The Impact of and Responses to Globalized Big Business - Essay Example

THE IMPACT OF AND RESPONSES TO GLOBALISED ‘BIG BUSINESS’ ON NATIONAL AND REGIONAL CULTURES By Name Course Instructor Institution City/State Date The impact of and responses to globalised ‘Big Business’ on national and regional cultures Introduction The number of the large businesses operating globally has continued to increase, and the world has opened up for foreign companies. Due to high competition the globalised big businesses operating overseas are enormous challenges than before. According to Wu (2008, p.171), when going global the problems that big business have to handle are unfamiliar and new. Challenges that big business never faced beforehand are turning out to be critical in the daily work. In view of this, culture presents obstacles that negatively impact the whole corporation. The globalised big business is influenced by culture in different ways, but the main problems are attributed to pricing difficulties, language problems, communication gap, cultural distance, Strategic mind-set/predisposition as well as culture collisions. The company have to be in a position to respond to such difficulties in a satisfying manner bearing in mind that mistakes may be hard to correct and disregard for the foreign culture may result in business failure. Culture as defined by Ghemawat and Reiche (2011, p.1) is a set of shared knowledge, beliefs, experience, attitudes, values, meanings, and concepts by a group of persons in the course of generations. Challenges attributed to cultural differences are of special interest in globalised big businesses, wherein differentiation, complexity as well as variation in relations between the headquarters and subsidiaries are distinguishing features. As pointed out by Hofstede, cultural differences are important, and may turn out to be a key issue particularly for managements in multicultural, multinational companies. The purpose of this essay is to analyse the impact of and responses to globalised ‘Big Businesses’ on national and regional cultures. Body A number of sources have analysed the impact of and responses to globalised Big Business on national and regional cultures. Ghemawat and Reiche (2011, p.1) posit that even though cultural differences are hard to measure and observe, they are evidently very important. Therefore, failing to appreciate as well as account for them may result in excruciating mistakes, strain relationships, and negatively impact the performance of the business. Cultural effects according to Ghemawat and Reiche (2011, p.1) persist even in critical situations as evidenced by the high incidence of Korean Air’s plane crashes between 1970 and 2000. Even though there could be some convergence in cultural symbols artefacts and habits at the surface level, Ghemawat and Reiche (2011, p.2) maintains that cultural differences persist at a deeper level. Considering the dominance of Western big businesses, the values dominating the global context are time and again anchored on a free market financial system, tolerance and acceptance of diversity, democracy, openness to change as well as individual rights. Leung et al. (2005, p.363) argue that networks and organisations at the national level together with their local cultures that vary from one network or nation to another are nested below the global level. Local organisations are further down, and even though they all share similar values of their national culture, Leung et al. (2005, p.363) posit that they differ in their local organisational cultures. These local cultures are shaped by the type of ownership, type of industry represented, the founders values, and so forth. According to Bird and Stevens (2003, p.397), the forces that resulted in the advent of a global culture are brought about by factors that resulted in globalisation and they include: The progresses in the world trade as well as the accompanying business activity; tremendous advancements in telecommunications; ease of transmission as well as data storage; augmented opportunity and facility for business; and so forth. As a combination, the above-mentioned forces have resulted in the perception that the world has become smaller and interdependence has increased. The national culture as mentioned by Bird and Stevens (2003, p.397) is overwhelmed by the global culture brought about by globalisation. This indicates that national cultures are overwhelmed by the forces moving the world towards globalisation, and as a result, the nation culture is being pushed more towards the irrelevance periphery. Globalised or ‘big business’ has had a range of impact on national and regional cultures. Three forms of impact are; the communication gap, cultural distance, and Strategic mind-set/predisposition. As mentioned by Colakoglu and Caligiuri 2008, p.225), cultural differences are key factor that bring about friction between parties in the globalised big business, and in consequence, can result in a communication gap. So as to get the needed information, personnel in different organisational departments must communicate; however, communication is influenced largely by cultural factors. For this reason, people in the globalised big business must culturally determine ways and styles of carrying out business, which is achieved mainly through their national culture and corporate culture. Another type of impact is cultural distance, which is brought about by mental programming of people through their national culture and includes cultural stereotypes, cultural shock, national ethnocentrism, as well as prejudices. Cultural distance can expose expatriates to culture shock, which reflects stress, confusion and frustration of a person facing difficulties to adapt a new culture (Colakoglu & Caligiuri, 2008, p.225). Such difficulties can reduce the effectiveness of a person, making them develop negative attitudes towards people from the new culture; thus, hindering the cross-cultural interactions. The third type of impact is the strategic mind-set/predisposition, which defines different organisational design elements like staffing, communication patterns, and organisational culture and structure concerned with human relationships of the globalised big businesses (Rozkwitalska, 2013, p.67). Therefore, it has an impact on the intensity, frequency, as well as character of contacts in the big business system. Imperatively, strategic predisposition as indicated by Rozkwitalska (2013, p.67), can present less responsive approach to foreign subsidiaries’ management, which can consequently generate tension between interpersonal contacts. Some large businesses have developed effective responses in an effort to minimise or reduce their negative impact on other cultures. Three of these responses or approaches involve Focusing on cultural similarities, externalisation, and promoting a strong corporate culture. Emphasising on cultural similarities according to Ghemawat and Reiche (2011, p.10) can help reduce the desire for variation, and this can be achieved by focusing the big business operations on locations with cultures that are more similar. For instance, concentrating on serving the diaspora members from the firm’s home country may help ease international market entry by decreasing the cultural distance. Another effective response is externalisation, for example, through joint ventures. Ghemawat and Reiche (2011, p.10) maintain that externalisation can help large businesses to cut the cost of adapting to national or regional cultures. In this case, partnering with a company from the host country may enable the large businesses to understand easily the local culture, business networks, and the rest, that could be time-consuming and costly for a the international firm to develop by itself. Provided that the partners are successful in setting up an interface for addressing cultural differences in partnership management, Ghemawat and Reiche (2011, p.10) suggest that broader cultural congruence may be enhanced. Interpersonal contacts in a large business system according to Rozkwitalska (2013, p.68) may be improved by developing common orientation, specifically corporate culture which act as a bridge between diverse and multiple subcultures of the large business units. Furthermore, attracting as well as cultivating customers and employees who are drawn to a certain corporate culture may help reduce the need for responding to differences in the national culture. Some large Australian-based businesses have developed and applied successful marketing strategies or responses in dealing with national or regional culture issues. Two of these are Apple and McDonalds Australia. Apple encourages a supportive, culturally diverse, and creative work environment at the global level. For this reason, the company makes sure that it offers a workplace that is free of cultural discrimination or harassment with regard to factors such as colour, national origin, race, or religion. Apple understands the essence of the culture in its global business operations; therefore, the company does not tolerate employee harassment or discrimination based on culture. All Apple products and services offered to the customers are high-quality, innovative and demonstrate integrity. On the other hand, McDonalds Australia has integrated cultural values in their services and always values the communities wherein they carry out their business. The company approaches every aspect of its business with integrity and honesty and gives back to the community that has made hem successful. In spite of its geographic variety, McDonalds is essentially very consistent, with lots of attention making sure that the company’s values are globally applied. Globalisation for McDonalds has meant engaging as well as embracing different cultures while simultaneously retaining a brand that is strong enough and identifiable. Conclusion In conclusion, the essay has analysed the impact of and responses to globalised ‘Big Businesses’ on national and regional cultures. As mentioned in the essay, the capabilities of the big businesses should be improved so as to bridge the cultural differences. Without a doubt, cultural differences are persistent and offer numerous challenges for globalised big business. Companies that successfully manage cultural differences can result in congruence in different cultures while extending their cultural diversity sources across borders. Big businesses have different impacts on national and regional cultures such as communication gap, cultural distance, and strategic mind-set/predisposition. Responses for minimising the company’s negative impact on other cultures include; focusing on cultural similarities, externalisation, and promoting a strong corporate culture. References Bird, A. & Stevens, M.J., 2003. Toward an emergent global culture and the effects of globalization on obsolescing national cultures. Journal of International Management, vol. 9, pp.395–407. Colakoglu, S. & Caligiuri, P., 2008. Cultural distance, expatriate staffing and subsidiary performance: The case of US subsidiaries of multinational corporations. The International Journal of Human Resource Management, vol. 19, no. 2, pp.223–39. Ghemawat, P. & Reiche, S., 2011. National Cultural Differences and Multinational Business. Globalization Note Series, pp.1-18. Available at: http://www.aacsb.edu/~/media/AACSB/Publications/CDs%20and%20DVDs/GLOBE/ [Accessed 30 August 2015]. Leung, K. et al., 2005. Culture and international business: recent advances and their implications for future research. Journal of International Business Studies, vol. 36, pp.357–78. Rozkwitalska, M., 2013. Effective Cross-cultural Relationships in Multinational Corporations. Foreign Subsidiaries’ Viewpoint. In Gdansk, P., ed. 3rd Annual International Conference on Business Strategy and Organizational Behaviour., 2013. Wu, J., 2008. An Analysis of Business Challenges Faced by Foreign Multinationals Operating the Chinese Market. vol. 3, no. 12, pp.169-74. Read More