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Cultural dimensions in international business
Characteristics of culture in international business
Characteristics of culture in international business
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A Local Foreign Manager is Best for Managing Foreign Subsidiaries
For many global organizations, or organizations that produce or sell goods or services in more than one country, a difficult question is how to develop and place managers in foreign operations. Some people believe organizations should let foreign managers run foreign subsidiaries because of the large differences among national cultures while others believe that domestic managers should be trained to run foreign subsidiaries because of loyalty issues.
Nation culture is the particular set of economic, political, and social values that exist in a particular nation. This culture effects all aspects of global organizations operations. Foreign exchange rates, banking and accounting laws, and tax codes can all affect the profitability of foreign subsidiaries. These rules and regulations vary from country to county. The way Japan accounts for good will varies dramatically from the way the United Sates regulatory agency demands it be recorded. In some countries politics play a larger role than others. In sm...
Globalization can be defined as “making worldwide in scope or application”(1). In this comparison of the global corporate culture of Northwest Airlines and American Airlines several areas will be addressed. The strength of the global culture with-in the companies. The fit of the company to the global marketplace, and the adaptive ness or the empowerment of the employees will be examined and compared. Perhaps more important, than whether they currently have a global atmosphere, is whether they can improve or create this atmosphere. A comparison between the two airlines will be made on their mission statements, information dissemination, global-mindedness, career paths, and the use of cultural differences as an asset and if a worldwide training system is in place. A conclusion will then be made as to which corporation has the best organizational composition to compete in the global market.
Japan and the United States are both well-recognized nations in the business world. And both have been trade partners for several decades. However, there are many differences in business and social practices between these countries. Both countries do focus on excellence and competition in business. And social status and education also have a strong affect on probable success in the work world. But, there are a few differences in philosophy, cultural actions, and business practices.
Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations. Second Edition, Thousand Oaks CA: Sage Publications, 2001
In business, creating a culture of ethical behavior and productivity are two of the most important elements in daily operations. There are deferring opinions on how to establish those standards. One standard is universal in which human rights are general and should apply to every human being or having a one-size fits all standard of practice (Hugh, M.C., 2002). For example, an organization could great a set of ethical standards that universal and standard to apply to its members. However, the opposing view is cultural relativism, where the view that all values are meaningful only within specific cultures (Hugh, M.C., 2002). In other words, each culture defines what is right and what is wrong. Applying this to business, an organization can create ethical standards that are specific to their service line and provide specificity to members about their services, behavior, and social
Geert Hofstede’s research in this area has been largely accepted as the standard for understanding culture within nations for study in many different disciplines including sociology and management research, among others. His studies because of their vastness in scale, gathering data from more than ”60,000 respondents in seventy different countries,” makes his research extremely reliable and foundational to research in this area (Hofstede, 1984, 1991, 2001).”
These include following the firm’s own values to the latter, adopting the host country’s values and business practices and abandoning operations in the host country. Organizations should endeavor to integrate their ethical values and business operation practices with universal ethical principles as well as with local cultural norms and business practices for success, (Hamilton, Knouse & Hill, 2008). Firms have a responsibility to respect the host country’s cultural legitimacy for following particular business practices. Firms that adapt their business practices to those of the host culture are likely to encounter low costs of introducing new practices, (Hamilton, Knouse & Hill, 2008). Moreover, incorporating host country values is a source of leverage to the firm since respect of local ethical values and practices enhance the reputation of the firm as one that respects, values and promotes the welfare of the local society and its values and cultural norms, (Hill et al. 2006).
The authors identify that there are three main factors that effect how people act, think, and make decisions. The first is religion, in some countries faith plays an important role in all areas of life in the culture of the country and can influence many of their customs and behavior. The second factor is that of fact. In many countries their greatest desire is to find the best deal and the best product or services. The final factor is feeling, if a culture is based on feelings the people will conduct business accordingly. For example it would be essential to make a personal connection with this type of individual.
The essay will describe the concept of organizational culture and national culture. In the course of trying to describe both types of culture; subcultures and socialization examples will be discussed. A few real world examples will be mentioned in an attempt to further explain the topics in the essay. There are many similarities to how organizations and nations are structured and shaped by culture. The concept of cross-cultured management and multinational corporations are also a concept that organizations use to explain the behavior of their culture. Finally the essay will discuss how organizational and national cultures are interrelated. The interrelationship can be explained in the cultural dimensions and how the influence behavior and management.
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.
International businesses are also finding new ways of increasing diversity abroad. Instead of using expatriate employees as management, they are starting to hire locals. Companies that operate abroad are realizing that using expatriate employees is not a permanent solution. They are often expensive, and are not capable of translating their skills into the new environment. In a company that operates globally, it is important that the company knows how to relate to the local markets, and a great way to do this is by hiring local talent. Hiring locally is cheaper, there is not a language barrier, and they are accustomed to the business environment in the area(5). They can also help the business by providing a new perspective into international markets, and offer ways that the company can improve their diversity abroa...
Value systems across cultures can help to explain the differences in behaviour amongst people from different countries (McCort and Malhotra, 1993), which tend to stay with people over time. There are many different cultures and in order for an organisation to be successful, they need to take many different into account to ensure that they are successful in different countries and cultures. Cultural values appear to have considerable effects on management decision making processes (Clark, 1990; Ken, 1985; Picken, 1987; Shane, 1988; Swierczek, 1991). Culture is defined as “the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, ways of living together, value systems, traditions and beliefs” (Unesco, 2002).
The Japanese are well known for their unique culture, which has been established as a complex and multifaceted system since ancient times. Most importantly, they are known to set a high value of protocols and etiquette during any type of business affairs, which applies to foreigners as well. When an external company wishes to conduct business with any Japanese companies, it is crucial for them to firstly understand the major elements and dimensions of the Japanese culture, as well as their impact on the way Japanese companies conduct their business. Using Geert Hofstede’s six dimensions, the unique Japanese national culture can be exemplified to hold several unique characteristics.
1a) FrieslandCampina, has its business practice influenced by the cultural norms of its home country, as well as foreign markets. The following graph provides an overview of the scores of the Netherlands using Hofstede’s five dimensions of culture.
The differences in other cultures vary from beliefs to ways of life, or norms, of the different societies. The importance of understanding and sensitivity to other countries’ differences is crucial to a business’ success. “Lack of familiarity with the business practices, social customs, and etiquette of a country can weaken a co...
In the wake of the current globalization trend, modern organizations need to improve their communication and cross-cultural communication in order to enhance chances of surviving global competition. One of the ideal ways through which multinationals can attain this objective is through training global managers. It is important for the training to encompass both human resource management and complexities inherent in global culture. In addition, global businesses should be more culture sensitive via such means as understanding and appreciating other people cultural