Cultural Diversity Assignment Examining the Role of Decision-Making in International Business

Question

Task: The Questions to be answered in this cultural diversity assignment are:
Question 1: What are two (2) examples of the means of internationalisation?
Question 2: In a Western cultural context, describe the essential individual characteristics or professional traits expected from managers? Provide at least five (5) examples in your response.
Question 3: Multi-national enterprises (MNEs) have been criticised for having a “cash-cow” perspective of their host country’s resources. Explain why this may be the case and provide examples in your response.
Question 4: As part of cultural leadership, there are four (4) important culture-based norms and beliefs which need to be considered. Explain each type of culture-based norms and beliefs and provide appropriate examples in your response.
Question 5: When engaging in cross-cultural communication, there are six (6) fundamental patterns of culture differences. Explain five (5) of them and provide appropriate examples in your response.

Answer

Tutorial Questions to be answered in the cultural diversity assignment:
A1. What are two (2) examples of the means of internationalisation?
The term internationalisation is the act of designing the products in a way, which consumers are willing to purchase in different countries. In terms of economics, Internationalisation refers to the process of increasing the involvement of international companies or markets. This is often understood as an advantage for the companies, looking forward to expand their footprints by reaching out into the international markets. For an example can be given such as the company that manufactures electronic appliances such as hair dryers must ensure the compatibility of their products with the different levels of wattages in diverse countries (Ramón-Llorens, García-Meca and Duréndez, 2017).
Product Diversification or Product portfolio performance in the new markets: it states development of the new product lines as per the needs and preferences of the customers in new market. For e.g. A fast food business need to undertake different norms and procedures to sell their food items with context to the country. McDonalds, operating in India customised their menu to suit the local Indian tastes, also ensured the management of separate vegetarian kitchens, with separate utensils and cooks (Barroso, Giarratana and Pasquini, 2019). This differs from the food outlet operations in the countries such as China and others. This is because the company may require changing their menu and providing non-veg items in the western countries as per the preferences of people in the region. This needs the businesses to produce or design products which must be localized to fit the needs of domestic market, along with the international market. Therefore, it is the most significant means of the process of internationalisation adopted by businesses in different fields (Torkkeli, Nummel and Saarenketo, 2018).

Secondly, internationalisation process also means the increment in the acquisition, integration, and the use of knowledge in context to foreign market. Acquisition of the local companies or firms in the host country is a major part of the internationalisation. For an instance, Starbucks is an American multinational chain of the coffeehouses and other products, has internationalised their operations. The company operates in several other countries such as India, China, Europe and many others (Vecchi, 2017).

It explains that if the firm wants to expand and sell their products in India, (host country), then it would need to develop effective relations with the local suppliers, and other manufacturing firms. The strategy of internationalisation is used by most business executives to reduce the cost of operations.
Furthermore, MNCs often seek to explore and exploit the capabilities of the resources (physical or financial) for gaining competitive advantage in the international market. With the opportunity of expansion businesses are often exposed to various threats and risks, in the international market. The volatile political and economic environment can pose threats to the effective functioning. Multinational corporations investing in other countries must ensure developing effective policies, and strategies to avoid any pitfalls or risks in business environment. These may include undertaking the risk management program, analysing country risk, managing cultural barriers and so on. Thus, it will support the business in the internationalisation in different markets (Roberts, 2018). A2. In a Western cultural context, describe individual characteristics expected from managers with examples. A global manager is accountable and responsible for managing the teams and business operations across diverse cultures with unique set of skills and capabilities. The characteristics and professional traits of managers include communication, decision-making skills, leadership, emotional intelligence, time-management, and delegation and so on. However, these skills and qualities of managers differ in context to the western culture, which influences the management functions (Wells, 2018). According to the western culture, the characteristics and professional traits of managers are:

• Encouragement and support to team and groups - Western culture managers encourage the group members or the team, to focus on their tasks, and attain goals. The manager undertakes the responsibility of building their confidence and increasing the performance of employees in the organisation (Stanko, 2017).

• Commercial and social practices in operations: It is one of the special traits of an effective manager in respect to the western culture, to be able to adopt different social practices to manage diverse staff in the business. The western manager focuses on the commercial practices that assist in adhering to the norms and rules in the business environment (Lim, Sung and Lee, 2018).
• Communication: Managers in western culture should effectively communicatetheir business strategies and goals to their employees in the organisation. Also, they should allow employees to share their opinion, which will create balance, and motivate employees to work in diverse culture.
• Understanding cultural values and adopting the local environment: Managers in western culture need to adapt to essential skills of working with different cultural backgrounds to manage other functions of HRM. This means western managers must attain the capability and qualities to work with people in context to the country culture. This will assist them in understanding the preferences of the customers, and thereby marketing products and services (Stephan and Pathak, 2016).
• Leadership: a manager needs to build effective leadership skills to influence and guide the group members or employees towards a common goal. This includes components such as trust, communication, and employee motivation. In western culture, manager must adopt specific skills to practice participative leadership in the business to strengthen their teamwork and enhance organisational performance (Fuchs and Schalljo, 2016). Here are some of the examples:

a. Effective implementation of participative leadership will assist manager in taking right decision for the activities to achieve set targets in international markets.
b. Understanding of the social practices, the manager would be able to communicate easily in different regions which would support the smooth functioning of business activities.

c. Political norms and rules well acknowledged by the manager indicate the capability of manager to manage and control various political and economic aspects, and strengths, and weaknesses existing in the target market (Lim, Sung and Lee, 2018).

d. Adam Smith and Steve Jobs are the great examples as their leadership styles led to the huge success of the organisations.
e. Effectiveness in understanding and dealing with the social issues, norms, will also support in the constructive marketing and advertising of their brand, products and services, thereby increasing sales in different markets (Thach, Unni and Abdelmoety, 2018).
A.3. Criticism of Multinationals for cash-cow perspective of their host countries resources.
‘Cash-cow’ is one of the four quadrants in the BCG matrix that signifies the product, product line, or the company with a high market share in a mature industry. It also refers to a business unit, or a product that has been paid off once, but will continue producing cash-flow over lifetime. This matrix is useful to the businesses in understanding about the position of their company in terms of market share and growth in the industry. Therefore, it conducts a comparative analysis of the firm’s potential and evaluation of market. One of the common examples is, iPhone, which is the cash cow of Apple. This is because the company has higher returns on assets, in comparison to the industry growth rate. So, Apple can easily invest the additional cash generated by the iPhone into other business projects (B2U, 2017).

Therefore, an organisation or any product in this situation extracts maximum profits with the least investment of cash as possible. It has been found through research that an increase in the relative market share will result into the increase in cash flows. Samsung is one of the great examples that are likely to have positive cash flows in comparison to other business units in product category (Kader and Hossain, 2020).

The reasons behind the criticism of MNCs for their perspective of host countries resources as cash cows are enlisted:

• Increase in the rate of unemployment in businesses – multinationals were criticised because they used the resources in the host country to excessive levels, which undermined the overall effectiveness of operations and revenue. It further led to the situation of unemployment in the region.

• Contribution towards inflation in the economy – the rates of inflation i.e. rise in the prices has been also found from the analysis of MNCs perspective on the resources of host country (Lim, Sung and Lee, 2018).

• Using inefficient technologies – amongst all the negative outcomes, use of less competent or inappropriate technologies disrupted the operations, and therefore led to criticism.

• Deploying the scarce resources, and substituting the demand for the essential goods and services to luxury goods. These were some other major reasons behind the issue of criticism of the companies (Barroso, Giarratana and Pasquini, 2019).

A4. Explain four culture-based norms and beliefs which need to be considered in cultural leadership
Cultural leadership refers to the act of leading the cultural sector which is embedded in the values of community, family and cultural identity. As the term culture itself explains, this leadership originates from different people and groups; therefore leadership can be practised in different ways.
Practising cultural leadership in two ways include competent management of the organisations within culture sector. This means analysing their financial feasibility and viability, and organised management of staff working in the company. Secondly, it aims at improving the culture i.e. enhancing the work effectiveness and enabling people analyse their own thinking skills, and experiences (Hitt, Li and Xu, 2016).
Cultural norms and beliefs are the standards or rules that direct people about their behaviour in the organisation. This form of leadership is a creative leader whereby leaders serve themselves first as a servant to their followers or people in the society. They are creative, wise, reflective and holistic leaders who acknowledge their life experiences through professional networks (Ramon-Llorens, García-Meca and Duréndez, 2017).

There are four culture-based norms and beliefs that can be considered under this leadership:
1. Conventions or Folkways: This is one of the important cultural norms in context to international business. It refers to the standards of expected behaviour of people within an organisation. In business organisations, different people behave differently due to cultural differences and also in context to their job roles by their managers. For an instance, the power to influence decisions is limited with the low positioned employee, whereas ‘manager’ or supervisors with high designated job role have high power. This would lead to a change in the behaviour at workplace, often due to the influence of cultural and social background (Groysberg et al., 2018).

2. Expectations and mores: These refer to the norms and beliefs of morality of doing business with different cultural and social background. They give a clear understanding of the expectation of behaviour from the cultural leaders in the organisation. It is demonstrated as the cultural background prevailing in the society of any country, i.e. feminine or masculine. Therefore, leaders create their expectations from the employees in context to the culture, as an employee from the feminist society will behave and perceive their leader’s role according to their values. This may conflict with the employees from the masculine society, as they may feel controlled in the business.

3. Power authority influence of leaders: Leaders are vital persons in every business and they aim to inspire people to increase their performance in the organisation. As they belong to different communities therefore, influence people in different ways. For an instance, a leader’s thinking skills will directly impact the decisions taken in the organisation. This is one of the beliefs that follow up the constructive process of cultural leadership (Lim, 2016).

4. Leader’s position and status in the business: It is also a significant norm performed by the management. It also includeslaws that are the set of rules and regulations that need to be maintained by the society and organisation for their operations. These will be analysed at the time of allocating or delegating any new job role to the leader (Beugelsdijk et al., 2018).

A5. Explain six fundamental patterns of cultural differences in cross-cultural communication. Cross cultural communication refers to the study that represents the communication between people or members of different cultural backgrounds. Understanding cross cultural communication is significant for the managers or businesses that have a diverse workforce, and working on a global level. This is because cultural differences influence the effective functioning and performance of the business in the longer period (Mladenovi? et al., 2017).

Culture is central to every organisation, and often reflects to the operations within businesses, and amongst social groups. However, cultural differences may lead to situations of conflicts which can hamper the functioning, growth and success of the business. Therefore, a manager needs to understand the cultural differences to promote and improve cross-cultural communication within organisational members (Ramón-Llorens, García-Meca and Duréndez, 2017).

Now, the six fundamental patterns of cultural differences will be described as follows:
1. Communication styles– People communicate in different styles within and outside the organisation cultures. One of the important aspects that determine communication style is language. It mentions the difference in the meanings of the words and phrases for communicating within groups. Second major aspect in cultural differences consists of the importance attributed to the verbal and non-verbal communication. For an instance, Japanese prefer to have a direct and high-context communication between the superior-subordinate or amongst other groups in the organisation. They focus more on the facial and body language and other non-verbal aspects of communication (Xiaoge and Qian, 2017).

2. Different Attitudes towards conflict – In some of the cultures, conflict is taken in the positive manner for carrying out business activities, whereas, other businesses avoid it. In U.S. conflicts are not considered positive, as they prioritize to face the conflicting situation directly. This goes same with the eastern countries and they often believe in resolving the issue with written means of communication (Abramson and Moran, 2017).

3. Approaches to competing task— People in different cultures often work in different manner, so their approach for completion of task varies. This is because of the difference in judgements or opinions regarding the rewards after task accomplishment, time notion or accessibility to the available resources for completing the work. Also, there are different patterns of developing relationships at work in context to different countries. For e.g. Hispanic, and Asian culture values developing the relationships at the start of a shared task or project and focuses more on the task completion (Berry and Dasen, 2019).

4. Decision-making styles –The participatory roles performed by individuals in the decision-making activity of an organisation varies from culture to culture. A common example is U.S where the decisions are delegated frequently, wherein there is a greater role of an official authority in delegating responsibilities for a specific job. This is opposite to the culture of Japan, as they believe in consensus decision-making style for better results in the organisation (Lim, 2016).

5. Attitude towards disclosure –This is another vital pattern of cultural differences which defines the openness of sharing one’s emotions feelings, conflicts or misunderstanding in the group. As in some cultures, this is not considered appropriate, as it may drive different reactions from the members of the organisation. Example is the appreciation of these patterns of cultural differences, which can assist us to understand a single emotion in various ways (Beugelsdijk et al., 2018).

6. Approaches to knowing – This aspect explains the degree of differences that occurs amongst people in the way of knowing things. It varies from cultural to culture. Example, In European culture the information is considered to be acquired through the counting and measuring methods than other ways. African culture emphasized knowing things in an attractive manner, through using symbolic imagery and rhythm. Thus, these are some of the patterns of cultural differences in context to cross-cultural communication in the organisation (Thomas and Peterson, 2016). ?

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