Print Email Download Reference This Send to Kindle Reddit This
submit to reddit

Strategies to be undertaken by Azure Tea Company

Write the problem statement for your client Azure Tea Co. (A statement of the specific business issue that you will be researching and providing recommendations for the client.)

Problem Statement:

Formulation of Expansion Strategy in Overseas-Markets, ensuring a culture-fit with Azure Tea Company’s low-key corporate style (restrained and subdued in nature). The research would as incorporate the inclination of local consumers towards adapting the ‘healthy’ organic tea. It would be a two-fold strategy comprising of the following steps:

Establishment of Sales-offices: The first-phase would comprise of testing the overseas markets by gaining a targeted market share through setting up Sales-offices.

Establishment of Manufacturing-plant: The second-phase, depending on the success of the first one, would consist of a long-term plan of setting up of production facilities in the overseas markets to ensure local sourcing benefits.

An in-depth analysis of each and every country in the world, based on the 5-D Cultural Model proposed by Geert Hofstede would be carried out to zero-down at the most suitable choices of Overseas Market destinations.

Question 2

Use the Hofstede model to document your findings for possible combinations of countries for the location of the offices. Your notes should include discussion of the home country's (USA) relative position on the Hofstede scales compared to other countries.

Hofstede 5-D Model

Geert Hofstede, a Dutch organizational sociologist proposed a five dimensional model to aid in studying the correlation between National Culture and Organizational Culture. Every major country has been scored on each of the five dimensions comprising of Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI) and Long-Term Orientation (LTO). Each dimension is a scale with two extremes which could b interpreted subjectively in the context of a specific industry, in this case Tea induatry.

Analysis of Home country (USA) w.r.t other countries of the World on Hofstede 5-D Model

Below is the table stating Hofstede Cultural Dimensions for 69 countries/regions of the world:

Country

PDI

IDV

MAS

UAI

LTO

Arab World

80

38

52

68

 

Argentina

49

46

56

86

 

Australia

36

90

61

51

31

Austria

11

55

79

70

 

Austria

11

55

79

70

 

Bangladesh

80

20

55

60

40

Belgium

65

75

54

94

 

Brazil

69

38

49

76

65

Bulgaria

70

30

40

85

 

Canada

39

80

52

48

23

Chile

63

23

28

86

 

China

80

20

66

30

118

Colombia

67

13

64

80

 

Costa Rica

35

15

21

86

 

Czech Republic

57

58

57

74

13

Denmark

18

74

16

23

 

East Africa

64

27

41

52

25

Ecuador

78

8

63

67

 

El Salvador

66

19

40

94

 

Estonia

40

60

30

60

 

Finland

33

63

26

59

 

France

68

71

43

86

 

Germany

35

67

66

65

31

Greece

60

35

57

112

 

Guatemala

95

6

37

101

 

Hong Kong

68

25

57

29

96

Hungary

46

80

88

82

50

India

77

48

56

40

61

Indonesia

78

14

46

48

 

Iran

58

41

43

59

 

Ireland

28

70

68

35

 

Israel

13

54

47

81

 

Italy

50

76

70

75

 

Jamaica

45

39

68

13

 

Japan

54

46

95

92

80

Luxembourg

40

60

50

70

 

Malaysia

104

26

50

36

 

Malta

56

59

47

96

 

Mexico

81

30

69

82

 

Morocco

70

46

53

68

 

Netherlands

38

80

14

53

44

New Zealand

22

79

58

49

30

Norway

31

69

8

50

20

Pakistan

55

14

50

70

0

Panama

95

11

44

86

 

Peru

64

16

42

87

 

Philippines

94

32

64

44

19

Poland

68

60

64

93

32

Portugal

63

27

31

104

 

Romania

90

30

42

90

 

Russia

93

39

36

95

 

Singapore

74

20

48

8

48

Slovakia

104

52

110

51

38

South Africa

49

65

63

49

 

South Korea

60

18

39

85

75

Spain

57

51

42

86

 

Surinam

85

47

37

92

 

Sweden

31

71

5

29

33

Switzerland

34

68

70

58

 

Taiwan

58

17

45

69

87

Thailand

64

20

34

64

56

Trinidad

47

16

58

55

 

Turkey

66

37

45

85

 

United Kingdom

35

89

66

35

25

USA

40

91

62

46

29

Uruguay

61

36

38

100

 

Venezuela

81

12

73

76

 

Vietnam

70

20

40

30

80

West Africa

77

20

46

54

16

WORLD AVERAGE

55

43

50

64

45

The last column indicates the ‘World Average’ for each of the five dimensions.

A comparison of USA with the World-Averages would indicate the relative cultural fabric of USA in the global context.

Index of colour-coding in tables:

Colour

Deviation from USA

 

20%

 

10%

Figures in brackets (... , ...) indicate USA score and World-Average score respectively.

High Ranking Dimensions

IDV (Individuality): It signifies the degree to which an individual is integrated in a group. USA has the highest IDV dimension in the world, almost double the global average at 91 points. This points out towards a loosely held society with weak ties between individuals. The populace is largely self reliant and family boundaries don’t extend beyond the immediate members.

Following is the table depicting the countries with IDV within 20% of deviation from the USA score:

IDV (91, 43)

United States

Australia

United Kingdom

Canada

Netherlands

Hungary

New Zealand

Italy

Belgium

Denmark

MAS (Masculinity): The next dimension with a high score is Masculinity which indicates a society disposed more towards the assertive, aggressive and materially inclined traits as opposed to the caring and softer (feminine) traits. A high score of 62 as compared to the world average of 50 indicated a male dominant country with the female populace consequentially being transformed into a more aggressive and competitive breed. The USA society displays a high degree of shift from females into male role models away from their traditional female roles.

Following is the table depicting the countries with MAS within 20% of deviation from the USA score:

MAS (62, 50)

Venezuela

Italy

Switzerland

Mexico

Ireland

Jamaica

United Kingdom

Germany

China

Poland

Philippines

Colombia

South Africa

Ecuador

United States

Australia

New Zealand

Trinidad

Czech Republic

Greece

Hong Kong

India

Argentina

Bangladesh

Belgium

Morocco

Canada

Arab World

Luxembourg

Low Ranking Dimensions:

PDI (Power Distance Index): A low score of 40 as compared to the global average of 50 indicates a greater equality between the genders. The society endorses a low level of inequality between the genders reinforcing a more stable and cohesive social structure.

Following is the table depicting the countries with PDI within 20% of deviation from the USA score:

PDI (40, 55)

Finland

Switzerland

United Kingdom

Germany

Costa Rica

Australia

Netherlands

Canada

United States

Luxembourg

Estonia

Jamaica

Hungary

Trinidad

UAI(Uncertainty Avoidance Index) and LTO(Long-term Orientation): Low scores in these two dimensions, almost half the global average signifies a society with higher levels of tolerance for ideas, beliefs and perseverance driven orientation towards short-term prospects . The society has fewer and less stringent rules and regulations and is endulges in appreciation of other cultures.

Following are the tables depicting the countries with UAI and LTO within 20% of deviation from the USA score:

UAI (46, 64)

LTO (29,45)

United Kingdom

35

Canada

Ireland

35

United Kingdom

Malaysia

36

East Africa

India

40

United States

Philippines

44

New Zealand

United States

46

Germany

Canada

48

Australia

Indonesia

48

Poland

New Zealand

49

Sweden

South Africa

49

Norway

50

Australia

51

Slovakia

51

East Africa

52

Netherlands

53

West Africa

54

Trinidad

55

Question 3

Develop a set of specific recommendations for Azure Tea Co. on the two countries where they should locate their new international offices. In your recommendations, include the preliminary data that you gathered in the previous step that supports your recommendations. State what dimensions of the Hofstede model you consider most important for Azure Tea Co. to consider as a US Tea company and for the industry that they represent.

Correlation between Hofstede Dimensions and the Problem Statement:

The five Hofstede dimensions can be grouped under the following tree sub-headings when combined with the perspective of the Problem statement (context of Home country, i.e., USA) of Phase 1 (Est. of Sales Offices) and Phase 2 (Est. of Manufacturing plants)

More-Important Dimensions

Less-Important Dimensions

Low-Key Corporate Style:

It is indicative of a relatively flatter organizational structure with lower PDI and UAI score. The latter contributes to a freer working environment with lesser regulations governing the desired outcome and results as the acceptability levels of Uncertainty allow freedom of ideas, beliefs and thoughts.

Local populace’s inclination towards ‘Healthy’ Organic tea

A high IDV score indicated a higher degree of Individualism in the society which may translate into a favourable Consumer DMP (Decision Making Process). A loosely held society constitutes of families with smaller areas of influence extending to their immediate family members, resulting in a more independent way of life. Thus, it would be easier for these families to shift their choice of Tea from the conventional/presently-used varieties to the Azure Tea Company’s offering of ‘Healthy’ Organic Tea.

Smooth Organizational Functioning

MAS and LTO are the lesser important dimensions with reference to the Tea industry scenario. However, in case of the target Overseas-Markets, they must be similar to the ones of USA (low sores) to ensure a smoother organizational functioning by mitigating the cultural differences.

MAS importance in the Phase 2 of acquisition: In case, Azure decides to further advance to establishment of a manufacturing facility in the overseas markets, Masculinity could prove to be a significant factor too as Women are the dominant workforce in the Global Tea Industry. Thus a higher degree of competitiveness and aggressive attitude in the fairer sex would prove to be an asset for a tea company in the context of establishment of an efficient Production unit.

Scoring Pattern:

Following is the scoring algorithm followed to rank the countries in order to zero-down on the most-suitable location of the Overseas-Market.

Colour

Deviation from USA

Score

More-Important Dimensions (PDI, UAI, IDV)

Less-Important Dimensions (MAS, LTO)

 

20%

1 Point

0.5 Point

 

10%

2 Points

1 Ponit

Negative Impact Correction:

In case, the country’s score in any of the dimension is deviated by more than 20% of the USA score value in that particular dimension, following correction is applied:

Deviation between 20% and 50% of the USA score: Deduct 1 point (PDI, UAI, IDV) and 0.5 point (MAS, LTO)

Deviation over 50% of the USA score: Deduct 2 points (PDI, UAI, IDV) and 1 point (MAS, LTO)

Net Score = Score – Negative Impact Correction

Global Scoring Chart:

Countries

Score

Negative Impact Correction

Net Score

Australia

10.5

0

10.5

United Kingdom

6

0

6

Canada

5.5

0

5.5

New Zealand

5

-1

4

Germany

5

-2

3

Poland

4

 

 

Netherlands

3.5

 

 

Trinidad

3.5

 

 

India

3

 

 

Philippines

3

 

 

South Africa

3

 

 

Jamaica

3

 

 

Luxembourg

3

 

 

Argentina

2

 

 

Belgium

2

 

 

China

2

 

 

Colombia

2

 

 

Czech Republic

2

 

 

Ecuador

2

 

 

Estonia

2

 

 

Greece

2

 

 

Hong Kong

2

 

 

Hungary

2

 

 

Italy

2

 

 

Switzerland

2

 

 

East Africa

1

 

 

Indonesia

1

 

 

Norway

1

 

 

Slovakia

1

 

 

Arab World

1

 

 

Bangladesh

1

 

 

Costa Rica

1

 

 

Denmark

1

 

 

Finland

1

 

 

Mexico

1

 

 

Morocco

1

 

 

Sweden

1

 

 

Venezuela

1

 

 

Malaysia

0.5

 

 

West Africa

0.5

 

 

Ireland

0.5

 

 

Note:

Countries below the Score of 0.5 have been summarily rejected from the table.

Negative Impact Correction calculation only performed for the top 5 countries.

Conclusion / Recommendations:

As per the calculated results depicted in the above, the two recommend countries to be considered in order to expand in the Overseas-Markets for Azure Tea Company would be:

Australia

United Kingdom

Also, the per capita Tea consumption in Australia and United Kingdom is among the Top 10 in the world as per the table below.

Rank↓

Country↓

Tea consumption↓

1

http://upload.wikimedia.org/wikipedia/commons/thumb/b/b4/Flag_of_Turkey.svg/22px-Flag_of_Turkey.svg.png Turkey

2.1 kg (74 oz)

2

http://upload.wikimedia.org/wikipedia/commons/thumb/a/ae/Flag_of_the_United_Kingdom.svg/22px-Flag_of_the_United_Kingdom.svg.png United Kingdom

2.0 kg (71 oz)

2

http://upload.wikimedia.org/wikipedia/commons/thumb/c/ca/Flag_of_Iran.svg/22px-Flag_of_Iran.svg.png Iran

2.0 kg (71 oz)

4

http://upload.wikimedia.org/wikipedia/commons/thumb/4/45/Flag_of_Ireland.svg/22px-Flag_of_Ireland.svg.png Ireland

1.4 kg (49 oz)

5

http://upload.wikimedia.org/wikipedia/commons/thumb/2/2c/Flag_of_Morocco.svg/22px-Flag_of_Morocco.svg.png Morocco

1.2 kg (42 oz)

6

http://upload.wikimedia.org/wikipedia/commons/thumb/f/fe/Flag_of_Egypt.svg/22px-Flag_of_Egypt.svg.png Egypt

1.1 kg (39 oz)

7

http://upload.wikimedia.org/wikipedia/commons/thumb/3/3e/Flag_of_New_Zealand.svg/22px-Flag_of_New_Zealand.svg.png New Zealand

1 kg (35 oz)

7

http://upload.wikimedia.org/wikipedia/commons/thumb/1/12/Flag_of_Poland.svg/22px-Flag_of_Poland.svg.png Poland

1 kg (35 oz)

9

http://upload.wikimedia.org/wikipedia/commons/thumb/9/9e/Flag_of_Japan.svg/22px-Flag_of_Japan.svg.png Japan

0.9 kg (32 oz)

10

http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/Flag_of_the_Netherlands.svg/22px-Flag_of_the_Netherlands.svg.png Netherlands

0.8 kg (28 oz)

10

http://upload.wikimedia.org/wikipedia/commons/thumb/b/b9/Flag_of_Australia.svg/22px-Flag_of_Australia.svg.png Australia

0.8 kg (28 oz)

Thus Azure Tea Company should choose Australia and UK for expansion in the Overseas Tea Markets. Relative comparisons with USA:

http://www.geert-hofstede.com/graphs/5dgraph.php?c1=United+States&pdi1=40&idv1=91&mas1=62&uai1=46&ltp1=29&c2=Australia&pdi2=36&idv2=90&mas2=61&uai2=51&ltp2=31

http://www.geert-hofstede.com/graphs/5dgraph.php?c1=United+States&pdi1=40&idv1=91&mas1=62&uai1=46&ltp1=29&c2=United+Kingdom&pdi2=35&idv2=89&mas2=66&uai2=35&ltp2=25

Print Email Download Reference This Send to Kindle Reddit This

Share This Essay

To share this essay on Reddit, Facebook, Twitter, or Google+ just click on the buttons below:

Request Removal

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please click on the link below to request removal:

Request the removal of this essay.


More from UK Essays

Doing your resits? We can help!