Thursday, October 31, 2013

Multi-national companies- individual business report

About Managing in Multi-national companies- individual business report



Executive summary

Culture refers to the programming of the minds. The organizational culture plays a very important role in the success of the operations i.e. through enhancement of the creativity and the innovation, execution of the varied strategies of the firm. The Hofstede cultural dimensions include the power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance and long term orientation. Germany has a decentralized culture while Japan is a hierarchical society which is characterized with positions in all the social settings. Japan has a focus on the group harmony while Germany focuses on the self-actualization where loyalty is based on the preference, the sense of responsibility and the duty. Germany is considered as a masculine society. The focus is on performance and the people live so that they can be able to work. Japan is the most masculine country in the world but the collectivism significantly reduces the effects of the competitiveness and the assertiveness. Germany and Japan are both high uncertainty avoiding countries. Germany is a short term orientation culture while Japan on the other hand is a long term orientation culture. The Japanese are focused on the need to be able to serve the stakeholders and the society and they are generally workaholics. Germany focuses on the performances. The recommended rule for the overtime is the use of different rules for the overtime. German operations should be given the overtime based on the hours worked. The Japanese should be given overtime based on bonuses following the financial performance of the firm.





1.0 Introduction

The rise of the globalization and the liberalization of many of the industries of the world have led to the increase in the number of the multinational companies (MNCs). The MNCs usually operate in different countries of the world thus the firms must be able to understand the diverse approaches that are applied in the company norms and the approaches to the employment that are used in the different countries. The paper considers an MNC that operates in two diverse cultures; Germany and Japan. The paper will offer a critical evaluation of different attitudes that the employees in Japan and Germany have towards work. It has been noticed that the Japanese employees can work overtime hours without pay while their German counterparts expect to be paid for every overtime hours that are worked. The paper will also offer a recommendation as to whether the organization should have one policy or rule for the overtime or have different rules for the different countries.

The appropriate justifications will be provided on the ways in which the firm can be able to implement the recommended solution. The paper will begin with the clear definitions of culture, the organizational culture and the descriptions of the types of the culture as well as the importance of culture towards the success of an organization. The second elements that will be considered are the cultural differences between Germany and Japan. It will also entail the explanation of the differences in the attitudes between the Japanese and the German employees. Finally, the recommended rule for the overtime and the manner in which the recommendation will be undertaken will also be considered.

2.0 Organizational culture

Culture refers to the patterns of the behavior that can be explicitly or implicitly gained and or spread through the use of the symbols that are a depiction of the achievement of the humans. The cultures usually arise from the actions of the people, be it in a country, an organization or a community (Armenakis and Brown, 2011; Deal, and Kennedy, 1982). Hofstede is one of the scholars that undertook significant studies with regards to the culture of the organizations. According to Hofstede, culture refers to the programming of the minds that leads to the differences that exist between groups of humans from the others while also leading to the development of similarities in the other people.

Organizational culture has elicited a number of definitions and there is a little agreement between the scholars on just what makes up the concept of the organizational culture. The organizational culture according to some scholars is the observable patterns of behavior in an organization (Deshpande, and Webster, 1989). The core of the culture under this definition is the repeated habits and the behavior. This definition significantly deemphasizes the feelings of the people who are found in the organization (Linstead, and Grafton-Small, 1992). There is also the view that the organizational culture is a product of the compensation whereby the rewards, status advancement, sanctions and the recognition all play a role in the development of the culture as the employees who are part of the organization will be subject. There is also the view that the organizational culture refers to the shared or the joint description of the given organization from within.

2.1Types of organizational culture

There are four main types of the organizational culture that can be explored. First, there is the power culture which is mostly related to the control in the organization. The power in the organization is usually related to the centralization of the functions and the centralization of the control, communication and the decision making in the firm (McLean, 2005). The second type of organizational culture is the role power where the members of the organization clearly and succinctly recognize the fact that their roles are a result of the formal instruments for instance the job descriptions of the contract of service (Hofstede, 1991). The third type of the organizational culture is the task culture where the focus is on the establishment of the teamwork in the organization (Schneider and Rentsch, 1988). The person culture refers to the focus on the individuals where the activities that are to be undertaken are under a particular individual and such individuals are responsible for the completion of the roles.

2.2 Importance of the organizational culture in the success of the firm

The organizational culture plays a very important role in the success of the operations. The MNC must be able to understand the culture of the different employees so that the success can be achieved in the firm. The organizational culture plays a significant role in the enhancement of the creativity and the innovation in the organization (Kilmann, Saxton, and Serpa, 1986). Due to the increasing changes in the production and business environment in which the firm operate, the firm will need to engage in innovative ways of creating products and services to satisfy the changing tastes and the aspirations of the customers and also contribute towards the economic wellbeing of the organization. The recognition of creative ideas from their point of inception is important based on their potentials for the realization of some or all of the goals that are listed above. The creative ideas must be supported adequately through funding. When the organizational culture promotes creativity, innovation will be encouraged in the firm.

Organizational culture impacts on the process of innovation through a number of dimensions. It impacts the process of the innovation through the proper communication of the procedures and methods that the employees in the organization need to consider when they want to come up with creative ideas for instance allowing for open debate of ideas, allowing employees to takes risks and also encouraging the employees to challenge traditional ways of doing things (Gogheri, Nawaser, Vesal, Jahanshahi and Kazi, 2013). Moreover, the firm can focus on the use of reward systems to encourage novelty by rewarding those who conceive new ideas of doing things. Finally, the employees can be given freedom to determine the means by which they can achieve the goals but not necessary the freedom to set the goals. After all the above activities are carried out, the employees can come up with new ways that are cost reducing, increasing the efficiency of the firm’s operation thus contributing to the success of the firm.



Secondly, the organizational culture also plays an important role in the execution of the varied strategies of the firm. The organizational culture contain the values, rules and the regulations that are followed in the firm thus they play a role as they help in the backing of the activities that are being undertaken in the firm. The levels of the commitment of the employees will be enhanced through the development of an organizational culture. The culture also significantly determines the levels of the communication in the firm (Mihaela and Bratianu, 2012). The organizational culture also allows for the achievement of the success through ensuring that there is the proper compliance with the procedures that are found in the workplace. The employees of the firm will not commit any errors or mistakes due to the fact that this will jeopardize the achievement of the goals or the objectives of the firm. The reward systems that are used in the organization also play a role in the ability of the organizational culture to help a firm achieve success in the industry (De Witte and van Muijen, 1999).



The punishments and the rewards that are meted out in the organization are important for the success of the firm as the employees will always work hard to receive the rewards and avoid any forms of punishments. The organizational culture ensures that the employees are well informed of the impacts of all the actions that may be undertaken in the firm thus they will always seek to remain in line. The success rate will be enhanced as the wastage in the form of the errors will be reduced significantly.

The organizational culture also contributes to the success of the organization through the encouragement of the organizational learning. The culture of collectivism and team work leads to the development of a learning organization as the employees and teams will work towards the sharing of the knowledge that they may have in the organization (De Witte, and van Muijen, 1999). The employees who support the learning are always given even greater responsibilities in the firm and they will be encouraged to undertake further rewards in the firm.

3.0 Cultural in Japan and Germany

3.1 Hofstede cultural dimensions

First, there is the element of the power distance which deals with the fact that the individuals in the society are not equal. The power distance refers to the magnitude in which the people who are less powerful accept the power that is distributed inequality in the country or the organization where such people are found (Hofstede, 2013a). Secondly, there is the element of the individualism versus collectivism. The dimension significantly addresses the level or the degree of the interdependence that is maintained between the different people in a society. In the individualistic societies, the people are supposed to look after their immediate family and themselves while in the collectivist society, the focus is on the looking after the society and the whole group which the individual belongs to. The third dimension that is considered is the masculinity versus femininity where the focus is on the motives of the people or the factors that motivate the people.

The masculine societies are motivated by the competition, achievement as well as the successes that an individual may have. The success in such a society is defined by the winner or the person who is the best in their given field (Hofstede, 2013a). The competition and the value system start from the elementary school right up to the organizational level. On the other hand, the feminine societies are characterized with the focus on the care for the other people as well as the enhancement of the quality of the life. The quality of the life is usually an indication or a sign of the success of an individual. The people in the feminine societies do not like to stand out from the crowd.

The fourth dimension that will also be considered is the uncertainty avoidance. The uncertainty avoidance is the dimension that shows the extent to which the people in the culture are usually afraid of or threatened of the unknown situations or happenings thus form or develop the organizations and the beliefs that are used to try and avoid such in known situations (Hofstede, 2013a). The uncertainty avoidance is related to the manner in which the society tries to deal with the reality that the future may not be known. In some cultures, the future is controlled while in the others, the future is left to pan out the way it wants. The ambiguity in the future brings certain amounts of anxiety in the societies or the organizations thus the different ways have been formed to be able to deal with the anxieties. Finally, there is the consideration of the long term orientation and are mostly related to the search for virtue by the society. The society can either show the conventional and historical short term view or the future oriented and pragmatic view. The dimension is related to the teachings of Confucius (Hofstede, 2013a).

3.2 Comparison of the culture of Japan and Germany

Germany has a power distance of 35 thus making it a much decentralized culture which is characterized with a very strong middle class (Hofstede, 2013a). The culture is characterized with co-determination where all the individuals in the society are involved in a participative and direct communication between the leaders and the followers. The control of the employees is significantly not accepted by the people who are found in the culture. The leadership in the firm is always challenged to be able to show the expertise and in many cases, the leadership is accepted when it has the ability to show the high levels of expertise. On the other hand, Japan is a hierarchical society which is characterized with positions in all the social settings. The top management confirms all the decisions that are made by the firm unlike in Germany where the control is in the hands of the employees. The decision making in Germany is faster as compared to the decision making in Japan which has a power distance score of 54 (Hofstede, 2013b). Secondly, there are also the differences that exist based on the individualism.

Although Japan has a score of 46, it is considered slightly collectivist especially with regards to the focus on the group harmony thus individuals shelve their individual opinions under the fear that they will lead to disharmony in the organization (Hofstede, 2013b). There is also the element of the loyalty to the companies which they work for. The Japanese are thus considered collectivist by the western standards and individualistic by the Asian standards as there is a great lack of loyalty to the community. Germany on the other hand is an individualistic society where there is the relationship based on the parent and children (Hofstede, 2013a). The focus of the society is on self-actualization and the loyalty is based on the preference, the sense of responsibility and the duty amongst the many others for instance the contract between the employee and the employer. Honesty is the virtue thus the communication between the people who are found in the society are very direct. The people are given a chance to be able to learn from the past mistakes that they made.

There are also the considerations of the masculinity/ femininity where Germany is considered as a masculine society. The focus is on performance and the people live so that they can be able to work (Hofstede, 2013a). The Germans draw a lot of self-esteem from the work that they undertake and the managers are expected to be decisive so that they can be able to command the respect of the people in the firm. Japan is the most masculine country in the world but the collectivism significantly reduces the effects of the competitiveness and the assertiveness by the individuals and the competition is undertaken in groups and not as individuals. The notorious workaholism amongst the Japanese is a sign of the masculinity of the Japanese. The culture is characterized with hard and long working hours (Hofstede, 2013b).

Germany is a high uncertainty avoiding country thus the focus is on detail so that certainty can be created. The country significantly lies on the expertise to be able to bring about the certainty (Hofstede, 2013a). Japanese culture is highly uncertainty avoiding thus the changes in the way of the undertaking of the operations take massive time (Hofstede, 2013b). The high uncertainty avoidance in Japan make the changes from the current reward systems to the one where overtime is paid due to the massive amount of time that will be taken to make decisions especially based on the need to consider all the factors and the risks. Germany also focuses on the need for the detail. Finally, Germany is a short term orientation culture thus the respect for the traditions and the lower propensity by the individuals to undertake any savings (Hofstede, 2013a). Japan on the other hand is a long term orientation culture for instance the focus on serving the society and the stakeholders for the generations to come (Hofstede, 2013b).



3.3. Differences in the attitudes towards work

The Japanese are focused on the need to be able to serve the stakeholders and the society thus their ability to be able to work the overtimes without pay. The short term orientation in Germany leads to low savings thus the people require all the money that they can lay their hands on to support their middle income lives (Hofstede, 2013a). The other difference that exists is the view of the work. The notorious workaholism amongst the Japanese allows them to work hard and for long hours (Hofstede, 2013b). Germany on the other hand focuses on the performances thus the need to be able to be paid for all the extra performances that they put into the organization. The other difference that exists in the attitudes is the group harmony thus not ideas that will bring disharmony are supported or brought forward (Dalton, 2005). The focus of the German society is on self-actualization and the loyalty is based on the preference, the sense of responsibility and the duty amongst the many others for instance the contract between the employee and the employer. Therefore, the Germans must be paid for the overtime while the Japanese are contented with work without pay (Schein, 1990).

Finally, in Japan all the decisions are made and ratified by the top management while in Germany, the decision making are decentralized (Ramachandran, Chong, and Ismail, 2011). The Japanese undertake what they are told to do while the Germans can question the decisions that are made. 4.0 Recommended rule for the overtime and the implementation of the rule

The recommended rule for the overtime is the use of different rules for the overtime. German operations should be given the overtime based on the hours that are worked while the Japanese can be given the overtime based on bonuses following the financial performance of the firm. The above are based on the differences (Halsall and Brown, 2013). The long term orientation of the Japanese makes the performance based bonus the best option as the high uncertainty will prevent the implementation of the changes to incorporate hour-based overtime (Buschman, 2013). The Japanese are workaholics and thus they may clock very many hours on the clock thus leading to the cost overruns. The short term orientation of the Germans also supports the use of the hourly overtime so that they can be able to have the self-actualization.

5.0 Conclusion

It has been noted that the two countries have differences in the cultures thus leading to the differences in eth management of the elements of the operations of the MNCs in the cultures. The firm needs to be able to adopt different strategies so that it can be able to significantly survive in the diverse markets.