Economics Assignment: Cultural Impact on International Business

Question

Task:
The Questions to be answered in this economics 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

Answer 1

The two means of internationalization are discussed below within this economics assignment:

Acquisition of local companies in the host country: For example, if an American organisation wants to sell its products in India, then it would need to develop relations with the local suppliers or may need to purchase some manufacturing or production organisation.

Diversification of the product portfolio: It may include the development of the new product range as per the needs and preferences of the customers of the new market. For example, a food outlet working in India revising veg food may be influenced to offer some non-veg food items if it goes in western countries as people living there prefer the same (Costa, et al., 2017).

For example. In an MNC enters into a market with high competition, it would need to develop some effective business policies, hiring talent from its home country to support the development of business along with investing in the marketing and advertisement campaigns. These all activities would need to make a large investment which may be higher to the investment made in its host country in some cases.

Answer 2

The main professional traits in managers expected in Western Cultures can be defined as follows:

Must understand social and commercial practices: The managers working in western cultures should be able to adopt social and commercial practices as it helps in managing the diversified workforce working within the organisation. Social practices help them in adopting appropriate leadership strategies and thus to lead the employees with effectiveness and efficiency. The commercial practices help in adhering to the rules and norms prevailing in internal as well as in the external business environment. 

Adoption of Local environment: The managers are western cultures are required to adopt the cultures of the place at which they are working (Tandilashvili, 2017). It helps them in understanding the preferences and needs of the local customers and thus, designing appropriate marketing of the available products and services. 

Effective Leadership: This is the most important trait of a professional's behavior. Western managers are expected to familiar with all types of leadership practices. They are also expected to have such a capacity to change their leadership style based on different behaviour employees (Puffer and Braithwaite, 2016). 

The examples for above mentioned traits can be defined as follows

• Effective leadership may influence the workers to provide their best to achieve the team objectives.
• The most famous example of leadership is Steve Jobs and his leadership style that has resulted in giving new heights to the organisation.
• If a manager is good at social norms, then he/she would be able to easily communicate with the customers at the time of facing issues by a customer support executive.
• Western managers are required to have a deep understanding of social norms trait to understand the strength, weaknesses, opportunities and threats prevailing in the target market and thus to assist the organisation.
• Easy adoption of local environment may help the manager increasing overall sales of the organisation by developing services and products accordingly. 

Answer 3

Cash cow is one of the four elements discussed under the BCG Matrix. It can be defined as an organisation having a large market share in the developed/mature and slow-growing industry. An organisation dealing in this situation can generate cash with minimum investment that can be utilized to develop other business units located in some other areas. The multinational organisations work in more than one country. For example, if a BPO is operating in China and is headquartered in the US, It does not need to establish new business practices, head offices, or headquarter in China as well. It can easily operate by just opening branches.

The main reason due to which, this criticism is faced by the MNCs are as follows:

• Use of inappropriate technology
• Increase in the unemployment
• Purchasing the existing facilities instead of developing a new one
• Dominating the major industrial sector
• Contributes towards the inflation
• Accountable to home country
• Replacing demand for the essential goods and services with luxury goods.
• Deployment of the scarce resources
• Discharging the plan of host country related to development (Iarema, 2017)
• Withholding of technology and resources
• Unnecessary emphasis on the major natural resources from the processing and extraction industry. 

Thus, the working of MNC’s in criticized in the organisations working in the same or related industry within the host country. However, these criticisms can be encountered by stating that MNCs generally have to pat high cost of labour, challenges are faced in the management of supply chain and operations, and have to deal with the political instability in the developing economies. In addition to this, if investment in made in a lead developed or developing economy, there are lack of chances of higher profitability. In such case, the technology introduced may be expensive and capital intensive which may not be suitable for the host country.

Answer 4

The cultural leadership depends upon them for basic and important norms which can be defined as follows:

The behaviour of people in different roles: The behavior of individuals is different as per different job roles which is resulted by the authorities and responsibilities delegated to them. For example, an employee is not expected to give orders to his/her companions when he/she is working at a lower level. But when he is designated at the managerial level, a sudden change can be seen in high personality and job role. This change is followed by the cultural and social background up to some extent (Stephan and Pathak, 2016).

Expectations from the leaders: The expectations from the leaders are also different and followed by the cultural backgrounds of the employees. For example, if an employee belongs to feminine society, he must be willing to expect the same from his/her leaders. Opposite to this, an employee coming from the masculine society may feel dissatisfied in case of facing norms of feminine society.

Leader’s Influence: Leaders from different societies are expected to influence their peers in different ways. For example, if a leader belongs from a traditional family then he/she may influence the employees to become sensitive in decision making instead of practical. Opposite to this, if a leader is coming from a modern family, he/she may focus to adopt the practical decision-making approaches while leading the employees (Lin and Roelfsema, 2018).

Status Given to Leader: Irrespective of the equal practices, priority is still given to the individuals on the basis of their cultural backgrounds in most of the organisations. For example, if a leader is coming from a poor background, then the cultural background of such person will be considered at the time of providing any new designation or status along with the skills, competences, and professional qualification and vice versa.

Answer 5

The main fundamental patterns of cultural differences can be defined as follows:

Different communication styles

It indicates the ways in which individuals communicate widely among different cultures. One of the main aspects of the communication style is the use of language. Another major aspect of an appropriate communication style includes the level of importance given to nonverbal communication. For example., In the USA, It may also include seating arrangement sense of time and personal distance.

Attitudes toward conflict

In some cultures, conflict is termed as a positive thing while it can be termed as negative in some other cultures. For example, In the US, conflict is not accepted usually but individually is also trained to deal with the conflicts that can be aroused in certain situations (Lim, 2016). One to one meeting is recommended as an effective way to decrease the level of conflict and to eliminate.

Competing tasks

There are different ways to complete a task-based upon the different cultural backgrounds of the employees. Some main reasons may include different access to the organizational resources, different decision-making styles, and some different rewards and motivation schemes provided to complete tasks and job responsibilities. When employees from different cultural backgrounds come together to perform a task, different mindsets and knowledge help in completing the task with more innovation and creativity (Gibbons, et al., 2018). For example, Hispanic, Asian culture needs to attach more value in enhancing the relationship at the starting of a shared project and more influence n the completion of the task. 

Decision-making styles

The role of the employees played while making a decision may be different from culture to culture. For example, the decisions made by the US employees are regularly delegated which indicates an official sign of responsivities towards a particular matter or a job role. 

Be careful with disclosure

In some specific cultures, it is not required to become frank in relation to feelings and emotions as it may lead to creating misunderstanding and conflicts among employees or may reveal some personal information as well. For example, an appreciation of the patters in cultural differences may assist in processing as a single emotion in a different way that is respectful to others and disrespectful to some other persons.

References

Costa, R.J.L.D., António, N.J.S. and Miguel, M.I. (2017). Internationalisation and economic growth: the Portuguese case. International Journal of Learning and Change, 9(2), pp.91-110. Available at: https://www.researchgate.net/profile/Renato_Costa11/publication/317652847_Internationalisation_and_
economic_growth_The_Portuguese_case/links/5a945d56aca2721405674770/Internationalisation-and-economic-growth-The-Portuguese-case.pdf

Gibbons, C.J., Skevington, S.M. and WHOQOL Group (2018). Adjusting for cross-cultural differences in computer-adaptive tests of quality of life. Quality of Life Research, 27(4), pp.1027-1039. Available at: https://link.springer.com/article/10.1007/s11136-017-1738-7

Iarema, I. (2017). Restating the fundamental principle of nuclear security culture and the importance of cultural differences. Table of Content Issue n 54, p.97. Available at; http://www.academia.edu/download/54830292/B_2017_054.pdf#page=99

Lim, N. (2016). Cultural differences in emotion: differences in emotional arousal level between the East and the West. Economics assignmentIntegrative medicine research, 5(2), pp.105-109. Available at: https://www.sciencedirect.com/science/article/pii/S2213422016300191

Lin, L., Li, P.P. and Roelfsema, H. (2018). The traditional Chinese philosophies in inter-cultural leadership. Cross Cultural & Strategic Management. Available at: https://www.emerald.com/insight/content/doi/10.1108/CCSM-01-2017-0001/full/html

Puffer, S.M. and Braithwaite, K. (2016). The Russian Management Revolution: Preparing Managers for a Market Economy: Preparing Managers for a Market Economy. Routledge. Available at: https://books.google.com/books?hl=en&lr=&id=BOxmDAAAQBAJ&oi=fnd&pg=PP1&dq=characteristic+of+western+managers&ots=b269sZ_
75X&sig=vfXuk8gENI6Sl0dTTM9TXm65B_s

Stephan, U. and Pathak, S. (2016). Beyond cultural values? Cultural leadership ideals and entrepreneurship. Journal of Business Venturing, 31(5), pp.505-523. Available at: https://www.sciencedirect.com/science/article/pii/S0883902616300337

Tandilashvili, A. (2017). THE IMAGE IDENTITY AS A COMPETITIVE CHARACTERISTIC OF MANAGERS. In International Scientific and Practical Conference World science (Vol. 1, No. 7, pp. 49-52). ROST. Available at: http://archive.ws-conference.com/wp-content/uploads/ws1724.pdf