HI6008 Assignment

Topic: The positive and negative relationships between the success of multinational companies and an alignment or misalignment to the culture of the host country.

Introduction

This report discusses different aspects by differentiating the relationship between the success and alignment of a host country. In this, the host country is analyzed in order to determine the misalignment or an alignment of culture that country is facing. At the same time, a positive and negative relationship is determined in relation to the success of multinational companies in which also the relationship is differentiated between the alignment of host country culture and success of multinational companies (Meyer, et al., 2011). This study report will help in understanding the alignment of culture which host country carries like in India where the culture is different from other countries. In context to it, different challenges and issues will be discussed in-depth in order to identify the positive and negative relationship difference between the success of multinational companies and alignment culture of the host country (Aharoni, et al., 2011). Overall, this study will help in identifying and determining a relationship between the multinational success and alignment or misalignment of culture in a host country.

Project Objective

For accomplishing this project study successfully, it is necessary to consider all project research objectives which are as follows:

• To determine the impact of culture alignment of host countries on business performance on multinational companies
• To explore the challenges in aligning the culture of the host country
• To suggest ways of overcoming the challenges faced by the host country due to aligning with culture.

Project Scope

The project scope of this assignment is wide as it helps in understanding and developing knowledge regarding the aligning culture of the host country. The main scope of this project study is that to provide adequate information regarding the resources and activities which are to be undertaken in order to accomplish the project objective successfully. In addition, this study will provide additional information such as time, cost, planning, managing, etc which are important to be considered.

Literature Review

In today’s globalization market, many companies are operating their business in more than one country, and for that, it is necessary for the companies to understand the culture of different countries. This is because there are many employees from different employees who are working in multinational companies together and for making them conformable; companies need to create an effective environment that encourages them to work together. In simple words, Farndale, et al., (2010) defined culture as a total of some characteristics of a human population like beliefs, rules, techniques and institutions. Every country has its own separate culture like Australia and America follow western culture, but at the same time, India follows both traditional and western culture. In the views of Qian, et al., (2013), it is important for the firms to consider the cultural aspects of the country to be successful in the international market. Multinational firms adopt the local culture of the country where they do business and provide the products and services accordingly to meet the customer requirements.

In support of this, Meyer, et al., (2011) depicted that it is a crucial aspect for international firms to focus on cultural values of the customers because the cultural values have a significant influence on the needs and requirements of the customers. Due to cultural differences, there are differences in the needs and requirements of the customers. For meeting the differences in the needs and requirements of the customers, it is crucial for multinational firms to consider the cultural differences. On the other hand, the study of the Bailey & Li (2015) reveals that alignment to the culture of the host country plays an important role in the success of multinational companies. It is because it is helpful for the multinational companies to design the products and services as per the culture of the people that increase their satisfaction level and improve the revenues and profitability.

In a different way, it can be evaluated from the research of Al Ariss & Syed (2011) that language differences are a significant part of cultural differences that are considered by multinational firms while conducting business in foreign countries. The consideration of languages is an essential aspect for international business to develop a better relationship with the stakeholders including suppliers, customers and employees of the host country. In relation to this, Steers, et al., (2010) also opined that by developing language competency, the managers at international firms can connect with the local customers and develop trust and loyalty with them to increase revenues and achieve high success.

Impact of culture alignment of host countries on business performance of multinational companies 

The impact of culture alignment of host countries is positive on business performance because culture difference is one major factor that directly or indirectly influences the employees to work values and develops implications on the management functions and activities. In the research study of Gammeltoft, et al., (2012), it is clearly elaborated that cultural diversity also has an impact on employee performance as well as on the business practices which are adopted by multinational companies in a host country. There are large numbers of companies that are operating their business globally for targeting a large market share and for which they are analyzing the cultural diversity of different countries.

In addition, Bailey & Li (2015) also stated that cross-cultural management is creating a great effect on the business performance as well as on the success of multinational companies. The impact of aligning culture with business and employee performance is huge as an employee from different countries follows different cultures because of which company performance and efficiency get reduce. So, multinational companies are required to develop their working environment where different cultures people get to work together without any miscommunication and conflict. Wexler, et al., (2014) also illustrated that in India, there are a large number of multinational companies which are investing and operating their business like Genpact, Tele performance, Deutsche Bank, etc which are influencing the cultural diversity in a positive manner. In like manner, these companies are operating their business successfully because of only the culture which they understood and analyzed before they started their business.

The research study of Akanwa (2015) also clearly explained that a multinational company’s success is creating a positive relationship with the host country due to the alignment of culture which is followed or adopted. This creates a positive relationship between the multinational company and the host country. But at the same time, Al Ariss & Syed (2011) opposed the statement that there is a positive relationship between the success of MNC’s and align the culture of host countries because it stated that there is a negative relationship observed between the aligned culture and multinational companies. From his study, it is found that there are some situations where multinational companies are not able to align themselves according to the culture of the host country where they are operating their business.

While analyzing the relationship between multinational success and align the culture of a host country, it is found that multinational companies always prefer to develop their information regarding the culture which is followed in a host country. This development of cultural information helps the companies to develop their business and create a working environment according to the aligned culture which motivates the staff or employees to work comfortably and efficiently. According to Steers, et al., (2010), a positive relationship creates a positive impact on the culture alignment and that directly influences the business performance to a large extent. While studying, it is also observed that cross-cultural management is creating an impact on the business performance, but at the same time, it is important for a multinational company to understand the culture and environment where their business will operate.

Challenges faced in aligning the culture of the host country

There are some challenges which multinational company’s faces while aligning the culture of host countries in their working environment. According to Cruz & Boehe (2010), it is defined that aligning culture in multinational firms creates a huge impact on the business performance and their efficiency level. The major issue found is cross-cultural management in context to business.  In concern to this, Stone & Deadrick (2015) elaborated that cross-cultural management issue is very big in context to the business as cultural management is one factor which affects the business performance in both positive and negative manner.

In support of this, Campbell, et al., (2012) stated that there are some cultural and social norms which are to be followed by the companies in every country in order to maintain efficiency and effectiveness. In every organization, cross-cultural people work together and for that company are required to develop mutual understanding between them towards each other culture. Peltokorpi (2010) depicted that mutual understanding and different cultural – business aspects need to be considered that result into the effectiveness and efficiency of the communication, and also it influences them to work in a multicultural environment, i.e., from shop floor level to senior level. The other challenge of multinational companies in aligning the culture of the host country is that cultural awareness. The research study of Kelly & Moogan (2012), discussed that cultural awareness is a major issue for the MNC’s as it is very important for the companies to conduct a proper cultural awareness program for the employees in order to encourage and motivate the employees to develop their competency and efficiency. Reinartz, et al., (2011) also explained that cultural differences are a very high challenge for companies because it is very difficult for the companies to understand or determine the cultural issues which employees are facing within the organization.

In addition to it, Enderwick & Nagar (2011) also identified in their research study that language differences are a significant challenge in the cultural alignment in the host country. It is troublesome for the firms to teach their employees the languages spoken in the host country. Due to language differences, it is difficult for the employees to work properly due to ineffective communication with the customers. In support to this, Ostrowski & Penner (2011) stated that due to language differences, it is difficult for the firms to develop an understanding of the culture of the host country and align it effectively within their operations.

Suggest ways for overcoming the challenges faced by the host country while aligning the culture

There are different ways that are recommended to host countries in regards to managing the cultural diversity in multinational companies. While studying, it is observed that culture diversity workforce need to be analyzed and undertaken by the companies and employees at an individual level in order to overcome the challenges and issues which multinational companies face. In concern to this, Meyer, et al., (2014) stated that cultural competency training is the best way to overcome the issue related to the cross-cultural management. The impact of the cultural difference in the workplace and marketplace is different as there are some customers who prefer or adopts different culture as market trends as similar like fashion trends.

In the views of Salazar (2012), it was found that it is necessary that people admit that cultural differences exist. Differences are related to the difference in the thinking, perceptions, point of view, interpretations of the social situations. It is necessary to explain, describe these issues in a prescribed manner. In support of this, Zikic, et al., (2010) stated that people should respect and give due consideration to the other culture same as theirs. Because there is no perfect culture or no culture is better or significant than other cultures. People should start accepting all the major differences that exist and should not develop a feeling of judgment. People should always develop an outlook to gain other’s point of view. People should always respect another point of view. In addition to this, Hahn & Bunyaratavej (2010) it was illustrated that people should always be open and welcome to learn new and innovation things. They should not develop a feeling or state of resistance to change.

For this, it is essential for the organizations to conduct cross-cultural training programs and language programs that can be helpful for the employees to develop an understanding of the language differences. Apart from this, French (2015) also recommended that the firms need to appoint trained expatriates in the operations in host countries. Expatriates should be trained properly to meet the local requirements and successfully operate the business.  Additionally, Harsanyi & Schmidt (2012) also suggested a way to overcome the issues that business partnership with the local partners can be effective to develop an understanding of cultural differences and handle the related challenges successfully. The partnership with these local partners helps to understand the needs and requirements of the local customers and meet them effectively to get a better idea of a host country and get success.

Conclusion

From the above study, it can be easily summarized that relationship between the success of multinational companies and align the culture of the host country is very different, i.e., both positive and negative manner. The aligned culture of the host country is a major factor for the multinational companies are achieving huge success as this helps the companies to produce or market the product and services which satisfy customers satisfaction level to a large extent and also high position in the competitive market. The challenges which MNC’s faces are language differences, cultural awareness, cross-cultural management, etc are issues that impact the companies to a large extent. At last, this study concludes that there is a high positive relationship between the MNC’s and align the culture of the host county as companies are adopting align culture in their surrounding efficiently and effectively for achieving success.

Reference

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