Ola Cabs: A Report on Expanding Business Operations in China

This report examines Ola Cabs' expansion strategy into the Chinese market, addressing country-specific factors like China's perception of Indian companies, regulatory environment, and cyber-attack threats, as well as industry-specific factors such as competition and technology differences. It analyzes the cultural factors that influence the expansion, including language, Chinese identity, and safety regulations. The report also addresses cross-cultural factors, such as power distance, individualism versus collectivism, masculinity, uncertainty avoidance, and long-term orientation. It outlines steps for effective negotiation and cross-cultural communication, including preparation, defining ground rules, clarification, bargaining, and closure. Furthermore, it discusses how HRM practices of the two nations can be merged or adjusted. Finally, it identifies three significant cultural challenges and provides a conclusion based on the analysis.

WORKING ACROSS
CULTURES

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Contents
Introduction................................................................................................................................1
Country specific factors.............................................................................................................1
Industry specific factors.............................................................................................................2
Cultural factors that needs attention...........................................................................................2
Cross cultural factors..................................................................................................................3
Steps undertaken to facilitate effective negotiation, inter and intra cultural communication....3
HRM practices of the two nations can be merged or adjusted...................................................4
Three most significant cultural challenges.................................................................................4
Engaging the board to make an investment decisions...............................................................5
Conclusion..................................................................................................................................5
References..................................................................................................................................6

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Introduction
Many companies from the emerging countries are moving into new nations in search of new
customer sets. This has allowed people the firms to manage and generate new revenue
sources. This is also essential for the firms in terms of the fact that competition in industries
have increased and firms need to make sure that they have a plan for ensuring their growth
however cross-border expansion is not so smooth (Hedley, 2019). It is critical to merge the
HRM practices of two nations so as to have standardisation in the company’s norms. Ola cabs
is a transportation network company that offers services including ride sharing hailing, food
delivery, taxi and peer-to-peer ridesharing. This company is created by ANI Technologies
Pvt. Ltd. and was valued to approx. $6.2 billion. Till now this firm is operational in Australia,
New Zealand and UK. This report is going to highlight the country specific factor and the
industry specific factor that is going to have impact on the expansion plans of Ola in China.
Cultural and cross-cultural factors differences between the home and host country influences
the firm’s ability to make quick expansion. It also underlines the ways in which cross-cultural
barriers could be treated along with the ways in which HRM practices of the two nations can
be merged or adjusted. It also defines the three major cultural challenges that could be faced
by Ola while expanding into China.
Country specific factors
There are certain country specific factors which is having influence on the expansion project.
These are:
 Chinese approach towards Indian companies: It is seen that Chinese people considers
India as a rival country hence the perception about the Indian companies is not so
good. This will have impact on the pace of the expansion of Ola.
 Regulatory environment: Chinese government has imposed a harsh regulatory
environment which is not allowing firms to deal with the business decision making in
their own manner. The Chinese government policies are such that it favours the
companies that are from China.
 Complex bureaucracy: Bureaucracy in China is too complex and it is not allowing the
firms to make fast policies. The challenge related to corruption is much bigger
headache for the companies that aim to expand in this country however this company
had spent a lot of their time in dealing with such issues in India. This might increase

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the overall cost of expansion in any country (Ardichvili, Jondle, Kowske,
Cornachione, Li & Thakadipuram, 2012).
 Cyber-attacks: It is seen that China is a part of those countries where cyber-attacks is
too common. Hackers are creating threats related to data privacy and security which
again is a concern for the companies.
 Trade war: Trade war between China and U.S. is on the higher side. This
enhancement in the trade war has impact on the business climate in China. This is
making it difficult for the companies to make investments in China. This is also true
in terms of the fact that trade barriers are not allowing companies to arrange
international investors that could help a firm in arranging capital for expansion within
China (Ndubisi, 2011).
Industry specific factors
 Competition: China has huge competition in the transport network industry. This will
have impact on the way organisation is going to plan their expansion. This can be
understood by the fact that it is the competitors according to which companies have to
design their own expansion strategies (Minkov, 2011). Higher amount of competition
had also forced firms to make sure that they have sustainable growth plans.
 China specific technology: It is seen that China uses technology that is different from
other nations. This has allowed the firms to make sure that they also utilise their
technologies to do their business. For instance in marketing company needs to use the
social media apps that are allowed in China (Lunicheva, 2014). Since Facebook and
other social media apps are not used in the China.
 Labour cost: With the government policies implemented in China it was seen that
labour cost within the industry is on the higher side. This increase in the labour cost
will have impact on the penetration strategy of the company such as pricing.
Cultural factors that needs attention
Culture plays a significant role in the business expansion. Some of the cultural factors that
will have impact on the company’s expansion project are:
 Language and literature: In china there is use of Chinese language and literature
which will have impact on the way an organisation is dealing with the customers.
They will have to transform their business operations to Chinese language only so that

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they could have better relationship with their clients and can perform smoothly
(Nicholson & Salaber, 2013). Officials might need translators for interacting with the
employees and other stakeholders from China.
 Chinese identity: It is seen that people in China are highly connected to their own
culture and they prefer to give importance to the companies that are of Chinese origin.
This also goes true with the brand names that are given to the business as people get
connected with such companies easily. Since people have strong connection to their
own culture which has impact on the way an organisation is dealing with the culture
(Ong, 2013). It is also the fact that Chinese culture makes the country to be
relationship-oriented society.
 Reward oriented society: People get connected to the companies that provide more
rewards to the client. Offer centric culture within the firm has impact on the rewards
that is provided by the company (Moran, Abramson and Moran, 2014). This also
includes giving gifts and offers at the time of purchase which is able to attract more
numbers of people towards the business of Ola.
 Safety regulation: The safety concerns in China are high and this advanced safety
regulation requirements within the firm has impact on the way organisations like Ola
performs. If there is fault from the side of Ola then they will have to pay higher as
compensation to the Chinese people. For this it is also critical that Ola focus on giving
higher amount of training to the employees that can help them in providing better and
safe services to the customers (World Business Culture, 2019).
 Staffing consideration: Due to a different kind of cultural background in China
companies will have to make sure that they hire more people from within China. This
is critical for maintaining healthy relations with government but it is also critical for
dealing with small cultural aspects such as greeting each other and treating other
Chinese fellow.
Cross cultural factors
Companies have to face many cross-cultural challenges along with the fact there are certain
country specific and industry specific factors that also has impact on the expansion plans of
the firms. This will be much bigger problems for expatriate managers and employees that Ola
will send to China from India. Some of these challenges are:

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 Power Difference: There is not much difference in the power distance dimension in
the two nations which suggests that in both the nation people know that what
authorities are and what is their powers against taking decisions and the subordinates
also accepts the power.
 Collectivism and individualism: Chinese culture suggests that there is collectivist
culture within the firm and this has impact on the way an organisation is performing.
Since the companies that fail to adopt the culture of team-work might not be able to
achieve desired success. More collectivist society means there is requirement of being
more associated with stakeholders which is essential for the success in the society
while there is more individualist culture in India hence people prefer to work more for
personal rewards and benefits (Hennigs, et al. 2012).
 Masculinity: A higher score on the masculinity dimension suggests that people in
China still support masculine ideologies such as competition, success and
achievement. The value system in China is very strong as it continues throughout the
lifecycle of an individual. This also suggests that China is a workaholic society hence
the company will have to build the same culture in China also.
 Uncertainty avoidance: It is seen that in China people are ready to take risk and it is
also higher than that of India. Due to this Ola can make fast expansion in the country
with limited threats.
 Long term orientation: It is seen that China scores high on the long-term orientation.
This helps the company to make sure that they have long term plans for dealing with
the sustainability for which they can make better long term plans for the company.
People in China believe that there is pragmatic orientation within the firm hence they
are ready for any situation that might arise in the future (Hofstede Insights, 2019).
 Indulgence: In china there is lesser indulgence in which people try to control the
impulses and desires. This suggests the fact that companies will have to be more
socialised and the environment within the organisation needs to be more controlled.
However this is similar to India hence this will not be much bigger challenge for the
company.

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Steps undertaken to facilitate effective negotiation, inter and intra cultural
communication
The steps that can be undertaken to facilitate effective negotiation, inter and intra-cultural
communication are:
 Prepare and plan: In order to effectively negotiate and doing inter and intra-cultural
communication it is critical that there is preparation and pre-planning that could help
the company to interact with the people from different cultural backgrounds.
 Defining ground rules: It is critical that before going into the negotiation and
successful inter and intra cultural communication, it is essential to define ground rules
so that employees of Ola knows what are the do and don’ts in the Chinese culture
(Shenkar, Luo and Chi, 2014).
 Clarification and justification: It is necessary that in order to make effective inter and
intra-cultural communication and for doing negotiation it is essential that employees
clarifies and justifies about the things that is not understood by them. The more the
clarification will be the better the chance that people will be able to interact.
 Bargaining and problem solving: It is critical to know the skills related to bargaining
and problem solving. In the training employees should know about the ways in which
they can bargain that can benefit them. Effective bargaining plays a critical role in the
negotiation process. At the same time it is also essential to have problem solving
skills. This is necessary for dealing with any contingent situations (Liu and Woywode,
2013).
 Closure and implementation: It is critical for that everything that is negotiated comes
to a final agreement so that they do not face challenges in future over the same issue.
It is also to be made sure that processes gets implemented in a better manner.
HRM practices of the two nations can be merged or adjusted
HRM practices in different countries differs and for the companies that are operational in two
countries then it became essential for the management to make sure that HRM practices are
merged or adjusted. If necessary, the HRM practices of the two nations can be merged by
making policies where the practices are designed in such a manner that they obey the culture
of both the nations. The designing of the practices has to be made according to the
stakeholders of the company from these two companies (Podoshen, Li and Zhang, 2011). It is
critical to make sure that people from both the companies to agree on all terms. Standard HR

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practices can be developed that can help the company in ringing uniformity in the business
process.
Three most significant cultural challenges
Since there is a change while entering into the China and this will have impact on the
company’s expansion plan in other parts of the world. Three significant cultural challenges
that OLA will have to face are:
 Language: It is difficult for the people in different parts of the world and this will
have impact on the way employees will interact with each other. The officials will
have to face challenges related to understanding the requirements and problems of the
local staffs. In this regards it becomes critical for the management to have an
understanding about the change in the language. Due to this companies will have to
have translators (Cavusgil, Ghauri and Akcal, 2012).
 Cultural purchasing behaviour: It is seen that people in the Chinese culture have a
different understanding about the purchasing something. Chinese people love to
purchase things that have Chinese cultural aspect associated with it and people have
lesser faith on the India products. Due to this company will have to make sure that
they have adoption of Chinese culture within their business model. People have love
for their own culture.
 Technology oriented culture: It is seen that there is huge penetration of technology in
the Chinese society and due to this technology company will also have to enhance the
skills related to the technology use and due to this they will have to trained
appropriately so as to ensure that they do not feel problems related to the management
of skills and they can appropriately utilise their technology like data management
system that can help them in improving their business. However the privacy related
concerns are increasing in the Chinese culture (Cooke, Saini and Wang, 2014).
The ways in which Ola can meet these challenges
In order to meet the challenges this company needs to certain things. Some of these ways are:
 It is critical that for efficient utilisation of technology it is critical that the international
level training is given to the employees.

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 It is recommended that OLA provides cross-cultural training so that all the employees
are able to understand the language of the China (Dong and Liu, 2010). This is highly
critical for the expatriate managers.
 It is also critical that OLA brands and markets itself as a company that is more look
like a Chinese brand. In this the role of marketing becomes very much critical.
Engaging the board to make an investment decisions
There are people from both the counties in the board hence for engaging the board member it
is critical to suggest them about the potential about the Chinese market. For engaging
company’s board it is critical that cross-cultural understanding is developed (Lewis, 2010).
Investment decisions have to be made according to the understanding of the market hence
giving presentation about the Chinese market structure could motivate them to make
investment decisions.
Conclusion
From the above based report it can be concluded that Chinese approach towards Indian
companies, regulatory environment, Complex bureaucracy, Cyber-attacks and Trade war are
some of the country specific challenges that OLA have to face while expanding into China.
Competition, China specific technology and Labour cost are some of the industry related
challenges that OLA will have to face while Language and literature, Chinese identity,
Reward oriented society, Safety regulation and Staffing consideration are some of the cultural
challenges faced by the firm. There are certain cross cultural differences between India and
China and this will have impact on the expatriate manager that aims to work in China.
However three most significant challenges faced by the firm are Language, Cultural
purchasing behaviour and Technology oriented culture. In order to meet these challenges
company needs to provide training related to the technology, cross cultural training and
associating the OLA with Chinese culture.

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