Professional Documents
Culture Documents
Table of Contents
1.0 Introduction..........................................................................................................................2
2.0 Michelin in China.................................................................................................................2
3.0 Problems in Combining Two Cultures.................................................................................3
4.0 Differences in Cultures.........................................................................................................4
5.0 Differences in Management Styles......................................................................................5
6.0 Managing Cultural Change..................................................................................................6
7.0 Conclusion............................................................................................................................7
References..................................................................................................................................9
In order to be successful in China, Michelin was required to adopt new management practices
with new ideas and values. The company was successful in adopting technology, marketing,
communication, and few management aspects. But on the other hand, it faced some critical
issues in adopting new management practices and to comply with the Chinese local culture
and management policies within the Chinese organisational culture. This is often the case
when a new firm entered into a new market to look for business opportunities and failed to
create a balance between already implemented management practices and local management
policies (Haghirian, 2010). Therefore, the joint venture produced several critical concerns
that resulted in various conflicts and misunderstandings (The Link, 2005). The main reason
behind these conflicts was the influence of Michelins state-owned mentality, organisational
culture, and management styles that have been developed and implemented since its
establishment.
environment. The company also continued to enforce individual behavioural patterns that
were adopted by the organisation before starting its operations in China. Therefore,
Michelins plan was to repeat the success by applying same management practices and
behaviours in the Chinese culture and business environment. But the scenario was different in
China. The major problem was that the Chinese values and beliefs were different from
Michelins and this difference resulted costly and led various conflicts and management
issues. Therefore, there was a need to rearrange the cultural morals and beliefs to become
successful in implementing changes to a joint project.
The case study of Michelin demonstrates that cultural differences influence on multinational
organisations particularly in managing and implementing their business strategies. Managing
change is a difficult task as the beliefs and values of two organisations from different cultures
are unseen and people communicate below the level of awareness in silent languages such
as time, space, things, friendships and agreements (Hall, 1983).
performance awards by themselves. Therefore, this traditional culture does not promote
knowledge sharing and also discourage employees in communicating innovative ideas.
The plan of Michelin was to successfully implement innovation and strategic changes with
least employee effort. But unfortunately, the company faced countless problems in carrying
out their business activities in China. These issues emerged because of a clash with the
approach adopted by STRC due to an entirely different culture.
the basis for trust between management and employees. The transparency of the system and
the standardised approach allow Michelin to deal with internal clashes and conflicting issues.
In contrast to Michelin, STRCs management style was influenced by the Chinese national
culture which believes in power distance with centralised decision making. This means that
STRC adopted Theory X leadership and management style where employees are somewhat
allowed to contribute to decision making (McGregor, 1960). In fact, their involvement in key
decisions is limited. As a result, employees are discouraged especially when it comes to
decisions that affect them in making strategic changes. In reality, this traditional approach
follows by STRC creates a group of people who are dissatisfied with their jobs within the
organisation. Consequently, employees are reluctant to provide quality output and this was
one of the reasons of the hardships and failure of management systems of STRC.
The approach of STRC in the context of human relations is also influenced by Chinese
culture. They follow Guanxi philosophy which means a common relationship (Thomas et
al. 2002). This means that it is planned to protect each others face by giving minor
importance to efficiency. This idea is also highlighted by Rugman and Brewer (2003) by
asserting that Chinese cultures tried to be high on the significance of social context and the by
the concept of Guanxi. In this way, management avoids conflict and fear of ruining the
relationship with employees. On the other hand, Chen and Chen (2004) argue that Guanxi is
an informal link between two persons who are restricted to by a psychological agreement to
follow the principles of Guanxi. They considered Guanxi an ineffective approach where
nobody can say something really important just due to the fear of a conflict.
The above stated differences in the management styles of both companies did not promote
teamwork and the idea of functional departments was considered to avoid conflicts and
confusions. On the basis of the facts highlighted in this section, one may easily argue that
management styles are also important practices to be considered when firms establish their
businesses internationally.
required to unlearn its existing culture that was hindering the success of strategic efforts and
cross-cultural management in China. In most of the cases, implementing change results in
conflict between management and employees. According to Paton and McCalman (2008),
organisational culture creates stability, continuity, and the pursuit of security which leads to
a stable working environment(p. 53). This then becomes the source of clash between
employees and management because employees prefer no change in the existing
environment.
Leaving existing culture was also essential for Michelin because where there is a cultural
collapse; there will always be a collapse in the opinions. As a result, the activities and
organisational ultimate goals could be affected. Managing the cultural change could be a very
complex procedure because it usually involves changing attitudes, norms, behaviours, and
patterns that have been adopted by individuals and organisations over a long period of time
(Bate, 1996).
According to Schein (1992), an organisation can implement cultural change by implementing
changes in human resource practices particularly in terms of recruitment, selection,
promotion, performance appraisal, reward systems, and the procedures for dealing with
critical situations; for instance, handling conflicts between and employees and management.
Thus, it was essential for Michelin to implement cultural changes in human resource practices
to ensure a new way of thinking that improves employee relations. In this way, they can
effectively contribute to the success of the organisation. Also, they can facilitate
technological and structural changes throughout the organisation.
The change management process requires an effective leadership and an innovative and
creative organisational culture. Further in effective change management process, there is a
need for change managers to initiate and constantly monitor the change process (Paton and
McCalman, 2008). The STRC has limited capacity of change managers and therefore the
management in STRC has limited introduction to modern management concepts (The Link,
2005). On the other hand, Michelin has skilled management and expatriates who are capable
of implementing organisational and cultural changes effectively. But unfortunately, the
change was not implemented successfully and as a result Michelin faced too many problems.
7.0 Conclusion
Organisations operating in an international environment are required to understand and deal
with cultural differences; so that they can learn new standards, values, norms, and
expectations of the culture where they operate. The analysis of case study shows the
difficulties that an organisation could face when establishing its business in another country
with different culture and values. In this way, the organisation can establish a common
cultural identity to avail opportunities. The cross-border joint ventures and acquisitions tend
to increase cultural and management issues as evident in the case of Michelin. Michelins
decision to enter into the Chinese market was based on market attractiveness rather than
cultural similarities. The culture of Michelin was based on the modern management theories
with a major focus on staff efficiency and effectiveness by establishing relationships between
the management and employees.
On the other hand, the Chinese culture was based on Guanxi concept where high importance
is given to avoid conflicts but in contrast, less or no priority is given to resolve other issues or
to make adjustments for wrong doings. It is also concluded that culture influences strategic
thinking and changing the culture of a host company can be difficult because it represents the
local culture whose values have been accepted and followed from the beginning. The use of
foreign skilled employees to implement cultural and management changes is a wise decision
because they are not the part of the existing organisational culture and thus can learn and
implement changes more efficiently. The adoption of the Michelin culture was required
because the company, with existing management practices, was previously successful in
carrying out projects at international level. Therefore, it was necessary for both Michelin and
STRC to work with mutual understanding of the environment and culture in order to achieve
individual and mutual short-term goals and long-term objectives.
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