Introduction
Managing joint ventures that involve two or more countries is not an easy task. This is attributed to economic, political and social culture differences between the parties involved in the venture (Daft & Lane, 2010). This essay is going to critically analyse the case of Shui Fabrics which is a joint venture between Shanghai fabric Ltd based in China, and Rocky River industries based in USA with reference to GLOBE Project Value Dimensions.
Management differences
As stated in the case study, it is evident that, Shui Fabrics management team differs on the company’s performance with regards to returns on investment. Ray Betzell (Shui general manager) is concerned about being competitive rather than creating employment. On the other hand, Chiu Wai (Shui deputy general manager) is concerned about creating employment for his people rather than being competitive (Daft & Lane, 2010). These two differences are well described in the GLOBE Project as high assertiveness and low assertiveness respectively (Daft, 2010).
The two managers also differ with regards to future orientation of the company (Daft, 2010). Ray is alarmed about the long term goal of the company; which is to maximize on the trade of fabrics globally thus, maximising on returns on investment. However, Chiu is worried about short term goals such as creating employment, quick gratification from his government and impacting positively on the Chinese economy (Daft & Lane, 2010).
According to Daft and Marcic, (2009), performance orientation can either be low or high. A country with high performance orientation values high performance levels in the production process and thus, it rewards its workers highly. A country with low performance orientation pays no attention on the performance level of the workforce and thus, the returns on labour for such a society are low. With reference to this case, Ray’s perspective on performance is very high while, Chiu’s performance orientation is low (Daft & Lane, 2010).
Emerging issues in the current strategy
Power distance as outlined in the GLOBES Project is also a major issue between Ray and Chiu’s perspectives on Shui Fabrics. Chiu is comfortable with the 5% returns on investment that Rocky River Industries is getting. This is because a higher rate would mean that the Americans will still continue to dominate the economy of the Chinese people. However, this assertion does not augur well with Ray. This is because he is mandated to ensure that Rocky River Industries maximises on generating profits thus, empowering the American economy as opposed to the Chinese economy (Daft & Lane, 2010).
Other issues that are very evident in this case include uncertainty avoidance (Daft & Marcic, 2009). Chiu is confident and comfortable with the uncertainty of the company while, Ray and his boss Paul are not willing to entertain the uncertainty surrounding the business. Further, Chiu seems to be humane orientation by dealing with unemployment in his country. On the other hand, Ray is not concerned about unemployment but rather, he is concerned about generating more profits (Daft & Lane, 2010).
Of the already mentioned differences between Ray and Chiu there are three central issues that are vital for this case. They include the issues on performance orientation, assertiveness and power distance. Performance orientation is central because, the company as per Paul’s description is performing way below his expectations of 20% returns on investment. This is why Paul has recommended that the company reduces on the workforce and maximises on technology.
Assertiveness is also a key concern for this joint venture because, Rocky River industries is keen on maximising profits rather than understanding the need for improving employment levels for the Chinese people. Further, Power distance is also a central theme that is driving the American based company towards maximising on returns from China. However, the Chinese government is also keen on ensuring that their citizens are not exploited (Daft & Lane, 2010).
Alternative strategy
It is possible to reverse the status quo of Shui Fabrics by employing strategies that are in line with management within a global environment. Such strategies include: Instead of Cutting down on labour, the company should maximise on the availability of cheap labour by outsourcing for more manpower. Employees should also be taken through intensive training in order to create room for specialization. This will appease Paul because World Bank (2006) asserts that specialization leads to performance improvement.
Baring in mind that, the company produces global brands; technology use will also come in handy in terms of improving on efficiency and product quality thus, leading to an increase in returns on investment (World Bank, 2006). This will appease Paul because he highly recommends that the company embraces technology, and that, the company should make more revenue.
Benefits of the alternative strategy
The above mentioned recommendations have a number of benefits over the status quo. By employing more people and improving the performance levels, both parties will have accomplished their goals as opposed to the current status where, Chiu is meeting his goals while Ray is not. This will also improve the relations between the member countries because they all stand to benefit from the venture thus, they will have equal powers. Improving the performance levels will improve on the returns on investment therefore, improving on the certainty of the company, a condition that Paul thinks is currently being compromised.
Conclusion
Managing joint ventures’ in a global environment can be a daunting task but, with appropriate strategies and reduced ethnocentrism, it possible to actualize organizational goals without giving in to political, cultural and economic differences.
References
Daft, R. (2010). Management (10th ed.). Connecticut: Cengage Learning.
Daft, R., & Lane, P. (2010). Management (9th ed.). Connecticut: Cengage Learning.
Daft, R., & Marcic, D. (2009). Understanding Management (7th ed.). Connecticut: Cengage Learning.
World Bank. (2006). Global economic prospects 2006: economic implications of remittances and migration. Washington, DC: World Bank Publications.