Cultural Diversity Management in NBK's International Expansion

This report provides an in-depth analysis of the cultural aspects influencing the international operations of the National Bank of Kuwait (NBK), with a specific focus on its UK subsidiary. It explores the cultural elements impacting organizational performance, comparing the cultural differences between Kuwait and the UK, including aspects of hierarchy, staffing, motivation, and leadership. The report highlights the challenges of managing a multinational workforce, emphasizing the importance of understanding cultural nuances to enhance employee motivation and customer satisfaction. It examines the organizational differences, including individualism versus collectivism, power distance, and masculinity versus femininity, to provide recommendations for effective cross-cultural management and international expansion strategies. The report concludes with recommendations for the NBK to optimize its international growth potential by addressing the cultural differences and adapting its strategies to suit the needs of its diverse customer base.

Running head: MANAGING CULTURAL DIVERSITY
MANAGING CULTURAL DIVERSITY
Name of the Student
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Abstract
The study is focused on evaluating the prospects for multi-national and multi-cultural
characteristics of the National bank of Kuwait in its international operations. The study has
found some important elements related to the cultural aspects that affect the operations of the
organization. The cultures of Kuwait and the UK have been compared to gain better
understanding of organizational workings.

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Table of Contents
Abstract............................................................................................................................................1
Introduction......................................................................................................................................3
Organization overview and project..................................................................................................3
Cultural elements.............................................................................................................................4
Country culture differences.............................................................................................................5
Inclusive analysis of organizational differences..............................................................................6
Home organizational culture and branch organizational culture.....................................................8
Culture analysis...............................................................................................................................9
Conclusion and recommendation..................................................................................................10
References......................................................................................................................................11

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Introduction
The study is focused on evaluating the cultural aspects that are connected with the
development of multi-national organizations. The focus is on analyzing and understanding the
cross-boundary challenges that a specific organization faces or can face in the future. The
selected organization for the study is The National Bank of Kuwait (NBK). The culture of
Kuwait has been taken into consideration for gathering the essential implications of the study.
The multinational business challenge of operating its operations in the UK subsidiary of the
National Bank of Kuwait PLC is considered as the main focus of the report. Culture becomes
one of the main aspects that need to be considered while operating cross-border businesses. One
of the challenges of operating a subsidiary in the United Kingdom is tackling the challenges of
organizational culture that can arise due to the cultural differences of the two countries. The
organization can face the critical challenge of maintaining multi-cultural and multi-national
characteristics of this organization in the international operations. The project team would be
vested with the responsibility of expanding the organization in the UK. The British workforces
might not be familiar or comfortable with the organizational culture that exists in Kuwait. This
can led to the failure of future projects if proper actions are not taken to tackle the challenges that
can result from the existing cultural differences. Hence, a major challenge that the organization
faces is working with the multinational employees in the UK. Employee motivation can lead to
greater customer satisfaction and in turn lead to greater productivity and performance for the
NBK.
Organization overview and project
The project being selected for the study is in regards to opening new branches of the
NBK in the UK. In regards to the same, the multinational and multicultural characteristics of the
organization in its international operations needs to be analyzed. It is important to understand the
background of the organization in order to understand more about the multicultural and
multinational aspects that affect its organizational culture. The multicultural nature of the
company needs to be backed by strong and effective cross-cultural management that focuses on
enhancing the performance of the organization concerning diversity management. A
multinational entity like the National bank of Kuwait needs to consider several cultural factors
that can affect its business operations across the globe. Some of the major issues that the

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organization faces are in regards to the organizational culture that varies between the
organization and its subsidiaries at various parts of the world.
The UK culture and the culture of Kuwait vary very much in terms of professionalism
and work attitude. These are not the only differentiating factors and these countries have various
cultural differences that can affect their external and internal business functions. The NBK group
has started to provide more emphasis on managing diversity and multiculturalism. The
organization is rooted in the Arabic culture. The National Bank of Kuwait was formed in 1952 as
the first local and Shareholding Company in both Kuwait and the Persian Gulf. The NBK was
formed to cater to the financial and banking needs of the local population of Kuwait. The current
profits of the organization exceed 898 million USD (Ltd, 2020). The company has a growth rate
of 14.3%. In Kuwait, it is the largest financial institution. In the country, the NBK has 68
branches. It operates more than 143 branches worldwide.
The company has created an international advisory board to facilitate its international
business decision making. The advisory board was established in 2007. The current chairman of
the organization is Nasser Musaed Abdulla Al Sayer. The project can be focused towards the
development of the organization’s operations in the UK. This is also much important for the
development of the multicultural prospects of the organization. This can help to better organize
the organizational standards of the Bank to meet the requirements of the growing international
customer base. In essence, the organization needs to optimize its international growth potential
through catering to the more western oriented customers. International joint venture and fully
owned subsidiaries are some of the important entry strategy alternatives.
Cultural elements
The multinational and multicultural characteristics of the organization in its international
operations is the focus of the study. In regards to the same, the cultural elements that determine
the performance of the organization become very important. As mentioned above the principal
cultural background of the organization is Kuwaiti. Hence, there is a strong Arabic influence in
the work that takes place in the organization. There are some key cultural elements that need to
be considered in order for the organization to expand further in the UK.

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An important cultural element that needs to be considered is organizational hierarchy. In
the Arabian based business operations, the focus is on maintaining strict organizational
hierarchies. The more experienced and older leaders are given positions that are at the top of the
ladder. According to Al-Hashemi (2016) the vision of the experienced leaders are given utmost
importance in Kuwait. Hierarchy is hence one of the important areas of culture that needs to be
focused on while developing multinational and multicultural characteristics to optimize its
international operations.
Another key cultural element that is connected with the international expansion of the
organization is staffing. The organization needs to develop a more polycentric approach towards
staffing rather than the present ethnocentric approach. This would enhance the developmental
prospects of its international operations. In a polycentric approach, the staffing is done on the
cultural basis of multinational strategies (Korzilius, Bücker & Beerlage, 2017). The focus in on
recruiting more host-country nationals. This is a very important expansion strategy as a parent
country based staffing approach can hamper the organizations growth in the UK. A stronger
staffing mechanism is needed wherein all the members of the organization can come from the
host county and contribute towards developing a multicultural employee base.
A very important cultural factor is motivation and leading. Cultural motivation is an
important aspect that needs to be considered for expansion of business. In this regards, the
complexities of the variables that are involved in motivation and leadership in cross-cultural
settings need to be given more importance. Cultural leadership is important as the essential
aspects that are related to cross-cultural motivation, management and communication can be
addressed through a strong cultural leadership. Motivation is a related cultural aspect that needs
to be considered much importantly. The employees in the UK will not be motivated by the same
factors that can greatly motivated the employees that are working in Kuwait. The meaning of
work varies greatly between different cultures. The most important variables are needed income,
satisfaction, contacts, serving society, means of keeping occupied and prestige.
Country culture differences
The two main countries in question here are Kuwait and the UK. There are various
differences that exist between the cultures of Kuwait and the UK. The cultural contexts are based
on the organizational functions that are present for companies that work within these countries.

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There is a need to address the cultural elements that make up the cultural frame of mind of the
employees that work for the various organizations in these two countries. According to White &
Alkandari (2019) Kuwait is an Islamic country and the cultural aspects that govern the society
are greatly Islamic in nature. The focus is more on communal unity and helping the fellow
Muslims in achieving their goals. Hence, the culture that is followed is that of collective
development.
This is reflected in the organizational mindset of the employees of the National Bank of
Kuwait. The Islamic way of life dominates the cultural aspects of Kuwait. The employees of the
organization in the country adhere to their religious beliefs strictly apart from engaging in their
daily work oriented activities. Dress codes are very strictly followed in the country. This also
extends to businesses and corporate lifestyles. Covering the body is important for both men and
women. Provocative dresses are not allowed. The general attitude of the employees as well as the
common people are friendly and inviting (Arditi, Nayak & Damci, 2017). Arabic traditional
dresses are dominantly worn at all places including offices. The people need to be given full
respect while addressing them. The usage of short form of the names is strictly prohibited in
business areas. At all times, the rulers of Kuwait need to be given respect.
The UK culture is vastly different from the traditional predominantly Arabic culture of
Kuwait. In the UK the western way of life is given more prominence. At the same time, the UK
is a liberal multi-cultural country. English is the common language and the most widely used
language across the UK Businesses. However, there are a number of other widely spoken
languages in the social sphere like Polish, Gaelic, Punjabi, Gujarati and Bengali due to the large
number of people present from vastly different cultures. The business culture of the country is
highly individualistic. There is not much restriction on the attire of the people. However, formal
attires are must for business purposes. This include shirts, trousers, skirts and other formal
attires. People generally do not like to interfere in the lives of others. Privacy is well respected
across the business and social spheres of the country.
Inclusive analysis of organizational differences
The organizational cultural differences need to be discussed essentially at this point. The
business oriented differences of the people are large in the two countries.

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The power distance aspects are more for the UK than Kuwait. The UK is a more
individualistic country than Kuwait. In terms of masculinity or femininity, the UK has a more
masculine and Kuwait has a more feminine culture. The Kuwaitis rank more in terms of
uncertainty avoidance.
Individualism or Collectivism refers to the extent to which interdependence is maintained
in a society among the members. The self-image of the people in this case vary between being
defined as in terms of ‘I’ or ‘we’. In case of Kuwait, it can be said that a collectivist
organizational mindset is present among the workers. They prefer to perform in groups and the
goals are more group focused than individual (Beugelsdijk & Welzel, 2018). Loyalty and
relationships are more important in Kuwaiti organizations. In consideration of the UK culture, it
can be said that it is more individualistic. The target set for the workers are individual in nature.
The predominant culture is to mind the private tasks without much help from the other members.
Individual motivations rank higher than group motivations.
The hierarchies of the Kuwaiti organizations are strict and the power distance factor is
more. Centralization of power is more popular in the Kuwait based organizations. The leadership
is more or less autocratic and the subordinates are engaged lesser in the decision making process.
In regards to the UK, the power distance is much lesser. There is an environment of fair play in
the country. There is a focus towards maintaining equality in the internal business processes.
The Kuwaiti organizational culture can be said to be more feminine than the UK culture.
The Kuwaiti organizational culture is feminine, indicating that the organizational culture is based
on the values of caring for others and life quality. It more about liking the work that is done. The
UK is a masculine society. The individuals are growth and goal oriented. People have clear
career goals and career objectives (Saleem & Larimo, 2017). They tend to go for performances
that can help them to improve their way of life.
Kuwait ranks much higher in regard to uncertainty avoidance. This means that the
country has a business environment where risk taking is not generally encouraged. The members
of any business team want to avoid uncertainty. The people are more intolerant of any
unorthodox behavior. Innovativeness is not valued much. The UK has a very low uncertainty
avoidance. Here, people are focused more on changing as per the business situations. This

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contributes to the development of more tolerance for ambiguous situations. It is important that
the organization focus on values that are innovative and flexible.
Home organizational culture and branch organizational culture
The home organization culture, as revealed through the interview was found to be very
rigid and hierarchical. The manger from the Kuwaiti branch of NBK was found to be more
inclined towards leading his team collectively. The interview further revealed that the focus is
more on serving people the right way and giving more importance towards the development of
relationships. These included relationships that were to be established externally with the clients
as well as the relationships that needed to be established among the people of the organization. It
was revealed that the group sessions focused on helping others in their works and leading the
junior members towards better understanding their job roles.
Further, the second interview of the senior employee at the Kuwaiti organization revealed
that the members had to follow the orders of the management strictly. There was not much scope
for any negotiation. At the same time the employee revealed that there was in general very good
respect for the senior employees as well as the senior management. There was always a focus on
avoiding conflicts at the office premises. The employees were to perform collectively and the
welfare of the customers were to be provided prime importance. This is important as it further
shows the collectivist mindset of the home branch.
The interview of the manager from the subsidiary UK branch revealed that the employees
were much more individualistic. The cultural aspects were more inclined towards individual
contribution to teams. The employees had clear ambitions to climb up the corporate ladder. The
employees in this case were focused more on maintaining the business processes rather than
collective efforts towards customer welfare. The interview further revealed that the employees
belonged to different cultural backgrounds and they were focused towards maintaining an
inclusive work environment.
The interview revealed that work environment is very important to develop strong
operational standards (Dhir, 2019). The operational standards of working was revealed to be very
important in terms of the expansion of various organizations to newer markets. In regards to the

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same it was further revealed that there was a significant difference between the working
standards in Kuwait and the culture in the UK.
Culture analysis
The analysis of the culture of the two organizations reveal that culture plays an important
role in organizations. The productivity of organizations are very much based on the cultural
factors that affect them. It was seen that the Kuwaiti culture was that of collectivism and welfare.
On the other hand the UK subsidiary revealed a more individualistic culture. The centralization
of power in collectivist cultures become easier as they can be well maintained through the
hierarchical structures that are created. However, with regards to individualistic cultures it
becomes difficult to maintain an effective setup for centralized systems. The organizational
development can be hampered and this leads to the ineffective management of organization at
times. At this point in time it is important that effective management of the organization is
developed through greater emphasis on the development of systems that can contribute to the
creation of better cultures.
An important cultural element that needs to be considered is organizational hierarchy. In
the Arabian based business operations, the focus is on maintaining strict organizational
hierarchies. The more experienced and older leaders are given positions that are at the top of the
ladder. Another key cultural element that is connected with the international expansion of the
organization is staffing. The organization needs to develop a more polycentric approach towards
staffing rather than the present ethnocentric approach. This would enhance the developmental
prospects of its international operations. A very important cultural factor is motivation and
leading. Cultural motivation is an important aspect that needs to be considered for expansion of
business. In this regards, the complexities of the variables that are involved in motivation and
leadership in cross-cultural settings need to be given more importance. All these three factors
were found to be very important in determining the organizational culture of the organization.
It is important to understand that the differences in cultures contribute towards the
performance motives of the organizations. In this case the culture of Kuwait can be more aligned
with the culture of the country and provide greater productivity onsite. However, the subsidiary
branch might not be able to perform better due to the confusion that arises between the home

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branch management and the subsidiary branch management. This ensuing confusion can lead to
the occurrence of issues leading to lack of growth.
Conclusion and recommendation
The implications derived from the study points towards the fact that there needs to be a
strong cultural assimilation if the NBK wants to expand further into the western markets. In
regards to the same it becomes very important that the organization pays much importance to the
development of effective organizational culture in its subsidiary branches. In essence, there is a
need to develop strategies that incorporate multi-national and multicultural operations. It
becomes more important that the cultural contexts are maintained essentially to develop a
stronger and more effective organizational environment. The value of development needs to be
respected among both the home and the subsidiary branch. The development of the organization
needs to consider the cultural factors more than the other factors that can affect the development.
Firstly, it is highly recommended that strong cross-cultural communication is maintained
throughout the organization. Moreover, it becomes further important that the leadership is
optimized in order to incorporate more cross-cultural values among the members.
Secondly, it becomes important that an effective culture based strategy for expansion in
the UK market is set. This would also include host country staffing systems. The focus should
always be on the development of an inclusive workspace. This would ensure the better
management of the cultural aspects.
Thirdly, it becomes important that the leadership of the organization is optimized in order
to incorporate the right values among the teams and the organization. The organizational
hierarchies need to be made more flexible. A decentralized decision making system would be
more effective in determining success.

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References
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