Module 05: Managing Cultures and Decisions Module 05: Discussion Module 05: DiscussionDanone’s Wrangle with WahahaThis week’s discussion will focus on cul

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Module 05: Discussion

Module 05: DiscussionDanone’s Wrangle with WahahaThis week’s discussion will focus on cultural decision-making using the case study about Danone in China (p. 255 in the textbook).This case focuses on the cultural differences and management styles of the French company Danone Group in its joint venture with its Chinese company partner, Wahaha Group.  In this situation, Wahaha established other companies outside the joint venture that Danone Group claimed infringed on Danone’s interests. These infringements were alleged to be in violation of a non-compete clause and unauthorized use of the “Wahaha”’ trademark owned by the joint venture. Danone sued Wahaha and the lawsuit eventually resulted in Danone Group accepting a cash settlement from Wahaha Group to the “Wahaha” trademark.
 

After reflecting on this situation involving cultural differences, as a leader, how might an international company enter into a joint venture in Saudi Arabia with a domestic company and demonstrate the commitment to working together well, respecting the Saudi Arabian culture and management style to resolve such a conflict? What types of decisions would you need to make? Would there be bias in the decision-making process? Can you give an example? Embed course material concepts, principles, and theories, which require supporting citations along with two scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.Be sure to support your statements with logic and argument, citing all sources referenced. Post your initial response early and check back often to continue the discussion. Be sure to respond to your peers’ posts as well. 

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Chapter 5

Managing across Cultures

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Learning Objectives

Examine the strategic dispositions that characterize responses to different cultures

Discuss cross-cultural differences and similarities

Review cultural differences in select countries and regions, and note some of the important strategic guidelines for doing business in each

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3

Strategic Predispositions

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Ethnocentric

Firm allows values and interests of the parent company to guide strategic decisions

Polycentric

Company makes strategic decisions tailored to suit the cultures of the countries where the MNC operates

Regiocentric

Firm blends its own interests with those of its subsidiaries on a regional basis

Geocentric

Company integrates a global systems approach to decision making

Table 5.1 – Orientation of an MNC under Different Profiles

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.

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Table 5.1 – Orientation of an MNC under Different Profiles (continued 1)

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.

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Table 5.1 – Orientation of an MNC under Different Profiles (continued 2)

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.

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Globalization Imperative

Belief that one worldwide approach to doing business is key to efficiency and effectiveness

Effective multinational companies (MNCs) should make efforts to address local needs

Regional strategies can be used effectively to capture and maintain worldwide market niches

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Need for Unique Strategies for Different Cultures

Diversity of worldwide industry standards

Continual demand by local customers for differentiated and locally-sourced products

Difficulty of managing global organizations

Local units should be allowed to use their own abilities and talents unconstrained by headquarters

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Delivery of Marketing Message

Nationality Nature of advertising
Germans Factual and rational
Spots feature a standard family of two parents, two children, and grandmother
French Avoidance of reasoning or logic
Emotional, dramatic, and symbolic
Spots are viewed as cultural events and reviewed as if they were literature or films
British Laughter is valued
Typical broad, self-deprecating commercial mocks both the advertiser and consumer

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Challenges Faced by MNCs

Staying abreast of local market conditions and not assuming that all markets are same

Knowing the strengths and weaknesses of its subsidiaries and assisting them in addressing local demands

Giving more autonomy to the subsidiary

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Barriers to Cross-Cultural Management

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Parochialism

Tendency to view the world through one’s own eyes and perspectives

Simplification

Process of exhibiting the same orientation toward different cultural groups

Table 5.2 – Six Basic Cultural Variations

Note: *Indicates the dominant U.S. orientation.

Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.

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Table 5.2 – Six Basic Cultural Variations (continued)

Note: *Indicates the dominant U.S. orientation.

Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.

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Cross-Cultural Similarities

Russia and U.S.

Traditional management, communication, human resources, and networking activities

Organizational behavior modification interventions

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Cross-Cultural Similarities (continued)

Korea and U.S.

Organizational commitment relates to employees’ position in the hierarchy, tenure in their current position, and age

Commitment increases with positive perceptions of organizational climate

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Cross-Cultural Differences

Examples Human resource management differences
Mexico Concept of an hourly wage plays a minor role
Austria and Brazil Employees with one year of service are automatically given 30 days of paid vacation
Some jurisdictions in Canada Legislated pay equity between male- and female-intensive jobs
Japan Compensation levels are determined by age, length of service, and educational background
United Kingdom Employees are allowed up to 40 weeks of maternity leave, and employers must provide a government-mandated amount of pay for 18 of those weeks
Majority of large Swedish companies Head of human resources is on the board of directors

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Approaches for Formulating Effective Compensation Strategies in Different Clusters

Examples Strategies
Pacific Rim countries Incentive plans should be group-based
Japan, Hong Kong, Malaysia, the Philippines, and Singapore High salaries should be paid to senior-level managers
Italy and Belgium Higher salaries should be paid to local senior-level managers
Portugal and Greece Profit-sharing plans are effective
Denmark, the Netherlands, and Germany Personal-incentive plans are useful
Great Britain, Ireland, and the United States Compensation plans should provide opportunity for earnings, recognition, advancement, and challenge

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GLOBE Project

Provides an extensive breakdown of:

How managers behave

How different cultures can affect the perspectives of managers

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Business in China

Primary criterion – Technical competence

Value is placed on punctuality, patience, guanxi networking, and reciprocity

Guanxi: Good connections

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Business in Russia

Building personal relationships with partners is important

Working with local consultants can be valuable

Gift-giving is considered ethical when engaging in business transactions

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Business in India

India has become a desirable market because of unsaturated consumer markets with cheap labor and production locations

Bureaucratic restrictions have been lifted to attract foreign investment and raise economic growth rate

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Business in France

Social interactions are affected by class stereotypes

French organizations tend to be highly centralized and have rigid structures

Management is autocratic in nature

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Business in Brazil

Brazilian businesspeople tend to have a relaxed work ethic

Face-to-face interaction is preferred

Patience is key when managing business

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Business in Arab Countries

Arab businesspeople:

Follow a fatalistic approach to time

Tend to attach a great deal of importance to status and rank

Business-related discussions may not occur until the third or fourth meeting

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Review and Discuss

Define the four basic predispositions MNCs have toward their international operations

If a locally based manufacturing firm with sales of $350 million decided to enter the EU market by setting up operations in France, which orientation would be the most effective: ethnocentric, polycentric, regiocentric, or geocentric? Why?

Explain your choice

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Review and Discuss (continued 1)

In what ways are parochialism and simplification barriers to effective cross-cultural management?

Give an example for each case

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Review and Discuss (continued 2)

Many MNCs would like to do business overseas in the same way that they do business domestically

Do research findings show that any approaches that work well in the U.S. also work well in other cultures?

If so, identify and describe two

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