BB0027 - Cross Cultural Aspects of Business

Feb drive 2011

Bachelor of Business Administration-BBA Semester 6

BB0027 - Cross Cultural Aspects of Business- 4 Credits

Marks 60

Q.1 What is culture? Discuss the characteristics of culture.

Ans : Definition of Culture:

Scholars have never been able to agree on a simple definition of culture. The task of understanding culture is complicated by a over abundance of definitions. Anthropologists and sociologists define culture as “ways of living” built-up by a group of human beings which are transmitted from one generation to another. A culture acts out its ways of living in the context of social institutions, including family, educational, religious, governmental and business institutions. Ralph Linton (1945:2) provides a Timeless definition of culture as the configuration of learned behaviour and results of behaviour whose component elements are shared and transmitted by the members of a particular society. Or perhaps more appropriately ; “the way we do things around here”. So defined China has a culture – a commonality of beliefs, experiences, values and expectations – that sets it apart from Egypt, India, Poland or Mexico. In an international business, culture refers to acquired knowledge that people use to interpret, experience and generate social behaviour. This knowledge forms values, creates attitudes, and influences behaviour.

Culture can also be defined as “a continuously changing totality of learned values and shared meanings, rituals, norms and traditions among the members of an organisation or society.” By values we mean abstract ideas about what a group believes to be good, right, and desirable. Put differently, values are shared assumption about how things ought to be. Values form the bedrock of a culture.

Characteristics of Culture:

Although there are many definitions of culture, the experts seem to agree on a number of characteristics of culture :

(1) Culture is learnt :

Culture is not inherited. It is learnt through experience. People over time transmit the culture of their group from generation to generation.

(2) Culture is shared :

The tenets of the culture are accepted by most members of the group. Culture is not specific to single individuals, but is shared by people who are members of particular groups, organisations and societies.

(3) Culture is trans generational :

Culture is passed on, in a cumulative process from one generation to the next. It is always passed on from one generation to another.

(4) Culture is inter-related :

One part of the culture is deeply connected with another part, such as religion with marriage or business with social status.

(5) Culture is symbolic :

It depends on individuals human capacity to symbolize or to use one thing to represent another.

(6) Culture is patterned :

Culture possess structure and is integrated. Change in one aspect of culture causes changes in another.

(7) Culture is adoptive :

Culture depends on the human capacity to adopt to change.

(8) Culture is descriptive :

Culture defines the boundaries of different groups.

Q.2 Write a note on Upward communication.

Ans : A formal communication network is one which is created by management and described with the help of an organizational chart. An organizational chart specifies the hierarchy and the reporting system in the organization. Therefore, in a formal network, information is passed on only through official channels such as memos, bulletins and intranet (email within the organization).The organizational chart implies that information can flow in any of three directions – vertically, i.e., upward or downward, and horizontally.

Upward Communication:

This may be defined as information that flows from subordinates to superiors. Some of the reasons for upward communication include discussing work related problems, giving suggestions for improvement and sharing feelings about the job and co-workers.

This type of communication has both benefits and disadvantages. One of the biggest benefits is problem-solving. Once a subordinate has brought a problem to his superior’s notice, chances are that the problem will not recur, since the subordinate learns from his superior how to tackle it the next time. Thus, his ability to solve new problems and therefore his managerial ability, improves. Another benefit that could arise from upward communication is that valuable ideas and suggestions may sometimes come from lower level employees. Therefore organizations should encourage this kind of communication.

A third benefit is that employees learn to accept the decisions of management and thereby work as a team. The biggest problem associated with this type of communication is that it may lead to “handing down” of decisions by superiors. When subordinates frequently seek the superior’s guidance, the latter may adopt an authoritarian approach and merely give instructions, disregarding the subordinate’s opinion completely. One consistent finding is that employee satisfaction with upward communication tends to be lower than their satisfaction with downward communication (Gibson 1985; Gibson and Hodgetts 1991:221-22). Larkin and Larkin (1994) found low levels of satisfaction with all the strategies commonly used to enhance upward communication, including employee surveys, suggestion programs, employee grievance programs, and employee participation programs such as quality circles and team meetings. Gibson and Hodgetts (1991:268-69) note several management-based reasons for this lack of satisfaction, particularly that these strategies often do not involve two-way communication, are not packaged well, are poorly timed, and are apt to trigger defensiveness on the part of managers.

McCelland (1988) found a number of employee-based reasons why upward communication tends to be poor, including:

Fear of reprisal – people are afraid to speak their minds

Filters – employees feel their ideas/concerns are modified as they get transmitted upward

Time – managers give the impression that they don’t have the time to listen to employees

Q.3 Discuss Universalism Vs. Particularism.

Ans : Universalism vs. Particularism :

It is a concept forwarded by Fons Trompenaars, a Dutch author. Basically, this dimension asks if which is more important to you, rules or relationships. The Universalist, or rule-based, approach is roughly: "What is good and right can be defined and ALWAYS applies." In particularistic cultures, far greater attention is given to the obligations of relationships and unique circumstances.

Universalism vs. Particularism indicates how a society applies rules of morals and ethics. In a Universal society such as the U.S., rules and contracts are developed which can apply in any situation. For example, take the case of trying to cross the street at the red light. In a very rule-based society like the U.S., you will still be frowned at even if there is no traffic. It tends to imply equality in the sense that all persons, or citizens, falling under the rule should be treated the same.

On the contrary, in Asian societies like Taiwan, where particularist judgments focus on the exceptional nature of circumstances, it is likely to be OK with one if it is his/her brothers or friends that violate the traffic rule. These people are not "citizens", but their "friends" or "brothers". This difference probably explains why there have been difficulties in implementing a judicial system that is credible in our country.

The Universalist attaches great importance to the observance of rules. The behavior tends to be abstract. In universalist, rule-based societies there are certain absolutes that apply across the board. They apply regardless of circumstances or particular situations. What is right is always right in every situation and for everybody. A Universalist tries to apply the same rules in all situations. To remain fair a universalist will not make differences between people from the narrow environment, such as family, friends or members of the so-called ingroup and the wider community, such as strangers and members of the outgroup. Wherever possible, personal feelings and emotions are put aside and the Universalist prefer to look objectively at the situation. To remain always fair everyone is equal as there are no differences. Finally, rule-based behavior refers to the tendency that exceptions in the rule construct could lead to weaknesses. It is feared that once exceptions are approved, could be a door down the system.

The Particularist assesses more the specific circumstances or the personal backgrounds. In particularism societies in any situation behave depends on the circumstances. What is right in one situation may not be right in another. A Particularist must therefore sustain, protect or discount this person no matter what the rules say. People in such societies treat their family, friends and members of their ingroup as best they can. The other people around them are on their own. Their ingroup will take care of them. The in- or outgroups are clearly distinguished. A particularist always differences between individuals. No one is seen as the same, everyone is treated as unique.

Q.4 Explain the Organizational characteristics of MNC’s.

Ans : Today’s MNCs are faced with fast and technologically-influenced changes in global markets. Optimizing global efficiencies, national responsiveness, and worldwide learning all required MNCs to find new strategic orientations and changes in organizational capabilities. International markets are complex and volatile, requiring management to find new ways of efficiently meeting rapid changes.

Characteristics:

1. Decentralized Federation:

Most European companies expanding abroad faced local competition, so they needed to build local production facilities, and these National Units became increasingly independent. This form suited European management tastes, where the internal culture emphasized personal relationships rather than formal structures, and financial controls more than operational/technical details. National Units had more operating independence and strategic freedoms from HQ, and were managed more as a portfolio of offshore investments rather than a single international business. At HQ, strategic decisions were decentralized, with loose, simple controls over subsidiaries, and subsidiaries mainly took capital out and sent dividends back, focusing on its own local market. This type of organization gave the company a multinational strategy with a decentralized federation.

2. Coordinated Federation:

American companies varied from European companies in this development, with an international strategy with a coordinated federation. HQ provided mainly formal system controls such as planning, budgeting, replicating parent company administrative systems, and subsidiaries provided mainly knowledge flows back to HQ in technology products, processes, and systems. This was also an “old boys’ network”, particularly powerful after World War II, where companies leveraged the U.S.’s strengths in technology, financing, and sheer size. Newly independent nations and reconstructions created built in demand for these American companies. Although the management systems were sophisticated (management consulting firms such as McKinsey and Bain did quite well during this period), foreign operations often felt they weren’t accorded a level of respect as they felt they deserved, with the amount of responsibility they managed.

3. Centralized Hub:

The typical Japanese company forayed into the international market mainly in the 1970’s, and faced a different environment than American and European companies. Trade barriers were falling, and its plants were new, efficient, and scale-intensive. The Japanese culture also contributed to this form, where competitive strategy emphasized cost advantages and quality assurance, and required tight central control of product development, procurement, and manufacturing. A centrally-controlled, export-based internationalization strategy represented a perfect fit. Group-oriented management practices came into play, communications-intensive, and people-dependent.

4. Integrated Network Model:

This type developed for the transnational corporation, different from multinational, international, or global corporations: It builds and legitimizes multiple diverse internal perspectives able to sense the complex environmental demands and opportunities; its physical assets and management capabilities are distributed internationally but are interdependent; and it has developed a robust and flexible internal integrative process. With transnational corporations, HQ doesn’t need to centralize activities for which global scale or specialized knowledge is important. It gives National Units/subsidiaries the ability to become the company’s world source for a product/expertise. Being local, these Units can have their thumbs on the local pulse in trends and developments.

Q.5 What is the importance of different group membership?

Ans : Each of us belongs to many kinds of group or organization: family, school or office. It is undeniable that the role of groups and organizations in our lives are vital. They are important to us because they give us the opportunity to learn teamwork, socialize and have competition.

To begin with, we learn to cooperate with others when we are members of a group. Imagine if you are an actor in the cast of a film, you not only have to study your part but also have to learn to play your part in harmony with others. By living in groups, we gradually come to realize that sometimes we have to sacrifice our own advantages in order to maintain the group's work. In other words, groups help us to learn teamwork.

In addition, groups offer us the chance to interact with others and learn useful life skills. For example, we can learn how to state and defend our opinion before others when we are members of a group. People who don't belong to any group don't have this advantage, which usually results in that their behavior before others is very awkward and unnatural.

Last but not least, we have the opportunity to compete with others when belonging to a group. This is especially true if the group is a selective one that only choose people with a special characteristic. In such groups, we have to compete with others in order to maintain our positions.

Importance of different group membership:

1.Delegate Tasks:

Working in a group allows members to share responsibilities, rather than the brunt of the work falling in the hands of one person. Instead, group members can delegate tasks to individuals who possess the knowledge, skills and abilities necessary to accomplish the task successfully.

2.Spark Creativity:

Group work helps spark creativity in the minds of the group members giving them a wider range of ideas as they work to come up with solutions for organizational problems. Individuals may go into a group with ideas, but with the help of the group, their ideas get expanded upon and turned into creative, attainable, strategic or timely solutions.

3.Share Diverse Opinions:

Group work gives members an opportunity to explore diverse opinions, which can provide different points of view, as they work to solve problems. One group member may consider an option or have a stance that other members of the group have not considered. With diverse experiences and knowledge, group work ensures that problems are not solved using one person's input.

4. Learn to Compromise:

Group work teaches members the essence of compromising and not insisting upon their own ways. As group members come up with solutions, they work to incorporate the ideas and opinions of the group in their final decisions.

Q.6 Given below is some information about the communication pattern followed in multi Money a financial corporation. The information is transmitted from Manager to subordinate. It is mostly for operational purposes. Identify the nature of communication and make suggestions for improving such communication.

Ans : In an organization communication occurs between members of different hierarchical positions. Superior-subordinate communication refers to the interactions between organizational leaders and their subordinates and how they work together to achieve personal and organizational goals. Satisfactory upward and downward communication is essential for a successful organization because it closes the gap between superior and subordinates by increasing the levels of trust, support, and the frequency of their interactions. Superior-subordinate communication is communication between a manager and those who directly report to the manager. Studies of superior-subordinate communication are concerned with ensuring communication channels are open, making sure that information is communicated in a respectful way and strengthening the superior-subordinate relationship while achieving organisational goals.

Superior-subordinate communication includes two types of communication:

1. downward communication, of which shareholders instructing management is another example, and upward communication, which is the flow of information from employees to senior management and shareholders.

2. Superior-subordinate communication has the potential to both strengthen and severely undermine organisational structure, employee engagement and internal innovation. Relationship building is an important part of ensuring effective and transparent superior-subordinate communications.

From the subordinate’s point of view, perceptions of organisational justice are key – the channels of communication and the way comments and ideas are handled will inform these perceptions. If the employee thinks they are being treated unfairly or that the superior is untrustworthy or authoritarian, this can lead to disengagement and in some cases workplace deviance.

Relationship Maintenance between superior and subordinate:-

Communication is what keeps an office moving. However, poor communication between superiors and subordinates can become endemic when certain mistakes are made. Managerial-level employees are paid to manage, and communication is a crucial part of managing a staff. Fortunately, it is not difficult to improve communication within an organization. Once you have done so, you will find that office efficiency improves and potential issues between staff become reduced. An organization which values its human resources is one which will have a happy staff. Maintaining the relationship between superior and subordinate will differ greatly, depending on the expectations of the individual parties. Some will settle for nothing less than a close friendship with their superior, others may be just focused on maintaining a professional relationship, while those may not get along with their superiors may be focused on just maintaining a civil relationship. The unusual relationship between superior and subordinates requires specific maintenance strategies since some typical ones, like avoidance, are unacceptable. There are four common types of relationship maintenance strategies for this variation of relationship. First there are informal interactions, such as joking and non-work related conversations that emphasize creating a friendship. There are also formal interactions, such as politeness and respect for the superior's authority, that help to create a professional superior-subordinate relationship.

Q.7Mr. Thomas works for a UK based Software Company. The company decides to expand its business in India. What all aspects Mr. Thomas needs to consider for doing business in India.??

Ans : Doing business in India:

Not considering expanding a business to India means ignoring one of the most promising new markets of the decade to come. India's economy is one of the fastest expanding in the world, with a rapidly expanding consumer class. It is a gold mine of business opportunities, in a very wide range of sectors.

Economy forecasts paint India as the fifth largest consumer market in 2025. Nowadays the Indian middle class counts 300 million people, comparable in size to the entire European Unions market. If the economy will follow the trends pre-crisis, the numbers are going to increase.

With bilateral trade between us still growing despite the difficult global trading conditions, the UK-India relationship is one of the biggest strengths we have to meet our countries ambitions for the future.

The UK is the biggest European investor in India and India last year overtook Japan to become the biggest Asian investor in the UK by number of projects. Over 600 Indian firms are represented in the UK, of which about two thirds are in information technology or software. Setting up a business in India is an operation which will find open doors and plenty of incentives.

Various aspects are:

Expanding a business in India means facing different cultures and languages, different business etiquettes and practices. As a general rule, you should make sure you gather as much information as possible about the country you are targeting, for example speaking with business men who have already experienced a similar adventure as you are planning.

In the specific case of India, keep in mind that in the country approximately the 39% of people live with less than $1 per day. Problems with the country's roads, railroads, ports, airports, education, power grid, and telecommunications are obstacles for India's economy to grow to its full potential, and they may become challenges for your business plan.

The liberalization policy in the country started in the early 90s, however some sectors remain of difficult penetration, in particular in the infrastructure area. In addition, India's customs tariff and excise tax system remains confusing and laden with exemptions. Bureaucracy may be burdensome and in the recent past government inefficiencies and corruption have also discouraged foreign investors from setting up a business in India. Things are gradually changing, however when licensing, incorporating or registering a business in India be ready to face procedures that are not as easy as in Western countries.

Do seek help locally, from British institutions and Indian agencies, which provide indispensable local information and advice. They are certainly better plugged in with local business and economic leaders than you.

Finally, thinking about starting a business in India do not consider the country as a single entity: it is strongly recommended that companies consider regional plans, focusing on multiple locations and markets within India and finding the appropriate partners and agents within each region.