Cross-Cultural Business Expansion Management - Essay Example

 Cultural Report Introduction As our company expands into the international markets, we will come across cultures which are significantly different as compared to ours and where our management methods might not be as readily accepted. However, by understanding other cultures we can create good relationships with different companies who are located in other parts of the world since these relationships will allow us to easily understand and transfer information as well as ideas between various cultures followed in other countries (Levy and Powell, 1998). This expansion is also necessary for us since the forces of globalization and competition have made it imperative that we expand our business for a more global market if we are to remain highly profitable. The two countries where we can expand our business have been identified as China and Canada. Canada has certain similarities to America in terms of the legal, cultural and economic environment but the systems in China are significantly different (Bartlett & Ghoshal, 1998). However, an understanding of both is important for us if we are to make our international venture a successful one for all concerned parties. The Canadian Culture Being our old ally and neighbor, Canada is particularly important for America as a trade and resource partner and there are quite a few similarities in terms of culture, laws, the environment and business processes which connect the two countries. In terms of size it is the world's second-biggest country with regard to governed area and it stretches from the Atlantic Ocean to the Pacific Ocean. The country was founded like America as a set of British colonies but it gained full independence from the UK in a peaceful process (Statistics Canada, 2007). Systemically, unlike America, Canada is a federal constitutional monarchy which is ruled by the Queen of England but it also has a parliamentary system of democracy. Culturally, Canada is a bilingual country since a significant population speaks French therefore both French and English are official languages (Statistics Canada, 2007). The levels of diversity in Canada are much higher than in America since a significant population segment is made up of immigrants to the country. In terms of doing business, it might be useful for us to have a French speaker or two if we really want our products to sell in the French speaking regions of the country. However, the advantage of doing business in Canada comes from its technological base and high standard of living as well as high support from the government for the health system which should put our products in a positive light (UNDP, 2007). The diversity in Canada, added to the sense of social responsibility makes it more likely that our products would be used by a diverse market which will also let us know if there are any modifications or adjustments which we need to make before we launch into other countries of the world. Politically, the country is stable and there should be no problems in political terms for getting our products into the country or getting money transfers out of the country. Of course the taxation structure in Canada is different from the American system therefore before we establish our set up in Canada it would be best to get consultation from international tax advisors so as to best set up the company (Statistics Canada, 2007). One significant problem which we might have in Canada is the system of measurements which is a reflection of the technological and sociological factors in Canada since the metric system is the primary system for the country. The Canadian culture a few years ago might have been conservative to the outsider but in recent years it has seem to taken a turn towards being less conservative and more free than America. While America has the cultural climate of a melting pot, Canada is to be seen as a mosaic of different groups. The ideas of freedom vs. control, individual rights vs. collective responsibility and the concept of equality are all leaning towards the left in the culture of Canada with time as the country becomes more diverse than it is (Goodrich, 2007). This creates and idea of a country where individuals are seeking inclusion and win-win situations during negotiations. The foundations of this new culture are connected deeply with the idea of immigration since it has created a mosaic for Canadian culture. The political awareness of issues in Canadian culture has also brought about many improvements in the standard of living as well as government services for Canadians which is placed at number five in the world while America is placed at number ten (UNDP, 2007). Doing business in Canada for American companies may also come with certain threats of getting a negative reaction since there are underlying feelings of anti-Americanism in Canadian culture. However, it does seem that those remain in the background and only make their appearances in political rhetoric or popular media since they do not translate into negative trade relations between the two nations (Zolf, 2007). In fact, the trade between Canada and America is quite significant since the borders between the countries are quite vast. Overall, our managers who go to Canada for establishing connections need to be aware of these few things when dealing with the Canadians. Cultural similarities are far greater than the differences The French-Canadian culture is very important to those who belong to it The culture is more liberal than America Some level of anti-American thought may exist The Case of China China is another nation which has a tremendous trade relationship with America but for us to do business with China requires many careful steps as compared to doing business in Canada mainly due to the language barriers which exist. Therefore, the central cultural difference that exists between China and the USA comes from the very basis of the culture i.e. language. While the predominant language of the labor in the USA is English, it is not used as the lingua franca in China and is only learnt by some as a second language. Translations of our mandates as well as our negotiations have to be carefully made since the message might not be there even if the right words are present. Bradhan (2006) suggests that the language barrier is particularly strong for production and industrial setups like our plans to set up the production house in China where the labor may not be fluent in English as compared to the individuals holding management positions. Therefore, the Chinese operations would require bilingual mangers that can explain our requirements to the labor forces of the company as well as communicate with us efficiently. A difference in the standard of living to which people in developed nations are used to as compared to those living in developing nations certainly exists as a part of the culture (Bean, 1994). Workers in America as well as many other western countries tend to place great value on their leisure time and have enjoyed a relatively high standard of life in the past while the majority of Chinese workers have lived in comparative poverty (Clark, 1996). Being sensitive to this difference is important because it can certainly affect the way individual salaries, increments and time based bonuses are handled by a company while they are being negotiated with employees (Kidger, 1991). At the same time, it must be noted that such situations may not remain true in the long term. Even in China, the trends of living with less could be on a downward slope as the population gets used to having more than their predecessors. A twenty year differential study for the economy of china shows that between 1981 and 2001 the percentage of working class individuals living on less than one US dollar per day decreased from almost eighty percent to less than thirty percent (Bardhan, 2006). Therefore, our company would have to carefully evaluate the cultural basis of salary structures in China. Negotiations in China take time since the cultural basis of the concept of time are different from those held in America. The pace of negotiations and talks between the two sides may not be useful with preset exact deadlines. The pace of negotiations can also be fast when it is to the advantage of the Chinese side but this must be recognized so that a deal can be struck which is beneficial for all parties rather than just one (LACLC, 2007). Chinese thinking may be dominated with paradoxes which can come up in business negotiations as well. Instead of using linier logic which the western mind is used to, a Chinese negotiator may look to combine several options while undertaking a negotiation between them. This is not evasion or even an attempt to deceive the other party since the negotiator is simply using his/her own culture to come up with a viable solution (LACLC, 2007). Therefore the combination of several options may be a part of the result in a negotiation process. Doing business in china also depends heavily on the idea of personal connections and relationships which have been established over time. In some cases, the relationship itself can be more important than the idea of doing business therefore it must be cultivated deeply before commercial transactions can be successful (LACLC, 2007). However, we must also be careful in terms of establishing relationships which become too close because then the idea of a contract between two companies takes a back seat to the relationship between two individuals who represent the company. In such cases, the contract between the companies is seen as little more than an agenda while the western negotiator may have considered them to be binding agreements. Signing a contract could even be considered a starting point of negotiations on the contract if it is a draft document since a final agreement could only be signed once a relationship between the parties has developed to a significant level (LACLC, 2007). Therefore, while doing business in china, it would be good if our managers saw the draft contract as a starting point rather than a document that only needs minor changes. Perhaps the most important aspect of doing business in China is the idea of keeping face. Face is kept by the Chinese if they are shown respect by their peers and is taken as a mark for personal honor. If our negotiators or business partners lose face during the process it is unlikely that the negotiations can be a success or even continue from that point. No jokes can be cracked about a person in front of others even in humorous nature. However, subtle praise now and then can improve the face of an individual but overdoing it would be seen as nothing more than insincerity (LACLC, 2007). In the final analysis, the employees who go to China for creating new business opportunities for us need to be aware of quite a few things when dealing with the Chinese and these include: The concept of face must be understood and appreicated Language differences can lead to the need for a local partner who can help in negotiations The concept of time is more fluid than the ones held by westerners The culture is more conservative than America The standard of living, although improving, is much lower than America A certain level of anti-western thought exists The presence of a westerner at the negotiations is seen as a sign of sincerity and respect Conclusion With these rules in mind, it is very likely that our negotiations and expansion towards the international markets would be successful. We know that International interdependence has increased exponentially since the 1970s with things like outsourcing and off shore operations becoming the norm rather than the exception. In fact, we might even be moving towards a global culture where local understanding of culture takes a back seat to the overall business culture where money is the ultimate motivator. High tech labor for example, is moving towards a global corporate culture which could further develop into something more unique with time. However, such a state is still far off in the future since societal norms and personal cultural backgrounds still have a greater influence than global business rules established by convention (Laurent, 1986). Till then, those who understand different cultures will always be at an advantage as compared to those who do not. Word Count: 2,263 Works Cited Bardhan, P. 2006, ‘Does Globalization Help OR Hurt the World's Poor?’, Scientific American, vol. 294 no. 4, pp84-91. Bartlett, C. & Ghoshal, S. 1998. Managing Across Borders: The Transnational Solution to Managing Across Borders, 2nd ed. Hutchinson, London. Bean, R. 1994, Comparative Industrial Relations: an introduction to cross-national perspectives, Thomson Business Press. Clark, T. 1996, European Human Resource Management, Blackwell Publishing. Goodrich, J. 2007, ‘Multiculturalism in Canada’, [Online] Available at: http://www.mta.ca/faculty/arts/canadian_studies/english/about/multi/index.htm#policy Kidger, P. 1991, ‘The emergence of international human resource management’, International Journal of Human Resource Management, vol. 2, no. 2, pp149-163. LACLC (Los Angeles Chinese Learning Center). 2007, ‘Chinese Business Culture’, [Online] Available at: http://chinese-school.netfirms.com/goldenhints.html Laurent, A. 1986, ‘The Cross-Cultural Puzzle of International Human Resource Management’, Human Resource Management, vol. 25, no. 1, pp 91-102. Levy, M and Powell, P. 1998, ‘SME flexibility and the role of information systems’, Small Business Economics, vol. 11, no. 2), pp. 183-197. Statistics Canada. 2007, ‘Canada Summary’, [Online] Available at: http://www41.statcan.ca/ceb_r000_e.htm UNDP. 2007, ‘HDI Rank by Country’, [Online] Available at:http://hdr.undp.org/statistics/data/country_fact_sheets/cty_fs_CAN.html Zolf, L. 2007, ‘Anti-Americanism and the Canadian Identity’, [Online] Available at: http://www.cbc.ca/news/viewpoint/vp_zolf/20060829.html Read More