Managing Across Cultures – Assignment

1 Managing Across Cultures Culture is the attitude, belief and social behaviour of a particular people or society. A person’s cultural behaviour is derived from their social environment, it is the law, morals, customs as well as other habits that a society operates within. Culture is learned, not inherited. Edgar Schein (2010) a well-known theorist on organisational culture defines culture as ‘both the “here and now” dynamic phenomenon and coercive background structure that influences us in multiple ways. Culture is constantly re-enacted and created by our interactions with others and shaped by our own behaviour

[1] Culture is learned on four levels, the first being Enculturation, whereby the culture that is currently established teaches an individual acceptable social norms and values of their current environment.

The individual is taught their role in society, as well as what ‘is’ and ‘is not’ acceptable behaviour. The second level is Primary socialisation, this usually occurs during childhood. As a person grows they will adopt attitudes and values appropriate to the members of their particular culture. The third is Subculture, which develops when a culture differentiates itself, be it through language, religion or ethnic reasoning from a larger culture to which they previously belonged. And the fourth is Secondary socialisation, which is the learning process that occurs after primary socialisation; it takes place outside of the home, and allows the individual to see what acceptable behaviour amongst its social group is and how to act accordingly to new rules. This phase usually happens during teenage years and early adulthood, for example – a new profession or relocating to a different environment. In business we often find that we have a group of employees who have come from different social groups and that while this often enriches the workplace it can cause various complications, with these differing cultural backgrounds there is a possibility of conflict and that in itself can cause issues with productivity and perhaps affect the overall moral of employees. There are two theories which explore the levels of culture within an organisation, French and Bell.(1990) developed the iceberg theory. (see appendices fig 1) Iceberg theory CIPD explains that the “The formal side of the organisation is the tip of the iceberg, the visual aspects such as strategy, structure and the organisational processes are exposed and in theory are perhaps easier to change, but the informal side of the business is submerged, suggesting that management styles, company politics, beliefs, values and attitudes are perhaps not so easy to see, and as a result are harder to change.

[2] Onion Theory Geert Hofstede (1997) developed the onion model theory (fig 2) – in this model values form the core of organisational culture and are set at the deepest level (centre), values are the morals and ethical codes which determine what people think should be done.

[3] Rituals (layered second) are practices which are deemed socially essential. Heroes (layered third) are individuals who are held in high regard and perform well within the organisation, perhaps a motivator who rallies everyone when things need to be done. The final layer is symbols which are gestures, objects, words or acts that signify meaning to an individual or group. Through all the layers runs the business practice. Tesco are the largest private sector employer in the UK with nearly 500,000 staff.

Their website shows their approach to human resources by listing their commitments to employees, which are as follows;

• To create inspiring work that makes our colleagues happy and proud of what they do
• To provide opportunities for our colleagues to be at their best
• To build relationships based on shared values
• To build an environment where all our colleagues contribute, make a difference and can be themselves (Tescoplc.com) [4]

Tesco’s website also declares to ‘Offer a market leading package of pay and benefits’ at the same time to ‘reward committed staff with a share scheme and generous pension’. Tesco UK also have a very strong relationship with Usdaw (Union of Shop, Distributive and Allied Workers), a partnership which is the biggest trade union agreement of any PLC, understanding the need for high standards of employment practice, suggesting that if the employee feels valued this will reflect in their work, and result in the overall achievement of Tesco strategic goals. (Tescoplc.com)

[4] Mullins (2010) defines organisational culture as ‘the collection of traditions, values, policies, beliefs, and attitudes that constitute a pervasive context for everything we do and think in an organisation.

[5] Human Resource Management has the task of recruitment and selection and as Tesco push their organisation into countries whose cultural backgrounds may differ greatly to those already established it is the task of HRM to apply the correct management practice. Certain theoretical tools can be applied to analyse how other countries behave in respect to their organisational culture, understanding the characteristics of a these differing culture’s and adapting to them will provide a foundation to successfully establish the organisation in a foreign market. Geert Hofstede is a Dutch social psychologist who developed the cultural dimensions theory, the framework for cross-cultural communication. The dimensions which Hofstede uses to help distinguish national culture are; (See appendices) Hofstede’s 5 cultural dimensions 1. Power Distance (PD) – measures the levels of inequality members of society are willing to accept in terms of the distribution of power, and that people understand their position within the system. Hofstede suggests that countries with a high PD would probably only send reports to top level management and have closed door meetings. 2. Individualism (IDV) – refers to the bonds individuals have with others within their community.

Hofstede suggests that a marketing campaign that empathises the benefits to the community would more likely be understood and better received. 3. Masculinity (MAS) – refers to how society values traditional male and female roles. High masculinity scores are in countries where men are the main providers to their culture. Low MAS do not mean the reverse of this, instead the roles are blurred, and job roles are shared equally. Hofstede suggests that in a country such as Japan (with high level MAS) would probably respond better to a male team leader, whereas a nation such as Sweden would respond to an appointment based on skill level rather than gender. 4. Uncertainty Avoidance (UAI) – relates to the levels of anxiety society members feel when faced with unknown situations. High level UAI countries will attempt to avoid this whenever possible seeking a collective truth, whereas low level UAI enjoy such events and are encouraged to discover their own truths. 5. Long Term Orientation (LTO) – refers to level of importance and nation applies to traditions and values.

According to Hofstede the US and UK has a low LTO which suggest to expect anything in terms of creative expression, that these two nation perhaps don’t value tradition as much as others and as such are more willing to help implement new ideas. Asian countries on the other hand have high level LTO and would likely be less receptive to change.

[6] Using this framework as a starting point would give an organisation a general sense of how to approach foreign cultures and evaluate how these different societies may react to the organisational behaviour of an expanding company, such as Tesco. Different HR tactics overseas During 2006 Tesco expanded to the US marketplace where they opened supermarkets under the name ‘Fresh & Easy’, with Tesco’s reputation for good employee relations the UFCW (Usdaw’s US equivalent) had expected to have a similar arrangement to the agreement of benefits employees enjoyed back in the UK. Unfortunately this was not the case, and in 2008 the UFCW issued a report entitled; ‘’Tell British investors, politicians, employees and shoppers why we think that the Tesco they know and admire as a business, with a great track record on community and employee relations, can be a very different organisation when it operates away from British shores’ – the report described that ‘Instead of engaging with community groups, Tesco refused to meet us, rather than offer partnership they instead greeted conflict.

Instead of defending freedom of association, they would rather pursue a policy to keep out trade unions”

[7] It was later revealed that this was always a planned strategy by Tesco as the job advert for the role of ‘Employee Relations Executive’ required the ‘maintaining of non-union activities’ and ‘avoidance of union activities amongst a list of job role responsibilities. Tesco responded by claiming the advertisement had been made in error. Mead and Andrews (2009) explain that “The organisational culture is strong when it is cohesive; group members share the same values, beliefs and attitudes; members can easily communicate between themselves; members depend on each other in meeting individual needs. The strength of a culture is shown superficially by uniformity, but more significantly by the tolerance that members show for each other’s experiences and ideas. When the opposite conditions apply and relations between members are not cohesive, the organisational culture is weak.

[8] In this instance Tesco’s move into the US market was met with opposition primarily due to a poor understanding of the wants and needs of the labour market. US employees had expected the same treatment in terms of union security as their UK counterparts and were surprised to find that Tesco managers had decided to treat overseas employees differently.

With Tesco unwilling to extend its UK employee principles and organisational behaviour overseas, it left the expansion into a lucrative market hanging by a thread. A fact perhaps reinforced by the news (according to USAToday.com) that Fresh & Easy will now pull out of the U.S Market in 2014. Alfonsus Trompenaars is a Dutch organisational theorist who alongside Charles Hampden-Turner (1997) developed the seven dimensions of culture. Although these are different they do seem similar in concept to Hofstede’s dimensions. Trompenaars and Hampden-Turner sampled over 30,000 employees in 50 countries worldwide. Based on this data, Trompenaars and Hampden-Turner proposed a series of seven dimensions which, they argue, are the basis of cultural differences.

[9] Universalism vs Particularism – Cultures that are universalistic believe that standards, values and codes are more important than relations and needs, whereas a culture which is predominately particularistic think that human relationships are more important than values and codes, for them human needs come first. Individualism vs Collectivism – An Individualistic culture will put the community after an individual. People have autonomy; they can make decisions and will take care of their family on their own.

Collectivism is the opposite of this and the needs of the group will always take precedent, the function and development of society takes precedent. Neutral vs Affective Relationships – Affective cultures are more likely to express emotion and feeling. They feel no need to hide themselves within this culture. A Neutral culture believes that it is not correct to express or share emotion; they would likely see the behaviour of an affective culture as overly excitable or too emotional. Specific vs Diffuse Relationships – A culture that is specific will always analyse the finer details, before finally putting them together to form the global picture. People of a diffuse cultures on the other hand will analyse the issues as a whole believing that all issues are linked to one another. Achievement vs Ascription – People of achievement cultures respect their colleagues based on knowledge and achievement. Those of ascription culture instead respect job titles and superiors Time orientation – looks at the comparison of sequential and synchronic cultures, where a sequence based culture might do things one at a time, a synchronic culture would prefer to do several things at once. Internal vs external control – looks at the fact that some cultures believe they have an element of control over their environment, while others believe they are controlled by it. Americans for instance have an internal culture and that what happens to them is of their own doing, Asian on the other hand believe that it is the environment that forms their destiny. Trompenaars cultural dimensions theory can be useful in a number of ways, for instance a company may deduce how an organisation operates culturally itself, and perhaps may better understand how to implement an overseas expansion, or how to take into account the culture of another nation when trading.

Marketing issues could also come into consideration, organisations could capitalise on specific elements of a nations culture in an effort to maximise its brand image. Perhaps a criticism of Trompenaars and Hampden-Turners theory is that it is now nearly twenty years old, and does not account for the cultural drift that is apparent as time passes by. Tesco opened its first store in China over 10 years ago (2004), relatively late compared to the likes of Walmart who as a result of earlier expansion into the Asian market (1996) enjoyed the choice of store location and low cost land, yet though Tesco had entered the market late, managers felt that they had a secret weapon in its bid to lure Chinese consumers – the ‘Tesco Clubcard’. It was hoped that the card would give the store management and marketing staff invaluable information about the elusive Chinese shoppers. The card would reveal their tastes, preferences, shopping habit and much more; it would hold the key to understanding the most demanding consumers in the world. However, the value of the Clubcard or indeed any loyalty programme in the Asian market may have been grossly overestimated. Warwick Business School Professor of Marketing and innovation Qing Wang of believed that the UK retailer should have looked into cultural differences before investing in the second biggest economy in the world. Wang explained ““The value of the Clubcard or indeed any loyalty programme in the Asian market may have been grossly overestimated,” he explained; “Research my colleagues and I have carried out in an Asian market with similar demographics and purchasing power to that of China’s large cities reveal consumers to be ill-suited to the clubcard approach.” Wang’s research team found that almost all consumers participated in at least one loyalty programme and that 63% of those had loyalty cards from four or more retailers. They believed larger choices gave them more power of control, more motivation to make decisions, more chances to have programmes which suited their needs and to have a more satisfying shopping experience.

This means that any customer information held on one store card is at best incomplete, and at worst misleading, and not fit for the purpose Tesco intended. [10] Asian shoppers were found to have no strong preference for any store, regardless of a loyalty card scheme, instead they sought the best deal from various supermarkets. As a result (and alongside it’s failing in the US market) Tesco have now announced after 10 years trading in China is to fold its unprofitable operation. Lured by the prospect of a rapidly growing middle class in the world’s second-biggesteconomy, many foreign firms have waded into China’sretailmarket only to find they lack local expertise, particularly in building supplier relationships. Conclusion Although the venture into the American market could have been extremely lucrative for Tesco it seems the organisation did not research the cultural dimensions of this foreign market. Refusing to expand the wealth of benefits that UK employees enjoyed and credit them to US workers caused great friction between staff and the organisation, as Mead and Andrews (2009) suggest ‘The organisational culture is strong when it is cohesive’ yet in the case of Fresh & Easy there was no showing of unity and Tesco will now very likely move away from the US market, according to the Independent Newspaper the company are now A£1 billion pounds poorer than when they first entered this market as a direct result. As French and Bell’s Iceberg suggests, the formal side of the organisation is clearer to see, but what Tesco did not take into account was the informal, submerged aspects of the business, most certainly Tesco misjudged the political aspect of the US based organisation and perhaps they also misunderstood its differing management style. On investigation it seems the cultural research was also not performed for the Chinese consumer demographic, in this case Tesco’s had tried to implement their own (Clubcard) culture rather than take into account the needs of an entirely different cultural market.

Perhaps arrogance has cost Tesco in this instance, after all, their European based operation is one of the strongest organisations on the continent, and their business model does seem to go from strength to strength. Unfortunately due to a lack of research alongside any real attempt to integrate into China’s entirely different cultural system, Tesco have again seen their operation fail due to a poor understanding of another countries cultural practices. Bibliography

[1] Edgar H. Schein, Organisational culture and Leadership (2010) Page 3 [Accessed on Dec 16]

[2] CIPD Online – https://www.cipd.co.uk/NR/rdonlyres/CAB172FE-E034-42FA-A749-48FAF7CB6925/0/1843980665sc.pdf (Page 65) (Accessed Dec 18 2014)

[2] https://www.culture-at-work.com/iceberg.html (Accessed Jan 9 2014)

[3] International Journal of Business and Management 2008 Hofstede’s Onion Diagram page 139 (Accessed Jan 9 2014

[4] https://www.tescoplc.com/index.asp?pageid=620 (Accessed Jan 3 2014)

[5] Laurie J.Mullins -Management and Organisational Behaviour (Page 106) (Accessed Jan 3 2014)

[6] https://geert-hofstede.com/ (Accessed Jan 3 2014)

[7] https://www.ufcw.org/2012/12/05/ufcw-statement-on-tescos-fresh-easy/ (Accessed Jan 2 2014)

[9] Richard Mead & Tim Andrews, International Management 2009 (Page 90) – (Accessed Jan 8 2014)

[9] Richard Mead & Tim Andrews, International Management 2009 (Page 90) – (Accessed Jan 8 2014) [10] https://www.wbs.ac.uk/news/tesco-find-their-secret-weapon-fails-in-china/ Appendices Hofstede’s 5 cultural dimensions 1. Power Distance 2. Individualism 3. Masculinity 4. Uncertainty Avoidance 5. Long Term Orientaion (Fig 1) (Fig 2) .

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