Case Study: Culture Clash in The Boardroom OB Assignment

Case Study: Culture Clash in the Boardroom OB Assignment
Introduction
Edgar Schein, defines culture as: a pattern of basic assumptions invented, discovered, or
developed by a given group as it learns to cope with its problems of external adaptation and
internal integration that has worked well enough to be considered valuable and, therefore, to
be taught to new members as the correct way to perceive, think, and feel in relation to those
problems.(Fred Luthan,2011)
Joanne Martin emphasizes the differing perspectives of cultures in organizations. She notes:
As individuals come into contact with organizations, they come into contact with dress
norms, stories people tell about what goes on, the organization’s formal rules and procedures,
its formal codes of behaviour, rituals, tasks, pay systems, jargon, and jokes only understood
by insiders, and so on. These elements are some of the manifestations of organizational
culture. (Fred Luthan, 2011)
Sometimes an organization determines that its culture has to be changed. For example, the
current environmental context has undergone drastic change and either the organization must
adapt to these new conditions or it may not survive. (Fred Luthan, 2011)
Besides the financial implications of M&As, the often slighted or even ignored organizational
culture implications can be dramatic. As one veteran of a number of M&As concluded about
the cultural side of mergers: you can’t do too much, and too little will be done. In the heat of
the deal, he says, “people issues, as real as they are, become obscured. (Fred Luthan, 2011)
Cultural differences have a strong influence on the business achievements of joint ventures
(Shenkar and Zeira, 1982). They have been shown in areas such as work values, knowledge
framework, physical appearance and conduct and language. The cultural differences are not
limited to the variety of cultural backgrounds of the individuals in a management group, but
also can be more precisely demonstrated through the concept of cultural distance (Hambrick,
Davision and Scott, 1998). Generally, the greater the cultural differences were, the more
difficult it was for the group members to communicate and the more unfavourable it was for
the organization’s success.
1
Key Issues in the article
It’s common to see cultural difference in a joint venture company’s which become a common
problem in international business and the problems arose with the joint venture between
Almond Chemical, a German based company and Chongqing, local company in China is
similar to the this phenomena . The German based company was trying to expand its reach in
China and wanted to gain a perfect position in the market. The main issue that the company
faced while expanding its market was cultural differences.
Chinese and Germany people have a cultural difference that can be expressed in different
ways and this cultural difference become a problem in the Almond chemical, a Germen based
company used to implement Germany’s culture and the local company’s in china which have
their own culture.
In Chinese culture (business culture); the business decisions were made quite smoothly and
effectively. The business decisions were made on behalf of the network connections or
relations. It was a normal way of doing business in China, to play golf together, presenting
gifts to the clients and giving the purchase manager of the other company some percentage of
the business deal. There was a small amount of bribe involvement necessary for doing
business smoothly.
The Germans realized that this was totally against their entire culture and their values. The
German company was destined to do business in a formal and in a straight path manner. All
the decisions were, according to the German standards and policies. Considering the Chinese
culture of doing business, it was totally against the corporate culture of Almond Chemical.
Hence, it was a vital problem that whether the Chinese culture of doing business was
perceived or staying with the true German culture of doing business. So this cultural
difference becomes a critical issue in the boardroom.
We can see that in our case Germans were quite formal and disciplined. They had standards
for everything and made them compulsory in their business environment. In case of
Chongqing, the Germans had built the production facilities according to their standard and
culture. The production facility created in Chongqing included all the safety equipment such
as helmets, shoes, protective clothing which was directly imported from Europe. These were
safety measures which German company took for the safety of workers working in the
production facility in Chongqing. According to the Germans, the safety tools and equipment
2
are very necessary for the workers in production facilities as anything can happen in the
production facility and to avoid any incidents and injuries Germans took care of the safety
measure necessary in production plants.
But, according to the Chinese, these safety measures were totally “wasteful” and “frivolous”.
The cost that incurred in the instalment of these safety measures and import of the protective
clothing was considered to be wastage of the money by the Chinese. They took this in
negative way regarding the company. Chinese thought that these safety measures were
“luxurious expenditures.
What should liu Peijin do?
I think Liu as president of Almond China should clearly understand the opinion of both sides
(the Chinese and the parent German company) and try to compromises in a way that can
benefit the organization. And Both the Chinese and the foreign managers need to be more
open-minded about the other side’s perspective. Their problems will not be solved if
everyone focuses on what his side stands to gain. The two sides should figure out together
what is best for the venture as a whole, over the long term.
I believe company’s need to be open to adopt new cultures and leave bad cultures; the
company should not be unmoving having old cultures. In some cases organizations find that
they must change their culture in order to remain competitive and even survive in their
environment.
To move forward, Liu needs to help the parties communicate better with one another.
Because they come from different cultures, they have distinctive approaches to work and
cooperation.
Recommendations;
Almond chemical is international company, so it should not hold the local Chinese culture of
implicit corruption (Network) culture that insist bribes and commissions. Ethics should not be
compromised for the short term benefit. So Almond should act ethically and respect the
firm’s beliefs and culture. I’d not recommend the joint venture to bend the company’s culture
as it could have a negative impact on the company not only in China but on a global scale.
Also, the company has a lot to lose, besides its reputations; it could lose some of its
stakeholders and distort their objectives as well.
3
Since it’s a global company, it’s important to follow the international laws with caution
otherwise the impact on the company’s reputation and growth/profit could be tremendous.
Liu fighting for the safety standard was also right; even if higher safety standard is
uncommon in china it’s very important for the company. They should have to hold this
culture if they need to succeed at international level especially at the long run.
But I think there may be one last solution that may probably used that is; Almond may use
different ethics and standards based on the level (local and export) products. In our case it
may use the chines ethical conduct and lousy safety standard for the local products. And use
the strong Germanys ethical conduct and tight safety standard for the international (export)
products.
Reference
Robbins, S. P., Judge, T. A. Organizational Behavior (fifteenth Edition). New Jersey:

Pearson Prentice Hall. (2013).
Fred Luthans Organizational behaviour : an evidence-based approach ,12th ed.(2011)
Yuan Zhang Do Ownership and Culture Matter to Joint Venture Success? University
of Electronic Science and Technology of China, journal of cooperative international
management volume 11, number1 (2008)
Katherine Xin and Wang Haijie, culture clash in boardroom ,Harvard business review,
September 2011.
Park, S. H. and G. R. Ungson. 1997. The effect of national culture, organizational
complementarily, and economic motivation on Joint Venture dissolution. Academy of
Management Journal, 40(2): 279-307
Killing, J. Peter. 1983. Strategies for Joint Venture Success. Routlege Kegan and
Paul: London.
Hambrick, D. C., S. C. Davison et al. 1998. When groups consist of multiple
nationalities: Toward a new understanding of the implications. Organization Studies,
19: 181-205.
Shenkar, O. and Y. Zeira. 1992. Role conflict and role ambiguity of CEOs in
international joint ventures. Journal of International Business Studies, 23(1): 55-75

Case Study: Culture Clash in The Boardroom OB Assignment

Uploaded by

Copyright:

Available Formats

Case Study: Culture Clash in The Boardroom OB Assignment

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Case Study: Culture Clash in The Boardroom OB Assignment

Uploaded by

Copyright:

Available Formats

Case Study: Culture Clash in the Boardroom OB Assignment

Key Issues in the article

What should liu Peijin do?

Robbins, S. P., Judge, T. A. Organizational Behavior (fifteenth Edition). New Jersey:

You might also like