The national culture affects management behavior in global business because of its differences in ideologies, culture and consumer values. Global thinking seeks to explain individual factors by breaking down business actions by international players. The best way to understand why organizations undertake certain steps is to dissect the reasoning behind it. The business strategies used by multinational corporations explains the pros and cons of the international environment. The Porters diamond model brings out the competitive nature of global organizations by showing how corporations manage to succeed. On the other hand, Hofstede and Lewis diversifies the regions using the cultural dimensions (Itim International , 2017). Managers in the global business environment try to capture the global markets by connecting with the new stakeholders. Arthur Lewis uses an approach that describes the difference between an industrial state and a subsistence one. This gives a wide array of factors emanating from the growth of national economies from traditional to industrial states. These economic and cultural approaches to cross border business management analyze highlight strategies used by nations in the markets. It also shows similarities and differences that compare and contrast management across cultures. The analysis of legal matters brings out the role of the national government in determining the policy framework within which organizations operate (Scherer & Palazzo, 2011: Welter & Smallbone, 2011).
Cross-cultural strategies acknowledge that the world continues to become one under globalization yet there are differences in cultural practices, values and identities. One of the common factors is technology, which is common across nations. E-commerce is one of the factors influencing the growth of the international market. Nations interact on a business platform and people can exchange ideas easily via the internet. World languages like English continue to rule the international communication scene although there are local translations. Despite these, communication cues such as nonverbal communication exhibit difference. Multinational organizations use localization as a strategy to gain acceptance in the national and regional markets (Cullen & Parbotteah, 2013, p. 63). There are economic and cultural oriented theories, which provide insight into the cross border practices.
Theoretical approaches that identify common factors include the international trade theory, which points towards challenges and opportunities in the system. When nations interact, economic benefits arise because of the trade in goods and services. Multinational corporations today have branches across the globe because of this. Consumers recognize popular brands like Nike, MacDonald’s, Samsung and Mercedes because of the trade activities. The emergence of multinational corporations (MNCs) in cross border business was not easy because some regions like the Middle East staged a resistance (Castells, 2011). Some countries have a surplus of certain goods while others show deficits. Africa and Asia are rich in human and natural resources hence become great investment points for manufacturers looking for cheap labour. The westernized countries have financial and technology advantages, which explains their dominance in the world, trade scenes. One way to understand the cross border operations is to analyze the capital-intensive economies verses the labour intensive ones. The exploitation of the global market creates winners and losers (Zott, 2011). This leads to the emergence of some countries and organizations as superior than others. Consequently, this is a reason for strategic planning as nations strive to gain a competitive edge. It also shows the emergence of intellectual properties, which is a great battleground for technology firms (Panitch & Gindin, 2012).
Michael Porter views the national markets as unique in that factors such as innovation and natural resources place some local markets at an advantage. In his opinion, there are four factors influencing this. He points out that the local firms have attributes or strategies, defined by the type of competition in the market. He also notes that local suppliers and other industries compliment the firms so that they gain from each other. In addition, the demand within the local market encourages innovation and growth in a nation for its growth. This explains why China, India, U.S and Australia take advantage of their market sizes to adopt policies that encourage local consumption of their products (Ryan, 2017). Porter reiterates that the local market has resources and capabilities, which shape the production trends. This means some countries stand out because of their geographical benefits while others have man made resources like technology and skilled work force. For example, BMW luxury cars sell more in Europe despite their high fuel consumption. Factors such as innovation, professional skills, technology and infrastructural development favor the growth of industries in some regions (Sakakibara & Porter, 2001).
Figure 1: Porters diamond approach (Sakakibara & Porter, 2001)
This theory of competitiveness encourages innovativeness in the local, regional and industry levels. Stakeholders pursue strategies like mergers in order to emerge as better than their counterparts do.
Professor Hofstede identifies six dimensions, which he terms as cultural dimensions. These are power distance, individualism, masculinity, uncertainty avoidance, long-term orientation and indulgence. Used as indices measures, these dimensions describe the level of acceptance in a country. For example, socialist states like China, Singapore and Tanzania in Africa have a high level of collectivism as compared to individualism in western nations. In these countries, communal cultural values are very important. Business organizations use these analytics for business etiquette and strategies during market penetration in these economies (Mitchell, 2016). Hofstede notion on femininity verses masculinity provides a guide for organizations to understand their chances of success with mergers (femininity) or competitiveness (masculinity). This breaks down the quagmire of futile investments, which collapse as soon as they start (Korutaro & Biekpe, 2013). Regulations and policies in new markets are important factors that differ across the globe. As a result, Hofstede advises on an analysis of uncertainty avoidance. In his opinion, indulgence and restraint determine the drive in a nation therefore; organizations must get an insight of the long term and short-term orientations of a society. For example, Japan and Brazil have come a long way into exhibiting their economic strengths because of the people, beliefs, and lifestyle, which translate to consumer trends (Waburton, 2017).
Theorists Arthur Lewis states that the international market is a dual economy featuring capitalist and subsistence sectors. The theory provides explanations as to why employees may travel across borders in search of greener pastures. It explains the growth of most economies from traditional to industrialist’s economies (Lewis, 2013). With specific focus on the agricultural sector, the approach shows why some regions enjoy a constant supply of workers. The international capital flight has deprived some regions like Africa of important skills. Citizens move abroad in search of jobs in industrialized countries. It explains the challenges of industrialization such as poverty, margination and monopolization. This approach describes an industrialized economy in which the manufaturing sector is thriving in terms of better wages and surplus production. Researchers use this theory to understand whether it is better to replace traditional economic factors with capitalist multinationals. This method of analysis raises questions on the ability of a capitalist economy to deliver economic benefits in a nation with some single nation allowing companies to make very high profits (Wood, 2012). The dual sector approach also analyses capitalism to in terms of the unequal distribution of resources.
Similar to Hofstede, Fons Trompenaars also recognizes cultural differences to explain global management. However, he mentions seven dimensions in comparisons. He discusses universalism verses particularism to explain why regions have standards of values that organizations must respect. These govern ethical practices within nations in that Muslim countries will reject MNCs because they advocate for western thoughts like equality and women rights. This relates to his opinion of individualism verses communitarianism as more people adopt the global culture out of choice. Trompenaars reference to neutral verses emotional cultural dimensions brings to memory consumers perception of brands from Islamic regions (Al Mutawa, 2013). He also discusses specific verses diffuse culture to explain how people accept culture from social influences and personal choices. The spread of ideas via social media confirms this notion. Other dimensions are achievement verses ascribed and sequential verses synchronous- which shows the progressive adoption of international trends like technology and innovation. Time reveals changes in the international management because of the factors of change. That is why he suggests that people go through internal verses external direction, which determines their outcome. Some analysts point that this is a more comprehensive approach than Hofstede and others (Stahl & Tung, 2015).
There are difference in how people and places look as well as how they operate (unice, 2008). The national culture characterizes the regions with distinct attributes that distinguish locations by their culture, values, lifestyle, food, language and norms. This creates a pattern within the regional systems to unveil the Asian, American, Africa, European, and Australian cultures. National differences explain the framework used in the formation of global interaction. That is why firms take restraint when investing in cross border locations because culture shapes consumer trends. Some brands have faced the wrath of the local communities for failure to recognize these differences (Waldmeir, 2013). It is important for organizations to carry out a Strength, Weakness, Opportunity and Threats analysis because it highlights its capabilities. (Castells, 2011)
Similarities in global management incudes common factors like technology adoption. Nations across the globe have adopted the internet and other innovative measures within the business levels (Van der Stede, 2003). E-commerce, mobile technology and changes in management practices are some of the new but shared ideas. The corporate world of business shares approaches on how to succeed in the global market. Based on the high competition, firms have to invest in emerging trends for best practice. Multinational corporations focus on Strategic Human Resource Management in order to be able to manage cultural diversities in the workforce. Most national groups allow MNCs to operate in their regions because of the competition and economic benefits that come with it. MNCs stir other companies to growth through best practices and high standards of operations (Green Garage, 2015).
International organizations operate via mergers, acquisitions, franchising and market penetration. These are strategies used by companies when entering a new market because of the political, economic, social, technological and legal reasons. In some cases, the use of local brands exudes confidence among the locals. Partnership with the locals adds value in terms of capital and ideas. The spread of the international corporations in the regions also creates quality jobs for improved standards of living and economic status of the locals. In most cases, large organizations invest back into the community with its profits. Part of the investment is in research and development, which encourages innovation. Corporate Social Responsibilities in form of charitable plans have benefited national communities in health, education and environmental management (Crane, et al., 2013). However, there have been complaints about some MNCs giving national governments and local communities a raw deal (Castells, 2011, p. 189). Some also argue that the introduction of MNC creates monopolies, which kill the local industries. What’s more, MNC in the retail and technology world make exceptionally high profits in regions.
International management tries to integrate business culture with national attributes (Sukumaran & Bhaskaran, 2007). The incorporation of values and beliefs connects the foreign brands to the local population. National values influence management practices in all parts of the global business. New entrants find common ground when penetrating the local markets. This ensures its success despite the differences in business plans. Some firms like the manufaturing industry have to incorporate sustainability factors that assure the community of environmental friendly practices. Failure to consider the local communities has led to adverse effects on natural resources.
Effective leadership in cross border management covers economic practices and the management of people. The competitive environment calls for multilevel business operations with branches across borders. Leadership at the international management level is different from other settings because it involves managing a multicultural team (Waburton, 2017). Leaders in international corporations have to overcome culture and language barriers. Adapting to different environments is a prerequisite because leaders ta a global setting travel a lot. Being able to cope with change is a plus for managers and expatriates willing to work in foreign countries. Organizations have structures that facilitate for multinational management practices.
Leaders save time by using communication strategies such as cloud computing and video conferencing to reach out to all branches. These techniques are also effective in training, recruitment and sharing information (Green Garage, 2015). Although the global environment provides immense opportunities, leaders are also aware of the need for risk management against problems like insecurity, cyber-attacks and patenting rights wars. Organizations are also keen on the political, economic, social, technology and legal. Laws are different across the nations and they affect business operations. Management and leadership overcomes challenges by using strategies designed for global organizations. Among these is the use of mergers and joint ventures for market entry or market penetration. These tactics give brands a competitive edge in the national, regional and international market (Jurevicious, 2013).
Culture defines a complex aspect of the international system because it represents numerous elements such as the social and religious factors. What is acceptable in Europe may not sell in Africa always. This challenge makes it hard for franchising which tries to duplicate the brand in the host country. In an effort to become part of the local industry, firms incorporate local elements like language and regional images in advertising as part of branding strategies. Although English comes out as a common language, it has differences between UK and American versions. Global culture influenced by the popular culture is mainly celebrity oriented. Differences in religious practices means that values and norms are divergent.
Other aspects of culture represents the social factors such as the education levels and professional skills. However, some theorists distinguish between culture and social factors citing differences in framework (Chan, et al., 2012). These are different because of different standards and systems of education. Hiring employees in some regions is a challenge because of the skill deficit. At the same time, there are stringent measures for importing skilled professionals in such regions. The high tax rates, unfamiliar working environment and cultural differences impede organizations from operating effectively across borders. These also hinder settlement of foreigners in a host country, especially business developers seeking new investment locations. The use of universal standards of education such as TOEFL allows students and professionals to travel across the border for serious businesses (Coombe, 2012).
Government laws and policies also differ. Some regions like China have a communist system, which has democratic elements. Some nations like Socialist Singapore favor community development to the free market system (Kowalczyk, 2015). The central government is responsible for tabling business policies that govern foreign operations. In some regions, multinational companies are free to own international properties and other related business operations. Some regions are more restrictive and skeptical about the economic control of MNC. High tax rates discourage business investments in some areas. The export of goods across countries at lower cost depends on the foreign market policies. In some regions, there are trade barriers caused by bilateral and multilateral trade agreements. These influence small, medium and large companies. Legal policies concerning procedures and international operations apply in different contexts. International organizations need to understand the rules clearly in order to avoid noncompliance. Despite the presence of national and international laws, there are challenges; investors cannot find answers to regional hindrances like insecurity (Sunga, 2015).
Compliance at a global level presents risk management because companies have lost millions in legal battles. There are laws governing global functions and operations. International organizations incorporate risk management strategies to manage change in regulation, competitor battles and other legal matters. Retail stores have faced numerous legal suits, and penalties for irregularities and violation of labour laws (Vandevelde & Mooney, 2017). Multinational companies in the technology world have multiple lawsuits in different parts of their operations. These differ in magnitude and scale. The court battles feature investor’s claims, internal mismanagement issues, scandals, malicious suits or simple violations.
Conclusion
Managing across border is complex and multidimensional. Culture is one of the main factors influencing the management of organizations and people across national settings. In order to understand how nations and multinational corporations operate in different regions, it is crucial to break down some of the elements affecting the processes. These dimensions give way to a myriad of approaches on how to succeed internationally. Management practices make use of theoretical approaches to solve challenges while taking advantage of the opportunities. Differences and similarities in these nations determine the trends adopted by the global brands. The economic dimensions compliment the cultural dynamics because both acknowledge the unique natural resources that distinguish or characterize nations.
The scope of the international operations covers external factors that influence decisions made. Organizations choose to adopt strategies such as the Hofstede culture dimension as a way of handling these diversities. On the other hand, an integrated approach also looks at the political, economic and legal factors influencing management practices. Technology as a common factor is evident in all national systems. It serves as a tool for spreading global culture, which is acceptable in all countries. Despite resistance from some conservative regions, globalization is an inevitable aspect of managing across borders. Each nation has its strengths, weaknesses, opportunities and threats to manage.
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