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(BMW) is an automobile manufacturing company with its Headquarters in Munich, Germany. The company manufactures three brands of luxury automobile BMW, MINI and Rolls-Royce. The BMW Group is seeking to establish a manufacturing plant in Chennai India. under the umbrella BMW India. By locating this manufacturing plant in India, it brings production closer to its eastern markets, and permits the firm to benefit from investment incentives and low labour cost.
Because of the nature of BMW's business, the manufacturing plant would have to be built from the ground up. This, move would bring the company face to face with several cross cultural issues in the operation, management and staffing of the new plant.
This report is intended to research and analyse the differences in the cultures of Germany (the home country) and India (the host country). Its purpose is to detect and highlight cultural issues which may act as pits, that if ignored can hinder the success of the company's business venture. It also recommends solutions to aid in the successful merger of the two cultures.
Taylor (1871/1958, p.1) Defines culture as the complex whole which includes knowledge, belief, arts, morals, law, custom and any other capabilities and habits acquired by man as a member of society"
The Culture of a country defines the behaviour of its people according to circumstances. Turner (1971) observed that cultural systems contain elements of 'ought' which prescribe forms of behaviour or allow behaviour to be judged acceptable or not. BMW management must therefore approach this venture with the awareness that there are and would be cultural expectations that would impact on the human resource management of the new company.
Therefore, management has to be sensitive to the differences in the cultures of both countries. It must be realized that principles of management cannot be universally applied. Therefore it is important that the management of BMW understand the dynamics of the personal, national and organizational culture in India and Germany, align them and use it to their competitive advantage.
3.0 Cultural Distance
India is one of the oldest civilisations in the world with heritage dating back at least 5000 years. It is a country with a diverse blend of cultures, religions, races and languages all of which impacts greatly on the way business is conducted. In many instances the culture differ from the way it's done in Germany, therefore knowledge of this is vital to the success of BMW India.
Hofstede's Cultural Dimensions of Germany and India, as shown in Figure 1 below helps to paint a picture of the cultural diversities of the two countries and contrast them against each other.
Figure1. Geert Hofstede Cultural Dimension Scores For Germany and India.
source: compilation of information obtained at www. Geert Hofstede.com
India is normally described as a collectivist society because of its strong sense of community and group defined orientation, while Germany is generally looked upon as an individualist society. Hofstede's (1993) Cultural Dimensions depicts India as high on power distance (PDI), low on uncertainty avoidance (UAI) and high on Long term orientation (LTO) displaying some distance when compared to Germany.
The PDI is reflective of Indians respect for seniority in the family. This is translated in their respect, allegiance and obedience to persons in charge. Indians are quite comfortable and functions well under a hierarchical industrial structure. Trompenaars and Hampden Turner (1993) classify German industrial culture as hierarchical and highly task oriented. Although they are lower on Hofstede's PDI, both cultures are accustom to hierarchical structures.
Germans are more individualistic, ascribing to personal success and own gain, while Indians in contrast are more collectivistic. This collectivism stems from India's sense of family. Indians would seek more the welfare of the group and this augurs well for team work.
The cultural distance in Masculinity for both countries is relatively close and mid-way on the scale. In Germany all genders have equal opportunity as reflective in their laws. India on the other hand though scoring close to Germany in the background still reflects 'it's a man's world'.
In terms of uncertainty avoidance, Germans are a more mathematical engineering people. German organisations operate in relatively stable and low risk conditions. They do not like surprises or sudden changes in business transactions, even if they may improve the outcome. Indian however, is a more adjustable society with a higher uncertainty avoidance score.
These cultural distances can emanate problems if ignored, but they can be bridged with the acquisition of knowledge, training and the implementation of the right managerial techniques.
Hall (1960) explains that cultures differ widely in the extent to which unspoken, unformulated and inexplicit rules govern how information is handled and how people relate to each other. He suggests that culture can be divided into two groups, high context cultures and low context cultures.
According to Hall Germany is a low context culture society. Germans have a direct style of communication (Low context) that can be perceived as blunt and possibly rude and offensive by persons from a high context society. India is classified as High context however they are moving towards a Low context culture and the change according to Chella (2007) is strongly supported by the four T's; Technology, Trade, Travel, and Television.
Both countries shares English as a common medium of communication. However the infusion of Hindi from a German or vice-versa bridges the communication platform. When workers from high-context and low-context cultures have to work together often problems occur in the area of information exchange. While one may be able to speak the language the acquisition of information may lay in the level of trust gained through socialization.
According to Hall, "time is one of the fundamental bases on which all cultures rest and around which all activities revolve". Figure 2. Outlines the difference between monochronicity and polychronicity. Understanding these differences can improve cross-cultural and interpersonal business communications.
Monochronic Culture Polychronic Culture
Interpersonal relations are subordinate to present schedule
Schedule co-ordinates activity; appointment time is rigid.
One task at a time
Breaks and Personal Time
Breaks and personal time are sacrosanct regardless of personal ties.
Time is flexible; Time is tangible
Work/Personal time Separability
Work time is clearly separable from personal time
Activities are isolated from organization as a whole; tasks are measured by output in time (activity per hour or minute)
Figure 2. Monochronic and Polychronic Cultures
German culture is said to be monochronic in their concept of time, they take deadlines and schedules seriously and do one thing at a time. The Indians in contras are polychromic. Fatalism influences their concept of time and human interaction is valued over time and material things. Lateness for appointments is not seen as a big deal (this could annoy German management). Therefore, acquired knowledge of the culture would increase management's tolerance levels in this aspect.
Hall's (1966) speaks of 'proxemics' as the human use of space. He argues that culture moulds and patterns human perceptions of space. He refers to space in terms of physical space usage and how relationships are managed through personal space.
Germans are very private and keep a large personal space. Indians because of population size share a smaller personal space which may account for their inquisitive nature. BMW expatriates may have to reduce the size of their personal space in order to foster work relations.
5.0 Management Style and Practices
To appropriately determine the correct management style and practice to adopt in BMW India, BMW's management must consider the factor of the Power distances of the two countries. Power distance deals with the way society accepts the unequal distribution of physical and intellectual capabilities.
Germany has a relatively low power distance they have strong belief in equality for each citizen and they all have the opportunity to rise in the organization and society. They are a decentralized society, with relatively flat organization structures with comparatively small proportion of supervisors. India in contras has a high Power Distance score, possesses high levels of inequality of power and wealth within the society (which reflects the attitudes of the outlawed traditional caste systems) and is considered a hierarchal society.
Because of these differences and traits, it might be prudent for the company to adopt a hierarchal organizational structure with a polycentric staffing approach to management. This would ensure that the company is less likely to suffer from cultural myopia.
If management chooses to place German female workers into the organisation they would have to guard against gender discrimination Problems as females are not highly regarded in India.
6.0 Human Resource Management
Human Resource Management (HRM) approaches vary from country to country according to the different cultures. Therefore the same HRM approaches may not yield the same effects in India as in Germany. BMW therefore would have to skew towards an internationalize HRM policy that would best support the organisation's strategy.
BMW has a consistent high-efficiency corporate culture that transcends throughout the organisation's strategy. In this regard it may be best for the company to adopt a geocentric approach towards selecting the person to head the India subsidiary because what may represent a standard profile in Germany may not be the same in India.
Peters and Waterman (1982) suggest a psychological theory of the link between organizational culture and business performance. BMW India's incumbent manager needs to be aware that gaining employee commitment and trust through emphasis on mutuality of employer/employee objectives is important to the success of the organisation.
6.1 Legislations and Trade Unions
Management must be aware of how the laws and regulations in India relates to foreign organizations, the work force and the Trade Unions. The total workforce in India is generally divided into two sectors formal and informal, with 92% informal and 8% formal. Unions are generally active but strike actions are restricted by law. The right to collective bargaining is guaranteed, but there is no legal obligation on employers to recognize a union or engage in collective bargaining.Â While the Laws may be skewed towards favouring employers, an International HRM policy and best practices would minimize strike actions that could disrupt the company's operations.
6.2 Performance Evaluation
Germany employee performances are generally assessed based on their individual accomplishments; how well they were able to achieve their targets based on time and costs. India possesses more of a team culture or collectivism. Teamwork and corporate productivity is appraised (Hofstede's (1993). Therefore the performance evaluation system adopted by the company should be one that reflects collective performance. Because India values harmony and relationship highly, team appraisal would help to 'save face' if the review is negative
6.3 Reward Systems
The reward system employed by BMW in Germany would have to be different to the one they intend to use in India. The performance related pay system may works well in an individualistic, low context society. However India having a Polychronic Culture (See Figure 2) and being a collectivist society that tends to work more efficiently in groups. A profit-sharing or gain-sharing plan would direct attention away from individuals and focus on group achievement of operational goals, such as total quality improvement, cycle time, productivity, and cost reduction.
7.0 Corporate Governance
Corporate governance is a system which ensures that the managers run the company in the interest of their shareholders. Both Germany and India have codes and laws that provide high levels of protection for investors.
from are guided by "the German Corporate Governance code" and in India
It is concerned with the power that the board has. In the UK pleasing the shareholders is very important, whereas in Japan shareholder value is not viewed the ultimate goal of the business enterprise. In most Japanese companies shareholders must rely on statutory auditors to hold the board accountable. In the UK business people believe the shareholder concept should become embedded in Japanese management. It is proven that foreign investors purchase larger stakes in companies that are governed under the committee system which was established by the Japanese government as an alternative to corporate governance
8.0 Ethics and Corporate Social Responsibility (CSR)
Ethics and Corporate Social Responsibility can both be linked to attaining high morals along with the fact that they contribute to the success of businesses and at large countries. CSR involves giving back to the community and creating innovative and proactive solutions for every day and long term challenges. On the other hand ethics is a set of moral principles or guidelines that determine decisions; it deals with things that are right and wrong.
Ethical issues are complex; values from different cultures determine what is ethical or unethical. In India gift giving is a form of building good relationships and helps to gain commercial foothold. However management has to be aware of the rampant corruption in India. (Javalagi and Talluri, 1996). speaks of " greasing the palms " such a gesture by a way of gifts would not be considered as creating a relationship. To avoid this, BMW executives must identify potential key contacts and develop trust in personal and professional relationships.
perfectly acceptable whereas in the UK it can be regarded as unethical (bribing). In the UK women can wear pants to work but it is unacceptable to do so in Japan as the men find it offensive. At times individuals may have values and beliefs that may run counter to the organisation and this can give rise to ethical issues.
CSR is ingrained in the Japanese society via its Confucian foundations. Since the Japanese have strong people bonds with reference to their community employees may have higher expectations than that of which management plans. Tan has to be aware of the expected responsibility of the organisation such as the long-standing commitment to workforce welfare (Mafune 1988) which is also known as "shogai koyo".
9.0 Recommendations and Conclusion
It can be easily identified how both cultures can easily misunderstand one another and cause failure. Management has to ensure that they learn and try to adapt to the Japanese communication style when meeting with them. It is also recommended that they hire an interpreter and carry him to meetings to ensure that the Japanese are not offended and to translate any negative or positive body language given off.
The Japanese have a saying "when you see a stranger, regard him as a thief", this goes to show that Tan will not be easily accepted so trust have to be developed. Tan should hire people who fit the company's along with Japanese culture in an aim for better cultural fit. The organisation has to train workers and assist them with understanding Japan's way.
It is recommended that they adopt a polycentric relationship when entering into Japan's market. Management at home will determine what is to be done and the Japanese will determine how it will be achieved. The organisation should work in collaboration with trade unions in an attempt to have closer relationships with its workforce.
Tan can minimize possible conflict when carrying out appraisals by identifying its actual purpose. In the case of feedback from performance appraisals Tan should have a third party to translate the message in the best possible way so as to refrain from workers losing 'face'.
Management could reward employees by carrying out the entire group to karaoke or dinner. If an employee did exceptionally well the boss can invite him to his home as this is a great honour to a Japanese employee, but this must be done in discretion. It is also important and necessary that Tan develop and implement innovative reward systems and a code of conduct.
The Japanese ask many probing questions in an attempt to test knowledge, sincerity and conviction. They admire people who are serious about their work, well informed, sincere and honest. They want to have some understanding of and feeling for the people involved in the organisation. Tan should not be impatient. If the Japanese are denied this opportunity to become acquainted, the organisation will not succeed. Do not mistake hospitality for friendship.
It is of utmost importance that Tan Limited acknowledges and understands the cultural difference between the UK and Japan. Once they realise the possible problems they may face and take heed to the recommendations identified above a smooth integration into the Japanese market is ensured.