ASSIGNMENT SUBMISSION COVER SHEET
SUBJECT CODE : BUSI 1313
SUBJECT TITLE : Cross Cultural Management
PROGRAMME : UOG BABM
SEGi ID : SCKL – 00047832
UOG ID : 000996065
LECTURER’S NAME : Dr. Gary Tan
LEARNING CENTRE : SEGi COLLEGE , KUALA LUMPUR
SUBMISSION DATE: 29th December 2017
TABLE OF CONTENT
1. Key culture factors 3
2. Culture advantages and disadvantages4
3. National culture and Organization culture differences5 – 7
4.Subsidiaries Would Accept The Mnc (Us Based)
GHRM Policies And Practices 7 – 9
5.Importance Of Intercultural Communication In Subsidiary Level 9 – 10
6. The barriers to intercultural communication within and between the 11 – 12 subsidiaries and with the head office
KEY CULTURE FACTORS
Culture is the set of qualities, thoughts, attitudes, and different images made to shape human behaviour. Banks (1984) characterizes culture as “the conduct, patterns, images, establishments, values, and other human made components of the society”.
The HiTree organisation wants to increase the integration of key global HRM policies and practices into each subsidiary. According to the diagram above, both the socio-cultural environment and the enterprise environment affect internal work culture and HRM practices. In the framework, there is a process which influences on the transfer of HRM policies and practices into each subsidiary (Anne Cox, 2014). Under the external environment, there is three division which are the social, national culture values and political/economic. The organisational work culture comes after the national culture values and it is divided into culturally indigenous and culturally alien HRM practices.
According to Professor Geert Hofstede (1967), he did a study of people who worked at IBM in over 50 countries around the world. Hofstede theory cover 6 dimensions of cross cultural management, which consist of power distance index (high vs. low), individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance index (high vs. low) pragmatic vs. normative and indulgence vs. restraint (Geert Hofstede,1967).
CULTURE ADVANTAGES AND DISADVANTAGES
In every business there will be issues in their cross-cultural management. Within individual firms, for instance, supervisors from a remote parent organization need to understand that local workers from the host country may require different organization structures and HRM strategies (RUGM, 2008). The advantages of MNC doing business across borders would be improvement of organisation’s employee on their work performance. When employees working in different environment, they might have the spirit to work harder and achieve their goals. Secondly there’s an advantage by reducing costs, it is done by offshoring; relocating a business to another country and gaining new experiences in the new market (Copeland, 2010).
The disadvantages could be culture barriers. Different culture has different values and for some reason these differences could bring some issues to the organization. For an example, gender, in some country they are not given equal right as man (Van Thompson, 2009). Besides that, other disadvantages that effects the culture would be legal issues. In every country there are different types of country laws. The organisation might have to pay extra taxes and import duties in the United States, if the company is importing goods across borders (Van Thompson, 2009).
US Germany Finland India
Power Distance Index (PDI) 40 35 33 77
Individualism vs Collectivism (IDV) 91 67 63 48
Masculinity vs Femininity (MAS) 62 66 26 56
Uncertainty Avoidance Index (UAI) 46 65 59 40
Long Term Orientation vs Short Term Normative Orientation (LTO) 26 83 38 51
Indulgence vs Restraint (IND) 68 40 57 26
Difference from US
(Absolute Value) Germany Finland India Dimension Difference
Power Distance Index (PDI) 5 7 37 49
Individualism vs Collectivism (IDV) 24 28 43 95
Masculinity vs Femininity (MAS) 4 36 6 46
Uncertainty Avoidance Index (UAI) 19 13 6 38
Long Term Orientation vs Short Term Normative Orientation (LTO) 57 12 25 94
Indulgence vs Restraint (IND) 28 11 42 81
Total 137 107 159 Table 2
According to Hofstede’s 6 dimensions of national culture, the most important dimensions identified among the subsidiaries of HiTree are long term vs. short term orientation, masculinity vs. femininity and individualism vs. collectivism. Germany has ranked the highest with 57, followed by India 43 and Finland with 36.
According to Hofstede’s national culture theory, Germany is more of long term oriented culture. HiTree Germany an organisation with long-term orientation culture focuses more on future. HiTree Germany has this value, they are more persistence, being able to adopt and a society that save money (Study.com, 2013). As they scored 57, in their society people believe that truth depends very much on time, statement and condition. For an example, they have strong work ethic and shows great respect for status differences (Cheryl Limer, 2013).
Another dimension of Hofstede is individualism vs. collectivism, India’s falls more on individualism scored 43, is a group with both collectivistic and individualist. People or organisation with individualist is expected to take care of themselves and their family members. HiTree India prefers personalised relationship rather than contractual relationship. Individualism culture people prefer to work alone and direct communication within employees. Indians are also very strong in their religion views, strong dominant of Hinduism (Hofstede Insight, 2017).
The lowest ranked dimension in the comparison of national culture is masculinity vs. femininity. Finland scored 36, they are low with femininity. According to Hofstede, femininity culture talks about nurturing, caring for the weak and quality of life. In femininity culture, both genders have to support each other in order to persevere in harsh life conditions. For an example, in Feminine nations the attention is on “working with a specific end goal to live”, managers make progress toward accord, individuals esteem equity, solidarity and quality in their working lives. Problems are solved compromise and negotiation (Hofstede Insight, 2017).
NATIONAL AND ORGANISATION CULTURE DIFFERENCES
Human resource management plays a very important part in an organisation yet crucial work as well. The practices of HRM involves recruiting, HR planning, selection, job rotation, performance appraisal, leadership development and others. According to the case study, HiTree subsidiaries has multi-cultural environment which causes differences in the employees behaviour, attitude, culture, and practices in workplace. It can lead differences in their national culture and organisation culture.
National culture: Organisations are structural regulations with deep historical roots; education; trade unions and religious institutions.
Organisation culture: At an organizational elevation, cultural history and shared experiences can create cross cultural challenges.
US Germany Finland India
Means-Oriented Vs. Goal-Oriented 1 3 3 5
Internally Driven Vs. Externally Driven 1 3 3 5
Easygoing Work Discipline Vs. Strict Work Discipline 1 5 5 5
Local Vs. Professional 5 5 3 1
Open System Vs. Closed System 3 5 3 1
Employee-Oriented Vs. Work-Oriented 1 3 3 5
Difference from US
(Absolute Value) Germany Finland India Dimension Difference
Means-Oriented vs. Goal-Oriented 2 2 4 8
Internally Driven vs. Externally Driven 2 2 4 8
Easygoing Work Discipline vs. Strict Work Discipline 4 4 4 12
Local Vs. Professional 0 -2 -4 6
Open System vs. Closed System 3 0 -2 1
Employee-Oriented vs. Work-Oriented 2 2 4 8
Total 17 8 10 Table 4
70 – 100High (5)
40 – 69Medium (3)
Below 40Low (1)
The culture of an organization represents certain predefined policies which guide the employees and give them a sense of direction at workplace. There are 6 types of dimensions according to Hofstede’s study; means vs. goal oriented, internally vs. externally driven, easy going vs. strict work discipline, local vs. professional, open vs. closed system, and employee vs. work oriented (Hofstede Insight, 2017).
According to the table 3 and 4 above, Germany ranked the highest difference (absolute value) with the score of 17, and followed by India with score of 10 and Finland scored the lowest 8. In Germany, they have a very strong organisational culture and the roles of managers are technical coordination. Hitree Germany has a very tall structure and their leadership styles are based on German cultural values. They prefer to have formal and communication is direct during meetings. According to the case study, HiTree Germany has a very good HRM practices placed and they reward their employees’ performance. For an example, the company’s personal development structure won famous German prize in the early 2000s.
In India, according to Hofstede’s multi focus model organisation prefers to be more employees oriented and has an easy-going work environment. HiTree India treats their staffs has family and feel that personal problems can be taken in at workplace (Hofstede Insight, 2017). Their leadership style is different from the other subsidiaries; leaders are expected to be involved in work process. The subordinates can depend for help from the leader itself. Due to their easy-going working environment, the business meetings are done in friendly and relaxed atmosphere.
Finland’s organisation culture is extremely driven and goal-oriented. In an extremely driven culture like HiTree Finland, manager focuses people moving forward in effective communication and results are important and essential. HiTree Finland also focuses more in productive use of their time; the employees should strictly follow the timetables. In a very goal- oriented organisation, employees are needed to achieve the tasks given within specific time (Hofstede Insight, 2017).
SUBSIDIARIES WOULD ACCEPT THE MNC (US BASED) GHRM POLICIES AND PRACTICES
Comparison between US and Subsidiaries
NATIONAL CULTURE FINLAND GERMANY INDIA
ORGANISATIONAL CULTURE GERMANY INDIA FINLAND
20288256985Finland = 1 + 3 = 2
360045029845Easiest to hardest to enter US GHRM policies and practices
0Easiest to hardest to enter US GHRM policies and practices
Germany = 2 + 1 = 1.5
India = 3 + 2 = 2.5
According to the rank diagram above, both national and organisational culture doesn’t match. So it’s not east to apply US GHRM policies and practice into the HiTree subsidiaries.
Looking at the comparison between US and Germany’s national culture; Germany ranked high in long term orientation (83) compared to US (26) is the opposite of it. Germany shows they are a pragmatic country. They trust that reality depends particularly on circumstance, setting and time. German culture prefers to be more thrift, but in the US culture, organizations are willing to spend even though it leads to borrowing. The next dimension that is different from US culture and Germany’s culture would be individualistic vs. collectivism. Germany ranked (67) and US ranked (91), whereby Germany is low in collectivism. Another comparison between the organization cultures, US have a bit of strict work discipline and Germany is more of easy going work discipline.
The second country falls in the comparison is Finland. According to Hofstede’s 6 dimension of national culture, Finland is low in femininity (26) and The US is high in masculinity (62). According to the case study, Finland prefers to work in groups and nurtures the staffs throughout the activity or task given to them. In HiTree Finland, union presence is high among workers that mean the organization cares for the employee dissatisfactions. In the organisation culture comparison, US culture is more professional and Finland’s culture is local. The HRM practices in HiTree Finland are medium and high performances work systems (Hofstede Insight, 2017).
The last country in the subsidiary is India. India’s national culture is very high in power distance compared to US culture. India scored 77 and US scored 40 which is not a surprise. In the culture of US, everybody in the organization wants equal distribution of power and acknowledges control relations that are more consultative or law based (Gloria Holder, 2012). Organizations high in power distance, like India is less intense acknowledge control relations that are more dictatorial and paternalistic. Looking on to the organisational culture comparisons, India’s results are almost opposite to US culture. For an example, India is high in employee-oriented and internally driven when compared to US culture is low in both dimensions. In India, their standardisation of IHRM applications is low.
1.0 IMPORTANCE OF INTERCULTURAL COMMUNICATION IN SUBSIDIARY LEVEL
Intercultural communication is done throughout all the countries around the world. In understanding the intercultural communication is a bit lower compared to the other types of communication (Stephen M. Croucher, 2015). In the case of HiTree, the analysis should be done between the HQ and subsidiary, between the subsidiaries and within the subsidiary. According to Edward Hall’s intercultural communication theory, he examined, discovered low context and high context culture.
83820034290000-571500257175Business Continuity and expansion
0Business Continuity and expansion
3505200337820001999615233045Creating positive work environment
0Creating positive work environment
The importance of intercultural communication in the level of subsidiary are; business continuity and expansion, minimizing conflicts, creating positive work environment, innovations and the company’s turnover will increase.
When there is misunderstanding in intercultural communication, the conflicts will increase. The examples of conflict would be wrong feedbacks given, disagreement, obtaining ideas and discord (Shum Su Kei ; Rashad Yazdanifard, 2015). Staff in an organization comes from different types of culture and walk of life. The overall bunch execution of the firm can diminish radically on the off chance that such debate of identities are not settled and they do no treach a shared conviction to work cooperatively (Pelled, 1993). Therefore, intercultural communication is important to reduce conflicts.
Another importance of intercultural communication would be business continuity and expansion. Once a company has branched out to a different country, communication is really important globally. For an example, the organization would have better understanding with customers and other employees round them. If the organization expands in various countries, there would be higher profits as the result (Shum Su Kei ; Rashad Yazdanifard, 2015).
The next important point for intercultural communication is creating positive work environment. This is a very important element in every organization, without positive work environment; employee or workers would get tensed and stressed in the particular office. Each individual expect to be respected and given appreciation on what they do, to find that they are worth being in the company. At the same time, managers could encourage multi-language communication, to encourage employees in order to create positive working environment (Shum Su Kei ; Rashad Yazdanifard, 2015).
Innovation is also equally important in intercultural communication. When there is misunderstanding between employees in an organization, less ideas and innovation will decrease. For an example, if it’s a small business, the company need to be innovative enough to be competitive. If there is lack of innovation, the company will face certain downfalls. One of the key successful of business is keeping up the innovation and creativity according to current trends of product, operations and services. Therefore, intercultural communication is important and it increases innovative ideas (Chad Brooks, 2013).
The last importance of intercultural communication is company’s turnover. When there is high rate of employee turnover, can have unnecessary cost in the company. When the turnover increases, there will be extra overtime costs, hiring costs and low productivity (Luanne Kelchner). Overall intercultural is important to businesses; but it is not that easy to be achieved by the subsidiary level.
2.0 THE BARRIERS TO INTERCULTURAL COMMUNICATION WITHIN AND
BETWEEN THE SUBSIDIARIES AND WITH THE HEAD OFFICE
The CEO of HiTree should know the barriers could be faced in intercultural communication within and between the subsidiaries and with the head office.
In intercultural communication perspective; according to Edward Hall’s theory (1976), Germany’s communication style is low-context. HiTree Germany begins every meeting with introduction of guests and associates (Angela Gamsriegler, 2005). This could a barriers, if a new expat is working at Germany, he or she adopt that first impression is culturally important. According to Hoftsede theory, uncertainty avoidance is high and they don’t avoid the future but able to accept ideas of the future.
On the other hand, Finland’s intercultural communication is low too. HiTree Finland is “particular Finnish”. But to non-Finns, they clearly say what they want and convey the message with respect for others. For expats working over there, they might face communication breakdown in the workplace. Finland people are high in individualism; they only prefer to take care of themselves only (Hofstede Insight, 2017).
The last country India has a very high context communication according to Edward Hall theory. Intercultural communication with the subsidiary is complex and not easy. India’s culture is high with power distance, the employees have to respect the managers and at the same time managers expect obedience from them.
Germany is high in long-term orientation whereby they are very contrast with Finland. It makes them to communicate better. Both Germany-Finland is high in individualistic, this makes them to work better in the subsidiaries.
Finland – India
Finland’s uncertainty avoidance is high and it is contrast with India. Both these countries are also contrasted in individualistic.
India – Germany
According to Trompenaar 7 dimensions (2007), India and Germany are more external direction. They believe that, they have to work in their environment to meet the organization goals. Winning isn’t important to them, but relationship is more important.
Between subsidiaries and head office
Germany – USA
People from Germany can easily adopt working in in USA, and people from US to can adopt the working environment in Germany. Their organisation and national culture could relate or contrasting each other.
Finland – USA
In terms of communication style, Finland seems to have high context. Both countries have a few contrast score in the national culture. The key difference would be Finland is more of femininity cultured but the US is more masculinity cultured.
India – USA
People from India can easily adopt working in USA but people from USA to India, it’s difficult to adopt, because communication in India is complex. And the level of power distance in India too high compared to US is very low. US culture and organisation is more of individualistic, compared to in India they prefer to work in groups and achieve their goals.
In conclusion, culture not only involves one person but it involves the whole group, where is comes with values, beliefs and apprehension. Mr Hilly CEO of HiTree US should consider all the culture disadvantage and disadvantage when conducting business abroad. On the other hand, intercultural communication is equally important to make sure the company could run with total profit. Both Greet Hofstede abd Trompenaar has taught all the key cultural dimensions of organisation and national culture.
According to Hofstede’s 6 dimensions of national culture, the most important dimension identified is the power distance (Pankaj Ghemawat and Sebastian Reiche, 2011). In HiTree subsidiaries India has ranked the highest for power distance; this is because the organisation in India accepts status differences and shows more respect to their superior. HiTree India has a strong hierarchical work structure and they treat those at lower levels with dignity.
On the other hand, India is much weaker in individualism, compared to USA is high in individualistic culture. HiTree USA focuses more on individual rights and the recognition of personal initiative and achievement.
The next dimension that Hofstede emphasized is on masculinity vs. femininity. Among the HiTree subsidiaries Germany ranked the highest on masculinity culture. HiTree Germany stated that making a first impression id culturally important and they dominate tough values such achievement, competition, and material reward for success. HiTree Finland ranked the lowest, they are more of femininity. Their employees preferred to work in group, team spirit is central and focuses on nurturing, care for others and modesty (Pankaj Ghemawat and Sebastian Reiche, 2011).
The next national culture that researched by Hofstede would be uncertainty avoidance. HiTree Germany ranked highest and India ranked the lowest among all the subsidiaries. Culture with high uncertainty avoidance, like Germany prefers continuity and stability at workplace. They don’t avoid the future and able to accept ideas of the future.
Hofstede added another dimension later in the year 1980’s, which is long-term vs. short-term orientation. HiTree Germany has ranked the highest and HiTree US is more of short-term oriented. Organisation with long-term orientation culture focuses more on future. HiTree Germany has this value, they are more persistence, being able to adopt and a society that save money (Study.com, 2013). As for US culture where they are more short-term oriented, a society that focuses on past and spend money even if leads to extra borrowing.
The last national culture of Hotstede is indulgence vs. restraint. HiTree US is high indulgence culture, whereby freedom of speech is given importance and personal control. For an example, in the culture of US the customer service representative should visibly show their happiness with a smile and create a positive environment. However, if we look it in restraint culture, this would be inappropriate in India’s culture (Matthew Maclachlan, 2013).
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