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Challenges Faced by MNC’s in Cross-Cultural Management

Current participation in the global market has brought with it challenges in terms of cross-cultural management. With an increase in the number of multinational corporations, people from a different cultural backgrounds are forced to work together under one roof despite the differences in beliefs and norms. The fundamental intellectual and technological dynamics within the market have made cross-cultural management a reality that every manager must face. As a result, one-way form of management which was Western-oriented cannot be accommodated in the current market. Researchers call upon approaches that employ both the Western and Asian cultures. Sadly, many managers and researchers have been able to critique the old approaches but failed to develop a solution. This paper intends to identify the key challenges faced by MNC’s in cross-cultural management and offer a plausible recommendation of how this issue could be solved.

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In their quest to attain an industrial status and gain some competitive advantage, many countries have opened up their doors to international organizations. One such country is Malaysia. With an influx of these organizations, there is an increase in need for expertise. Expatriates are then imported into the country to offer the skilled manpower. The expatriates also offer professional manpower and skills in different fields of production. Precisely, Malaysia reported a total of 21,859 registered expatriates in 1999 0nly (Malaysia, 2000).

Aside from the quest for competitive advantage for countries, Organizations from developed countries like the United States move their headquarters to develop countries in order to reduce their costs of operation. Tahir and Ismail (2007) point out that an estimated 1000 companies in the United States of America would have relocated to other convenient locations around the world by the year 2008. They move to other locations in search of tax incentives, looking for raw materials and also searching cheap costs of labor. This clearly indicates that people from different cultures will be forced to move to new regions hence increasing diversities in working environment. Therefore, more and more instances of cultural challenges are expected as the world continually moves towards globalization.

To begin with, the cultural diversity within MNC’s brings about the challenges for ethical culture to be adopted. In his analysis of ethics, Shakespeare clearly points out that there is nothing that can be curtly classified as good or bad. However, it is the constructed thinking of an individual that makes it acquire the quality of good or bad. On the other hand, different cultures advocate for different norms and hence differences in good or bad. This is a great challenge for MNC’s. While smaller companies and organizations depend mostly on employees from a more or less similar culture, MNC’s employ people from different cultures. The definition of good and bad becomes a challenge because, in one culture, an action might be good while at the same time it is bad in another culture. This forces the management to come up with a way that all these cultures are accommodated so that they can work together for the good of the company. There is needed to come up with an ethical code that is universal and relative in that the different cultures will not be ignored completely. This will assist the organization to compete favorably on the market (Fish & Wood, 1996).

Individuals’ actions and perception of the world are greatly shaped by the values within the society he grew. Consequently, the individual’s actions shape the dynamics of the organization with which he works. This means that MNC’s are greatly affected by the different cultures that are characteristic of the different backgrounds of their workforce. The perception of values might greatly differ from one employee to the other hence leading to misunderstandings between one and the other (Merriam, 1998).

Gender relations offer another great challenge in terms of cultural diversity. In a culturally diverse society, the expectations for women might differ from one employee to the other. For instance, it could be difficult for a woman to expect to hold a high position in management in some cultures. In male-dominated countries like Malaysia, male employees would find it difficult to accept a woman as the head of the organization. On the other hand, Western countries tend to incline towards equality. Women and men could hold any office provided their competency and educational ability allow them. This becomes a great challenge to the management of an organization that boasts of both cultures. While well-performing female employees qualify to have their statuses elevated, there could be forms of resistance from the male employees (Caliguiri & Cascio, 1998).

With these identified cultural challenges, what can an organization do to ensure that the cultural differences work for the best of the organization as opposed to destroying it? Bartol and Martin (1998) argue that culture and the self are one. Self-awareness cannot be separated from cultural awareness. It is therefore important that a person understands his culture in order to understand himself. How can this be achieved? This paper identifies two ways through which the management of an MNC can overcome the issue of cultural challenges. The first way is through cultural orientation and the second is policy formulation (Harrisons, 1994).

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Literature points out that there are four types of orientation, ethnocentric orientation, polycentric orientation, regiocentric orientation, and geocentric orientation. However, this paper recommends that for a successful multicultural management, organizations should put much consideration on geocentric orientation. This is a form of orientation that calls for a global view in which an organization develops a culture that becomes accepted by the headquarters and the subsidiaries alike. This form of culture should try to put into consideration the differences in the cultural perspectives and develop a unique system that aims at removing any form of inclination. Approaches that put little of each value and belief system to the table and tries ensure that every individual is comfortable within the new system (Foster, 2000).

The second approach to assist organizations meet the multicultural challenges is use of policies. A business policy is a guiding procedure that enterprises or business premises utilize in order to help them achieve their set goals and objectives. Businesses that employ people from diverse cultures and have their branches located in many different countries will definitely require a business policy that will guide in when dealing with such people from immense backgrounds. Considering Hofstede (2005)’s analysis of culture, each individual has a way of contributing to the development of this company depending on what he or she sees is valuable, based on their beliefs and approach towards life. A business organization should therefore seek a policy that will be in a position to accommodate the different needs of these employees while at the same time finding ways of managing the differences that exist among them. The guiding principle towards the establishment of a policy to govern a company that is operating in various countries and diverse employees is its employees. Since this is the team that will help the business grow and expand, the management should determine what their interests and requirements are and find out how to fulfill them. It needs to ensure that each employee, no matter his or her background, is in sync with the system in Business Objects.

In conclusion, it is arguable that cultural diversity is an inevitable challenge that no organization working across boundaries can fail to experience. Countries try to sharpen their competitive advantage while organizations run towards regions that reduce their operating costs. This calls for differences in cultures as expatriates are called for to meet the skilled manpower and professional needs within the organizations. As a result, professionals from different countries traverse the planet as they offer their services. This means that cultures continue merging while causing challenges as a result. Cultural challenges come in terms of values and belief systems created by society. This can be evidenced in the issue of gender where male societies might have problems accepting women at management levels.

As a form of respite, this paper has offered orientation as one of the solutions to multicultural challenges. Secondly, multinational organizations need to develop policies that put into consideration the positions of every employee regardless of his or her position and rank. This is especially important because all employees of the organization are parts of the organization system and a failure in any of the parts would lead to failure of the whole organization.

Reference List

Bartol, K. M. and Martin, D.C. (1998). Using intra-national diversity for international assignments: A model of bicultural competence and expatriate adjustment. Human Resource Management Review, 6(1), 47-74.

Caliguiri, P. M., and Cascio, W. F. (1998). Can we send her there? Maximizing women on global assignments. Business Journal of World, 33 (4), 394-416.

Fish, A., and Wood, J. (1996). A review of expatriate staffing practices in Australian business enterprises. International Journal of Human Resource Management, 7 (4), 846-865.

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Foster, N. (2000). Expatriates and the impact of cross-cultural training. Human Resource Management Journal, 10(3), 68-78.

Harrisons, K. (1994). Developing successful expatriate managers: A framework for the structural design and strategic alignment of cross-cultural training program. Human Resource Planning, 17(3), 17-35.

Hofstede, G., 2005. Cultures and Organizations: Software of The Mind. United States of America: McGraw Hill.

Malaysia (2000). Statistical Report Dated is 1999 . Kuala Lumpur: Immigration Department of Malaysia.

Merriam, S. B. (1998). Qualitative Research and Case Study Applications in Education. San Francisco, CA: Jossey-Bass Publishers.

Tahir, A. and Ismail, M. (2007). Cross-cultural challenges and adjustments of expatriates: A case study in Malaysia. Turkish Journal of International Relations, 6(3), 72-99.

Tung, R. L. (1998). American expatriates abroad: From neophytes to cosmopolitans. Journal of World Business, 33 (2), 125-144.

Usunier, J., 1998. International and Cross-Cultural Management Research. London: SAGE Publications Limited.

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StudyCorgi. (2021, December 30). Challenges Faced by MNC’s in Cross-Cultural Management. Retrieved from https://studycorgi.com/challenges-faced-by-mncs-in-cross-cultural-management/

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