International Business: Hofstede's Cultural Dimensions & Case Study

This report provides a comparative analysis of international business management, focusing on the cultural dimensions proposed by Hofstede. It examines Kenya, India, and the United Kingdom, detailing their cultural backgrounds and scores on Hofstede's five dimensions: Power Distance, Individualism, Masculinity, Uncertainty Avoidance, and Long Term Orientation. The report further explores the entry of two international organizations, IKEA and Zara, into the Indian market, discussing their strategies and the impact of Foreign Direct Investment (FDI) on their operations. The analysis highlights the importance of understanding cultural nuances in international business and how companies adapt their strategies to succeed in diverse markets.

International Business
Management

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Contents
INTRODUCTION.................................................................................................................................2
Background of the countries..................................................................................................................2
Kenya................................................................................................................................................2
India...................................................................................................................................................3
United Kingdom................................................................................................................................3
Hofstede’s five dimension of Kenya..................................................................................................3
Hofstede’s five dimension for India..................................................................................................6
Hofstede’s five dimension for United Kingdom................................................................................8
Two International business organisations..............................................................................................9
IKEA entry in India...........................................................................................................................9
Zara entry in India............................................................................................................................10
CONCLUSION...................................................................................................................................12
REFERENCES....................................................................................................................................12

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INTRODUCTION
In the age of globalisation, there are many companies which have expanded in the overseas
nations. In order to improve their position at the international level, it is crucial that a
company manages their operations at the international level in a well-defined manner. In
multinational organisations, several people with different cultural backgrounds work at the
same. This creates or might create problems related to cross-cultural communication which
could be very harmful for the organisation (Hofstede, 2011). There are several theories
suggested by researchers. Hofstede’s cultural dimension is one of the best frameworks that
elaborates the effect of culture of society on the member’s value and way in which it relates
to behaviour. Living in Kenya, I choose Kenya as my home country. The two other countries
that has been selected for this analysis are India, which is a developing nation, and United
Kingdom, a developed nation. This report compares India, Kenya and UK based on
Hofstede’s cultural dimension. It also explains the background of these two companies and
the entry mode that they have selected for themselves..
Background of the countries
In the modern-day business environment, it is essential that companies analyse the business
environment that is present in any country. Along with this it is also crucial that company
understands the culture of the country before entering it. This is essential because of improper
understanding of the other culture might lead to business disruption. Every company must
understand the changes in the culture which is necessary for the growth of the organisation. It
is crucial that a company builds its organisational culture in a manner that aligns with the
culture of the host country. Hofstede’s five dimensions is one of the best tools in this regard.
As it gives the idea of the overall aspects related to cultural dimension.
Kenya
Kenya is a developing nation and has a very distinct culture in the African region. Its capital
is Nairobi. This part of the East-African region has a warm and humid climate. The
population is 48 million and consists of 42 tribes. It was under colonial rule and got
independent in December 1963 and is a member of the Commonwealth. This country has

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been facing political and tribal violence over the years, especially in 2007 and in 2017 during
the campaign of the presidential elections. Still it is largest economy in the eastern and central
Africa (Bwisa & Ndolo, 2011). Agriculture is the major sector in the nation with major
products such as coffee, tea and other traditional cash crops. Kenya is having major part of its
population as youngsters with 73% of residents being below 30 years. It is having a diverse
population with almost all the major linguistic and ethno-racial groups found in Africa. The
42 tribes have their own mother tongues. Kiswahili is the common shared language. In the
midst of the 2017 presidential election, the government declared the Muhindi, Kenyans of
Indian descent, as a tribe of its own, even though they don’t identify themselves as a tribe.
India
India is the second populous and most populous democracy in the world. It is one of the super
powers in the Asian region. India is considered as one of the fastest developing nations in the
world. It is known for its cultural diversity (Zimmer, 2013). A lot of language are spoken in
different regions of India. Hindi and English are the two major languages in the country.
India won its independency in 1947. Traditions have been their cultural identity and are also
reflected in the business environment within the nation. This country has made many changes
in their economic and social orientation so that they can attract more investors into the
country.
United Kingdom
The UK is situated in Western Europe and its capital is London. It has been a major colonial
power over the centuries. This kingdom is a parliamentary democracy. It is a developed
nation with many cities acting as the centre for trade and economics (Wilson & Game, 2011).
It is the fifth largest economy in terms of GDP and in Human Development Index it stands on
the 14th position1. Because of its colonial past, the UK is a melting pot of people with
different racial backgrounds. They all share English as their common language. The UK has
been one of the super powers over the years. But in the recent times it is facing many types of
economic challenges especially after the recession of 2009 and the austerity measures.
Currently it has taken the decision to leave the European Union. This so-called ‘Brexit’
which will not only affect the operations of the UK-based companies but at the same time it
will affect the economy in the whole European Union. It is also facing challenges like
Scotland considering leaving the United Kingdom. Those aspirations have been revived by
the Brexit, since most Scots wish to remain within the EU.
1 http://hdr.undp.org/en/countries/profiles/GBR

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Hofstede’s five dimension of Kenya
Kenya being a culturally vibrant country has effect on its business operations. Hofstede’s five
dimensions applied on Kenya looks as follows:
Power Distance
It is the dimension that suggests that all individuals in the society are not the same. It
showcases the cultural attitude towards these inequalities among us. This dimension states
that power, or the lack of it, is derived from belonging to an organisation, institution of other
group of society. It is expected and accepted the power is dispersed unevenly. (Yoo, Donthu
& Lenartowicz, 2011).
The relative score of Kenya on this dimension is 70. Social hierarchy is considered important
is the Kenyan. It describes that the population appreciates a hierarchical order in which
everyone receives a position and requires no further explanation. Organisational hierarchy
reflects inherent inequalities, subordinates expect to be told to do something, centralisation is
popular. The ideal boss is always someone that acts as a benevolent autocrat and instructs
everyone to do something in a defined manner (Sartorius, Merino & Carmichael, 2011).
Individualism
The major and the basic challenge addressed by Individualism is the degree of
interdependence a society upholds in between their associates. Individualism is reflected by
whether the individual’s self-image is elaborated in the form of ‘we’ or ‘I’. In such society
people only look after themselves as well as their family. On the other hand, in the
collectivist societies, individuals belong to ‘a group’ which defines them, takes care of them,
this in exchange for faithfulness (Minkov & Hofstede, 2012). In this dimension it is having a
score of 25. Kenya is understood to be as the collectivistic society. It is evident from the facts
that people of Kenya make a long-term commitment with the members of the group, in the
case of Kenya, the tribe people belong to. Loyalty is most superior in the collectivistic society
and it is above all the societal, or tribal rules and regulations. Society has a strong relationship
with everyone from the tribe and hence they take the responsibility for other members, for
example at the workplace. In collectivist societies any mistake leads to shame or image
failure (Mungai & Ogot, 2012). Employee and employer relationship are understood in moral
terms. Recruitment and appraisal decisions consider employees within the group. Even the
management is a management of groups.

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Masculinity
Scoring high on Masculinity describes about the society that is driven by achievements,
success and competition (Venaik & Brewer, 2013). The success is defined by winners in an
area that is governed by a value system which starts in early age education and stays along
the organisational lifetime. On the other hand, scoring low on Masculinity suggests that
values that are dominant in the society are quality of life and caring for other people. Society
that is feminine is the one where quality of life is understood to be as the symbol of success
and staying at distance from the crowd is not appreciated (Dartey-Baah, 2013). Major
challenge here is what inspires people, i.e. demanding to become the best.
It scores 60 and is measured to be high on masculinity and hence understood to be a
“Masculine” society. People struggle to be the finest and the champion takes all the
advantage (Hofstede Insight, 2018). It acts as a basis through which recruitment and appraisal
decisions are to be made at the workstation. Conflicts are taken care of at the individual level
with an objective to win.
Uncertainty avoidance
Uncertainty avoidance is linked with the way society deals with the unpredictable
circumstances of the future. Should an institution attempt to regulate the future or just let it
occur? This kind of uncertainty can generate anxiety and various cultures might have their
own approach or strategies to deal with this anxiety (Cox, Friedman & Tribunella, 2011).
Levels to which the members of a culture are defenceless by unknown or the ambiguous
conditions. Organizations that escapes these parameters get it reflected back in their score of
uncertainty avoidance. The score of 50 illustrates it as they have no common or clear choice
in uncertainty avoidance (Hofstede Insight, 2018).
Long term orientation
Long Term Orientation says something about the way in which a society needs to uphold its
relationships with its own history while dealing with the issues of the present and future.
Societies can prioritize these two existential objectives in totally different manners (Bian &
Forsythe, 2012). Societies that are normative score low on Long Term Orientation like,
aiming to balance customary traditions and values while seeing societal alterations with
doubt. The culture that is scoring high has adopted a more pragmatic approach. These
societies strive for standard education as a method to get ready for the future.

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Hofstede’s five dimension for India
Five-dimensional analysis of India is as follows:
Power Distance
On this dimension India scores high 77. This indicates that there is acceptance for hierarchy
and top down structure in the organisation and society. If any person has to adopt Indian
attitude, they might use subsequent phrases and words. For example reliant on the leader or
the power holder for directing them, receiving of uneven rights among the power-privileged
and the ones that are lower down the command. Along with this it is also reflected in
management directs, paternalistic leader, provides appreciation to ones rewards and work-life
in interchange for loyalty from workers (Migliore, 2011). There is centralisation of real
power even when it may not seem to be and obedience of the participants of group is the
thing on which a manager counts. Workers assume to be informed in a proper manner as to
their function and what is expected of employees. Controls are common, even an attitude
towards leaders and psychological security are formal. Communication approach is top down,
and the style of communication is directive (Brewer & Venaik, 2011). Feedback is harmful
and is never given up the hierarchy.
Individualism
On this dimension, India stands on the score of 48. It is having a society with both
individualistic and collectivistic traits. People are expected to work in larger social network in
which individuals must work to the greater good. The activities of the person are affected by
different types of ideas like family opinion, neighbours and work team as well as other larger

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networks (Son, Jin & George, 2013). For a collectivist, being rejected by team mates or
perceived as less valuable within the group can lead to a feeling of intense emptiness.
Employee-employer relationship is based on the expectations. Indian society’s individualist
aspect is understood as an outcome of its dominant religion which is Hinduism. Deeds are
given higher value. Hence both the aspects gains are present and an intermediate score can be
gathered.
Masculinity
India scores 56 on Masculinity and is basically understood to be as a masculine society. In
the display of power and success this country is very masculine. For success, brand labels,
ostentation and flash are used in the advertising. India has a long cultural history and is a
spiritual country (Corbridge & Harriss, 2013). This prevents people from indulging in
masculine displays. In a masculine country the emphasis is on one’s achievements and profits
which is authenticated by solid gains.
Uncertainty avoidance
India is having a score of 40 on Uncertainty Avoidance and hence has an intermediate low
preference for avoiding insecurity. There is recognition of defectiveness and everything must
be done as planned. India is traditionally highly patient. People are not generally driven and
comfortably settled in the routines and roles with questioning (Hofstede Insight, 2018). Rules
are frequently made just to be avoided and one trusts on innovative measures to evade the
system.
Long term orientation
51 is the score of India on Long Term Orientation, an aggressive preference in the culture of
India is not easy to find. Indian society believes in karma and it drives their philosophical
convictions. This country has a great tolerance for religious views. Hinduism is understood as
a philosophy rather than a religion. Indian believes that there are several truths and depends
on the searcher what they choose to appropriate. Since the Indian society is quite pragmatic, a
lack of punctuality is often forgiven. (Hofstede Insight, 2018).

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Even though I don’t review the US in this paper, I consider it interesting to compare the
results of India with those of the US. It is visually educational.
Hofstede’s five dimension for United Kingdom
Power Distance
It just scores 35 and believes that inequalities in between the people must be minimised.
Although British culture knew a time when birth rank was significant, it has also a deep
rooted faith that the place where you are born must not restrict how far you can go (Saroglou,
2011). They believe that everyone should be treated equally and as equals.
Individualism
On this dimension UK scores 89. This is because these people are highly individualist and are
private in nature. Children from very early age are taught to care for themselves, to be
independent and how they can contribute to the society (Hofstede Insight, 2018). Personal
fulfilment is the route to happiness. There is a rise of rampant consumerism.
Masculinity
The society of UK can be considered masculine. and is highly success driven. Major factor of
misunderstanding lies in the apparent flaw among British culture of understatement and
modesty. This is at odds with the basic success driven value system in the culture. What is
said is not what is meant (Shenkar, 2012).
Uncertainty avoidance

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The United Kingdom scores just 35 on this dimension. They can make changes in their plans
in the light of some new information. The British are comfortable in ambiguous conditions.
They do not make many rules but are adhered to whatever present. The end goal is clear but
the way in which one can reach is flexible as according to the changing environment. They
have craze for innovation and thrives in marketing, finance and marketing engineering
(Dartey-Baah, 2013).
Long term orientation
They maintain the link between the past and future when they face challenges. In long term
orientation they scored 51 as the leading preference in British culture cannot be strong-
minded. They also believe in fostering education to prepare their society for the challenges of
the future (Hofstede Insight, 2018).
Two International business organisations
There are many international organisations that are moving into other countries for their
expansion. They have their own market entry strategies. This paper presents the case of Ikea
and Zara
IKEA entry in India
IKEA is originally a Swedish multinational firm. It designs and sells ready to assemble
furniture, kitchen appliances and home accessories. Ikea is one of the biggest furniture
retailers. The furniture design is modernist, and the interior is designed with eco-friendly
simplicity. This company is also known for its cost control measures, lower pricing (Pawar &

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Veer, 2013). This group has a complex corporate structure. It is having more than 425 stores
in 49 nations.
In order to enter the Indian market, they have adopted equity as an entry mode. They have
adopted 100% Foreign Direct Investment in single brand retail. This is a sole ownership
investment. In their entry strategy they have adopted a fully integrated production. Ikea
opened their stores in different locations of India. Since the company follows an integrated
approach, Ikea is dependent on others for their business operations. In most of the countries
they have followed the same entry mode and have been successful in their business
(McNamara & Descubes, 2016).
For India it is one of the best entry modes. This is because India has been a market where
local players have greater control in the furniture retail. Quality can be the only thing that can
help the company in their business operations. The reason for this market entry strategy is the
resource-based view in which they have high contact and control (Goyal, 2017). It allows the
company to directly make the contact with the customers. Due to political support FDI is
highly appreciated.
Apart from this, India is considered a developing economic environment. Its government
supports any new business coming into the country with direct investment. Sole ownership is
supported by the investment on every aspect of the operations (Swoboda, Elsner & Olejnik,
2015). There is an almost unlimited availability of low-cost workers, or in other words, cheap
labour. Ikea employs equally men and women, both good for 50%. Ikea controls all
processes, and this allows them, along with the cheap labour, to be consistent with their
lowest pricing strategy. In their entry into India, IKEA lobbied hard with the government to
tweak the original rider that stipulated 30% local sourcing from SMEs. Now they can source
from any Indian entity. They have also focused on 30% local sourcing by getting their supply
chain right. This entry mode can further be justified by the fact that it gives the leverage to
the company about making decision related to various retail operations (KUMAR, 2013).
They have made investment in multi-channel retail strategy with both online and offline
modes of business. Since products are available on both online and offline stores.
Zara entry in India
In order to contrast entry mode, the case of Zara entering India has been elaborated. This will
help to understand how and why the other retail giant entering the same country chose
another entry mode.

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Zara is a Spanish fast fashion retailer. It is the major brand of Inditex group and is the world’s
biggest clothing retailer. Zara in 2017 was able to manage up to 20 clothing collection in a
year. It is having a highly responsive supply chain management system which helps them in
shipping new products to the stores twice a week. Different suppliers produce 450 million
items in a year on behalf of Zara. It is having a zero advertising policy and the money saved
is used in opening new stores. Zara makes changes in their product portfolio based on
customer’s feedback and demand. Since the online market is expanding at much faster speed,
it has become essential for the company to shift their focus to online business (Mann & Byun,
2011).
Zara planned to enter the Indian market with different modes. It came to the India in 2009.
Since India did not allow FDI in single brand retail at that time, the company had to choose a
different kind of entry strategy. The entry strategy that Zara opted was a joint Venture. Zara
teamed up with the Tata group (Trent Limited). Within this alliance, Zara had 51% and Tata
49% of the shares. This mode of entry can be challenging for company to manage. The
benefit however is that is allows a company to handle the different cultural values of the host
country, in this case India. A joint venture allows the organisation to understand faster and
better the organisational behaviour and the cultural values that is present within a country
(Lu, Karpova & Fiore, 2011). An additional and essential argument was the position of the
Tata Group as a strong holder of the supply chain management of the company. Since India
has a huge cultural diversity, transforming the business that suits each of these cultural
variances is not an easy job. There are many local vendors who had a higher control over the
market hence taking the help of local distributer like Tata group was highly essential. A joint
venture is usually most effective when a company is new to an entirely different country with
a very mixed cultural background.
In my opinion, both the entry mode selected by both the retail giants is as per the situation of
the country. Still I believe the entry mode of Ikea is better than Zara, who had not the same
opportunity. This is because India is a developing nation and it will support the expansion of
the company within the country. Since sole ownership allows the company to control the
decision making process, it does not depend on others. This might facilitate a faster
expansion. This is also evident from the fact that the development of Zara was quite slow due
to the challenges that both the companies faced while working in collaboration (Crofton &
Dopico, 2012). Ikea, on the other hand, plans to reach every corner of the country by the end