Culture comparison and effect on international organisations

  • 11 Pages
  • Published On: 02-11-2023

Culture comparison and effect on international organisations

Modern business has adopted globalisation as a new way of doing things whereby the business environment has been transformed into a world with no borders. Given the increased contact in the global business environment, culture is a fundamental area of contemporary management which any organisation that is engaging in international business should consider in order to take full advantage of the resources that the international environment offers. A number of definitions have been proposed regarding culture. Schein (1990) defined culture as the pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaption and internal integration. Also, according to Campbell (2000), culture can be described as a complex web of information that a person learns and which guides each person`s action, experiences and perceptions. Further, Hofstede (1994) defines culture as the collective programming of the mind that distinguishes the members of one organisation from another. With the recent and increasing globalisation, having an understanding of the impact of national culture on organisational variables has turned out to be among the key factors that influence a company`s success or failure at the international business level.

One of the importance of culture in contemporary management is that it helps in the building of business relationships. This is because manners and etiquette are emphasised in many cultures and are of vital importance especially at international trade level. The understanding of a given country`s culture in relation to aspects such as handshakes practices, pleasant physical distance one should maintain during conversations as well as the expected dress standards could be a significant boost for business relationships in that it reduces the occurrence of misunderstandings. There are also other key cultural elements that define the effectiveness of contemporary management such as understanding a given country`s attitude toward punctuality, gestures, and humor (Leung et al., 2005). When these cultural aspects are unknown, they may result in confusion that is deal threatening to internationally operating organisations.

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Marketing implications depict another importance of culture in contemporary management. When one is well-informed about a country’s culture, they are unlikely to make marketing errors which may be expensive at times. Culture plays a vital role in determining a country`s buyer behaviour, consumption patterns as well as attitude (Watson, 2001). Thus, contemporary management must consider culture during the interpretation of market research in order to arrive at the appropriate colour, design, packaging, promotion and distribution. If language implications are taken lying down when naming services or products, it could derail an organisation`s international business venture.

In a globalised world, culture has a central role in negotiations. Business negotiations may be challenging, something that may even get more complex when it comes to the international level whereby negotiations are done between parties from different countries (Certo, 2003). Cross-cultural understanding is essential to develop trust among negotiating parties while some ability to communicate in a common language is a significant boost to the activity. During negotiations, participants can minimize the possibility of misunderstandings occurring by having some knowledge about people in a given country use of time, body language, and protocol in the communication of unspoken messages (Chhokar, Brodbeck & House, 2013).

The two countries whose cultures are to be compared and contrasted in this paper are the United States and Switzerland. The organisation of choice is Volkswagen, a giant automaker based in Germany. There are a number of reasons why the United States and Switzerland were chosen for cultural analysis. The United States is a vast country with diverse ethnicity and cultures. However, despite the diversity, the country also exhibits a unique business culture that encourages business ventures. Nonetheless, it is vital to understand the culture of the united states as a country in order to reap the full benefits of operating in the state as a multinational organisation. The United States has a distinct culture in terms of the key aspects that are required for analysis. For instance, the style of communication in the United States is a very direct one where primary communication purpose is the exchange of information, opinions, and facts (Marsden, 2006). According to Hall`s cross cultural theory, the US culture can be described as a low context whereby communication is more straight forward and uses more verbal communication. In the case where a conflict arises, Americans deal with it openly and directly and criticise or say “no” to something without hesitation (Marsden, 2006).

Another fundamental aspect of the American culture that makes it unique is the fact that time is money. This further underpins the American culture as a low-context from Hall`s perspective whereby time is highly organized. As such, time is highly valued and is often viewed as an asset that can be spent, saved or wasted. According to the American culture, wasting time is equated to the waste of money, and thus punctuality is a vital part of business in the United States. Further, lateness is deemed being rude and disrespectful. In the US culture, meetings often start on time with a handshake along with direct eye contact to signify sincerity, confidence, and interest to the other business partner (Jacoby, 2008).

Similar to the American culture, the Swiss culture has various unique aspects that make it suitable for analysis. The culture in Switzerland values sobriety, tolerance, thrift, and responsibility. Further, punctuality is crucial in the Business environment. An aspect that makes the Swiss culture unique is the fact that some formality applies to the making of appointments. In Switzerland, meetings are done in accordance with an appointment and not in a casual manner (Feld & Kirchgässner, 2000). Additionally, one is expected to arrive at a meeting some minutes before the scheduled time and punctuality should apply to all occasions whether social or business (Sagiv & Schwartz, 2007). Further, during conversations, it is expected that one should not interrupt their colleague with comments or unnecessary remarks. It is because of these strong cultural norms that Switzerland is also a suitable choice for the analysis. The reason Volkswagen was chosen is due to its strong presence in the two countries where it has expanded its business through the sale of its automobiles. Additionally, the company has experienced cultural issues by being involved in a cheating scandal.

By looking at the US culture from a lens of theoretical frameworks, one can gain a deeper understanding of the key cultural aspects of American culture in relation to that of Switzerland. To start with, there is the power distance element. According to Hofstede (1994), this is the degree people are comfortable with influencing upwards hence accepting inequality in power distribution in society. Inequality in the society is suggested by the fact that there is some uniqueness in each and everybody. The most visible feature of inequality is demonstrated by the degree of power that is exerted or can be exerted by each person over other individuals. Switzerland has a lower power distance ranking (Chevrier, 2009) indicating that the Swiss believe in minimising the inequalities that exist among people. Similarly, the United States also has a small power distance suggesting that equality is endorsed in the country as well (Marsden, 2006). The Swiss culture is characterised by equal rights, coaching leaders, accessible superiors, management that empowers and facilitates, decentralised power and consultation of employees (Chevrier, 2009). This is also the case in the US whereby there is a premise of justice and liberty for all which is demonstrated by a stress on equal rights. Like in the Swiss, American superiors are also accessible and consultations, as well as information sharing, are encouraged.

Further, the two countries share the aspect of individualism. In Hofstede framework (1994) individualism is the manner in which personal needs and goals are prioritized. The level of individualism in the US is higher than that of Switzerland and is considered among the highest in the world (Bellah et al., 2007). The strong individualism of the American culture is reflected in the emphasis on equal rights for all, established hierarchy in organisations and the expectation that people should take care of themselves and their families and should not rely on support from the authorities (Bellahb et al., 2007). In the world of business, employees should display initiative and be self-reliant. Similarly, the Swiss cultural framework is loosely knit and just like in America, people are expected to look after themselves as well as their families only. In the business world, decisions regarding promotion and hiring are made on the basis of merit (Chhokar, Brodbeckand & Hous, 2013).

Masculinity is another key aspect of cultures in both the US and Switzerland. The US has a high masculine score (Althen, Doran & Szmania, 2003) which has an implication that the American society has competition, success, and achievement as key driving factors. According to Hofstede (1994), in such a society, there are different rules for men and women compared to the situation in a feminine society. Equally, in Switzerland, the society is highly success driven indicating a masculine society due to the large degree of stress on materialism and wealth. There is also the cultural aspect of uncertainty avoidance which focuses on the unknown future. Hofstede (1994) describes uncertainty avoidance as the degree of acceptance for uncertainty or willingness to take risk. The US has a low uncertainty avoidance score (Marsden, 2008) which depict Americans as people who will accept innovative products, new ideas and are ready to try new or different things whether pertaining to food, business practices or technology. Thus, they tend to tolerate opinions and ideas from anyone and hence allow the freedom of expression while being less expressive emotionally. In contrast, Switzerland has a higher uncertainty avoidance (Chevrier, 2009) score which implies that the Swiss strongly avoid uncertainty. Thus, unlike the Americans, the Swiss do not tolerate unorthodox ideas or behaviour. In terms of long-term orientation, the United States scores low implying that it is a normative society. This is reflected by Americans tendency to accurately analyse any new information to verify its truth as they are well-known to have strong ideas about the good and evil. Additionally, visiting of church in the country has seen an increase since the 20th century (Jacoby, 2008). On the other hand, Switzerland has a high long-term orientation score which implies a pragmatic culture. Thus, the Swiss believe that truth is much dependent on situation, time and context. Besides, when conditions change, the Swiss can adapt quickly and have a high tendency to invest and save.

Volkswagen, as earlier stated, is a German carmaker that has expanded into many countries globally, among them the United States and Switzerland. Like is the case with any business venture, particularly, at the global market, there are many challenges that Volkswagen as an organisation faces in its efforts to perform international operations. Among them are cultural issues that arise from cultural differences between various countries in which the international organisation operates in. The greatest problem that Volkswagen has experienced is a decline in its global sales after the company was linked to a cheating scandal. Volkswagen was said to have manipulated emission results of their cars by installing some software that indicated a lower level of emission than the actual one. In the United States, Volkswagen`s market share fell by 15 % (Blackwelder et al., 2016) as a result of the emission scandal. Similarly, in Switzerland, where strong business culture is upheld, the sale of Volkswagen cars was banned, a move that was expected to affect 180,000 vehicles whose emission systems were outdated. This was a huge blow to the Volkswagen group as it resulted in huge financial losses to the company. The cheating scandal that Volkswagen was involved in was against what the two countries believe in “sincerity.”

To counter the challenges and issues that resulted from the involvement of the giant automaker in a cheating scandal, the organisation had to strategise how to respond to the reactions in order to win back the trust of the two countries again. In the united states, where the culture requires open and direct criticising of something that is not right, the company engaged its team in technical fixes in efforts to abide by the American culture. In the exercise, almost 500,000 cars that were affected were to be set at the company`s expense (Blackwelder, et al., 2016). Though the management admitted that the fixing could need bulky and expensive catalysts, it still remained to be among the options that Volkswagen had in order to adhere to the “right” American culture. This move was fundamental as by winning back the trust of the Americans; the company could stand a chance of bouncing back to its previous market position. It was also vital for Volkswagen to adhere and develop a culture that is in line with that of the Swiss in order to regain its position in Switzerland`s automobile industry. As earlier identified, in the Swiss culture, sobriety and responsibility are highly valued. As such, Volkswagen`s alleged actions were against the country`s culture which could have led to the temporary banning of some of the company`s cars for some period in Switzerland. Consequently, Volkswagen had to devise ways through which its image could be repainted in the Swiss cultural context. The first step was a sincere apology for what the company had been accused of. In agreement with the Swiss culture, the newly appointed Volkswagen CEO acknowledged that the corporation would have to stand by its responsibility (Blackwelder, et al., 2016). Also, the company engaged in the fixing of the affected cars in efforts to reposition itself in the Swiss automotive industry.

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In conclusion, as depicted herein, culture is an important aspect in contemporary management in a globalized world. Some of its importance include helping in the building of business relationships and its central role in negotiations. Also, it has been evident that cultures have an enormous impact on the international operations of companies that operate within a given country. This has been demonstrated by the United States and Switzerland, which are two countries with strong cultures that any organisation working in them should abide by in order to take full advantage from the economies. An analysis of the scandal that Volkswagen was involved in reveals that it is fundamental for international organisations to operate within the culture of the host countries to avoid issues that could result from lack of cultural sensitivity within the organisation. The case of Volkswagen and its operations in both the US and Switzerland serves as a perfect example of the importance of culture in contemporary management.

References

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  • Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J.S. and Wozniak, D., 2016. The Volkswagen Scandal.
  • Certo, S.C., 2003. Modern management: adding digital focus (Vol. 1). Prentice Hall.
  • Chevrier, S., 2009. Is national culture still relevant to management in a global context? The case of Switzerland. International Journal of Cross Cultural Management, 9(2), pp.169-183.
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