Today’s business environment is increasingly competitive which needs communication in order to be extremely successful and competitive. For the business corporations which perform internationally, communication is one such element which brings competitive advantage and helps in bridging the gap between different countries and cultures. The main purpose of this research is to focus on the challenges of managing cross-cultural in International Business (Luthans and Doh, 2018).
The study is done on Walmart which is the biggest retail chain of America and worldwide. The company provides goods at lower prices and brings best shopping experience to its customers. The company operates in many countries like UK, Australia, India, China and more but it has to face challenges of cross-cultural behavior. Walmart managed to enter into a number of international markets as it is successful in managing its cross-cultural factors. The Literature review is done in order to focus on such factors which make it strong in handling the cross-cultural issues and challenges.
The main objective of the study is to throw a light on the challenges which are to be faced by the businesses which operate internationally. With the advent of globalization, many businesses have now set their foot in various countries but they also have to go through various hurdles which need to be crossed in order to become successfully competitive. The main project objectives are:
The scope of the research is wide. It is because Globalization has created a need for every business to operate in various countries and to be competitive in order to achieve competitive advantage. This enhances the scope of this research. The review of literature will be done in order to study the challenges which the retail business have to face while going global and while operating in different countries. Walmart is such a big organization which operates in many different countries (Thomas and Peterson, 2017). It is very common for them to face cross-cultural issues as they deal with the people who belong to different cultures, speak different languages and have a different thought process.
With the increased expansion of the business across the world and the growing competition, it has become essential to have a diverse workforce in the organization and to manage it. A diverse workforce means diverse in terms of culture and traditions. It impacts the overall strategies and performance of Walmart as well. It is very important for a business to manage its cultural diversity so that its advantage can be made and competitive edge can be gained. There are various authors which have different say in this context (Binder, 2016).
According to Tung (2016), the advances in information and technology have increased the ease of companies in doing global business because of which most of the countries are operating in more than one country. This gave rise to the culture of multinational companies where the employees from various regions of the world work together in order to achieve common objective of Walmart. The management of resources at global level helps the company in facing tough situations but it is not easy. The human resources work together which belongs to different nations and regions which brings discrepancies in their culture, understanding, traditions, and nature of work and processes of work. The author added that cross-cultural management has great impact on the international business operations. It brings many challenges for the business. Culture and behavior of employees creates complexity in in international business. If a business has cross-cultural proficiency, it will be able to handle its foreign counterparts well. For e.g. proficiency of cross-cultural behavior helps Walmart in developing products and services as per the needs and demands of its foreign business countries. It also helps them in communicating with them and ultimately helps in promoting its deliverables effectively. The article says a lot about the advantages of cultural adaptations and barriers of the same. It also threw a light on the measures which helps in overcoming the barriers of the cultural adaptations. In Comparison to this, Tutar, Altinoz and Cakiroglu (2014) added that the multinational organizations are composed of the workforce, which is different in terms of geography, religion, languages and political backgrounds.
According to Cavusgil et al. (2014), linguistic differences could impact the way of communication with workforces, business partners, and customers. In Australia, different foreign language is used in working and advertisement. As a result, Walmart can provide the training of language to employees and develops the strategy on that language. Business could also face the same linguistic barriers in the local societies in which the high amount of population belongs to different nations. In opposed to this, Brewster et al. (2016) evaluated that culture assesses the behavior, habits, holidays and preferences of the consumer in every society. Business should focus on all the cultural characteristics of targeted society. For example, Walmart cannot sell the products that will breach the ethical conduct. The company cannot predict a boom in their revenues before blessing elsewhere outside of Australia as it could affect the whole sales. Cultural differences also create barriers in the local level of business.
In the view of Stahl and Tung (2015), information and knowledge regarding business etiquette, habit, and attitude of a foreign nation are significant to compete and co-operate the business in the international market. These attitudes also assess how Walmart deals with a diverse situation in the international market such as whether they act defensively or offensively. The company can also use the data regarding different attitudes of international business to compete against the international corporations in their domestic marketplace. In contrast to this, Stone and Deadrick (2015) stated that differences among the technical advancement and services of markets globally or within Australia could assess fundamentally opportunity for production, and sales and marketing to deal with the business. For instance, Walmart cannot deal in advance technology in that market where there is no advancement. But, it can develop promotion and advertising approach on the internet as web services are used by the high amount of national population and local society. It could be used as a primary source of data.
Moran Abramson and Moran (2014) opined that the international operation could be spread by the organization but it could create challenges for a company as there is the difference between social system and organizational culture. This new social system could impact on the responses of all involved individual. When employees of Walmart posted to the new nation then they could face challenges due to a variety of behavior. They can also fail to identify the key differences amid their own and other culture. But, if they go through these different behaviors then they tend to conclude that the effect of difference is inappropriate. They also assume that the two cultures are more related as compared to their actual culture. On the other hand, George et al. (2016) described that some of the employees can relatively individualistic, which shows that they highly focus on the personal welfare and needs. At the extreme, individualism recommends that their actions should be instructed by the motto and looks out for themselves rather than concern for others.
According to Tjosvold (2017), Ethnocentrism is a key challenge to uncomplicated adaption to another culture. It exists when an individual is prone to realize that their homeland circumstances are the significant. This predisposition is also called ethnocentrism and self-reference criterion. Although, this type of thinking is natural but it hinders the knowledge of human behavior in other culture and increases productivity from domestic workforces. For integrated the local and imported social system, employees of Walmart should develop the knowledge of local circumstances. This understanding could be adaptable to integrate the societies of interest of two or more culture. In contrast to this, Tian (2016) evaluated that company should understand the cultural distance between two nation when employees move to another nation in order to expect the adaptation extent. There is the amount of diversity amid two community systems but it may range from minimal to substantial. It is also stated that the amount of culture distance in Walmart can affect the responses of all individual to business but there is no matter how much extent of culture distance. Workforces tend to be fairly ethnocentrism and observe the circumstances in a new nation as per the standard of their homeland. These barriers will be overcome if the culture distance is high.
According to Saeed et al. (2014), when workforces enter into another country then they tend to suffer the cultural shock, which is puzzlement and uncertainty caused by encountering diverse culture. In Walmart, employees may not understand how to act as they may fear losing face and self-confidence. They may also become emotionally upset. Some people isolate themselves, whereas certain people make a decision to return home on the upcoming airplane. This situation could arise when an employee’s move from one advanced country to another. There are certain causes of cultural shock such as language, different management philosophies, attitude with regards to productivity and work, separation from colleagues and friends, unique currency system, alternative dress, language, food, availability of goods and driving patterns.
In support of this, Dunning (2014) stated that political factor may concern with government policies, regional economic blocks, and laws and administrative orientation of different nations. The political factor considers the regulating international trade with regards to quotas, technical standards, and tariffs. For instance, the Australian government has regulation to charge less tax on international trade. Political stability is also a significant concept for an international business scenario in Australia as it could have a favorable impact on the Walmart Business. But, at the same time, the political unrest and military coups could oblige the multinational company to close or delay the operations. On the other hand, French (2015) stated that economic growth rate could also impact on the level of demand for goods and services in international markets. But, the economic growth rate may be high in the certain nations and low in other nations. For instance, the inflation rate is low in Australia as it could be effective for Walmart to deal in the international market.
In the view of De Mooij (2015), the existence of technological infrastructure and technical capabilities assess the prosperity of international business in the host nation. There are certain factors such as technical training and broadband connectivity have become significant ingredients of successful operation in the modern business phenomenon. In addition, the level of the technological building in a given nation assesses the scope of technical knowledge amid its population whereas, it could be easier for Walmart to develop and maintain technical operation in high-technology nation i.e. Australia. On the contrary, Firth et al. (2014) evaluated that demographic factor like culture and religion could affect the quality, types, demand level and functional features of the product in the international markets. Culture integrates different meaning to time, name, objects, attitude and color. For instance, Walmart may suffer the low sales when it will introduce the unhealthy products in Australia as there are a large number of people, who emphasizes on a healthy lifestyle. Hence, Walmart may have the capabilities to discuss and understand the different cultural cues and structure that are features of international business scenario.
Barkema et al. (2015) stated that company faces complexities to deal with the competition despite its uniqueness. When a company starts the business, then it fights against more experienced and developed businesses in the same industry. After developing the business, it may face the newer firms, which try to decline their customers. Competition can break and make the business hence Walmart should identify the brick and mortar bookstores burned and crashed competing with other companies. In opposed to this, Brewster et al. (2016), lack of money could assess whether the company dies or survive in the Australian economy. When cash resources are too limited, then it could influence the number of recruited people, quality equipment, and the amount of advertising that company can buy. If Walamrt has adequate cash then it could have more flexibility to expand their business and endure economic downturn.
According to Alvarado Herrera et al. (2011), changes in government policies could have a large impact on their business. The retail industry is the standard example for this as Walmart have been required to produce quality products and labeling on their products and government gives the right to the advertisement of quality product on television and social media. Therefore, the percentage of Australian who uses unhealthy products has declined by more than half and it has also the corresponding impact on the revenue of industry. On the other hand, Stokes et al. (2016) evaluated that internal culture includes the attitudes, values, and priorities that employees have in an organization. A cutthroat culture in which every workforce competes with other market players may create a distinct atmosphere from a corporation that focuses on teamwork and collaboration. It is also analyzed that Walmart culture flows from the top down. Employees of the company will infer the value of the company but, it is relied on hired, fired and promoted type of people. Hence, Walmart should demonstrate their value to staff to integrate with the organizational culture.
According to McFarlin and Sweeney (2014), customers and suppliers are significant people for dealing the business. Further, suppliers have large impact on the expenses of Walmart. The power of specified suppliers relied on shortage such as if the business cannot buy the raw material from anywhere else then it could make limited negotiating the room. The powers of customers rely on competition level, product quality, and promotion against competitors. In contrast to this, Kolk (2016) stated that a well-run business may not be able to survive in case of bad economy. When customers lose their employment and take jobs that barely aids them then, they will spend fewer amounts on recreation, luxury goods, sports and new cars. Along with this, high-interest rates on credit card could discourage the customers for spending. Although, Walmart cannot control the business, but understanding could aid the company to decline the threats and grab the opportunities.
Saeed et al. (2014) stated that employees are a vital component of the internal environment of the company. Hence, employees of Walmart should have a good understanding at their jobs and assesses whether they writing the code or selling the goods and services to strangers. In addition, managers should have a good understanding to handle the lower level employees and manage the other part of internal circumstances. If everyone is talented and competent then conflicts and internal politics could ruin a good company. In opposed to this, McFarlin and Sweeney (2014) described that communication can be problematic for an organization where certain workforces speak in English as a second language. These problems could be raised due to the difference in the language of people in Walmart. For declining the confusion and misunderstanding, English speaking employees of Walmart should not use slang and jargon words in the emails and meetings. It is stated that ‘OK’ word could be appropriate to speak the international language with their colleagues over the lunch hour. But, if the same language is used in meeting with an individual who does not speak a foreign language then it can make those employees feel barred. According to the general rule, people should be encouraged to implement the language of their choice during the lunch hours and breaks, but they are restricted to use common language at the workplace during the formal discussion.
Employees and manager in Walmart gradually comprehend the diversity and dimension. Hence, it is the accountabilities of employees and manager to adopt the approaches to maintain the diversity at bay. There are certain strategies, which enables an organization to tackle the hurdles of cross-culture diversity. According to Barkema et al. (2015), the initial strategy is admitting and acknowledging the existence of diversity amid cultures. It will mainly entail the diversity in interpretations, perceptions, and assessment of social circumstances and people who develop them and act within the team. These differences should be identified by Walmart to eliminate the cultural diversity in the international business. Along with this, recognition of culture by an organization is the first circumstance of developing the mutual understanding and good cooperation. On the other side, De Mooij (2015) stated that company should respect the foreign culture to accept the differences of culture without any judgment. There is no evidence that some culture is perfect as compared to another culture. Walmart should demonstrate the finest services for the members due to diverse cultures. As a result, it would be beneficial to organize life circumstances in the situation they have been alive for a long time.
Tian (2016) recommended the procedure to address the common solution, mutual comprehension, and generalization of the complex and demanding procedure of behaving diverse cultural environment. It aids to keep to liaison with the foreign culture. Furthermore, Walmart should give their cultural background on social media to deals in international business. It could be also recommended that Walmart should use their understanding about own culture in order to comprehend the culture of partner as it could be quite easy to deals in international level. The key perspective is that Walmart should have good knowledge of partners and their cultural environment to avoid the diversity. On the contrary, George et al. (2016) stated that company should ignore the cultural differences. Under this strategy, a manager ignores the differences of culture at the workplace. It could be irrelevant when a manager and employees have good comprehension about cultures and practices of each other as earlier, they would learn to respect the culture of others. Under this strategy, the managers and workforces of Walmart feel that ‘our way is the only way’ in provincial sort of organizations. The elimination of diversity entails the effective management of cultural difference and prohibited the chances of adverse impacts and increases the favorable impact of diversity.
According to Stone and Deadrick (2015), minimize differences is the strategy to eliminate the cultural diversity in international business. Under this strategy, the managers feel differences of culture but only as a source of problems. This approach is highly adopted by ethnocentric organizations. In Walmart, managers try to decline the issues of diversity by declining the cultural diversity. They also do not think regarding benefits of diversity. They also try to choose culturally homogenous employees and makes effort to socialize all workforces into behavior structure of dominant culture. In opposed to this, Stahl and Tung (2015) described that managing differences are adopted by synergistic companies. Moreover, Walmart identifies the impact of cultural diversity, which leads to both disadvantages and advantages. The managers in the synergistic company believe that ‘our way and their way of thinking and organizing differ’, as could create barriers in international business. In such case, employees and managers eliminate the potential issues by organizing the impact of cultural diversity. As well as, the managers maximize the potential benefits by organizing the effect of differences in culture as compared to ignoring them. Walmart should use the approach of managing diversity such as providing training to both employees and managers to recognize the cultural differences and creates benefits in favor of an organization.
In the view of Cavusgil et al. (2014), employees should be recruited, who are low in ethnocentrism and other possible troublesome distinctiveness. The desire to experience in other culture and live in another country may also have a significant requirement to assess the worth attitude of others. It is recommended that learning the attitude of workforces with regards to project can be significant for Walmart. Since, it makes sure that there is a strong support to deal in the international market. In support to this, Stahl and Tung (2015) stated that the adjustment to the new nation could become easy for workforces on their initial international project if they are sent to the nations, which are similar to their own. It is also stated that Walmart tries to accelerate adjustment to the domestic nation by leading workforces to learn the domestic language. It also provides training prior to assignments. But, Walmart should focus on the orientation of the customs, geography, political environment, and culture in which the workforces will be living. In addition to this, the adjustment is further led by the company for employees after reaching in the new nation. The company can also assign the mentor for ease transition.
From the above interpretation, it can be concluded that some challenges could be faced by Walmart to manage the cross-cultural behavior in International business. These challenges are advances in information and technology, linguistic differences, diverse social system and organizational culture, Ethnocentrism, and uncertainty. It could be also summarized that there are certain factors which are responsible for the success of International Business. These factors are a political factor, economic growth rate, the existence of technological infrastructure, demographic factor, changes in government policies, internal culture, customers and suppliers, internal environment and communication. It can be also summarized that there are some strategies, which can assist Walmart to eliminate the challenges of the global organizations. These strategies are admitting and acknowledging the existence of diversity amid cultures, respect the foreign culture, ignore the cultural differences, eliminate the cultural diversity, and hired employees should have low in ethnocentrism.
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