Understanding National Culture For Multinational Corporations: A Case Study Of Woolworths Limited

Significance of cultural differences in global business

Question:

Describe about  “management and organisation on a global business environment”.
 

Cultural differences are sometimes very difficult to observe and measure, but signified as the most important aspect in the globalised business market. According to Moran, Abramson and Moran (2014), the companies, which fail to understand the cultural value often lead to face strain relationships and embarrassing blunders. Moreover, the performance of the business can even dragged down due to such failure to understand of the cultural value of the nations. It is to be noted that the effects of such misinterpretation can sometimes cause the life-and-death situations for some of the globalised companies. Depending on such increasing demands of the economy, the global occurrences, prices, and supply chain management are impacted. De Mooij (2013) proclaimed that international trade is the major platform for the business traders to avail the opportunity to explore the services and products. In fact, various types of the goods and the services are available in the international market. It is to be indicated that the culture itself is considered as the group of people who have been working together for deriving benefits to their organisations.

Aronczyk (2013) pointed out that national culture can be tangible or intangible during the team work performed by a group of the people. The cultural artefacts, norms, and values are somewhat connected to the diversified cultured people who are completely different to each other. The difference in the geographical position, religious development, and climate conditions are much prominent in such cases. One country includes diversified cultures and subcultures, which usually characterize the unique features of the organisational divisions (Wild, Wild and Han 2014). Such of these divisions are units, departments, different locations and so on. Working within a social group by collecting people is much promising for an organisation (Hill, Cronk and Wickramasekera 2013). In such cases, the focus on the societal benefits and the cultural differences would be preferable to maintain the organisational value.

The study will be focusing on the understanding of the national culture, which is quite necessary for maintaining sustainability of the national and multinational company. The study will especially be focusing on the case of Woolworths Limited, which is the famous retail chain based on Australian retail market. Since, the company is trying to expand the brand efficiency by operating in the global market, it is important to understand the cultural value. The specification of the difference between the organisational culture and the national culture will be discussed in this study. Generally, it can be stated that the recognition of the dimensions would be signifying impact of the national culture that usually affect the globally operated corporations. Recognising these aspects will be conceptualised in the context of Woolworths.

The major purpose of the study is to evaluate the importance of the national culture for the multinational corporations, which seek to operate the business globally. The focus on the subject matter is needed to be supported through the assimilations the conceptual discussions. Therefore, the study will be revealing the major components that are associated with the value of the national culture while operating the business in the global scenario. In addition, the comparison between the cultural traits in the national and international context will also specify the purpose of the study.

Components associated with national culture while operating in the global business market

Woolworths was found in the year of 1924 in Sydney and is renowned as the famous retail store in the Australian market. The company is even signifying the most trustable and recognised brands in the Australian Supermarket. The motto of the company is to create the world class customer experience with the establishment of the sustainability management. The diversified brands like Endeavour Drinks Group, Master Home Improvement, Woolworths Money, ALH Group, and Woolworths Rewards have created the significant impact on the customers (Woolworthslimited.com.au 2016). However, the company has been focusing much on the sustainability development to ensure the business expansion in the international market. The major focus of the company is thus reflecting the diversity management, which is associated with the cultural influences on the internationalized corporate scenario. The company has been even signifying the strengthened position in maintaining the corporate social responsibilities (Woolworthslimited.com.au 2016). The excellent progress towards achieving the sustainability targets is quiet commendable and this has made the company trustworthy. More specifically, the different initiatives undertaken by the company to maintain the sustainability and promote the diversity program are reflecting the positive impact on the cultural values. However, the focus is needed to be based on the national cultural aspects, which are the major obstacles for the corporations operating globally. In keeping concentration on such aspects, the recommendations would be associated accordingly.

In considering the cultural values within the organisational context of Woolworths, it is required to understand the value of the cultures maintained in the organisational workforces. According to Ferraro and Brody (2015), the maintenance of the diversity is necessary within an organisational environment and this encourages the employees to determine their long-term career goals. Grant O’Brien, the CEO of Woolworths stated, “Whether someone is looking for a long term career, a technical skill, a casual job or just the chance to have a go, we can provide this for them. At Woolworths we are committed to having a diverse workforce” (Woolworthslimited.com.au 2016). It is noted that Woolworth is marked as the first Australian retailer, which has introduced the leaves related to the parental purposes. It was recognized that in the year of 2013, almost 2,278 employees were benefitted with such leaves. However, the most significant movement undertaken by Woolworths was the signing of landmark agreement with Australian Government in the year of 2012. As per this agreement, the people with diverse background including people with disability, indigenous people, old workers, and the people with long term unemployment can participate in the work programs. Moreover, the agreement indicates that these employees will be able to avail the opportunity to get the proper training session based on the innovative job creation. In June 2011, the Reconciliation Action Plan was launched and it was observed the number of the indigenous employees increased up to 2,506. It is noted that the plan attempts to assist the prevention of the gaps between non-indigenous ad indigenous people working within the same organisational environment. There are four major pillars associated with the formulation of such plan and these are as follows:

• Relationships: The first focus is to establish the positive working relationships with both the internal and the external stakeholder groups and the leaders in the community.
• Opportunities: The continuous process is enabling the Aboriginal and Torres Strait Islander Australian for facilitating the raining, employment, business, and education opportunities with Woolworths. The initiative undertaken by the company is considering both the formal and the informal access to the work related programs. More specifically, working with the small businesses along with the community investment programs has been considering the high range of the stores with high indigenous customer base.
• Respect: The development of the cultural understanding within the business environment has been encouraging the company to avail more opportunities as well as creating several policies and protocols.
• Reporting: The Company has been concentrating on keeping the records, monitoring the progress, and tracking the efficiencies of the outcomes.

Comparison between cultural traits in the national and international context

The above segments are reflecting the workplace diversity and the cultural evaluation necessary for the sustainability management. The key highlights associated with the business practices are much remarkable. It is noted that almost 53.6% of the female workforces are associated with the organisational activities. In fact, the women are provided with the leadership roles to manage the organisational purposes (Dunning 2014). The maintenance of the flexibility in the workplace scenario is thus concerning the opportunity to establish the business in the international market by considering such cultural influences.

Geert Hofstede, the Dutch social psychologist introduced ‘culture’ as the set of behavioural rules that are needed to be maintained by the group of people. He has identified the five diversified dimensions related to such cultural values and has taught the cooperation within the evaluation of the human essentials.  These diversified dimensions included in the Hofstede’s Model are discussed further:

Power Distance: As opined by Brewer and Venaik (013), the power distance dimension is considered as the literal management layer that connects the employees with upper authority. It is to be indicated that the individual contractor needs to report to the manager, manager needs to present the report to the director, director to the vice president, and vice president report to the CEO of the company (Hill, Cronk and Wickramasekera 2013). Unger, Rank and Gemünden (2014) revealed that the Power Distance Index (PDI) is mainly concentrating on the degree of equality and inequality.

PDI	Characteristic	Tips
High PDI	Centralized Organisation Identified gaps in author, compensation, and respect Complex hierarchy	Acknowledging the status of the leaders.
Low PDI	Equality between the employees and supervisors	Higher delegate Involving the decision-making process, which can be affected directly

Table 1: Power Distance Index

In keeping concentration on the higher PDI, it has been seen that the employees accept the inequality and the hierarchical distribution associated within an organisational scenario (Unger, Rank and Gemünden 2014). Employees need to understand the power specifications of the higher authority which drives the changes and lead the organisation towards progress (Venaik and Brewer 2016). More specifically, it can be mentioned that the cultural dimensions are representing the independent preferences for considering one state of affairs over another countries. The uniqueness of the individuals is therefore determined in this aspect. Zheng et al. (2012) even made a point in supporting such statement and it was stated that the culture is needed to be used by making the proper comparison between the power distances. Hence, the organisation may knock down the structural implication to connect the employees with the senior level. The power distance is even defining the ranking of the individuals in a society or in a company (Venaik and Brewer 2013). It has been seen that this is mostly used in the sociological and psychological studies. Some of the characteristics are associated with the power distance dimension in this Hofstede’s model. The large power distance indicates the autocratic leadership, which describes the authoritarian decision-making (Ho, Wang and Vitell 2012). In such cases, the employees need to consider the power of the upper management and have to work as per their instructions (Venaik and Brewer 2013). Along with such autocratic style, this particular form is also described as the paternalistic management style and centralized authority. One can generally classify the power distance into low power and the high power. The point of view of the individual is necessary in this particular segment, which is indicating the different cultural value in the society. It is true that recognition of the high power distance is generally reflecting the reality of life (Fullan 2014). Within an organisation, the decision made by the higher authority can determine the organisational practices (Taras, Steel and Kirkman 2012). Hence, while one company is trying to operate the business globally, it is required to understand the importance of power distance.

Recommendations for Woolworths Limited to approach cultural differences

Difference between Small and Large Power Distance: The difference between such small and large power distance are structured in the table below:

Small Power Distance	Large Power Distance
In the small power distance the use of power is needed to be authentic and subjected to the justified criteria of good or bad. The hierarchy is related to the inequality of roles and depended on the convenience Consultation is needed to be consulted	Large power distance does not deal with legitimate functionality Hierarchy determines the existential inequality  Larger power distance commands over the subordinates

Table 2: Difference between Small and larger power distance

In exploring the key concept of power distance, it can be inferred that if someone belongs to one culture that has been highlighting the high power distance; the person will view the society as the real form of the hierarchal power. In such cases, people tend to accept the reality and consider the authoritarian power and work accordingly (De Mooij 2013). The subordinates simply acknowledge the power of the superior people as per the hierarchy. People usually follow the leader to maintain their position in the society (Ferraro and Brody 2015). The orders received from the higher authority are hardly questions due to such power distance.

Figure 1: Hofstede’s five cultural dimensions

Individualism: This dimension of the model has been signifying the unique characteristic attributes of the employees as well as the formulation of integrated collective group. In other words, it can also be stated that the individualism refers to the culture of the self-oriented members that reflects in their behaviour. Lim and Park (2013) pointed out that the culture of the individualists can be placed as higher value based attributes that determines the individual achievement and the self-interests. The collectivism is the opposite form of individualism (Berger 2014). In this aspect, the collectivism refers to the societal purposes, which has no link with the individual characteristics. The difference between the individualism and collectivism is presented further:

Individualism	Collectivism
People usually are concentrating on their own selves and their current family	People focus on extending families and protect them in exchange of the loyalties.
Right of privacy	Belonging stress
Classified as individuals	Classified as group
Present their personal opinion	Consulting with the group
Task prevails over relationships	Relationships prevails over tasks

Table 3: Difference between Individualism and Collectivism

Individualism is considered as the political philosophy, social outlook, or the moral stance that influence the moral worth of the individuals (Shafritz, Ott and Jang 2015). It has been seen that the individuals usually promote the practices that are necessary in accomplishing the pre-determined goals. It is even helpful for recognising the self-worth and makes a person self-reliable. The advocacies related to the individual interests are needed to be achieved through the preferences over any social group or a state (Taras et al. 2014). On the other hand, opposing the external interference upon the interests of others by the institutions or any society can also be considered in this segment (Antonczyk, Breuer and Salzmann 2014). The basic focus of the individualism is to define the fundamental premises, which consider the human individual as the primary importance. Therefore, the individualism is often described as “the right of the individual to freedom and self-realization”.

The position of the individualism in a society can sometimes be controversial. On the contrary, it has been seen that the person can take the attempt to identify the self-interests depending on the personal needs (Ferraro and Brody 2015). In such cases, the individualists disobey the social structure in a prominent manner. Lee, Scandura and Sharif (2014) ensured that one of the most common traits on an individualist is the independent thinking. In fact, a form of ignorance can also be noticed in the behavioural trait of an individualist.

Understanding the value of cultures maintained in organisational workforce

Masculinity and Femininity: In considering the masculinity dimension, the societal preferences are depended on the achievements. Some of the researches related to this dimension are specifying the values based on genders. Firstly, it has been seen the value of the woman slightly differ from that of the value of men in the society. On the other hand, it is seen that the value of the men varies from one country to another by containing the assertive dimensions. In case of the internationalized companies, this assertiveness is also much required (Venaik and Brewer 2013). In some of the cases, the value of men determines the competitiveness in considering the value of the women. In feminine countries, the same modesty has been found while in the masculine country, the reflection of the competitiveness has been featured. The gap between the values of men and women is also being featured in such cases. However, the differences between the value of masculinity and femininity are presented further:

Masculinity	Femininity
The maximum amount of the emotional and the differentiation between social roles are found.	Fewer amounts of the emotional and diversified social roles are foreseen.
Work usually prevails over the family members	Maintenance of the balance between the family and work is recognised
Men should be assertive and women may sometimes be assertive and ambitious.	Both men and women are needed  to be caring and modest
Boys usually fight back and they never cry. On the other hand, girls usually cry and have not got the authority to fight back.	Both the boys and girls can cry but they never should fight back.
Sympathy is shown for the weak	Admirations are for the strong personalities
Both the mothers and fathers have to deal with the facts and the feelings	Mothers deal with the feelings and fathers deal with the facts
The number of children should be decided by the mother	Fathers usually decide the number of the children
Many woman can take participations on the elected political parties	Few of the women have the authority to participate on the elected political parties.
Religions are mainly based on the human beings	Religions are mainly based on the gods and goddesses.

Table 4: Differences between Masculinity and Femininity

Unger, Rank and Gemünden (2014) mentioned that the masculinity is usually signifying the traits of the male as recognised by the society. On the contrary, as opined by Zheng et al. (2012), the femininity is considered as the traditional thoughts of conventional traits that are possessed by the individuals. Such of these traits are carefulness, supportive, and something surrounding the relationship attributes. It is to be notified that each of the types is responding to the societal matters in diversified ways. In case of the business companies, the audiences play such roles of responding in different manners (Budhwar and Debrah 2013). In this regards, the communicators need to realize the relevant culture that is needed to be accepted for surviving in a society. Masculine cultures are mostly depended on the male gender roles, which are mainly associated with the success, value, and competition. The assimilation of the power, dominance, assertiveness, and the material success is foreseen within such traits of the behaviour. According to Moran, Abramson and Moran (2014), this particular dimension has been signifying the measurement of the organisational personality against the stereotypes culture of masculinity and femininity. Most importantly, one company with the nature of the masculinity is mainly operating the business with more assertiveness and the competiveness. On the other hand, the feminine culture within an organisation is mostly associated with the modesty and care approaches. Hence, the employees are always shown the ways of their leaders. If the leaders tend to focus on the masculine traits, the assertiveness as well as the competitiveness will be huge in amount. Similarly, the feminism culture would specify the modesty and caring accordingly. Following the path of the masculine nature would encourage the employees to be more competitive towards the competitors. Simultaneously, following the feminism within an organisation would lead the employees towards acquiring the trait of tolerance and compassions.

Uncertainty Avoidance: Lee, Scandura and Sharif (2014) explained that the uncertainty avoidance differs from the risk avoidance. The uncertainty avoidance is much influenced by tolerance for ambiguity. To be very specific, it can be mentioned that the indication of the uncertainty avoidance is justifying the extent of providing the comforts to the members of the cultural program. The application of several codes of conduct, rules, regulations, and laws are effective enough in preventing such uncertain situations. There are some of the classifications are seen between the weak and string uncertain avoidance. These are shown below:

Strong Uncertainty Avoidance	Weak Uncertainty Avoidance
Involvement of the higher stress, anxiety, emotionality, and neuroticism	Low stress, low anxiety, ease, and self-control.
The inherent life seems to be surrounded with more threats that are needed to be solved out	The inherent life is associated with acceptability and each of the day can be survived
Require the clarifications and structured methods	Quite comfortable with chaos and ambiguity
Rules are required for the emotional state of mind if it is not being controlled.	Written and unwritten rules are eliminated.
Score is low in considering the well-being and subjective health	Score is high in considering the well-being and subjective health
Staying in jobs is tough and disliked	Job can be changed frequently
The belief in ultimate truth is associated with the religious views as well as the philosophies.	Citizens usually feel more competent towards the authorities in case of the political scenario.
Intolerance is found	Tolerance is the major trait

Table 5: Difference between Strong and Weak Uncertainty Avoidance Societies

It is to be noted that people tend to control their lives as per their wishes and expectations. The societies, which are much fused towards the uncertainty avoidance, more likely to be attempting the predictable life. However, once they feel that they cannot get hold of such society or lives, they usually stop trying to chase their wishes. These people usually put their faith on Gods. The model of Hofstede deals with the measurement of the employees’ comfort level with the evaluation of the unstructured environments. When any of the surprising events take place, many of the people are unable to tolerate such conditions. In determining the organisational scenario, the structure is needed to be depended on the efficiency and safety (Zheng et al. 2012). Any organisation associated with the creative skills is much influenced by the cultural flexibility and problem solving traits. If the employee cannot find the required comfort while dealing with a global organisation, it will be harmful for the company to acquire the profitability. The employee who is much fond of planning each moment of the working life might get frustrated too easily in such situations.

Long Term Orientation: The long term orientation usually refers to the degree to which people explain their extent of being inexplicable. This long term orientation is somewhat related to the nationalism and religiosity (Taras et al. 2014). This particular dimension is added currently and due to such reason, the information regarding such dimension is very less. However, it is noted that this particular dimension has the linking with the eastern culture in time of the Chinese leader Confucius (Venaik and Brewer 2013). The dimension is usually concentrating on the measurement of the long term values and is completely against of the short term values. In this structure, the leaders are highly respected. It has been seen that the employers with the lesser measurement of the long-term orientation signify the stability and maintain the customs, which is reflecting the reciprocating favours and rewards from others.

The dimensions based on the natural culture are signifying the cultural value and the diversifications associated in the society (Schneider, Ehrhart and Macey 2013). Company like Woolworths need to identify the proper dimensions while expanding the business globally. Even though the organisational cultures are much influenced by the national cultures, there are some of the significant differences are also foreseen (Fullan 2014). The description of the differentiation between the organisational culture and national culture is provided further: 

The superior strength of the national culture and the organisational culture depends on the consequences. It is to be indicated that whether it is national culture or the organisational culture, both have the significant impact on the lives of the people (Li et al. 2013). It is sometimes rare for the employees. In fact, the corporations which have been operating globally may face the potential challenges and conflicts in adjusting with such diversified changes. Brigham et al. 2014) pointed out that the culture of a country signifies the formal traits whereas the organisational culture mostly signifies the informal traits. The result derived from such shared values, behaviours of the population group, and preferences are different to each of the segments. In case of the formulation of of the sub-groups, the preferences are also different to each other.

On the other hand, in describing the organisational culture, the establishment of the align behaviours and common values are taken into consideration as the benefits. Antonczyk, Breuer and Salzmann (2014) revealed other different forces can also shape the organisational culture. In many of the corporate firms, use of the corporate ethics guidelines and employee handbook is required. Apart from these, the written value definitions as well as the other tools are also necessary for determining this type of alignment with the national culture (Ferraro and Brody 2015). The previous researches cannot present the justified answer in defining the alignment between the organisational culture and the national culture. Some of the published results have presented some useful materials regarding such subject matter.

However, the debate is based on the superiority of the power between these two cultures. It is to be indicated that there is no scope of assuming the strengthened capacity of the corporate culture, which sometimes create influence on the national culture (Cavusgil et al. 2014). When employees are trying to respond in focusing on the national culture, the conflict with the organisational culture takes place more prominently. Therefore, many of the corporations seek for recruiting only those who are compatible with their organisational cultures and perform the business practices accordingly (Berger 2014). Some of the changes in the several segments of the organisational culture are required in such cases. Simultaneously, some of the stages are needed to be developed accordingly for resolving such conflicts, which can make the foreigners feel much comfortable in dealing with the companies. However, the compromise with the national culture is much required in such cases.

Some of the theorists developed the dimensions to evaluate differences foreseen in the national culture. It is to be interpreted that the influence of such diversified cultures may create the significant impact on the foreign employees while they have been dealing with the foreign stakeholders (Herzfeld 2014). More specifically, the managers usually face the potential challenges while recruiting people from different cultural background. Banks (2015) explained that the national cultures are mainly concentrated on the deep rooted value in determining the respective cultures (Ang and Van Dyne 2015). The cultural values associated with such aspect have been structuring the expectation of the people to maintain the strengthened and transparent relationship with the leaders. However, such of these expectations are needed to be balanced between the employees and the employers. In some of the cases, it is seen that the cultural distance cause the conflicts and problems for the companies, which are operating the business globally.

During the recruitment process, the company may ensure the benefits of establishing the unified organisational cultures (Shafritz, Ott and Jang 2015). The major difference between these two cultures is that while national culture is found to be associated with the values of the culture, the corporate culture is based on the diversified corporate practices. The international companies are needed to be accustomed with such cultural value that can be helpful in expanding the business across the borders and achieve the success accordingly (Cavusgil et al. 2014). The practices found in the national culture can sometimes be difficult in managing people to make them socialize. It is to be noted that not every company get benefitted y recruiting the people from diversified cultural background. The corporate culture has to cope with the differences existed in the national culture (Ang and Van Dyne 2015). On the contrary, many of the corporations usually exploit the cultural differences to understand the core value of the cultural competence.

The continuous changes in world may sometimes affect the cultural values for both the nationalism and the corporate aspect. Hence, it is important to create the dimension paradigm that will be helpful to understand the underpinning logic and diversified implications of change (Ferraro and Brody 2015). Some of the critics have presented their argumentative suggestions, which indicate that the dimensions are needed to be extended in considering the frequent changes in the Globe. However, while analysing the statistical concept, it has been seen that majority of the dimensions are already exist. Moran, R.T., Abramson and Moran (2014) explained that these statistical paradigms require the proper validation by ensuring the establishment of the effective correlation. The assimilation of the external measurement is also much required in such cases (De Mooij 2013). More specifically, it can be inferred that the huge numbers of the dimensions are generally small in structure.

The above discussion has been specifying the dimensional view of the natural culture. It is true that Woolworths has been promoting the diversifying cultural programs for the organisation to maintain the sustainability. However, while expanding business in the international market, it is required to keep the concentration on the local culture. It is a retail chain and it requires the customer base for determining the achievement of the business objectives. While establishing the business infrastructure in the foreign countries or in the international market, it is required to identify the cultural traits of the local societies. The identification of their needs would be considered as the driving force for maintaining sustainability. However, in some of the cases, majority of the global corporations fail to manage the dimensional aspects. Being a local retail sector, Woolworths needs to keep the business standards high to operate globally. Dealing with the diversified cultured people is quite a difficult aspect to perform. In fact, while operating globally, the company would require the local people to be associated with the business practices. For example, if the western culture aligns with the eastern culture, the possibilities of conflicts may arise. More specifically, if Woolworths need to expand their business in Asian countries, the difference between the cultural traits may clash. In such case, the occurrence of any of the conflicts may prove to be much harmful for the business establishment. 

Conclusion

The study has been considering the difference between the national culture and the corporate culture. To be very specific, it can be stated that the study has been featuring the impact of the national culture on the corporations, which are operating the business practices globally. The changes in the global market have been very frequent in these current times. The study is associated with the generalised idea of the business practices maintained by Woolworths, the famous retail brand in Australian market. It is to be noted that the comoany has been maintaining the cultural traits in a commendable manner. Therefore, the company has been promoting the diversity aspect to maintain the cultural differences among the employees and facilitate the business programs. The agreement of Reconciliation Action Plan for promoting the diversity program is providing the opportunities to the indigenous people. However, in considering the national cultures, the dimension model of Hofstede has been defined.  

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