Impact of Cultural Differences in HSBC and Bank of China Joint Venture

This report analyzes the cultural dynamics within the joint venture between HSBC and the Bank of China, highlighting the impact of cultural differences on business operations. It explores the significance of Hofstede's cultural dimensions in understanding and addressing potential communication barriers and differing work styles between UK, German, and Chinese cultures. The report also discusses the importance of cross-cultural training and development in fostering effective collaboration and achieving business objectives within international partnerships. The report examines a case study of a joint venture between HSBC and the Bank of China, focusing on how cultural understanding can influence the success of such collaborations, and how leadership plays a key role in managing these differences. The report provides insights into the application of Hofstede's model and its relevance to leadership in global business settings.

Making sense of
organizations

EXECUTIVE SUMMARY
Culture is followed differently at different places. There are various differences in
cultures among UK as they are have welcoming nature and they talk to every person with respect
and dignity while Germany people are very abrupt, they believe that everything should be right
and they are very effective in there work process. The differences in culture can be described
with the help of Hofstede model which states that culture can cause communication barriers and
this can affect their abilities to interact with other persons and motivate them to achieve goals
and business objectives. This model is very useful as it helps in removing the differences by six
elements so that persons can perform their working in a planned way. Cross culture training is
given to people so that they can make themselves aware about various cultures which are
followed in society and thus, they do not face any difficulty in the future if they had to go and
work at different places. This is a useful tool as it helps in the development of skills and
knowledge of individuals and they can adjust themselves at any place.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Culture is described as the social behaviour which are found in human societies. It
consists of norms, rituals and beliefs which are followed by people in nations like UK, Germany
and China. Every country follows different culture and thus, they have different beliefs
according to it. It also reflects the way in which employees will be interacting with each other as
they are coming from different cultures. It can be said that cultures are developed according to
the traits which are followed by people. There are various cultural differences seen at workplaces
due to difference in their beliefs but these have to be resolved so that people can work with peace
and harmony (Alvesson and Spicer, 2012). There are various issues that can be identified at
workplace like language difference as people are not able to understand what the other persons
want to say, difference in there lifestyle these create major difference at business places. This
report is based on joint ventures between HSBC and the bank of China. They have contributed
towards the growth of economy by having second largest share in the world in banking sector. In
the present report, Hofstedes Model which consists of six elements and issues which have been
focused by leaders along with the importance of cross culture training and development will be
discussed.
TASK
Background of the case
In this case, there is the joint venture between HSBC with bank of China and they have
agreed to share all their profits which they will receive. This is a useful method in order to
expand their business and provide services to the customers in lending and borrowing money in
order to execute business operations. HSBC will be having 33% of stake in this joint venture
while the rest part will be divided into two other entities (Pyrczak, 2016.).
There is an example of venture between Jaguar Land Rover and Chery auto-mobiles and
these have contributed the largest shares in economy by doing these types of joint ventures
programmes. The investment in ventures will consist of establishing a new plant in Changshu.
There is combined effort put by company in research and development programmes as well as in
production facility of engine manufacturing. These models are developed in the Chinese
marketplace. This venture will help them to develop new models in cars which are luxury and
these are developed by understanding the needs of Chinese markets so that their demands can
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also be fulfilled. Their partnership business is named as Chery land rover and Jaguar company
(JLR) dealing in auto-mobile sector. They had made a commitment from China which is
established third largest country dealing in this sector (Alvesson and Willmott, 2012).
Business of HSBC bank is rapidly expanding in the Chinese markets and these have
provided various types of facilities to customers so that they can easily borrow money .Jaguar
had developed various models in cars which are developed by new and innovative facilities
which provides comfort to people and luxury feelings. While they have gained experience in the
auto-mobile industry, now they are thinking of expanding their operations at the international
level.
Thus, partnership business between HSBC and bank of China is beneficial in increasing
growth and development for firms by which they can contribute in the growth and development
of economy. In joint ventures, both businesses are working as partners and they are equally
giving their contribution in increasing sales and profit ratios.
Culture
Cultures are defined as the group of organised community and society. It evaluates all the
patterns that are developed or discovered as well as solved the problems which were faced by
business organisation, difficulty in interaction with the members of group which are operating in
business environment. The results of these responses are linked with adopting right ways to think
on it, perceive and act. After that, they are passed to other members who are performing
operations with the help of teaching programmes and emissions (Bolman, 2017).
The cultural are useful in determining what is exactable by the society and what is not,
which elements are of importance and which does not, working and the non working aspects and
what things are wrong and right in the programmes. It consists of all learning and the shared
experiences, knowledgeable factors, culture, belief and values of people, aspects related with
explicit and tacit factors, assumptions of people, their way of living, attitude towards others as
well as different languages which are spoken by the people. In short, it can be defined as
knowledge and characteristics of a group of people in relation to their habits and the languages
spoken by them (Boczkowski, 2012).
There will be three countries Germany, china and UK they will decide about the joint
ventures how they will going to distribute there shares at the market places. They are
contributing well in the banking sector thus achieved growth for HSBC bank.
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Example: Every company follows different cultures and thus, the people of UK will have
different aspects than people of Germany. They may not understand the languages spoken by
them. Therefore, there can be conflicts or misunderstanding because of these aspects.
Hofstede’s model
There are various important aspects of this model as it helps in solving cultural
differences which arise in the business organisations. As the technology is growing, it has
brought people altogether who belong to different cultures and performing business operations
along with understanding what other people want to say that as they are speaking different
languages. This is very interesting as there are many opportunities to learn, speak various
languages as well as cultures but this can be confusing & frustrating when they are trying to
understand something but fail to do so.
This is the model which was developed by Geert Hofstede and he has done various
researches in order to know about various cultural dimensions that have been analysed all around
the world. The people from various countries are coming together and doing the same type of
work connected at one business organisation. They are mainly focused on collecting the
information linked with cultural aspects and had analysed all the finding about the collected data.
There are mainly four types of dimensions that were valuable in making differences about
various cultures. After this, another fifth module was added and studied in the present scenario
(Bolman and Deal, 2017).
The four dimensions of the models are described as:
Power/Distance: It describes the degree of inequalities that are developing among the
people they can be related with power aspects or may not. If the powers are high than it shows
that they members of the society are accepting inequality in distribution of powers and they have
analysed their places which are made for them in the whole systems. Whereas lower power
factor states that powers are shared equally among all the members of the society and each
persons see there own self as equal.
Applications: According to this model, if there is High Power Distance in the UK and
Germany then the reports which are related with these aspects are sent to higher authorities and
then they are conducting meetings about this reports only with few selected leaders and there
decisions had to be followed.
PD Characteristics Solutions/Tips
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High PD When are companies are
centralised, there is gap in
compensation, respect and
authorities which are given to
people and stronger hierarchy.
Acknowledging the power of
leaders. It had to be kept in
mind that we had to to the
higher level authorities for
getting the correct answers.
Lower PD It is mostly seen in flatter
organisations and there, all the
supervisors and the employees
are treated equally in all
aspects (Willmott, 2012).
There should be focus on
developing teams in order to
achieve positive results. In the
decision making process, large
number of people should be
involved so that new and
innovative ideas can be
developed in order to solve the
problem.
Individualism (IDV): It is described as bounding which are developed among the
people in business organisations. If there is high IDV, it implies that there is loosing connections
among the people of community. Higher IDV implies that they are lacking in making
connections and the responsibilities shared among them are very little among family members
and they have very less close friends who are doing the business operations. The society where
there is lower IDV scores than they are mostly chances of group togetherness this helps in
building loyalty and mutual trust among all the group members. The group members are very
large and people are involved in taking responsibilities for each other so that their working can
be carried out in an effective way (Pyrczak, 2016).
Applications: This models analyses that in the Central American countries, scores of
IDV are seen very lower. A marketing campaign is conducted in order to analyse all the benefits
that community will get or if there are involved in the political movements than they can can
easily understand there future results or consequences.
German people had established good ties among themselves in order to achieve growth
so that they can work well in positive working environment.
IDV Characteristics Solutions/Tips
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High IDV It is valued on the basis of time
which is taken by people and
there are having needs to get
freedom for there life.
They fell happy to face all the
challenges and in turn expect
rewards for there work. They
respects the aspects which are
linked with privacy (Boykoff,
2011).
Complete all the task on time.
There should not be any
emphasis on the aspects of
personal informations.
Encourage to participate in the
debate and express the ideas in
there own ways.
Lower IDV It is focused on building skills
so that they can become
perfect in doing anything
which is given to them. They
are always working to get
those rewards which are
intrinsic. They feel that
harmony is more vital to them
than factors which are linked
with honesty.
They always show respect for
attaining wisdom. All the
feelings and emotions are
working together in harmony.
All the traditions should be
given with respect and the
changes or modifications
should be introduced slowly.
Masculinity (MAS)
It is described as the way in which a society strikes or gain values as well as traditional
roles which are played by male and female members. Higher MAS is found in those countries
where they have expectations from men to be hard, provider and also assertive. If any of the
woman is going to work out from their homes then they are having different professional from
there husbands. While low MAS does not reverse the role of genders , there roles are simply
blurred. But as the economy is growing, all men and women are working together in there
professionalism. Men are seen as sensitive while women had to work hard in order to gain
success in there workings.
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Application: Japanese are more masculine and in there comparison with japan, UK and
China has the lowest values to be measured. According to this model if there is any need to
establish new office in Japan than success has to gathered in order to appoint male candidates
who can easily lead the team in strong ways. While in UK gender does not matter they are
appointing people on the basis of there skills and abilities (Conner and et. al., 2014).
MAS Characteristics Solutions/Tips
Higher MAS Men are called as masculine
while females are referred as
feminine. There is difference
between the abilities of men
and women work (Wolfsfeld,
2011).
People are having expecting
that roles of males and females
are different.
They should avoid all the
decisions which are based on
any persons emotions.
Lower MAS Men and women can do the
same type of work and they
are not different in any aspect.
All the women which are
powerful are given respect and
dignity.
Avoid all the mentality which
are related with old boys clubs.
The job designs practices
cannot be discriminated with
any of the gender. Thus all the
men and women should be
treated equally in all aspects.
Uncertainty/ avoidance Index (UAI)
It is linked with the degree of anxiety which the society members have feeling in
uncertain situations. In High UAI all the people of the nations try to avoid the situations when
ever it is possible. They have to follow all the rules and regulations. While lower UAI reflects
that society members are enjoying the novel events and they have to use the differences in their
valuable events. There are less plans and policies and people are forced to analyse there own
truth (Schutt, 2012).
Application: This model states that if any of the projects are to be discussed with the
people of Belgium that research had to be conducted on various aspects and than the choices
have to be reflected but detailed study had to be made on risk planning and contingent factors.
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UAI Characteristics Solutions/Tips
Higher UAI The business are carried out in
very formal ways by applying
various rules and regulations.
They need all those structures
which are expect. They are
nervous at higher scales in
showing there emptions. All
the differences are to be
avoided (Kornberger, 2015).
Every person should be clear
about their expectations and
needs. Planning about
communication and long term
goals should be effective and
they should be concerned
about the tactical aspects.
All emotions can be expressed
with the help of raising their
voices and movements of
hands.
Lower UAI They are having informal
attitude towards the business.
They believe in applying long
term plans and strategies than
reflecting what is happening in
there daily life. They accept all
the changes in a friendly way.
There should be no rules which
had to be imposed forcefully.
All the situations should be
analysed and then a person
should give his view. If
difference are to be discovered
than they should show concern
and courtesy for that.
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All these models can be applied to the team in order to check efficiency level by which
people are doing work. These models are valuable in removing all the differences that are faced
by men and women in business. Hence, all the persons are equal in every aspect and thus, they
should be treated equally. All the people should help each other in there working and they should
not show cooperation in order to perform their business operations in an effective way.
(Source: Hosftede Model, 2017)
From the above graph it can be concluded that Germany is highly long term
oriented while comparison are made with UK. After this they have achieved growth in
Individualism as they have trust respect for each other in performing there business activities.
People of Germany are showing concern for the partners in there business and thus they are
helping them to carry out the work in desired time frames and achieve targets.
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Illustration 1: Comparison Chart

(Source: Hosftede Model, 2017)
The above graph reflects that comparison are made with UK and China in which China
have achieved growth in there long term orientation programmes as compared to UK. China
have the lowest share in Individualism as they does not believe in showing respect for any
persons. China people does not believe in making strong relations with any people.
Reasons for cross cultural training and development:
There are various reasons for conducting cross culture training and development which
are described as:
 Helps employees to get familiar with the working environment and so, they have an idea
in order to achieve their goals and targets.
 Getting knowledge about various types of cultures which are followed in that country.
 Understanding the language that people speak so that they can easily communicate with
their clients.
 Development of positive working environment at workplace.
 It is very useful in developing confidence among the new employees so that they can
easily make themselves feel comfortable in the crowd (Pitsis, 2015).
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Illustration 2: Comparison Chart