Multinational Companies and Cultural Environment
In a situation where multinational cooperations invest in foreign countries with different cultural practices, it is essential that the country make an appropriate adaption to the new cultures. Adopting the right cultural practices is essential as it leads to an understanding of the process of decision-making, intercultural negotiation, and cross-cultural communication. Poor adaptation to the cultural environment of the host country may lead to conflict due to the different practices. There is likely to be an unavoidable conflict of culture, corporate social responsibility, and operating practices of local employees (Hutnek, 2016). The failure to adequately address the cultural differences causes problems with the government over regulations and human resources management issue. This points out to problems and failure of the management in steering the company in a market with a different culture.
The management can set up an environment in the organization that accommodates the cultural differences. Management of cultural differences seeks to establish an environment that enables the employee with different cultural backgrounds and maximize the utilization of their capabilities (Tutar, Altinoz, & Cakiroglu, 2014). The management should establish cultural competence training programs within the organization to help the process convert the cultural differences into a competitive edge.
Hutnek, S. M. (2016). The Impact of Cultural Differences on Human Resources Policies of Multinational Companies.
Tutar, H., Altinoz, M., & Cakiroglu, D. (2014). A study on cultural difference management strategies at multinational organizations. Procedia-Social and Behavioral Sciences, 150, 345-353.
Operations of Multinational Managers in Diverse Cultural Environments
It is clear that in carrying out their duties the multinational managers face an uphill task due to the diverse cultural environments. The three diagnostic models that can assist the multinational manager to effectively carry out their duties in a culturally diverse environment include Hofstede model of national culture, global leadership and organizational behavior effectiveness (GLOBE) project, 7d culture model. The Hofstede model of national culture is comprised of five major dimensions of elementary cultural values, which include power distance, uncertainty avoidance, individualism, masculinity, and long-term orientation (Hofstede, 2011). The management practices that are highlighted under the Hofstede’s model include human resource management such as management selection, training, evaluation, and remuneration; leadership styles, motivational assumptions, decision-making process, and strategy. Power distance entails how cultures manage inequality and are build on norms that establish the limits of how those in authority can influence the behavior of the subordinates. Uncertainty avoidance regards the norms, values, and beliefs about tolerance for ambiguity. Individualism is concerned with the nature of the relationship between the individual and the group. Masculinity refers to the tendency of the cultural practices to support traditional masculine orientation. Long-term orientation is focused on the time that values patience.
The diagnostic technique of Global Leadership and Organizational Behavior Studies (GLOBE) is an initiative that entails 170 researchers gathering data from over 1,700 managers in 62 nations. The unique dimension described in the GLOBE technique includes performance orientation and humane orientation (Pin, 2016). Performance orientation deals with the level at which the community fosters the members to be innovative, attain higher performance levels, and achieve higher levels of excellence. Humane orientation points out to the level at which individuals are required to act in a fair, altruistic, caring, and generous manner.
The 7ds cultural dimensions model seeks to establish traditional anthropological approaches to understanding cultures. It proposes that the purpose of culture is to help people to resolve the basic problems of survival. The dimensions proposed in this culture include universalism vs. particularism, collectivism v. individualism, neutral vs. affective, diffuse vs. specific, achievement vs. ascription.
Hofstede, G. (2011). Dimensionalizing Cultures: The Hofstede model in context. Online readings in psychology and culture, 2(1), 8.
Pin, L. S. H. (2016). Exploring culture theory global leadership and organizational behavior effectiveness in cross-cultural communication in Asian business negotiations. International Review of Management and Marketing, 6(S7), 57-64.
Regional Trade Agreements and Global Economy
Regional Trade Agreement refers to the arrangement that seeks to establish a mutual relation between member states and facilitates free trade between signatory members in specified areas. The presence of regional trade agreements seeks to enhance economic integration and reduce barriers to trade. The RTA is influential in the reduction of barriers of trade through the elimination or reduction of tariffs and coming up with common technical and economic standards (Santos-Paulino, DiCaprio, & Sokolova, 2017). The regional trade agreements operate within the WTO rules that indicates that the countries within the RTA can engage in trade amongst themselves under the preferential tariffs. Regional Trade Agreement have been noted to be useful in enhancing growth. The RTA format trade in a manner that it expands the domestic productive potential, enhance harmonization of standards, including technical know-how into the domestic market, and expands the preferential access to the targeted markets.
The multinationals are key players towards the achievement of the objective of the Regional Trade Agreements. It is noted that in foreign investment, multinational firm’s activities, and production fragmentation has a possible effect to reshaping the governments’ trade policy objectives. The multinational companies are noted to have a major influence on the terms trade externality, which in turn is a major determinant of the trade policy (Blanchard, 2015). The multinational firms place interest in the importing country and thereby opens up to more trading options.
Blanchard, E. (2015). Is trade policy affected by the activity of multinational companies? Retrieved from https://www.weforum.org/agenda/2015/04/is-trade-policy-affected-by-the-activity-of-multinational-companies/
Santos-Paulino, A. U., DiCaprio, A., & Sokolova, M. V. (2017). Regional integration and development. UNCTAD Research Paper No. 1
Problems Arising for the Use of Internet for the Global Business Environment
The advancement of technology, especially the internet has offered businesses an advantage in conducting business, especially an expansion of the market reach to the global market. The internet has introduced flexibility in the manner of doing business. However, these advancements have had problems arising and posing threats to businesses. One of the issues that arise from the use of the internet for conducting business is on privacy and security concerns. Doing business over the internet including payment option leaves the players susceptible to unscrupulous individuals. The system may be prone to hacking attack causing a breach to customer’s private information. The consumers have fears on the misuse of their private information thereby exposing them to risks of losses. This has seen the enactment of laws on privacy protection laws, which introduces more regulatory requirements for the organization to fulfill. Organizations can deal with this by investing in security techniques that safeguard the consumers’ personal data. There should also be options allowing the consumers an opportunity to select the privacy preference on the issues that they need to be addressed. Organizations further need to show commitment to the voluntary disclosure program that as opposed to only having the disclosure program when compelled by law (Udo, 2001).
Udo, G. J. (2001). Privacy and security concerns as major barriers for e-commerce: a survey study. Information Management & Computer Security, 9(4), 165-174.
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