Globalisation is a rising trend in today’s business environment. It involves international integration resulting from continuous exchange of culture, views, as well as products and services. It is mainly fuelled by advances in telecommunication and transportation infrastructure (Siegel, Licht & Schwartz 2011). Clever Clogs International is one of the firms that have embraced globalisation. It is a financial institution based in Lebanon. The organisation is rapidly expanding its activities across the globe. It has recently opened a new branch in Amsterdam, the Netherlands. As a result, there has been a felt need to send a manager to oversee the operations of the new division for a two year assignment. Clever Clogs International’s main aim is to revolutionise the banking sector in efforts to prevent the occurrence of another economic crunch.
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The organisation has already identified the manager to be transferred to the Amsterdam station. It is a female Muslim who is in her mid-thirties. There is no doubt that she is the most suitable candidate for the assignment. The reason is that her hard work has earned her two promotions within the four year period that she has been with the company. Evaluation records also show that she has the right skill-set to handle the task. However, the candidate had never been in a foreign assignment before. For this reason, no formal training on international operation has been offered to the manager. Consequently, Clever Clogs International has sought the help of an external party to deliver a cross-cultural briefing report to the new manager. The purpose of the brief is to sensitise the manager on the challenges linked to globalisation that face executives in the financial sector (Siegel, Licht & Schwartz 2011).
One such challenge is surviving mergers and acquisitions. Banks and other financial institutions tend to merge with or acquire other firms when entering into new markets (Aguinis, Joo & Gottfredson 2012). Cultural conflicts often ensue, especially among employees, which negatively affects their performance. For Clever Clogs International to successfully run its newly opened branch in Amsterdam, it is important to conduct a brief overview of macro-level factors associated with the Netherlands.
Macro-Level Facts of the Netherlands
The Netherlands is one of the world’s greatest democracies. The government is known to embrace neutrality in international matters. Over the past few years, the country has become a member of numerous international organisations, key among them being the United Nations (UN), the European Union (EU), and the North Atlantic Treaty Organisation (NATO). The country’s economy is considered to be one of the most liberalised in the world. It relies heavily on international trade. The government of Netherlands is considered to be one of the most progressive agencies when it comes to international trade (What about the Netherlands? 2013).
Foreign companies are welcome to invest in the economy. The country’s population is also diverse. About 80 percent of the persons living in the Netherlands are of Dutch origin. The remaining 20 percent is made up of people from different nations across the globe. Such countries include Germany, Indonesia, Morocco, and Turkey. As a result, the workforce is also highly diverse and is made up of different cultures. Consequently, executives working in the country should be adequately prepared to deal with numerous cases of cultural conflicts.
Following globalisation, some of the sectors in the Dutch economy, such as fishing, agriculture, trade, shipping, banking, and finance, have grown rapidly over the past two decades. The reason is that many foreign firms have moved to invest in the Netherlands. Amsterdam, the capital and a major financial hub in the country, plays host to most of these organisations. Some of the businesses import labour from their mother country. However, the government of Netherlands is opposed to the move in a bid to create more employment opportunities for the country’s population (What about the Netherlands? 2013). For this reason, executives of the foreign firms should be ready to work with the Dutch people in spite of their cultural differences. To better understand the Netherlands, the country will be compared to Lebanon based on Geert Hofstede’s theory.
A Comparison between the Netherlands and Lebanon
The Geert Hofstede’s theory will be used to compare communication in the two nations. The framework describes the manner in which the culture of a particular society affects its members (Hofstede 1993). At the same time, it seeks to shed light on the effects of cultural values on the behaviour of people. In the workplace setting, the theoretical framework is used to show how organisational values are influenced by culture. More emphasis is on the financial sector. In the past, the framework was used to compare the various elements or dimensions of the cultural values of different nations.
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In total, the theory has six dimensions. The first element is the power distance index (PDI). It identifies the relationship between individuals with varying levels of influence in the society. The second dimension is individualism versus collectivism (IDV). Its main purpose is to assess the degree to which members of a particular society are organised into groups (Hofstede 1993). Uncertainty avoidance index, abbreviated as UAI, is the third dimension of cultural values. It illustrates the extent to which the society is willing to tolerate ambiguity. It may be in the form of events that are unexpected or unknown to the members (Hofstede 1993).
Masculinity versus femininity (MAS) is the fourth dimension proposed by the theoretical framework. It describes the extent to which the society champions for achievement, assertiveness, heroism, and the use of material rewards to honour success. The fifth element of Hofstede’s theory is the long-term versus short-term orientation (LTO). Here, the theory attempts to create a link between the past and the present to determine whether the society honours and upholds traditions or not. Indulgence versus restraint (IND) is the sixth dimension proposed in the theoretical framework. It is a measure of happiness within a particular setting. It seeks to evaluate the extent to which the society allows free gratification of different human desires.
The table below shows the scores of both Lebanon and the Netherlands on the six dimensions:
Table 1: Comparison between Lebanon and the Netherlands based on the dimensions of Hofstede’s theory
|Power Distance Index||75||38|
|Individualism versus collectivism||40||80|
|Uncertainty avoidance Index||65||14|
|Masculinity versus femininity||50||53|
|Long-term versus short-term orientation||14||67|
|Indulgence versus Restraint||25||68|
Source: What about the Netherlands? (2013) and What about Lebanon? (2013)
The figure below shows how Lebanon and the Netherlands perform in terms of the six dimensions of the Hofstede’s cross-cultural communication framework:
Although the Hofstede’s theory is successful in illustrating cross cultural communications, it has attracted criticism from various analysts.
A Critique of Hofstede’s Work in Relation to Macro Level Indices
Different criticisms on Hofstede’s theory have emerged in relation to the macro level indices. To begin with, critics are of the opinion that his work only focuses on national cultural values (Hofstede 1993). The values are not necessarily similar to those in cultures of specific sectors. National cultures are also been slowly eroded by globalisation (Imai & Gelfand 2010). The reason is that new ideas are introduced into the country. As a result, the six dimensions highlighted in the theory are not entirely relevant to the macro level indices used in daily-level management practices in the finance sector (Imai & Gelfand 2010). For example, the high individualism index reported in the Netherlands may have no effect on firms operating in the financial sector (Moti 2015). The reason is that the organisational culture can be changed through continuous training of the workforce on the importance of working together in tightly-knit groups (Gelfand et al. 2012).
Hofstede’s theoretical framework also leaves out numerous possible dimensions of cross cultural communication that are relevant to macro level indices used in day-to-day management practices. They include demographic factors, such as religion, race, and ethnicity. Such aspects need to be looked into carefully in daily management practices (Kline 2010). An executive should acknowledge and respect these aspects to improve the relationship between them and their subordinates (Triandis 2006). In the financial sector, these factors are important since they touch on the identity of the individual. The decisions made by the manager of a financial institution need to accommodate persons from all walks of life (Liviu 2015).
Business and Management Challenges Faced by International Managers
As an international manager, it is important to note that decision making is based on the contingency theory. The framework insists that the behaviour of the leader should be considerate. One has to create positive relationships with other stakeholders in the organisation, mainly employees and customers. However, this is often a difficult task owing to the diverse nature of the workforce. The manager has to put into consideration the different cultures represented within the firm (Liviu 2015). Failure to do so will translate to cultural conflict within the workforce. In the case of Clever Clogs International, the new manager sent to the Netherlands needs to develop genuine links with the workforce (Blasco, Feldt & Jakobsen 2012). The reason behind this is that service delivery organisations, such as those operating in the financial sector, depend entirely on the efforts of their employees. Failure to show consideration may lead to poor performance.
According to the contingency theory, another challenge faced by international managers involves initiating structures. An administrator is expected to lead by example. One is charged with the responsibility of assigning roles to subordinates. Planning is also a major role of the management. At the same time, the manager is required to schedule tasks to be completed by the firm. However, this is not often possible for executives in foreign assignments (Aycan et al. 2013).
The reason is that they are not fully aware of the factors that they need to put into consideration when making such decisions. For example, managers of financial institutions operating in foreign countries find it difficult to create a match between organisational goals and those of the employee (Coldwell et al. 2008). The reason is that the individual members of the workforce may differ from one another (Thomas & Peterson 2014). The culture of the home country also tends to differ from that of the foreign nation. Consequently, decisions are made at a slower rate owing to numerous consultations that require to be carried out before final decisions are made.
Rising globalisation has prompted many firms to expand their operations into foreign nations. Managers from the parent company have to be sent on foreign assignments to oversee the running of the new divisions. In some cases, the administrators may lack the skills needed to run international firms (Blasco, Feldt & Jakobsen 2012). They may also lack knowledge on how to deal with the issue of cultural differences. As a result, they are often faced with the challenge of cultural conflict. To prevent such occurrences, it is important to brief managers sent on foreign assignments. International executives working for financial institutions need to be culturally competent. The reason for this is that the performance of service delivery companies depends purely on the commitment of the workforce.
Three major considerations should be factored in when handling international assignments. They include:
- The realisation that no two countries have the same cultural settings. As such, a foreign assignment to one nation needs to be handled differently from that in another.
- The acknowledgement that cultural differences are to be appreciated and respected by international managers to enhance the success of the divisions they are running.
- The realisation that decisions made should be inclusive to improve productivity.
The manager overseeing the Netherlands branch should be aware of these cultural differences.
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