operation in this cluster (Chhoker & et. al., 2012). Latin Europe Cluster France and Spain, the important founder partners of Airbus Consortium have been classified to be under Latin Europe cultural cluster. This cultural cluster relatively rank low in terms of humane orientation as well as institutional collectivism. With regard to the cultural cluster, the company relatively shows high humane orientation. It will be in favour of the company to adopt performance oriented leadership and behaviour while operating in countries in this cluster (Chhoker & et. al., 2012). Southern Asia Cluster and Sub-Sahara Africa Cluster The southern Asia cultural cluster scores relatively high in terms of humane orientation and in-group collectivism. The sub-Sahara Africa cultural cluster is similar to that of southern Asia cultural cluster. These cultural clusters are the assimilation of humane aspects and refrain from conflicts. Airbus consortium intending to enter and succeed in these clusters will have to strictly value the humane and in-group collectivism (Chhoker & et. al., 2012). Nordic Europe Cluster The countries that fall under this cluster rate are high in future orientation as well as gender egalitarianism. The cluster focuses on humane oriented leadership. Airbus has to consider humane aspects critically for its successful operation within the cluster (Chhoker & et. al., 2012). Eastern Europe Cluster The Eastern Europe cultural cluster ranks high in assertiveness, gender egalitarianism and in-group collectivism. Therefore, Airbus has to rely more on the above principles while conducting business with respect to countries of the cluster (Chhoker & et. al., 2012). Confucian Asia Cluster The countries in this cluster score high on in-group collectivism, institutional collectivism and performance orientation while other dimensions are in mid range. Airbus consortium expanding its business has to strive in building team efforts and apply collective decision making in its leadership style (Chhoker & et. al., 2012). Conclusion Globalisation has provided a wide platform for the organisations to expand their business globally. However, it is not an easy task for the organisations to succeed in foreign countries. There are several determinants that restrict the operational capacities of the organisations. In recent times, it has been recognized that failure to properly understand the cultural aspects of the host country has significant impact on the business procedural aspects of the international organisations. Airbus consortium a multinational and leading manufacturer of commercial jetliners and military airlifters is ingenuity of major European countries including France, Germany, the UK, and Spain have been confronted with cultural problems in recent times. The cultural differences between the employees particularly French and German have affected the productivity of the organisation. The stereotyped perception held by the employees has significantly hampered the reputation of the company at the marketplace. Hence, it is essential for the company to make radical changes in order to tackle the related problems. The cautious analysis of GLOBE will enable Airbus consortium to focus on certain essential aspects of leadership to be followed on the basis of different clusters recognised by GLOBE project. References Airbus S. A. S., 2012. History. Company. [Online] Available at: http://www.airbus.com/company/history/ [Accessed November 05, 2012]. Airbus S. A. S., 2012. People Culture. Company. [Online] Available at: http://www.airbus.com/company/people-culture/ [Accessed November 05, 2012]. Ashkanasy, N. M. & et. al., 2002. The Anglo Cluster: Legacy of the British Empire. Later published in Journal of World Business, Vol. 37, Iss. 1, pp. 28-39. Chhoker, J. S. & et. al., 2012. Culture And Leadership, Across The World: The GLOBE Book of In-Depth Studies of 25 Societies LEA's Organization and Management Series. Routledge. Ghemawat, P. & Reiche, S., 2011. National Cultural Differences and Multinational Business. Globalization Note Series. [Online] Available at: http://www.aacsb.edu/resources/globalization/globecourse/contents/readings/national-cultural-differences-and-multinational-business.pdf [Accessed November 05, 2012]. Hoppe, M. H., 2007. Country Clusters According to GLOBE. Culture and Leader Effectiveness: The GLOBE Study. [Online] Available at: http://www.inspireimagineinnovate.com/PDF/GLOBEsummary-by-Michael-H-Hoppe.pdf [Accessed November 05, 2012]. Mansour, J. & et. al., 2005. Cross-border transfer of knowledge: Cultural lessons from Project GLOBE. Academy of Management Executive, Vol. 19, No. 2. Observatory of Sustainability in Aviation, 2012. Airbus People. Practice. [Online] Available at: http://www.obsa.org/Lists/Documentacion/Attachments/144/Part_III_Social_EN.pdf [Accessed November 05, 2012]. Peng, M. W., 2008. Global Business. Cengage Learning. The Culturosity Group, LLC, 2004. The Costly (and Humorous) Impact of Cultural Blunders. Cultural Blunders. 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