Global Organizations and Cultural Issues

Today, many scientists state that neither the knowledge of a language, nor intuition is enough to communicate efficiently with people from other countries. That is why a cross cultural science was invented. It is a relatively new science that studies the relations and communication between people belonging to different cultures in various or the same situations. The term “culture” is from Latin origin that appeared in the era of Roman antiquity. This word comes from the verb “colere”, which means "cultivation", "processing" and “care”.  A starting point in the formation of scientific concept of the word “culture” is considered to be a treatise "Tusculan Disputations" by a Roman orator and philosopher Marcus Cicero (106-43 BC). He used this term metaphorically. Thus, today researches on cross-cultural communication become more and more important because of globalization and intense migration processes.

 Nowadays, some particularities of cross-cultural communication are studied by different sciences including: psychology, linguistics, ethnology, anthropology, sociology and each of them uses their own approaches to their studies. This concept was first introduced in the 1950s, by American cultural anthropologist Edward T. Hall. It was invented in order to ease the adaptation of American diplomats and businessman in the other countries.  Nowadays, a dynamic understanding of a culture is dominating. Culture is defined as a totality of norms, values and behaviors belonging to any social group of people. This concept of a culture does not imply a strict stability of a cultural system; it may vary depending on the different social situations.

Everyone has his/her own history, life, culture and cultural identity. It includes geographic, ethnic, moral, ethical, religious and political aspects. Different cultural values may exist even within the same family. That is why, it is very important to have a cross-cultural competence. It is an ability to communicate effectively with individuals from other cultures. Also, there is such term as ethnocentrism. It is the way people perceive other cultures. As nobody is born with ethnocentrism, it has to be developed in the course of time. This term has two types. The first is the strong belief that his/her own nation or social group is superior. The second is also the belief in inferiority of someone’s nation or social group. While working in an organization or international business company, it is very important to know whether an employee considers oneself as an inferior or superior person. It may be reflected in his/her attitude towards other people. A good example of it is the word “foreigner”. In most countries it has a negative connotation. It means something negative and undesirable. Such people may build their behavior on the basis of someone’s racial, cultural, ethnical or religious beliefs.  Ethnocentrism is a barrier in cross-cultural communication; it prevents a person from understanding people with unlike beliefs and views.  

Today, for most global companies, to be successful and profitable is not enough to have low prices, high quality products and a good discount system. Rhinesmith (1991) states, “Going global does not mean just doing business abroad”. Many global organizations have many problems in the countries they do their business. It happens because they do not understand some strategic key points in organization business abroad. Firstly, they must know the language of a country, both spoken and written. The understanding of this is a key point to success. Another problem is unawareness of laws and regulations of the country. As a result, many people may sue the company. Social setup knowledge also plays a vital role while doing business abroad. This term presupposes understanding the cultural and religious beliefs, taboos, social interests and holidays of the country. Another reason that may lead to heavy losses is non-understanding of political environment. It is crucial important to know the ideology and political risks the company may be faced with when working in the foreign country. One more factor is educational system and values of people. Organizations should study the values, attitude to perfection, and completeness etc. Thus, the company has to adjust to the country it works in. 

Every global company in order to be profitable should have three main components: the global sourcing strategy, the right corporate culture and good global team (Global organizations, p. 4).

The global sourcing strategy presupposes making use from lower cost labor abroad. It also includes such aspects as transportation (domestic or global), payment methods and currency used.

A good global team work brings efficiency to the organization. There are some qualities and skills employees must have to perform their duties competently, including reliability, constructive communication, and cooperation in the team, ability to take quick decisions and respect other cultures.  Global organizations indicate that it is also very important to be “sensitive to gestures in different countries. For example, in Western and Arab cultures prolonged eye contact with a person is acceptable. In Japan, on the other hand, holding the gaze of another person is considered rude. The Japanese generally focus on a person’s neck or tie knot (Global organizations, p. 9).

A good example of the global company that has some drawbacks is Wal-Mart. Wal-Mart is the biggest retailer in the world. It sells goods at prices below average. According to Winston-Salem Journal(2010), “Wal-Mart had sales of $405 billion for its fiscal year 2010. The retailer has 8,500 stores under 55 different banners in 15 countries and employs more than 2 million people”. Majority of Americans consider Wal-Mart as one of the most successful companies after Microsoft. But being number one in the United States does not always guarantee being number one elsewhere in the world. In 1997, Wal-Mart decided to start business in Germany by acquisitions. As a result, in a few years Wal-Mart became the fourth biggest operator of hypermarkets in the country. But in 2001, instead of growing and developing its network, the company had to close some outlets and to fire almost 1.000 staff. In 2006, Wal-Mart was forced to suspend its business in Germany. The company lost almost a billion dollars. All outlets were sold to Metro Company. There are many reasons of this crash, including economic, social and cultural factors. By making decision to start business, they did not fully realize that they want to enter a highly competitive German market. Initially, the company hired managers that did not speak German at all. Soon English became an official language of the companies’ managers (Knorr & Arndt, 2003, p. 20).  Besides they hired only actively seeking job executive managers that had been dismissed from other retail companies before. The next reason is a small number of people that belonged to unions. Though, the unions number in Germany was decreasing, they were still very powerful and influential. People were not protected from numerous salaries cuts and firing (Knorr & Arndt, p. 21). Furthermore, most German customers do not like when they are welcomed at the entrance with a wide grin. These and some others reasons prove that Wal-Mart Company has drawbacks in economic, social and cultural planning of its international business. 

Furthermore, Wal-Mart has not only problems in Germany, but also in many other countries. Another example is Brazil. Most Brazilians live in very small houses and do not have much room to store big volume of purchases. In addition, they did not get used to paying for a membership fee (Lewis, 1998, p. 12).  It is undeniably that Wal-Mart has to change its strategies in order to fit this culture. Sexual discrimination is another controversial topic concerning Wal-Mart. Many women complain that they are neglected and ignored when there is time to get promotion. Furthermore, an Ideal Wal-Mart strategy “everyday low price” is quite doubtful nowadays. Despite the fact that the company always states that their products are cheaper than in their competitors, one can hardly feel a great difference in prices. The point is that in the United States Wal-Mart is the biggest retailer; therefore, all suppliers have to adjust to it and follow its rules. That is why it is possible to sell goods cheaper in the U.S. However, the situation may be totally different in other countries. A new cross-border retailer cannot become a giant retailer quickly.  Besides, there are many people that do not want to buy many goods at once; they better prefer a small, convenient store near their home. As a result, employees’ low salaries, different sorts of discriminations and limitation in suppliers are good examples which demonstrate disadvantages of Wal-Mart retailing business. 

Thus, there are many different problems that global organizations may be faced with while starting business in a new country. Ignoring of which may lead to heavy losses and even bankruptcy. Before starting a business in other countries, every company should make a substantial research in order to get as much information and perspectives about the country as possible. It includes economic, political, social, cultural and religious analysis.