Ib Assignement 2 Report

8/7/2019 Ib Assignement 2 Report

http://slidepdf.com/reader/full/ib-assignement-2-report 1/7

The purpose of this report is to investigate the influence of culture in the acquisition of our

Chinese competitor, there a number of well-known contrasts between Chinese and Western cultural

values that shape management beliefs in important ways, but also evidence shows that the cross-

cultural transfer of management processes in general is not always successful. This report will

increase our understanding of cultural differences between UK and China. It will also describe the

potential issues that might arise as a consequence of cultural differences in terms of Marketing andHuman resources and will give precise and summarised information on how to guide and manage

Chinese employees for the Uk managers in charge of the management functions. Finally, it will

provide recommendations on how to deal successfully with those issues.

The purpose of this first part is to summarise the cultural differences between two culturally

diametric countries: China and UK (Hofstede 1991, 2001). In the term of marketing, culture is “a

system of values and norms that are shared among a group of people and that when taken together

constitute a design for living”. (Doney et al 1998, 601).

Hofstede has identified 5 aspects of cultural dimensions (see figures below).

According to Hosftede, the Power Distance (PDI) indicates the extent to which people accept theunequal distribution of power. In our case, in China, organizations are usually taller, more

hierarchical pyramid structures whereas in UK, organizational structures are usually flatter with a

less distinctive hierarchy. (Chen and Partington, 2003)

The Indivitualism-collectivism (IDV) dimensions is the degree to which individuals are integrated

into groups. In our case, China's labour force's personal interests and goals are subordinate to the

interests and goals of the organization. They have a need for group affiliation (family, school, work

…) and subjugate their own feelings for the good of the group (kwintessential, 2010).

Whereas in the individualist UK, individual and collective goals are distinguished, British are more

likely to be self-centred and seek fulfilment of their own goals (Jiao, 2009).

The Uncertainty Avoidance Index (UAI) refers to people's discomfort with uncertain or unstructured

situations, and preference for predictability and stability. It's about whether people like to take risk.

In a high uncertainty avoidance society, people are normally associated with risk aversion. Chinese

people tend to fear unfamiliarity and risky situations. According to Milosevic (1999) “what is

different, is dangerous”. They seek and rely more upon rules and regulations. On the contrary,

British are more comfortable with risk and ambiguity. As said by Hofstede (1993), for them “What

is different, is curious”.

The Long-Term Orientation (LTO) indicates a society's time perspective and an attitude of

persevering. China's rank is high, Chinese's personal, social and business relationships aremaintained and reinforced through continuous and long-term associations (Yeung & Tung, 1996).

Chinese are more likely to be classified into those criteria: persistence (perseverance), ordering

relationships by status, thrift, having a sense of shame.

In the Uk, by contrast, social transactions of all types are more often seen as isolated occurrences.

The objective of any transaction is to achieve optimal. An emphasis is placed on immediate gains

from the interaction (Yeung & Tung, 1996). British are more likely to be classified into those

criteria: personal steadiness and stability, respect for tradition, reciprocation of greetings, favours,

and gifts.



sources: Hosfede (2008)

We can describe other important cultural differences between China and Uk;

There is what is called in China “the concept of face” which can be translated as “honour”,

“respect” or/and “good reputation”. It is very important to avoid losing face or causing the loss of

face at all times.

In the business world, negotiations should be conducted to assure that theperson at the other end of the table maintains face even if the deal should notsuccessfully conclude.



The non-verbal communication, Chinese rely on facial expression, tone of voice and posture to tell

them what someone feels. Frowning while someone is speaking is interpreted as a sign of

disagreement. Concerning the business world differences, meetings require patience. Mobile phones

ring frequently and conversations tend to be boisterous. Never ask a Chinese to turn off their mobile

phones as this causes you both to lose face.

Moreover, small cultural differences can be really important in terms of business etiquette; you

should hold the card in both hands when offering a business card and you should examine it before

putting it on the table next to you. Greetings are formal and the oldest person is always greeted first.

Finally there are things that are very different than in Uk, do not give flowers, as many Chinese

associate these with funerals. Four is an unlucky number so do not give four of anything.Always

present gifts with two hands. Gifts may be refused three times before they are accepted and so on.

Chinese vs. UK conceptions of project management.

Chinese conceptions UK conceptions

Relationship with company Employee of the company,

working for own career

achievements and the

company's benefits.

Manager of the project,

working for own career

achievement and job

satisfaction.

Team Family-like, mutual-care.

Existing long- term team. 'We',

'own' people.

Friend-like, respect and trust.

New team, new people. 'You'

and 'I' work for this project.

Client 'Boss' of the project. Make the

client happy. Working and

personal relations.

Provider of project funds. Keep

the client informed. Working

relations.Subcontractors Brothers/sisters of the family.

Long-term cooperation.

A member of the team.

Cooperation for this project.

Conflict resolution Negotiation first and last. No

claims. Need good

relationships.

Negotiation first. Claims when

necessary. Need good contract.

Organizational structure

preference

Disliking Western-style matrix

structures.

Accepting and being used to the

matrix structures. Liking to

know new people through new

project.

Attitude to uncertainty Too many uncertainties and

responsibilities. Enjoying final

achievement, but feeling

pressured throughout.

Enjoying experiencing new

things. Enjoying both final

achievement and day-to-day

challenge.

Sources: P. Chen et al., International Journal of Project Management.

Because of those two culturally diametric countries, issues might arise. Many foreign

companies have found that there is a great scarcity of high-performing local management and

professional staff in China (Wong and Law, 1999). Cultural differences involve difference

conceptions of work, Chinese culture is a strong determinant of the way in which Chinese

organizations are managed (Lockett, 1988; Easterby-smith et al., 1995). As key aspects of Chineseculture are taken to be: respect of hierarchical position, age, the concept of face, and the importance

of relationships (Lockett, 1988). Here are the issues that might arise in case of the acquisition;



− Because of the IDV difference, Chinese project managers will primarily associate their work

identity with the company, The Chinese project managers express a strong self-identity as a

company employee. Uk project managers will primarily associate their work identity with

the self. Moreover, being bought by a foreign company could be seen as a lose of “face”.

−The Uk manager would have to manage a Chinese team but Chinese projects managers paygreater attention than Uk managers to building and maintaining personal relationships

within the project team. Indeed, for the Chinese manager, a good relationship with the team

meant that the project team should work as a close family, the family members should care

for each other, and also affectionate relationship outside work, the project manager is seen as

the father. Which is totally different from the Uk's conception of a team.

− Concerning the conflicts, it involves the lose of “face”, Chinese project managers pay

greater attention than Western project managers to group harmony and lasting relationships

when resolving conflicts. Indeed, negotiation is the only choice of approach to conflict

resolution, and it can involve whoever would help. Claims is considered as something

extreme that would result in lose of “face” which is totally different than in UK.

− Finally, concerning the organizational structure preference, Chinese managers prefer to use

their own stable, existing team, they don't want to share their leadership with functional

managers which might be an issue as Uk managers like to use matrix organization.

To summarised, few issues might arise, concerning team relationship, organizational structure, lose

of “face” when resolving conflicts or during negotiation which would be the result of a strong

cultural difference between the UK and China. But concerning the HR and Marketing manager, here

are the others issues involving cultural differences;

Human resources is when you move into a country “the most critical aspect because the company's

culture reside in the people that populate that company” (Michael Laske, 2010), indeed, the first

issue would be to get the right people into your team so that you can bring your own culture and

value into play and have them merge in a mutually supportive way with the chinese culture.

Another issue would be that once the Chinese employees are working for your company, you have

to make sure that their behaviour is consistent with what you're looking for.

Uk managers would have to adapt their HRM policies and practices to the Chinese environment

(Child, 1991, 1994). In fact, several studies have shown that a lack of employee initiatives and

responsibility taking on the part of local employees was commonly seen in the Chinese HRM.

Because of the high cultural distance between the UK and China, the transfer of a UK's firm flat

organizational structure to a country which is perceived to place a high value on hierarchy would bea problem. As seen previously, team members are considered as a family, if the UK managers

wouldn't be able to speak mandarin, he could't be able to speak directly to his staff, let alone read

registration in Chinese. Moreover, when expatriates with the inappropriate technical and personal

skills are involved, the “friction” of cultural distance can be increased (Child and Markoczy 1993).

However, transferring the UK's firm HRM system to the Chinese one would be a major issue,

Indeed, a range of factor can be identified which promote or inhibit the transfer of HRM from UK

to China. Those factors are in this country: the particular legislative (socialism/communism)

institutional and cultural framework use in China.



Concerning the marketing, issues can arise because, there are important disparity in the importance

given to metric categories in evaluating marketing performance, in the UK financial measures

would be the most important whereas in China it's the consumer behaviour and consumer

intermediate metrics. Which would be a huge issue as for UK, profits is the main goal of marketing

whereas for China, the main goal of marketing is to satisfy customers (Levitt, 1983).

Moreover, while in China there is a close relationship between customer orientation andmeasurement of consumer behaviour and consumer intermediate, there is no relationship between

this orientation and the importance of measures based on direct trade customers as there is with

British businesses. Moreover, another marketing issue would be that Chinese firm appear to focus

on cost reduction and productivity improvement whereas British firm tend to raise volume by

expanding the total market or entering into new markets.

A final example issue that might arise would be that, because of the Long Term Orientation (LTO)

index, UK's firms tend to set long-term objectives. As for China's firms, they tend to set short-term

(brooksbank et al 1992).

However, there are some advices that a Uk manager should follow in order to avoid and/or

deal with potential issues. Indeed, cross-cultural studies have shown that different cultures supportdifferent sets of management beliefs and practices, which means imposing the UK's management

method wouldn't be the best way to manage a Chinese company.

First of all, it is clear that UK management method need to be adapted to fit better with Chinese

conditions and culture, indeed, “despite a few areas of similarity between the UK and China, there

are strong cultural factors which limit the adoption of many feature of HRM in China” (Lockett,

1988). Our first advice would be that UK management method may seek to fit in by imitating local

practices (Rosenzweig, 1994).

However, after the acquisition of the Chinese company, the first things to do would be to adapt

completely the HRM, indeed, the presence of expatriates in the new company would facilitate the

dissemination of standardized UK's practices. According to Rosenzweig (1994), the expectation is

that affiliates with a high expatriate presence will more closely adhere to the management practice

of the UK, moreover, bringing expatriates would also fulfil the administration heritage role (Barlett,

1998). Our advice would be to bring some expatriates from the UK into the Chinese company,

indeed, they would serve as key control function in areas such as setting overall strategy, in finance

and marketing (Gamble, 2000), in fact bringing expatriate managers would be good both in the

communication and in the transfer of explicit knowledge and would indeed resolve the issue of the

difference method of marketing between the UK and China and also the issue of the short and long

term orientation (LTO). However, the expatriates would have to know a minimum of mandarin and

Chinese culture, when expatriates with the appropriate technical and personal skills are involved,the friction of cultural distance can be reduced (Child, 1993).

Another recommendation would be to focus the HRM on individual performance and employee

motivation. Several studies have pointed that the strong effect of performance-based rewards and

individual performance appraisal on organizational performance is remarkable and would influence

the behaviour of the local employees (Child, 1993). As said previously, Chinese employees attached

a strong importance to their company, but being bought by a foreign company could be hard to

accept but by operating individual appraisal and rewards systems, the organization can gradually be

instilled with the value of people taking personal responsibility for the success of their own, their

department's and their company's operations.



Finally, in order to gain loyalty, motivation and experience, the UK manager should organize

selected Chinese employees in training visits to the company based in the UK.

This report has highlighted the important cultural differences that exist between the UK and

China and all the issues that might arise from it as well as the recommendations that the UK

manager should apply in case of the confirmation of the acquisition from the UK company of itsChinese competitor. Also, this report indicates that cultural distance does not present an

insurmountable barrier to the transfer of knowledge, management method and skills from a UK

company to a Chinese company.

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http://www.youtube.com/watch?v=pl-b-zSVcCI



http://www.gooddealsonoffer.co.uk/Final%20Drafts%202.pdf

http://www.kwintessential.co.uk/resources/global-etiquette/china-country-profile.html

http://www.youtube.com/watch?v=pl-b-zSVcCI

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Ib Assignement 2 Report