Cross-Cultural Management: Capella Kempinski's Global Strategy Report

This report examines cross-cultural management strategies within the context of Capella Kempinski, a leading hospitality business. The report focuses on the company's planned expansion into Russia and China, analyzing the cultural landscapes of these nations and identifying potential practical issues that the company might face. It includes an overview of Capella Kempinski, its aims, strategy, and organizational structure. The report emphasizes the importance of cultural models, such as Handy's and Hofstede's, for effective cross-cultural management. Furthermore, the report discusses international recruitment approaches like ethnocentric and polycentric methods. The report offers recommendations to facilitate successful global expansion, aiming to help the company navigate cultural differences and achieve its business objectives. The report concludes by summarizing key findings and emphasizing the importance of adapting management practices to suit diverse cultural contexts within the hospitality industry.

Cross Cultural
management
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EXECUTIVE SUMMARY
The mentioned report is based upon the idea of cross cultural management in which
business concerns works in distinct nations and at same time faces diversity issues. Globalisation
helps companies that are functioning under hospitality industry to grab opportunities addition to
performing functions overseas. Capella Kempinski is selected firm for the report that works to
take care of individuals who has motive to look into new locations addition to spend quality
duration with other people. Moreover, executives with business owners are planning activities
for expansion in developing areas including Russia and China. For this, cultural analysis for the
two nations is done along with various identifying practical issues that can be faced by the
enterprise. Further, for cross cultural management, organisational managers are recommended to
follow cultural models including Handy's culture together with Hofstede's culture so that best
expansion decisions can be made for the company.
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Company overview......................................................................................................................3
Cultural analysis of two countries...............................................................................................6
Practical issues...........................................................................................................................11
Recommendations......................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Cross cultural management is characterised to managing people addition to things
involving distinct cultural backgrounds. In other words, it comprises managing working of teams
by considering differences in practices, consumer preferences together with cultures at
international level. It defines the ways certain external factors impacts on functioning of specific
business concern together with on its staff members. In order to make the cross culture
management effective, it is important for managers to identify as well as acknowledge the
perspectives of different preferences, cultures along with practices performed by organisational
workforce (Hutzschenreuter, Kleindienst, and Lange, 2014). When all the aspects are set to
engage staff members with distinct culture, departmental heads should develop proper
understanding among all in context to pertaining work culture. To develop comprehension about
cross cultural management, Capella Kempinski is chosen that is considered as leading hospitality
business concern in Germany that provides services including accommodation, trek
arrangements, organising packed holidays, food with beverage facilities and conducting
reservations for numerous travellers. Executives along with owners of the company have planned
the expansion of business trading operations in another two developing nations such as China
and Russia who possessing growing economic conditions. In addition, the report focuses on key
background information about the company along with its aims, structure, strategy and industry.
It also include cultural analysis of two nations, practical issues that organisation may face and
suggestion to overcome them. At last, valid recommendations are built so that the company can
expand successfully.
MAIN BODY
Company overview
Capella Kempinski is well considered among the leading hospitality business in
Germany that performs operations to offer wide services to their targetted clients. The company
has its head quarters located at Berlin, Germany since 2010 and from the date, the entity has
gained huge growth not only in the native nation but also at international level by satisfying the
wants, preferences or needs of travellers. The entity provides services such as adventurous
holiday packages, lodging, event planning, accommodation, organising packed holidays,
administrating reservations addition to trek arrangements for its key travellers and potential
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customers. In contrary, the tourism industry of Germany, the country is among the mostly visited
nation having 8th rank over the globe. The total number of overnight visitors are more than
477.26 million and among them more than 68.83 million night outs are foreign visitors.
Capella Kempinski's size
The company provides employment to more than 1800 personnels all over the world in
present time so to serve targetted customers in effective manner. In addition, the Capella
Kempinski has around 10 lack rooms along with 350 offices in Germany and its surrounding
nations that helped in becoming popular brand worldwide. However, the company has also
gained attractions of travellers by targeting people belonging to middle level addition to high
level income generators among the age group of 22 to 65 years so to offer services according to
their spending pattern together with convenience.
Aim of Capella Kempinski
The aim of Capella Kempinski is to become top business concern at international level by
effectively fulfilling requirements of key and potential clients by delivering long lasting
experiences. In addition, the company has other aim to communicate successfully with distant
located audiences and catering them best services. For this, marketers of the firm has used
promotional tools including customer support services, telephonic conversations, e-mail
marketing, websites and live chats. Other than this, Capella Kempinski has another aim to
operate the functions of business in each part of the world. This has raised numerous
opportunities such as expanding business via offering quality services to huge customer base of
distinct countries like China as well as Russia.
Strategy
In present time, hospitality industry is growing with faster speed which unblocks working
aspects for various companies within the industry to compete against the rivals so to accelerate
the growth. The strategy adopted by management team of Capella Kempinski is based on value
creation strategy through which the entity emphasis on targeting portfolio audiences in order to
gain reliability addition to trust through delivering unique and supreme quality services together
with long lasting experiences (Baruch, and et. al., 2013). As per the organisational executives,
adoption of value creation strategy helped them to build interest of external addition to internal
stakeholders in various operations that resulted in sustaining in today's competitive business
environment for long duration.
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Organisational structure
Top authorities of Capella Kempinski precede activities through functional organisational
structure where individuals are grouped in teams according to their knowledge, specialization
area and skill set. The firm has distinct departments including marketing, front office,
housekeeping, human resource, security and engineering. All the work related information are
distributed among all the functional units in systematic and accurate manner (Kim, and Van
Dyne, 2012). The team members are supervised and directed by functional managers possessing
expertise in similar field. With this structure, all the relevant information flows between top
level, medium level addition to low level management along with one department to other
without any hurdles or delays. The company works in various developed countries such as
Australia, USA, Germany, Denmark and UK where the same structure is followed. With this
structure, the managers can also expand the business concern in other countries including Russia
and China as it has various advantages associate with it. With the structure, the organisation can
fix roles addition to responsibilities of each team member which can benefits in facilitating
proper accountability of work, avoiding duplication of operations, providing securities to
personnels and facilitating cooperation with communication within functions. In addition,
efficient service delivery along with better effort coordination, the managers of Capella
Kempinski has planned to work with same strategies so t o expand the workings in other
countries. However, the enterprise has to be extra cautious with external environment factors
because of unstable political systems together with dynamic government conditions. Properly
following the structure in other countries will help in managing all the conditions addition to
capacity in deliberate manner. Other than this, from the beginning duration, organisational
managers has adopted various technologies as well as continued bringing various innovative
advancements which resulted in winning circumstances to spread awareness about pertaining
hospitality services through websites or successful tools. Hence, usage of customised
advertisements addition to google analytics for different people has benefit respective firm to
adopt best strategies to outreach potential customers in distinct economic parts in successful
manner.
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Cultural analysis of two countries
At present market scenario of hospitality industry depicts that there is cut throat
competition along with numerous challenges impacting on decision making procedures as well
as performance level for reach business goals in prompt manner. In addition, concept of
organisational culture involves philosophies, shared values, background as well as beliefs
impacting directly or indirectly on individuals with leaders. To remain in competition,
companies require efficient and skilled personnels possessing capabilities for further initiatives
with full contributions to attain objectives successfully. In addition, rapid changes in
globalisation context, quantity with quality of staff members is also increasing as well as
multicultural aspects imposes diverse challenges on human resource managers in order to handle
together with manage employees by enhancing their satisfaction level (Brannen, Piekkari and
Tietze, 2017). It is further said that rules, regulations as well as legislations in context to
employment varies from region to region addition to place to place. Hence, it is important for all
business entities to identify capabilities, areas of interest and potentiality of personnel so to work
in improved manner.
Various people are recruited for improving the market share of Capella Kempinski in
market. The human resource department of this organisation plays a key role in hiring of new
personnel. The first step taken by HR department is to analyse business environment of different
countries in which business has to be established. After this evaluation, recruiting strategies can
be made for enhancing market share of the company. A good HR management is able to hire and
manage effective and strong employees those can achieve goals and objectives of organisation in
less time. This will help in increasing the profits and productivity of the company. There are
some international recruitment approaches like ethnocentric, geocentric, poly centric,
regiocentric which are described below –
Ethnocentric approach: This is an international recruitment method and in this type of
approach, the human resource department hires right candidate for doing the job which is at
international level. The person hired to work at international level must be able to mix with
culture of different countries and have good communication skills. In this kind of recruitment
process, organisation selects skilled and effective employees for its firm. Different employees are
hired for working in various functional departments (Kreps, C., 2013). The key positions of the
organisation are filled with employees of parent country. The responsibility of HR is to find the
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best person who can work and manage company at international level. Several organisations
adopt this type of recruitment procedure for keeping employees belonging to parent company to
have competence for vacant posts. Recruitment process where ethnocentric approach can be
applied while making selection of pool candidates are skill assessment, creating pool, self-
selection and many other ways. Companies adopt these as per their requirements and demands.
Polycentric approach: This is another international recruitment method in which HR
hires person operating in international markets. The nationals of host country are recruited for
posts of managers for carrying out operations of subsidiary organisation. The main reason for
adopting this type of approach is that individuals of hot country analyse culture in more effective
manner. Another advantage is that this helps in cost saving in conducting their foreign operations
by company. Also, it can also help in building a better relationship across borders (Briscoe,
Tarique, and Schuler, 2012). This also helps in increasing brand image of company in host
country as well as in international market.
The above mentioned approaches are effectively utilised by Capella kempinski for
recruiting and selecting the right kind of person who can work in the firm effectively. This
company was thinking of expanding in other countries so it needs more number of employees
who can work in an effective manner. Also, the organisation must need to have some foreign
investors. This will help in developing effective results in specified time frame. It is important
for Capella Kemoinski to determine various trends that are needed by both host as well as
subsidiary country. Also, there are some of models of culture which will help Capella Kempinski
to meet requirements in an effective manner. Moreover, HR department of Capella Kempinski
would also require to improve a range of factors like quality, equality and many more and take
right type of decisions for making appropriate corrective actions for improving the working
culture of firm.
Hofstede model :
Hofstede model created by Geert Hofstede is a key factor that helps us improve cross-
cultural communication . It helps us explain why values of members of a society are directly
interlinked with their culture. It takes into account various dimensions that scarcely interlinked
with each other to help balance the principles of the workforce and create a positive and
productive work environment. Developed in the 1980's, this model focuses mainly on evaluating
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the beliefs of various cultures across the world for differences and similarities, which helps us
determine a direct link between values and behaviours. Some dimensions are mentioned
underneath that help understand this model better :
Individualist: This dimension primarily focuses on the self-sufficiency and self reliance of a
staff member. It analyses the individuals attempts to recognise superiors in order to establish a
social communication system in a company setting. The individual efforts of a staff member are
recorded in order to identify his efforts to achieve the general goal of the organisation. Thus it
become critical for the superiors create a sound line of communication with each individual and
rewarding the individual performing towards the general goals (Luthans, and Doh, 2012). It also
encourages staff members to communicate with each other to boost the ethnocentric social
platform.
Collectivist: Unlike individualism collectivism focuses mainly on the ability of an
individual to actively act as member to a larger group, communicating with various individuals
in order to boost the collective output of the entire group rather than focusing on personal
achievements. When dealing with a poly-centric workforce this factor becomes increasingly
important as effective communication becomes an obstruction between two individuals with
different cultures. Therefore employees are encouraged to interact with each other exchange
ideas, strategies and opinions that not only improves the companies performance but also helps
individuals perform better in future. It also enables them to support believes of various cultures
that enhances organisational efficiency.
Power Distance: This dimension explain how an individual copes up with the
distribution of power into various tiers and identifies not only his position in the chain of
command but also believes in growth of power through consistent positive performance and
personal development (Caligiuri, and Tarique, 2012). This dimension also sheds some light on
the ability of an individual to accept institution from a superior and act upon them, believing that
each instruction is for the betterment of not only the individual but also the organisation itself
Masculinity vs. Femininity: Masculinity and femininity are an important aspects of the
human personality. It is a balance of both that make up the mental state of an individual. Both
masculinity and femininity here are used more in a generic manner rather than the literal
meaning. Masculinity corresponds to the self uplifting activities of an individual. These activities
include acts to seek social appreciation as well as materialistic gains. These include acts of
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heroism, attention seeking etc. On the other hand, Femininity represents the giving nature
generally associated with females. The acts of supporting the weak, caring about the colleagues,
cooperation with the team etc. This effort generally doesn’t come into light but are crucial for
any organisation. The employees are nurtured to have an ideal balance of both masculinity and
femininity in order to maximize both individual and team performance while mentioning a
positively competitive work environment.
Uncertainty Avoidance: With so many dimensions in play it is understood that not all
employees are cut out for each and every work environment, an individual might not be
comfortable in a certain environment and might even be reluctant to express the issue with
others. There are many uncertainties that are present in a business environment. Not all
uncertainties are avoidable but these can be effectively avoidable with deeper analysis. These
avoidable uncertainties end up causing a lot of losses to organisations and thus should be avoided
at all costs.
Handy's cultural model
According to Handy, culture is defined as way in which people share their bond and love.
As per Charles handy, there are four types of culture i.e. power, role, task and person. This was
stated by Charles in the year 1999. The various aspects involved in Handy's cultural model are
given below -
Power culture- In this type of organisation where power culture is followed, power is
given to some respective individuals. They have the authority to communicate organisational
goals and objectives among employees and subordinates. In this type of culture, there are some
regulations and rules. People who have power within organisation are responsible for taking and
making decisions. It is not necessary that decisions taken by them are best for long term interest
of the company (Cavusgil, and et. al., 2014). Power culture is a strong culture but it may lead to
toxic consequences sometimes. distribution of power is about an extent to which management of
an organisation is open to be working with top- down and bottom up approach. In this, power
remain in hands of some people and they are authorized to take the effective decisions. They can
able to delegate the responsibilities to other staff members. In power culture, manager can be
partial to other person.
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Task culture- In this type of culture, various teams are made for doing a particular project. In
other words, teams are formed within company for addressing specific problems or issues. Task
is an important aspect and thus power in team changes continuously. The shifting of power takes
place depending upon team members and the status of project or problem. Several team are
created within an organisation for attaining goals and targets. Other factors includes solving
various organisational issues. In context of Capella Kempinski, several teams are made for
achieving goals and objectives in assigned time frame. Individuals having similar interests and
preferences forms teams. Each team has four to five members and they all contribute to
accomplish project assigned in specified time frame (Thomas, and Peterson, 2016). The
effectiveness of team is determined by team dynamic. If teams are having right type of skills,
leadership and personalities, team work is creative and productive.
Person culture- The person culture is one in which individuals or employees see
themselves as unique and more superior to the firm. The presence of organisation is there in
order to make people work effectively. When an organisation is following person culture, it
includes collection of people who are working in similar firm. In person culture, people see
themselves as superior and unique to company. The employees working in Capella Kempinski
are working for achieving organisational goals. People working in this firm are more concerned
about objectives of the company (Emmerling, Boyatzis, and Emmerling, 2012). Employees work
hard and this reflects their loyalty towards management of company.
Role culture- In this type of culture, there are some rules and regulations. These are said
to be highly controlled organisational cultures. In this, each and every individual working in the
firm knows what are the roles and responsibilities of company. Power of role culture is estimated
by determining position of power of the individual in organisational structure. The organisational
structure which are generally tall adopts role culture. The decision making process in role culture
is not quick, it is slow. Organisations which adopts this type of culture are said to take less risks
while running business. The role culture adopting organisations are bureaucratic. In this type of
culture, different members of staff are delegate roles and responsibilities depending upon their
interests, educational qualification, and specialization top extract better out of them. Every
individual is responsible for taking ownership to perform task assigned to them.
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It is concluded from the above discussed cultures, Capella Kempinski is able to make
effective actions for determining market conditions take initiative for positive working culture.
This helps in enhancing productivity and efficiency of the company.
Practical issues
There are various multinational companies which integrate with other small or big firms
for reducing the amount of risk generated in running a business. When the organisation has to
provide services in developing countries then it has to conduct an effective research. There are
various practical issues and ways for overcoming which are mentioned below – Political risk – This is known as a kind of risk which a firm face when political influence
affects running of successful businesses. According to this there are different political
events and issues that affects profitability and efficiency of an organisation. Some of the
political issues include that each and every country has its own regulations and way of
working. If the government of a country is not stable, then establishing business in these
countries is not easy (Emotional and social intelligence (French, R., 2015.) For
overcoming these political barriers, it is necessary for Capella Kempinski to critically
evaluate the consequences of starting providing services in countries. It is suggested to
this organisation develop an effective marketing strategy before running business
effectively.
 Communication barriers – A cross cultural management requires to have effective
communication so that there will be less conflicts and smooth running of all operations.
Communication in cross culture is defined as process of meditating, negotiating or
exchange of culture differences of a single person by language or non-verbal gestures.
This is very important for carrying out business successfully. Every country has it’ s own
language in which people communicate. For doing business in different countries,
Capella kempinski requires to analyse more about language used in different regions,
culture of people, etc. Some candidates can be recruited by this organisation for enabling
communication between people from different culture.
Recommendations
There are several recommendations for Capella kampinski after doing the above report.
There is huge chance of this organisation to get success in different countries. The following
recommendations will help the organisation for expanding it’s business in an effective manner. It
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is advised for this organisation to effectively conduct a research that will analyse culture of
different region, behaviour of people, customer attitude, population, political stability, rules and
regulations given by government etc. after evaluating these factors, Capella Kampinski is able to
easily implement operations in different countries. There are following recommendations made
for this organisation
 It is essential for countries to identify various factors like culture and customs before
expanding business. People working in Capella Kampinski are ready to adopt culture of
other countries and people for working in those areas. As this company wants to expand
it’s services in China and Russia it is important for this company to know about each
country’s consumers and the culture followed by them. Russian population is considered
to be more attracted towards travelling, trekking and experiencing adventure. On the
other hand, China people are more attracted towards culture. So, the analyses of both
countries suggests that it is more easy for Capella Kampinski to start business in Russia.
 It is advisable for Capella kampinski to localise the brand and create positive brand image
in front of customers. Marketing of organisation is always a great option while increasing
brand image. This increment results in attracting a lot of customers towards brand. In
context of Capella kampinski it is seen that it is easier to create brand image in Russian
market than China market. Population of Russia is more prone towards having positive
attitude for creativity and innovation. This is a great opportunity for increasing customer
base. Russian people have more fond of travelling and exploring new places. So Capella
kampinski has opportunity to expand business in this country. A right kind of marketing
done at right time will provide best results to the company. Capella kampinski can attract
Russian customers by providing discounts on holiday packages, giving extra benefits on
festive time (). These are ways by which customers van be promoted in an effective
manner. Culture of Russia and customer’s interest affects the company in a positive
manner.
There is a huge impact of rules and regulations given by government on the business
operations and activities of Capella kampinski. There are strict regulations followed by
government of China. So this can have negative impact on smooth running of business. It will
cost less for Capella kampinski to expand business in Russia as it has lowest registration fees
across the world.
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CONCLUSION
From the above discussion, it has been analysed that it is important for every company to
have proper cross culture management as it helps in reducing barriers to operate in more than one
country. Different countries have different cultures and they are different form one another. It is
essential for firms to adopt requisite structure and grab benefits. Effectiveness of business can be
increased by Managerial personnel by adopting and applying tools of cross- culture and manage
diversity. Moreover, cross cultural management is a way of effectively promoting progress,
development and improving communication to provide the better alternatives. There has been
studied about the cultural analysis of different countries such as China and Russia by using
Hofstede and Handy's cultural model. The Hofstede model stated about impact of culture in
social group and on the other hand, Handy culture model is to rules which help in relate the
organisational culture with structure. These both are helpful in create the awareness about
different countries and also its values. When company conduct its business in different culture
then it need to understand business environment to enlarge market share in to the new
geographical region. It helps in provide advantages to company by enhancing productivity level.
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REFERENCES
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Luthans, F. and Doh, J. P., 2012. International management: Culture, strategy, and behavior.
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Online
https://blog.hqrevenue.com/german-hotel-market-increasing-competitive-pressure-despite-high-
demand (German hospitality industry. 2019)
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