Cross Culture Management
About a decade ago around 20 per cent of the world’s Gross Domestic Product (GDP) was produced and consumed in international market. In the views of most of the economist, in the next two decades, the international Gross Domestic Product is expected to increase up to $ 91 trillion and around 80 per cent of the world output will be in the intercontinental markets. Thus there will be an increase of approximately 12 folds and worldwide accessible arena could reach to around $ 73 trillion (Al-Soufi, n.d). This clearly shows that information flow, technology, knowledge and economic has lead towards globalization and internationalization. Thus, to gain sustainability in the international business environment, organizations have to expand their business beyond domestic boundaries. In this regards, the main challenge faced by these companies are cultural diversity. In the words of Geert Hofstede, culture is considered to be a spring of conflicts rather than synergy. Most of the times cultural differences results in disaster and nuisance (Mead and Andrews, 2009). Whenever two persons from different culture interact with each other, both the individuals can interpret their actions through their culture’s standards, however, most of the times it results in misunderstandings. Organizations can overcome this problem by understanding cultural differences such as power structure, religious belief, attitude towards work and time and communication styles. Organization can benefit from diverse workforce only when they are aware of cultural of different workers belonging to different nations. The present report discusses various cross culture management theories and techniques that will help the Saudi Arabian company the ‘DaVinci Apps’ in expanding its business in Rome and Italy (Denison, 1990). It will compare the cultural dimension of the two countries and will advise the lady manager how quickly and effortlessly she can adjust in the foreign business environment.
Italy is one of the most popular countries of European nation. Its currency is Euro and the Gross Domestic Product of the country is 1188 billion dollar. As per the 2005 census the Gross National Product of the nation is 1724.9 billion dollar and GNP per capita is 29999 dollar. Tourism contributes significantly in the growth of the nation and is ranked fourth in the world. Some of the most important cities of the country are Rome, Florence, Venice, and Milan. Italian is the mother tong of the country. Climatic condition of this nation is entirely different from that of Saudi Arabia. Unlike Saudi Arabia which remains hot throughout the year, in Italy the temperature ranges between 8 degree and 25 degree (Understanding Italy, 2014).
Greet Hofestede proposed a cultural dimension theory known as Hofestede’s cultural dimensions theory which acts as a framework for cross culture communications. It considers various parameters such as attitude, beliefs and values of people which affects the attitude and culture of the people and society as a whole. Organizations use these theory understanding cross-cultural psychology and cross-cultural communication in international business. This theory centers around five parameters, namely, power distance index; individualism; uncertainty avoidance index; masculinity; and long-term orientation (Cebuc and Losif, n.d). The below chart shows a clear comparison between Saudi Arabia and Italy on the above stated parameters:
Figure 1: Country Comparison
(Source: The Hofstede Centre, n.d)
Power Distance: Power distance tells about equality of individuals in the society. Further it reflects the attitude of the people and culture towards inequality existing in the culture. In this regards Italy has a score of 50 which means there exists equality in the country and decision making process is decentralized. People of Italy like more open management and teamwork, and dislike control and formal supervision. On the other hand, this score is 95 for the Saudi Arabia which reflects there is lot of inequality at the work place and people are not involved in decision making process (Geert, 2001).
Individualism: It tells about the interdependency of a society among the individuals. That is, whether people are “I” centered or “We” centered. From the above graph it is clear that in Italy people are more self centered as its score is 76. On the other hand, in Saudi Arabia people are less self-centered (Geert, 2001).
Masculinity: If this score is high, it means society is more focused towards competition, achievement and success; whereas a low score, that is, feminine means caring and other quality of life dominates the society. In this regards, Italy has scored 70 which means it is highly masculine. People are highly success oriented and driven. They believe in healthy competition and give much importance on success. On the other hand, this score for Saudi Arabia is 60 which show that they are also driven by success and believes in competition, but sometimes they give more importance to quality of life than success (Geert and Gert-Jan, 2004).
Uncertainty Avoidance: It tells how people deal with the situation of ambiguity. If the number is higher it means people are not comfortable with uncertain situation and vice versa. In case of Italy, this score is 75 which mean people of Italy are not comfortable with ambiguous situation. On the other hand, it is 80 for Saudi Arabia which is similar to that of Italy (Geert and Gert-Jan, 2004).
Thus on the basis of the above discussion it can be said that there are certain similarity and certain difference between the two nations, that is, Italy and Saudi Arabia, therefore, it is essential for the lady manager to understand the similarities and difference between the two nation before taking the assignment in the new country. The subsequent paragraphs will now discuss business and management culture in Italy and will compare it with that of Saudi Arabia so as to make the lady manager of the DaVinci Apps completely aware of the skills which she needs to develop in order to achieve sustainability in the foreign market. It will not only help the manager to survive their successfully but will also help the company in successfully expanding it business boundaries.
Business And Management Culture
Firstly, in Italy people do not give much importance to the values and beliefs. People are more practice and self centered. Although, the people of Italy are self centered, but when it comes to business, like most of the other European nations, Italian people give emphasis on relationship building. They are relationship oriented and before getting down to business, they want to establish direct relationship with the client. Thus, before entering into any business contract, they establish a reciprocal climate of respect and trust (Bhaskaran and Sukumaran, 2007). Since, the Saudi Arabian people also gives consideration on the relationship building, thus this characteristic of business and culture management will help the manager of DaVinci Apps in establishing cordial relationship with the foreign people and she will be able to mark the presence of the company and its products and services in the market of Italy.
In Italian organizations, the hierarchy structure is very rigid and there is very little visible association between the ranks. This shows that in decision making process all the offices of different ranks are not involved and most of the decisions are taken by the top management. This is entirely different from the case of Saudi Arabia. In case of Saudi Arabia, managers of all the ranks are involved in the decision making process (Brocke and Sinnl, 2011). All the managers are free to express their views and ideas on the situation and on the basis of all the arguments a final decision is taken. In other words it can be said that there is participative management style followed in the Saudi Arabian countries and because of this management nature, decision making in these companies is a slow process. In Italian companies, however autocratic management style is practiced, still in those companies also the decision making is comparatively slower in comparison to companies of other nation which also practice autocratic management style. The main reason behind this slow decision making process is Italian bureaucracy and legal system. The Italian bureaucracy and political and legal system are relative slow in taking any decision and as a result of this, companies have to suffer (López et. al. 2004). Thus, the manager of DaVinci Apps must not accept a quick decision in Italy and thus must plan accordingly. Sufficient time must be there before entering into the market because this slow decision making behavior of legal and political system of Italy may affect the overall business plan and activities of the company.
Looking at the communication aspects, although Italian is the main or mother tong of the Italy, yet most of the business communications are done in English language. In Saudi Arabia, DaVinci Apps can communicate in local language and can use any mode of communication, but in Italy, since there local language is Italian and the manager of DaVinci Apps cannot understand and speak Italian, she has to communicate in English only. Moreover, to overcome the barrier of communication, the manager has to use the written mode of communication in the first approach (Jackson, n.d). Thus, if the manager wants initiate the process with the foreign delegates or bureaucrats in Italy, she should first fax a letter before subsequent phone call or meeting. Moreover, a brief introduction about the DaVinci and that of manager by some acquaintance to both the parties will be an added advantage for the Saudi Arabian manager.
The Italian market is considered to be one of the most sophisticated and well developed markets in the entire world. Across all the market segments, it is very challenging for a new or foreign player to enter in the market as all the market offers stiff challenges from the local players. Small scale industries and family owned businesses have great contribution in the development and growth of the Italian industry. As per the reports, 92 percent of business firms in Italy are small or medium and make a contribution of around 70 per cent in the Gross Domestic Product of the company (Italy Introduction, 2012). Thus, DaVinci has to formulate appropriate stagiest to face the challenges for these small and medium enterprises. An appropriate strategy will help the company in making it presence in the market and achieving sustainability in the Italian business environment.
Finally, talking about the negotiation process, the manager must prepare herself for the long and lengthy negotiation process. Negotiation process in Italy are relatively slower, this is because of following reasons; firstly, there is hierarchical decision making process in the Italian companies and secondly, before entering into any deal or contract, Italian companies carefully evaluate advantages and risks associated with the deal. Therefore, it is essential for the manager of DaVinci Apps to contact with different people of the company handling different roles and provide them entire information as they have limited decisional authority on the matter being negotiated. Later on, after asses all the information, they will provide the report to their boss and the final decision will be taken by the chairman (Flamholtz and Randle, 2011). There are chances that there may be sudden changes in the negotiation process as many times Italian companies adopt short and medium term plans and strategies. Finally, Italian companies prefer verbal communication in negotiation process instead of written. Thus, it will be beneficial for the manager to either learn the local language or hire a translator.
After working on the above report, it can be concluded that for global managers, it is essential to manage intercultural differences. If the organizations will have complete understanding about the cross culture management, they will definitely get an edge over their competitors and in addition to this; they will be able to compete effectively with the local players. In the present case, it is advised that manager of DaVinci firstly must understand the decision making process as per the Italian companies. Secondly, it is essential for her learn and understand the local language as it will help her in negotiation process and finally, instead of focusing more on quality of life, she must focus on completion and success.
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