A Study on Cross Culture Business - Desklib

This study explores the impact of cross culture business with Desklib's study material. It discusses Hofstede's model of cultural dimensions and its limitations. It also analyses Burberry's expansion in India. The study highlights the differences in culture between the UK and India based on Hofstede's model.

Running head: A STUDY ON CROSS CULTURE BUSINESS
A STUDY ON CROSS CULTURE BUSINESS
Name of the Student
Name of the University
Author Note

1A STUDY ON CROSS CULTURE BUSINESS
Introduction
Due to globalization the international borders have opened up for business opportunities.
Because of this there has been a growth in the academic research in this field. Business
organisations have realised their scope and potential in the international market, however there
are also several problems and challenges that are faced by the managements in order to manage
and understand the dynamics of people who are from a completely different background.
Globalisation has been gaining boost due to the improvement of the technological infrastructure
and acceptance of diversity among the people. These are the areas that have been explored in the
research studies. In this assignment Hofstede’s model of cultural dimensions are going to be
discussed.
Section 1: Hofstede’s model of cultural dimension
Geert Hofstede developed a model to help organisations understand cultural differences
and level of compatibility by conducting a survey. He chose to survey the employees of IBM and
this was to be undertaken across several countries. Developing this model was a lengthy process
and several successive researches have taken place in order to develop the six dimensions which
are used today.
The study will discuss the way in which each of these dimensions are conceptualised and
explained by Hofstede. The six dimensions that are explained in the model are Power Distance,
Uncertainty Avoidance, Individualism/Collectivism, Masculinity/Femininity, Long/Short Term
Orientation and Indulgence/Restraint (Hofstede-insights.com 2018). There are 76 countries that
are scored out of 100 in each of these dimensions. Information regarding this model and any of

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the listed countries can be easily available on the official website (Hofstede-insights.com 2018).
Organisations can easily check the differences in culture before deciding upon the expansion
strategy of the company.
According to Hofstede, culture can be defined as “the collective programming of the
mind distinguishing the members of one group or category of people from others”. The
dimensions that are described in the model represent the factors that differentiate one nation state
from another.
Power distance
The focus of this dimension is based on the ways in which society of the country deals
with inequalities among the population. It explains the ways in that the people of a society who
are comparatively less powerful than others recognize and expect that power is distributed
unequally. The societies win which this dimension has higher level of score understand the
importance and accepts hierarchy and there are few areas of justification in this case. Vies versa
is true for the society which has a lower degree of power index. Depending on the values and the
principles as well as the structure of the organisation decisions can be made based on this
dimension (Hofstede-insights.com 2018).
For example, if the company already have a hierarchal form of organisation structure can
be comfortable in expanding in a country where this structure is easily acceptable. At the same
time if the countries have a low power distance index then there are chances for internal
disturbance and issues in the country.

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Individualism versus collectivism
The nature of the social framework and the ways in which the society functions as a unit
is the concept that is used in this dimension. The concern of the society for oneself and one’s
family is the priority in the individualism dimension (Minkov and Hofstede 2011). The
individual society is characterised by choices which are not be biased by anyone and hence there
will be a chance for the emerging brands or foreign brands to make a place in the market. The
focus of this dimension is how the society represents them as “I” or “WE” (Hofstede-
insights.com 2018).
This dimension is also significant for an organisation trying to expand as in the individual
society there are chances that the people are not opting for the new trends and are going for the
lasting brands and companies in the market. At the same time if the nations are collectivism
followers then there are high chances that if an individual selects the companies brand then the
mass will also select that brand and that will increase the company profit in a single step.
However, the same risk is also there that if a single customer has disliked the product then there
are chances that the mass will also drop the product and thus the company will face a huge loss
in the market (Minkov and Hofstede 2011).
Masculinity versus femininity
The importance of assertion and recognition are the basis of this dimension. The
masculine society is competitive in nature; people in the society want to be recognised as heroes
and to be distinguished from another. On the other hand, a feminine society works with
corporation and has a sense of care and responsibility towards others. This dimension is also
known to be “Tough versus Tender”. This can represent as an extension of the dimension that
has been discussed above (Hofstede-insights.com 2018).

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A company while expending will like to work in a society where there is understanding,
as it is essential to have a connect with the people while expansion, if people try to outshine one
another there will be more chances of conflict. However, due to competitiveness, there are
opportunities of achieving a higher performance form the people as well. This is because the
people are mostly motivated and are driven to deliver the work (Minkov and Hofstede 2011).
Uncertainty avoidance index
Based on the acceptance of uncertainty and ambiguity, this dimension tackles the issue of
the ways a society accepts the fact that the future is unknown; as well as the approach of the
society to deal with the situation. The countries where there is high UAI score is observed there
is very specific rules and regulations are maintained regarding people’s believe changes and
unorthodox methods are discouraged in such a society. It is the opposite for a society where the
degree of UAI is low. In this society practice gets precedence over principles (Hofstede-
insights.com 2018).
The business in countries with strong UAI will be easier if the customers get customised
with the product and have already become familiar to the product types. The countries do not
tend to change their choice and tastes and thus stick to the lasting companies and brands. It is
safe to trade in this company only if the company already has a position in the company. If the
company has not made any benchmark in these companies then it is better to keep an alternate
trade place as there can be a high risk to get rejected from these orthodox societies (Chhokar et
al. 2013). Thus it can be said that the countries with low UAI is more beneficial for international
trade as they readily accept new trends and business types in their culture and the companies also
find a better scope for transaction. However, there are also opportunities in terms of the ways a
company establishes the strategies according to this dimension (Chhokar et al. 2013).

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Long term orientation versus short term orientation
Also known as the pragmatic versus normative, this dimension is conceptualised based
on the importance of the past, the lessons that are learnt from the past experiences allow the
people of a society have different approach form the society that does not link the past with the
future. A society that has a pragmatic approach is characterised by urge of learning and gathering
knowledge along with values such as obligation and modesty. However on the other hand, a
normative society is characterised with strong conviction, here principles and values are highly
considered to be implemented on the day to day operations (Hofstede-insights.com 2018).
In societies with a high score on culture will encourage the modernization and readily
accept the social changes made in the country. The company will have a high chance to enter the
market and create their own place in the foreign market. They entertain development and change
in the trends and brands in the society thus allowing a cross culture trade to make its market in
the nation. However, there are also opportunities in the normative society as well for example;
United States has a normative score according to the website scores. These countries will have a
limited approach for foreign trades; however, they will make chances for businesses to trade with
new countries (Minkov and Hofstede 2011).
Indulgence versus restraint
This dimension is related to the perception that the society that allows the people to enjoy
life and dive into indulgence. It is developed and conceptualized on the fact that there is basic
sense of fulfillment among the people which is natural among the human beings. On the contrary

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the other side of Indulgence is Restraint, here the society does not recognize gratification of
needs and controls it with the help of severe social standards (Hofstede-insights.com 2018).
The nation that supports indulgence will have a flexible choice and thus it will be easy
for foreign trading companies to enter the market with various trends and technologies.
However, these countries will have a tough competition in their market as new business will be
emerging to such business every day, trying to make their own way in the country. The risk for
foreign countries will be high in such cases (Hofstede 2011).
At the same time, countries with a restraint lifestyle will tend to stick to the orthodox
culture a system (Eisenberg et al 2013). There are chances that the countries will not accept the
foreign brands easily into their culture, however if the brands are accepted in their culture the
business will be secured as they have very less variations in the choice and tends to stick their
previous culture (Hofstede 2011).
Limitation of the model
Based on the above analysis it can be said that the fact that one organisation was chosen
to develop the dimension makes it a very biased sample size. On the other hand there have been
several changes that has taken place in the society since the model was developed, impacting
some of the scores. The accuracy of the data and the analysis is also questioned by a number of
experts as the timeline is different and the mode of collection of primary data is survey. There
are several other limitations of collecting survey data for the purpose of research (Venaik and
Brewer 2013).
Another limitation that has been observed is that culture as a whole is defined in this
model. Individuals react in different ways in different situations. Some of the aspects may be

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similar but the fact that each person is unique. There are subcultures and religions that do not fall
in the six categories that have been explained. The model is more like a guide than a concrete
framework (Brewer and Venaik 2012).
Out of 195 countries in the world the model only has 76 recorded scores of countries; this
limits the usage and option for a research to use this model if they are choosing to expand to a
country that is not on the list (Venaik and Brewer 2013).
One of the models that can be used as an alternative to this framework is GLOBE
framework. This is an extension of the Hofstede dimension as the six divisions are further
divided and extended to 18. This covers some of the limitations that have been discussed above
(Venaik and Brewer 2013).
Section 2: Organisational analysis of expansion of Burberry
Example 1: Burberry in India
Overview of the company
Headquartered in London, UK, Burberry was established in 1856. The company is a
luxury fashion brand; the company has a wide portfolio of products form apparels to fragrances
to accessories and make up. The company manufactures and retails the products
(Burberryplc.com 2018). Over the years the organisation has expanded in several international
markets and has achieved success in the process. In the process of distribution there are several
licensing and other modes used by the company. In this study the expansion of Burberry in the
Indian market will be analysed (Burberryplc.com 2018).

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Burberry in India
Before strategising a joint venture the company had two stores in India with franchising
strategy. However, this was change with the decision of venturing with Genesis Colors. Burberry
is a company that represents the English culture; the company is popular for the patented patterns
and the trench coat which is a staple wardrobe essential in the country. On the other hand,
Genesis Colour is a company that has the essence of Indian culture, the company own popular
ethnic designer ware in India. However, the Joint venture did not work and Burberry has some of
its own stores in India (Sen 2009).
The companies both operate in the luxury industry of two different countries and
therefore, the idea of expansion with the help of another company working in the same industry
is feasible.

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Comparison between UK and India
Figure: Comparison in between UK and India
Source: (Hofstede-insights.com 2018)
The difference in the culture according to the Hofstede model is in Individualism and
Indulgence. Here are some of the factors that led to the failure of the venture:
Difference in the aspect of individualism in the culture of the two countries- The score of India
in this segment is 48 which make the society partly collective and partly individualistic. There is
importance to families, neighbours and friends and their opinion matters in the lives of the
people, therefore the actions of the people are also influenced by these aspects. However, there is
a significant focus on religion and based on various individual traditions making each people
responsible for the way they lead their lives and the impact it will have upon their rebirth
(Triandis 2018).

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UK scores 89 on this segment, therefore making the society independent of any other
influences. Therefore there are also fewer amounts of responsibility and liability on the
individuals as well (Triandis 2018). Personal fulfillment is important for the people. This aspect
of the UK society makes it very different from the Indian society, the importance of individual
upon oneself make them want a luxury brand. But in the Indian society there are also other
responsibilities for others and people hold back while spending largely on luxury items (Minkov
et al. 2013).
The idea of indulgence of luxury in between the two countries- The Indian society ranks
26 on the Hofstede model, which makes it a resistant society, this is as mentioned in the above
category that the society is more responsible for others as well, which makes it important for the
people to save and spent less on luxury items. According to Hofstede (1984), such a low score on
the indulgence index refers to a tendency towards cynicism and pessimism. There is a sense of
wrong-doing in such a low indulgence rate society.
At 69, the UK society is high at indulgence, enjoying life and having fun is important in
the society hence, for a luxury company like Burberry that is originated from UK have
understanding difference from the Indian society. This can be said to one of the major reasons
for the failure of the venture in between the two companies (Mora 2013).
The two aspects that are discussed above indicate that there are chances for the
companies to have ideological differences.

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Example 2: Starbucks in China
Overview of the company
Starbucks in China
Know to be one of the most successful joint venture stories, the company focused on the
needs and requirement so the customers of China as well as worked with the partners of the Joint
venture Uni-President Enterprises and President Chain Store. The company has recently
announced a deal with the partners where around 1300 stores are being bought by Starbucks in
order to have 100 percent share. The joint Venture is a massive success as The Chinese market is
the largest international market of Starbucks. The companies also further have plans on opening
more stores in Chinese mainland.
Use of any kind of beverage is a part of the culture, in the Chinese culture there is an
acceptance of hot beverage as Tea has been a part of the history of the country. Coffee is the
prime substitute for tea and Starbucks have an array of tea as well as coffee depending upon the
taste of the customers.

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Comparison between US and China
Figure: Comparison in between US and China
Source: (Hofstede-insights.com 2018)
It is clear from the above diagram that there are major differences in several aspects like:
power distance, individualism, long term orientation and indulgence. However with such
differences in the cultural aspect from one country to another the venture is successful (Wang
2012).
Some of the factors that led to the success of the venture are as follows:
Market research: when the company decided to expand the market in the Chinese territory there
was a lot of speculation regarding this decision as the Chinese target market are traditionally tea

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drinking people. However, the market survey had discovered a scope where people would like a
place to meet friends and spend time along with enjoying their favourite beverage (Smith
Maguire and Hu 2013).
Marketing strategies: the company did not focus on advertising on introducing the brand as a
threat to the tea drinking population; rather they placed the stores strategically. The choice of
ingredients in the beverages is the most important impact of cultural acceptance displayed by.
The company used local ingredients to engaded the target market (Qian and Xing 2016).
Managing the people: One of the strategies that the company employee while expansion is
training the people with the best baristas. This is in order to maintain the originality in the brand
the company sends expert baristas to the local stores where they can look after the operations in
order to maintain a global standard (Wang 2012).
Localised menu: though the company stands to follow the global footprint they have a local
menu which encourages the people to explore the options. Starbucks understood the importance
of this aspect and developed a menu for the Chinese market which could cater to both traditional
as well as experimental people (Qian and Xing 2016).
Understanding the market: The company with the help of market research as discussed above
also gathered insights regarding the way the society works in china (Qian and Xing 2016). They
discovered that the market is very different form one part of the country to another. In order to
deal with this complexity the company partnered with several local partners. Starbucks agreed
upon a joint-venture with Beijing Mei Da coffee company to deal with the northern parts of the
country (Wang 2012). Taiwan-based company Uni-President was partnered with in order to
establish the eastern market and Maxim’s Caterers a Hong Kong based organisation joined the

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partnership to focus on the southern market (Lin 2012). It is the eastern region that the company
is bought 100 shares from the partners in 2018, taking complete control over the stores that was
set up in this joint venture.
Thus it can be concluded that despite having difference in the host country and the
country of origin the company had strategies formulated to bridge the gap rather than focusing
on what was difference, the company took the chance and ensured a successful venture (Qian
and Xing 2016).
Section 3: Building cross cultural teams
A leader is an individual who is responsible for others not only to drive them towards the
collective goal but also to support and participate in the process. Understanding a person in the
team and deal with the individual’s issues and grievances are the role of a leader or a manager.
Managers that operate in a multinational company that encourages inclusive work culture have to
maintain similar stands.
The Hofstede model is like a guide to the mangers in this case, it prepares a leader to
analyses and understands the culture thereby developing an understanding of the individual’s
culture and the difference that is being created. It can not only solve conflicts within the team it
can also help the management of the company understand the needs and requirement of the
customers. It not only helps in the expansion strategy it also guides the leaders of the
organisation to focus on the difference and develop strategies to bridge the gap.
Some of the personal adaptations that are required for an individual to manage a cross
cultural team successfully are:

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Communication: any organisation works in the aspect of effective communication, as a cross-
cultural team, there are chances that there is a gap in understanding the language. Or there is
certain gestural communication that is misinterpreted as there are differences in the interpretation
of the same gesture form one culture to another. These are some of the examples of the barriers
in communication that might create in a cross cultural team. Therefore, it is important for a
manager to understand the cultural background of each of the team members in order to avoid
these issues. Promoting open communication is a solution to these issues. Generally, the workers
and official s are uneasy in different work culture and environment (Pudelko, Tenzer and
Harzing 2014). In MNC’s the level of communication determines the business life or death. The
communication system must be open and flexible to maintain the relation between different
countries and nations (Martin and Nakayama 2013).
Get to know the team members- it is important for the official heads, team leaders to know the
workers and their journey so that they can manipulate , encourage and support the workers to
understand the job role and motivate them to give their best in the organization. It is very
important for the employees to know each other to create an understanding work system and thus
maintain a balance in their work life. For example, in the case of Starbucks the company sends
their experts to train the new people and also to get to know them. The employees must work
mutually to improve the production quality and standard of their business (Klitmøller and
Lauring 2013).
Embrace diversity- a diverse workforce included challenges like difference in culture, regions,
customs, communication (Samovaret al 2014). It is extremely important to accept and embrace

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the difference across the business. A well-defined business system includes diversity in every
aspect. It is extremely humble to open the business scope for every culture and caste and allow
him or her to exchange his or her work culture and strategy with the present culture (Laukkanen
et al 2013.). Promoting diversity requires a mutual effort from all the sides thus allowing all the
castes to meet and confront each other at every stage.
The business must take steps to retain cultural diversity- the business must make sure that all the
workers are getting equal respect and position in the work area. There will be a huge gap and
crisis if the work culture has not adopted the life style culture of the native region. The cross
culture business with different culture will have to adopt the culture of the trading country s the
customers and employees will belong from that particular culture (McShane and Von Glinow
2013). The employees must feel free to work and communicate in the work area and hence the
work quality and production level will be uplifted automatically.
Creating clear norms and maintaining them- the multicultural team with a diverse number of
workers will have various issues in their work life. Thus to reduce the chances of problems and
difficult in the workers life the business must adopt clear and simple rules and maintain them.
The business must consider the rules equal for everyone and no discrimination should be done
based on class, caste or culture (Mensah and Chen 2013). A peaceful and well-maintained
working place can always enhance the work life of the employees and thus reduce the work
pressure.
Work to build personal bonds- the business should work on the strategies to build good relation
among the employees. Initially it would be difficult for the employees coming from different
background to interact and work among each other. If the business takes up the responsibility to

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make the employees communicate with each other, it will be beneficial for the business and the
employees. A mutual understanding and co-ordination among the employees will the help
business to expand in future and a working environment in the work place(Moran, Abramson
and Moran 2014.).
Creating structure for cross culture management – The business should create a special structure
that treats all the culture and religions equally. They should maintain strategy that supports cross
culture work system and enhances the chances of mutual work and teamwork. The business must
make sure that there policy is not offending and culture or system. they should support a clear
access to the resources with any misunderstandings and doubt. The business might face conflict
and chaos that will affect the production quantity and quality.
There are several organisations that use the competency model in order to understand
individual behavior and to manage the performance of the people. There are a number of aspects
in the competency model which makes it effective at the same time complex. Management can
customize the aspects in the model aligning it with the operations off the business in order to
meet the requirement of the company.
Conclusion
It can be concluded form the above discussion that globalization has enabled the business
environment achieve global recognition and reach out to larger target market. It has higher scope
for profit and expansion. However, the business might face few issues in the work time. The
above study has completed a detailed study on cross culture business. The first part of the study
has defined the positive and negative impact of cross culture business with the help of Hofstede
model. Two examples are used in the assignment to observe a success and failure case of cross

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cultural expansion. In the case of Burberry the factors that impact the failure is the nature of the
products and industry being in conflict with the culture of the country. On the contrary the
success of Starbucks is in the acceptance of the difference and strategizing accordingly to meet
the need of the market. The last part has shown the importance of adaptation of strategies to
maintain healthy and peaceful work culture in cross culture business. A business that has
followed the following measures has high scope for expansion in the global business sys tem
with a cross culture business.

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