Intercultural Management in Business: Case Study Analysis

This case study analysis highlights the importance of understanding cultural differences in international business transactions. It includes a detailed analysis of a joint venture between a US sports equipment manufacturer and a Japanese firm, and the cultural misunderstandings that led to its failure. The report recommends effective cross-cultural management strategies and the use of Hofstede's cultural dimension theory to better comprehend cultural differences.

Intercultural Management in Business

CONTENTS
INTRODUCTION......................................................................................................................1
WHAT WENT WRONG?.........................................................................................................1
UNDERSTANDING THE CROSS-CULTURAL PROBLEM.................................................2
RECOMMENDATIONS...........................................................................................................5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

TABLE OF FIGURES
Figure 1: Hofstede’s Cultural Dimensions Theory....................................................................3
Figure 2: Schulz von Thun’s value-square.................................................................................5

INTRODUCTION
Culture is defined as a belief, social behaviour and opinion of a particular community,
people or a country. It has a very crucial role to play in influencing the activities and
transactions of a business when it is being performed at the international level. The national
culture system along with the culture of an individual highly affects the culture of a particular
organization. Cultural differences might also leads to demotivation and conflicts among the
individuals which results into lower level of performance and hinders the growth of the
company (Bird and Mendenhall, 2016). Thus, it is quite essential to manage cross culture
effectively. Considering this, the main aim of the present case study report is to determine the
culture specific preferences in international business context and will demonstrate
understanding of inter-cultural awareness in varied business interaction through utilizing
different models and theories. The case one is being considered for the current research work
wherein a U.S. sports equipment manufacturer explored the possibilities of a joint venture
with the Japanese firm.
WHAT WENT WRONG?
As specified in the case one, a U.S. sports equipment manufacturer explored the
possibilities of a joint venture with the Japanese firm as they have a huge interest towards the
golf game. In this regards, three representatives from each company decided to meet at San
Francisco for working out the details of the proposed project of joint venture. While they
were introducing themselves, Americans rolled up their sleeves and took out their jackets and
started conversing with Japanese. Due to this gesture of American, the joint venture never
happened. This all happened due to lack of cultural awareness by the American
representatives in regards with Japan. Here it is important to comprehend that Japan is mainly
regarded as more culturally western as compared to the other Asian cultures. However, when
a comparison is being made with the United States of America, there are certainly many
cultural differences amid both these nations. The proposed joint venture didn’t took place
because of the informal approach of American representatives. This is a generalization that
people in Japan are more formal than Americans (Lauring, 2015).
Furthermore, the nation is more socially colder as compared to the areas of US.
People in Japan maintains distance while speaking and last name along with honorifics or
title word for showing respect is being utilized at times when people speak to one another.
This has not been followed by the Americans in the case study. In addition to this, in America
people communicate with each other warmly as well as friendly. Nonetheless, this is not the
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case in Japan as they are more formal and unobtrusive. Again, it is quite known that in many
of the Asian nations people make use of bowing rather than shaking hands, however mostly
people in Japan often bow for many situations instead of greetings. So pertaining to this, the
gesture of the American representative of saying hello and introducing themselves was not
accepted by the Japanese representative (Lachman, Nedd and Hinings, 2014). Other than this,
being too direct is regarded as rude in the culture of Japan. But, people in America are being
taught from their childhood that they need to look directly in someone’s eye to reflect that
they are participating actively. Extended eye contact is considered as uncomfortable as eyes
are most of the time averted in Japanese culture. Therefore, these are some of the reasons
why Americans went wrong in the overall case.
UNDERSTANDING THE CROSS-CULTURAL PROBLEM
Within the global collaboration particularly between the small as well as medium
enterprises, inter-cultural interaction is prone to have a variety of communication issues as
individuals does not have an exposure of the backgrounds of the other culture. As in the
current case, the Americans were not aware about the cultural backgrounds, values and belief
of Japanese’s culture and they fail to have a collaboration. Thus, it is crucial to comprehend
the manner people from varied nations or cultures behave, manage, organize, communicate
and observe the world around them. There are different individuals who makes an argument
in the inter-cultural business communication that it is the culture which identifies the manner
people encode messages, the type of means to be selected for communicating information and
the manner in which the messages will be deduced. When importuning for joint ventures in
the manufacturing industry, there are few such collaboration that took place between Japan
and America. This is the main reason behind why they does not known each other and are
being surrounded in their prejudices and own perceptions (Blodgett, 2018).
It is crucial that inter-cultural differences between the nations needs to be understood
and a trust and respect for such partnership is required to be establish. There is one important
cultural difference theory that can be applied for analysing and comprehending the ways in
which different nations behave and it is Hofstede’s cultural dimension theory. Through
understanding the dissimilarities and variations in culture along with adapting them will
provide a strong foundation for efficaciously creating joint ventures in the international
markets. Geert Hofstede, a Dutch social psychologist have originated this theory which is
also recognised as the framework for cross-cultural communication. There are five important
elements being used in this theory and they will going to render a supportive hand in
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comprehending the cross-cultural problems and differences between two nation’s cultures
(Barkema, Bell and Pennings, 2016). Elucidation of the five cultural dimensions of
Hofstede:
 Power Distance index – The very first one is power distance index which signifies the
degree of inequality prevailing in a particular society or in other words the extent to
which the community is able to agree to take the dissemination of power. A high
power distance index shows that the culture or a nation takes into account hierarchical
dissemination of power and individuals are aware about their position in the overall
system. But, if the power index score is quite low than it means in that culture power
is equally distributed and shared by all extensively.
Figure 1: Hofstede’s Cultural Dimensions Theory
(Hofstede’s Cultural Dimensions Theory, 2021).
 Individualism versus Collectivism – This again an important cultural dimension which
signifies the strength of connection or link which the people have with one another in
a community or any country. A high score of individualism states that the particular
nation does not comprehend inter-personal communication and they solely think
about themselves. On contrary, if the score of collectivism dimension is quite more
than it means that the specified culture or nation regards group and team work and are
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also loyal towards community as they consider societal interest as their first priority
than individual interest.
 Masculinity versus Femininity – Masculinity and Femininity aspect is being
connected with the circulation of jobs in the midst of the guys and females. Those
culture wherein the masculinity scores are very high there men are expected to act
self-assuredly (Nicolaidis, 2016). Then again, in the event that the score of
masculinity is low, it implies that jobs are divided among people and more
accentuation is being given on great relationship with the bosses. For instance, the
country like Japan which is having high masculinity score will bound to respond
better to a men chief on in opposition to the nation like USA, they will respond to the
arrangement based on the degrees of expertise rather than sexual category.
 Uncertainty Avoidance Index – Talking in relation with this dimension, it is being
connected with the degree of tension the individuals from the local area feel when
they run over with anonymous circumstances or occasions. The nations scoring very
high in vulnerability aversion record demonstrates that individuals puts forth attempts
to stay away from this if conceivable and search for aggregate reality. On the opposite
side, in the event that Uncertainty Avoidance Index score is less, it means that the
way of life is more disposed towards open-finished navigation and learning and is
very open to advancement and there is less urge to get moving.
 Long versus short Term Orientation – the last one is long versus short term
orientation which is characterized as the time skyline being shown by individuals in
the social orders. Nations scoring high in long term orientation underscore more on
ideals and commitments and those with high transient direction inclines to overvalue
themselves and spotlights on values as well as freedoms (Hofstede, 1994).
From the above analysis of the cultural difference theory, it can be stated that with the
use of this framework at the very beginning, companies can have a general idea of the ways
of approaching towards an international business market, culture or a country. It will help
them to better comprehend how some country or culture behave in a particular manner and
how the differences can have impact on the functioning of day to day activities of the
business in the international context. Even, it is also important to consider that varied
countries have varied concept or idea about communication, motivation, leadership, decision
making as well as negotiation. For instance, the merger of Daimler and Chrysler was an
uneasy match amid the two companies which have total diverse corporate cultures (Farmer,
2015). These factors should also needs to be apprehended for effective and smooth
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functioning. For example, assuming the leaders or managers have information, mindfulness
and comprehension of the social upsides of a specific culture or country then they can
successfully oversee work by social contentions and cooperation’s. Essentially, verbal too as
non-verbal correspondence can obliterate or cultivate appreciation of a culture. Yet, it
likewise turns out to be simple, clear and exact assuming there is comprehension of various
differences that are present between wide ranging societies. Moreover, the navigation can be
concentrated as well as decentralized relying on various culture. Nations which follows
various levelled structure frequently have brought together dynamic set up as well as the
other way around. The social factors extraordinarily impacts the inspiration level of
labourers. In certain society inspiration can be collaboration though in other it very well may
be from association with colleagues (Willmott, 2020). In like manner, culture additionally
impacts exchanges. More established, single parent youthful or individuals from different
nations, all will haggle contrastingly and will decipher their cycle of negotiation. This large
number of contrasts in culture are basic to comprehend for successful working and activity.
RECOMMENDATIONS
Based on the case analysis, it is highly recommended to the American representatives
to acknowledge diversity in culture that exists between different nations and different people.
It is important for them to understand that each and every people have different attitude
towards diversity and these can be either positive or negative (Bond and Haynes, 2014).
Those who think that diversity is positive then they achieve progress and those who consider
it as negative can overview it as a source of conflict. For comprehending the diversity
American representatives must look at the Schulz von Thun’s value-square model. As per this
model, high emphasis on diversity can result into
Figure 2: Schulz von Thun’s value-square
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(Schulz von Thun, 2018).
Confusion and too much of homogeneity can result into monotony and therefore, the
potential of both should be adopted by the American representative. Other than this, it is also
important for them to recognize the cultural differences that exists between both the nations
and respect that diversity in culture for having smooth and enhanced flow of transactions and
business activities.
CONCLUSION
Consequently, from the above evaluation of the case it can be concluded that at times
when any organization is making plans to step-in in the international market, it is very
essential that cultural differences should be understood effectively for the smooth functioning
of the business transactions. It has been originated that each and every culture has different
values, beliefs, opinions and viewpoints, a handshake in one nation is acceptable in one
nation might not be considered right in the other. Therefore, it becomes indispensable on the
part of the organizations to manage this cross culture effectively so that cohesiveness can be
developed in multi-cultural teams which further leads the firm to the path of success.
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REFERENCES
Books and journals
Barkema, H., Bell, J. and Pennings, J., 2016. Foreign entry, cultural barrier and learning.
Strategic Management Journal, 17, pp.151-166.
Bird, A. and Mendenhall, M.E., 2016. From cross-cultural management to global leadership:
Evolution and adaptation. Journal of World Business, 51(1).
Blodgett, L.L., 2018. Factors in the instability of international joint ventures: An event
history analysis. Strategic Management Journal, 13(6), pp.475-481.
Bond, M. and Haynes, M., 2014. Workplace Diversity: A Social-Ecological Framework and
Policy Implications. Social Issues and Policy Review, 8(1), pp.167-201.
Farmer, RT., 2015. Corporate culture defines a company and its future. American Journal of
Business, 20(2), pp.7-3.
Hofstede, G., 1994. Culture’s Consequences. Beverly Hills. Sage Publications. California.
Lachman, R., Nedd, A. and Hinings, B., 2014. Analysing cross-national management and
organizations: A theoretical framework. Human Relations, 55(1), pp.89-118.
Lauring, J., 2015. Intercultural Organizational Communication: The Social Organizing of
Interaction in International Encounters. Journal of Business and Communication, 48(3),
pp.231–55.
Nicolaidis, C.S., 2016. Cultural Determinants of Corporate Excellence in an Integrated
World Economy: The Impact of National Cultures on Organisational Performance.
Reading.
Schulz von Thun, F., 2018. Miteinander reden 1. Störungen und Klärungen: allgemeine
Psychologie der Kommunikation. Reinbek bei Hamburg.
Willmott, R., 2020. The place of culture in organization theory: Introducing the
morphogenetic approach. Organization, 7(1), pp.95-128.
Online references
Hofstede’s Cultural Dimensions Theory. 2021. [Online]. Available through:
<https://www.iedunote.com/hofstedes-cultural-dimensions-theory>. [Accessed on
8thMarch 2022].
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