Management Consultancy Business in China - Assignment Example

Management Consultancy Business in China Introduction Business leadership of a management consultancy company has elected to open a new business office in the People’s Republic of China. This represents a significant volume of challenges to the consultancy business, in terms of working with different political, cultural, and other important considerations which can cause either disruption or assist in running a successful consultancy company in this new, foreign region. This report highlights the different external environments which will likely affect the new business office as well as offering a strong focus on cultural issues which might face the firm. Environmental analysis One expert in international business proposes what the author calls the four Ps of corporate political activity. First, it is proposed that the business which is opening in a new, international environment should consider how the political issues actually arise in order to determine the best method of dealing with these issues1. The new consultancy office will face no significant issues in terms of political activity in this region. This is supported by the notion that today’s more liberal Chinese leadership does not attempt to restrict foreign business leaders from entering the Chinese marketplace, rather this political leadership attempts to build relationships with incoming foreign businesses in order to enhance the country’s economic conditions2. What is suggested is that the political landscape is much more Westernised in which regulatory entities in China understand the added value of foreign businesses, especially those which do not import products, to assisting the national economy from a business perspective. Research evidence did not uncover any unusual or notable political aspects which would hinder business, especially a service-oriented consultancy business, in any measurable way. Since the consultancy firm will not be exposed to tariff restrictions, since there are no products being imported, it is expected to enter a market environment which promotes foreign business success and values partnerships. In terms of economic issues which might face this consultancy business, the Chinese environment, today, maintains a strong focus on greener business principles3. This appears to affect virtually every sector of business in all different types of industries. Research did not uncover any government-sponsored programmes which offers taxation breaks to companies who maintain a green focus on the environment. Therefore, one aspect which must be considered is the notion that any government-induced initiatives aimed at businesses for green business practices do not exist, therefore compliance with green initiatives could be an operational expense which will be routinely experienced in the Chinese environment. This could involve in-office paper reduction efforts, the disposal of certain technologies (cellular phones, computers), or any other green-focused programme which could cause budgetary restrictions to this consultancy business. Additionally, there appears to be a great deal of investor pressure placed on firms in the Chinese environment, with much emphasis on transparency in terms of earnings and business strategy4. Today, this would not be a significant issue for the consultancy firm, as it is not traded publicly on the stock market. However, with this new expansion plan in place, this being the new Chinese office, future plans to take the business public could experience significant business disruption or complication. For instance, if investors are demanding that the business devote a portion of its financial resources to a specific investor-minded agenda, the business, from a budget perspective, could have significant difficulties in developing a sound strategic plan. The above situation might not, at first glance, seem to be an external economic issue in terms of the Chinese environment, however since the new consultancy office will be established in the local Chinese market, future investor-related scenarios create an economic climate which is a risk to the business. This should be considered when determining the economic environment. Also in terms of the economic environment, China maintains a high gross domestic product and there is considerable stability from a global financial perspective.5 By this, China maintains a well-educated workforce and the ratio of imports to exports is within a global, acceptable ratio. For this new consultancy office, entering a region where there is financial stability represents much less risk to the business in many ways. The business may not be inundated with cash-strapped taxation increases on the new office or any other financial burden imposed by a local economy which attempts to recover costs by adding new tax-related payments to the Chinese government. In China, nearly 70 percent of its residents have access to the internet6. This represents a significant opportunity for the new consultancy business as the new office generates most of its services via online and other mobile technologies. Emerging technologies such as Wi-Fi and Bluetooth Internet-capable mobile devices will allow the new consultancy office to have instant access to a variety of business partners and foreign-hired staff members to ensure a more efficient communications system. Unlike other less-developed regions, inability for people to access internet technologies can limit many aspects of business, from online promotional activity to other marketing functions. Since the new consultancy firm will be utilising different promotional literature in order to attract new market opportunities, this is yet another strength of the technological environment in China. Another aspect of the technological environment is the well-developed infrastructure which exists in China, from state-of-the-art buildings to the physical distribution network (i.e. roadways and other transportation technologies)7. These technological improvements have sophisticated the process of performing business, such as meeting with clients in different Chinese regions by having a quality set of roads by which to ensure rapid transport of consultancy representatives and without burdening the travel budget of the new consultancy office. As with other less-developed regions, those with poor roadways and poor travel options, this is a positive aspect of the Chinese technological environment which will only serve to enhance the quality of business operations at the firm. Research did not uncover any notable issues with the legal environment as it would pertain to the consultancy business. Case study research was attempted, through various secondary resource materials, in order to identify any legal situations which have occurred in this area for other foreign businesses. Since the legal environment does not appear to cause detriment to the success of business, it should be assumed that legal aspects need not be considered unless they are encountered after the business office has been established. Cultural concerns One business professional identifies, as a strength for the new consultancy office, that because of other foreign businesses which have established remote locations in China, the cultural environment in China is considered to be a “melting pot of multicultural people”8. People of many different sociological, religious, and cultural backgrounds work in China and are active participants in performing multiple areas of business. Therefore, there is going to be a quality workforce from which to recruit new employees for the consultancy office, should this need arise. At the same time, company budgets will not be impacted by having to train staff members hired from the local region in aspects of cultural diversity and understanding how to perform business with diverse attitudes and beliefs. This is a strength for the business not only in terms of finance and budget, but in ensuring that workforce members can interact successfully without cultural barriers. However, despite this strength, there are also significant cultural differences between the European marketplace and the Chinese marketplace which should be considered. First, Chinese citizens have a much stronger focus on receiving personal leisure time over that of being strongly business-oriented9. In our European marketplace, the consultancy firm has established a performance-minded business, which rewards individuals for their focus on excellence in business focus. Many staff members work above and beyond expectations. However, because the Chinese culture is leisure-focused, there may not be the dedication required on behalf of locally-hired employees which is so strongly a part of the consultancy’s organisational culture. It would appear that Chinese employees will expect more personal breaks during business and shorter working days to commune with family members. This should be considered as a potential risk to the business when determining which variety of organisational culture should be considered for the new office in China. Chinese works, also, are very collectivist in nature, which means that they value the opinions of group members much more than expecting to be rewarded on an individual basis10. In Europe, staff members in most organisations, based on local culture, are more individualistic in business, meaning that they value unique insight from individual employees and expect to be rewarded accordingly. In China, workers will be expected to be more group-focused and often look to the peers and colleagues for acceptance and opinion. This might represent a challenge when it comes to the new, foreign office setup due to the fact that employees will tend to go with the larger whole when making decisions and would thus, likely, not provide innovative solutions to unique business problems. The management consultancy firm in Europe maintains a strong internal culture where ideas are brainstormed in meeting environments. Should this type of business environment be considered, it is likely the local market employees will provide less resource to the new office in the long-term. Chinese workers are also score very high in uncertainty avoidance, as part of Hofstede’s cultural dimensions, meaning that these professionals will often avoid situations where risky solutions could be the outcome11. It is relatively commonplace for employees in the European market to take more risk when it comes to decision-making, even in terms of marketing, investment, and overall business direction. Sometimes the riskier decisions will return better results, which is something that has been found to exist in the history of the consultancy firm. In China, however, high scores in uncertainty avoidance means that there may be organisational resistance to risky business solutions when they are proposed by senior leadership. When dealing with clients of the business, there may also be issues with the Chinese business leaders rejecting any decision with an element of risk, thus causing potential problems with future strategic alliances or similar business partnerships. Chinese people also seem to be very focused on modernism, as they attempt to break away from more traditional beliefs which existed during the country’s communist state. This is apparent in the modern exterior of buildings and other structures in the Chinese landscape. One business expert familiar with this environment suggests that in China, people are more likely to remain with the business (retention in HR) if the facility, itself, is considered attractive and well-suited to their needs12. This will involve conducting considerable research before designing the interior or exterior of the building to ensure that it is culturally-acceptable and fitting to unique employee needs hired from the local market. In order to maximise effectiveness, and also enhance recruitment and retention efforts of the human resources division, it would seem that from a cultural perspective, the new office facility must be catered to the local market and also appeal to modern lifestyle values. Lifestyle in the local marketplace In the capital city, as with most of mainland China, from a cultural perspective, workers and citizens alike will be much more appreciative of receiving explicit responses to questions and in general discussion13. This would mean that the Chinese people are not very reserved in their choice of responses in casual or professional discussion and will also let the facts of their opinions and thoughts be given. Unlike in the European marketplace, where it has been reinforced to business leaders to somewhat soften bad business news by first highlighting the positive aspects of the situation prior to delivering the problems to individuals. In China, this would not be an acceptable practice In due to their desire to have explicit answers, therefore how business leadership (or in general culture) handles responses will likely impact perceptions which could cause relationship harm. In order to personally prepare for this aspect of culture, leaders will need to abandon some of their Westernised principles of communication to provide more exact and explicit responses in order to build respect from the local community members. Despite the many different cultures and lifestyles which one can expect to find in China, there is also a cultural issue surrounding how the Chinese people view the male and female in society. Even with a more modern and liberal cultural attitude, these people still score highly in Hofstede’s masculinity/femininity index, therefore the culture seems to lean toward respecting the views of the male primarily. For any female business leader, this could represent a problem both in the professional world and the social world when attempting to project their unique thoughts and ideas. If masculine values are most primary, then communications styles would need to be considered and readjusted in order to appeal to this cultural value. This does not necessarily mean that European females will not be respected, however in a business or social meeting in which the volume of men outweigh women, they may find themselves lost in the discussion or not taken as seriously as their male counterparts. Conclusion Clearly, there are potential business risks to the company when opening a new office in China, both in terms of the external marketplace and also how culture is defined in this area. The exact business models which are being utilized at the European offices will require complete restructure or a simple readjustment based on the severity of risk proposed by any environmental or social issues. Though long-term it might not be impossible to assist foreign-hired workers in adopting more Westernised values, in the short-term outlook any potential risks to the business should be considered prior to launch of the new, foreign organisation. Despite any identified problems in China, the environment is largely beneficial to business activities and transition should not be considerably difficult for the new office. Bibliography Barton, Emily C. 2007. “Technology in China”. http://businessforefront.com/china/article18765487/source.html. Accessed 19 Jul 2009. Dahan, Nicolas M. 2009. The four Ps of corporate political activity: A framework for environmental analysis and corporate action. Journal of Public Affairs, London. 9(2): 111. Fan, P. and Zigang, Z. 2004. Cross-cultural challenges when doing business in China. Singapore Management Review, Singapore. 26(1): 81. Greenwald, Steven F. 2008. Legal and regulatory: The green trade-off. Power. 152(6): 20. Hu, Wang C. 2008. Today’s Economic China: Changing Virtues and Values. www.sociologyexplore.org/mission/under/standing/asp?refer.html. Accessed 17 Jul 2009. King-Metters, K. and Metters, R. 2008. 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