H&M: Cultural Differences Impact on International Business Operations

This report examines the challenges H&M faced due to cultural differences, focusing on the advertising campaign that sparked controversy. It analyzes the cultural shock experienced by the company, highlighting the differences between Swedish and American cultural contexts. The report delves into the impact of cultural identity on organizations, emphasizing the importance of human resource management in cross-cultural settings. It discusses strategies for overcoming cultural barriers, including clear communication, cultural awareness, and respect for differences. Furthermore, the report explores the political, ethical, and legal aspects of international business, emphasizing the need for a strong social mission. The analysis underscores the importance of understanding cultural nuances to avoid misunderstandings and ensure successful global operations, particularly when considering differences between Sweden and the United States. This report, available on Desklib, provides a comprehensive understanding of the complexities of managing across cultures in a global business environment.

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MANAGING ACROSS CULTURES
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Abstract
This study focuses on the fashion retain company H&M. The company was recently faced with a
challenge evolved from the culture difference. The present study represents the reasons that
made possible the mistakes with the analysis of cultural difference between the Sweden and
united state. The report represents an analysis of the cultural difference and its impact that has
been the cause that the company faced. The concepts of cultural shock, cultural identity and its
impact, the relation between human resource management and cultural organization are the
aspects discussed to make the analysis meaningful.

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MANAGING ACROSS CULTURES
The term ‘culture’ has never been easy to define since it is simple as well as complex in
its own way. Culture is a way of life, includes values, norms, beliefs, customs, food habits,
language and traditions (Birukou et al., 2013). Although culture varies from place to place and
time to time the existence of culture is inevitable since the inception of human life. Culture plays
a significant role in humankind, therefore, people have developed high priority and sensibility
towards their own culture (Duncan & Ley, 2013). Culture is a vital factor that needs attention as
it can build as well as ruin a company. In this contemporary era, companies will travel far from
own land to expand and grow. The first H & M store was opened in the year 1947 by the
Swedish entrepreneur Erling Persson in Västerås, Sweden (Santos, 2015). The company was
soon popular with its unique style of clothing for women, men and kids. With its rapid growth, it
started its expansion to international boundaries and had worked successfully until today. The
problem that arose was when the global brand recently took out an advertisement campaign that
has offended consumers around the world. The reason the brand has sparked a good deal of
anger is the way the advertising campaign was considered blatantly racist. It happened to be a
culture shock for H&M as it is a Swedish brand and coming from different cultural history than
the United state. Thesis statement
Culture Shock:
A complete state of confusion with the feeling of uncertainty and anxiety that is
experienced by people when visiting a place that differs from their land is considered as culture
shock (Jack, 2014). Often in business when the company wants to expand beyond their home
countries when the company is faced with such confusion or uncertainty about culture, it is the

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company experiences the culture shock (Presbitero, 2016). The culture shock may occur due to
unfamiliarity with the local customs, behaviour, values, norms and languages as the culture of
different places and societies are different. In the current issue of H&M, the brand uses a young
black boy to model a hoodie that says “coolest monkey in the jungle”. The usage of a black child
in the advertisement portrayed racism according to the people of the united state. The Swedish
company was having a different history than the United state in the sphere of the race, and
therefore it was the cultural shock and ignorance of the brand.
Cultural Identity Impact On An Organization
The organisational culture has an important role to play in companies. The purpose it
serves is incorporating the mission of the company and shaping the vision. Management
researchers have confirmed firmly the importance of culture for the growth and stability of any
organization. It is important for leaders, employees and for the company’s atmosphere
(Hornstein, 2015). United state is a state with a history of diversity with people of different
ethnicities. United state has been referred to as the ‘melting pot’ where traditions and customs
from different races and ethnicities have blended and lost their distinctions over time
(Cunningham & Alhabash, 2015). The culture of the united state is influenced by a multicultural
ethos that includes Native American, African, Latin American, Asian, Polynesian people and
their diverse culture. Due to large-scale migration, the state is ethnically and racially diverse
country. It is a vital job for any organisation amidst different cultures to consider the cultural
aspects. The united state and Sweden has a long history of racist culture (Ekman, 2014).
However, the multicultural country is intolerable to such racist actions. Racist depiction and
racism against black people are very common in Sweden whereas in united state there is an on-

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going struggle fighting against racism. The difference in the culture of accepting the racism has
made the company face the circumstances.
Human Resources And The Cross-Cultural Organization:
The process of managing people in an organisation in a structured and organised manner
is called human resource management. The process is an effective way of handling people
through innovative and creative approaches that would help efficiently running the organisation.
The work culture is developed by the human resources department of the organisation where
they play the vital role in bringing the best out of employees and developing a trait of loyalty for
the organisation. Interaction and communication are essential in today’s global expansion of
companies, and it has become necessary for many workers around the world. The pressure of
finding employees that are not only professionally strong but also culturally perspective.
Employees having crucial intercultural skills can understand the cultural differences, depict
different cultural context and demonstrate respect for other culture.
Similarly, H&M needs to develop on the human resources that will understand the cultural
identity the place where the company determined to work. Change in the workforce to bring a
cross-culture atmosphere would have understood the impact of the advertisement on the US
culture and prevented the company from the damage. Lacking the culture perspective team in the
organisation is one of the primary reasons that damaged the company’s reputation.
Overcoming Cross Cultural Barriers (Language, Education, And Training)
As business targets to operate in different countries, it requires particular attention in its
marketing and managing structure to make workplace diverse. Diversity is inevitable to come

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across for any company operating overseas. Communication is the essential constituents of the
progress of any business and culture manipulate discussion as it is a powerful tool in bringing
companies as well as make rivals. Cultural barriers can create an obstacle for conducting the
successful communication. Cultural barriers are the challenges that the organisation face while
interacting with a different culture that has a different set of belief, use different language, use
different gesture to indicate non-verbal communication. The strategies that H&M would require
to overcome the cross-cultural barriers are as follows:
• Clear and polite communication: the initial step of overcoming the obstacles is the clear and
polite communication. The first conversation is not necessarily needed depth. More using of
simpler lines, formal sentences and gestures help in building the business relationship on good
terms.
• Pre-learning the client’s culture: learning the client’s culture gives cultural insights and helps
in to understand the perspective of client and customers.
• Promoting the appreciation of cultural differences: people are always enthusiastic about own
cultures and seeing own culture getting recognised with higher identity makes culture happy.
Promoting the culture differences and showing high respect to the other culture helps to achieve
happy customer.
• Building self-awareness: while operating a successful business in a country apart from the
home country needs severe awareness about the cultural aspects, essential dates, festivals and
other occasions.

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• Avoiding stereotyping: avoiding stereotypes and improper stigma helps in adapting to
different cultures. The openness to the new cultural insight is a significant trait of good cross-
cultural organisation.
• Respecting cultural differences: one mandatory feature of the companies that have successful
cross-cultural workforce is the respecting of cultural differences.
Crossing The Borders
While the expansion of business is absolutely necessary for successful growth, it is also
required to compare the cultures of the home country and the target country to avoid any cultural
disputes. Sweden, the home country of H&M has a low score on the power dimension which
interprets Sweden as independent and has a hierarchy for convenience. Unlike the USA, where
the less powerful members of the organisation expect and accept that power is distributed
unequally, in Sweden is the employees are anticipated to be consulted. USA has a low score in
power distance and a very score of individuality which makes the USA a country of liberty and
justice for all (Lin, Wang & Chen, 2013). This feature makes the USA a state where the unequal
treatment is not accepted, and people can openly voice their opinion. The Americans are slightly
on the masculine side which is a vastly different trait than Sweden. Americans are derived by
competition where the Swedish culture believes in liking what they do. The uncertainty of
avoidance rate America is found higher than in Sweden, making Sweden a country that is more
relaxed by nature in an uncertain situation. Sweden is also open to the ideas and tries different
methods of achieving success, however, when the methods do not work for them, they are happy
to abandon or change them. The United state has a very low score in the long-term orientation
which makes the country adapting to social change and views social changes as a positive move,

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unlike Sweden where the long-term orientation has a high score that makes Sweden a state where
the traditional values play an important role. The indulgence level of Sweden is high that
indicates that Swedish culture exhibit a willingness to realise their impulses and desires when it
comes to enjoying life and having fun. The American culture scores little lesser than Sweden,
that makes itself a country that believes in hard work at the same enjoying life.
Cross Culture And International Business:
Politics: Many external factors are present in a state that needs to be considered when companies
aim for international business with cross culture. The political aspects consider the political
decisions that may affect the economy, socio-cultural environment, emergence of new
technology and acceptance of new technologies (Silverstone, 2017). With a stable political
environment, advanced technology and infrastructure the state has attracted many foreign direct
investments. One of them is H&M that has been in the USA. However, the USA promotes
democracy around the world and therefore, the people have the right to object to any act that is
felt offensive.
Ethics: Ethics refer to the accepted principles considered either right or wrong (Bednarz, 2013).
Ethics govern the conduct of a person, actions of the organisation and the members of a
profession. A certain act can be identified ethical in one society and unethical in another society.
There are explicit and implicit types of ethical code. The implicit is unwritten but well
understood, and the exact system of ethics is the written policy that specifies the ethical and
unethical behaviour explicitly. It includes employee behaviour, hiring practices, business
direction and cultural differences. In the present situation, it is an implicit code of ethics to use
the black kid for the promotion of the ‘coolest monkey in the jungle’ t-shirt. The advertisement

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displays a racist attitude that is unacceptable in the United States where the state has a major
culture identity of black people.
Legal: Legal issues consist of the set of laws that dictates about the activities that are wrong
(Policy, 2016). Any events that will go against the set of laws prescribed by the state or
government will result in a punishable offence. The laws can be in regards to financial, safety,
discrimination or bribery.
Cross-Cultural Organizations And The Social Mission:
Social mission helps in bringing purpose and defines how a business will engage with its
customers, employees, stakeholders and other people related to it (Dees, 2017). Serving a certain
kind of social mission can be empowering and also helps in demonstrating the business well.
Similarly, H&M has some corporate social responsibility. The company is committed to
sustainability for a very long time. The company is known for using renewable and sustainably
sourced materials. It has been contributing to help create fewer pollutions and cause less damage
to the environment.
Future Challenges And Trends:
The H&M group is moving to become the sustainable fashion brand (Turker & Altuntas,
2014). However, there are other companies as well who are coming up with similar as well as
better ideas. Although at present H&M is not affected by cultural obstacles after apologies to the
audiences, it is facing some other problems. Increase in competitions is one of the main reasons
for the Swedish company to not perform well. The company has 4500 physical outlets across the

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globe and decides to open more 390 while closing 170 outlets. The company is in severe need to
come up with innovative ideas to retain its customers.
Conclusion
During the research on H&M it is discovered that the business is family operated, the first
store that opened was just for woman, and also all of its top management including the board are
all Caucasian. Their marketing techniques are not diverse at all when the website is visited its
geared towards one culture and the designers featured in the origin store are not culturally
diverse. The question arises if the company is intentionally trying to leave specific culture groups
out. The majority of their clothing is made in Asia in a sweatshop where a high rate of sexual
harassment is found and the wages are extremely low. The company wastes a large amount of
textile and they have been involved in many incidents surrounding Racism or Cultural
insensitivity.
Prior to the research and the incident with the Monkey sweatshirt, H&M was assumed as a fairly
priced retail store to find clothing for every occasion. Also, it was assumed that the founder was
Caucasian but the store origin country was the United States. With the store being so popular
and also having a popular parent store Zara; it was not expected that the company manufactured
clothing outside of a sweatshop. Racism existing in the organisation was not assumed, and the
company produced clothing for all culture. However, after the research, the top manager is
believed to be non-diverse, and the company does not cater to the diverse client base including
the marketing team as insensitive to the different cultures of the customers. The only aim of the
company is to generate revenue and not the well-being of the employee which concludes that the
company will start to phase out of specific communities due to the merchandising choices.

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