Impact Of National Culture On International Business Operations: Management Approaches And Samsung Case Study

National culture and business operations

Discuss anout the Multinationality of Multinational and National Firms.

The national culture has become important for the successful operations of the business organizations in the modern business environment. The most effective way of expressing the impact of culture on the business environment is based on the statement that the activities of the managers in all the operations of the organization is the same, however, the ways by which these activities are conducted is different. The globalization of business organizations is increasing in a rapid pace in today’s modern business world. With the high rates of the global expansion, the ways of understanding impact of the national culture on operations of the organizations is also changing rapidly. The national culture is thereby becoming the most important factor for the successful operations of the organizations (Perlmutter 2017).

The cultural diversity that is faced by organizations in various parts of the world influences the day to day operations of the business to a large extent. The international business organizations face a significant challenge regarding the successful operations in the various areas or countries. The organizations need to adapt to the diverse cultures and the impact that these have on the operations. The basic concept which is based on the culture of the organizations is the values that are an inherent part of the culture that is followed in that country. The values thereby provide the basic understanding of the ways by which the people belonging to the particular culture are most likely to react in a particular situation (Michailova et al. 2017).

The report will be mainly based on the different styles of management or approaches that are followed in the areas where the business organization has its operations. The various management approaches are thereby based on the changes in the culture of the areas where the business organizations expand their operations. The culture of the particular country thereby helps in deciding the type of management approach that can be applied by the company in the particular area of its operations. The three approaches of management that will be discussed in the report are, ethnocentric approach, polycentric approach and geocentric approach.

The various human resource managers in the global organizations use different approaches of staffing in the different areas of the world. The different organizations follow different styles of management based on the needs of the staff and the environment in which it has the operations. The organizations tend to go in different directions if they have the operations in various countries of the world. The human resource management approaches help the organizations to operate in a particular direction so that the they can remain focussed on the core values with which they are able to operate successfully in various areas of the world. The core values of the organizations help in deciding the ways by which they can operate in the different areas of the world (Lakshman, Lakshman and Estay 2017).

Management approaches based on national culture

The ethnocentric approach is a method that is used for the recruitment of the employees in the international areas. The organizations in which this approach is followed, the human resource managers recruit the right person who is suitable for the right position in the international business. This selection is thereby based on skills that are required and willingness of candidates for the purpose of mixing with culture of the organization. The main rationale which is related to this approach is that the staff of parent country is the best and they are able to represent the organizational culture which is related to the interest of headquarters of the company (Guo, Rammal and Dowling 2016).

The major advantages that are provided to the organizations by this approach are,

• Better levels of coordination between the parent and host company.
• The culture based on parent company is easily transferrable to subsidiary companies which helps in infusing the practices and beliefs into the other country.
• The control over the subsidiary needs to be effective in nature.
• The parent company is able to watch the operations of the subsidiaries in a close manner.
• The transfer of the technical knowledge is also easy.
• The communication level between the host company and the parent company is high.
• The company thereby does not need to build an international local labour market (Isiaka et al. 2016).

The disadvantages that are related to the use of this approach are as follows,

• The staff of parent country can find difficulties in adjusting to the culture that is followed in the host country.
• The management may find it quite difficult to guide the employees in the host country from the far away operations.
• The organization may also miss the opportunity to hire the best talent from the country in which it operates.
• The clashes based on the culture between the executives of the parent country and the staff members of host country may cause hindrance in the organizational operations.
• The restrictions that are placed by the government of the host country may cause issues for the operations of the parent company (Teixeira et al. 2017).

The polycentric approach is a method of international recruitment which is based on the ways by which the human resource manager recruits the employees for the international business organizations. In case of the polycentric approach the employees in the managerial positions are recruited from among the people of the host country in which the company has expanded its operations. The main rationale of the organizations for following this approach is based on the fact that the locals of the host country have better levels of knowledge as compared to the people belonging to the parent location. This can help the management in running the business successfully and efficiently in the various areas of its operations (Storgaard, Tienari and Piekkari 2014).

The major advantages that are provided by this approach are as follows,

• The expatriates are able to adjust to the environment of the company easily as they belong to the area in which the organization is operating.
• The hiring of the locals in the business organization will also reduce the costs that are related to the recruitment of new employees in the company.
• The levels of productivity of the employees of the local areas are also quite high as they have high knowledge about the area in which the company is operating.
• The company provides high career opportunities for the local people of the area in which it plans to operate.
• The support of the government that can be provided to the company will also be quite high.
• The chances related to the success of the company in that particular area of operations becomes quite high (Plakhotnik et al. 2015).

The disadvantages that are related to the polycentric approach are as follows,

• The lack of the coordination levels between the host company and parent company is high due to the absence of the link needs can be created if the expatriates of the parent company are appointed in the managerial positions of the company.
• The levels of effective communication among the members of the staff of the parent company and the host country can be caused due to the barrier in language among them.
• The parent company may also find it quite difficult to exercise their control over the subsidiaries.
• The lack of knowledge related to the conditions of the market of host country can also cause issues for the operations of the parent company.
• The conflicts are likely to arise among the managers of the host country and the parent company due to the different ways of thinking that are followed by them (Meuer et al. 2017).

The natives of host country are appointed by the human resource managers to run operations of subsidiary and they are also provided with the authority for the formulation of strategies for the successful operations of the business. The decisions related to the operations need to be taken based on the mission and the vision of the organization. The nationals of the parent country on the other hand hold the important positions at the headquarters and are held responsible for scrutinising the various operations of the subsidiaries (Kang and Shen 2016).

The geocentric approach is another method related to international management where multinational organizations hire the person who is suitable for a particular job irrespective of the nationality to which they belong. The major rationale that is related to this recruitment approach is based on the concept that the world holds a pool of talent and eligible candidates. The human resource managers thereby need to appoint the most suitable persons for the suitable positions irrespective of the nationality to which they belong. This approach is thereby followed by the organizations that are global in nature as they are able to follow the integrated global strategy of business (POPOVSKI, POPOVSKA and JOVCHESKA 2014).

Ethnocentric approach

The main advantages that are provided by the geocentric approach are as follows,

• The multinational organizations have the ability of developing a pool of the senior executives who have international experiences and various contacts across borders.
• The expertise levels of the managers are useful for accomplishment of various objectives of the multinational corporations.
• The reduction of the unfair treatment that can be provided to the employees of various operational areas are reduced.
• The employees are thereby able to learn from the various experiences that they had in their own professional lives (Al-Asfour and Shield 2015).

The disadvantages that are related to the geocentric approach are as follows,

• The costs that are related to the training provided to the employees are high and the compensation and relocation based charges are also quite high.
• The control of the staffing needs to be highly centralized in nature.
• The human resource manager needs to conduct proper scrutiny so that the most suitable person for the job can be selected.
• The approach has proved to be quite costly for the organizations which plan to hire the staff with the help of the recruitment agencies and the consultants (Bebenroth 2015).

The recruitment agencies or consultants are hired by the organizations for the purpose of finding the employees who are most suitable for the job positions. The employees are selected based on the skills that are held by them which are helpful for their employment in the global business operations. The multinational corporations can also make use of the internal recruitment sources with the help of the track records that are maintained by their concerned human resource department (Aschkenazi 2016).

The organization which can be analysed based on the usage of an international staffing policy in the country of its operations and bringing changes in the operations after the expansion in other countries is Samsung. The approach of the Samsung Group or the Samsung Electronics towards the international human resource management based approach is mainly related to the ethnocentric policy which is followed by the company. The Samsung Group and Samsung Electronics is a South Korean organization and is a leader in the technological market of the world (Samsung Electronics America. 2018). The organization was established in the year 1938 by Lee Byung-Chull. The company was primarily known for the semiconductor business. Later, the organization gained reputation in the market for being at the forefront of the various innovative products that were offered by the company in the smartphone industry. The concepts of innovation and imagination have always remained at the forefront of the operations of the various business organizations. The company has been in the business for 75 years and has been expanding its operations in the different countries rapidly. The personnel of the company span many different countries, however, the headquarters of Samsung is located in Korea (Samsung Electronics America. 2018).

The major strategy that has been implemented by Samsung to stay profitable in the market is the ways by which the management is capable of inspiring progression, production and worth of the human resources of the firm. The practices based on the compensation that is to be provided to the employees are different for the various countries. The labour laws that are followed in the various countries are also different from each other. The Samsung Electronics operates with the help of the ethnocentric staffing policy. The ethnocentric policy is applied as there is no person who is qualified enough to hold the positions in the company based on the upper management (Aschkenazi 2016). The culture of the company is maintained in the various foreign operations all over the world. The core of the firm is thereby transferred to the foreign operations of the company so that the desired results can be produced. The determination of the Samsung Group and the Samsung Electronics is mainly based on the growth of the company and the corporate citizenship. The human resource management system that has been implemented by Samsung in the different areas of its operations is thereby based on the ways by which the organization has formulated a particular strategy in different areas of its operations (Bebenroth 2015).

Polycentric approach

Samsung has been spending a high amount in the various marketing related activities of the organization. The popularity of the company is thereby based on the massive amount that is spent on the various marketing related activities. The amounts that have been spent by Samsung in the marketing activities have been higher than that total amount that has been spent on the marketing based activities. The growth that has been experienced by Samsung is however based more on the changes in the culture that has been acknowledged by the company rather than the amounts that have been spent on the marketing activities (POPOVSKI, POPOVSKA and JOVCHESKA 2014). The company has gained the benefits of the position that has been received in the industry and the ways by which it manipulates the cultural perceptions of the products. The attitudes of the consumers towards the products which are manufactured outside their country has changed in the recent years. The attitude of the consumers can be defined by the term consumer ethnocentrism. This term refers to the people who prefer the products that are manufactured in their own country. The measurement of the levels of ethnocentrism of the consumers have shown that the consumers in Europe are less ethnocentric as compared to those in the US (Kang and Shen 2016). On the other hand, the Asian consumers are less ethnocentric than the Americans. The ethnocentrism of the customers plays an important role in the decisions related to purchasing that are taken by them. The major reason behind the success of the products of the Korean company Samsung in the US is based in its association with Google which is perceived to be a high end organization of the country. The brand rankings of Samsung have seen huge increase from the year 2011 to the year 2018. Samsung, being a non US company has been successful in creating a different position in the industry (Plakhotnik et al. 2015). The improvement of the brand of Samsung in the country has led to the strong ties that have been established with the foreign organizations. The company has thereby expanded the investment that had been planned in the US. Samsung has set up Open Innovation Centres in the country. The centres are mainly responsible for purpose of driving the innovation activities of the software that has been used by them. The centres will be mainly responsible for the increasing the innovation in their software which has been a weak area for the company. The investment that has been made by the company in the country has further helped in the creation of jobs for local people (Storgaard, Tienari and Piekkari 2014). This has thereby marked a change in the international staffing approach of Samsung from the ethnocentric approach to the geocentric approach. The company has thereby aimed at changing the attitudes of the US consumers towards the products that are not manufactured in their country. The company has thereby been able to produce products that have earned the technical acclaim and the manufacture and sales have taken place on a global scale. Samsung has been thereby dominating the market of smartphones and has been able to become the largest smartphone vendor in the world. The organization has been successful in overtaking its biggest competitors in the market namely, Apple and Nokia (Guo, Rammal and Dowling 2016).

Geocentric approach

The strategy related to the change of the staffing approach of Samsung has helped the company to create a different position in the market. The company has thereby been successful in gaining high shares in the US market due to the changes that were made in the staffing related policies of the company. The organization thereby had to change the approach of international human resource management to operate successfully in the international market of the United States.

Conclusion

The report can be concluded by stating that the international human resource management approach of the global organizations is an important part of their operations in the various countries. The organizations thereby need to choose the appropriate approach for management of their staffs according to the areas in which they have the operations. The three types of staffing approaches have been discussed in the report which are based three different concepts of staffing. The analysis has shown that all the approaches have advantages and disadvantages and it is the duty of the human resource managers to choose the perfect approach among the provided options. The organization which has been analysed on this basis is Samsung. Samsung has changed its style of operations and staffing based on the ways by which the operations are conducted in the US. The staffing approach of the company has been changed from ethnocentric to geocentric approach in the aim to capture the US market and overtaking its competitors namely, Nokia and Apple. The company has been successful in the ways of its operations and has achieved a huge share in the market with the help of this approach.

References

Al-Asfour, A. and Shield, S.W., 2015. Leadership for Multicultural Organizations. Journal of Leadership and Management, 3(5-6).

Aschkenazi, J., 2016. Human Capital and International Assignments. In Quantitative Multidisciplinary Approaches in Human Capital and Asset Management(pp. 142-152). IGI Global.

Bebenroth, R., 2015. Expatriates and Other Choices. In International Business Mergers and Acquisitions in Japan (pp. 217-227). Springer, Tokyo.

Guo, Y., Rammal, H.G. and Dowling, P.J., 2016. Global talent management and staffing in MNEs: An introduction to the edited volume of international business and management. In Global Talent Management and Staffing in MNEs (pp. xv-xxiv). Emerald Group Publishing Limited.

Isiaka, S.B., Aliyu, M.O., Abogunrin, A.P., Aremu, N.S. and Abdullah, A.S., 2016. A Conceptual Analysis of Global Human Resource Practices: Challenges and Prospects.

Kang, H. and Shen, J., 2016. International human resource management policies and practices. Management in South Korea Revisited, p.42.

Lakshman, S., Lakshman, C. and Estay, C., 2017. The relationship between MNCs’ strategies and executive staffing. International Journal of Organizational Analysis, 25(2), pp.233-250.

Meuer, J., Kluike, M., Backes-Gellner, U. and Pull, K., 2017. Using Expatriates for Adapting Subsidiaries’ Employment Modes to Different Market Economies.

Michailova, S., Piekkari, R., Storgaard, M. and Tienari, J., 2017. Rethinking ethnocentrism in international business research. Global Strategy Journal, 7(4), pp.335-353.

Perlmutter, H.V., 2017. The tortuous evolution of the multinational corporation. In International Business (pp. 117-126). Routledge.

Plakhotnik, M.S., Rocco, T.S., Collins, J.C. and Landorf, H., 2015. Connection, value, and growth: how employees with different national identities experience a geocentric organizational culture of a global corporation. Human Resource Development International, 18(1), pp.39-57.

POPOVSKI, V., POPOVSKA, M.B. and JOVCHESKA, S., 2014. FACTORS RANKED BY EXPATRIATE MANAGERS FOR SUCCESSFUL IMPLEMENTATION OF INTERNATIONAL TASKS. Economic Development/Ekonomiski Razvoj, 16(3).

Samsung Electronics America. (2018). Mobile - Phones | Samsung US. [online] Available at: https://www.samsung.com/us/mobile/phones/ [Accessed 20 Ma

Storgaard, M., Tienari, J. and Piekkari, R., 2014. “The Most Public Secret”: Concealing and Silencing Ethnocentrism in the MNC. In Orchestration of the Global Network Organization (pp. 191-212). Emerald Group Publishing Limited.

Teixeira, M.L.M., da Paz, M.D.G.T., de Araújo, B.F.V.B. and Machado, M.M., 2017. Expatriates: The Multinationality of Multinational and National Firms. In Organizational Psychology and Evidence-Based Management (pp. 267-285). Springer, Cham.