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Leadership in Multinational companies Essay

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Updated: Jul 23rd, 2019

National and organizational cultures are both important factors that determine how business organisations and employees conduct themselves as well as perform their duties. An organization may profess an informal culture in its operations whereby it takes risk in any venture while a national government may be averse in taking risks making its culture rather formal (Loveland & Adams, 2008).

Therefore any multinational company must realign the behaviours and beliefs of its employees to be in agreement with the cultural expectations of the company. on the same note, behavioural patterns, tastes and preferences of people in a given nation are determined by their respective national cultures (Torres-baumgarten & Yucetepe, 2009).

This is perhaps why a particular group of people would prefer a particular commodity or business while another group in another country might have a different choice.

Furthermore, organizational cultures have powerful influences on the employees. Some of these cultures are a reflection of their leaders’ behaviour or personality (Bellin & Pham, 2007). They may be acquired if a multinational company operates in a given geographical location for a considerable length of time.

In this present age, there is a fiercer competition in the business world. Every multinational company is under great pressure to have a significant share of the available markets. Needless to say, this cut-throat competition has been largely occasioned by globalization. The multinationals are trying to harmonise both national and organisational cultures to work for their good (Harrison-Walker, 2007).

They are increasing their flexibility so as to be able to embrace those cultures that are foreign to them and use them in their favour. This essay will explore how national and organizational cultures influence the managers and employees of multinational companies.

Multinational companies have large organizational structures having departments that plays host to important business and management functions. These departments include production, marketing and finance among others.

These organizational structures describe the nature of strategy a company has (Loveland & Adams, 2008). A bigger and more advanced structure denotes a greater global strategy unlike a structure that will house small and domestic business functions.

A multinational company may choose to adopt a particular kind of organizational structure that equally defines its culture. While one multinational company may opt for the Matrix method, another may go for the Global Area method (Harold, James & Arindam, 2008). Other methods would include Global Product division and International Division in which the latter is used by a multinational company called The Coca-Cola Company.

Due to the changing times and globalization, many companies have adopted new and better ways of organizing there structures. The system of work and relationship has changed (Daniel & David, 2008).

For instance, an individual may be required to multitask, leaders may be required strategize for investments and policies for finance and to draw strategies for development and scientific research (Harold, James & Arindam, 2008). This new structural organization combines autonomous and semi-autonomous way of administration.

In addition, some organizational structures are advanced in such a way that their major concern is to establish and do business in other countries. A fine example is a multinational company with an international Division structure like The Coca-Cola Company (Dotlich, Cairo & Rhinesmith, 2008).

This structure has departments for foreign markets. International Division structure works well because it has more staff, it is flexible and changes quickly to adapt to the business environment and is efficient in terms of quality of production.

An effective organizational culture will improve the level of productivity within a company. As such, work performance will be more efficient and effectively done. It is important to note that the business world is growing faster and becoming more complex.

Businesses that want to cope with the growing complexity of market trends, and understand that service is key to growth of many economies, incorporate speed in decision making, increase the flow of information in and out of the business environment and offer mobility and value to all its workers. Hence, a company’s organizational culture will become an asset (Sheard & Kakabadse, 2007).

Moreover, it is also important that the managers of a company have knowledge of managing the affairs of an organisation in order to improve the status of the organization. According to Harrison-Walker (2007), shrewd company management and strategic development should go hand in hand in a company for it to experience success.

They argue that in order to strengthen the competitive position of an organization, proper and efficient strategic alignment should be put in place. However, they are warning against isolation of a department in an organization as it hampers success. The units in a company should work together as a single body, a culture that helps in achieving the goals a company has set in its strategy.

Culture is made up of assumptions or understandings that are distinct to a group, tactic and explicit, held commonly by a society or a group of people. Even though culture changes over time, these assumptions are passed from one generation to another serving as guides to feelings, thoughts and behaviours which can be either acceptable or unacceptable.

Work culture in an organization embraces beliefs and national cultural values (Harold, James & Arindam, 2008). It is evident in practices of remuneration, staff appraisals, recruitment and work arrangement. Therefore, an organization creates its own organizational structure that guides the reception, interpretation and dissemination of information in a

Cultural differences affect the performance of a business. On a daily basis, multinational corporations encounter cultural challenges from different countries they conduct trade (Sheard & Kakabadse, 2007) since the various countries exhibit different cultural backgrounds.

It is through these cultural values that these nations have established their systems (Harrison-Walker, 2007). They run their affairs; religious, educational, law and government on the foundations of these beliefs. Therefore, any business enterprise contemplating to run business activities either in the domestic or foreign country ought to be flexible enough to counter market challenges.

On the other hand, national culture is a phenomenon that distinguishes one group from another. Different nations have distinct cultures that affect how they run their affairs (Harrison-Walker, 2007). A country may express its culture through concepts rituals and beliefs. Some of the visible and practical cultures include rituals, symbols and heroes (Loveland & Adams, 2008).

As multinational companies conduct business in different countries, they encounter different challenges brought about by culture. Additionally, people employed by these global corporations are drawn from unique cultural and social backgrounds and therefore manifest different gender, ethnic, regional and national beliefs.

It is against this backdrop that culture derives its roots from institutions like the community, learning institutions and family unit. For example, national cukture may manifest itself through the use language.

In some instances, a country may have ethnic societies that speak different languages. A case example is a country like Nigeria which a sum total of has 374 ethnic languages (Loveland & Adams, 2008). Undoubtedly, this has a direct impact on the operations of a multinational corporation located in such a region. One are that can be affected is on marketing of a company’s products and services.

For a multinational positioned in such a multilingual society, it wil be vital to note only devise the best and most appealing marketing strategies, but also understand the divergent needs of consumers from both the high and low end market spectrum. Definitely, proper planning coupled with strategic marketing competences are inevitable in such a scenario.

Religion is a cultural aspect in a country. Nations have used religion formidable culture that cannot be separated from day-to-day activities. Moreover, religious beliefs and systems are so intact in some countries to an extent that every single sector of the society is not affected by it. In some societies, religion hinders people from walking around publicly.

In some areas, religious cultures do not permit selling, buying or even drinking of alcoholic beverages. (Bellin & Pham, 2007). Such staunch religious and cultural beliefs impact the operations of multinational corporations. A business organisation may not perform to the optimum due to such cultural restrictions unless it transforms its business strategies and improve competitive advantage (Loveland & Adams, 2008).

As Baack and Boggs (2008) observe, national culture affects the type of product a nation may want to use owing to the fact that some nations have particular beliefs that are shared in common. Consumers may end up purchasing particular products which are similar and generally acceptable in their culture.

Therefore, for multinational companies to be able to perform pretty well both in the local domestic market and overseas locations, they must put together knowledge in management as well as critically study organizational characteristics in relation to dominant culture as tactics for success (Dotlich, Cairo & Rhinesmith, 2008).

A company has to be flexible and embrace change on a regular basis. Furthermore, those companies that intend to be innovative in production against organizational and national culture ought to incorporate and integrate knowledge management and the well defined strategies for growth.

While globalization may be taking a huge toll on the success or failure of most multinational companies, both the organizational and national cultures can still be harnessed in a way that it is overly beneficial amid the impacts of internationalization that has made the world a global village.

Nevertheless, it is paramount to note that the impact and importance of national culture overrides that culture adopted and embraced within an organisation per se. this implies that a national culture has a stronger bearing on the operations of a multinational corporation than organizational culture.

Firstly, a national culture encompasses a wider scope of issues ranging from religion, personal to broader issues affecting the society. Secondly, while a multinational company may adjust its internal culture easily in order to be fairly compatible with the business environment, it is close to impossible to turn and twist cultural values of a country that may be negatively affecting business operations.

Therefore, multinational companies should be able to overcome cultural challenges (whether at the level of an organisation or a country) by devising strategies that will be instrumental in securing domestic and foreign markets (Harold, James & Arindam, 2008).

Better still; the strategies should work towards offering quality goods and services, competitive prices and sound sales promotion. Finally, all multinational companies should come up with better ways and practical solutions that will ensure that they don’t fail to perform due to cultural influences.


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