Cross Cultural Management

Running head: CROSS CULTURAL MANAGEMENT
Cross Cultural Management
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CROSS CULTURAL MANAGEMENTExecutive summary
This report highlights the importance of cultural differences and conflicts that arise from the cultural
differences between two countries. Hofstede cultural dimensions are discussed to explain the cultural
diversity aspects and the conflicts that can arise between Australia and China while forming an IJV in
China. The report also mentions the negotiated practices for conflict resolution and ways to prepare the
expatriate to handle the venture in China. Lastly, some recommendations are provided in order to enhance
the skills of the expatriate to increase the productivity of the IJV.

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CROSS CULTURAL MANAGEMENT
Introduction
The report highlights the cross cultural management issues in regards to the International Joint
Venture (IJV) that is going to happen between an Australian infrastructure company, InfraCo. and a
Chinese manufacturing company, ManuCo. The IJV will be name RailCo. Both the companies are
coming together to establish a successful joint venture by combining their money, property, skills, efforts,
knowledge and technology and jointly share the profit and loss of the venture. At the same time, it has
also been declared that an Australian senior leader, who will based in China. However, IJVs have some
cultural issues that create challenges for the successful run of the ventures. Due to differences in culture
in different countries, there can be various issues, such as, cultural conflicts which would affect the
performances of the workers which in turn would influence the business performance (Zhong, Wayne and
Liden 2016). In this report, various cultural aspects of IJVs will be discussed to give an understanding of
the difficulties and challenges faced by RailCo. due to cultural differences in Australia and China and
how these potential cross cultural conflicts can be resolved through negotiated practices will also be
discussed. Furthermore, the preparation process for an Australian leader to handle a successful expatriate
assignment will also be explored and assessed and based on the research findings, recommendations will
be given to for enhancing the skills of the expatriate to achieve success in the new venture.
Discussion
Cultural dynamics in IJVs
The term ‘Joint Venture’ refers to one form of business partnership between two or more
companies collaborate and share the ownership of the venture or project, expenses, profits, return on
investments, governance etc. (Monios and Bergqvist 2015). Thus, International Joint Ventures (IJVs) are
the business partnership that occurs between two or more companies belonging to different countries. It is
beneficial for exploring the business opportunities in the established or emerging markets and tapping the
new growth opportunities, such as, accessing the new technologies or entering in to a new market. Thus,
Yan and Luo (2016) stated that IJVs allows to have various benefits similar to that of a merger and
acquisition, while the risks, option to exit and the consequences for the partner organizations also exist
and have to be faced by the business partners. However, Wong et al. (2018) stated that the advantages of
an international joint venture can be affected due to cross cultural differences and conflicts, misaligned
business objectives and interests, operational inefficiencies, lack of commitment, inefficient governance,
failure in proper talent acquisition, and negotiation policies.

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CROSS CULTURAL MANAGEMENTCross cultural differences and conflicts is one of the major issues of international joint ventures
(IJVs). The cultural differences between Australia and China can be explained through the Hofstede
cultural dimensions. Hofstede has introduced 6 cultural dimensions, namely, power distance,
individualism versus collectivism, masculinity versus femininity, uncertainty avoidance, long term
orientation and indulgence versus restraint (Hofstede 2015). To understand the cultural differences
between two countries and their potential impact on the businesses and way of life, it is highly important
to evaluate the 6 cultural dimensions of those nations. According to Hofstede-insights.com (2019), the
scores of the countries are shown in the below image.
Figure 1: Cultural aspects comparison between Australia and China
(Source: Hofstede-insights.com 2019)
It can be said from the country comparison that in Australia, the level of power distance is very
low than in China and hence, the rigidity in the organizational hierarchy is very high in China. It is also
seen that Australia puts more emphasis on individual self-reliance and efforts, while in China, the society
and the organizations believe in collectivism and group efforts are emphasized. China scores higher in
case of masculinity and long term orientation, while Australia scores higher for uncertainty avoidance and
indulgence. These indicate that China focuses more on being aggressive and competitive in businesses
and they prefer to have long term vision and goals than the Australians, while on the other hand,
Australians are risk takers and they also prefer to have self indulgence in their personal lives while the
Chinese people believe in pessimism and cynicism and they restrain their personal and professional
actions as a norm of the society (Beugelsdijk, Kostova and Roth 2017).