Archives for September 2015

The benefits for organizations embracing cultural diversity are unlimited and range from innovative, creative solutions in business challenges to substantial growth and financial success. In order to capitalize on these benefits, synergy must be achieved. Synergy may seem like an abstract idea, but it has concrete meaning to a Multinational Enterprise (MNE) who adds cultural diversity as a building block for success. A comprehensive definition of synergy describes it as, “a cooperative or combined action, and occurs when diverse or disparate individuals or groups collaborate for a common cause. The objective is to increase effectiveness by sharing perceptions and experiences, insights, and knowledge (Moran, Abramson, & Moran, 2014, p.266). When you examine this definition, it reveals that the heart of synergy requires shared viewpoints, experiences and knowledge which are usually found in teams. Common sense would indicate to any leader whether that leader is an individual or corporation that synergy and cultural diversity go hand in hand.

“Cultural diversity is already an aspect of many

companies; the next step is to recognize it as a valuable

resource and put it to good use.” Festo AG & Co. KG

Retrieved from Cultural Diversity

Synergy By Diversity

Access the study by clicking this link: Bertelsmann-Stiftung

Bertelsmann Stiftung, a German non-profit foundation committed to social change released a study which chronicled the success of twelve different MNE’s whose operations span the globe and reach into multiple cultures. They advocate that, “The diversity of our workforce clearly offers untapped resources for success in the international marketplace” (Stiftung, 2008, p. 6). In each one of the companies profiled, their teams, projects and partnerships were made up a multicultural mix of personnel. The study revealed each company reported synergy effects through diversity in the following three areas:

– Conflict reduction and satisfaction

– Customer focus and market access

– Cooperation and international success

Team Conflict

“I believe the key is to create a team environment in

which the potential problems of diversity are minimized

while the potential benefits are unleashed.”

Dr. Taylor Cox Jr

There were myriad methods used by the MNE’s to overcome many of the problems associated with a diverse workforce. One of the primary concerns for a global corporation is assembling good teams and this is where the potential for conflict enters as each team member tends to view the world from their own point of view (PSU, 2015) or what is known as an ethnocentric perspective. One executive profiled in the study was Eva Kaiser-Nolden of Ford, who explained that to overcome conflict between team members there must be an agreement in how they perceive others and how they are viewed by the group (Stiftung, 2008). It is important that the team go through a process of identity negotiation to discover skills and values differences. In most instances, people possess different skills which leads to the generation of new ideas based on their particular expertise and can be described as a positive outcome of conflict (PSU, 2015). On the other hand, differing values often leads to emotional conflict which is detrimental to the team. A team will be successful if each person can identify with their team rather than their individual ethnic group (Stiftung, 2008). Moran et al., (2014) classified team participation as an intense learning experience and indicated synergy happens when team members listen to each other and think of others. It is up to organizations and their leaders to foster an environment where diversity can have a positive result in team success.

Customer Focus

Retrieved from Ay Yildiz

Another company highlighted in the study was the German telecommunications company, E-Plus Group which launched the cell phone brand Ay Yildiz in order to market cell phones to the 2.7 million Turks who had immigrated into Germany (Stiftung, 2008). The company did not employ anyone who spoke the language and they were unfamiliar with the culture. They responded by building a team comprised of local Turkish people from the community and redesigned their marketing campaign to target the specific population group. This allowed them to reach Turks not only in Germany, but other parts of the world as well. Ay Yildiz is a perfect example of Perlmutter’s (1969) theory that companies evolve from the ethnocentric, polycentric and geocentric mindset that allows them to achieve global success and local responsiveness simultaneously (as cited in Moran et al., 2014). Building a culturally diverse marketing team allowed them to achieve brand recognition and improve their image in the global marketplace.

Cooperation Builds Success

Deutsche Telekom is a global company who boasts substantial cultural diversity in its heterogeneous workforce of 80000 employees in 50 countries outside the home office in Germany (Stiftung, 2008). As a cultural diversity trendsetter, they recognize the differences within groups and the differences between groups. Their products take into consideration the various age, gender and socio-economic factors of each cultural group while also considering the variations between Turks, Slovakians and South African’s (Stiftung, 2008). Deutsche also accounts for the diversity of their employees and developed “ethnic handbooks” for their personnel which assist them with learning how to respect other cultures. Their strategy is customer oriented, but they have also forged strategic partnerships in each country which ensures their success.

Global Mindset

“Globalization challenges us to question our attitudes.

That’s why it’s so exciting!” Prof. Eckard Minx

The common thread with all these companies is they cultivated a global mindset in their approach to success by embracing cultural diversity. Moran et al., (2014) suggested attitudes and ethnocentric views are learned, and it is apparent these companies evolved in both arenas. Global leaders can follow suit by choosing to evolve and broaden their depth by: assembling multi-culturally diverse teams, targeting new ethnic groups in their business strategies and capitalizing on the opportunities created by cultural synergy.

Koppel, P., Sandner, D. (2008). Synergy by diversity: Real life examples of cultural diversity in corporations. Germany: Bertelsmann Stiftung.

Moran, R.T., Abramson, N.R., Moran, S.V. (2014). Managing cultural differences. (9^th ed.) New York, NY: Routledge.

Pennsylvania State University (2015a). Lesson 6: Cultural synergy. Retrieved from https://courses.worldcampus.psu.edu/fa15/olead410/001/content/06_lesson/03_page.html

Pennsylvania State University (2015b). Lesson 6: Cultural synergy. Retrieved from https://courses.worldcampus.psu.edu/fa15/olead410/001/content/06_lesson/03_page.html

The three mindsets as defined by Perlmutter regarding Mutli-National Enterprises are directly relatable to the United States Military. In my experience, traveling to 5 different countries all with the Military, I have noticed a very strong Geocentric mindset when the Military deals within the military, but Ethnocentric when dealing with other countries; this leads me to suggest that the military has a problem of ethnocentric thinking. Geocentric is by far the most ideal mindset for a MNE, because it represents a collaborative effort between local and home country leaders to develop policies (Moran et al., 2014). This can be seen within the Military easily when we look at individual units, regardless of location, communicating needs to higher authority.
When I traveled to Jordan, my unit has very little communication to the United States to determine proper course of action when discussing the operation with local militaries. Most would assume this was a terrible thing, however it was partially planned for. Before we had left, we discussed this possibility and I remember hearing “well, if something comes up, I’m sure you’ll be able to handle it appropriately.” This was obviously representative of trust in the local commander to make the best decision possible without the input of home HQ. This however, is not always the case when dealing with someone outside of the United States Military.
Perlmutter defines the Ethnocentric mindset by the use of a single, home country based, success rubric that is then applied to all subsidiary organizations, regardless of ethnic or cultural background (as cited in Moran et al., 2014). This can lead to lack of production and profit since those home standards aren’t always conducive to the local culture. With this in mind, we can apply this mindset when the United State Military tries to work with foreign countries militaries, particularly if we view their military abilities as substandard to us. For instance, we aren’t going to try and tell the British Army how to do their job, but when training the Afghanistan National Army, the standards we graded their success on were the same as ours.
Additionally, when discussing the foreign militaries, we typically assume that they are not one our level. This thinking has potentially prevented us from learning valuable training techniques, new ways to accomplish missions, or better gear to carry while forward operating. The one group of individuals I have worked with that did not do this, was arguably the most well trained forces in the military, Navy SEALS. When deployed with them, they typically would adjust their movements, actions, and structure to better blend into the local culture, and ultimately I believe that is the single most decisive factor in their success rate with so few personnel.
References
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014) Managing Cultural Differences (9th ed.). New York, NY

The foundation of organizations primarily resides on the ability for organizational change when adapting into a globalized fashion.  Moran (2014) argues different types of change organizations embark on to maintain a successful organization in the business climate of globalization.  For instance, reactive change prohibits the need for crisis change in order to prevent a negative outcome of the experiences of an international corporation such as their supplies used in the marketplace.  The international corporation of Ericsson has implemented a series of changes for a competitive advantage in the globalized marketplace since the early 1990’s.  Although organizations must enter the international business climate, organizations need to be able to enforce change to maintain success as evidenced by corporations such as Ericsson. Thus, globalization is forcing organizations to take a step back and initiate change within their corporation to give a competitive advantage with their products in the marketplace.

Ericsson is a prime example of using Moran’s (2014) theory of reactionary change to initiate success in the global marketplace. Usually at this time in a corporation, warning signs such as numbers within the company are beginning to head downhill with the success of products and sales with neighboring competitors.  Moran (2014) highlights the need for this type of change when he states “sales and profits are off former highs and managers begin to realize that the company is on a downslope and the readiness for change begins to develop” (p. 108).  Ericsson experienced this downhill spiral in the 1990’s with an IT product beginning to fail in the global marketplace. Upon almost entering a crisis, managers began to work hard to help their employees work toward reactionary change within the organization.  However, they chose to begin at the local level before moving towards a globalized level.

The idea of beginning at a local level is a theory of internationalization (as cited by Moran, 2014).  Moran argues how companies will begin to change at a localized level before expanding into the globalized world.  For instance, Moran (2014) highlights this tactic of corporations adapting to new technology at the local level when he states “the danger for the MNE is that the local partner will learn its advanced technology before the MNE learns the local market” (p. 111).  Ericsson was well aware of this idea of competing at a local level, and began to train employees on the IT product within the locality of the market.  Scholar Iveroth who worked closely with Ericson during this time studied their methodology and reported “the change agents were characterized by their long experience of working at both the local and global level in the F and A department within Ericsson” (p. 139).  Thus, Ericsson was working towards achieving a global competitive advantage by first working with their local partners. Evidently, the changes implemented by this company allowed Ericcson to head towards a competitive advantage with their IT product in the marketplace.

In conclusion, the changes initiated by an international firm such as Ericsson manifested the need for corporations to be reactionary when their products are headed in a downward spin.  Upon using at IT product at Ericsson, Ericcson enacted changes at a local level competing in the local marketplace after this product became more knowledgeable to employees.  Even though organizations must enter the international business climate, organizations need to be able to enforce change to maintain success as evidenced by corporations such as Ericsson.  The ability to begin to compete at local level will lead to a global scale, which gives companies a competitive advantage. Thus, the foundation of an international firm such as Ericsson is to assess how they must change to head towards a more promising future in the globalized marketplace.

References

Iveroth, Einar.  (2010). Inside Ericsson: A Framework for the Practice of Leading Global It-Enabled

Change.  California Management Review.  53(1).  136-151.

Moran, Robert. & Abramson Neil & Moran, Sarah V.  (2014). Managing Cultural Differences. Oxford:

Routledge.

Change is something that everyone has to go through, especially a business. When a bigger or better product comes out, you have to compete in order to thrive. In the wireless communications industry, there are a few key big name companies that run the market. At one point, there was a company who basically started the industry by selling the world’s first mobile phone, but failed to adapt to change and is now struggling to keep up. Motorola is a company who blazed the trail but fell short in keeping up with the market and adapting to change.

Motorola has roots dated back to 1928, but was in a much different business than they are today. Back then their focus was car radios in which they were the first to produce in a brand new market. But this wouldn’t be their only first production. They were the first to launch a variety of products that other companies learned, improved, and became better well known for.

Motorola developed the first pager, which eventually led to the world’s first cell phone. In a brand new market, in which they were the first company in it, they should have capitalized and dominated. They could have controlled the market by expanding their research and technology team to constantly come up with better improvements. Instead other companies such as Apple pushed them out and took over the market. Now Motorola struggles to compete with their own ‘Droid’ lineup.

Another huge area they missed out on was wireless networking. In the IT industry there are two main competitors, Linksys and Cisco. Everyone in the industry knows about them because they continually put out great products year after year. But a little known fact is that Mottorola was the first company to actually put out the first wireless cable modem gateway. If you have internet in your house from any major cable provider such as Comcast, Verizon Fios, Time Warner, or Cox Cable, you almost certainly have a newer version of the old wireless cable modems.

Motorola is a company who peaked at 150,000 employees who failed to keep up with change and is now struggling in the market. They had many opportunities to dominate the market with being the first company to come out with a variety of world famous products, but failed to clinch at an opportunistic time.

References

Wikipedia. (n.d.). Motorola – Wikipedia, the free encyclopedia. Retrieved September 27, 2015, from https://en.wikipedia.org/wiki/Motorola

A leader can no longer view their role comparable to a line assembly job where there is specialization and mastery of rote ways of conducting their business in one type of environment. To have a competitive edge in today’s world, leaders are required to have a more geocentric mindset which requires different cultural competencies and adaptation to new environments.  As economies rapidly change and companies try to expand and increase their markets, reduce labor costs and get tax breaks, there is a shift towards transplanting the business abroad. In order for this move to be successful, it would require people who can adjust and redesign how the business that they are in charge of is handled.  Levy et al did a great job of explaining this when they state, “to be effective, transnational managers need both the culturally specific knowledge and adaptation skills required in international firms, and the ability to acquire a worldwide perspective and to integrate the worldwide diversity required in multinational firms. The transnational manager must be discrete when choosing to be locally responsive and when to emphasize global integration.”

True geocentric leaders do not believe in one size fits all, homogenous way of thinking as the headquarters. In contrast, their mindset is to “produce a collaborative and cooperative effort on the parts of both headquarters and all subsidiaries to establish worldwide standards, and permissible local standards variations. (Moran et al).Geocentric leaders would focus on adopting practices that achieves the overall objectives. This means striking a balance between what works in the parent location and what is needed in the geographical location that they are leading.  Communication is paramount as the following sectors are addressed so that the company’s overall objectives are attained. The impact of the leaders competencies can be seen in the following areas.

Global leaders and the workforce: Adaption is very important with the workforce. While a U.S originated leader may be comfortable with a participative type of leadership, this may not work well in other cultures, for instance, it may be deemed insubordinate for an employee in Japan to voice their opinion to someone in a superior position. When there is a clear distinction and emphasis in the power distance in a culture, there is less ease in sharing and collaborating by the employee. Where a leader may come from a masculine cultural context, the aggression may be viewed as conflict, which is avoided in other cultures. It is important that when leading the charge in a different culture that the leader develops a strategy by using Hofstede’s five cultural dimensions as a guide in understanding how the workforce operates. An excellent tool can be found on http://geert-hofstede.com/countries.html

Global leaders and the customers: There are a few examples of companies where geocentrism is in force for instance KFC has “a vegetarian thali (a mixed meal with rice and cooked vegetables) and Chana Snacker (burger with chickpeas) to cater to vegetarians in India” and Viacom’s MTV channels are “branded accordingly as MTV India, MTV Korea, MTV China and MTV Japan and use more local employees with use of local language” (Manish 2010)  while playing music that is suited to the respective cultures. While the entire menu was not changed by KFC, they did consider local spices (e.g. curry) and infused them in some of the options in their menu.

http://giftssendtokolkata.com/kfc/chana_snacker.jpg

http://www.indianshowbiz.com/wp-content/uploads/2012/12/image006.jpg

They even involve their customers by collaborating on social media; a sure way of letting the host country know that their input matters.

http://blinksolution.com/projects/kfc-india-curry-crunch-campaign/

Another example where leaders think and act globally and locally is with McDonald’s, a hamburger chain. McDonalds does not offer beef options in India due to customer preferences. The global leader is still achieving the objectives of the head office but has modified their strategy to match the needs and preferences of their local market.

Global leaders and the society: As MNE’s expand worldwide their impact to the economics and society in general is certain. As they infuse employment opportunities into developing countries, poverty concerns are ameliorated and there is a boost in spending within the country which can potentially lead to economic growth within the country. As social learning is encouraged, it creates an even more dynamic and educated workforce which again has the potential for promoting growth for the country or region.

References

Manish, J. Glocalization Examples- Think Globally and Act Locally. Retrieved from: http://www.casestudyinc.com/glocalization-examples-think-globally-and-act-locally

Moran, Abramson, Moran (2014): Managing Cultural Differences. Chapter 4

Orly Levy, Schon Beechler, Sully Taylor and Nakiye A Boyacigiller http://www.palgrave-journals.com/jibs/journal/v38/n2/fig_tab/8400265t1.html

Organizational change can signal boom or bust for multinational enterprises (MNE) with no preference on who ends up being labeled a winner or loser. Change means an MNE must adapt to remain competitive in the business environment (Moran, Abramsom, & Moran, 2014) whether that environment is economic changes, technological advances or global expansion into emerging markets in Asia. In early 2012, Kodak, a titan in the film industry suffered the devastating consequences from failing to adapt and institute organizational changes which resulted in bankruptcy.

Retrieved from http://www.google.com

In an attempt to explain the tragic demise of the conglomerate, Kotter (2012) wrote, “The Kodak problem, on the surface, is that it did not move into the digital world well enough and fast enough”. Schein’s (1980) planned change theory suggests an organization will not change unless it is motivated to. His theory also indicates that change must be initiated through key members of the organization like the Chief Executive Officer (PSU, 2015). Kodak’s problem was the CEO and the executives at the top were complacent and failed to take action when people within their hierarchy offered ideas (Kotter, 2012). The technical experts within the company were not able to properly motivate and “unfreeze” the senior leadership towards adopting new technology being implemented by competitors like Fuji. Why did they fail to realize the need for change?

One possible explanation for the complacency on the part of the corporate executives could have been anticipatory change which is defined by Moran et al. (2014), as the awareness that the company has reached its growth limit and is compounded by the senior management who may have been caught up in feelings of success or invincibility. Kodak was used to being on top of the market and failed to accept that the competition was passing them by in the digital technology environment. By the late 1980’s, making strategic decisions like changing CEO’s and slowly integrating technology was too little too late to turn back the tide and bankruptcy followed. Perhaps Kodak’s fall could have been avoided with a solid strategy for change based on Schein’s (1980) model which tells us unlearning something is unpleasant. But in this scenario, it is hard to imagine complacency and the status quo would have been preferred to bankruptcy.

Kotter, J. (2012, May). Barriers to change: The real reason behind the Kodak downfall. Forbes, Retrieved from http://www.forbes.com/sites/johnkotter/2012/05/02/barriers-to-change-the-real-reason-behind-the-kodak-downfall/

Moran, R.T., Abramsom, N.R., Moran, S.V. (2014). Managing cultural differences. Thousand Oaks, CA: Routledge.

Pennsylvania State University, (2015). Lesson 5: Learning and change in a global setting. Retrieved from

https://courses.worldcampus.psu.edu/fa15/olead410/001/content/05_lesson/04_page.html

Schein, E. H. (1980). Organizational psychology. Englewood Cliffs, NJ: Prentice Hall.

Leaders often have to meet with many people both within the company and outside the company.  At time leaders have to meet with people of different cultures which doesn’t mean outside of your country.  Cultural differences exist throughout the world, for example someone from Florida may have many differences than a person from Pennsylvania.  In doing some research I have found that eye contact while communicating can be misinterpreted by many.

“In many Western cultures, a person who does not maintain good eye contact is regarded as slightly suspect.  Those who avoid eye contact are unconsciously considered unfriendly, insecure, untrustworthy, inattentive, and impersonal.” (Moran, Abramson and Moran)  I was taught to make eye contact with people I was talking to no matter their status in society.  Others throughout the world are taught to lower their gazes to those who are higher in status or superior to them.

“The rules for eye contact are highly culturally dependent.” (Galanes and Adams)  When meeting with someone of a different culture they may not make eye contact but that doesn’t mean that they aren’t listening or being rude, it is their culture to look elsewhere on the person to show respect.

“Hispanic children are taught to lower their gaze to indicate respect, but this can backfire.”  “For example, white American teachers and police officers sometimes misinterpret a lowered gaze as sullenness.”  (Galanes and Adams)  As leaders we need to remember that just because we were taught one way to do something that doesn’t mean that people of other cultures weren’t taught differently.

Moran, R.T., Abramson, N.R., Moran, S.V. (2014). Managing cultural differences. (9th ed.) New York, NY: Routledge

Galanes, G., Adams, K; (2013). Effective Group Discussion; (14th ed.) New York, NY; McGraw Hill

The differences amongst cultures in resolving conflict has become apparent in recent years as the corporate world seeks to head towards globalization.  Moran highlights the main areas of the world impacted by these cultural differences are “North America, Europe, and Japan” (as cited by Moran, 2014).  Within the realm of intercultural communication resides the issue of negotiating a conflict with international boundaries.  Despite Moran arguing how North America, Europe, and Japan are dominating the cultural hindrances in effective business communication, smaller countries are still impacted by cultural differences in their negotiation process with other countries as evidenced by revolutionary movements in Fiji since 2001.  Thus, a culture closely linked to one of the larger countries studied for their differences was able to improve their methods at resolving conflict for the common good of their country in the corporate world.

When a conflict arises on the international platform, cultures must be able to first assess their own first culture Moran argues the ability for cultures to assess their own cultures when he states “to create cultural synergistic solutions to management problems and international negotiating, U.S. managers must identify and understand what is American about America, what common cultural traits are shared by Americans, and what values and assumptions form their foundation” (p. 77).  With a solid perception of one’s own culture, a leader can then move forward with the framework of a negotiation, and break down the cultural barriers that are hindering a resolution.  In 2001, Fiji was maintaining a “pro-western” mentality when approaching an international conflict with Australia.  Fiji was closely linked to China, and maintained similar personality traits such as “physical centering” (as cited by Moran, 2014).  When both countries approached the conflict, the resolution began to become more apparent due to a westernized way of approaching conflict.  Thus, despite the three large areas studied for cultural differences in negotiating a conflict, Fiji used China’s tactics in resolving a conflict with Australia.

The eventual resolution to ongoing tensions between Fiji and Australia led to revolutionary movements for Fiji.  For example, Fiji adapted a “look north” policy in which they adapted to physical centering such a communicating in a more direct fashion with their international partners.  Fiji was able to ease tensions with international partners by relating to their competitors’ personality similarities.  Moran (2014) highlights how personality similarities are a key component to understanding cultural differences when he states “ the central principle determines to a large degree how one processes information, and the secondary principle drives what kind of information one tends to process” (p. 58).  If Fiji had adapted to personality similarities with Australia, the process model of negotiation consisting of frustration may have been decreased.  However, due to such frustration amongst the two cultures during that negotiation, Fiji was forced to adopt the “look North Policy” for future negotiations taking into account a globalized corporate world.  Thus, the frustration of the negotiation process that led to an overall outcome between the two countries resulted in a revolutionary action for Fiji promising a bright future ahead in a changing globalized world.

In conclusion, the three larger parts of the world that are thoroughly studied for cultural differences are North America, Europe, and China. However, when scholars look deeper into the globalized world, smaller countries such as Fiji battled cultural barriers when they embarked on a mission to resolve a conflict.  Despite growing tensions, Fiji used the negative experience to adopt a policy for future negotiations that consisted of using personality similarities with the countries they work closely with.  Although larger parts of the world are battling cultural barriers while using effective business communication, smaller countries such as Fiji have also encountered the cultural differences that impact resolving a conflict.  It is crucial to understand the elements that impact the negotiation process stemming from the personality differences and similarities of different cultures involved.

Moran, Robert. & Abramson Neil & Moran, Sarah V.  (2014). Managing Cultural Differences. Oxford:

Routledge.

Foreign Relations.  (2015).  International Relations.  6-31.