Change in Global Business

Describe about the Cultural Intelligence, Individual Interactions Across Cultures/Working Across Cultures?

Corporate strategy is determined on the basis of the current business environment. Reviewing wide range of literature I have found that over the last twenty years, globalization and evolution in information and communication technology have led to significant changes in the global business environment, business model and practices. In this paper, I would like to discuss how the global business has changed due to globalization (Gupta, 2013). Additionally, the change has notable implication for the managers of the multinational companies. Managing people and business activities in cross cultural environment poses various challenges to the management. In this paper I will also focus on discussing how the managers will adapt the changed global business for becoming successful. The managers need to have clear insight regarding different cultures for dealing with the diverse work force as well as addressing the need of different foreign markets having distinct cultural background (Filippetti, 2011). Moreover, Hofstede, Trompennars and Global models have been discussed in this paper in order to substantiate my arguments.

The business environment across the globe has confronted rapid change in the past twenty years. The wave of globalization has accelerated development of a complicated, interdependent and dynamic business environment. Various companies from different part of the world have focused on integrating their business activities in the international market for maximizing the value of the firm. On the other hand, several nations have concentrated on attracting foreign investment in order to boost up their economy (Filippetti, 2011). Over the last few years the emerging economies of Asia have encountered significant growth due to globalization. It has facilitated increase in number of the multi-national organizations across the world. The business organizations have been facing and challenges as well as ample opportunities for exploring the international market. The organizational activities and management practices have changed due to integration of the business in foreign markets. It has become essential to consider the environmental forces of the foreign market for achieving success (Gupta, 2013). The global business management has been encountering major issues relating to the market analysis, adoption of appropriate business strategy, existing political and legislative framework, cultural issues etc (Shah and Sankar R.N., 2014).

Presently business firms are focusing on gaining competitive advantages. Globalization has demonstrated that the locus of the demographic and economic power has started to shift from the developed countries to the emerging nations. Technological advancement has provided unrestricted access to global knowledge and developed a global consumer environment. Enhanced technological connectivity, online mobility, easy transaction on mobile devices has facilitated the new model of customer engagement. The organizations are focusing on establishing digital strategies. Globalization has developed an international marketplace which led to change in the business model (Harris, 2006). In order to achieve competitive advantage in the international market business organizations have been focusing on the constant innovation and aligning the organizational model for maximizing cross geographic synergies.

Business organizations encounter different issues in the new environment relating to the risk management, compliance with legal framework and ethical standards etc. In order to achieve competitive advantage it is essential to analyze the customer profile or the target market. It is evident that culture is one of the most significant aspects for analyzing the consumer behavior and orientation. Hence, it becomes essential for the managers to understand the cultural background of the consumers in order to influence their purchasing behavior.

Adaption of New Environment by Managers

On the other hand, it is very important to manage the diverse work force for maximizing the benefits of cross cultural team. In the new business environment, the manager will deal with the workforce belonging to different cultures. Hence, conflict is a natural part of the cross cultural organizational team (van der Aalsvoort et al., 2013). It is essential for the managers to enhance knowledge regarding different cultures. Enhanced cultural quotient will help in managing conflict, effective negotiation and developing a positive work environment for improving the performance level (Bhagat, 2006).  Theorists have developed models which help in understanding the cultural dimension in case of cross cultural communication in business organization.  

Hofstede has developed a model for defining five major dimensions of a culture which must be considered by the managers while working in cross cultural business environment. Studies had been conducted by Hofstede in different organizations across the world. Power Distance is the first dimension which indicates the extent to which the subordinates or the less powerful employees accept the fact that power will be distributed unequally in an organization. In simple terms high power distance index indicates strong presence of hierarchy in the society as well as organization (Shi and Wang, 2011). In this culture the subordinates will accept the decision of higher authority without asking for justification. Second dimensions are individualism and it represents the degree to which an individual is integrated into team. It has an important implication for the business organization as the collectivist societies are found to be efficient group members and has a positive impact on the organizational performance. Uncertainty avoidance index is the third dimension which focuses on measuring the tolerance level of the particular society relating to uncertainty. High level of uncertainty avoidance index implies that the people are emotional and try to minimize the risk in the process (Yeganeh and Su, 2007). Masculinity vs. femininity is the fourth dimension which helps in distributing the emotional roles between different genders. In case of the masculine culture, the values are ambition, competitiveness, power, materialism and assertiveness (Tang and Koveos, 2008). On the other hand, feminine culture places greater value on the quality of life and relationship. Long term orientation is the last dimension and it focuses on analyzing whether the society poses more importance to the future. It has been found that the societies which are long term oriented foster pragmatic values which are oriented to the future such as consistency, ability to adapt and saving etc.  These dimensions change across regions and nations (Tung and Verbeke, 2010).

Trompennars had identified seven important dimensions of cultural differences. First dimension is universalism versus particularism which measures the importance of values and rules in that particular society. Second dimension is individualism versus communitarianism which determines how much importance is given to an individual and group.  Third dimension is specific versus diffuse and it estimates how far people get involve. Fourth dimension of Trompennars model analyzes how people express their emotion.  Fifth dimension of this model is very important as it helps in understanding how people views status in a particular culture. Sixth dimension of this model is sequential time versus synchronous time for analyzing how people manage time (Trompenaars and Hampden-Turner, 2004). In some society people like the events to occur in order and higher importance is given to the punctuality. On the other hand, synchronous time indicate that people will consider several work at a time. Last dimension of Trompennars model is internal direction versus outer direction and it helps in understanding how people react to the environment.

Hofstede’s Model of Cultural Dimension

GLOBE model is an important model for managing the cross cultural workforce. It has been found that this model significantly helps in exploring the complex impacts of culture of competitive advantage, organizational effectiveness and leadership. GLOBE model can be tagged as the modified Hofstede’s model. This model has included five cultural dimensions of Hofstede’s model and added four dimensions. Assertiveness is one of the important cultural dimensions of this model which seeks to explore the degree of assertiveness among the individuals in a society (Orpen, 2003). Future orientation is another dimension which is associated with understanding the degree the society is involved in planning future, investing etc. Performance orientation dimension of culture estimates rewards received by individuals for improving performance.  Last dimension is the human orientation which is associated with estimation of the extent to which individuals are rewarded for being kind, friendly, and altruistic and fair (McCrae et al., 2008).

Analyzing the change in global business environment and increase in international business integration I can recommend that it is very important for the managers to enhance their cultural quotient for dealing with the cross cultural workforce successfully. It is recommended that the managers must consider different cultural dimensions identified by the Hofstede’s model, Trompennars model and GLOBE model (Westney, 2011).

Conclusion

In the above sections, I have focused on discussing the change in global business and its reason. I have identified that globalization have encouraged the business organizations in exploring international markets which led to diverse workforce. It is important for the managers to adapt the changes in global business by enhancing the cultural quotient or knowledge regarding different cultural backgrounds. Considering the cultural dimensions recognized by the Hofstede’s model, Trompennars model and GLOBE model, the managers can understand different culture and make effective communication and negotiation in order to maximize the cross cultural synergies.

References

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