Importance of Cross-Cultural Management in International Business Essay

Introduction

Globalization has created a dynamic business environment that requires business leaders all over the world to be equipped with vital skills in order to succeed. As a result of globalization, the geographical distance has changed and this has greatly affected the way business is carried out throughout the world (Vaara, Sarala, Stahl and Björkman 2012).Firms that stick to their traditional ways of conducting business lose many opportunities to excel. Drawing from a study by Velo (2011, 3), relationships and communications play a very critical role is guaranteeing the survival of business enterprises. Apparently, technology is an important asset in this regard and is accessible to all businesses.The biggest challenge, however, is the ability to maintain businesses across borders. Clearly, those with skills to effectively conduct business across borders stand a better chance of excelling in their operations unlike those who lack such skills.An essential ingredient for success in any international business setup is the ability to understand other cultures and their dynamics. As pointed out by Okoro (2013, p. 2), the ability of managers at all levels to be equipped with cross cultural communication skills is an important asset for business enterprises.This paper looks at the importance and function of cross cultural management in international business. Ostensibly, several attempts have been made by different scholars to define culture. For some people, culture simply refers to a nation’s way of being. It is also regarded by others as a system of behaviors that is born from the social process.However, it is important to note that underneath every definition exists the relationship between an individual and the society that he or she belongs to. As pointed out by Kawar (2012, p. 105), culture is mainly acquired at a very early age in life.This is mainly due to the act that the ability to absorb cultural norms from the surrounding environment is high during the childhood years. This enables individuals to successfully fit and function within a given society. Culture may also be regarded as the outcome of human relationships that involve people meeting, communicating, and interacting.

Importance and function of Cross-cultural management in international business

The need for multi-cultural management has been brought about by a number of factors (Greblikaite and Daugeliene 2010). First, there is increased globalization that has led to the desire for business enterprises to compete and remain relevant in the contemporary business environment.In addition, the rate of migration from one country to another has been growing steadily over the years. The outcome of these activities has been the creation of work environments made up of employees from different cultures.By and large, cross-cultural management looks at how different people around the world respond to situations. It goes ahead to provide strategies to ensure that people from varied cultures across the globe can successfully work together (Kawar 2012, p. 107).The number of businesses venturing into multinational operations across the world has been on rise driven by the ever increasing trend of globalization. As business enterprises continue to expand operations beyond their domestic market, the need for managers who can effectively perform in a cross-cultural environment can not be overemphasized.

Unlike in the past, corporate bodies are today compelled to create strategic alliances and establish joint ventures in foreign markets (Okoro 2013, p. 2). Besides having managers who are capable, it is also important for multinational businesses to ensure that employees are properly equipped with vital skills necessary for surviving in a multi-cultural setup.For this reason, corporate bodies make every effort to provide an opportunity for managers and employees at different levels to visit other countries and learn how to cope with different cultures (Piekkari, Welch and Welch 2014). Arguably, this makes it possible for managers to have fruitful engagements with people from other cultures and to take advantage of business opportunities that may be found in other countries.Generally, scholars are in agreement that cross cultural management is very critical for success to be realized in an international business environment due to increased globalization (Primecz, Romani and Sackmann 2011). Considering that many business enterprises, big and small are now taking advantage of the growing global market, it is necessary to come up with strategies for managing and negotiating across different cultures in order to succeed.An elaborate understanding of the culture existing in a given business environment thus plays a big role in ensuring that managers can be productive in an international business setting. In the absence of such an understanding, the success of international engagements will be severely affected.

Factors that contribute to Cross-cultural management failure

In several ways, cultural values affect how business enterprises are managed throughout the world. At an international level, managers encounter various cultural differences. As noted by Barrera (2010, p. 41), inability to comprehend cultural differences is the biggest cause of failure in international business ventures.First and fore most, time is regarded differently in different cultures (Helfrich, Hölter and Arzhenovskiy 2012). In a culture where things are done based on a monochromic time system, individuals perform their work related tasks based on a pre-set schedule.Typically, work tasks under a monochromic time system are carried out one activity at a time. This is in contrast to cultures that are guided by a polychromic time system in which individuals can focus on more than one activity at a time. People are considered to be more important in a polychromic system and schedules are quite flexible.

Power is also perceived differently in different cultures (Giudice, Carayannis and Peruta 2011). In some cultures, it is based on an existing culture, built over time, and inequality is permitted. On the other hand, equality is favored in some cultures since it helps to foster healthy working relationships.In some cultures, competition plays a very important role in motivating employees. In such cultures, wealth creation and ambitions are the order of the day. In other cultures, however, competition is not present and employees are mostly concerned with how satisfied they are with their jobs.Space is also looked at differently in different cultures. While a person may consider a particular space as private in one culture, it may be taken as public space by members of a different culture. If not well understood, this can greatly affect the performance of a manager in a cross-cultural setup.The perception of organizational structures in different cultures may also end up affecting the performance of managers. While some cultures advocate for individualism, others tend to prefer collectivism. Consequently, it is imperative for managers to be familiar with the two forms of organizational structures in order to be effective.

There are other factors that my also lead to the failure of managers in cross-cultural business environments. Understanding the right way to behave before assuming an international assignment is an important requirement if success is to be realized.Failure to take time to learn the correct etiquette for a given cultural setup can easily lead to failed negotiations in international business (Briscoe, Schuler and Tarique 2012). It is thus crucial for managers to be up to date with how things are done in a given culture before any engagements can begin.Managers also fail in international business setups when they do no adapt to foreign ways of looking at things. Managers are thus expected to work hard in order to fit into new cultures. It is also vital to appreciate other people’s culture.As pointed out earlier, international business enterprises make every attempt to provide an opportunity for managers as well as staff members at different levels in the organization to visit other markets abroad in order to learn and be equipped with vital skills to cope with different cultures. To a certain extent, this permits managers and other employees to engage successfully with members of other cultures.In the end, it is the business that benefits by taking advantage of existing business opportunities that may be available in other countries. Failure to grab such opportunities creates room for competitors to progress at the expense of other firms that are unable to do so.These factors, alongside others, are responsible for failed international business undertakings (Shen and Lang 2009). As earlier pointed out, a vital requirement for success in an international business setup is the ability of managers to comprehend and appreciate other cultures across the world.

Challenges of Cross-cultural management and survival strategies

One of the major challenges faced as far as cross-cultural management is concerned is in the area of negotiation. To be successful in a cross-cultural environment, effective negotiation skills are very critical. For this reason, it is very important for managers to be skilled negotiators (Devinney and Pedersen 2010).Apparently, the process of negotiating is specific to different cultures and must be handled very carefully. Usually, negotiators are expected to be familiar with the requirements in different cultures. Considering that effective negotiation skills are needed to excel in a cross-cultural environment, all managers at a global level must endeavor to learn how to survive in other cultures.To a certain extent, managers must be familiar with government requirements to operate in foreign markets. A number of studies have been carried out to determine how the process of negotiation can be affected by culture. Often, the goal is to ensure that managers in cross-cultural environments are fully equipped to deal with any challenges that may be encountered.Another challenge that may be encountered by global managers in the process of performing their business related duties in an international setup has to do with communication. Without a doubt, effective communication is critical in any business engagement and especially in a multicultural business environment.Arguably, cases of miscommunication are likely to be experienced in negotiations that involve individuals from different cultures (Moran, Harris, and Moran 2011). The ability to effectively communicate in a multicultural business environment is thus vital for success to be realized in a global business setup.Individuals who are required to work with a diverse workforce, locally or internationally, are therefore expected to flexible and enthusiastic enough to cooperate with people of other cultures. The management of cross-cultural environments also requires managers to exercise due diligence when dealing at all times. Messages must, for example, be interpreted properly in order to eliminate cases of being misunderstood.

Managing Cross-cultural international business environments

Drawing from a study by Krishna, Sundeep and Geoff (2004, p. 64), effective management of cross-cultural business environments begins with making the right choices. Ostensibly, this helps to improve relationships and minimize the possibility of conflicts.It is equally important for managers to understand the limits to which one can go to fit into a foreign culture. When it comes to recruitment, managers should make a deliberate move to use locally available talent where feasible. Global managers should also plan for trainings to equip employees with skills that are required to succeed in a multicultural environment (Dowling, Festing and Engle 2008).Before undertaking any training, however, it is necessary to spend enough time to understand the training needs. Certainly, this ensures that participating individuals are subjected to the correct training. As a prerequisite, most international business enterprises undertake to train employees before allowing them to take up international assignments (McFarlin and Sweeney 2014).Among other things, this makes sure that employees moving to work in a foreign market are protected from culture shock. For effectiveness to be realized, it is necessary to ensure that the training offered covers all the cultures involved.

To a large extent, failure to recognize cross-cultural differences in international business often creates a problem (Barrera 2010, p. 41). Furthermore, the way a multinational company deals with cross-cultural challenges greatly determines the level of success that can be realized in international business.Success in a multicultural business environment also depends on the ability of a firm to conduct an elaborate study to determine if it is worthwhile to proceed with the proposed business plan (Guang & Trotter 2012). In order to succeed, experienced managers make use of existing structures and proceed to create new structures as needed.A number of studies in the past point to the fact that culture has an effect on the way people live and socialize (Chanlat, Davel and Dupuis 2013). It affects how they eat and consequently their buying behavior. Clearly, penetrating a market without establishing whether the goods or services intended for a given market will be welcomed can lead to a major downfall of a multinational company.Individuals and firms with vital skills to successfully carry out business operations in an international setup have a better opportunity to attract new customers and effectively deal with any form of competition that may be encountered during business operations (Adekola and Sergi 2012).As has already been explained, firms can not ignore the need to understand the dynamics of other cultures if they are to succeed in the modern day competitive global business environment. Undoubtedly, managers at all levels within a business enterprise must be prepared with skills that will guarantee their success of their operations in a cross-cultural environment.Business enterprises must see to it that managers at different levels are able to communicate properly in an environment that is populated with individuals from a diverse background.

Conclusion

As the effect of globalization continues to be felt throughout the world and as business enterprises expand their operations beyond borders, it is imperative to ensure that global managers are properly equipped with skills that are necessary to effectively manage a diverse business environment.It is important for corporate bodies that are involved in international business to ensure that managers are presented with opportunities to learn and appreciate what other cultures have to offer. Based on the discussion presented in this paper, it is imperative for managers in an international business environment to have a clear understanding of the different cultures they have to work in.Apparently, the inability to understand how to operate in a certain culture is what eventually kicks a business enterprise out of a lucrative international business opportunity. As mentioned earlier, there are various instances at which cultural differences may be encountered in an international business environment.Often, differences are encountered with regards to time, power, competition, and organizational structures among others.While there are several challenges that may be encountered in a multicultural business environment, negotiation is quite critical. Without a doubt, managers must be equipped with powerful negotiation skills that will help them to survive in a cross-cultural business setup.Given the importance of effective negotiation, firms must take it upon themselves to equip managers and employees with the requisite skills needed to excel. Ordinarily, it is imperative for everyone involved in the negotiation process to be in touch with the requirements of different cultural setups.Based on research findings, the negotiation process can easily be affected by the culture of a given place. Usually, the goal is to ensure that managers in cross-cultural business environments are fully equipped to deal with challenges that may be encountered. As a matter of fact, business enterprises must go to the extent of getting familiar with government regulations in the host country so as to be on the safe side.

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