Cross-Cultural Awareness for the International Manager - Essay Example

Executive Summary In the face of rapid globalisation and high level of cross-cultural dealings, cultural sensitivity and awareness of cultural differences has become a prerequisite for success in international business. Cultures differ on various dimensions and such differences impact on the business practices. Companies which try to implement global and standardised business practices regardless of such cross cultural differences will face many obstacles. Thus, its now a recognised and accepted fact that companies operating in the international arena needs to bring in a certain level of local perspective in to their international businesses incorporating cultural differences in to how business is conducted. This report assesses the operations of Muffin King Ltd, an international chain of bakery outlets that is fast expanding in the global market. The key objective of the report is to propose business strategies based on a high level of awareness and close insight of cross cultural differences among different international markets, which will yield the business a competitive advantage. 1. Introduction Achieving business competitiveness in today’s highly competitive globalised scenario is no longer possible through traditional success factors such as low production costs, high productivity and shorter lead-times, which have now become prerequisites to stay in business. Neither can global players in the market offer standardised product offers or implement standardised work processes and human resource management (HRM) practices across different nations in which they operate. Companies today have realised that to succeed in the global market place, a high level of awareness and a deep insight is required of the cross- cultural differences existing across the world (Broek 2005). These cross-cultural dimensions are a source of competitive advantage if understood and exploited to the company’s advantage. As global multinationals such as Ecare the Swedish furniture marketer, the MTV Broadcasting Company or MacDonald have realised, companies need to change and adopt their products and business practices to suit different cultural dimensions in order to stay competitive (Hill 2003). This report aims at evaluating the business operations of “Muffin King Ltd.” a UK based international chain of bakery outlets, and make recommendations which will exploit the sources of competitive advantages in the sphere of cross -cultural differences. 2. Company Overview “Muffin King Ltd.” is a UK based retail chain of bakery outlets, which has recently expanded to the international market. Established in year 1981 with a single outlet in Lancashire, the company grew in to over 170 outlets in UK. With its emphasis on product quality, freshness and speedy service the outlets operate mainly with built in production facilities. Muffin King with its premium brand image commands prices above the market rates and offers products ranging from pastries, breads and buns to cakes. They also undertake catering orders for parties and functions as well as being well known for its popular birthday cakes made to orders. With its local success, the company decided to open its international outlets in Germany in 1999 and expanded to 35 outlets within the past 6 years. It also operates 20 outlets in France currently. In 2003, the company decided to test waters in Asia and choose to enter the lucrative Japanese market. The Japanese venture with a local partner involved in super marketing provides Muffin King with a ready-made location and clientele to tap on to. However, the operations in Japan prompts the Muffin King management in to realising that their current business strategies ranging from, products, marketing, HRM to business process have to be re-analysed to suit the cross cultural differences in the global market place. With plans for entering markets such as USA, Brazil, India and China in near future, the company hires Global Insight Consultants to evaluate its business operations and gain a better understanding of the cross cultural differences in different countries. Consultant’s recommendations are focused on how the company can redesign certain business practices and strategies to derive a competitive advantage through such cross cultural differences. 3. National Culture and Impact on Business Culture influence and affects the business climate and the perception of international business and level of nationalism within a culture. These factors mould the national attitude toward the outside world and the level of accomodation of foriegners and foreign goods and ideas which is reflected in foreign policies, rules and regulations and other protective measures (Cundiff and Hilger 1988). Therefore, those companies that venture in to the global market should realise that they will not be able to fully replicate their original business models and practices in standadised fashion in other countries but will need to adjust and adopt according to the cultural differences in each country. 4. Analysing Business Implications of Cultural Dimensions There are many facets and dimensins to culture and studies on cross cultural differences have revealed that culutres of different countries differ markedly across these dimensions. Following analysis provides an insight in to how the cultural dimensions differ from country to country and how Muffin King’s business operations are impacted by such cross cultural differences. 4.1 Seven Dimensions Of Culture Considering the dimension of Universalism vs. Particularism, the universalism places greater importance upon the rules in the society while the particularism focus on the circumstances involved when making decisions about what is right and wrong (Trompenaars and Hampden-Turner 1998). When countries such as UK, Germany or USA, which are highly universalistic are considered, greater emphasis is placed upon business contracts, rules and regulations. However if countries such as Japan, China, India or even France are considered, they are more particularistic cultures where circumstances and relationships are considered in making decisions. Individualism & Collectivism dimension refers to the degree to which the concern is focused on self or on the group (Trompenaars and Hampden-Turner 1998) 1998). USA is ranked as the most indivdualistic culture in the world while UK, France and Germany are also among the top twenty countries in this ranking. Asian cultures such as Japan, China and India has a high focus on group (Hofstede 2001). Such group oriented cultures also remain highly nationalistic and aiming to preserve their own cultures. This aspect of culture prompts businesses seeking a competitive advantage to modify their product offerings to be more localised and cater to nationalistic views by sourcing rawmaterials locally at most times. McDonalds for example have developed “Maharaja Mac” a mutton burger to cater to the non beef eating Hindus in India. MTV channels is another such example where different localised program streams are used to cater to different cultural tastes across the world. Neutrality vs. Affectivism refers to the degree to which people display their emotions. While Neutral cultures may still possess a high level of emotions, their public display will be low compared to highly expressive cultures (Trompenaars and Hampden-Turner 1998). Implications of this dimension lie in the mannerisms of people not only in business negotiations but also in customer contact points such as service counters. Even in developing marketing communications this aspect should be considered so that a somber audience is not targeted with a too boisterous marketing message. Specific vs. Diffused cultures are concerned of the nature of relationships based on the private and public spaces of a person and the relationships. The Specific types will have little private space and greater public space. In contrast the Diffused cultures will allow for greater private space. The impact of this on business practices is that the in Specific cultures, the work and private life are strictly separated (Trompenaars and Hampden-Turner 1998). The official hierarchy does not apply in other social settings. Achieved Status vs. Ascribed Status is concerned with whether a person’s status in the society is achieved through own effort or whether it was ascribed or inherited. In cultures where status is ascribed to a greater degree, the family backgrounds and associations are of significant importance (Trompenaars and Hampden-Turner 1998). In an ascribing culture as Indian, Chinese or Japanese culture, seniority, age, gender is important in determining the status. Such cultural differences carry implications when applying performance appraisals for staff as well as desiging perfomance based reward systems. It also impact upon leadership choices. Sequential time vs. Synchronal time considers the perception of time in cultures. Some cultures tend to comprehend time a sequential and linear perspective while other cultures sees it as secular where past, present and future are interrelated. Those cultures that see time as sequential, places greater importance on punctuality, sequence of operations and speedy actions as time wasted is seen as time lost (Trompenaars and Hampden-Turner 1998). For businesses, the implications of this cultural dimension are manifolds. Timeliness, speed and efficiency of service, customer expectations on service speed, reliability of supply sources, as well as timeliness depend largely on such time orientations. It also impact on how marketing messages can appeal to synchronic cultures with depictions of “circle of life” while for sequential cultures, more of “present bound” messages are required. Internal vs. External orientation addresses how societies interpret the relationship with nature. Some cultures believe that nature can be controlled while others think that nature controls man. Internally oriented cultures as British, American or German culture believe in being able to control nature and their outer space explorations are an example of how they seek to control and dominate nature (Weiss 2003). Impact on the business practices is that internal cultures may decide to change market conditions and modify the environment while those business cultures based on external orientation may decide to phase out a product, seek to modify a product or organisation to fit with the environment. 4.2 Work Related Values As per the Hofstede’s model of cultural diversity, power distance is a dimension, which measures the degree to which people respect authority. In high power distant societies, the hierarchy is rigid and employees in different levels are treated differently. In high power distant culture such as France or India, Muffin King needs to consider these aspects prior to planning organisational structures and establishing level of authority (Hofstede 2001). Uncertainty avoidance is another parameter, which assess cultural behavior and reflected in business practices. Considering Muffin Kings markets current markets, French and Japanese cultures are highly uncertainty avoiding countries while India and America are lowest. Refer to Appendix I for details. This is a critical aspect for the company to consider when strategic business planning and decision making is involved. Individualism vs. collectivism, which was discussed under the Trompenaars model as well, concerns group orientation vs., individualism. This aspect of culture should be taken in to consideration when planning out marketing targets, reward structures as well as team building efforts. Masculinity Vs. Feminity is again a dimension where vast differences exist. Japanese culture is rated highest in this dimension as a masculine culture while UK, Germany and America falls in mid range. These differences will affect how effective female employees and managers will be in performing in these cultures. Such orientations also carry implications for designing marketing communications where audiences of highly masculine societies will not bond well with a highly feminine message vice versa (Hofstede 2001). 5. Recommendations – Competitive Advantage through Cultural Differences Having considered various implications of different cultural dimensions on business, the following recommendations are being, proposed to be incorporated in to the Muffin King business process so as to secure competitive advantage through the synergetic effect of all areas of business being targeted for improvement through the recommendations. 5.1 Recommendations for Human Resource Management Staffing policies – Currently Muffin King practices an ethnocentric staffing policy where majority of key management positions in overseas operations are being filled by UK expatriates. However, taking the collectivistic nature of cultures such as Japan and India where the company is expanding in to, it’s important to reconsider this aspect. Even countries such as France and Germany would be more welcoming of a polycentric staffing policy. A polycentric staffing policy decides to recruit and fill most positions from local labour market while having few key management representations from the international firm. McDonalds is a good example of a company, which practices polycentric staffing policy to achieve a competitive advantage through the local know-how that can be tapped on to through local management. In order to ensure success of management positions, and avoid conflicts, which cost the productivity of the company, its important that staffing in highly masculine cultures, avoid female managers in key positions. Organisational Structures – In a service industry as Muffin King’s business, its important to design flat and agile organisational structures. In designing organisational structures national cultural dimensions as individualism and collectivism should be taken in to account. For Japanese operations, quality circles and work teams can be implemented with group targets while this can be modified to indvidualised targets for British, German or American operations. Power distance in different cultures will mean that Muffin King should plan hierarchical positions as supervisors to suit operations in France or Japan while more team positions such as “Crew Members” for operations in UK or Germany. 5.2 Recommendations for Marketing Product Offers – Muffin King needs to offer a number of standard products and incorporate localised items as well in to its range of bakery items. For example, in Japan, China and India the birthday cakes can be designed to represent Chinese astrology signs or the Indian birth signs. These may not be the case in less astrologically biased cultures in Europe. The product specifications and quality accreditations should also be considered by Muffin King. For countries such as UK, USA and Germany such standards are very much important. With its national culture of quality consciousness, Japan too seek adherence to product quality established by their own authorities. Such measures will provide Muffin King with competitive advantage over others when operating in these different global markets. Language of communications – Marketing communications of Muffin King needs to be designed with a local flavor while maintaining the global brand image. Companies such as McDonalds or Coca Cola are examples of companies, which have designed their marketing communications to suit different cultural aspects in different markets they operate. For example, when Muffin King advertisements are produced for the Japanese market, which has a neutral nature in expression, the tone of the message has to be subtle and somber. It may also bring in extended family concepts prevalent in cultures such as Indian or Chinese when designing for those markets. Ascribed vs. Achieved status are also important to be considered when planning marketing communications to assess the level of inspirational values associated with patronising premium outlets such as Muffin King. Marketing & Business Strategies – In this aspect too, Muffin King will benefit if the head office undertakes only a limited amount of key corporate planning and allow local management to incorporate cultural differences in to their strategising process. For example, it’s likely that marketing strategies of European or American cultures are more aggressive and competitive as a result of their individualistic nature and the achievement orientation. However, in Asian cultures, it’s with collectivistic attitudes, coexistence with competitors is promoted than outright competitiveness. Internally oriented cultures as US or British will aim for changing market conditions and achieving their targets while Indian or Japanese cultures will promote adopting to market conditions. Thus, its best to allow for local level strategising so that decisions taken can be effectively implemented within the business environment in which the company operates. This will allow the Muffin King to achieve the competitive advantage stemming from localised decision-making and implementation. 5.3 Recommendations for Other Aspects of Business Technology & Quality are areas which some national cultures have developed a high reputation. For example, Germans are renowned for their technological expertise and this has become a key aspect of their national culture. In the same manner, the quality is an aspect of Japanese national culture (Hoecklin 1995). Gourmet food and delicacy foods are a part of French national culture. Muffin King can use its associations with these cultures and implement globally recognised business expertise of these cultures in standardised manner to achieve a competitive advantage. For example, by using equipment, plant and machinery from Germany, which is renowned for ultra modern technology, the Muffin King will enhance its image. By applying Japanese quality practices, it can enhance its process efficiency. Implementing Japanese quality practices will give the company high productivity, high quality and low defect rates. Associating with French expertise in food will benefit the brand image on global scale. 6. Conclusion Having considered the differences in cross cultural business environments across the world and of countries in which Muffin King is currently operating or hopes to expand in to, the report has provided recommendations for change. Such recommendations have been made based on studies of cultural differences, which highlights dimensions across which cultures differ. Through the analysis, its established that such dimensions of cultural differences can be exploited to the advantage of the company and will combinedly provide a basis for securing a competitive advantage to succeed in the global market. References Broek, V. V. (2005) The Affects of National Culture on Business-to-Business Relationships [online] Available from: [Accessed 04 August 2006]. Cundiff, E. & Hilger, M.T. (1988) Marketing in the International Environment. 2nd ed. Englewood Cliffs, N.J.: Prentice-Hall, Inc. Hofstede, G. (2001) Cultures Consequence: Comparing Values, Behaviors, Institutions and Organisations Across Nations. London: Sage Publications Ltd. Hofstede, G. (1994) Cultures and Organizations - Intercultural Cooperation and its Importance for Survival. London: Harper Ollins. Hoecklin L. (1995) Managing Cultural Differences: Strategies for Competitive Advantage. [n.p] Addison-Wesley. Ohmae, K. (1982) The Mind of the Strategist. Middlesex: Penguin Books Ltd. Trompenaars, F. & Hampden-Turner, C. (1998) Riding the Wave of Culture: Understanding Diversity in Global Business. 2nd ed. New York: McGraw Hill Companies. Weiss, J.W. (2001) Organisational Behavior & Change. 2nd ed. Ohio: South-Western Collage Publishing. Appendix I Table 1 – Work Related Values for 20 Selected Countries Country Power Distance Uncertainty Avoidance Individualism Masculinity Argentina 49 86 46 56 Australia 36 51 90 61 Brazil 69 76 38 49 Canada 39 48 80 52 Denmark 18 23 74 16 France 68 86 71 43 Germany 35 65 67 66 Great Britain 35 35 89 66 Indonesia 78 48 14 46 India 77 40 48 56 Israel 13 81 54 47 Japan 54 92 46 95 Mexico 81 82 30 69 Netherlands 38 53 80 14 Panama 95 86 41 44 Spain 57 86 51 42 Sweden 31 29 71 5 Thailand 64 64 20 34 Turkey 66 85 37 45 United States 40 46 91 62 Adapted from: Culture’s Consequences, Beverly Hills: Sage 1980. Achieving Competitive Advantage Through Cross Cultural Differences Name : Course Title : Date : Table Of Content Content Page Executive Summary 01 1. Introduction 02 2. Company Overview 02 3. National Culture and Impact on Business 03 4. Analysing Business Implications of Cultural Dimensions 04 4.1 Seven Dimensions Of Culture 04 4.2 Work Related Values 06 5. Recommendations – Competitive Advantage through Cultural Differences 07 5.1 Recommendations for HRM 07 5.2 Recommendations for Marketing 08 5.3 Recommendations for Other Aspects of Business 10 6. Conclusion 10 References 11 Appendix I – Work Related Values for 20 Selected Countries 12 Read More