Busm4699 a2 g04 thesquad_ A2 GRP Team Consultancy Project Group Written Report (80%)

A) Provide an overview, with citations, of the issues companies face relating to cross cultural management. B) Using the information gathered during your interview (A1) and another example from a chosen online news article, apply some of the theoretical and conceptual issues outlined in Part A to write a case study of the challenges companies face in managing across cultures. C) Based on Part A and B, make some recommendations on how companies can seek to avoid or address cultural misunderstandings when operating across borders or crossculturally within the company such as working with expatriates.

RMIT University Vietnam

Semester C - 2022

Subject Code &

Name:

BUSM4699 - Cross Culture Management

Student Name:

Table of Content

Executive Summary 3

Introduction 3

Part A: Cross-cultural problems 4

1 Communication Misunderstanding 4

2 Leadership 6

3 Time differences: Synchronic vs Sequential 7

Part B: Case studies 8

1 Case study 1: PMU 85 (Interview 1A) 8

2 Case study 2: 8

3 Summary 9

Part C: Recommendations 10

1 Improving the CQ ability 10

2 Structural reforms at the organizational level and bridge individuals 11

3 Creating an adaptation strategy 12

Conclusion 13

References: 14

Appendix 19

Executive Summary

The purpose of this team consultancy report is to talk about the challenges that might occur in the workplace when managing cross-cultural businesses, simultaneously, suggesting practical solutions for those problems, therefore, enterprises dealing with those particular issues can improve in the future The first part of this report is to analyze the issues in cross-cultural management, which are cultural misunderstanding, leadership, and time difference Those issues will be illustrated within the theoretical framework in BUSM 4699 courses, which are Hall’s context theory, Trompenaars Cultural Dimensions, etc Next, there are some case studies provided as specific examples of inefficient cross-cultural management, including one case from our interview in the last assignment - PMU 85, and the other two that others researched online, which are the Subway and Walmart cases Specifically, Subway Sandwich had to deal with the decrease in sales and the increase in stores shut down; meanwhile, Walmart with inappropriate management policies ended up leaving the German market The last part of this consultancy report is the solution for the aforementioned issues regarding cross-cultural management It is believed that these recommendations will probably help the organization overcome its current obstacles Firstly,

we suggest that they should implement cultural intelligence (CQ) as a manager requirement via 3 stages Secondly, structural reformation at the organizational level and bridges should be conducted Lastly, to improve professionalism level and shorten the gap of time dimension differences, we suggest that companies should follow the adaptation strategy for working standard unification From that, the company will be able to have a drastic development which also creates a better working environment for such a diverse culture due to the organization’s multinational characteristics

Introduction

Undeniably, numerous large corporations have adapted to the concept of cross-cultural commerce since this assists companies in expanding their global markets and locating resources in several nations (Hummel 2012) However, cross-cultural issues are not inevitable in those multinational companies (MNCs); plus, effectively leading a multinational team and fostering employee success in a contemporary workplace is the challenging aspect (Reynolds 2017) Therefore, in this paper, communication problems, time zone disparities, and leadership style differences are chosen to be elaborated within the theoretical framework initially Following that, case studies of businesses that failed internationally will be discussed, additionally, certain practical approaches will be suggested for further improvements

Part A: Cross-cultural problems

1 Communication Misunderstanding

Misunderstanding in intercultural communication may result from language barriers and high-low context culture differences (House 1997)

a Language barriers

o Verbal communication

People from different cultures will experience different accents based on their social and geographical backgrounds, some regional accents are extremely unfamiliar with standard accents (Grondelaers et al 2010) Different accents make it difficult for listeners to recognize and understand accurate words, thus, listeners probably miss key information, resulting in messages misinterpretation Currently, global businesses use lingua franca (e.g: English) to communicate Differences in language competency or proficiency between lingua franca native and non-native speakers trigger misunderstanding because native speakers with complex and extensive vocabulary confound non-native peers’ understanding, with basic language competency (Mauranen 2006) Aside from different contexts, cultural backgrounds, and socialized contextual awareness, people have different perceptions and interpretations of language or events (Thompson et al 2020) Therefore, words and phrases’s meanings vary cross-culturally, thereby, communication misunderstandings are unavoidable

Figure 1: Differences in same phrases’ meanings in communication between British and Dutch

Source: adapted from Ripmeester (2021)

o Non-verbal communication

Non-verbal language barriers caused by cultural differences lead to notorious communication misunderstandings because non-verbal cues (eye contacts, smiles, body languages, gestures) have diverse meanings cross-culturally (Abu-Arqoub & Alserhan 2019)

b Context-cultural differences

Regarding Hall (1990), context is the environment, or ambiance surrounding an event, which determines communication style and people's behavior in a culture (Guffey et al 2013) Hall’s context theory (Hall 1976) stated that different cultures experience different communication styles; some communicate directly (low-context cultures) while others communicate indirectly (high-context cultures) The way people interpret messages and react to them varies according to their different cultural context and backgrounds, thus, cultural misunderstandings between two contexts are unavoidable (Hall & Hall 1990)

Figure 2: Comparison between communication styles for low-context and high-context cultures

Source: adapted from Guffey et al (2013)

Regarding Figure 2, explicit and simple communication styles, giving and receiving both positive and negative feedback are commonplace in low-context cultures (e.g., the US, UK, Germany) across all the business hierarchy’s levels, while China, Korea, or Japan (high-context cultures), heavily rely on non-verbal communication, with implicit message (Koyuncu & Chipindu 2019) Giving direct negative feedback to coworkers, or staff is unusual Speaking negatively of managers is a taboo because high-context cultures significantly value hierarchy (Imada 2012) Particularly, it is normal that a U.S manager (low-context) gives comments on his staff’s performance directly but when working with Chinese staff (high-context), his behavior will cause dissatisfaction and hostility due to communication styles’ misinterpretation Different cultural backgrounds induce potential misunderstandings and even internal conflicts reducing teams collaboration, creativity and efficiency, destroy member’s trust, restrain relationships deteriorate work productivity in an organization (Wurtz 2005)

2 Leadership

International academics agreed that effective management and leadership must reflect the culture in which they were found (Smith et al 1988)

Figure 3: Theoretical Model of Leader Processes

Figure 3 depicts the leadership process as a set of causal leader behavior variables affecting followers' work satisfaction and role ambiguity Workplace performance and organizational commitment are outcome variables in the model They are influenced by job satisfaction and role ambiguity (Williams &

Hazer 1986) Moreover, leader's actions have a direct impact on employee commitment and performance while this commitment has an impact on work performance Culture moderates' leadership impacts and affects leaders' conduct It is consistent with contingency leadership theories and most cross-cultural leadership studies to view leader behaviors as causal factors (Smith & Peterson 1988) The degree of industrialization, paternalism, and Asian versus Western perspectives on work and authority are valuable contexts to evaluate the transferability of broad characteristics of leadership (Hofstede 1991) For instance, the ideal leadership model in Japan comes from a person who was skillfully unassertive and had nonverbal communication, and indirect discussions Conversely, the US has a distinctive, and its paternalism is moderate (Dorfman et al 1997) Hofstede (1980) characterized the US as individualistic, low on power distance and uncertainty avoidance, and medium on masculinity Plus, supportive leadership has significant positive associations with followers' satisfaction and organizational loyalty These results might reflect the American culture's low power distance scores and moderate masculinity and directive leadership have also proven significant (Dorfman et al 1997)

3 Time differences: Synchronic vs Sequential

Time has played a crucial role in society and daily life However, the perception of time between different cultures is not similar (Gianetto 2021) Robert Levin has discovered that some countries such as the US or Japan place a high value on time and treat it as money while Middle Eastern cultures have a more relaxed attitude regarding time (Mraovic 2021) Hence, time conflicts between cultures are inevitable while working in a cross-cultural environment Trompenaars and Hampden-Turner devised a cultural model (called Trompenaars Cultural Dimensions) to distinguish seven cultural dimensions (Appendix 1) (Romani 2004) Two cultures of time included in this model are Sequential and Synchronic Particularly, sequential (monochronic) is a culture of an individual giving full attention to one action at a time and strictly following a pre-established schedule (Goman 2010) Meanwhile, synchronic (polychronic) culture shows that people can do many things at once and their schedule can be changed (Harzing & Ruysseveldt 2004) These two cultures may have conflict and misunderstanding in organizational encounters Conflicts arise when synchronic cultures can flex their schedule; whereas sequential cultures believe that decisions will ruin considered plans (Koyuncu & Chipindu 2019) Moreover, the most important thing for

a business is to establish a time culture There are roughly 20% of expatriates turned back home early on business trips as they cannot adapt to different cultures regarding time (Mraovic 2021) Thus, different cultures need to investigate and be aware of the differences between them to avoid conflict and they can accomplish common benefits

Part B: Case studies

1 Case study 1: PMU 85 (Interview 1A)

o Communication misunderstanding

PMU 85 is currently suffering from communication misunderstanding, specifically regarding verbal and non-verbal communication When someone is unable to comprehend or effectively communicate a message being delivered to them, communication issues may arise (STL n.d.) Due to this barrier, the foreign employees, except for those using English as their mother language cannot fully understand what other colleagues try to convey to them Another problem is about the high & low context culture High-context cultures utilize language emphasizing the message's underlying High-context, meaning, and tone; whereas, Low-context cultures demand that messages be made plain to avoid confusion, and if a message

is not sufficiently clear, it will slow down the flow of communication (Hall 1976) Regarding Ms Hoa, Western contractors are usually straightforward in giving feedback or discussing during work; while Asian employees tend to have a high degree of caution in expressing feedback because they assume that being straightforward is not always a good option, especially in the workplace

o Cultural conflict

The next problem is about the cultural conflicts, which includes the difference of attitude to time of each employee from different cultures, specifically regarding the sequential and synchronic culture that have mentioned above Besides, Ms Hoa has revealed that among a large number of foreign partners, there will be countries with a higher level of professionalism than others leading to more barriers In this case, because there are many people who work in the organization that come from different countries, the way each person acknowledges what is professional, and working experience will be different due to different cultures This highly causes some conflicts when it comes to working together with foreign partners, leading to being inefficient and might delay the work progress Thus, Ms Hoa said: "Because people in the operation come from different cultures, their English word use, interpretation, and written style are different, which creates the language barrier between the colleagues”

2 Case study 2:

o Subway and its expansion management

Despite the financial crisis, Subway Sandwich expanded its store locations from 20,721 (2006) to 25,285 franchises (2011) leading to a decrease in sales volume (Maze 2018) Afterward, hundreds of stores closed due to poor management Regarding Yazdanifard and Nging (2015), delivering a good mindset and supportive behavior is fundamental for employees, however, the distrust of leaders, loss of work control, and fear of uncertainty have caused a staff shortage of those characteristics This is because staff who do not comprehend the impending adjustments, plus, not given equivalent notice of certain

adjustments may cause doubtfulness about the benefits and the detrimental effects of this overexpansion-related change As mentioned in part A, additionally, leaders can influence the workers’ performance, therefore, since Subway leaders miscommunicate about the transition to their employees, a lack of trust occurs between the leader and the followers Moreover, multiple Subway franchises originated as modest businesses, with experience in a few stores simultaneously This caused a decline in sales accelerated, and stores shut down 5,000 units (2015) (Maze 2021) Another crucial problem apropos this expansion was language and dietary preferences Specifically, Subway targeted customers who desire more healthy food and avoid obesity instead of fast-food eating patterns in western countries; meanwhile, the situation in Asia-Pacific is different due to low obesity indicators and health risks (Anh 2017) Therefore, a multinational leader in Subway requires the ability to communicate with franchisees’ employees and target the precise customers' needs

o Walmart and its unsuitable employee policy

Another leadership failure comes from Walmart when operating in Germany due to its inappropriate employee management Originating in the United States, Walmart staff start their day by singing a company anthem, despite the low wages and working conditions; moreover, Germans are hesitant to accept the warm pleasantries from workers and packers at every single checkout (Clark 2006) Therefore, these instances had a negative impact on the overall efficiency of workers since they were compelled to operate against the German working culture Furthermore, Walmart in Germany’s leadership style is conventional and egocentric, which means, they were inflexible in applying Walmart's typical standard in their operation without regard for employee feedback (Hayden et al 2002) Importantly, American managers exerted pressure on German leaders to adapt their leadership approach in the workforce (Schaefer 2006); nevertheless, this approach failed and created multiple internal and external consequences Plus, workers were threatened whenever they refused to follow certain policies Those facts, as a result, have contributed to the worker’s weak performance and ultimately compelled Walmart

to revert from Germany (Clark 2006)

3 Summary

Part C: Recommendations

1 Improving the CQ ability

Technically, CQ has outlined the capacity of a person to engage successfully with culturally varied individuals within their cultural milieu (Angm, Dyene & Koh 2006) This skill comprises a collection of abilities allowing multicultural managers to communicate with others of numerous cultures (Charoensukmongkol 2016) In fact, high CQ leaders foster an environment of open communication and mutual trust among team members by emphasizing the organizational adjustment’s significance; hence avoiding potential conflicts due to the cultural mix of members (Dorga & Dixit 2016) For instance,