Understanding Business Culture: Hofstede Model and Challenges Faced by Tesco

This article discusses the importance of culture in business and how it affects strategic direction. It explores the Hofstede Model and its dimensions, as well as the challenges faced by Tesco in expanding to China. The role of corporate culture in the success of an organization is also analyzed.

Business Across
Culture

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Contents
Introduction................................................................................................................................2
Hofstede Model..........................................................................................................................2
Criticism of the Hofstede Model................................................................................................6
Alternatives................................................................................................................................6
Challenge face by the organisation............................................................................................7
Role of the Hofstede Model.......................................................................................................8
Role of Corporate Culture..........................................................................................................9
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
Culture is a key component in the business due to which it affects the strategic direction. It
influences the management, decision and all the activities of the business from counting to
production. The business culture of the company includes terms such as behaviours, etiquette
and ethics in order to develop a positive environment (Business Culture, 2018). The business
culture of the company states the values, vision, working style, belief and habits. Nowadays,
globalisation is increasing day by day due to the expansion of companies into other areas.
Expansion of business helps to achieve the objective of the company. Enter into the new
market arises the cultural challenges for the company. Each and every nation has its own
culture and it is essential for the company to adopt the culture and tradition as per the host
country (López‐Duarte, Vidal‐Suárez, and González‐Díaz, 2016). International companies
face cultural issues as it operates in a different nation and follows the different culture. In this
report, Tesco has been taken into consideration in order to analyse the challenges, which are
faced by the company. Hofstede model is a method, which helps to evaluate the culture of a
different nation.
At the beginning of the report, the Hofstede model of national culture will be discussed in
order to understand its use. Later on, the discussion is made on the dimension of national
culture that affects the actions and behaviour of the business. In the end, the role of
organisational culture will be analysed in the success of the organisation.
Hofstede Model
Hofstede’s cultural dimension theory is a framework for cross-cultural communication. It was
developed by Geert Hofstede, which helps to compare the culture of the different nationalities
in the specific terms. It describes the impacts and effects of a society culture on the value of

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its members and it also describes the values related to behaviour. It is an original model that
helps to analyse the factors that affect the business and the employees. This model describes
the culture on the basis of six dimensions such as power distance index, Individualism versus
collectivism, Masculinity versus Femininity (MAS), Uncertainty Avoidance Index (UAI),
Long Term Orientation versus Short Term Normative Orientation (LTO), Indulgence versus
Restraint (IND) (Hofstede Insights, 2019). The culture of the countries is compared with
these dimensions in order to analyse the culture of the nation. The dimensions are briefly
described by comparing the two countries culture such as China and the UK.
Power Distance
This dimension states that all individual in society is not equal in terms of power. It expresses
the culture of the company towards equality and inequality. As per the analysis, it is observed
that China adopts the inequalities among the people. It means the manager of an organisation
gives the order to their subordinate and also abuses them for their work. Subordinate does not
have the power to stand against their managers for their rights (Geert Hofstede, 2018).
People of the United Kingdom follow the policy of equality in society. It accepts that every
individual of the society has equal power to represent his or her point of view. In the UK,
people are treated equally by giving them the same importance as the powerful people have
importance.
Individualism versus Collectivism
The degree of interdependence defines the degree of interdependence a society maintains
among its members. This dimension classifies into two categories such as individualism and
Collectivism. Individualism refers that an individual will take care of themselves and their
family only. It believes in doing the business along with its own capacity and ability.

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Collectivism refers that preferences of people towards the society are first after that they
think about themselves. In this category of people believes to do things with the help of group
members.
In China, the people follow the collectivism, as they believe in doing group work or to do the
things for the nation. The people of China show their interest in the group not for themselves.
The contribution of employees towards the organisation is low but the relationship with the
colleagues is co-operative (Zhang, Harzing, and Fan, 2018).
In the United Kingdom, people believe in individualism as they think about themselves first.
Children’s are also taught from an early age to think about themselves in order to find the
talent and capacity of themselves so that they can contribute to society with their talent. The
route of contributing to society is through personal satisfaction. The contribution of
employees is high towards the organisation but it is observed that the employees does not co-
operate each other (Atkins, and Bowler, 2016).
Masculinity versus Femininity (MAS)
This dimension of Hofstede model states that the nature and culture of the society in terms of
strong competition and the caring values. Masculinity society prefers the achievement,
competition, heroism and material rewards for success. Femininity society refers to the caring
nature of people towards society.
China is a masculinity society because the people believe in achieving success and it is also
strong enough to compete with the competitors. Employees are more dedicated to the work of
an organisation.

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The United Kingdom is a masculinity society which is highly success oriented and driven.
People of the UK live to do the work and has a clear picture in their mind of performance
ambition (Guiso, Herrera, and Morelli, 2016).
Uncertainty Avoidance Index (UAI)
This dimension states social tolerance towards ambiguity. The high degree of UAI states that
the country adopts the high degree of rules and regulation and accepts the truth or belief that
everyone accepts it. Low degree of UAI states the culture that adopts the low level of degree
of rules and regulation and gives the freedom to people.
China has a low level in the uncertainty of avoidance, which states the laws and regulation
are flexible and can easily adjust on the basis of the current situation (Rowley, and Lewis,
2018).
The UK has a low level of uncertainty of avoidance, which means that the rules and
regulation are developed by per the current information. There is a low level of restriction on
the employees and also follow the decentralised structure.
Long Term Orientation versus Short Term Normative Orientation (LTO)
Long Term orientation refers that the society has to maintain the past while dealing with
future challenges. Short term normative orientation defines the society who believes in a
pragmatic approach, people who believe in truth and the condition at the current time.
China has pragmatic culture, as the people believe that the truth depends on the situation,
context and time. The employee can easily adjust to the environment of the organisation as
per the condition and time (Mackie, 2018).
People of the UK also work as per the current situation as they follow the pragmatic culture.

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Indulgence versus Restraint (IND)
Restraint dimension defines the society in which the people try to control their desires and
impulses. Indulgence states the low level of control on their desires and needs.
In China, people are restraint as they control their desires and impulses. As per their
perception, indulging is wrong somewhere. The behaviour of consumers is to save more
instead of spending a large amount.
In the UK, People spend a large amount of money in order to satisfy the desire and needs.
Consumers of the UK believe in spending money on their desires related to enjoying life and
having fun.
Criticism of the Hofstede Model
This model is beneficial for the organisation in order to reduce the challenges as it helps to
analyse the culture. It affects all the national culture, which is an important factor for
multinational managers in enhancing the employee motivation and reducing the conflict. The
risk of facing the challenges is also to reduce during the expansion of the business.
The assumption of the Hofstede model is not appropriate as per the modern world. It is
assumed that location is not affected the reaction of employees but it is observed that in the
modern world, the employees reacted on changing the location. In this point, it can be said
that the Hofstede model is failed. It is also observed that the model analysed the culture in
limited areas. It analyses the culture on the basis of six dimensions of Hofstede model. The
assumption of the Hofstede model is a problem because it only analyses the culture on the
basis of organisational culture in IBM. It avoids the extensive literature which argues for the
recognition of multiple, organic, counter, plural and incomplete contradictory in an
organisation (Schmiedel, vom Brocke, and Recker, 2015).

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Alternatives
There are many alternatives that are more persuasive as compare to the Hofstede model in the
modern world. Hall model and Globe research are the alternative models that are more
persuasive in the modern world as this analyse the culture on the basis of long term and short
term (Changing Minds, 2018). Globe is a long term programmatic that is designed to explore
the complex effects on different elements such as leadership, organisational effectiveness,
economic and many others but Hofstede analyse the organisational culture. That is why there
are more persuasive.
Challenge face by the organisation
Tesco is the multinational groceries and the general merchandise retailer in the United
Kingdom. It operates in eleven countries across the United Kingdom such as Asia, Europe,
Ireland, Hungary and Thailand. It also operates in the diversified area such as retailing of
books, electronics, clothing, furniture, toys and many others. It operates the business at the
international level due to which it faces the culture issue (Tesco Plc, 2018). Tesco is the
company which faced the challenge of culture during the expansion of the business in China.
The expansion of the organisation is failed in China due to cultural differences (Pendrous,
2013).
The first difference between China and the UK is the purchasing power of the consumer. As
discussed above, the UK is a restraints country where people believe in spending money on
fulfilling their needs and demands. The people of China believe in saving money for the
future. It states that the people of China consume low amount due to which the company
faces the issues in terms of revenue. The mentality of a consumer in spending the money is
based on the culture followed by the country (The telegraph, 2018).

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The second culture difference between China and the UK is the taste of the consumers. Tesco
contains the different types of products that are not associated with China consumers. The
taste of the China people is different as per the product of the company (Bleidorn, et. al,
2016). Tesco does not analyse the taste of the consumers before entering the new market due
to which it faces the issue of the culture gap. The demand for Tesco products decreases due to
different taste and culture of people of China and they fail in the market (Morgan, and
Vorhies, 2018).
Tesco is a grocery store that operates in a different world and contains a different variety of
product. It is a fact that the delivery of a variety of product reduces the quality of the product
(Quain, 2019). It is observed that the consumer of China is more demanding and strong-
minded in the world. The consumers of China is more conscious about the quality of product
and services that is why, they prefer fresh food as compare to supermarket product. The result
of these challenges is a failure in the expansion of the business of grocery store in China (The
telegraph, 2018).
Role of the Hofstede Model
Understanding the Culture
The six dimensions of Hofstede model help the company to analyse the culture. Analysing
the culture reduce the challenge issues for the company during the expansion in China.
Comparison
The company can compare the culture of the host country in order to reduce the culture gap.
It helps the Tesco to achieve success in the China market by comparing the taste and trends
of the consumers. The company can design their shelf as per the demand of China consumers
in order to increases the sale in the market (Beugelsdijk, Kostova, and Roth, 2017).

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Expectation of Employees
It is a fact that reaction and demand of an individual are different as per the location. This
model helps the organisation to evaluate the expectation of an employee. It is necessary for
the company to satisfy the employee so that they perform well in their responsibility.
Employees are the main asset for the organisation that helps to gain a competitive advantage
in the market (The Internal Business Centre, 2018).
Role of Corporate Culture
Organisational culture defines the assumption, values, beliefs and ways of participating in the
contribution of economic development or develops the positive environment in the
organisation. The beliefs and behaviour determine the employees and management
interaction and handle outside transaction. It affects the demand of consumers and it directly
affects the success of the venture. Corporate culture plays an important role in the
achievement of the venture. There are many activities and functions are performed on the
basis of the culture due to which the chances of achieving success are high (Williams,
Mummalaneni, and Erramilli, 2015).
It has been seen that the corporate culture build brand identity. The more people understand
and identify the brand, the more they will buy the product from the company. It is essential to
build a strong relationship with the consumers and the culture is the only source that helps to
develop the connection with the consumers. Culture defines the goals and value of the
company which helps to achieve success and, it also makes the brand different as compare to
the others. It also shows the employees what is most important for the brand and inspires

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them to perform their functions with high responsibility (Bogatyreva, Edelman, Manolova,
Osiyevskyy, and Shirokova, 2019).
It is also observed that corporate culture increases loyalty among the employees. It is a fact
that the employees do not like to come to the office and to the work. Companies with a strong
culture inspire the employee to face the challenges of their job, build a strong relation with
co-workers and enjoy the atmosphere of the workplace. It gives the employees a driving goal
and purpose for what they do to enjoy life. Culture connects the people with each other by
building the relation among them. It also connects the leadership team with the rest of the
employees and binds them with the set of the share of beliefs. It is necessary that the
employees feel like they are an essential part of the organisation and their contribution to it
have something bigger result. Treating the employees very precious and different from the
others increases the loyalty of employees towards the organisation. The employees who are
enthusiastic about the companies are getting more productive for the company. It is a fact that
the customer will never love the company until employees of the organisation love it first
(Gotham Culture, 2018).
Corporate culture helps to identify the internal and external identity of the venture. Culture if
the organisation is defined in the different dimensions such as good work, life balance, lots of
meetings, team-oriented and many others. Culture plays an important role in presenting the
organisation in the market in front of consumers (Hickman, and Silva, 2018). It represents the
way you do the work for the consumers. It builds a strong image of the company in the
market only with the way of work. It can be said that the culture identifies the image of the
company that means it determines the way that how the people and the consumers perceive
the organisation (Guiso, Sapienza, and Zingales, 2015).

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A strong organisational culture helps to retain the best people in the organisation. It is a fact
that the employees who get high importance in the organisation will stay for a long time
period. The strong culture of an organisation delivers the unique employee experience,
improves engagement and makes the people more connected (Audi, Loughran, and
McDonald, 2016). Build a strong relationship with the employees and give them the
importance to encourage them to retain with the company for a long time. It is the best way to
attract the top employees who perform well in their work and more dedicated to the work. As
per the discussion, it is observed that corporate culture plays an essential role in the different
segments that helps to achieve success in the market.
Conclusion
In the end, it is concluded that an international organisation has to analyse the culture before
entering the new market. Hofstede Model is a method that helps to analyse the culture by
comparing the countries from each other. The main purpose of this model is to understand the
culture of host country so that an organisation does not face any issue or challenge during
expansion of the business. This model is applied in limited areas to analyse the culture as per
its dimensions. In the modern world, there are many other alternatives tools that help to
analyse the culture of different nation such as Hall mode, Globe and many others. However,
the model plays an important role in achieving success by reducing the cultural challenges for
the organisation. Tesco faced the cultural challenges in China during the expansion of the
business. There are many cultural differences between the countries affects the sales of the
organisation. Hofstede model helps to reduce these challenges and helps the organisation to
achieve success. The whole scenario indicates that corporate culture plays a vital role in the
success of a venture. It connects the people inside or outside the organisation that helps to
achieve success.

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