The increasing internationalization and globalization armed with technology has made the world a global village. This means that people in different parts worldwide can intersect at a common place for reasons such as employment. Likewise, companies start looking around to expand their operations as the world increasingly becomes interconnected.
Though this concept looks interesting, it has some drawbacks due to cultural diversity. Both small and established companies face challenges such as pricing, development strategy, structuring projects and motivating people (Hofstede’s cultural dimensions theory, Para 1 n.d).
Hofstede came up with five distinct cultural dimensions which show cultural distance from one culture to another and their impact on managerial decision making. Human masculinity (MAS) is one of the issues that he puts across. This refers to how society values men and women. Initially, men and women had different roles.
Therefore, if such believes apply in some areas, companies need to strategize on how to cope up with them. A good example is companies in Japan and Sweden. For a company to succeed in Japan, It needs to prefer male employees to women. On the other hand, a company getting into Sweden market will take into account employees with diversified working techniques regardless of gender.
A company getting into such market has to analyze and evaluate their staff and adopt accordingly (Devinney, Pedersen & Tihanyi, p 45, 2010). Another factor is individualism (IDV). This is the strength of ties among individuals within a community. A large IDV enhances arguments and idea expression. Therefore, companies should not inquire a lot about personal information and accomplishments.
Contrary, low IDV suppress emotions and feelings to enable harmony at work and slow to adopt changes as it respects tradition. An example is Guatemala and Panama where there is low IDV. The companies need to ensure that their benefits to the community is well-received and understood (Rohn, P 146, 2009).
In addition, power/distance (PD) is another factor. It refers to the extent of inequality between people without power and those with power. A high PD indicates strong hierarchies, centralized companies, and wide gaps in authority, respect and compensation. On the other hand, low PD implies that power dispersion and sharing are reasonable.
Thus, companies consider employees and supervisors to be almost at equal level. Companies in Malaysia mark good examples; Malaysia is a country with a high PD and where characteristics such as a closed door meeting with powerful leaders and select few individuals occur (National Culture – Geert Hofstede, para 4).
Yet another is uncertainty/avoidance index (UAi). This is the extent to which the society is anxious in situations where people and businesses do not know them. For a high UAI, It means that communication and preparation in the company is in time. Further, the company has to guarantee the details of the jobs or projects. This is so to ensure that companies avoid differences with the society.
In case of a low UAI, it shows that some businesses have minimized society value and rules. For instance if a company intends to establish a branch in Belgium where there is a high UAI scale, the managers should be able to investigate different options and provide limited possible choices. However, the company should have a detailed structure of information on risk plans (National Culture – Geert Hofstede, para 4, n.d).
Finally, long term orientation (LTO) is of paramount importance. It refers to how much a community values long values to short term values and traditions. A high LTO entails high ethical conduct and high values emphasized in education. It also implies that men and parents have more authority than women and young people. A low LTO promotes equality and also observe self-actualization.
An example is a company that wants to invest or intends to start a business in the United Kingdom and the United states. Since there is low scores with regard to LTO in these countries, the managers of the company entering these markets should keep in mind the availability of much creativity and idea expression in their culture. This means that people in the areas will help the company in terms of creativity and innovation (Rohn, P 145, 2009).
With reference to Hofstedeās Cultural dimensions, the distance in culture is one of the important issues that a company needs to take into account when getting into any foreign market. It has a substantial impact on the managerial decisions. In fact, it determines the culture, structure, and the financial performance of any company.
References
Devinney, T. M., Pedersen, T., & Tihanyi, L. (2010). The past, present and future of international business & management. Bingley, UK: Emerald.
Hofstede’s cultural dimensions theory – Wikipedia, the free encyclopedia. (n.d.). Web.
National Culture – Geert Hofstede. (n.d.). Cultural Insights – Geert Hofstede. Web.
Rohn, U. (2009). Cultural barriers to the success of foreign media content: Western media in China, India, and Japan.. Frankfurt: Peter Lang.