International business means either operating on the global platform or utilizing the prospect of globalization to increase the business efficiency and enhance the competency level (Gurung and Prater 2017). It is also an interesting point that what all compels an organization to move to international locations. They do it to widen up their market to increase their customer base and most importantly, to enhance their market shares and maintain a progressive profitable venture (Gurung and Prater 2017). They also move to international locations to access the resources like technological advancement and the cost-effective production in the target foreign location (Gurung and Prater 2017). Globalization has widened up the scope and integrated the different cultures on the same platform. The globalization of production is one of its kinds that companies use to increase its efficiency by accessing the technological advancements and the cost-effective production of the target country (Islam and Hossain 2016). The globalization of market helps to take a company-specific factor to the global platform to fetch a home like success (Crane, Kawashima and Kawasaki 2016). Globalization of market is indeed a challenge as it involves cultural intervention in notable amounts. This creates problems for the human resource management as they will have a diverse workforce to take care of. The management faces the challenge to understand the culture of the target country and finds this difficult to offer only relevant products or services to customers. The study is aimed at understanding the importance of national culture in the international business environment.
Globalization is perhaps one such factor that has largely contributed to the fact that national cultures are important at the global level. Foreign markets or most probably a potential market has now seen as a potential prospect, which is why multinational companies look to enter the target market (Wood and Wilberger 2015). They do it in numerous ways. Globalization can be defined in two types of globalization of production and globalization of market. Firms use globalization of market to target a new market with a new set of a product line. However, they used to keep their unique elements intact at the global platform as well (Chung 2014). This can be understood from an example of the Coca-Cola Company that has maintained its supremacy over the supply chain operation in the countries across the globe (Mohamed and Omwenga 2015). Their success is not limited only to the United States but the success story is the same in many centers across the globe. The Coca-Cola Company is a leading name in most markets. In this example, the company has maintained its supply chain uniqueness at the global level. The approach may be different; however, they have maintained the success and took this to the global platform (Mohamed and Omwenga 2015).
Globalization of production is another factor that has helped to integrate the different cultures on just one platform. The needs to have advanced technologies and a cost-effective production have encouraged many multinational firms to establish business relationship with the different countries (Christensen and Kowalczyk 2017). For example, China has been considered by many multinational companies for outsourcing of production works or some have also considered to import the Chinese made products to offer cost-effective products to customers and importantly, maintaining a competitive advantage in the market (Balsvik, Jensen and Salvanes 2015). China had offered cheap material and the labor costs. These two factors have a high influence on the cost of production (Paul and Mas 2016). Walmart is one of such examples that has maintained a healthy relationship with China and imported the Chinese made goods and products to remain cost-effective (Spicer and Hyatt 2017). Walmart is an American based company and has a quite different business culture in comparison to the cultures in China. Such cultural integration could become possible due to the globalization of production. Walmart had needed to work to understand the work culture of China (Spicer and Hyatt 2017). It just shows that national culture is critical while doing business with the foreign countries.
Comparing the national culture based on Hofstede’s Cultural Dimension
The importance of understanding a national culture can well be understood with the help of Hofstede’s Cultural Dimension. Hofstede’s has taken a very unconventional move to study the cultures in different countries. The findings may or may not be realistic to some extent, but it offers a really good concept to compare the cultures in the two different countries. The cultural dimension is divided into few segments upon which the differences are measured. The dimensions are divided into six segments like as follows (Beugelsdijk, Kostova and Roth 2017):
The section provides a comparative study of the cultures in the two different countries Australia and Saudi Arabia. The comparison has been given to understand the influence of national cultures on the international business environment.
Power Distance Index (high versus low)
In terms of power distance index, Saudi Arabia is much higher in Australia. The gap is very wider, which means the cultures are very distinguished in this regard. According to the cultural dimension, when power distance is low, this will provide a highly accessible organizational hierarchy (Degens et al. 2017). This means that the organizational hierarchy in Australia has lesser distance between the managers and the employees. Managers are quite accessible whereas a very high scoring of Saudi Arabia means a wider distance between the managers and the employees. Employees will not maintain high formalities to reach to their managers. However, employees will find this indeed difficult to reach to their managers. In addition to this, managers also encourage the participation of employees in the decision-making process. On the other side, only high designated people are invited to take part in the decision making process.
Importantly, communication is much informal at the Australian workplace whereas, in Saudi Arabia, high formalities will be required to communicate to the managers or to the top managers (De Mooij 2015). A high score in power distance is limited only to those few nations and it is manageable as well. They have their own measures on how to proceed with such cultures; however, this may be problematic if it gets united with an altogether different culture. Management will expectedly face the challenge if they enter such market. The problem will remain hidden until it produces profitable results. However, an unexpected business crisis might all change the face (De Mooij 2015).
This can well be understood from an example of joint venture union between an American based Pfizer and the Chinese based Hisun. The joint venture had happened because Pfizer had wanted to capitalize the market for generic drugs. Moreover, Hisun is a leading Chinese company in manufacturing the generic drugs. On the other side, Hisun had wanted a better production capability driven by the extensive technologies and a capable research & development process. A mutual purpose was served with the joint venture union (Hughes-Morgan and Yao 2016). It was interestingly a collaboration of different expertise and had been thought as one of the historic joint ventures in the history. However, the venture had failed due to the decreasing exports of generic medicines from the United States (Hughes-Morgan and Yao 2016). Such business failures can be because of various reasons; however, both the companies had wider cultural differences.
Individualism versus Collectivism
Australia scores much higher to Saudi Arabia in terms of individualism. This means that the workplace culture in Australia is much in favor of individual contribution. Employees will have high values to self-reliance and will not hesitate to display any initiative. On the other hand, employees in Saudi Arabia will have the high inclination to collective work. They will utilize their skills to the betterment of their performance; however, they will have the tendency to avoid taking any initiative. Such tendency may be good at times when employees do not have the relevant experience behind them. However, this will not be productive for the company if they are experienced enough but are restraining them to take any initiative (Ribbink and Grimm 2014).
Innovation is indeed produced when employees have encouragement into them to take innovative steps (Drucker 2014). There are examples of organizations that have been benefitted from the innovative decisions of their employees. One of such is of First National Bank (FNB) that had created a revolution by entering into the different social sites like Facebook, YouTube, Twitter and LinkedIn (Simbanegavi, Greenberg and Gwatidzo 2014). Employees were encouraged to come up with the better ideas as they will be rewarded with a certain sum of the amount on the annual basis (Simbanegavi, Greenberg and Gwatidzo 2014). The efforts had then paid off as employees had produced an ample of creative suggestions like e Facebook Game Wallet and storytelling on YouTube (Simbanegavi, Greenberg and Gwatidzo 2014). Such efforts had helped the customer to interact with the CEO of the company on Twitter and be updated with the news on YouTube (Simbanegavi, Greenberg and Gwatidzo 2014). Moreover, Facebook was also used for the transaction process (Simbanegavi, Greenberg and Gwatidzo 2014).
Masculinity versus Femininity
Both Saudi Arabia and Australia score more or less the same in terms of Masculinity. Both will be considered as a “Masculine” society. Such a society will have high importance to the shared values (Chua, Roth and Lemoine 2015). They will share each other’s success and importantly, each one of them will strive for the success. They rely on their individual capacity as a performer. They do hard to attain the best possible qualities to get preferred during the interview process. The workforce will be able to get the best talent. Additionally, they do the selection and prefer the best skills to the relevant position.
Employees who have been working in Australia will face not much challenge in this regard in the Kingdom of Saudi Arabia. Good performers will find the same treatment as it happens in Australia (Chua, Roth and Lemoine 2015).
Uncertainty Avoidance Index (high versus low)
Australia scores a much fairer number in terms of uncertainty avoidance. The country is halfway between the numbers are much more balanced than Saudi Arabia. There are extreme gaps between Saudi Arabia and Australia in respect to the level of avoidance that they have for an uncertain future. Australia looks much more relaxed in terms of future uncertainty. They believe that they will be able to mitigate the future challenges. They trust in their skilled workforce and the other resources. On the other hand, the Kingdom of Saudi Arabia looks much worried about the unexpected future (Gentina, Shrum and Lowrey 2016). This is because of the reason they try to develop huge attempts to be ready for an unexpected future.
The nature of work will be affected by such thinking as they will be expected to support the cultural thoughts with their extreme hard works. An added burden of work pressure may reduce the time for leisure purpose (Gentina, Shrum and Lowrey 2016). Employees working in Australia may find this difficult to integrate their capability with the work pressure in Saudi as they are much more inclined to leisure time. They believe to perform well by working smartly. They try to get sufficient time for their work as well as for their lives. In other words, work-life balance is much more important to the Australians. On the other hand, employees working in Saudi Arabia may also have desires for a balanced relation between the work and life; however, they might not be able to get that.
Pragmatic versus Normative
Australia scores lower than the Saudi Arabia in terms of Long-Term Orientation. It means that they correlate things with the present while not bothering much about the future. They have high respect for the traditions. They focus less on the future and believe in achieving the quick results (Sabiote-Ortiz, Frías-Jamilena and Castañeda-García 2016). Australian employees will rely on day-to-day performance. Employees in Saudi will have the same style but to a lesser extent than Australia. Such business culture will have its tendency to respect the time-bound culture. They will consider changes based on the temporal changes in cultures. The workplace culture will be to attain quick results by not relying significantly on the future outcome. Moreover, it means giving values to the organizational culture that may be influenced by the change in customer’s demands (Sabiote-Ortiz, Frías-Jamilena and Castañeda-García 2016).
This can well be understood as an example of Corporate Social Responsibility (CSR), which has become an integral part of multinational companies across the globe. They are doing it to present an improved picture of their culture in regards to caring the surrounding community (de Jong and van der Meer 2017).
Indulgence versus Restraint
Both Australia and Saudi Arabia are indulgent in culture; however, Australia scores more in this regard. An indulgent society will have the willingness to realize what they feel good. They have positive attitudes and are quite optimistic about their future. They are positive at the time when they are in the workplace. They are positive as well when they are into their personal lives. They have high values to having fun and enjoying the life. Moreover, they are much in favor of work-life balance approach (Malik and Yazar 2016). However, Saudi Arabia despite being an indulgent society lags quite behind to Australia in terms of optimism and self-oriented workforce.
Opportunities for business in Saudi Arabia
Cultural differences between the Kingdom of Saudi Arabia and Australia as discussed in the earlier segment has helped to realize a very few difference in the workplace cultures of both the countries. A business that operates in Australia and has planned to expand its network by entering Saudi Arabia will need to understand the identified differences in the workplace cultures. This will not only help the human resource management to have its good control of the diverse workforce, but this will also help during the selection process. The human resource management will be able to design the job accordingly, which will also educate the recruiters on what kinds of applicants they might get (McFarlin and Sweeney 2014). Moreover, recruiters will be able to manage their proceeding accordingly.
Cultural awareness will largely help the human resource management and the employees. Cultural differences might attract an unexpected conflict that may also delay the project and produce a negative consequence (Hemmert, Bstieler and Okamuro 2014). Cultural awareness is also important to understand the common people in the target country. This is another very important point of consideration as it helps to design the products accordingly. The national culture that comprises of cultures both at the workplace and of the common people is utterly required in regards to have a good performing unit and to produce the relevant products (Hemmert, Bstieler and Okamuro 2014). Businesses in foreign locations depend much on a balanced workforce and the supportive customers. Interestingly, both the purposes can be served after having a sound knowledge of cultures that matters to the foreign employees and the customers (Hemmert, Bstieler and Okamuro 2014).
Saudi Arabia has similar scores to Australia for being a “Masculine” society. This will be an opportunity for international business in particular to Australia. Australia is on the same line with Saudi Arabia in terms of Masculinity. Moreover, Saudi will provide the career-oriented workforce, which will have high passions for performance (Baptista and Oliveira 2015). Moreover, they will also have values to other’s success. Success will be celebrated as if it is a whole team (Baptista and Oliveira 2015). Such culture will produce productive results.
Saudi Arabia is quite close to Australia in terms of long-term orientation, which means an Australian business will be able to design a more or less the same future plans with a new venture as it used to follow in Australia. There are similarities in putting instant goals for success as well as dependence on self-contribution (Peltokorpi and Froese 2014). Management will be able to plan several ventures and the plans will get the expected support of the workforce (Peltokorpi and Froese 2014). The workforce in Australia is indulgence in nature. Saudi Arabia is little behind in Australia in terms of indulgence. Management and the human resource department will face less challenge to correlate with the workforce in Saudi Arabia (Peltokorpi and Froese 2014). Moreover, fewer difficulties will be there while working with both the Australian and the Arabian employees. Australian employees need the work-life balance policies whereas the Arabian employees are also comfortable with the same.
Possible challenges in doing business in Saudi Arabia
Some potential challenge may be difficult to confront while operating in Saudi Arabia. One of such challenges is the power distance of Hofstede’s cultural dimension. Organizational hierarchy in Australia is very rare in nature in particular to the Middle East countries. Managers in Australia are easily accessible. There are very fewer or probably no formalities while an employee approach the management. Moreover, managers do also rely on its workforce and look to them as if they would also provide them the valuable suggestions (Sarala et al. 2016).
On the other hand, the organizational hierarchy is much more confined with formalities in Saudi Arabia. There are significant gaps between the management and the employees. Managers are not easily accessible. In the specific situation, Australian employees working in the Saudi Arabia branch of the company will face the challenge to correlate them with the management. Managers in Saudi might feel insulted while working with the few of the employees from the Australian branch (Lisak and Erez 2015). This will not only create a conflicting environment in between the management and the few employees. Moreover, a common set of rules in such situation will not get the support from the few foreign employees. On the other side, management from the parent company based in Australia will feel like as if the management style is less productive in Saudi. The difference in management style in Saudi and Australia will produce a conflicting environment and a sustainable business will then be a challenge (Lisak and Erez 2015).
Australian managers belong to an individualist society. They are self-reliant and take initiatives when it is needed. On the other hand, managers in Saudi are collectivist. They are less self-reliant. They are also dependent on others. Moreover, the same company will then be managed differently in Australia and in Saudi. Managers in the two different countries will face contradicting thoughts on significant occasions. Contradicting thoughts looks suppressed until there is a big business loss (Lisak and Erez 2015).
There are some recommended strategies, which can be used to reduce the cultural barriers and promote a reduced challenging work environment. Following are the few recommendations:
Openness to any culture
Managers and the employees need to have an open mind about any culture. They try to adapt the different cultures with which they are working. A collective involvement of the managers and the employees will be required in all such cases. They need to have high flexibility in the different cultures.
Be accommodating
Management needs to accommodate some cultural values like the religious beliefs. This will significantly encourage the employees and motivate them to a committed work. This will work wonder for an Australian business operating in Saudi Arabia. Saudi Arabia is one of those countries that have the majority of the population as Muslims. Offering prayer at five different times during a day is highly important to them. Management can provide sufficient time to Muslim workers to show that they have high values to their culture. This can produce effective results and motivate the Muslims workers for a committed work.
Conclusion
To conclude, national culture plays a very significant role at the global level when two different cultures unite together to run a business. The Hofstede’s Cultural Dimension is a very good strategy to understand the probable impact that a business will face at the global level in particular with the different countries. It has been found in this study that there are evident differences in the cultures of Australia and Saudi Arabia. The differences are less evident in some regards like long-term orientation and masculinity. It, on the other hand, is highly evident in terms of power distance and individualism. The differences that are higher can prove to be much severe to an Australian business operating in Saudi Arabia. These two are very much opposed to one another. Management will find this challenging to manage such a diverse workforce. Few activities, in particular, the cultural activities will then be required in such circumstances. Adaptability and openness to different cultures will then do the much-needed relief from the cultural barriers. It is not advisable to be rigid with just one culture. It rather requires having the passion to change accordingly to get the best possible results in favor of the business. Additionally, employees should also understand each other. This will help them to reduce their cultural distances to some extent. Moreover, they will then be able to develop some opportunity for the business at the international level.
References
Balsvik, R., Jensen, S. and Salvanes, K.G., 2015. Made in China, sold in Norway: Local labor market effects of an import shock. Journal of Public Economics, 127, pp.137-144.
Baptista, G. and Oliveira, T., 2015. Understanding mobile banking: The unified theory of acceptance and use of technology combined with cultural moderators. Computers in Human Behavior, 50, pp.418-430.
Beugelsdijk, S., Kostova, T. and Roth, K., 2017. An overview of Hofstede-inspired country-level culture research in international business since 2006. Journal of International Business Studies, 48(1), pp.30-47.
Christensen, B.J. and Kowalczyk, C., 2017. Introduction to Globalization: Strategies and Effects. In Globalization (pp. 1-16). Springer Berlin Heidelberg.
Chua, R.Y., Roth, Y. and Lemoine, J.F., 2015. The impact of culture on creativity: How cultural tightness and cultural distance affect global innovation crowdsourcing work. Administrative Science Quarterly, 60(2), pp.189-227.
Chung, H.M., 2014. The role of family management and ownership on semi-globalization pattern of globalization: The case of family business groups. International Business Review, 23(1), pp.260-271.
Crane, D., Kawashima, N. and Kawasaki, K.I. eds., 2016. Global culture: Media, arts, policy, and globalization. Routledge.
de Jong, M.D. and van der Meer, M., 2017. How does it fit? Exploring the congruence between organizations and their corporate social responsibility (CSR) activities. Journal of business ethics, 143(1), pp.71-83.
De Mooij, M., 2015. Cross-cultural research in international marketing: clearing up some of the confusion. International Marketing Review, 32(6), pp.646-662.
Degens, N., Endrass, B., Hofstede, G.J., Beulens, A. and André, E., 2017. ‘What I see is not what you get’: why culture-specific behaviours for virtual characters should be user-tested across cultures. AI & society, 32(1), pp.37-49.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Gentina, E., Shrum, L.J. and Lowrey, T.M., 2016. Teen attitudes toward luxury fashion brands from a social identity perspective: A cross-cultural study of French and US teenagers. Journal of Business Research, 69(12), pp.5785-5792.
Gurung, A. and Prater, E., 2017. A research framework for the impact of cultural differences on IT outsourcing. In Global Sourcing of Services: Strategies, Issues and Challenges (pp. 49-82).
Hemmert, M., Bstieler, L. and Okamuro, H., 2014. Bridging the cultural divide: Trust formation in university–industry research collaborations in the US, Japan, and South Korea. Technovation, 34(10), pp.605-616.
Hughes-Morgan, M. and Yao, B.E., 2016. Rent Appropriation in strategic alliances: A study of technical alliances in pharmaceutical industry. Long Range Planning, 49(2), pp.186-195.
Islam, M.S. and Hossain, M.I., 2016. Social Justice in the Globalization of Production: Labor, Gender, and the Environment Nexus. Springer.
Lisak, A. and Erez, M., 2015. Leadership emergence in multicultural teams: The power of global characteristics. Journal of World Business, 50(1), pp.3-14.
Malik, T.H. and Yazar, O.H., 2016. The negotiator’s power as enabler and cultural distance as inhibitor in the international alliance formation. International Business Review, 25(5), pp.1043-1052.
McFarlin, D. and Sweeney, P.D., 2014. International management: strategic opportunities & cultural challenges. Routledge.
Mohamed, K.S. and Omwenga, J., 2015. Supply chain risks mitigation strategies adopted by manufacturing firms in Kenya: A case of Coca Cola Company (K). International Academic Journal of Procurement and Supply Chain Management, 1(4), pp.45-65.
Paul, J. and Mas, E., 2016. The emergence of China and India in the global market. Journal of East-West Business, 22(1), pp.28-50.
Peltokorpi, V. and Froese, F., 2014. Expatriate personality and cultural fit: The moderating role of host country context on job satisfaction. International Business Review, 23(1), pp.293-302.
Ribbink, D. and Grimm, C.M., 2014. The impact of cultural differences on buyer–supplier negotiations: An experimental study. Journal of Operations Management, 32(3), pp.114-126.
Sabiote-Ortiz, C.M., Frías-Jamilena, D.M. and Castañeda-García, J.A., 2016. Overall perceived value of a tourism service delivered via different media: a cross-cultural perspective. Journal of Travel Research, 55(1), pp.34-51.
Sarala, R.M., Junni, P., Cooper, C.L. and Tarba, S.Y., 2016. A sociocultural perspective on knowledge transfer in mergers and acquisitions. Journal of Management, 42(5), pp.1230-1249.
Simbanegavi, W., Greenberg, J.B. and Gwatidzo, T., 2014. Testing for competition in the South African banking sector. Journal of African Economies, 24(3), pp.303-324.
Spicer, A. and Hyatt, D., 2017. Walmart’s Emergent Low-Cost Sustainable Product Strategy. California Management Review, 59(2), pp.116-141.
Wood, V.R. and Wilberger, J.S., 2015. Globalization, cultural diversity and organizational commitment: Theoretical underpinnings. World, 6(2), pp.154-171.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download