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Challenges encountered by multinational corporations
Challenges facing multinational corporations
Geert Hofstede’s ideas on national culture
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In society today, we are observing a rapid increase in globalisation and economic integration. Internationalisation is now a key component for companies’ success in todays highly competitive market. My essay will discuss four Geert Hofstede’s cultural dimensions theory and discuss problems that businesses are confronted with when working across foreign borders. I have selected the New Zealand based gourmet hamburger chain Burgerfuel as my case study to relate and discuss Hofstede’s model in relating to the expansion of the business into the United Arab Emirates Market (UAE) market. Culture may be defined as the totality of the mental and physical reactions and activities that characterize the behaviour of individuals composing a social group collectively and individually in relations to their natural environment, to other groups, to members of the group itself and of each individual to himself. It also includes the products of these activities and their role in the life of the groups. The mere enumerations of these various aspects of life, however, does not constitute culture. It is more, for its elements are not independent, they have a structure (Boas, 1911).This definition of culture is highly relevant when discussing why businesses may encounter issues when working with foreign cultures. Due to increasing globalization it is crucial for companies to educate themselves and maintain an element of sensitivity when conducting business with foreign nations. It is crucial that companies identify with and understand that all countries have different values, beliefs, languages and religion. The concept of globalisation implies, first and foremost, a stretching of social, political and economic activities across frontiers such that ev... ... middle of paper ... ...y believe that as a multi-national company, Burgerfuels’ success has been an inspiration for small business around the world looking to expand into foreign markets. Their perseverance and understanding of the numerous cultural barriers between New Zealand and the United Arab Emirates has been the key factor in their success in the region today. I believe that Burgerfuel will continue to grow into the future and expand into more countries around the world. They have proven their ability in one of the strictest and most regulated regions in the world. In conclusion, in order for companies to find success and growth in expanding business to foreign parts of the world it is invaluable that they are educated on the prospective nation’s culture, values and beliefs. Burgerfuel is a prime case of a small privately owned company that has generated great success by doing so.
According to Hofstede’s cultural dimensions, Mexico has high scores of Power Distance, Uncertainty Avoidance, and Masculinity. We can tell from the scores that Mexico is a hierarchical society that people tend to work and live in orders, which means that there are levels among people and they try to fit into their own positions; people try to avoid unknowns and unwilling to take risks; and gap of values between men and women does exist in Mexico, competition, achievement, and success are emphasized in this society so people want to be the best instead of liking what they do. With low scores of Individualism and Long-term Orientation, Mexico is considered a collectivistic society with a normative culture. It emphasizes loyalty and strong relationships
Each country has its own culture, with subcultures inside the dominant culture (Schaefer, 2009, p.69). “Culture is the totality of learned, socially transmitted custom, knowledge, material objects, and behavior” (Schaefer, 2009, p.57). Values, artifacts, and ideas are also part of culture (p57). With globalization there is the integration of these cultural aspects, as well as language, social movements, and ideas throughout the world (Schaefer, 2009, p.20). Internationalization helps with this integration. Internationalization is the process of planning and implementing products and services so that they can easily be adapted to specific local languages and cultures (Linfo, 2006). Numerous American retail firms have expanded to other countries. Many have been quite successful due to their internationalization. However, failure to study the culture, retail practices, and consumer market of the country they intend to expand to can be quite costly. Although Home Depot is one of the world’s largest home improvement stores, their expansion to Chile cost them enormous financial loss, resulting in their divestment (Bianchi & Ostale, 2006, section 1, para3). This paper will look at successful international expansion of Home Depot stores, analyze what mistakes were made in Chile, and make suggestions of what could have been done differently.
When the term “Globalization” is discussed, most academics, scholars, professionals and intellectuals attempt to define and interpret it in a summarized fashion. My main concern with this approach is that one cannot and should not define a process that altered decades of history and continues to, in less than 30 words. Global Shift is a book with remarkable insight. Peter Dicken rather than attempting to define the commonly misused word, explains Globalization in a clear and logical fashion, which interconnects numerous views. Dicken takes full advantage of his position to write and identify the imperative changes of political, economic, social, and technological dimensions of globalization.
Some transnational corporations have accommodated the needs of unique individuals and cultures rather than adopting the concept of a global identity. This has been demonstrated by the popular American fast food chain McDonald’s, and their response to local cultures. In India, lamb or vegetarian burgers are served in response to Muslim and Hindu dietary restrictions. Not only do they separate the food preparation so the meat never makes contact with the vegetarian food, they also separate the menus, so vegetarians don’t even have to read about meat dishes. This illustrates how seemingly ruthless companies value the individual consumer and the different lifestyles found worldwide. Successful transnational corporations have embraced hybridization by expanding their companies to other countries and blending elements of the country’s specific culture into their business plan. By doing this, corporations are promoting individuality and as such helping to shape a national identity rather than simply accepting the concept of a westernized global
In this essay I will give a detailed explanation of what sociologists mean by the term ‘globalisation’ and how they have tried to explain it.
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.
In conclusion, the difference in culture can be the determinate factor to do business internationally, successfully. With this in mind, it is imperative for managers that conduct business abroad or businesses that want to expand its operation overseas. To study the county’s culture and the society values and norms before take off in this venture. By knowing a little what to expect these businesses can adjust, and inter graded better, its way of conducting business with other countries.
... conclusion, to compete with the intense competition in today’s fast-food market, KFC China differentiates the company by being innovative. Three significant innovative strategies are localizing the menu, understanding the Chinese culture, and hiring local management. KFC demonstrates that one size fits all approach in the global market does not always work. Many typical Western approach to foreign expansion is to deliver the same products or services as their original establishment. For instance, Domino’s Pizza, an American restaurant chain, nearly failed in Australia due to the underestimation of the need to adapt their offerings to the local tastes. KFC China offers important lessons for global firms. It is essential to know that to what extend the company should keep the existing business model in emerging markets and to what extend it should be thrown away.
In the assigned readings, few concepts and ideas have been discussed: Cultural Imperialism, Globalism and Local Cultures, Transnationalism and the Multi-local Corporation and McDonaldization versus Localization. The reading also provided a brief history (the timing) of McDonald’s expands in East Asia and also explained the Rationalization of McDonald’s (i.e. McDonaldization) and it’s Local Sensitivities.
The word 'culture' is often described in terms of concrete ideas or social artifacts. Gary R. Weaver describes some common conceptions such as "good taste," "art or music," or "something that people in exotic foreign lands had."1 However, culture in the context of international assignments relates to how people perceive the world and the influence this perception has on their actions. It is culture on the interpersonal level. Different cultures can perceive the same thing differently, which leads to miscommunication and misunderstanding when one crosses into another culture not their own.
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...
Basically, Hofstede’s cultural dimension is divided into five dimensions along which national culture could be described: power distance (PDI), individualism-collectivism (IDV), masculinity-femininity (MAS), uncertainty avoidance (UAI) and long-term orientation versus short-term normative orientation (LTO).
I selected an international business article from The Wall Street Journal titled “McDonald’s, Pizza Hut Cook Up New Plans for India” for my article summary assignment. This article is relevant to our course because it covers American fast food companies expanding in India. In order to be successful in foreign markets, it requires adjusting to the foreign country’s culture and customs in order to be successful in a global market. It also requires innovation and adaption to serve the local people in foreign countries, and they need strategies and a vision to address current trends and local competition.
There are many differences among cultures in the modern world. Certain cultures hold high regard for specific values and distaste for other values. This difference in values can effect international business positively.
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.