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Management in country X- How does it vary across cultures?
1. EXECUTIVE SUMMARY:
ATTIRE VILLE Pvt Ltd. is a cloth manufacturing company based in United Kingdom. It was originally found in 2005, and is well established in the country. Seeing the market trend the company wants to expand the business in the international markets as well, but they are facing some cultural conflicts and they are not well informed about these conflicts. With its new strategies it wants to conquer the international market in the clothing sector.
The objective of the business plan is to raise development of the company. This company is dealing in cloth manufacture of all age groups that is from infants, children, teenagers and elders. But they are unaware about the market requirements in the markets abroad.
We are a consultancy company which help company’s and sole proprietors in dealing with their business problems and troubles. It might be domestic or international issues.
Attire Ville Pvt. Ltd. Is a cloth manufacturing company and our client, they need help and advice from our consultancy for their international business expansion plan. The information they need is regarding culture that is being followed in various parts of world. That is they are unaware that what kind of cultural conflicts can be faced in the process of expansion of business in the international markets.
2. OVERVIEW OF THE SITUATION:
Substantial part of international trade is carried out by MNC’s that are under conflicting pressures of their stakeholders. Some of the notable pressures are listed below:
• Pressure to meet demands from consumers differing in their lifestyles and environmental factors on a firm to meet their differing expectations from the same product and/or service.
• Pressure to meet the expectations of shareholders about rate of return on investment, requiring them to be prudent investors and to effectively handle various risks of their activities.
• Pressure to do effective financial management including tax planning.
• Pressure to compete.
A review of various pressures on major players in international trade shows the needs to clearly lay down guidelines, in the form of code of ethics for their employees.
The first and foremost criterion that needs to be kept in mind is the geographical environment of the country wherein the business is planned to expand, and there after comes the cultural factors.
Geography is the most important component of the foreign environment especially when the company deals in clothing. It refers to country’s climate, topography, natural resources and people. Everyone engaged in international business must have some knowledge of geographic features of the foreign country as these influence the nature and characteristics of the society. It also affects the demand pattern of the people living in the country. Geography is a major contributory factor to the development of business systems, trade centers’ and routes.
A different climatic condition which is rain, snowfall, wind, temperature, humidity, etc. gives rise to demand for different types of products. It is largely due to climatic differences that people differ in their housing, clothing, and food, medical and recreational needs. Therefore, the company has to keep in mind the climatic conditions of the country they are planning to have their cloth manufacturing plant. And after all these factors comes the cultural factors that need to be given importance.
3. ANALYSIS OF THE SITUATION:
Socio cultural environment is very important to be kept in mind since any company should know the difference in culture of the other countries. Business is as much a cultural phenomenon as it is an economic activity. Per capita income in two countries may be same, yet the consumption patterns of these countries may differ. Cultural forces have considerable impact on the types of product people consume; designs, colors, and symbols they like; dresses they wear and emphasis they place on religion, work, entertainment, family and other social relations. Cultural environment influences all aspects of human behavior and is pervasive in all facets of business operations.
Hosmer has suggested a model for ethical analysis decisions that is helpful in analyzing the cultural problem and dilemmas of international manager.
CULTURE can be defined as a “sum total of man’s knowledge, beliefs, art, morals, laws, customs and any other capabilities and habits acquired by man as a member of society.” It is a distinctive way of life of a group of people, their complete design of living. Culture thus refers to a man’s entire social heritage- a distinctive style of a society and its total value system which is intricately related to the consumption pattern of the people and management philosophies and practices. Furthermore, within each culture there are many sub-cultures that can have business significances for instance in a country like USA distinct sub culture prevail in the south, north eastern on mid western parts. Sub cultures are found in all national cultures and failure to recognize them may create impression of sameness which in reality may not exist. A single national and political boundary does not necessarily mean a single culture entity.
ELEMENTS OF CULTURE:
The following are the elements of the culture which are needed to be understood by any company to know the cultural environment of other countries:
It is an important element of culture and it is language through which most of the communication takes place. An international marketer should thorough understanding of the language of the market particularly the semantic differentials and idiomatic nuances which are essential characteristics of all languages of the world. For instance, Londoners speak British English, Americans speak different English. Also in some cases same words have different meanings in different countries therefore the company have be vigilant in deciding the words that they use while selling the products.
It pertains to a culture’s sense of beauty and good taste, and is expressed in arts, drama, music, folklore, dance and the like. Aesthetics are special interest to the international business executives for these govern the norms of beauty in a society and are helpful in correctly interpreting meanings of various methods of artistic expressions, colors, shapes, forms and symbols in particular culture. Colors for instance mean different things to different people for example Green is restful colors for Americans but it is disliked by people in Malaysia where it connotes illness and death. Sensitivity to the aesthetics of a society and their symbolic expressions can greatly help in avoiding socially embarrassing situations and correctly designing the products and messages.
Education is generally understood as formal schooling. But it is better to adopt a broader perspective and define education as any process, formal or informal, through which one acquires skills, ideas, values and attitudes. It is important as it affects not only the educational levels but also the development of mental faculties and various skills.
According to Ball and Mc Culloch, material culture refers to all man-made objects and its study is concerned with how man makes things and who makes what and why. While the question ‘how’ relates to technology, other questions ‘who’, ‘what’ and ‘why’ are part of economics.
It includes the ways and means applied in making of material goods. It is technical know-how in possession of the people of a society. Choice of technology has its repercussions on the size of investment, scale of operations as well as type and extent of factors of production to be employed. Technology transfer has been a highly controversial issue while many developing countries have laid down stringent rules and regulations concerning technology imports and payments, developed countries as well as MNCs have their own policy regarding the nature of technology to be transferred and the conditions governing the transfer.
Social Groups and Organization:
A study of social groups and organizations is important as it determines how people relate to one another and organize their activities. The size and cohesiveness of the family, role of men and women in society, and positions of different social classes differ from country to country.
Business customs and practices:
A familiarity with business customs and practices prevalent in different countries is a must to avoid business blunders. An international business manager must have necessary knowledge about how business is conducted and what importance business people in foreign country attach to work, time, formality, change and achievement
4. SOLUTIONS AND RECOMMENDATIONS:
A person dealing with different people from different cultures should be well aware of differences in the number and nature of stages involved in business negotiations and formalities to be observed in concluding business contracts.
Ethical System of Belief:
1. Eternal Laws: the religious teachings reveal the moral standards and these standards are eternal law to which we should adhere. However, multiple interpretation of the law creates problem.
2. Utilitarian Theory: the perceived outcome of the action provides standards. Following approach, it is easy to justify immoral acts by referring to the benefits to the majority at the expense of a minority.
3. Universal Theory (Formalism): in this case, standards are derived from intent of the decision according to universal principles. The problem in this approach arises from the concept of universality and who judges the morality of principles.
4. Distributive Justice: a single value of justice, namely that everyone should act towards the more equitable distribution of benefits provides the basis for moral standards. It is believed that this will lead to social cooperation. However, the social cooperation may or may not occur when this decision making rule is followed.
The company should take the responsibility of being socially correct and appropriate. Therefore they need work accordingly and the following are the social responsibilities of any company and these could help the company to ground itself in the international markets.
Social responsibility can be examined at four levels, these are:
1. Economic: for all profit business, an organization has economic responsibility to produce product and services needed, by people and sell them at profit. Peter Druker advises organizations not to undertake social actions that are economically unviable or act as distraction in achieving a minimally acceptable profit level.
2. Legal: for an organization to pursue its activities within the boundaries of law and regulations is it second responsibility and is termed as legal responsibility. The Laws and regulation of a society do not cover all the possible actions that an organization and its managers are called upon to undertake.
AREAS OF SOCIAL RESPONSIBILTY: Socially responsible organizations are all the time looking for creative and new ways of servicing their stakeholders. Such efforts can be grouped under the following categories:
- Local community welfare of the international market including health care, education , human rights, customer rights and support for cultural events.
Socially responsible business van make substantial differences to the welfare of local and regional community by providing leadership and assistance in solving its pressing needs. By devising well considered programs, many banks have shown that it is possible to be both socially responsible and financially sound. Socially responsible organizations have also realized that investing in community healthcare is not only but also valuable and necessary for everyone including the company, the employees and the community at large.
Many organization earmark large some of money for community development and welfare. The resource for the purpose need not have to be large. Encouraging and providing time off managers and employees to do volunteer work for hospitals, healthcare centers’ and engage in other welfare and develop mental activities.
5. FORECASTS AND OUTCOMES
Here we would like to quote an example for our client so that they can understand well about the international culture and attitudes.
A production manager who had been sent to some foreign country and was convinced that he could motivate workers to higher productivity by instituting a more democratic decision making style. He brought in trainers from the home office to teach supervisors how to solicit decisions and feedbacks from the workers. Shortly after the new management style was introduced the workers began quitting their job when asked why, they replied that the new production manager and his supervisors apparently did not know what to do and were therefore, asking the workers for advice. Obviously, the company would not last long with this kind of management, and workers, therefore, wanted to quit before the collapse because then everyone would be hunting for a job at the same time.
SOURCE: Based on Ball and McCulloch (1988).
Thus these things would help company to sustain in the international market. And thus making profits with higher demands and satisfying people as well.
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