Cultural Differences Biggest Challenge For MNCS

With the changes in the global economic reforms and advent of globalization, international business has become the greatest priority for every business to become the Multinational Company to take the competitive advantage of whole global market. But with these benefits, the companies have to face the major challenges and complexities too to manage the business in other countries. The major challenges comprises of the environmental factors and out of which cultural differences is also the major issue that the MNC’s faces within the host country. The issue of cultural diversity within the international business is the current scenario is constantly rising up with the growing factor of globalization (The Problem of Cultural Diversity in International Business, 2008).

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Managing the differences in the languages, traditions, cultures and religions within the host country is very difficult and complex job as compared to the home country for the MNC. The cultural diversity among the human resources and the customers not only relates to the social setup but also have impact on the psychology and the personality of the stakeholders. Setting up an organizational culture which makes the pace with the country culture is quite difficult for any MNC as business culture is quite different from the social culture of the host country (The Problem of Cultural Diversity in International Business, 2008).
The UAE is considered as the country of great cultural heritage which is strongly influenced by the originality of its people. Though the UAE is considered as the greatest business hub for the international trade but at the same time, it is quite difficult for MNC’s to adapt the cultural shift within the country. The business within the UAE has its own cultural etiquettes and ethics which a MNC’s need to adapt with tolerance and flexibility. The UAE is the Islamic country whose culture is totally different in respect to greetings, attribute towards the god, prayers, appearance, religion, behavior, communications, workplace environment, women at workplace, eating and drinking habits etc. Thus the MNC doing business o planning to do business within UAE have to follow such cultural norms in relation to marketing and all other operational activities so as to follow the legal obligations and also to make the market loyal towards the company with the feeling of belongingness (Cross cultural business relationships: Abu Dhabi, 2011).
FedEx Express is the industry global leaders in the express distribution industry and committed to provide rapid, reliable, and timely delivery service in about 220 countries and territories which connects the network of more than 90 percent of the world’s GDP within one to three business days. The company facilitates the customers with several world class services such as unmatched air route authorities and best transport infrastructure, integrates with high class technical infrastructure which makes FedEx Express as the world’s largest freight and express transportation organization. The global leader has to face various challenges of the global business environment and combating with all such challenges it becomes the leader to take the competitive advantage of the global market. Being the global leader, the company faces various challenges in trading within the foreign countries including the cultural challenges utmost. FedEx UAE also faced various cross cultural challenges to establish itself and to earn the loyalty of the customers as FedEx is the US based company and UAE is the Islamic country thus there is a huge cultural difference between both the home country and the host country of the FedEx (Company Information).
Cultural Challenges faced by FedEx in UAE
Being the global market leader of the express industry and even in the UAE express market, FedEx has to face various environmental challenges particularly the cross cultural challenges with respect to the workplace environment and the marketing among the host country customers. The cultural challenges relate to religion, language, working style, women at workplace, behavior, attitude, appearances etc. These Factors pay a very vital role in the organizational culture and the customer satisfaction and loyalty as the local national prefer those brands within which they have trust and belongingness and the most culturally related organization is able to reach more and more local customers. Within the host country, the FedEx have to attract the UAE local Nationals and have to employ the local Emirati people as per the UAE policy of Emiritization and to reduce the operational cost. But in doing so the company has to face various challenges related to cross cultural environment.
Islam, the official religion of UAE encompasses the every aspect of life within the country. Showing disrespectful feeling for the Islam is the serious and punishable offense within the country. The Islamic faith throws light on the generosity, respect and the modesty within the business which is totally opposite to the US based organizational culture. The individual honor and respect as the human is the most prominent and supreme within the Islamic culture and business discussions are mainly done with the help of indirect style of communications. Hierarchy is the most important concept within the UAE which mainly focuses on the top down approach having the decisions, powers and authorities centralized to the single person. Within the direct communication, they leave comparatively less personal space as compared to other organizational culture but the Arab gives high value to the Civility within the business itself. Shaking hands within the meetings and departing is restricted only to Men; Women usually avoid shaking hands for greeting and the Men usually place hand over their own heart in greeting women. Status of the person within the organization is considered as very much important and most senior person in the group is greeted first whether with the first or last name or with the titles. Hospitality is considered as the matter of pride within the Arab culture and they preserve the honor of the host (Culture and Work Styles in Dubai, 2011).
The culture is very many vast terms and comprises of various factors, attire is one of the major factor within UAE culture. Arab Men used to wear Thobe, a long ankle length white cotton garment and the women wore Abaya which makes them covered from shoulders to feet. Foreign men wore the formal business attire for the business and western women wear western clothing with the care to cover the legs, arms, shoulders and legs as it is considered as impolite to remain them uncovered (Culture and Work Styles in Dubai, 2011).
Alcohol is strictly prohibited under the culture and it is considers as illegal offence to have the license of alcohol. Bars and hotel provides the alcohol for the tourist, expats and the residents who have the license to buy the fixed amount of alcohol every month. Public display of drinking alcohol is the strict offence and punished as fine to incarceration as per the offence (Culture and Work Styles in Dubai, 2011).
As compared to Europe and the US, the attitude towards time in the UAE is far more relaxed for instances, the meetings can start late or can be cancelled at the last moment without any warning which is the greatest challenge for FedEx as it is the US based firm where strict timelines are followed. The working week within UAE culture is also different from the Christian countries i.e. it runs from Saturday to Wednesday with the weekend having the Muslin Sabbath (Challanges of Doing Business in UAE).
Arabic is considered as the official language of UAE, though English, Hindi, Persian is widely spoken in the country and Urdu is considered as the language of commerce. More than 80 % of the UAE national and Expats follow Sunni Branch of Islam, and rest follows Shia Branch of Islam. Religious freedom is being provided by the constitution and other religions practiced in the country are Hinduism and Christianity (Culture & People).
Strategies and Measures to manage such challenges
Such cross cultural challenges so faced by the FedEx within UAE can affect it international business in the host country of UAE as it directly affects the work culture environment and the organizational culture and also affects the marketing strategy of the company. FedEx have to interact the local UAE consumers directly as it is involved in the Express business. Managing the cultural impact is quite difficult to the company in the direct marketing and interaction with the consumers and even with the other stakeholders. Some of the strategies and measures can be applied in order to combat with such challenges and to evolve as the UAE local as well as the global market leader within the Express market of UAE. Such measures are as follows:
A basic understanding of Islam.
Knowledge about role of women in the workplace environment and at home.
Awareness to the Arab workplace culture.
Knowledge of verbal and non verbal communication in the Arab culture.
Attire and dressing knowledge as per the requirement.
Effective translation during communication.
Respect as a prominent factor (Cross cultural business relationships: Abu Dhabi, 2011).
Future Prospects
The UAE is considered as the most cosmopolitan and westernized country of the world but in spite of such business exposure, it has preserved its cultural heritage. The globalization have resulted to the transformation of traditional culture in to multicultural tapestry which would lead to the mix of traditional and modern eastern and western culture within the UAE and helps to manage the cross cultural challenges for the MNC’s planning to set p their business in UAE.