Discuss about the Cross Cultural Management Report.
The rapid rate at which technology is changing and market boundary is expanding enables companies to start operating on global business. Most companies are crossing geographical boundaries purposely for multicultural organization which brings together managers from various countries. Effective use of knowledge possessed by mangers can reduce the production cost and make the business more competitive, besides they can also exploit the available business opportunities across the globe. Carrying out business in a foreign country always entail cross cultural management because every individual has to think about the differences in terms of culture (Trompenaars 1994, p.13). Though the practice can be more attractive and profitable, companies are faced by various factors such as cultural, political, environmental and economic which can hinder the accomplishment of the stated goals and missions in multicultural business. The differences of cross culture can be important (Adler 2008, p.12) for the success of multi-cultural business activities. Considering India as the host country, the paper is going to analyze the discrepancies in Automobile industry and provide possible solutions for effective cross cultural business in the country.
Automobile business in India has become globally competitive making India main target for foreign investors. According to (Hofstede, 1993), carrying out cross cultural business has reduced cases of regional and national differences making it more competitive. However, besides other difficulties such as language barrier, technology and law, culture has become the most hindrance to carrying business in India. It is evident that there is a big gap of cultural differences between India and other countries especially America as far as Hofstede’s theory is concerned. (Hofstede 2001, p. 29) describes the five different cross-cultures as follows: power distance, individualism versus collectivism, uncertainty avoidance, long-term versus short-term oriented persons and masculinity versus femininity.
Cross Cultural and Human Resource Management Issues
The culture of an organization needs to program its members in a way that they can either feel comfortable or uncomfortable in unstructured circumstances. Unknown or surprising situation are very common in various organization, however, the culture that guards business premises are very different meaning that organizations have specific degrees to which the avoid uncertainty. Americans are good at risk taking and are much flexible especially when dealing with tasks that are not succeeding unlike the Indians who only avoid risk.
Not all non Indians understand the Indian English. Out of this many investors can easily face communication challenges especially during negotiations or even face to face meeting with Indians. Cases such as different sentence structure, speech patterns, accents and intonation, and difficulty in structuring complex information can be among the hindrances to be faced by managers from across the globe. The use of indirect communication styles such nodding of the head is mostly liked by Indians a gesture which cannot be easily understood by non-Indians. Actually Indians based their conclusions on assumptions making it harder for them to work with other people being that they do not wait for clarification. They do not communicate in time in case of delay or misunderstanding. This can lead to communication barrier between the business partners of the home and host country
The extent to which the less powerful people in an organization accept that the power cannot be equality distributed in an organization refers to as power distance. When operating in a different country where people value power, it can be very hectic especially when it comes to power distribution. There is a big contrast in attitude and values between the high PDI countries and low PDI countries. Indians value power and therefore carrying out a business there can be very sensitive. Power will have to be distributed equally unlike US where that unequally distribute power among the subordinates.
Workforce can be effectively managed when working with people that one is well familiar with. It will be hard recruiting foreign people into the business and this therefore calls for proper understanding of partners before settling down for the business. Managers will have to outsource manpower from other organizations. Doing this can be very costly in terms of payments and risk taking in that no one knows the attitudes and values of the outsourced employees.
Countries are ruled by strict laws that make discrimination and rights abuses in the workplace sternly punishable. HR managers dealing in multicultural organizations need to be aware that certain practices might be illegal in the country they are operating in same to home country and therefore proper understanding of the rights and laws result to proper management of personnel. Discrimination based on age, gender, religion and race, vary with the country and this can hinder the operation if not well reflected on. According to (Ting-Toomey, 1985), providing factual evidence and suggestion of possible solutions can help in solving conflict that may arise between business partners. Not all countries knows how to solve conflict and this can lead to failure of the business
Decision making is more important especially when trying to combat the uncertainty in the market. Higher uncertainty avoidance translates to lack of adventurous spirits, and not in a position of making immediate decisions in case of uncertainty. Indians managers take less risky decisions barring them from any business opportunities that might accompany risk taking. In comparison to America Managers, will probably volunteer to take risk as they embrace new technology and can easily invest in new product out of risk taking. They are more of risk taking than risk avoiding.
Output of any organization is highly linked to the way employees are motivated. As stated by Leung (1997), the method used in distributing payments as a way of motivating employees is dependent on cultural values of society. When payments are done equally then they will be embracing equality while if it is done based on performance then it will be out of equity. India being a collectivism society, they practice principle of equality as compared to America that majorly focuses on individualism thus practicing equity. Human resource management between these countries is not that easier and can negatively impact the productivity of the company.
Internationalization and Globalization are terms which became common in economic industries (Adler 2008, p 5). Managers from different countries who are coming together to set up a business should realize that there are both micro and macro environmental challenges to be faced when operating the business, some of them might be beyond their control and can directly or indirectly affect their business. It is therefore important to lay down strategies that will help in combating these challenges. Factors influencing business can be viewed from the internal known as micro-economic factors (Mussnig 2007, 41) and from the outside entitled macro-economic factors (McCarthy 1975, p. 37).
Micro-environmental factors
Setting up an industry in a foreign country can be challenging especially when it comes to competition. That company will be facing stiff competition from other companies that are already operating, thus calling for suitable strategies which can yield suitable outcome or products. Automobile industry n India is more competitive being that it is among the biggest industries the whole world that are much competitive. Many other automobile industries have been set up within the country; therefore, it is prudent if new ways of outdoing other products are invented.
Choosing among the suppliers can play a big role in determining the success of the business. It is important to ensure that the selected supplier provides the best products to be used in the company. A case where the suppliers hold the business power in that they are the only suppliers can be a disadvantage to the business in that there will be no other alternatives. The products supplied should be those that can yields suitable output in the market thus calling for selecting suitable suppliers.
The major targets in the markets are the customers, the interests of customers is very important therefore before starting any business it is important to consider the interest of customers to be served. It is advisable to take a market survey and realize some of the customer needs especially at this era where technology is controlling things and the demand of people are changing. Customer is among the factors worth considering being that all that is about to be set up will serve them. Products of Automobile industry are very on high demand and customers most probably will go for current and new cars, thus, it the end product that will determine whether customers will buy them or decline.
Ignoring the public can greatly impact the success of the company industry. It is important to consider the public within which the company will be laid in. They are the great determinant of the business. Any action taken by the company should go hand in hand with the demand of the public. They can either contribute to the failure of the company or its success in that they have the power of controlling the company’s activities.
Macro environmental Factors
Demographic forces within which the company is operating can easily impact the market segment. Forces such as age, ethnicity, household lifestyle, education level and cultural characteristics can be among the forces which will directly or indirectly affect the success of the business. When manufacturing cars, there are gases that are emitted into the environment. It is important to select an area that is not much populated so that to avoid cases of pollution to the surrounding. The age factor is also important when it comes to manufacturing of cars. There are some cars that cannot be used by old people or rather young people go for classy and current things. Producing cars that are outdated will be a waste and in fact nobody will buy them.
Every country has its own legal laws that regulate investors. Carrying out a business that is banned from that particular country will be an offence or even importing products from a different country yet they have been illegalized will be going against law. It is advisable to understand the political and legal laws of that particular country before settling down. India has laws that govern the operation of automobile industry which is not well understand can lead to termination of the project.
Technology is rapidly changing and it is beyond people to regulate it. It can directly or even indirectly impact the operation of any company thus call for regular advancing in knowledge in relation to the automobile industry. The products used in manufacturing cars are rapidly changing and failure to understand how they are operated or used can lead to outdated products.
Operating in multicultural organizations can increase the profitability and efficiency of the business. However, it is advisable for the business parties of the home and host countries to understand that there is cultural and human resource barriers to the success of the business. Laying down proper strategies and understanding the different cultures can an added advantage to the business. Environmental factors are beyond control, it is therefore important to know how to manage such factors such as technological obsolescence. Regular training and innovation can help in combating this issue.
Conclusion
The ability of an organization to retain, motivate and attract managers or customers from diverse cultural background may result to competitive advantage especially when they maintain the highest quality of human resource. Understanding the environmental factors both the micro and macro within which the company is set can be an achievement too. Organizations can gain a competitive advantage in problem solving, creativity, and flexible adaptation to change if they capitalizing on the potential benefits of cultural diversity in work groups. To avoid potential risks and achieve organizational goals, the managers should promote creativity and motivation and be culturally sensitive through flexible leadership.
Reference List
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