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Complexity of Managing Multinational Corporations: MNC Culture

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Updated: Sep 10th, 2019

Globalization has resulted in the liberalization of various countries’ markets, enhanced communication systems, and wide networks of connections. Consequently, the rise of multinational corporations has been steady, with many of such corporations emerging in the twentieth and twenty-first centuries.

Multinational companies have representatives in various parts of the globe of which each society in which such a business venture is established has a diverse and authentic culture and cultural beliefs.

The management of such an enterprise established in diverse cultural affiliation has to be considerate of such cultural varieties since a society’s culture is unique and in many ways influence the behavioural pattern including the consumption of a certain good or utilization of a given service.

The goal of this proposal is to critically assess the ways of managing of multinational companies in the different cultural settings. The major research area will be on the complexity of multinational management. This will take into account the regional approaches, theoretical, and empirical theories.

Managing multinational companies is a complex and taxing task. The management requires prior market research and cultural analysis, to make the management more competent and reliable, ensuring all parties are satisfied without cases of discrimination or favouritism.

With the right level of management, the international culture diversification will have positive and progressive impact on firm performance. In this study, we expect the nature of management to be directly affected by cultural diversification

Literature Review

Gomez & Palich (1997) in over a ten years period used cultural diversity to predict performance of multinational companies. They have pointed out that well organized and managed multinational companies yielded better results. This type of management acknowledges the existence of different cultures; individuals no matter the high of their education or sophistication belong to one type of culture or the other.

Individuals exist in a society and every society has its own culture that generally unites the population, this type of culture is easy to pin point as it greatly influences the conducts and behaviours of individuals exhibiting homogenous attributes.

They state that global cultural diversification intertwined with multinational firm’s performance should yield positive results that are also beneficial to the society. Since markets are not perfectly integrated multidimensional approach in market strategies enables a company to draw greatly from the diverse markets.

Management has the chance of observing the culture that mostly and perfectly favours their products or services, in so doing they can greatly reduce the various costs of operation by concentrating more in this cultural area.

Culture is the fundamental basis for human social behaviours and all other aspects are it political or economical would not be profound outside a societal setting. For a company to realize the most desired results, the most suitable environment for individual workers must be established of which cultural consideration is one of the requirements.

Bergemann (2004) has stated that there are numerous challenges in managing multinational firms owing to the cultural diversities. The author has pointed out that some of the multinational companies realize the importance of effective management and they know that managing diversity is pivotal to employment equity initiatives.

However many instead of focusing on the need of offering extra training in tackling the real issues facing an organization and look for the appropriate way of integrating it with other strategic initiatives engage only in offering additional training program to managers only.

The author has said that in the contemporary modern society, managing diversity in multinational business firms is a critical competency that is very much desired. This type of management is on the effective management of people irrespective of race, gender, religion, ethnic background and so on. If not well executed management of diversities will result in confusion with employment equity.

It was found out that managing diversity is not an intellectual trait that can be achieved overnight by neither attending training programs nor a matter of learning how to discern the different ethnic and national cultures. It has since been proposed that for effective management of a multinational firm, then the issue must be adopted as a strategic company objective that requires much commitment in integrating it in both the crucial policies and procedures of a company.

The implementation should also be in such a way that it is fashioned to be in line with the organizational culture of the company in context as a whole that has been established over the years.

Various dynamics and measures should be considered for effective management. Massive sensitization and education must be carried out in all departments to ensure that people are aware that the responsibility of managing diversity is not vested on the human resource department alone, rather people should know it is also the responsibility of every person that work to ensure the company’s vision and goals are realized in the most desirable manner.

The leadership of the company must therefore be willing to take the issue o f cultural diversity a success and must engage the individual workers.

Top management should not only be heard offering their support rather they should be fully actively involved, the failure of many polices is that the top officials are passive participants rather than active participants in spearheading any of the formulated policies regarding diversification of cultures.

For positive appreciation of diverse cultures in multinational companies at the same time using this diversity to the advantage of the firm, then appropriate management measures, willingness and commitment ought to be in place.

A company or any other business firm must, at all times ensure that cultural diversity is not exploited and used as the basis for discrimination. It is thus essential for firms to establish employment equity at the same time managing these diversities objectively, so that the firm should not on the other side, become overwhelmed by cultural diversities.

Cultural diversities management in the multinational business firms like any other human resource management deals with people and people’s way of life. Consultations between the involved stakeholders have been very much advocated for. It was found out that for a successful management, the staff must get involved.

Cultural diversities not only affect the management but also other branches within the same organization and beyond. For employees to coexist in harmony without cultural prejudice then all these employees must be taught in the most objective manner, how to adapt to different cultural diversities.

Unlike the generally held belief that the management bears the greatest responsibility in managing diversities, it was found that all stakeholders were equally important from the top[ most manager to the lowest ranked junior officer. In a company where employees do not know how to handle cultural diversities, then there emanate many individual differences among workers, which negatively hurts the productivity level of the work force.

Some of the measures that have been proposed in this sector are like conducting an audit covering current policies and procedures at the same time greatly focusing on the issue of workforce composition and recruitment trends. Focus- groups with clearly defined goals, questionnaires, or electronic surveys should be used in conducting the very crucial research on climate survey.

Climate survey enables the firm to get resourceful insights of the perception held on the failures and successes of operating in a given area. Perceptions on the sensitive issues of equity and diversity can also be deduced from conducting a survey on employees.

Active participation by employees is very important as primary information is gotten on whether the current managerial strategies have been appropriately effective or they have just served to be divisive and undesired hence requiring an overhaul.

A committee that composes of both staff and management should be mandated to undertake the role of managing diversity in the workplace in the multinational corporations. Without such a committee, imminent issues will not be solved first hand and thus in dealing with the inevitable day-to-day issues, a support person is also necessary.

Appropriate training for managers should be focused on the three inter-related and inter-linked aspects of diversity, equity, and dignity. In so doing in employing such methods in the management of diversities in multinational businesses, it has been found that it is not only beneficial to the business, but also to the surrounding community and the larger world community at large.

Tolerance that is coupled with appreciation is established. Diversity committees shared by staff and management should thus be established of which this will greatly cultivate the staff-management relationship taking care of many problems that emanate from lack of elaborate communicative medium.

According to OPPapers (2011) article, some multinational companies are faced with the issue of handling cultural diversity. Cultural diversity especially at the place of work has been described as the varying and ranging differences that are imminent between individuals in an organization.

Multinational companies sometimes fail in their expansion missions because they fail to take into consideration the issue of cultural diversity.

If multinational companies are to be successful in exploring and firmly establishing themselves in new areas, then they have to change their said organization to adapt to the new country of interest, cultural consideration being the main point of inference.

Culture has been described and shown to entail sharing and learning aspect in the manner in which certain things are done in a specific given society.

Since the way things are done in, a society has been attributed to culture, then eating, dressing, exchanging greetings, treatment of others, children instilling of information and discipline and the manner in which problems are solved all fall under culture.

Therefore, failure to recognize the importance of culture in any given society has been cited as the first steps toward the downfall of a company in a given specific place, with the said company being of international stature.

Even in cosmopolitan areas, the lack of a predominant culture becomes the culture of the place in that there are multidimensional cultures. All cultures are authentic as they fulfil the need of the given society. All different cultures are complete and there is no culture that should be considered superior than the other as they all serve the same role in any given society.

Language, which is very important for communication purposes, is one aspect of a culture of a people. Advertising in pursuing the potential customer to consider purchasing the item is done using language. To understand a given language then it is important to also study and understand a people’s culture. Since all cultures are authentic, bias should be eradicated with colonial and imperialist mentalities being discouraged.

The study of culture tells you of the things to expect, do and don’ts, what the community values are and gives a company a planning strategy in establishing its command and the ability to predict whether the products or services it is offering are going to be successful or not in establishing a reliable market force.

The study of culture helps a multinational business in assessing many issues and thus is able to penetrate markets with ease reducing the incidences of taking a gamble.

Therefore, multinational companies have in one way or the other have to employ people from different cultures especially the local people of the area of establishment. A multinational business firm should comprehensively understand the host market. Host markets are best understood by employing the local population and consequently the doors of cultural diversity are opened in the multinational company’s path of operation and human resource management.

Cultural diversities have therefore come to be keenly and properly managed, failure to which will result in problems of clashing misunderstandings. The modern world has to be understood in the context that there are no boundaries as a result of globalization thus cultures are flowing from all areas and it would be wrong to force people of diverse cultures to conform to a certain given culture (Karimi 1991).

Employees’ uniqueness must be identified and strengthened, their different talents and ideas developed and improved in a way that result in growth on both the individual level and on the company level in the process creating a platform for the employees to release their full potential.

The modern business world is very competitive, dynamic and very radical; one of the most effective ways of remaining relevant and competitive is through capturing the energy and ideas of the culturally diverse people.

No culture is static or rigid as all are dynamic and in a state of flux, multidimensional development of cultures at the workplace will be an added advantage to a multinational company in keeping in touch with the various happenings on the ground and the various changing needs and evolving demands.

The understanding of such changing needs and demands can be freely collected from a survey on employees in different countries there by helping a company in cost, saving.

Raisinghani & Farshori (not dated) have asserted the need for multinational corporations to not only understand the local cultures but to also to be in a position to communicate in the various international languages used by their employees and clients. It is also very important for corporations to understand the working schedule of any given society. Some people like Christians in some parts of the world feel offended if called upon to work on Sundays.

It is also very essential to understand the calendar year of any given society. Different societies have different school curriculum and consequently different learning schedules. While some societies are re-opening school, others are closing. Failure to understand such basic things could have far-reaching negative effects on a company.

Culture of a people has been compared to an iceberg. An iceberg has two parts, one that is visible to the eye and another one that is in water. (See appendices) Many business corporations only endeavour to concentrate on the tip of the ice beg and forget the part that is in water, which is even the bigger part.

This means that in the real sense business corporations only concentrate on understanding the simple and obvious concepts of a given society and fail to go into details on understanding the real functioning of a given society and its logical backing for certain process.

In so doing businesses miss to understand, key essential agendas thus unable to reap maximum benefit from international investments. Like a ship that hits an iceberg consequently sinking, lack of proper cultural understanding might lead to closure of operations of multinational companies in a given area.

P&G dealing with cultural differences within the company

Proctor & Gamble is a multinational company whose goods are diversified and ranges in varieties. It is one of the biggest Fortune 500 Company, and is globally admired, dealing with products in beauty, household items, health and well-being. This company serves more than 180 countries worldwide and has a workforce of more than twenty thousand personnel who come from different parts of the world.

The company’s brands serve over four billion of the world’s population and thus are a much diversified with company having multinational management that has been gearing towards integration. The company in dealing with its huge and culturally diversified population of workers mainly emphasizes on its main philosophy and advocates for strict observation of the philosophy.

This is the philosophy of relying in the regeneration and building from within. This mainly has to do with fostering a strong culture, founded on trust and shared experience. This compact knit is comparable to a family setting where there is mutual trust, having a common background uniting the members.

Diversity and inclusion has been deeply entrenched in the company’s agendas and principles. The company has a wealthy and healthy diverse workforce, to foster integration the company acknowledges that each individual is unique, beyond what the eyes can see, coming from very rich diverse traditions.

Each person is also respected as having a wide range of experiences and points of view. The company in strategies and planning has come to accept and utilize the diversity of its workforce.

The cultural differences have been well utilized with individuals called upon to display their talents, perspectives and all forms of experiences. In so doing, the company has emphasized the celebration of everyone’s uniqueness (Dyer, Fredrick& Rowena 2004).


Methodological perspectives

In this research, to distinguish different ways multinational companies use to manage diverse cultural differences, qualitative research methodology will be mainly applied. Managers of various companies from the selected samples will be interviewed to shed light on how they cope with diversified cultural workforce; the effects of diversified cultures on productivity and various hurdles that are countered in the process of managing the diverse culture. Employees will also be interviewed.

Research design

Research design deals with a logical problem. The evidence needed on this issue is to show that diversified cultures adversely affect the production of a company. Case study will therefore be used as a logical structure of inquiry. This will create the appropriate module on which the methods will effectively be applied.


This research aims at critically assessing how multinational business firms manage diverse cultural differences. For this study, the population will be multinational companies cutting across the line of production.

Sample or subjects

The sample will contain four multinational companies engaged in diverse business ventures namely, soft drinks-Coca-Cola, clothing-Calvin Klein, farm equipments-John Deere and software manufacturing-Microsoft.

This will verify whether these companies have employed similar methods of management. The data collected will be used to classify and categorize the effects of efficient and non-efficient methods of managing multinational companies based on cultural differences.

Data collection methods

Questionnaires will be issued to the different managers to fill on the specific guided questions, this is more preferable than interviewing them since appointment will consume a lot of time and thus a wide area will not be covered in the desired period.

On the contrary, employees of whom it is easier and more convenient to have audience with, will be interviewed to find out whether they are satisfied with their organizational management among many other things. However, this is limiting since some might not conversant with the language of the interviewer. Data mining software can also be employed if need be.

Data analysis methods

The data collected will be empirically analyzed and computed to verify there is consistency, and whether new knowledge has been attained. Inductive and deductive logic will be applied to show whether the conclusion is consistent with the premises.

Inductive logic involves the testability of the results with truth constructed; to flow from universal general to universal particular while deductive will be used to come up with universal general from universal particular.

Reference List

Bergermann, R. 2004. Managing Cultural Diversity in the Work Place. Web.

Dyer, D,. Frederick D., and Rowena, O. (2004). Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. Boston, Harvard Business Press.

Gomez, M,. Palich, L. 1997. Journal of International Business Studies Palgrave Macmillan Journals.

Karimi, J. 1991. Journal of Management Information Systems.

Opp.com 2011. . Web.

Raisinghani, M. Fashori, S. Not dated. . Web.

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