Importance of blending the local/regional culture with the Global MNC
In the globalized world, the customer shares a central position which necessitates the understanding and prioritizing of local markets. It is therefore vital for managements of multinational corporations to understand the varied cultures within which firms choose to operate and function. Products and services in addition to management styles need to be adapted to suit the needs of the society and culture of the specific place. Since culture provides “a sense of belonging” to people and dictates “how they should behave” and “what they should be doing”, it impacts the behaviors, morale and attitudes of the people. It is therefore necessary for global organizations and mangers to follow ten major tenets of leadership (Harris and Moran, 1996).
- Global leadership entails the capability of effective functioning in a global environments and being respectful of cultural diversity
- Cross cultural communication entails the need to recognize self image and role in addition to personal values and expectations which are accustomed to the culture in which one operates
- Cultural Sensitivity entails the assimilation of the general culture based on organizational and personal experiences
- Acculturation entails effective adjustment and adaptation to specific cultures, in foreign lands or to a minority culture within one’s country.
- Cultural Influences on management practices entail the understanding that management philosophies are developed rooted in a particular culture due to which they may fail to transfer to another
- Effective Intercultural Performance entails the application of knowledge of cultural theory and insight to particular cross cultural organizations and situations which can have a positive impact on the performance and outcome of people.
- Changing International Business Activities entails the management of interdependent business activities globally and culturally or regionally.
- Cultural Synergy refers to the distinctions between people from different cultures and communities and how the similarities can be integrated to enrich the working system of the organization.
- Work Culture refers to the application of the general traits of the people of a particular culture of cultures to learn the dynamics of their styles of functioning at a particular time and place.
- Global Culture refers to the crucial knowledge and understanding that human culture is universal and a unique global culture is evolving with certain specific characteristics or features.
Regional and National Impact on HRM strategies of Multinational companies
Multinational corporations face the challenge of globally integrating their policies and programs while ensuring that these are adapted locally and regionally. This requires a culturally synergistic approach to international human resource management which can be achieved by exploring the cultural diversity of the place (Hoecklin, 1995) and applying the process model of problem solving (Schein, 1999).
The synergistic approach to problem solving entails three crucial in solving the problem which include the description of the situation, the cultural interpretation of the situation and the development of new solutions which are culturally creative Adler's (1997). It is important for managers to first define the problem which needs to be solved following which they undertake the vital task of interpreting the situation and analyzing the patterns which explain the cultural behavior. The final step involves the development of culturally creative solutions which facilitate the effectiveness and productivity of the product and the organization. Schein’s problem solving model (1999) entails the formulation of a problem and generating proposals for action followed by the proposed solutions and testing proposals. The second cycle follows which includes planning of action, implementing the steps for action and the evaluation of the outcomes.
However, in order to understand the needs and perceptions of people of a particular nation or region, and go about the course of planning and implementation of strategies, it is first important to understand the culture of that place. Geert Hofstede (1980) studied and analyzed the behaviors of multinational organization staff in forty countries and formulated four dimensions on which to base the culture on a country. These dimensions include Power Distance, Uncertainty Avoidance, Individualism and Masculinity and are useful for human resource professionals to study the culture of a specific nation to implement appropriate practices for that specific culture and community (Firoz, Ahmad & Kim, 2002).
Power Distance is referred to the extent to which the less powerful members of a particular society accept the fact that power should be distributed unequally which results in unequal relationships between parents-children, teacher-student, politician-public etc. this inequality will also reflect in business corporations since it is the basis of the boss-employee relationship (Firoz, Ahmad & Kim, 2002). Uncertainty avoidance refers to the extent to which people try their best to avoid certain situations in which the outcomes or expectations are not clearly stated (Firoz, Ahmad & Kim, 2002). People of specific cultures rank high on uncertainty avoidance and would tend to work with prefer working with people they know for instance, friends and acquaintances rather than strangers (Gannon, 2001). Individualism refers to the belief that the self comes first Griffin and Pustay (1998) and people from high individualistic cultures prefer to place their personal interests above those of families and friends (Griffin and Pustay, 1998). On the other hand, collectivist cultures place family and friends ahead of the self. America is an individualistic society while Asian countries like China and India are collectivist. Masculinity or Goal Orientation as opposed to feminity refers to the aggressive and materialistic behaviors of humans. Finally, Long-term orientation as opposed to short term work outlook refers to the perceptions and attitude of the people on their work, life and other important aspects of society (Firoz, Ahmad & Kim, 2002). Asian cultures such as the Indians and Chinese tend to regard long term future orientations and place value on hard work, sincerity and dedications s opposed to certain other cultures which focus on the past and present (Griffin and Pustay, 1998).
Case studies
A case example in which the HR of a multinational company followed the “Go global; think local” doctrine is the Ford Motor company which had to completely change the design and structure of their popular model, Ford Escort for the Indian market to suit the needs of the Indian customers (Hilsemath, 2000). Escort was popular all over the world but not so in India due to which Ford developed a completely new car for the Indian market, the Ford Ikon. The engineers, who worked on Ford, changed the structure of the Ford Fiesta completely and revamped everything from its wheels to its interior. The headroom of the Ikon was designed for more space to accommodate “men in turbans” and “doors were adjusted to open wider than normal to avoid catching the flowing saris of women”. Several other structural changes had to made to suit the climate of India, especially the monsoon season for which valves were fitted in order to avoid flooding and air conditioning system was improved keeping in view the intense heat of Indian summers. Special consideration was given to Indian roads by making the shock absorbers tougher. The new version of the altered car was a huge success unlike its predecessor Escort.
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