How culture impacts components such as products In an Industry
This report covers CLO 1, 2, 3, 4 and 5. This project covers how culture impacts components such as
products, HRM, and communication and negotiation when firms within a specific industry expand its
business overseas. (Group: 20%; Individual: 10%)
This report may differ from the requirements from earlier semesters. This will be a challenging, yet
rewarding experience as you make a transition from students to contributors to the world of International
Business. Your time management skills are important as your CEO does not like reports to be submitted
late considering this delays the decision making process for your simulation below.
Also, the CEO prefers soft copies to be submitted, double spaced and professionally formatted with a
maximum of fifteen (15) pages which includes a cover page, table of contents and page listing your
resources. Your CEO has a limited time to review your findings before submitting a summary to the Board
of Directors.
Welcome to Widgets Incorporated. Your company sells one product, widgets. Your single offering has
transformed the lives of all people in the UAE and it is time to cross the borders and establish regional
distribution in differing countries and continents.
Task and Objective: Develop a global expansion advancement plan. Due to your success in the
UAE, the organization is selling widgets and plans to begin global distribution. Based on an analysis from
the Marketing Department, your company is planning on expanding to three of the following countries and
markets. Panama-Bocas del Toro, Turkey-Antalya, New Zealand-Wellington and South Africa-Pretoria.
These three countries and cities will be referenced as the “Big Three” within this document.
Your aim is to provide a comprehensive report to the CEO that fully details the steps to enter the markets
listed above. Unfortunately, your CEO has no knowledge of the business culture in the Big Three nations
and their respective cities. Overall, the report to the CEO requires focus on your understanding of culture
in the countries targeted for this step and your guidance can mean the difference between success and
failure. You need to inform the CEO of the capabilities of the managers and workers. Are they compatible
with the aggressive expansion goals of Widgets Incorporated?
You will need a minimum of 15 references from credible sources. Per HCT policy, our program requires all
written reports to be presented in APA method. Please access Purdue Owl if you have any questions while
providing your comprehensive analysis. https://owl.english.purdue.edu/owl/resource/560/01/
Solution
Part One-Opening: (CLO 1, 2)
In recent time, there have been changes in the global economic reforms and the advent of
globalization, thus, regional companies want to expand into global or international business,
widgets incorporated being among them. The expansion process has become the greatest priority
for the company so as to allow it to become a multinational company and also to take the
competitive advantage of the whole global market. However, these benefits, the company to have
competitive advantage the company has to face the major challenges and complexities too to
manage the business in other countries. Generally, the major challenges comprises of the
environmental factors and out of which cultural differences are also the major issue that the
widgets incorporated might face in the new host countries that is the big three. The issue of
cultural diversity within the international business, is the new scenario, furthermore, the issue I is
constantly rising up with the growing factor of globalization (Alvesson and Sveningsson, 2015).
Another important motive of the company to expand and spread its product to the big three is to
acquire resources such as raw materials, capital, products, technology, products or services at a
fair price. In addition, Governments of the big three developed services that facilitate further
international business other than that of the country of origin, thus the venture has to take the
advantage of this.
I choose the big three because managing the differences in the languages, traditions,
cultures and religions within these countries is not very difficult and complex job; it is almost the
same as in the home country. Widget incorporated needs to expand and adapt new business
culture because I most cases, the success of the business can be attributed to their ability to adapt
their business to the diverse culture and the fast pace of city life by providing quality products
HOW CULTURE IMPACTS COMPONENTS 3
and services and also enable it to provide varieties of services within a short period of time, in
addition become consistent in offering the product and services for fair prices. Moreover, the
expansion of the business keeps production costs down enabling them to generate higher
turnover every year and enjoy the economies of scale. It is important for the business to expand
aggressively, to provide their product to and service to the global middle class, particularly in
emerging markets like opening offices and shops in the big three. The big three have capital
market, which prompts the flow of foreign investments into the country, increasing household
income, increasing investment into the region primarily due to cheap labor compared to home
country. The business stakeholders need to further assess the potential of a new market for
expansion in the big three by putting into consideration several factors providing a
comprehensive background of the environment that the business firm expects to enter into this is
because there is always an environment of uncertainty for investors. The economic condition of
the big three affects the financial condition of foreign investments (Stahl and Tung, 2014).
Part Two – Challenges: (CLO 2)
Expanding into international business has its own challenges, these challenges interferes
with flow of idea, services, capital and the expansion of the business. The major challenge that
widget incorporation has to deal with is competitors. Within the big three there are numerous
companies offering the same product offered by widget incorporation hence the company need to
find a strategy that will enable it to stand out to generate customers (Chadee, Roxas, Rogmans,
2015). In is important for the widget incorporation to understand and know their major
competitors and what they are currently doing, this will enable them to know he appropriate
strategy to use. The business venture needs to offer high quality product and at a slightly lower
HOW CULTURE IMPACTS COMPONENTS 4
price than the competitors, put into consideration the cost advantage. Apart from already existing
companies that are already competing, the business will encounter challenges from the entry of a
new competitor in a market, this new firm in the market may affect the firms that already
operating in the market this intensify competition by abstracting market share away from them,
thus shrinking their share of profit. Widget incorporated being among the new business venture
will have to share this percentage of profit, if the competition is stiff and the business does not
get its market share the profits will be eroded. To overcome this challenge, widget incorporated
will have to carry out adequate marketing strategies on advertisement to overcome the hindrance
of the company to achieve the anticipated growth. The business venture will have to build the
brand by promoting and establishing close relationship with customers.
Another challenge that widget incorporated will experience will be the social and
political challenge. This factor determines the value and the system of the society which, in turn,
affects the functioning of the business within the host country. This factor includes issues such
as cost structure, customs and conventions, cultures, lifestyles, and much more which have an
extensive impact on the business. This factor determines the code of conduct the business should
follow in the host country. In addition, the social groups such as trade unions or consumer forum
will intervene if the business follows the unethical practices. On the other hand the political
factor in the host country influences businesses to a great extent (Marquardt and Horvath, 2014).
In case the host country will have an unstable political environment will affect the business
adversely. It is important for the company has to understand how they work in order to survive.
Politicians are involved in the formulation of the rules and regulation that governs business in the
country, this legal factor includes flexibility and adaptability of law and other legal rules
governing the business.
HOW CULTURE IMPACTS COMPONENTS 5
Part Three – Communications: (CLO3)
Communication is an important issue in any business since it helps in, interpersonal
interactions, and interpretation and translation. It is a multi functional tool whereby it serves as a
channel in transmitting ideas from generation to generation. In addition, it also creates linkages
between individuals in order for them to establish a shared identity in the organization.
Communication has its respective concerns with different forms and purposes as well as varying
intensity, emotional charge and dimensions (Knapp, Vangelisti, Caughlin, 2014). There are
different communication styles that the firm can use, but in this report I will discuss only two
that is the passive communication style and aggressive communication style: passive
communication, is a style in which workers in the organization to develop a pattern of avoiding
expressing their opinions or feelings, protecting their rights, and identifying issues to meet their
own and organizational. When passive communication is used in an organization, in most cases,
individuals do not respond to anger-inducing situations. Instead, they allow grievances and
annoyances to mount, usually unaware of the buildup, but once they have reached their high
tolerance threshold for unacceptable behavior, and they are prone to explosive outbursts, which
are usually out of proportion to the triggering incident. After the outburst, however, they may
feel shame, guilt, and confusion, so they return to being passive (Ting-Toomey and Chung,
2012). This style does not allow the users to assert themselves, thus allow other individuals to
infringe their rights of expressing themselves. The impact of passive communication is that,
usually individual often feel depressed because they feel stuck on a certain issue. On the other
hand, aggressive communication is a style in which individuals express their feelings and
HOW CULTURE IMPACTS COMPONENTS 6
opinions and advocate for their needs in a way that violates the rights of others, in other words
the style does not consider the needs of others. In this case, the management will try to dominate
the workers or the junior by using humiliation to control them criticize, blame, or attack them, be
very impulsive and have low frustration tolerance.
For the management to ensure that communication within the widget incorporated is
successful, it is essential to ensure that the receiver attributes the same meaning to the message
as intended by the sender of the message though the act of communication can never be perfect.
In some cases, the intended message lost the meaning; this is because the message encounters
various barriers along its passage between the sender and the receiver. The barriers may arise at
any of the stages through which a message passes during the process of communication within
the firm. There are many barriers of communication that lead to the failure of communication
including: noise, semantic barrier, cultural differences, complexity of subject matter, personal
biases, psychological barriers, filtering, information overload, poor retention, poor listening, and
much more. These barriers are categorized into on the basis of the stage of the communication
process during which the problem arises, in this report I will address two of the categories that is
the physical barriers and the semantic barriers: physical barrier include factors such as; time and
distance, wrong choice of medium and the surrounding. Time and distance may obstruct the
smooth flow of information from one point to another. Though in the modern world we have
faster means of communication available to us, this means might face technical problem, due to
this, cause gaps between the sender and the receiver. In terms of time, since the widget
incorporated and the big three are located different miles away they have different time shifts.
Time differences between people living in two different countries may affect communication
between them, in addition, workers in this three countries works in different shifts. Another
HOW CULTURE IMPACTS COMPONENTS 7
physical barrier is the wrong choice of medium, for example, using written communication to
illiterate audience. The environment; the environmental conditions have a direct impact on the
sender and the receiver of the message (Guffey and Loewy, 2012). When two people have to
communicate with each other under extreme weather conditions, whether too hot or too cold,
their surroundings do have a direct repercussion on the effectiveness of the exchange that takes
place between them. The other category of communication barrier is the semantic barrier which
is the most common; Semantic problems often arise because of the gap between the meanings as
intended by the sender, different from that understood by the receiver. In most cases, the words
are capable of expressing a variety of meanings depending upon their usage and the context, for
communication to be clear the sender should use simple and clear words that can be easily
understood by the receiver.
On the basis of the various kinds of communication barriers discussed, they are various
recommendations that would help the firm to overcome these barriers and thus improve
communication. Communication is essential for the success of a business organization, thus the
business organization should adopt an open door policy at all levels or departments so as to
ensure that the communication atmosphere in the organization so that the communication gap
between the superiors and the subordinates may be reduced, and the communication process be
improved. In addition, widget incorporated, should ensure that the organizational hierarchies and
policies are not deterring the free flow of information within the organization. Within the
organization, the top management should encourage their subordinates to communicate without
hesitation and also freely; this is achieved by ensuring there is a two way communication in the
organization. The subordinates should be encouraged to participate in the decision-making
process and also in solving problems the issue of communication in the organization. By
HOW CULTURE IMPACTS COMPONENTS 8
providing this open environment which is conducive to free interaction among the employees
will prove beneficial and will contribute to the growth and success of the organization. It is
important for the firm to be aware that in business, there are chances of communication failure
because the message is not only complex in itself, but also the stages through which it passes
renders it susceptible to various interferences, the organization should always put across that will
ensure there is an effective communication system.
Part Four – Negotiations: (CLO 4)
Negotiations is a very important process to the success of the business venture, when
negotiating there are factors that the organization should put into consideration; firstly, the
organization should consider the power which has been regarded as one of the elements that
contributes to, and influence the outcome of the negotiation. Power is a factor that multinational
corporations and large organizations use power to get what they want in a negotiation process,
thus the widget incorporated should use power in the big three to negotiate (Šperka and Spišák,
2014). This is achieved through the availability of resources and information at their disposal.
The organization can only use power while negotiating when is the only best alternative to use
and also they expect the best result from it.
The key source of power that widget incorporated should have is information concerning
the business culture within the big three. Thus, information is the second factor that the
organization should put into consideration. This means that, before the organization involve itself
in any negotiation process, it should plan the negation based on the knowledge that they are
stipulated in the company’s main objective both in the origin country and the host country. The
organization should ensure that the obtained information should be accurate. Accurate
HOW CULTURE IMPACTS COMPONENTS 9
information will enable the organization to convince the government of the host country that is
the big three that the project to be carried out by widget incorporated will benefit the people, and
there were no negative consequences, which were going to affect the indigenous people. For
example, when widget incorporation, involve itself in negotiation in Panama, the organization
should anticipate problems during the preparation stage and formulate several strategies for
dealing with the problems as they arise, the organization will inevitably have to think on its feet
during the negotiation itself so as to understand all the problems within Panama.There are
several tactics that the organization can use to improve while negotiating in the international
markets, the organization should include expert from different field such a financial experts and
lawyers who will be capable of convincing the other parties. Another tactic that it is
recommended for the company to use is keeping in touch with the current trends in the
international market of the big three, the organization should know the current negotiating
system of the host country, keeping in touch ensures the organization is updated and has the right
information. Finally, the organization should keep good relation with their contacts in the
international market, for example, knowing areas of expertise, and country’s background (Barry,
Lewicki, Saunders, 2015).
Part Five-Motivation: (CLO 1, 5)
There are different ways of motivating people in different motivation levels of managers
which can be challenging because individuals get motivated with different factors. The managers
must be able to communicate the workers so as to understand what motivates them, by doing this
the manager will be to regard the most important motivational techniques. The organization will
HOW CULTURE IMPACTS COMPONENTS 10
able to know whether to use monetary incentives which are important, or even sometimes non-
monetary incentives are the better choice. Based on the research done by Mason Haire the
management will be able to assess the relationship between how unconscious motives motivate
individuals. Before having any level of motivation in the big three the organization should
research on the marketing and the consumer behavior by measuring their attitude to know what
will motivate them to buy its product. Attitude is considered to be a powerful determinant of
consumer behavior management teams in these locations is crucial. On the other hand Maslow’s
hierarchy of needs has often represented in a hierarchical pyramid consisting of five levels that is
the physiological, safety, belongings, esteem and self actualization that must be influenced to
influence the behavior of the consumer to buy the product in the new host country. For example,
in Panama, new- Zealand and South Africa the basic needs include air food and water.
There are two factors that Herzberg elaborates that are hygiene factor and the motivation
factors; Hygiene factors are those job factors which are essential for existence of motivation in
the workplace. These do not lead to positive satisfaction in the long run. However, if these
factors are absent in the workplace, and then they lead to dissatisfaction (Yusoff, Kian and Idris,
2013). These factors describe the job environment and include factors such as pay and
company’s policies. The other factor is the motivational factors; according to Herzberg, the
hygiene factors cannot be regarded as motivators thus the motivational factors yield positive
satisfaction in the organization this because they are inherent to work hence motivating
employees to do a good job. The motivational factors include, rewarding, recognition, sense of
achievement and much more
In the three countries there are a lot of aspects which can influence motivation within an
organization. These aspects may include interests, enjoyment, salary and power can influence the
HOW CULTURE IMPACTS COMPONENTS 11
motivation of both the top managers and the subordinate employees. When managers want to
measure the motivation, they can use 'self-reports' over time. After a period the managers can
compare the two points with each other. Motivation is a psychological process which is invisible
and internal, motivation can be divisible into two dichotomies of motivation called intrinsic and
extrinsic.
According to Schunk, Meece and Pintrich, (2012), motivation is considered to be
intrinsic if any activity is undertaken for immediate satisfaction; in this case individuals perform
an activity for themselves in the organization intrinsic motivation could include involvement in
behavioral patterns, thought processes, action and activity or reaction for its own importance. In
the big three intrinsic motivation can be measured either by free choice or self report. Free
choice is a situation where individuals in the organization do what they want to do and do not
look for somebody else. Self report is another way of measuring intrinsic motivation; this is
where the organization supply questionnaire to be answered by the workers and later evaluates
the extent of motivation among workers. On the other hand extrinsic motivation relates to the
external values unlike intrinsic which consider the internal values. Usually, extrinsic motivation
occurs when employees are able to satisfy their needs indirectly, most importantly through a
financial compensation and benefits. The external values that apply in extrinsic motivation
include salary, holidays and other favorable working conditions within the organization.
Part Six-Leadership: (CLO 5)
When the widget incorporated expand to the big three, it has to send some managers from
the home country that is from the UAE, these managers sent are required to manage either a
culturally different or a highly diverse workforce, thus the managers are likely to face a problem
HOW CULTURE IMPACTS COMPONENTS 12
from the host country. The major problems that the managers will encounter are culturally
contingent. The manager will encounter this problem while they relocate from the UAE to the
big three as a result of difference in their leadership styles. Due to this, it is very crucial for the
management to understand different management styles that could be used in the host countries
so as to achieve organizational goals. There are different leadership styles that have been
proposed by various scholars. However, in this report only two models will be considered in this
work that is the transformational and the transactional leadership styles (Hall, (2013). The
transformational leadership style has overtime demonstrated benefits over other leadership styles
in achieving organizational goals. The transformational leaders are capable of stimulating and
inspiring their followers to achieve extraordinary outcomes and in the process, develop their own
leadership capacity. Managers can also employ different motivational strategies and techniques
to boost employee performance or accomplish internal change. It is important for the
management of widget incorporated to apply this style so as to inspire their followers to do more
than they originally intended in the host country. On the other hand, transactional leaders, are
said to lead through social exchange, thus explain how the behavior of a leader affects the social
performance and satisfaction of subordinates
In leadership, theory X and Y are two philosophical assumptions which Douglas
McGregor labelled to understand the human nature. The Theory X assumes that people are
basically lazy and, coercion and threats of punishment are often necessary to get them to work.
In this case, leadership style has to be controlling and monitoring the workers in the organization
(Herrick, 2012). For organization to obtain the intended goals, it is essential to use coercion,
control and threats of punishment to the workers. On the other hand, the Theory Y is based on
the assumption that under the right conditions, people will work hard and also seek increased
HOW CULTURE IMPACTS COMPONENTS 13
responsibility and challenge. Due to this, external control and threats of punishment are not the
only ways of getting people to work towards achieving organizational objectives. The widget
incorporated should implement the managerial grid is based on two behavioral dimensions: on
the grid the axis consist of two behavior dimensions, concern for people and concern for
production that is the concern for people and concern for production. Under the concern for
people dimension the leader considers the needs of employees when deciding how tasks or jobs
should be done in the firm, this behavior dimension moves along the y-axis vertically from
bottom to top of the grid. Under concern for production dimension a leader emphasizes
objectives and productivity goals when deciding how tasks or jobs should be done in the
organization. This can this behavior dimension moves horizontally along the x-axis from left to
right (Costa, Passos, Bakker, 2016).
Part Seven-Findings and Recommendations: (CLO 2)
In order to cope with the challenges that will be experienced while the company is
transforming and expanding to other countries, there are several recommendations highlighted it
provide solutions; firstly, the manager of the mother company should develop trust with the host
country. Trust enables the organization to develop the good will and to enable it work efficiently
in the global market and industry. The management should also understand the business culture
of the host country. A corporate culture can be explained by convening several different cultures
represented by numerous different workers, working in a multinational enterprise. Furthermore,
every country has its own culture, values, beliefs, habits, language and so on that should be
understood. Organizations acting global can never work without interference of the leader board
to create a global corporate culture. That is why a multinational company has to offer corporate
HOW CULTURE IMPACTS COMPONENTS 14
values, beliefs, methods, habits and working processes all set in the global corporate culture. In
conclusion, in order for the organizations to go for global business and have success there, it is
very important to understand the global business environment, in this study we have seen that
how global environment is formed.
HOW CULTURE IMPACTS COMPONENTS 15
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