LCBS5042 Business Across Cultures: Hofstede & Cross-Border Impact

This assignment provides a critical evaluation of Hofstede's model of national culture, discussing its six dimensions and associated criticisms. It further explores the impact of national cultural differences on cross-border business development using McDonald's as a specific example, contrasting the cultural environments of China and the US. The analysis considers how national culture, as defined by Hofstede's dimensions, influences business strategies and outcomes. The assignment also refers to the Organizational Culture Inventory to explain how organizational culture plays a role in the success or failure of international ventures, highlighting the importance of cultural awareness and adaptation in global business operations. The assignment also highlights the importance of GLOBE model as a substitute to Hofstede's model.

Business Across Culture Assignment
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Table of Contents
Introduction....................................................................................................................................2
1. Critically assess the Hofstede model of national culture..........................................................3
2. Identify a specific example of a cross-border business development that is impacted,
positively and/or negatively, by national cultural differences......................................................7
Conclusion....................................................................................................................................11
References.....................................................................................................................................12
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Introduction
In the modern era, different persons from the different culture are appointed in an organization. It
is not possible that all the members of an organization are situated at a particular location. The
supplier of the company is from the different area of the country, the customers are completely
differing irrespective of the language and culture. Therefore, in order to have a successful
business operation, an organization is required to regulate its business in the global environment.
In order to serve the global market, overall; the company is required to navigate various cross-
cultural differences and communication. Henceforth, many strategies are needed to be designed
irrespectively for achieving set endeavours by facing all the hurdles that arises with cross culture
communication. Moreover, the cross-culture communication is the term that instances
exchanging, negotiating and conversing of the information that is shared verbally as well as non-
verbally with culturally different people. In addition, the company is required to deal with the
peoples of the different society and their customs or traditional as well from time to time.
In the assignment; the importance, awareness as well as criticism related to the business across
the culture has been accentuated. In the first section, critical assessment of Hofstede’s model of
culture has been provided after discussing what it is about. In the forthcoming sections, by taking
example of McDonald’s, differences in businesses following cultural dimensions have been put
across and concluded with how the theory of Organizational Culture Inventory plays a role in the
success of the venture itself.
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Critically assess the Hofstede model of national culture
Hofstede model dimension theory is the cross-culture communication based framework that was
introduced by the Geert Hofstede. It is the theory that evaluates all the facts that affects the
values of the society’s culture and its members as well as all the values that are related to the
structure and behaviour (Helmreich and Merritt, 2017). The Hofstede model was developed to
analyze the factors related to employee’s value by performing worldwide surveys. Hofstede
introduced the traditional research for the cross-cultural psychology that are based on the
consultants as well as researches related to the field of communications and international
business. There are total six dimensions that are evaluated with the respected theory (Kim,
2017). All the dimensions are used to evaluate the external and internal environment of the
business and it helps to determine the best decision (Ziegel-Meyer, 2013).
Six Dimensions of the National Culture
 Power Distance Index (PDI)
The power distance index is the term that defines the members of the company that are less
powerful. Thus, in this dimension; the concept of inequality as well as perceived power from the
respective member has been evaluated at the lower strata (Favarettoet al., 2016). The high rate of
the index in the dimension indicates the effective establishment of the hierarchy in the society
without any reason or doubt. The low range of the dimension indicates that the power is
distributed, and the members are questioning the authority (Trompenaars and Hampden-Turner
1997). In this respect, the PDI rate is high in Arab (80) while the lowest is measured in Australia
(11)
 Individualism vs. collectivism (IDV)
The integrated society into the groups are explored in this dimension which influences the
individualistic societies that have loose ties and are often related to their immediate family (Van
Hoorn, 2015). In this dimension, the major emphasis is on “I” vs. “We”. It describes counterpart
and collectivism in the society that highly integrates the relationship ties of extended families
and into groups. The entire group is laced with the support and loyalty whenever the conflict
arises with the other groups. United State is leading in this dimension with a score of 91. On the
other hand, Gautemala has the lowest rate that of 6
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 Uncertainty avoidance (UA)
The uncertainty avoidance index is based on the society tolerance that accentuates the ambiguity,
using which, people avert and embrace certain events that are unexpected, are away from that of
status and unknown (Qu and Yang, 2015). The society that determines the high rate in this
dimension are opposite for the stiff codes on laws, behaviour, guidelines and are generally
relying on the absolute truth like Greece that has the 112 rates in this dimension. On the other
hand, the lower rate on this dimension indicates poor laws and regulations that has been seen in
the Singapore with a rate of 8 (Giebelset al., 2017).
 Masculinity vs. femininity (MAS)
Masculinity is the term that defines the achievement, assertiveness, heroism as well as the
material rewards in the society for the success. The concept is underpinned for the modesty,
corporation as well as care for the quality of the life of the poor and weak. However, in the
society of the femininity, the caring and modest is as equal to the women as for the men of the
society (Andrijauskienė and Dumčiuvienė, 2017,). The women are as competitive and assertive
as men. However, the society in the dimension still taboos for the masculine societies for the
femininity. Japan has been observed as the highest rate of 95 whereas, Sweden has the lowest
rate of 5.
 Long-term orientation vs. short term orientation (LTO)
This dimension is associated with connecting the future and current challenges and actions. The
lower range of this dimension leads to indicate that the traditional methods are honoured and are
kept steadfast valued like in Ghana, Nigeria and Sierra Leone, which display the lowest rate that
of 16 (Ivanickovaet al., 2015). Society with the high range integrates circumstantial and
adaptation which leads to pragmatism, like in the country of China that has the highest rate in the
dimension. The low-quality group of the society ensures no economic development whereas the
long term oriented countries ensures development to the certain extent.
 Indulgence vs. restraint (IND)
This dimension is concerned with the freedom of the societal norms while ensuring that the
human desires are fulfilled (Schwartz and Bardi 2001). In the given dimension indulgence is
defined as the term that accentuates the society which allows free gratifications of the natural and
basic human desire which enables to enjoy the life with utmost fun. The counter parts of it,
define the society that controls the gratification irrespective to the needs of the strict social norms
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(Schwartz and Bardi 2001). The highest rate in this section of dimension 68 that is been observed
in United States, whereas the lowest rate is 24 observed by the China.
Figure 1: Six dimensions of the Hofstede Model
(Source: Schwartz and Bardi 2001)
Critical evaluation of the Hofstede Model
The study deals with the understanding and collaborations of the business culture all across the
world. Irrespective to the various advantages of the Hofstede, this model attracts several
criticisms. It has been observed that understanding the culture of the various nations is crucial
for the operations and smooth functioning of the international business (Ivanickovaet al., 2015).
There are still many multinational organizations that still do not prefer using the Hofstede model
due to its tools and methodology that are used to survey and research. By evaluating the accuracy
of the work, the model has been criticised (Spencer-Oatey and Franklin 2009). It has been
observed that the wrong tools and methods of the Hofstede leads to many unexpected results that
may influence the poor and negative performance of the company.. Apart from the above,
criticism has been observed by many organizations that the model only leads to collect the data
and information related to the market conditions and customers.
One of the most crucial criticisms of the model is that, the Hofstede assumes the
homogeneousness of the national populations as a whole. The dimensions of the Hofstede model
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have questioned the existence of the influencing national culture. It has been remarked that the
works done by the help of Hofstede attends to measure uncertainty facts that are immeasurable,
applying the wrong methods. In addition, it has been pointed that the national culture is not that
theorized as the single culture. However, it relates to the totality of the cultures that occurs within
nations and that distinguishes the people from that of one nation to the other.
The criticism determines that the model is quite controversial as well as sensitive at the time of
evaluating the research (Rowley and Lewis, 2018). This is because, the structure and method
used by the Hofstede model is very inflexible and firm, that leads to accommodate various views
that available which are designed for the systematic measures of the data collection that are
based on the coherent theory. It has been proved intrinsic for the marketplaces as well as some
other scholars for which the city argues that the sampling are inconsistent as well as unevenly
distributed. To address this shortcoming, another affecting model like GLOBE is widely used
these days.
GLOBE research is the approach that includes all the key elements of the leadership that are
essential for the smooth functioning of the organization as compared to the Hofstede model.
However, the GLOBE model has extended the Hofstede model by introducing new dimensions
that instance human orientation, performance orientation and assertiveness. This discusses
personal experiences irrespective to the sociological, physiological, anthropological,
geographical, geopolitical and psychological effects on the globalizations which has been absent
in the Hofstede model.
In order to expand the market in the international markets many companies follow the GLOBE
model rather than Hofstede model. This model leads to enhancing the effectiveness of the
leadership behaviours in organizations (Smith, 2015). The insight and talent in the respective
models leads to navigate the humanity through various developments that focuses around the
globalization phenomenon which is difficult to measure using Hofstede model. Therefore, the
model rectifies the effective and embrace guide to the evaluation of the mankind's that integrate
and blur national, social and economic strategies (Hair et al., 2015). Irrespective to the GLOBE
research, some of the crucial points have been discussed that enhance the business across the
culture.
 Willing to engage
 Cognitive openness and flexibility
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 Emotional regulation
 Uncertainty tolerance
 Self-efficacy
 Ethno cultural empathy
Identify a specific example of a cross-border business development
that is impacted, positively and/or negatively, by national cultural
differences.
McDonalds is one of the leading fast foods industries that are spread all over the world through
its franchise and layouts. It has been observed that the foods that are offered by McDonalds are
highly appreciated by all the ages of the people worldwide. Therefore, there is the huge
comparison between the products and services that are offered by McDonald's in China and US.
It was a challenge for McDonald to adapt in accordance to China. The cultural difference
between the China and US are various irrespective to the money, comfort, job securities and
satisfactions, people demands and populations. China is considered as the country high in the
growth of populations compared to the US (Tabibi et al., 2015). Some of the similarities as well
as differences to the intercultural communication in China and US is discussed below:
 The society of the Chinese is all about togetherness whereas US is all about the personal
lifestyle. Any success in the US is the achievement of the individual whereas in China
any success is the achievement of the country, family or the group.
 Hierarchy is the crucial part for the Chinese as compared to the US. US people are
mainly focused to the flatter structure (Gürhan-Canliet al., 2018). The pay scale in China
is relatively low irrespective to the US.
From the above, it is very clear that the cultural difference faced by McDonald in these two
different countries was quite opposite to each other. Henceforth, it became mandatory for the
company to maintain the adequate balance related to both the cultural values. It had to make
some changes to adapt to this, however. As is known now, the menu list of McDonald in China
is slightly different from that of US as major items are offered in the combo pack. Classic land
air warfare combo, thick Angus beef burger with cheese sauce combo and many are the different
items in the China McDonalds. The interiors of the McDonalds in the China are different from
that of the US. The interior of the US McDonalds is normal like all the other countries
McDonalds whereas the interior is more focused in the China McDonalds. A high touch of
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traditional status and wall hanging can be seen in the China McDonald. Moreover, to match with
the scenario, the restaurant keeps playing soft Chinese music in the restaurant that leads to give
warmth to the customers. In China, order is placed at the counter only whereas in US the self-
order system through the digital ordering board is introduced to save the time of customers.
McDonalds in China is more service oriented than that of the McDonalds in US. The services
providers enhance their performance to provide the effective services to their customers. On the
other hand, the customers are bound to do the self-services in order to have enjoyed their meal.
Therefore, no such touch screen services in China, the foods are required to be ordered manually
and is provided to the customer after they have entered the restaurant. McDonald’s in China
offers various gifts in their combo packs that create more customer satisfaction. However, this is
hardly the case in US McDonalds. Chinese are more concerned about their health and skin
compared to the US, therefore; healthy items are also offered in the Chinese franchise of
McDonalds.
Therefore, from the above study, the differences are quite obvious in terms of national culture
followed by a cross border organization. The company is required to adapt to the culture and
product preferences as per the population’s tastes and preferences. Henceforth, along with the
common menu of the McDonald’s, there are hence, many different items that are offered by the
restaurant.
The success and failure of McDonalds China can be defined in the context of cultural by using
the Hofstede’s Model because as the venture is successfully operating globally it has considered
the cultural difference which has an impact on the organizational performance. China is having a
high power index which signifies that the centralization of the power to the upper level of the
management. McDonalds is US based fast food venture wherein the society is having very less
PDI in this context the organization had to make some strategic changes in order to deal with this
cultural issue. Due to the hierarchy in the organization the employees faced some challenges in
terms of communication due to the difference in language as well as flow of communication.
However to deal with this issue McDonalds China introduces effective communication strategy
in the organization wherein a local store manager is appointed with whom the employees can
discuss the issues in the localised language. This is considered as a success factor for the venture
by utilizing the cultural dimension of Hofstede. China does not supports individualism that is in
other words it can be said that the society of China follows collectivism rather than
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individualism. McDonalds being a US based company supports the concept of individualism that
is it is more concentrated in achieving the business goals and objectives. In short it can be said
that McDonalds is more inclined in achieving the profit margins, however this culture of
individualism is continued in every country and hence no changes in the strategies are made in
this context. This gap in the cultural dimension has not been filled up effectively by the
organization which can lead to the failure of the organization. McDonalds China in this context
adopted the Chinese values like in US the stores of McDonalds are located in the street sides but
the stores of McDonalds China are located in the restaurant with densely populated people. Both
China and U.S are task or result oriented that is supports the cultural dimension of masculinity.
In this context McDonalds China did not had to make several strategic changes. McDonalds
China is more customer oriented that is in other words it can be said that the venture added a line
of service in order to gain the popularity in the international market in terms of market share.
This is indeed considered as a successful factor of the organization (Kaur and Noman, 2015).
The Organizational Cultural Inventory (OCI) is the widely used research for the cultural
assignment irrelative to measure the organisational culture. The OCI looks beyond the company
culture, corporate culture as well as workplace culture that lead to measure all types of the
organizations dimension. This OCI helps to measure the current culture in respect to the
behaviour norms that is required to maintain in the organization to meet the expectations.
Moreover, this leads to increase the effectiveness of the construction. However, the
organizational culture identifies the preferred culture and optimal for the organization. Moreover,
the methods that are applied in these models ensure the effectiveness operations and functioning
that will lead to achieve the goals of the organization. Some of the valuable factors that is
included in OCI.
 It helps in validating and signalling for the cultural transformation.
 Helps to support the programs that improve the employee engagement, quality as well as
reliability of the products, strategy implementation, customer services and many more.
 Helps to address the barriers of adaptability, agility as well as innovation.
 Helps to evaluate all the impacts relevant to the changes using cultural survey.
In OCI, only the experienced, skilled and qualified Synergistic Human Consultant can be applied
that evaluates all the crucial factors that are required for the decision making. As per the changes
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that were adopted by McDonalds, a proper OCI accreditation had been arranged in one or more
department. Moreover, OCI leads to increase the effectiveness of the skills administers at the
appropriate level in order to achieve the long-term changes in culture orientations (Stephan and
Pathak, 2016).
However, from the above it can be analyzed that organizational culture inventory is the critical
material that has been adopted by McDonalds in order to operate its functions in the global
environment. It can be observed that the adoption of the OCI by McDonalds helped the company
in the systematic operations of the productivity leading to increase in the overall economic
growth of the company. Moreover, it can be evaluated that any decisions that are made by the
employees of OCI will be accurate and beneficial to achieve goals of the organization as they are
highly skilled and experience. Moreover, it proves to be the relevant strategy in the business of
fast food industry as has been adopted by McDonald’s as it helped to fulfil all the requirements
of the business in the global marketing.
From the above, it can be observed that in order to be dynamic, the global environment business
like for example McDonalds, needs to relevant with the different cultures of the countries. Also,
that corporate culture plays a crucial role in success of the venture of the organization in a
multicultural environment. Therefore, the example of McDonalds, shows that; the business might
demand for changes such as, new levels of strategies, but largely, it has to be oriented as per the
customers of the host country and their culture. In order to expand the business in the global
market, McDonald had to adopt to the new business and culture centric situations to maintain
their own existing business culture. The value of PDI was relatively higher in China compared to
the US, meaning there was presence of cultural inequalities, people with low status were not
allowed to enter the restaurant (Jayatilleke and Gunawardena, 2016.).
In the US McDonald’s, the employee commitment is relatively low as compared to the China.
The relationship between the colleagues is high in China and relatively low in US. The feminine
society in the modern era is equal in both the countries as there are many female workers in the
McDonalds of both China and US. The ambiguity in China is differently followed as compared
to that of the US in the McDonald. The rules and laws irrespective to establish the franchise in
China is high as the laws and legislations policies are strict. The laws and policies of the US are
stable as the government of the US is very friendly and country oriented. The people of the
China are very traditional and beliefs in the ability to adapt the changing conditions. China as
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compared to US has a strong propensity in order to invest and save perseverance and thriftiness
to achieve the results. Incorporation of these changes has led McDonald’s to add a level of
flexibility and agility in operations and combat the rising competition. It is indeed one of the
success factors for McDonald’s.
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