Cross-Cultural Issues in International Business - Coursework Example

Name: Professor: Institution: Course: Date: Intercontinental trade, increase in number of global Companies, technological expansion has risen as a result of globalization. Dramatic change has been brought about by the large number of Companies who are today dealing in international trade. People have as a result been brought together from different countries to interact as they expand and market their business. (Payne, 2010). By this statement it means that the world has become connected towards one economy in spite of the boundaries across nations. International competitors are eyeing the international market for opportunities that will increase the market share globally such that the domestic businesses are today neglected and ignored. Conflicts in business communication are as a result of misunderstanding between two different cultures. The most significant problem will emerge when some people cling to an ethnocentric view stating in detail how they are supposed to conduct business. Gene,et.al, (2001) stated that according to a recent study done by KPMG revealed that in majority of mergers and Acquisitions majority of approximately 83% were not beneficial to the shareholders and more than half of the Companies incurred losses of destroyed value. The cause of these failures in the business mergers was found out to be cultural differences. This scenario is more common for Companies which are from two different Countries, states of continents. In today’s business arena Economic Integration and business culture are important concepts that are found in international Business. Economic Integration simply put means removing the barriers between business and economic activity. The Free Trade Area has opted to try and remove barriers among countries to enhance Business across nations. Business culture on the other hand pertains the ethos of business and how the staff act and think. Porter (2005), stated that the importance of acquiring another Company is synergy. In reality when two business units come together and integrate they will increase their competitive advantage against their competitor. The acquisition is also a way of increasing the expertise of the Company and improvement of technology. The managers may be incubated and compelled to become more innovative due to the wealth of knowledge and expertise gained. For instance the Japanese mode of management has been a great contributor towards their rapid development if funding developing countries. Acquisition also ensures that economies of scale are achieved. Lodorfos,et.al,(2006) General Motors is one of the old and worlds most famous Car manufacturing Company whose brands include Vauxhall, Cadillac, Saturn, Hummer, Pontiac, Chevrolet and others. GM has spread globally forming global alliances with high stakes in Suzuki, Fiat Auto, Fuji Heavy Industries and Isuzu Motors Ltd. GM has had its ups and downs shedding un economical Companies and it has continued to retain its position as the world’s leading maker of automobiles. GM has for long been accountable, transparent and observed integrity which are some of the factors that helped it to grow as a market leader. This is because they have continued to value quality consistency, clear communication and provided their employees, suppliers, customers and dealers true information. GM has been involved in many Company acquisitions and in 1931; GM acquired Germany’s Adam Opel. S. Kim, (2011). With this acquisition GM aimed at acquiring a large market share of the small vehicles which are very popular in Europe. The acquisition of Adam Opel comes with increase in provision of products and services to the greater community. Opel has been affected in the past by short- term financing and this has lead to poor profitability and a high cost manufacturer. Opel has had the challenge for years and though the similarities between individuals are more than the differences, the negligible differences are far more apparent which overshadows the similarities. Researchers have found out that communication is the only way by which members can cooperate and get along with one another in multi -culture especially where subsidiary Branches are present. Erez,(2002) It is believed that when such a Company combines with another Company different employees merge together with different cultures, problems begin to arise in the process of working together as a result of the culture practiced in each Organization. Conflicts arise probably because they have never dealt with such an issue before. Communication is one of the problems that the staffs have to deal with and both parties are unwilling to identify the cause of difficulty. The staffs have a tendency to assume that everybody understands their language which is quite wrong. During meetings the communication becomes even worse as a result of stereo-types. People even go to the extent of creating haddocks out of hillock. Some of the factors affecting Opel cross-cultural business communication are social organization, technological considerations, non-verbal communication, language and Authority. The Language barrier in Opel is brought about by poor translation and lack of distinction of one language to another. Wrong translation leads to conflicts as the interpretation changes because many translations turn out to be ridiculous and others do not make sense at all. This as a result wastes time and the parties involved patience is worn out as they feel disrespected for the translation error. The attitude of Opel towards dialects and accents also create international business Communication barriers in the essence that a particular accent suggests loyalty to a nation while the dialect can be detected by the language the native speaker uses. The Culture in GM USA staff use sociolinguistics in their differentiation of one economic class from the other which the Opel staffs are not aware. Certain accents in GM USA are associated with certain urban areas while the rural areas have a different accent all the same. Environmental issues result to poor communication in Opel because GM culture find it absurd to ship automobiles by the circuitous route since Germany is flat and they may opt to use overland mode of transportation. Transportation logistics due to topography and climate cause conflicts between Opel and GM especially when Germany water ways freeze as well as the roads. The Population size in Opel really affects the exporting and importing of the Automobiles, United States has a large domestic market and exporting is out of choice. The population density in Germany is quite different compared to GM USA and the plant layout and materials used by Opel will communicates a certain message. The culture in GM in USA space and size layout communicate how flushy the office owner feels while Opel office décor describe an individual’s aesthetics. In GM the office partitioning is done regularly in USA while in Opel culture there are no partitions and no individual offices exist but the staffs communicate their status by the way they are strategically placed in the office. Vadyba,(2006). GM in USA has a culture of hiring relatives while Opel will hire even strangers. In GM USA nepotism will fulfill the personal obligations because they believe that the relatives are far much more accountable and they can trust them. The nature by which the employees are motivated is quite in contrasts between Opel and GM in that GM in USA will find it beneficial to promote an employee because of productivity since the staff is motivated while the communication passed on in Europe is referred to as a poor policy. The contexting of communication is reflected as either high or low when the flow of communication is passed on from one person to another. The higher the frequency of contexting the lesser the communication is required to convince someone. (Edward T. (2007) USA and Germany are low context countries which is a cause for concern of conflicts between GM and Opel Management. The contexting factor depends entirely on how much information one person over others and they are expected to possess and convey the same to others. Despite this notion we still find that the two parties in USA and Germany had parties which were either higher contexted and other parties which were low in context. This contexting clearly represents cross – cultural shift which is explained as either implicit or explicit communication. The managers in GM USA believe that the actual words matter most than what was the intended meaning. Therefore during meetings the Management in USA is more concerned with what is actually said than what is written. This results to rigidity of adherence to law while in high context the staffs are flexible to accommodate whichever situation is brought before them. The culture of written agreements by GM in USA are more binding of a contract while personal oral words are not binding at all while the relationships in Opel Germany are highly dictated by external rules. General Motors management are geared more towards what is written than the face value of the business person is not essential while Opel would prefer more of a confrontation strategy with a direct approach of a plan to pass on the business information required. The staffs in GM, USA are used to more direct communication which is their culture while Opel interpret as being rude despite the fact there are Germans who are also very direct and offensive in communication. However, staff in GM are expected to communicate clearly and in detail verbally while in Opel Germany the communication amount does not matter whether its minimal and the more vague it is the better. The level and hierarchy of authority affects the business communication significantly since people rate the level of communication according to how the message was passed on. Thus GM USA tends to weigh the performance of Opel relatively to how well the person was convincing on the matter. Non verbal communication is not recognized in USA thus the management have to pass on information direct than read somebody’s mind. Eye contact is more relevant in USA than in Germany Opel as they believe it shows more keen interest in listening and how much the other person is attentive. Both Opel and GM USA prefer a closer face to face communication while there are situations where we meet speakers from other cultural backgrounds who prefer keeping distance. Larsson R., Risberg A. (2005 The management style used in GM is quite differing from Opel because managers solve differences differently and the decision making is also different. US managers prefer a competitive style of leadership and management while in Opel a set of rules are followed. Power distance and individualism describes how ties are loose between different people and how people are supposed to look after each other extended or immediate family. Hofstede, (2006) On the other hand collectivism describes how from birth till old age how individuals are correlated. GM is more collectivist while Opel management is more individualist. This means that if the managers delegate more authority to the juniors, they result to being individualist and if GM decides to centralize everything they result to being collectivist. When it comes to masculinity and feminist, the GM Company recognizes the power and leadership of women since Americans have no problem choosing a woman as their leader and they have always been gender sensitize while the Europeans will prefer their women to take care of the families and their role in family development is more dominant than in leadership. Therefore Opel would be better of being led by a masculine person than a woman as a manager. (Usunier & Lee, 2005) That is why GM USA prefers material progress and power to be duplicated in the acquired Opel. Ethnocentrism is complicated simply because the culture of USA based management will view their culture as logical and for Germany not logical. Since each culture has got its own set of values and believes the differentiation between staff behaviors’ becomes even more apparent since some culture values are perceived as blurred, improper foolish and the right standards are not followed by neither Opel nor GM USA. However it is good to clarify that Ethnocentrism affects majority of those who do not recognize their cultures. Opel management is more concerned with what is the right set of values to follow and identify their behavior with such that the conflicts are reduced. Daphne, (2007) demonstrated that some of the attributes associated with multicultural environment differences are that it’s closely related with power and privilege. This is because power and privilege may be used by people to control others from knowing their educational class or gender. In this scenario, Opel will have to adapt to working in a multicultural environment where power and privilege is demonstrated by GM USA. The Management style applicable in Opel is a decentralized structure with a flat hierarchical structure. This is necessary in order to limit the Number of supervisory levels. The lesser the chain of command and scalar chain the less the conflicts. It is better to have less number of answerable managers to minimize the chances of culture shock for these two Companies. Dinnel, (2005) However the ideal leader of the Company should be democratic in allowing all employees to participate and give their views and opinions in matters pertaining to Company objectives and goals. This also ensures that the salary ranges between the top level management and lower level management is relatively minimal and hence it ensures fair and justice salary distribution. Superiority complex is eliminated as staff members are all viewed from one same level where they share parking, toilets and canteens or cafeterias. With such a flat structure the subordinate staff expect to be involved in decision making and in consultation of matters relating to their jobs or decision that affect their roles and responsibilities. Decentralized Organizations have a stabilized standard way of dealing with conflicts, power abuses and constant complaints from employees. However, Hofstede (2006) argued that there is no proven enough justification that cultural differences will arise in multi cultural environments. Drenth et. al, (2007) found out that it is necessary to first differentiate the patterns and different characteristic behaviors and whether the differences are triggered by cultural differences. In conclusion, the challenges facing today modern Managers in the management of acquired Organizations and integration of Company operations is a challenge especially in Companies where Management is conducted in adhoc measures and managed by objectives. The strategy laid down by the Management should be accelerating the communication effectiveness, allowing leadership to be democratic, adapt to the new changes and training on cultural differences. Though as a result of globalization, most of the Organizations today run in multi- cultural environments and it is becoming manageable to deal with conflicts as they emerge daily. Traditional Companies are very rare today and culture and cultural differences play a significant role in international business organizations, the knowledge of cultural differences should be emphasized in all Organizations in order to alleviate the differences. APPENDIX My reflection working with a group of 6 from Spain, France, Japan, and Germany was a nightmare especially in regard to communication where cultural background was different especially when one was required to interpret the correct meaning of what the other student is trying to say. We met at least four times in a weekLukášová, Nový et al., (2004) stated that the behaviors of the students are always quite contradicting because of the different perceptions and opinions involved. The differences in which I as a student went through in feeling and thinking were deeper than the differences which resulted from the group meetings. (Raynaud, et al.2002). The differences in the group meetings led to the differences in communication such that some of us were shy, others aggressive, dynamic, challenging, engaging and others cynical and rude. The multi cultural environment differences increased the students’ expectations. I came to realize that the process of adapting to another foreign culture would take several phases to be implemented fully with the group for us to be able to communicate freely. However, we were determined to work together to get good grades. The first phase which we the students had to go through is Observation phase where we got to know one another by introducing ourselves into the group and much attention was paid to those who were new to the College so that they accept their new position in the Group. The second stage was collision phase where the students were no longer reliable as they used to be and new contacts with new people were next to impossible, it was even difficult for all of us to meet and discuss anything. Collisions caused the students to develop a negative attitude towards the environment and culture, they become tense, stressful and we had to undergo culture shock. The next phase was consolidation phase whereby the students balanced after the collision and adapted to the new environment. The last stage was departure stage where the students were ready to depart and go back to their busy routine rather meet every day for a group discussion. The best way to overcome the challenges as a student and help others within the College is to first know your own culture as an individual and understand the pros and cons of one’s culture. Rufei H. (2010) recommended some of the ways by which an individual can be helped to cooperate and improve on the international environment. One of the stages which we used was having good knowledge of the foreign culture by first accepting the culture of the different students, how they perceive and interpret their culture. Easier said than done, I was in a position to motivate the rest of the students in learning the foreign culture as a hobby and made the learning to be more adventuresome than educating. The second way was respecting the foreign culture by ensuring that as an individual you do not only value your culture but respect the culture of the other country. Through learning the foreign language I was in a position to help the student respect the others culture the same way that they respect their own culture. The third stage is finding a common ground by which people come to an agreement or consensus on how to find a common ground for the solution beforehand. It is easier to simplify the complications that are involved in integration of cultures by recommending ways of gaining the other parties culture knowledge. This is neither simple nor difficult to handle because not every student was ready to listen to an international student with ideas on cultural integration but the bottom line is that the few who sacrificed to learn and get closer to another culture were more respected in the group and recommendations were made for every other student to follow suit. References Daphne, A. (2007); Reconceptualizing cultural identity and its role in intercultural Business Communication. Journal of Business Communication. 44(3), 210 - 225 Drenth, P. J. D., & Den Hartog, D. N. (2007). Culture and organizational differences. In W. J. Lonner, & D. L. Dinnel (Eds.), (2005) Merging past, present, and future in cross-cultural psychology: Selected papers from the fourteenth international congress of the international association for cross-cultural psychology ( pp. 489–502). Bristol, PA: Swets and Zeitlinger Publishers. Lodorfos, G. and Boateng, G. (2006). The Role of Culture in the Merger and Acquisition Process Evidence from the European Chemical Industry. Management Decision, 44, 10, 1405-1421. Porter, M. E. (2005). Competitive analysis. New York: Free Press Hofstede,G.. H.（2006）. Culture’s Consequences: International Differences in Work-related Values. Newbury Park, CA: Sage. Gene,G., John W. B., Lionel L. (2001); Seven Pitfalls on the path to Merger success . Available at [Accessed 7th December, 2011] Payne N. (2010); Cross Cultural Solutions for International Business; Available at [Accessed 7th December, 2011] Raynaud, M. (2002). Confusions and Acquisitions: Post-merger Culture Shock and Some remedies. Acquisitions Monthly, November, 1-4. soyoung kim and ben klayman (2011); General Motors Company Information. Available at [Accessed 10th December, 2011] Hall, Edward T. (2007), The Silent Language. Greenwich, CT: Fawcett Publications Larsson R., Risberg A. (2005); Cultural Awareness and National versus Corporate Barriers to Acculturation. In Gertsen, M. C., Søderberg, A., Torp, J. E. (eds.) Cultural Dimensions of International Mergers and Acquisitions. Berlin: Walter de Gruyter,. ISBN 3-11-015799-3. pp. 39 – 56. Lukášová R., Nový,I. a kol. (2004); Organizační kultura. Praha: Grada, Hofstede G. (2001); Culture´s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations. London: Sage Publications. ISBN 0-8039-7323-3. Usunier, J. and Lee, J. A. (2005). Marketing across cultures (fourth edition). Pearson Education Ltd., Edinburg Gate Harlow. Erez, M. (2002). “Interpersonal Communication Systems in Organizations, and their Relationships to Cultural Values, Productivity and Innovation: The Case of Japanese Corporations”. An International Review, 41 (1), PP. 43-64. Rufei He & Jianchao Liu (2010); Barriers of Cross Cultural Communication in Multinational Firms. A Case Study of Swedish Company and its Subsidiary. Halmstad School of Business and Engineering Vadyba / Management. (2006) M. Nr. 3–4 (12–13); Cross-Culture Management: Worker In A Multicultural Environment. Read More