Challenges Faced by the Airbase Consortium - Case Study Example

Introduction Globally, culture is defined as those shared motives, interpretations and/meanings, identities, values and beliefs about prime events that are as a resultant of widespread experiences by a people in a society and that are passed on from one generation to the next. Companies experience a challenge of cultural diversity and therefore are obliged to find ways of dealing with those challenges and at the same time, sustain their service delivery to their customers. International companies have an array of customers from all over the world; therefore, cultural diversity is an issue that they need to observe very keenly in their designing of the products and services to be presented to the market (Gupta & Govindarajan 2000). Different companies too, have their distinctive operating cultures which define the nature of their operations. The GLOBE, which is a project that majors in cross-cultural researches, has clustered a number of business cultures based on the organizational values, culture and practices. This paper is going to look at the cross-cultural challenges faced by the Airbase Consortium in relation to GLOBE’s culture clusters and come up with the possible solutions. These clusters, include; in-group collectivism, gender egalitarianism, the distance power, orientation of the future, performance orientation, assertiveness, avoidance of the uncertainty, and the humane orientation. Lessons learned about what companies that embark on in international projects should or must do, will also be provided in this paper. Challenges Faced by the Airbase Consortium This company was founded as a European consortium in 1970 with the aim of attaining from the aircraft construction a share, a market that is known to have been US dominated. Initially, it was partnered by French and German but was later joined by Spain and Britain companies. This company is known to have overcome national divides, agreed on a common language and measurement set, shared developmental costs, and even joined forces to attain a market share that was greater. Al these saw the company transform its face and lead to achievement of valid competition to the crews, airlines and passengers. The company has been successful especially after producing its first twin-engine jet, which technically is the most highly developed plane globally However, such a major development did not come unaccompanied by some challenges. There was reorganization of the organization for the purposes of co-ordination betterment, lower the cost of production and the lifespan of development of the planes and their release and introduction to service provision. The four partners, previously operating independently, merged their assets of plane-making in 2001, thus forming the airbus SAS. Besides the company’s reorganization, another challenge thy faced in introduction of the A380, twin-jet, to twin market were a delay of two years and a concomitant loss. Both challenges left the company no option but to cut down their work force, have some of their plants closed down and acquire aircrafts parts by outsourcing. The company suffered this kind of loss due to economic patriotism (Montgomery 2002). This was after the French president declared that absolute equilibrium was to be maintained in the Airbus restructuring so that the work force o the company was proportionally distributed geographically among the states’ partners. This somehow compromised the efficiency in production. This practice of economic nationalism is usually meaningful at instances where a government misrepresents economic factors of private transactors by categorize foreigners for the sake of national interest. Airbus faced inefficiency and bad corporate governance as a result of this economic nationalism. Initially when the company had only two partners, the twin structure was maintained even though tensions and crises flourished. Problems that came with the development of A380 however, tinted the company’s reputation now that many partners were involved. Competition also became distorted as those companies that are supported by the government have an added advantage of access to procurement contracts and infrastructure. Introduction and development of A380 can be attributed to the complex design in its wiring that was adopted in its creation. This was a great challenge as it caused delays and thereby cancelling of orders by some airlines. Wiring is hectic since there are 1,200 functions that control the plane and this takes 98,000 wires and additional 40,000 connectors. 5000,000 models are contained in the digital design and mark you, all these must be synchronized in diverse countries by unmatched computerized design systems (Rogers 1995). It is important to note that the different plane parts were being manufactured in different states with the nose sections being made in France, the wings in Britain, tails in Spain and the fuselages in German while assembling of those parts would be done in Toulouse, France. Were all these manufacturing done at a central location, such delays would have been avoided and the loss in profits experienced wouldn’t have occurred at all, neither cancelling of orders by airlines. Another challenge was in the designing of the aircraft which turned out to be more difficult than had been anticipated. Even though these two versions are said to be compatible, engineers in Germany and in Spain used the V4 version CAD program while those in France and England used the V5 version. As a result, vast amounts of data were lost in the process of transferring from one program to the other. It is also noted that the Germans were not as much conversant with software experience as the French. This led to more problems in the incorporation of wiring changes for the fuselage parts in Germany, an execution failure due to their insufficient knowledge in engineering. There was a challenge of cultural diversity given that the Airbus aircraft company operated in over 80 nationalities that spoke over 20 diverse languages. It is a challenge that presented a priceless competitive advantage. The core reason for the development of this company was to realize the full potential expertise and creativity in their employees, their manufacturing partners, customers and suppliers. Relating Airbus Consortium challenges to GLOBE project’s clusters of business cultures The GLOBE project has presented a number of business culture clusters that give an insight to the problems that were faced by the Airbase consortium. Just as was the case with this company, (Bhagat & .et al.2002), these culture clusters illustrate how cultural diversities can easily complicate a successful knowledge transfer across borders. Considering the problem of different version usage by the partners in the Airbase Consortium, this led to massive loss of information during its transfer, and it can be redressed in future through proper training on the technologies to be employed and ensure that standardization of procedures are observed. This role is solely on the human resource department that should ensure employees are equipped with necessary knowledge (Szulanski 1996). Other employees are noted to have continually complained about senior managers’ decision making and communication that is to-down, resistance to change and organization’s lethargy. Apparently, the middle management was seen as discipline enforcers merely and information links rather than their role as partners in the search and improvement of new ideas. This can be linked to the challenge faced by the consortium in the poor management after they expanded their partnership to involve two more states. It led to frustrations and inefficiency in measuring performance. The dimension of power distance explains the challenge the consortium faced given the separation by prestige, power and authority given the employees were from these four states (Javidan & Dastmalchian 2003). The greater the cultural diversity, the more difficult it is for people to understand the competitive advantage of adopting certain knowledge and organizational practices. This is because people’s perceived routines and practices will always take precedence and this is true when we take into consideration of the different versions of programs used by the two states in data processing of the A380 design. A people’s structural values and practices and even language barrier raise the costs of information and knowledge transfer. Institutional collectivism as a cultural dimension relates to the consortium in that institutions should encourage their employees to execute their duties in harmony and integration as the principle values and not autonomy nor individual freedom. The consortium should have organized their employees in a manner that they would easily and freely liaise to employ same technology in their operations and offer one another technical assistance like the Germans who technologically were quite challenged back then. For the future dimension cluster of culture, it explains the extent to which employees are able to defer immediate gratification for benefits of the future. In this case, the consortium in the hunger for lowering operational costs and manufacture of the twin engine did not consider that fact that it was a hectic endeavor and therefore promised airlines to receive their orders in two years, something that never worked and pulling out of these airlines was the result after the let-down. The company should have withheld the urge to cut costs and focus on efficient designing and manufacturing process for the future benefit of maximum profits. Gender egalitarianism dimension is actually being observed in the consortium as the company is now recruiting women graduates as 20% of the total recruits. The company has embraced diversity more than nationality for successful growth. They want to develop talent, hard work and vision in order to keep the company on the front position. It is a global network with thousands of people from over 80 nationalities working for the Airbus. The usefulness of this research in understanding the issues involved and in devising viable solutions and the lessons that can be learned for companies embarking on international projects This research equips readers and potential company management teams with the necessary factors to consider when delivering services to culturally diversified clients. Especially with the increasing across border businesses, there should be an effective means to transfer knowledge both culturally and geographically (Kostova 1999). This is because passing knowledge across borders is quite expensive and thus should be managed prudently to curb such losses which are experienced when such information is lost. The research helps us learn that national culture and its differences shape the perceived knowledge values of a people (Glisby & Holden 2002). People’s differences in their cognitive should be respected and treated sensitively. Respect for others values is critical if we are to attain a common goal as culturally diversified groups that have come together. Programs that take into consideration the various partners’ values should be adopted so that no particular partner fills out of place in the company. The motivational disposition of a source unit is highly shaped by the national culture and its differences. Transfer of knowledge is contextually bound and comes with certain costs. Those managers in a source unit must be ready to spend a good deal of time and resources in delivering adequate knowledge, which could be personally affected by the individual’s own national culture. In other words, some people are highly affected by ethnocentrism and the aspect of cultural relativism exists nowhere in their vocabulary (Hendon 1994). This should however be rectified in any company that is operating internationally for their own goodwill. For companies that are operating internationally, it is worthwhile to note that the richness of channels of transmission can be affected by cultural differences to include communication barriers. To transfer knowledge, there is a great need for ample communication that is of high quality. It is however, quite hard to achieve especially across borders, the common barrier being language. Many managers globally do not possess a good command of English even though it is the pre-dominant language. It is difficult to communicate especially in non-face-to-face contact. This can however be solved by having more face to face communications which again is time consuming and considerably costly across borders (Henderson 1994). The communications methods used too should be considered. In the event that the knowledge emitter is a high uncertainty avoider, and the receiver is a low uncertainty avoider, then the communication will be very frustrating. The reason is that the former will accentuate very formal and structured communication pattern whereas the latter prefers informal and unplanned communication approaches. The absorptive capacity of the knowledge receivers may be affected cultural differences. This is in connection to the prior knowledge they hold, however, it is evident that knowledge acquisition is expected to accumulate more to the recipients and help build them. If a recipient is unable to assess the value of the incoming knowledge, this reduces the inspiration of the target firm to spent their energy and resources in the passing of such knowledge. The similarities degree between the knowledge passer and the recipient also determine how that knowledge will be perceived. Conclusion Many companies have their distinctive operating cultures which define the nature of their operations (Powell & Caseau 2004). The GLOBE, which is a project that majors in cross-cultural researches, has clustered a number of business cultures based on the organizational values, culture and practices. Companies experience a challenge of cultural diversity and therefore are obliged to find ways of dealing with those challenges and at the same time, sustain their service delivery to their customers. International companies have an array of customers from all over the world; therefore, cultural diversity is an issue that they need to observe very keenly in their designing of the products and services to be presented to the market (Montgomery 2002). It is worthwhile for companies operating internationally to note that the richness of channels of transmission can be affected by cultural differences to include communication barriers (Fisher-Yoshida & Geller 2009). To transfer knowledge, there is a great need for ample communication that is of high quality. It is however, quite hard to achieve especially across borders, the common barrier being language. Communication is therefore very key, its timeliness, the methods used and the attitude of both the sender and recipient. The power distance concept explains the challenge the consortium faced given the separation by prestige, power and authority as the employees were from these four states (Noor Al-Deen 1997). The greater the cultural diversity, the more difficult it is for people to understand the competitive advantage of adopting certain knowledge and organizational practices. It is therefore mandatory for managers to adopt communication strategies and/or approaches that embrace both bottom-up and top-bottom for effective passing of knowledge. References Bhagat, R.S., Kedia, B.L., Harveston, P.D., & Triandis, H.C. 2002. 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