How language can affect the performance. with explanation how and why. Discuss how language differences between the host country and the home country could affect subsidiary performance. Contrast how language differences between the host country and the home country can affect the subsidiary performance in a fully owned subsidiary vs joint venture with a local partner. Which mode is better in the presence of language barrier?
In the following assignment, the difference of languages between two countries i.e. the host country and the home country in an organization structure will be discussed. The employees who are coming from the foreign country to the host country of the parent company are facing various problems. Communication is one of the main problems which they are facing. To survive in a different country where the parent company has transferred their employees along with the social and cultural issue the employee has to adapt their language also. Without understanding the language the employees cannot survive in a foreign country. This language difference also affects the subsidiary performance of the organization. Few organizations opens their own subsidiaries in the host country and sometimes few organizations goes for joint venture with the local partner of that host country. It will also be discussed that if a foreign company wants to expands their business in a totally new country then what they should do. They should go for own subsidy or go for joint ventures with the local dealers or partners of that host country. As language is one of the important communication for a company to deal with the customers be it in their own home country or be it with the customers of the host country language is the most important thing. Without any communication the company cannot expand their business for which they are planning to expand their business in all over the world. By only knowing the language of a specific country where the parent company wants to expand their business many problems can be solved. So, in the following assignment the language problem and the difference that the host country and the home country (Brannen, Piekkari, & Tietze, 2014).
Whenever an organization launches their subsidiary in a foreign country for expanding their business they face a lot of problem. One of the major problem is the language of that country where the parent company wants to open their subsidiary company. They cannot hire all the employees for that subsidiary company from the host country. They have to transfer few of their employees from the home country and when those employees comes to the host country then it is totally a new place for the employees who have got transferred and the culture and communication is totally different. The company has come to the host country from their home country to do business and for that they have to understand the language of the host country without understanding the language they cannot do any business with that country. If the company does not understand the languages of the host country then the subsidiary company will face various problems which will affect their business and these affect the profit income of the parent income for which they have decided to expand their organization in different countries of the world. Their subsidiary performance will not go well because of the language problem. Without solving these language problem the subsidiary company cannot proceed with any type of negotiation with the host country. The host country will also face problem when they will have to do business with the subsidiary company. As the subsidiary company is having language problem so if they think that for their business they will bring their raw materials from their home country then it will affect their financially. It not at all a great idea for bringing the raw materials from the home country and they are avoiding to buy the products from the host country because they are facing problems with the language of that host country and they are unable to make the people or the partners of their host country understand that what they want (Powell, & Rhee, 2013). The subsidiary company should go for recruitment and recruit some employees who knows the market of the host country and can understand the language of both the host country and also the language of the subsidiary company’s home country. This is benefit both the subsidiary company and also the host country. When a subsidiary company goes for expanding their business in a totally new country then their main aim is to expand their business in that country such a way that their not any single competitors couldn’t get any chance to stay with their products in the same market. But for that the subsidiary country has to understand the market and also their customers. For both of this things the subsidiary company has to know the language to so that they can easily approach their customers and for that they have to approach their local vendors and local dealers. For approaching them also they have to know the language without which they would not able to make their products and also be unable to target their customers. For advertising their products also they have to know the language of the host country so that they can make the people understand that what they want to deliver to their customers. As it is already known that people sees those things only which they are able to understand and they gets attracted towards those products only which are easily understand and what the company wants to tell to their customers through their products. So, if the subsidiary company fails to do all these things i.e. to make their customer’s understand through their advertisements then the customers will not get attracted towards the product and then like this the performance of the subsidiary company will fail and then they will also fail to achieve the target that has been set by the parent company and this will affect the financial growth of both the parent company which is in the home country and also of the subsidiary company where they are facing the problems. To make their performance the subsidiary company has to recruit only the employee from the host country but also have to give training to those who are coming from the home country to the host country for expanding their business. The parent company should train their employees not only after coming and joining in the host country but they should give a preliminary training to them before they are transferred to the host country where they have opened up their subsidiary company. If the parent company goes all these procedures then only they will be able to make a stand in the host country with all the difficulties. AS it is known that it is not easy for a parent company to expand their business in a foreign country and open their subsidiary in that country and with that if they also have face the language problem then it is totally a mess for the parent company. If the subsidiary company with the help of the parent company i.e. with the help of training and also with the support of their partner with whom the subsidiary company is going for joint venture then it will not be that much of problem for the subsidiary company to excel in the market of the host country. Not only for the profit of the subsidiary company the employees have to go with the training but also for their own survival in a totally new country with new culture the employees will be having lot of problem for making them adjust in the totally new atmosphere with a total new environment (Vidal-Suárez, & López-Duarte, 2013). If the employees are facing language problem in their personal life i.e. for adjusting themselves in a totally new environment then how will they adjust themselves with total new atmosphere in their professional life and if they are not able to adjust in their both personal and professional life then it is not possible for the employees to excel in their professional field. Due to all this problems the employee are not able to give their hundred percent in their job and all these factors are affecting the company also. With the low performance of the employees the company’s performance is also decreasing and all these are not a good sign for the growth of the company. The subsidiary company has expanded their business to make more profit for them from other countries also but they are unable to give that performance and this language problem is the major issues and without overcoming these issues a company cannot grow in the market and if they are not able to expand in the market then they will be unable to reach to their customers and these will affect the yearly performance of the subsidiary company and if the subsidiary company gets affected then for slight also the parent company will get affected how much billionaire the company might be. Because for expanding their business in the host country the parent company has invested a lot and they also expects to earn those money which they have spent in the host country for expanding their business in the form of profit and also make a good position among the customers so that the customers gets attached to their product and not a single competitor stand in that market because of them (Hinds, Neeley, & Cramton, 2013).
For example- If an American, multinational firm wants to open up a new branch in China then at first they have to bring employees from the home country of the subsidiary company then at first they have bring employees from their home country and have to start their first base of expanding their firm i.e. starting the work process and with that they also have to start recruiting employees from China which is the host country of the American multinational firm. They have to recruit some employees from the host country because as it is an American firm so almost all the employees of the firm are from their home country and some are from other countries who are also new with the Chinese language so it will be very difficult for them to adjust themselves in this totally new country but they have to adjust and all this factors will affect the performance of the employees who have come from that country to help their company and give profit to their company and all these will also affect the future growth of the company also. Their planning to expand their business in a totally new place will fail and for all these they will have to think twice of expanding their business in a totally new place. So, the American company needs to train their employees in all ways so that the employees do not face any problem after going to the host country and give their hundred percent performance and give better result to the subsidiary company and also to the parent company (Harzing, & Pudelko, 2013).
As it is known that when a foreign firm comes to do business in a totally new country then they have face various problems. Those problems are cultural, social and language. More than all other factors language is the important factors which they has to face definitely. They have to overcome these problem as fast as possible because if these problems carries with them for a long time then their financial section of the company will effect more. Because of these language difference the company will think of owning their own subsidiary but to run their own subsidiary in a totally new place will be a lot of problem and by any reason they have to take help of the local people. So it will be the best for the parent company to go for joint ventures with the local partners of that host country if the host country have their production which is linked with the subsidiary company of the host country. Because the host country already have a firm which produces products which are like the products that the subsidiary company is already producing. But language is the important thing which will help the host country and the subsidiary company to communicate between each other and verbal and non-verbal are the most important mode of communication when it comes for dealing for business and to deal with the business partners of the host country it is necessary to know the language of the host country because the language will help them in dealing with them with the local dealers for the products of the host country. In East Asian countries particularly China, there are almost 56 types of ethnic language which is in practice and more than hundred alphabets are in practice and a common meaning can be drawn from those alphabets (Harzing, Köster, & Magner, 2011). The Chinese alphabets has very different behavioral patterns. For any outsider people it is very difficult to keep the Chinese language in their mind. It is very difficult to keep them memorize for a foreigner. But for the foreign company it is almost mandatory to understand the language of the country without understanding them they cannot strike for any deal in that country and as it is known that Chinese language is very difficult to understand so the foreigners need quite an additional time to understand the language and as in China there are many ethnic languages are used so the foreigners need much more time to learn the language. So, after they launch their company in the host country i.e. China the company should organize for a training session on language along with other training sessions for the employees of the firm. The managers and the higher authorities of the subsidiary company should also organize training sessions on non-verbal communication, symbolic communication and other communication related problems with the help of the experts of that country (Nordman, & Tolstoy, 2014).
It is also known that as China is one of the fastest developing country and all the foreign firms are deciding to expand their business or else launching a new product in this country and wanted to see that how the people of East Asia are accepting the products after that they will expand their business and launch their products in the other East and South East Asian countries. So, for launching their product and expanding their business in China they has to know the language of this country as it is very difficult and it cannot be easily grasped. The foreign investors and the companies will need a much time to grasp the language. So, for all these they have to deal with the local dealers of China and for that also they have to know the language for communicating with them (Jeanine, Leanna, Martin, & Peter, 2014). So, for all these the end result is to learn the language so that they can do their business easily without much difficulty and also can deal with the dealers of the host country who will help them in coming in contact with their customers of that country so that the product which the subsidiary company wants to sell in that host country. And for expanding the business the foreign company should always go for joining hands with the local partners or the dealers of that country as they know their customers very well and also knows the mind set of people of that country. The local partners know the habits of the people staying in that country (Konara, & Wei, 2013). The local dealers or the partners knows the thinking language of the people living there and they also knows that by what method they should approach their customers so that the customers gets easily attract towards the product and buy the products. But if the foreign company decides to own their own subsidiary without taking any help of the local partners then they will face many problems and the first problem they will be facing the language problem as they are new in the country and they are totally new with the language they do not understand a single word then how they will be approaching their customers and how they will make them understand what the product is and in what ways the product will be beneficial to the customers living in that country. If the subsidiary company do not go for any joint ventures then will face problems in dealing with the dealers through whom they will be selling their products and the products will reach to the customers of that country. The local dealers and the local partners knows their customers very well. They understand the thinking process of their customers. They knows that towards which product their customers are giving more interest during that time and by what methods the interest can be diverted from those products and make their focus on the product which has been launched by the subsidiary company (Davis, Desai, & Francis, 2011).
For example – If foreign company wants to launch their products in country like India then they have to see that at what things the people of this country are giving more interest. India is a multilingual country and to reach them the foreign subsidiary has to make advertisement of all the languages which are been spoken in the country. As the people of India are more attracted towards entertainment it can be of any type so the foreign subsidiary company has to introduce their product in those entertainment which will come into the notice of the customers and they will so some interest into the product and if the product is being advertised and especially in the language of that place where the advertisement is being shown then then it will attract the audience to see those advertisements. Because will give more interest in those things only which are easy for them to understand and they will show eagerness towards the product and will show more interest towards the product and will approach the local dealers to know more about them because they cannot deal or contact with the main company i.e. who is launching the product in the country and as in India there are people who belongs from different economic strata so it is not possible for them to come in contact with the main company for knowing more about the product (Brouthers, 2013). They have to contact with the local dealer only regarding the product and to know more about the product. So, it is better for the foreign subsidiaries to go for joint ventures than going for own subsidiaries. The local vendors or the partners are the perfect middlemen for the foreign subsidiaries because the local vendors are the bridge between the customer and the subsidiary companies. The local dealers or the partners are the people who understands the mindset of both the customer and also of the foreign subsidiaries. They can deal both the parts because they know what both the parties want. So, for the foreign subsidiaries it will be the best for going into the joint ventures in place of going with their own subsidies. The local partners in the joint venture will help the subsidiary company to understand their target market and their target customers and can expand in that host country with less problems whereas if the company goes for owning their own subsidiary in the host country then they will have to face many problems and language problem will be the main problem and without understanding that they will fail to understand the wants and desires of their customers and by that they fail to leave up to their customer’s expectation and if they are unable to reach their customer’s expectation then they will never able to reach their own expectation as a company. So, it will be better for the subsidiary company to go for joint ventures with the local dealers or local partners of the host country (López-Duarte, & Vidal-Suárez, 2012).
In a nutshell it can be said that from all the major factors that are needed to expand a business in a totally new country the language is the important factor which they need to survive there. Without knowing the language no person can survive in a new country how billionaire be that person or that company be. Language is the most important thing to adjust or to stay to survive in a new country. When a billionaire company wants to expand their business in a new country or wants to launch their new product in a country they have to know the language of that country. For a company their main target is their customers and by targeting their customers they wants to earn the profit for their company. If the company is not able to understand the language of their customers then how will they attract their customers towards their product and they will not able to make their customers understand that by their product what message they want to deliver to their customers. Language is the medium through which both the parties will be able to keep their thought in front of each other and will be make each other understand their personal thoughts. Without knowing the language the subsidiary company cannot make their base strong in the foreign country where they wants to expand their company.
When a foreign company wants to expand their business few of them goes with their own subsidy company and few of them goes for joint ventures with the local partners of that country. The companies who goes for joint venture they do the right thing because their partners knows the market very well and they will suggest them in planning out their strategy that how they should implement them and as they are the local partner they knows the language also and it will the easy for the subsidy company to expand their business or launch their product because the local partner knows each and every thing about the market of the host country. As they knows the language so the subsidiary company will have less problem in understanding their targeted customer’s mindset. But if the subsidiary company wants to expand and own an individual subsidiary company without going for any joint venture then they will face a lot of problem and understanding the language is the major problem. Without understanding the language the subsidiary company will be unable to understand the mindset of their customers and if they are unable to understand their customers then how will they place their products in front of them and with that they will also unable to make their profit in the market of that host country. So, at last it can be said that for expanding a company in a new country the parent company should train their employees the language of that country where they wants to expand so that they face less difficulties and have a great profit and future in that country.
References
Brannen, M. Y., Piekkari, R., & Tietze, S. (2014). The multifaceted role of language in international business: Unpacking the forms, functions and features of a critical challenge to MNC theory and performance. Journal of International Business Studies, 45(5), 495-507.
Brouthers, K. D. (2013). A retrospective on: Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, 44(1), 14-22.
Davis, P. S., Desai, A. B., & Francis, J. D. (2011). Mode of international entry: An isomorphism perspective. Journal of International Business Studies, 239-258.
Harzing, A. W., & Pudelko, M. (2013). Language competencies, policies and practices in multinational corporations: A comprehensive review and comparison of Anglophone, Asian, Continental European and Nordic MNCs.Journal of World Business, 48(1), 87-97.
Harzing, A. W., Köster, K., & Magner, U. (2011). Babel in business: The language barrier and its solutions in the HQ-subsidiary relationship. Journal of World Business, 46(3), 279-287.
Hinds, P. J., Neeley, T. B., & Cramton, C. D. (2013). Language as a lightning rod: Power contests, emotion regulation, and subgroup dynamics in global teams. Journal of International Business Studies, 45(5), 536-561.
Jeanine, K. A., Leanna, L., Martin, B., & Peter, J. R. (2014). Cultural impact of human resource practices on job satisfaction. Cross Cultural Management.
Konara, P., & Wei, Y. (2013). The role of language in bilateral foreign direct investment: a forgotten factor?.
López-Duarte, C., & Vidal-Suárez, M. M. (2012). External uncertainty and entry mode choice: Cultural distance, political risk and language diversity.International Business Review, 19(6), 575-588.
Nordman, E. R., & Tolstoy, D. (2014). Does relationship psychic distance matter for the learning processes of internationalizing SMEs?. International Business Review, 23(1), 30-37.
Powell, K. S., & Rhee, M. (2013). Experience in different institutional environments and foreign subsidiary ownership structure. Journal of Management, 0149206313506465.
Vidal-Suárez, M., & López-Duarte, C. (2013). Language distance and international acquisitions A transaction cost approach. International Journal of Cross Cultural Management, 13(1), 47-63.
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