Organization Culture In Multinational Companies Management Essay

Multinational companies are facing more challenges when they try to develop a cohesive organizational culture than domestic companies. In this study, several cases experienced from real life examples will be presented. They will be discussed with theoretical framework which allows reader to understand each situation through comparative analysis. The theory of Cultural Management, Cross Cultural Communication & Negotiation, Leadership, Motivating people is selected for cross referencing in accordance to the topic of the study.

The study focus on two main parts;

Part 1: Describe the challenges faced by MNCs on developing a global management, moving forward to identify the key challenges;

Part 2: Focus on managing people across borders and cultures implementing Cultural Management concepts and theories (Hofstede’s Cultural Dimensions 1980), leadership & Motivating theories. The intention of this part is to give a critically discussion on real business situations while being aware of the application of these selected theories.

The findings of useful methods for global leaders developing organizational culture will be explained in the conclusion. I will give my personal reflections on how the application of these theories will benefit leaders working in the similar situations in the international business.

Part 1 Challenges on developing a global management

Organizations are always facing challenges when they are doing business globally. These challenges include the assessment of the environment, managing social responsibility and ethics, communication & negotiation across cultures, etc. In the following paragraphs, I will give journal articles related to a real life example that has faced several critical challenges when developing a global management.

On 5th March 2012, China Labour bulletin reported a string of press release that there are a total of 27 logged reports of strike and protest from workers across China with the majority group of workers from the industrial/manufacturing and transport sector. The strikes and protests are mainly concerned on low wages, reduction of annual bonus, unreasonable employee layoff, management takeovers and relocations.

A related such case is workers at Putzmeister Machinery in Shanghai stages a strike over the unsatisfactory compensation package being offered after the company takeover by SANY Group. Putzmeister Machinery being one of the largest German Manufacturer of concrete pumps has been acquired by Sany Group (one of the largest manufacturer of heavy machinery in China). Workers who are benefitting from the existing European management system and packages cannot accept the sudden implementation changes adapted from the Chinese company. It is believed that SANY has amended the package not in favour to the workers.

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After acquisition took place, employees who are not from SANY Group are affected by several changed factors both internal and external of the SANY’s company policy. The culture which forms the organizational environment requires managers improve their cross-border learning capabilities. Managers from parent-country nationals or host-country nationals cannot ignore local employees’ needs. Successful leader & manager advocate to earn people’s loyalty and trust by learning their different cultures, they also try to help employees to understand what their future and opportunities may have in place.

Besides, exercising effective Change Management is necessary for leaders to understand the culture changes. This is because culture does not simply mean understanding who talks with whom, about what, and how the communication proceeds, it means how people encode messages, the meanings they have for messages, and the conditions and circumstances under which various messages may or may not be sent, noticed or interpreted. (Samovar and Porter, 1997) In this regards, the needs to understand the cultural variables are also necessary for Managers of SANY Group to enquire the skill to avoid miscommunication.

According to the study from Cameron and Green (2004), the role of a leader in acquisitions is providing situations to the individuals in organization as follows [1] :

1. Ensure that the team knows that a change will happen and things will not be the same way they used to.

2. Ensure that the people understand the things that will change, what will stay the same and when will all this happen.

3. Encourage people try to do things in a new way and provide the right environment.

Part 2 Managing and motivating people across cultures

People from the same culture usually share a common general understanding of “right” and “wrong”, “acceptable behavior” and “inappropriate behavior”. In multinational companies, staffs are from a variety of national cultures, they have variety cultural backgrounds, this requires managers who are operating in global interdependent market operating in a series of hugely diverse landscapes (Tom & Keen, Jim: “Leadership Landscapes”, palgrave, 2007). Serious misunderstandings may happen when managers cannot understand staffs’ real needs, values and self-actualization. Managing and motivating people across culture are not only a challenge to large companies but also something applicable to small-scale companies while multinational people are collected together.

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A reference of a real life example of China Wealth Middle East Machinery which is doing heavy machinery leasing business located in Dubai.

China Wealth Machinery Co Ltd is a subsidiary of SANY Group which was founded in 1999. The main core of business is leasing heavy equipment to civil and building contractors. Based in Hong Kong, China Wealth set up a subsidiary branch in Dubai on 2008, which is China Wealth Middle East Machinery (L.L.C) .

In China Wealth Middle East Machinery, there are workers from four different countries, China, Bangladesh, Pakistan and Afghanistan. These workers are employed in various operating position like operators, maintenance engineers, foreman and P.R.O. The company has faced challenge in managing, motivating people from different culture. In a general perspective, there is a similar culture with very few differences among the employees from Bangladesh, Pakistan and Afghanistan. However, the difference can be substantial when they are compared with the Chinese culture. Hofstede’s study gives comparison between Chinese and Bangladeshi cultures, the results are illustrated as follows,


PDI: Power Distance

IDV: Individualism vs. Collectivism

MAS: Masculinity vs. Femininity

UAI: Uncertainty Avoidance

LTO: Long term orientation


LTO: Long term/Short term orientation

Figure Comparing China and Bangladesh

The chart in Figure 1 shows the comparison of PDI, IDV, MAS, UAI between Chinese and Bangladeshi culture. There is significant similarity between the two cultures in PDI, IDV and MAS where PDI and IDV are exactly the same. In contrast, the great differences between the two cultures come at UAI and LTO.

There is distinctive evidence in the relationship among Chinese and Bangladeshi. They have both displayed high power distance in their workplace. Chinese have given more respect for the elderly; it is believed their behavior assembled from the Chinese Confucianism when taught in the younger days during their upbringing. Whereas, even the junior will to embrace with outstanding achievement, they are not able to gain the same respect as the elders. In China Wealth company, all the Bangladeshi operators are younger than the Chinese operators, therefore, they will only take the role as helpers at the beginning even the Bangladeshi has accumulated enough or already have experience. In addition, the Chinese will always command a longer term orientation and a better salary package which is almost double when they are both put on the same position. It can be seen as unfair but is widely accepted in the company.

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Furthermore, Bangladeshi workers show their high uncertainty avoidance which can be explained that they do not mind the status and acceptance of lower responsibility in exchange for a secured salary. They are easily contented people who do not desire a long term orientation. They can generally accept Salary which is sufficient to cover the basis expenses and support the family back home. On the contrary, Chinese workers need high salary and seek for long term orientation which allow them to spend freely and opportunity for promotion in future. They are risk taker and are ready for any unforeseen event that may or may not occur, they can also take challenges at work.

Thus, managers who work as multicultural role on motivation and management blend in different ways. They must consider the entire national and cultural context on a situation-by-situation basis, settle reward system not only rely on money but also search for their interest and satisfaction, means of keeping occupied, status and prestige. It is difficult to judge which type of workers’ behavior in China Wealth company is right or wrong. Managers should make different job motivation between Bangladeshi workers and Chinese workers according to their different cultures.

Part 3 Conclusions

In globalization competitive environment, leaders can be expatriates. They need to have multiple competencies to deal with challenges like cross border transaction. I think it is important for them to create new culture initiatives by allowing employees to extent their thinking and actions. “Creativity” can be one of the useful methods when dealing with multiple challenges. “Creativity” means doing things from a different way, leaders must learn different culture from people outside the system.

Leaders should consider the cultural differences when creating a new culture for the merger or acquisition.( Kuada, 2008), they can enable reward systems, planning and performance management, motivating systems working together to support the objective and preferred behaviour.

The leader’s job comprises cultural adaptability, leadership experience and technical knowledge, level of authority and autonomy etc. No single leadership style works well in all situations.( Helen Deresky, 2012) Global leaders should broaden their horizons strategically and cross-culturally. Besides, leaders should also try to develop a flexible model what can adapt to local situations then apply around the world.

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