Nowadays, businesses and organizations do not only limit in specific geographical areas. Folks are connecting to one another throughout the world using internet and other methods. Thus, globalization is important and be crucial specifically for those companies who are growing and expanding. In today's business world, you'll be said as "outdated" if you don't know what globalization is.
According to Bhagwati, J. (2004), "Globalization" can be described as "a process by which the people of the world are unified into a single society and functioning together. " Besides that, globalization is also thought as internationalism. In general, "globalization" is a term that the majority of the business set it as one of the goals in the company. Companies have a tendency to strive hard for growing globally and reaching more markets instead of sticking in one country.
In this globalization era, opportunities for doing business as well as enjoy better paychecks is obtainable everywhere. Entrepreneurs look for many ways to be able to get rich faster and easier. Therefore, they will never neglect in grabbing any chances.
Metaphorically, the complete business world is a scrumptious cake and each country is one slice of the cake. With natural characteristic of humans, people will choose the biggest slice as they can appreciate it the most. Same thing happen in business world, from the aspect of population and opportunity, China is seen as the biggest slice of the cake and companies would scramble to fully capture it as they can.
When there a wide range of competitors, capture the slice is challenging. Therefore, management and strategy is important to achieve the slice. According to Deresky (2006), global management is the process of developing strategies, designing and operating systems, and working with the people surrounding the world to ensure sustainable competitive advantage.
To capture China market, companies should use the sufficient strategy and work hard onto it. According to Haberberg and Rieple (2001), strategy refers to the "ways that an organization uses its knowledge and resources to achieve its objectives. "
Issues in Global Business is a broad subject that consist a lot of stuff including various challenges and strategies implemented on different issues. To grow globally, the first thing organizations should prepare is cultural challenges which can result in a failure if companies do not handle it well.
With sharing a tale, a result demonstrates knowing other's culture is important because people's culture is not identical to us.
[Once upon a period there is a great flood and involved two creatures that are a monkey and a fish. The monkey, being agile and experienced, was lucky enough to scramble up a tree and escape the raging water. As he looked down from his safe perch, he saw the indegent fish struggling against the swift current. With the best of intention, he reached down and tried to save lots of the fish from this particular. However, the result was inevitable. ]
From the culture story, misunderstanding the culture of others may cause an enormous impact in both parties. Therefore, cross-cultural management is important for a company going globalization and familiar with the particular country.
In this paper, based on the truth of 'Cross-Cultural Challenges When Doing Business in China' (Appendix 1), the analysis of culture will be conducted. Meanwhile, cultural comparison will be evaluated between China and America. From then on, the recommendations will be given based on the situation, as well as provide some critical ideas about global business.
Chapter 2: Literature Review
With the globalization of business community, China has become an attractive market for foreign investors. There is always called "management" in organizations in every countries. The global stage has brought challenges to the fore of management.
Globalization, similarly is effective in creating opportunities for global collaboration. Alternatively, it generates a lot of issues and problems caused in cultural variations and wrap up with a failure. Therefore, organizations should give consideration on the issue. Generally speaking, there's a huge gap between Western countries and China in culture issue. To clarify the differences, the truth of 'Cross-Cultural Challenges When Doing Business in China' has been used Hofstede's four cultural dimensions and Bond's fifth dimension, which can be power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance and long-term/short-term. From this article, some conclusion can be produced:
Cultural Dimensions
America
China
Power distance
Medium low
Tendency toward decentralized power
High
Centralized, tendency toward democracy
individualism/collectivism
Strongly
Individualism
Strongly Collectivism
masculinity/femininity
Medium Masculinity
Medium Femininity
uncertainty avoidance
Low
Risk-taking
High
Risk-avoiding
long-term/short-term
Short-term oriented
Long-term oriented
On the aspect of cooperative strategies, America has lower appreciation for cooperative strategies due to individualistic and masculinity. They are really highly independent and enjoy work alone. Besides, they place greater importance on contractual safeguards for maintaining effective cooperation. On the other hand, Chinese with collectivistic and femininity in nature are group-oriented and loyal to the group. They emphasize harmony and relationship ("guanxi").
China Vs America
In handling conflicts, Chinese who are from collectivistic high power distance culture tend to use indirect ways and avoid open and direct conflicts. Besides, they seldom use tactics in resolving problems to avoid embarrassing and overt disagreement as well as damaging "guanxi". Instead, they like to use negotiation and compromise. In contrary, Americans who are from individualistic low power distance are reluctant to invest time and effort to solve the conflict. They always utilize tactics in open and direct way to confront problems.
America Vs China
Furthermore, Americans who are low risk avoidance and have adventurous spirit, prefer to take risks. Within the contrast, Chinese who are high risk avoidance prefer comparatively safer always avoid risks. They don't make immediate decision when the circumstance is uncertain. For participation in decision-making, Americans believe in decentralization and empowered subordinates. They always make decision either individually or deferring with their supervisors rather than consulting with others. However, Chinese who are usually collectivistic-high power distance are participatory. Somehow this depends on many factors and generally, final decisions are made by more impressive range superiors without consulting subordinates in most of enough time.
America Vs China
In addition, relationship ("guanxi") is the prerequisite in Chinese business community. Chinese who are highly collectivistic and long-term oriented place great importance on building social and interpersonal relations. On the other hand, Americans are tasks and achievement-oriented. They are really short-term oriented who place greater importance on dealing a small business effectively. Basically, Americans do not give attention to long term business relationship and therefore tend to deal the business as soon as possible. In their mind, the time used to building relationship can be used in other more significant thing like closing other projects and businesses.
America Vs China
Lastly, the situation discussed about motivation system in term of cultural differences. Generally, equity principle is utilized in individualistic culture. IN THE US value systems, reward system pay for performance and individual achievement. Therefore, competition, achievement and personal goals are valued in recognizing individual contributions. On the other hand, collectivistic cultures focus on cooperation, interdependence, and group goals. Chinese think that one's success participate in group work not oneself. Thus, Chinese who support group harmony purchase equality principle in reward system.
China Vs America
In conclusion, America and China differ greatly in all the aspect regarding culture. According to Dess, Lumpkin and Eisner (2007), to set-up competitive advantage, global-national companies should work hard on cross-cultural management in order to acquire smooth collaboration. Besides, a good alliance can help the organization in gaining good reputation over time.
Chapter 3: Critical Analysis
Firstly, with regard to the case's content, the complete article is easy-understand and interesting. The language utilized by authors is generally not difficult and easy to understand. Besides, although this content included a lot of "high" and "low" word and some statistics, it is not complex in any way since authors have already summarized it in to the table. Readers can certainly catch the result and information from the table. Furthermore, it is clear that authors discuss the Hofstede and Bond's cultural dimension into several aspects and separate it into subtitles, that happen to be general cultural differences, cooperative strategies, conflict management, decision making, level of participation, work-group characteristics and motivation systems. As a result, readers will not confuse among one another. Moreover, readers have the ability to know whatever value dimensions affect which aspects to the organizations. Other than that, not like other articles, this article is short and sweet. The primary points plus some elaborations are obviously shown and there are not many superfluous and lengthy words. Eventually, reader won't get bored easily to read the lengthy words. Nevertheless, it is a pity thing in overall article is that the figure 1 has been omitted. I've tried my best to look for this through online and books but by the end still cannot find out the omitted figure. However, to this article, figure 1 is not much important which is still acceptable without having the figure in page 1.
There is not any perfection on the planet. In following, a few of points should be critiqued in line with the case. Firstly, there are a few contradictories existed in the article. In Hofstede's value dimension, it is claimed that America is a low power distance country. Thus, superiors and subordinates are inclined to regard each other as being equal power. Consequently, it may be chaotic because leaders tend to be contested and challenged. According to Deresky (2006), Autocratic management is not well-received in this culture. However, this article explained that American managers prefer making decision individually or deferring to their supervisors rather than seeing others. Implemented the theory in low power distance, it is problematic for American people to defer to others because they're also result from ethnocentrism who always believe that their decision and practices will be the best. Alternatively, China is a collectivistic country. Thus, Chinese involved a lot in communication and consultation among one another. When these theories applied in the amount of participatory in decision-making in this article, the contradictory existed again. For instance, some researches suggest that decisions are typically participatory in collectivistic-high power distance countries like China. Not surprisingly, other researchers claimed that employees in the country resist participation in decision making for their unquestioning attitudes toward their supervisors. Since some characteristic like high formality, low disclosure, and openness as well as centralization are normal in almost all of the firms; employees seldom have chances to really take part in decision-making process. Eventually, readers gets confuse whether Chinese employees hold the participatory in decision-making.
Other than that, although China is a collectivistic country, it is not suitable to utilize equality principle solely in reward system. From the article, we know that collectivistic cultures emphasize cooperation, interdependence, and group goals, and so prefer to aid group harmony. It is nothing wrong to emphasize on group goals, but companies should also pay attention on personal performance. It is because some employees may be the key individuals who are outstanding and help the whole group be the best. Besides, it is unfair that companies only emphasize on group performance. Generally, there are always some free riders inside the organizations or the groups. In the hard workers' perspective, it is unfair for them to share the same reward with those free riders. Instead, they deserve more reward on the hard works. According to Noe, Raymond A(2002), employees are the important assets in an organization that needs recognition and support from top management. Therefore, employees need appreciation and encouragement from other superior in term of motivation. Consequently, they'll feel more confident in accomplishing the next tasks and devoted themselves more in the business. Thus, I recommend that although one cannot claim the reward simply for oneself, they might claim "more reward" according to his / her effort. Moreover, in collectivistic country like China, it is strongly recommended to utilize both equality and equity principle in reward system. As a result, company will not only practise harmony but also fulfill employees and perform fairness in the organization. It benefits company in the long-run because the satisfaction of employees may lead the retention of good employees. Moreover, it can help the company in building good reputation and gaining competitive advantages.
Chapter 4: Conclusion and Recommendation
In conclusion, globalization motivates a lot of organizations to visit globally and extend their markets. China, with the widest land and population has become popular for foreign investors to look in. Companies wish to scramble a slice of the market because of great opportunities and low cost of production.
Growing globally spend the organizations a lot of time and effort in order to achieve the country. Therefore, strategic management is the most crucial thing that the investors should look into. According to Dess, Lumpkin and Eisner (2007), strategic management includes a lot of management and challenges which is a crucial thing for going internationally. In strategic management, cross-cultural management can be an interesting but toughest management that ought to be taken notice of all managerial folks who are expanding their business to other countries. You may deal with people only once you understand their culture and adapt to the differences.
Among the value dimensions, Hofstede's four value dimensions are the main knowledge which managerial people should be concentrate on, which included power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance. Besides, Bond's long-term/short-term dimension is also important to differentiate the cultural differences. Hofstede and Bond's value dimensions can be utilized in many aspects in the business which included cooperative strategies, conflict management, decision making, degree of participation, work-group characteristics and motivation system.
For recommendation, I would suggest that this article should add yet another impact of cultural differences, which is also affect a lot in productivity and profitability. That's "Impact of cultural variations on attaining goals. "
Generally speaking, attaining goals can be an important part in company and that's the reason companies set vision and mission. To attain effectiveness, companies should evaluate the ability to achieving goals and the attitude of employees in reaching goals. In cases like this, several variables have been manufactured in differentiate the cultural distinctions between America and China.
Due to individualism of America, Americans like to work alone instead in group-work based. Individual-work based has its advantage and disadvantage. For the benefit, Americans can concentrate in their tasks. Eventually, they could meet efficiency. However, they could lack of ideas when doing their work. Limitation of ideas is wii phenomenon for a company especially in term of creativity. Besides, limited idea is one of the weaknesses that company might face and lead to a threat if other competition have better ideas.
On the other hand, China is collectivistic and high power distance country. Chinese love to work as an organization rather than doing individually. Thus, more folks can come out with more ideas which benefit the company in many ways. Besides, group members can advise each other about the weaknesses and mistakes to be able to reach effectiveness. Nevertheless, disadvantages are unavoidable. Firstly, when there's a group of men and women doing one thing, they might chit-chat and do not concentrate in their work. Eventually, they might not meet efficiency. Moreover, when there are a lot of ideas, it might be create some problems and conflicts which can damage harmony in the group.
Ultimately, there are both advantage and disadvantage in the culture and practices from different country. Organization should get to know the practice of other countries in order to develop their business successfully in the particular countries. The greater effort invested, the more successful will be gained.
