Part B – CULTURAL RESPONSIVENESS & INTELLIGENCE

AS 91380 (3.2): Demonstrate understanding of strategic response to external factors by a business that operates in a global context

All businesses have their own culture ~ the values, ideas, expectations and beliefs shared by the staff and managers of the business.

Business culture is influenced by the mission or vision statement and organisational structure (hierarchical or flat) and can be seen in how the business approaches social, environmental or ethical issues. Another indicator of business culture is the example it sets in the treatment of staff or in decision-making.

Business culture normally consists of 4 elements

1. Values2. Symbols3. Rituals,

celebrations and rites

4. Heroes

Types of organisational culture

O Role culture ~ each member of staff has a clearly defined job title and role.

O Power culture ~ power is concentrated among a few people.

O Task culture ~ business success relies on co-operation and teamwork.

O Person culture ~ individuals are given the freedom to express themselves and make decisions.

O Entrepreneurial culture ~ where management and workers are encouraged to take risks, to come up with new ideas and test our new business ventures.

A business would normally operate with a combination of these.

A strong organisational culture

… creates a sense of belonging and security of staff because they feel as if they are part of the business. This can help to improve teamwork and increase motivation. Problems associated with a culture gap, such as conflict between different groups, are minimised.

Culture ClashThis occurs when there is conflict between two or more cultures within an organisation. A greater potential for a culture clash is when a business trades internationally as cultural vary from country to country.

Managing Cross-Cultural Issues

Businesses that market internationally must make themselves aware of the cultural environment they will be operating in, and adjust for cultural differences.

O A product name suitable in one country may have a totally different meaning in another.

O Colours have different meanings throughout the world. In the Far East white, rather than black, is associated with mourning.

O When Nike realised that the logo designed to look like flames for Air Melt and Air Grill basketball shoes, in fact resembled “Allah” in Arabic script, being potentially offensive to Muslims, it pulled 38,000 pairs of the shoes from sale and made a substantial donation to an Islamic school.

O In some countries, what may be regarded as a “bribe” in New Zealand is common business practice. Payments to industry or government officials may be required to get things done.

O The hand gesture we use in NZ for OK, where the hand is help up with the tip of the thumb touches the tip of the index finger, is an insult in Brazil, means “money” in Japan, and means “zero” in Russia.

O The French lemonade Pssschit would need a new name if it were to be sold in NZ!

To be successful in certain overseas countries, such as China and Japan, a multinational business will probably need it shift from an ethnocentric to a polycentric orientation.

Ethnocentric Culture Orientation

A business with an ethnocentric culture orientation ensures the values and interests of the parent company guide strategic decisions.O The mission is profitabilityO A top-down decision-making model

exists

O There is a global strategy (determined at headquarters) involving a global product which is based on the needs of the home country

O Management positions in the host country are held by home-country employees

O Profits from overseas subsidiaries are repatriated (go back) to the home country

Polycentric Culture Orientation

A business with an polycentric culture orientation is one where strategic decisions are made to suit the culture of the countries where the company operates.O Mission is public acceptance

O Overseas subsidiaries set their own objectives and use national responsiveness strategies to meet local needs

O Products are based on host country needs

O Local workers are trained for key positions

O Most profits are retained by the subsidiaries