August 7, 2012
In the business world today, many companies are moving more toward a global stage have to deal with cultural differences and other daily changing factors. As multinational corporations become “more transnational, their strategies must address the cultural similarities and differences in their varied markets” (Hodgetts, 2005, p. 128). In this paper, each contributor will identify two separate companies that have faced challenges in the areas of cross-cultural management. The paper will also review specific issues faced by the course scenario company, Riordan Manufacturing in comparison with the contributors selected companies, how each selected companies responded to the specific issue and outcomes of the company’s selected response.
Key Course Concepts
Diversity and Multiculturalism
Both Disney and L’Oreal have a very high-level of knowledge base concerning multiculturalism and diversity. They are operating under the Phase IV in the Evolution Cycle according to Nancy Alder. This phase is mostly characterized by when an organization demonstrates a high-level of understanding for the cultural dynamics when planning their strategy, developing and locating production facilities, culturally designing marketing techniques and products, and acquiring the ability to manage cross-cultural interaction throughout the organization.
It is shown the both these companies have achieved success when they have taken the risk to ensure they operate under a multicultural approach. A contingency approach takes into account that there are different HRM practices in different cultures and for some different HRM practices within the same culture (Alder, 1991). As stated earlier, L’Oréal Cosmetics have developed products for an entire marketing area through a global process and scientific research.
Riordan can build from the templates created and developed by both of these organizations. One key note is how the HR Group developed a complete multicultural procedure that allows the organization to train, understand, and fulfill the global market base. Additionally, through the developed programs and diversity training methods these organizations have risen to the top of potential employee selection base.
Cultural Differences in Selected Countries and Regions
There are risks involved when maintaining operations overseas such as the foreign currency and economy. Wal-Mart must be cautious when selecting a country for their company. The organization must be mindful of the potential risks such as economy fluctuations, and unsecure foreign investments. Completing research on foreign business practices is vital because unacceptable practices in America may be acceptable in other countries and Wal-Mart must be current on this knowledge. It is important for Wal-Mart to attempt an accurate forecast on the future outlook on global economies and then pursue decisions and investments consequently.
Assess the readiness of global organizations to develop cross-cultural initiatives
It is important for Motorola to identify the need for cross-cultural training when engaging in international business. Motorola did not seem to provide adequate culture training and awareness. When two cultures join into one company, management is responsible for forming a united organizational culture. Conflict will arise if management does not provide cross-cultural training, awareness, and understanding.
Motorola must strengthen their cross-cultural training program by providing language training, forming strategy groups, and accept suggestions from both cultures. By building a multicultural team Motorola will have greater flexibility when making decisions, and form new ideas and perspectives.
Some companies operate in one country their entire existence and do not have to work amongst different cultures and countries which require international management. When Riordan opened operations in the country of China, the company faced the issue of having to meld many different cultures and at the same time ensure that the company maintained consistency in different countries. This can be difficult to do as with international management, companies are exposed to many different factors that must be handled according to the countries way of doing things but also along the company’s policies and procedures. Both the Toyota Motor Company and ING Group have had to adjust their policies and procedures to adhere to international management.
The Walt Disney Company
The best aspect to a customer when it comes to having interactions with a business is how well that business knows its clients and his or her needs. What company better lives up to that demand than the Walt Disney World Company (Disney), which has gone global, having theme parks in Florida, California, Japan, Hong Kong, and Paris. According to some experts that deal with diversity and diversity on a global scale say; that global businesses combine people from different cultures and life experiences and effectively employs them together still giving the picture of one big “happy family” operating the same at each establishment.
The “Disney Experience” gives everyone attending the park the feeling of Disney being a vacation destination, Disney has used its resources to reach markets all over the globe with the latest being in Hong Kong. The best thing Disney does at each theme park is give their multicultural guests the ability to see themselves in the cast members, which relays the views that the company understands and respects its customers.
In-house, Disney sets the bar high to foster the best work environment this is shown through the employees the organization attracts. Currently, Disney attracts only the top applicants, representing equally the normally unbalanced cultural and gender specific categories in business. Disney sure proves its multicultural stance by the large hiring of minorities and females in key positions and going further to understand today’s employees they also offer opportunities for flexibility in the workplace as part of Disney’s Employment-related Diversity Initiatives.
The long term operations plan for Disney to have excellence in diversity that involves all employees. The President of Cast Members, Judson Green, for Disney Inc. has made having diversity in the forefront of Disney’s business organizations. He is committed by demonstrating his support by approving the following annual programs and cast celebrations: Black History Month, Asian-pacific American Heritage Month, Hispanic Heritage Month, Native American Heritage Month. These celebrations document the high levels of commitment, understanding, and acceptance of a diverse multicultural environment. Disney also has developed mandatory training for employees on diversity and diversity concepts (The Disney Company, 2010).
Disney has definitely set the bar for other organizations to follow when it comes to accepting, employing, training, and celebrating a diverse workforce and work environment. Disney moved up in ranking because of its increasingly inclusive workplace.
As far as cosmetics go one of the most familiar names in makeup is L’Oréal, to maintain this popularity it must serve a wide range of clients, the company has made diversity a principle foundation tool of operation. The organization has a very well-known and copied Human Resources Group (HR), a good example that they have established in-house is the company employs a very multicultural range of people, by doing this the organization’s level of skills and talent reaches all high ranges of production and in-turn dispels any type of questions of discrimination. Starting at the core of the organization and working outwards, L’Oreal’s products represents, complements through its products that are produced to highlight all forms of beauty. L’Oreal has developed one of the best templates through its development procedures and product base, their research laboratory in Shang-Hi is a good example, this facility creates the entire product color base for Asian skin characteristics (L’Oréal, 2010).
Some of the organizational beliefs the company operates under take into account a non-discriminatory position for every aspect of the organization, marketing efforts, and products. L’Oreal has developed a Code of Ethics the organization expects their employees to work by; it also lists the company’s ethical business practices and is distributed globally. The organizations code of ethics book was developed by using employees from 22 different countries, these employees were a part of an in-house team used to develop international operations and procedures, the employees represented Asia, Europe, North America, and Latin America. Through high degree of attention to a multicultural base, L’Oreal exemplifies another organization that reaches out too, accepts, and incorporates a diverse market, and client base. L’Oreal using the HR Group has produced what and who their organization is made up of currently (2010); there are 112 different nationalities with the leadership portion of the company represented by 54% women.
These efforts by L’Oreal have been recognized through the award of several recognitions, in 2004 the company received The Diversity Best Practices Global Leadership Award, and in 2006 the received The World Diversity Leadership Council’s Diversity Innovation Award (L’Oréal, 2010).
Wal-Mart has become the world’s largest retailer and still has much to learn about international trade. The company is in search for a country that will construct and promote new stores that will expand the market share. China is being considered because of the immense size and prospective profits. However, Wal-Mart’s strategy of “everyday low prices” is has been unsuccessful because the smaller retail stores are aggressively competitive with price-cutting. Wal-Mart must complete better research on different countries culture and economic status to be successful in the growth of international trade.
Wal-Mart had a decline in profits in Germany’s 85 stores, and the outcome was to sell all the stores. Shareholders were not pleased with this decision and management is trying to prove that the loss in shares will not affect the shareholders negatively. Other possible countries that may have to sell stores if profits decline are South Korea (16 stores) and Argentina (11stores). When dealing with a decrease in international stores, shareholder’s show concern toward Wal-Marts international strategy effectiveness. Wal-Mart’s mistake lies within their focus, which is investment; however ideally the focus should be on international growth. The focus on profits should be set aside and instead be on the stabilization of the stores in other countries. The international stores need to be stabilized and organized showing the ability to handle the strategy, economy, policies, and procedures. Wal-Mart must not with haste when setting up international stores but rather complete thorough research and facts about the country’s economy, culture, rules, and regulations.
Wal-Mart should benchmark Riordan Manufacturing and integrate cultural sensitivity within the organization, forming a store with different cultures with need cultural awareness and training. When employee’s needs are met this will create a feeling of satisfaction, involvement and appreciation in the company’s strategy. People will come with high hopes and for better job opportunities; however if Wal-Mart does not complete adequate research and chooses an area that may not be successful than employees may feel he or she were setup for failure.
“Motorola Inc. is a global leader in providing integrated communications and embedded electronic solutions” (Celestica, 2009, para. 4). The company is outsourcing work to other countries to consolidate manufacturing, and improve their financial performance and supply chain. Celestica Inc. has accepted offer from Motorola Inc. Celestica is headquartered in Dublin, Ireland and “provides a broad range of services including design, prototyping, assembly, testing, product assurance, supply chain management, worldwide distribution and after-sales service” (Celestica, 2009, para. 8). With this new business relationship Motorola will gain respect by taking time to research and understand the culture, policies, and regulations.
Motorola must create a team that has multicultural background and is culturally aware and sensitive to be successful. The advantage to a multicultural background is the individual would be more sensitive to the cultural differences than others. With this sensitivity, trust can be formed much easier between workers. Thus with that trust builds communication effectiveness, conflict management, and productivity. An individual with a multicultural background will be able to relate to the different ethnic groups and share knowledge and experiences. With this new connection will bring new perspectives, ideas, and collaborations to the organization and teams.
The main goal is to develop a “strategic relationship with a leader in the market and integrate communications and embed the electronic solutions that diversifies Celestica’s communication’s strength and internet infrastructure customer-base, which includes over 38 companies in the areas of optical, data networking, wireless and high-speed access” (Celestica, 2009, para. 4). Creating this business relationship with Celestica, Motorola will be able to globalize their product. Motorola must be involved with their employees, staying respectful and providing training about the different cultures will be essential to any business success.
As Riordan Manufacturing did, Motorola will be combining different cultures together with this new partnership. Motorola should take interest in researching other companies that have made a similar transition and benchmark the negative and positive findings.
PepsiCo, headquartered in Purchase, New York, USA, is a world leader in convenient snacks, foods and beverages with revenues of more than $60 billion and more than 285,000 employees. This includes 18 different product lines that each generates more than $1 billion in annual retail sales. Their employees are united by a unique commitment to sustainable growth, called Performance with Purpose. Their main businesses are Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade.
At the “Better City, Better Life” World Expo in Shanghai, China, Indra K Nooyi, CEO of Pepsico said “I’m also here to talk about further investments in China. In fact, I am pleased to use this opportunity to announce that PepsiCo will be investing a further $2.5 billion in China over the next three years. This comes on top of the $1 billion we announced two years ago. This investment will be allocated to a variety of projects, including 14 new beverage plants, five new food plants and farms, significant cooler investments and a significant scaling up of our China based research and development facilities” (Three on the Bund – China Speech, para. 2).
When they began to expand their China operation in 2008, the first thing Pepsi did was to engage with the Chinese government and NGOs to understand the social and developmental challenges the country faced. With their guidance, Pepsi was able to target resources and operations in a way, which maximized their impact. They also worked with the government’s strategy and supported its goals regarding water sustainability and employment. It was through those efforts Pepsi knew to target their employment in the North and West of the country where local economies needed the most help. It was also their information, which prompted Pepsi to invest in water cellars for dry villages.
Understand that companies willing to invest in China, with China’s goals in mind, can be extremely successful over the long term. Through a judicious balance of thinking through short-term investments with long-term goals in mind, Pepsi is realizing the success they envisioned.
Siemens is a multinational corporation and world leader of mobility infrastructure solutions. They are already successfully established in America and Germany but like most multinational organizations Siemens realized to meet the challenges of global megatrend and to benefit from the opportunities they offer, they would need to stay ahead by implementing systems to address possible issues. Like Riordan, being able to attract and retain talent globally and having systems in place to build effective multicultural teams needed to be a priority to realize success.
To drive this initiative, the function of Chief Diversity Officer (CDO) was established in November 2008. The primary responsibility of the CDO is global diversity management to obtain sustainable success through diversity. One of his or her main objectives is to ensure that Siemens’ management is filled with the best possible talent. The goal is to ensure processes that foster diversity, are embedded throughout the company by 2011. A key component of this effort has been the establishment of a central management structure to address this challenge and leverage the opportunities it presents to our businesses. They introduced systematic diversity processes in personnel development and for filling management positions. These steps enabled them to match the diversity of their customers and businesses while opening up better chances for their employees to develop their talents and expertise all around the globe. “In the U.S., Siemens set up a nationwide organizational structure called the Diversity Advisory Board, headed by the Senior Director, Diversity. This Board links all local diversity activities – horizontally, across all operating companies; as well as vertically, from the local Diversity Councils up to the Sector and Country CEOs. This provides a means for all U.S. Siemens companies to share and leverage a single strategy driven by the top business leadership. It also allows our U.S. CEOs to effectively champion and promote effective and increasingly competitive diversity practices.
A recent benchmark study by the Diversity Inc. Magazine that ranks Siemens in the top quartile of the 317 companies in the Diversity Inc database provides evidence that this organizational structure and our investments are working” (Siemen, 2010).
The company known as Toyota Motor is currently one of the world’s largest automobile makers by sales and production. First founded by Kiichiro Toyoda in 1937, the company came to America in 1957 during the time “Elvis was king of rock n’ roll, big cars with tailfins were “in” and postage stamps were just 3 cents” (Toyota, 2010). In the course scenario, Riordan’s expansion to the Hangzhou Province of China created some cultural issues, one of them being the need to create a culturally sensitive work environment where Chinese, Koreans, Pakistanis, Indians, and Americans could work together respectfully and efficiently. With Toyota’s continued expansion across the globe and considered “one of the largest multinational corporations that is specialized on the manufacturing of cars” (essay-911, 2010) they have also faced this similar cultural issue.
Riordan was in the position to grow and needed to identify cultural differences geographically and from a multicultural perspective. Toyota is “committed to making sure employees at all levels of our organization represent the many faces of America today” (Toyota, 2010).
The corporation adopted a company principle in 2001, which is known as the “Toyota Way.” After much examining of cultures and the automobile industry Toyota “has become a global symbol of passionate commitment to continual improvement and efficiency” (Getabstract, 2010). The company recognized the need to take the best from all cultures to operate like a Toyota vehicle “not necessarily fancy, but extraordinarily capable of getting you from point “A” to point “B” (Getabstract, 2010).
Both Riordan and Toyota need to be focused on a globalization imperative or “a belief that one worldwide approach to doing business is the key to both efficiency and effectiveness” (Hodgetts, 2005, p. 129). Toyota has made many of these commitments, especially in the areas of cultural diversity where Toyota has earned recognition “by Diversity Inc. and Black Enterprise as a leader in diversity” (Toyota, 2010). Every culture can contribute positively to global companies, the key issue for global companies it to continue to translate to success with multicultural companies on a global stage; to this point Toyota successfully has done this.
ING Group or “Internationale Nederlanden Groep” as it is also know is a financial institution of Dutch origin founded in 1991 and offers banking, insurance, and asset management services. In the class scenario, Riordan Manufacturing faced the decision to look at opportunities for the company to expand the facility to provide additional components internationally because they prospered. ING Group has been in a similar position in that they have expanded globally based on prosperity as well. The companies “first large acquisition took place in 1995, when ING took over Barings Bank” (ING, 2010). Subsequent acquisitions such as the Belgian Bank Brussels Lambert and “the Equitable of Iowa, ReliaStar, Aetna Financial Services and merchant bank Furman Selz” in the United States (ING, 2010) also produced major growth. The current financial crisis, which began in 2008 has hindered ING and the company “spent much of the last year getting back on track” (ING, 2010).
ING not only focuses internally on how to get better but also externally. The have chosen to carefully “monitor global issues, understand sensitivities and receive feedback on the way we operate, we engage with our stakeholders in an open and honest dialogue and adapt our policies when necessary” (ING, 2010). Although the company does focus outside the company, international management or “the process of applying management concepts and techniques in a multinational environment and adapting management practices to different economical, political, and cultural environments” (Hodgetts, 2005, p. 6) this is an important key to success. The company has set the commitment that “we act with integrity, we are open and clear, we respect each other and we are socially and environmentally responsible” (ING, 2010), which ultimately has helped them to create a culturally sensitive workforce. ING has been actively pursuing the balance of “bringing together men and women of all ages, from a wide range of backgrounds and nationalities” (ING, 2010). This was reported in what is referred to as their Corporate Responsibility Report. As seen in the 2009 report, ING “has been measuring, tracking and monitoring its performance in the ethical, social and environmental field since 1995, which helps us to continuously improve our track record” (ING, 2010). These steps along with others when fully instituted will help the company further be successful in the global environment.
Analysis that Synthesizes Key Findings
Cultural Differences in Selected Countries and Regions
Organizational culture can be defined as, “in its most basic form, the shared values and beliefs that enable members to understand their roles and the norms of the organization” (Hodgetts, Luthans, & Doh, 2005, p. 154). Wal-Mart needs to be more prepared and aware of countries they pick to implement new stores. The company’s mistake is that they did not thoroughly research the country’s economy and cultural differences before opening the new stores, thus employees suffered, and felt deceived. Wal-Mart will learn from these mistakes and create economically ready stores to sell their products and services while being more selective when choosing countries.
Assess the readiness of global organizations to develop cross-cultural initiatives
Motorola needed help to forward their brand name in developing countries, thus the company formed strategic relationships with other countries. This company shows good direction and character in marketing its brand, by working with countries that are economically ready for their services and products. Wal-Mart and Motorola share similar experiences even though their work is in different areas. “There often are substantial differences between the organizational cultures of different subsidiaries, and of course, this can cause coordination problems” (Hodgetts, Luthans & Doh, 2005, p. 175). Each company need to recognize the advantages and disadvantages when outsourcing in foreign countries, being culturally prepared is the key to being successful. Motorola and Wal-Mart must take the time to learn and teach its employees cultural differences.
Companies today that expand their operations to different countries have to make good use of international management or “the process of applying management concepts and techniques in a multicultural environment and adapting management practices to different economic, political, and cultural environments (Hodgetts, 2005, p. 128). Both Toyota Motor and ING Group have adopted techniques to help them have success in the area of international management. Between trying to construct a culture that is inclusive to all different groups in each nation that they are located to ensuring that policies, procedures, and decisions made are clearly communicated these two companies have taken large steps to be successful in this area.
Many companies in the business world today encounter multicultural and diversity issues and the ability to invoke successful international management. They also require the ability to assess the readiness of global organizations to develop cross-cultural initiatives, to be successful and remain competitive in the respective fields. In this paper, each contributor identified two separate companies that have faced challenges in different areas. The paper also reviewed specific issues faced by the course scenario company, Riordan Manufacturing in comparison with the contributors selected companies, how each selected companies responded to the specific issue and outcomes of the company’s selected response. Each company confronting the challenges of cross cultural management must always remember to investigate other cultures, prepare for change, and commit to dealing with differences in the business world.