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Cultural challenges in international business
Culture dimension in international business
Culture dimension in international business
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The importance of culture in International business today cannot be underestimated and it is imperative that attention is paid at strategic, organizational and the individual levels. The “Blue Ridge Spain” case elucidates these at all three levels. My analysis of this case is from the perspective of the Spanish corporation, Terralumen S.A. National culture is the shared implicit beliefs and tacit values that truly differentiate one cultural group from another. I will be using Geert Hofstede’s frame work to deconstruct this case into its separate dimensions.
On the strategic plane, Terralumen is a family owned company that has expanded into consumer products via joint ventures (JV) with different American companies. Their key strength lies
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BR was sold to Delta Foods in 1996 for US $2 billion. At this time, it was one of the largest fast-food chains in the world generating sales of US $6.8 billion. DF purchase of BR brought in a new cultural paradigm. DF is an individualistic, aggressive growth company with brands they believe are strong enough to support entry into new overseas markets without the need for local partnership. The DF strategy is one of direct acquisition and JV’s were not part of their strong suit. DF strategic implementation is based on hiring local managers directly or transferring seasoned managers from their soft drink and snack food divisions. The DF disdain for JVs is clearly reflected by their participation in only those JVs where local partnering was mandatory (e.g. China) to overcome regulatory barriers to entry. JVs had been the predominant strategy for BR which was unlike the DF outlook. Terralumen’s strategy was misaligned and out of sync with the DF strategy. This was unlike the complementarity that existed with BR’s strategy. This misalignment began to affect the JV relationship that had worked well with BR in the initial years. The failure of Terralumen and DF to recognize this fundamental cultural difference between their operational strategy styles i.e. Individualistic and Collectivism leads to their inability to proactively create steps for better alignment in the early period after acquisition, creating uncertainties and difficulties for both corporations. There is a lack of communication and virtually absence of trust between two new partners. DF appeared to be flexing its muscles in the relationship and using a more masculine approach compared to Terralumen’s more feminine approach. Both the corporations are strategically involved in a complex situation where they appear reluctant to address the issues at stake and move ahead together. The DF strategy of
Del Rio was established in 1933, and it is located in California. Its owners are Bob and Maria. Del Rio is an agricultural business where processed canned products and fresh produce are sold. Both owners have the same agricultural background which is why they are doing this business. They are running Del Rio successfully. When the world was going through a great depression, many businesses had tough time to survive. However, Del Rio Foods, Inc. was in stable condition even though they did not make a lot of money. From 1987 to 1990, their Income Statement shows that they had a steady increase in their net income each year. The CEO’s objective is to expand his business as far as into east coast. Del Rio acquired a couple of farms and built them as its main facility and a distributor. Joint venture was formed with few wholesalers and retail stores. Additionally, Cape Fear and Wilmington plants were bought to increase productivity. The mission statement, SWOT analysis, and action plan are discussed further.
My organization, Trader Joe’s, is not an international business. Their stores are all located in the United States; therefore, I chose Whole Foods, who is a main competitor of Trader Joe’s for this assignment.
TCBY has been a frozen treats product innovator from the day its first shop opened in Little Rock, Arkansas in 1981. The great-tasting, low-fat frozen yogurt concept received an enthusiastic response from an increasingly health-conscious public. Its trendy new product propelled the company to the forefront of franchising, and was the ‘first in a long line of ground-breaking menu items that anticipated consumer preferences and continually refreshed the TCBY concept’ (Conlin 2001, p. 133). But TCBY products are just one of the reasons that thousands of operators have concluded that a TCBY franchise is the preferred opportunity in branded frozen treats, and a dynamic partner in any co-branded concept. However, TCBY is facing a lot of problems, both internal and external, during the difficult period from the late 1980s to the early 1990s, especially the problem with its franchising system. The purpose of this report is to provide a comprehensive situation analysis of TCBY, with special reference to its franchising system, and identify several concerned issues of TCBY and its franchisees, and how these issues have negatively affected the relationship between them. Furthermore, this report also provides three recommendations in the attempt to diminish these concerned issues and better maintain the relationship between TCBY and its franchisees, and most importantly, help TCBY to increase the company’s performance and achieve their strategic goals in the next few years.
Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of Colorado and California Pizza Kitchen – in order to expand the company’s restaurant business. If indeed PepsiCo decides to pursue the acquisition of one or both, they must decide how to align each of these business units in its historically decentralized management approach and how to forge relationships between the acquired business units and existing business units. In their evaluation, Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired business units, but must also take into consideration that the additional business units will not hinder the profitability of the existing business units.
Unfortunately, this intercultural miscommunication does not only happen in personal relationships; it also occurs in many international deals with millions of dollars on stack. One such example is the famous case of Mitsubishi Motor Manufacturing in America. In this paper, I will try to analyze the Mitsubishi case as a consequence of intercultural miscommunication between American men and American women cultures, and the Japanese and American cultures.
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
Cultural Distinctions by Arlene Dávila The passage of time, advancement of technology and evolution of the world of business has had a tremendous impact on the organization of societies around the world the major systems of societies such as culture. The perspectives of culture have been revolutionized and redefined by changing business dynamics. For instance, culture has been divided into innumerable dynamics of official” and “popular” culture, and “authentic” and “commercial” culture. The involvement of the corporate sector in the cultural aspects of the Puerto
Ted Dorman's task on taking the assignment of managing a factory to aid in globalizing the business of his company to Mexico turns out to be a lot more work than expected. This analysis strives to explore the ways in which American and Mexican business practices differ and how those business cultures can be integrated to ultimately achieving a profitable, long survived organization. Ted Dorman is viewed as a family man with
“Going forward, the company is well positioned for future growth, and Nigel and his team remain focused on driving franchisee profitability and delivering shareholder value” shares Lead Director Raul Alvar...
Companies all over the world varies but yet shares a common challenge, that is to solve problem not only effectively and efficiently but also creatively. The P-O-L-C framework which stands for Planning, Organising, Leading and Controlling plays a major role in both the company’s survivability and success. The SWOT analysis looks at both internal and external factors that can affect the Starbucks’s performance. The purpose of this report is to define and analyse how Starbucks respond and should have respond to the change of its external environment on the cofee market,This report will also identify and disscuss how The P-O-L-C framework and can help starbucks to compete and reduce the loss of their failing peformance in the Australian market and how SWOT analysis helps to define some externalities that can be a threat to Starbucks.
Critics of Hofstede’s work argue that Hofstede’s study is flawed and outdated; for example, Hofstede’s analysis has a static and polarized vision of culture and is believed to be stable over time, whereas now with globalization, internationalization and convergence of cultures, cultures are rapidly changing (Fang 2009). Despite Hofstede’s work being nothing short of controversial, his work on culture, which Hofstede (1980, 1981) defines, as “the collective programming of the mind distinguishing the members of one group or category of people from others,” is still the most cited in the field of cross-cultural management in existence (Bond 2002). Furthermore, Hofstede’s groundbreaking research has successfully allowed for other cross-cultural scholars to comprehend and grasp the challenging concept of national cultural stereotypes in measurable and concrete terms (Fang
jeswald w. salacuse (2) 005 ‘The Top Ten ways that Culture can Affect International Negotiations ‘. Available from < http://iveybusinessjournal.com/topics/global-business/the-top-ten-ways-that-culture-can-affect-international-negotiations#.Uzwdh6iSySp > [ 3 April 2014]
Lewis (2012) suggests that multinational corporations should purpose to fill the ranks since the deviations and differences are a reflection of the culturally diverse global market. The global market serves diverse customers of different nationalities and incorporates the ideas from a diverse human resource pool in the formulation of policies and directives to determine the operations of a multinational organization; this is the most promising way for MNCs such as Microsoft. An international organization should bank on diversity since the rewards it ploughs back from the international exchanges of ideas and skills are more significant and are more of an advantage than a shortcoming. The three cultural divisions of organizational cultures reflect the differential of people’s lifestyles despite all of them being human beings (Lewis, 2012). Organizations, just like human beings, organize their operations to conform to values
Organisational culture is one of the most valuable assets of an organization. Many studies states that the culture is one of the key elements that benefits the performance and affects the success of the company (Kerr & Slocum 2005). This can be measured by income of the company, and market share. Also, an appropriate culture within the society can bring advantages to the company which helps to perform with the de...
One East Asian country and North African country are compared using Hofstede’s six dimensions of cultures to find similar results in four of six behaviors but an extreme difference in how each society keeps a link with the past while maintaining the present and future. The cultural difference between South Korea and Morocco are most obvious in the dimension of Long Term Orientation, and each approach business in the most opposite way. Analyzing the comparison of these two countries gives a further look into their particular culture and the impact it has on business choices. Understanding how culture is an important aspect of an entity leads to successful business and leaders.