CROSS-CULTURAL MANAGEMENT

MID-TERM TEST

Before moving deeper to solving case of Coca Cola in India, we have overview of cross-cultural
in Management. Culture is acquired knowledge that people use to interpret experience and
generate social behaviour. This knowledge forms value, creates attitudes, and influences
behaviour. Culture is affected by many factors: geography, climate, others natural conditions,
history, human…. This lead to the forming of cultural diversity. Because different cultures exist
in the world, an understanding of the impact of culture on behavior is critical to the study of
international management. Over the past several decades, researchers have attempted to provide
a composite picture of culture by examining its subparts, or dimensions.  According to
identification of Hofstede’s Cultural Dimension, there are six major dimensions of the culture:
Power Distances, Uncertainty Avoidance, Individualism, Masculinity, Time Orientation (1988)
and Indulgence Versus Restraint (2010).
Power distance is the extent to which less powerful members of institutions and
organizations accept that power is distributed unequally. There are two types: high power
distance and low power distance. Countries in which people blindly obey the orders of
their superiors, centrslised and tall organisation structures have high power distance.
Oppositely, in low power distance countries, organisation structures is flatter and
decentralised, also smaller ratio of supervisors.
Uncertainty Avoidance is the extent to which people feel threatened by ambiguous
situations and have created beliefs and institutions that try to avoid such situations. In
high-uncertainty-avoidance countries, people have high need for security, strong belief in
experts and thier knowledge, structured organizational activitics more written rules, less
risk taking by managers. Low-uncertainty-avoidance societies have organization settings
with less structuring of activities, fewer written rules, more risk taking by managers,
higher labor turnover, and more ambitious employees. The organization encourages
personnel to use their own initiative and assume responsibility for their actions.
Individualism is the tendency of people to look after themselves and their immediate
family only, people tend to be wealthier, support protestant work ethic, greater individual
initative, promotions based on market value. In the opposite of Individualism is
Collectivism - the tendency of people to belong to groups or collectives and to look after
each other in exchange for loyalty. Coutries high in collectivism tend to be poorer, less
support for protestant work ethic, less individual initiative, promotions based on seniotiry
Masculinity is a cultural characteristic in which the dominant values in society are
success, money, and things. Countries high in masculinity: great importance on earnings,
recognition, advancement, challenge, and wealth, high job stress. Different form
Masculinity, Femininity is a culture in which the dominate social values are caring for
others and the quality of life. Countries high in femininity: great importance on
cooperation, friendly atmosphere, employment security, group decision making, and
living environment; Low stress and more employee freedom.
Time Orientation (1988) is defined as dealing with society’s search for virtue. There are
two types: Long-term oriented societies that focus on the future and on achieving long-
 term results, are able to adapt traditions when conditions change, and tend to save and
invest; another one is Short-term oriented societies which focus on quick results, do not
tend to save, believe in absolutes, and value stability and leisure.
Indulgence versus Restraint (2010) Indulgent societies encourage instant gratification of
natural human needs; perceived happiness, life in control, positive emotions and
satisfaction of basic needs. Restrained cultures regulate and control behaviour based on
social norms; less happiness, sense of helplessness, less likely to remember positive
emotions, and unmet basic needs.

Looking at the case provided, it seems that the that may have been the fisrt cause of Coke’s
difficulties in India is the spoken and written language. There is no doubt that communication in
business is a key success factor. Paying attention to Coke’s difficulties in India, it is possible to
say that during the negotiations with the government of India, there might have been
miscommunications between the two different parties in expressing their language command.
The second cause of Coke’s difficulties is the fact that India has some potential political
and legal problems in the international arena. In fact, India’s laws and regulations are not
wholesome as compared to the United States of America. That can be the reason for causing
various issues for Coke’s operations in India.
The third cause of Coke’s difficulties is the ways of conducting businesses. As it is
widely known, both countries possess the different ways of running businesses. Undoubtedly,
foreign investors should properly think about bringing their own norms and regulations over to
India since it is possible to remember that due to the use of a polycentric approach by the United
States, many Indian consumers negatively reacted to this fact understanding those practices as
an inappropriate action.
The fourth cause is possible to add that Coke’s difficulties in India can be caused by
people’s concerns about contamination and water shortage provided by the company. Thus, it is
possible to say that the above-mentioned aspects are one of the major causes leading to Coke’s
difficulties in India.
I think these reason can explain some difficul major aspects of U.S. and Indian culture

There are four distinct strategic predispositions toward doing things in a particular way: (1)
Ethnocentric: A nationalistic philosophy of management whereby the values and interests of the
parent company guide strategic decisions.; (2) Polycentric: A philosophy of management
whereby strategic decisions are tailored to suit the cultures of the countries where the MNC
operates. Limit recruitment to the nationals of the host country (local people); (3) Regiocentric:
A philosophy of management whereby the firm tries to blend its own interests with those of its
subsidiaries on a regional basis. Use managers from various countries within the geographic
regions of business. Although the managers operate relatively independently in the region, they
are not normally moved to the company headquarters; (4) Geocentric: A philosophy of
management whereby the company tries to integrate a global systems approach to decision
making. Recruit the most suitable persons for the positions available, irrespective of their
nationalities. CocaCola use Geocentric strategic predispositions doing business in India. This
lead to many difficulty for Coke to develop in India market.
The studies concerning the norm of pesticides in water has led to the fact that several Indian
states banned the sale of Coke drinks, producing by American giants in India. As a result, Coca-
Cola can adequately respond by stating that they will surely check the water resources, which
the company utilizes for producing their products. The company should be able to do anything
in order to make the ground water resources safe for human consumption and pesticide free. In
addition to the above-mentioned information, it is possible to add that Coca-Cola should find the
appropriate ways in order to start growing the plants in that soil.
What is more, the company should apologize for destroying the water resources in India and
provide people who suffered from contamination and water shortage with an appropriate
compensation. It may include spring water, financial resources or any other marketing strategies
that can meet all the people’s needs and expectations.
Furthermore, it is essential to guarantee not to destroy the surrounding areas and the
environment as a whole. All these strategies can be done with the help of mass media,
newspapers, TVs, etc. For MNCs, it is critical to create service quality, solid reputation and
customer satisfaction at the international market since those tools are very critical in allowing
you to get and keep the loyal customers. That is why customer loyalty, as a subjectively positive
attitude of consumers to the company, produced goods and services, brand image, staff and
many other aspects, is an important mechanism any company should take in consideration and
try to implement in its everyday business activities. The availability of loyalty to the company
largely determines the success of its business assessment in the eyes of competitors and partners,
as well as a strong foundation for good and stable sales. Hence, consumer loyalty is expressed in
the fact that the buyer for a long period of time (usually a year) gets the goods or services of the
enterprise, almost without looking for similar solutions from competitors.
In order to get more of India’s soft drink market, Coca-Cola needs to change the style of
advertisement in order to be able to correspond to the flavor of Indian population and Indian
culture. In order to change the style of advertisement, it is recommended to utilize the star-
studded campaign ads. It is vital to provide some Indian cultural factors to demonstrate that the
company greatly focuses on Indian market. Also, the company needs to properly practice the
corporate social responsibilities in order to become more competitive at the global market.
Those activities can include the drilling of the village wells, effective efforts to reduce water
waste and pollution in Indian facilities since India is a country known for its lack of water
resources. All in all, Coca-Cola’s corporate social responsibility should include as follows:
+ Sponsorship and corporate philanthropy;
+ Active participation in various environmental programs;
+ Interaction with the local community;
+ The company’s willingness to engage in different crisis situations;
+ Production of quality products.
References:
1. Gerry Darlington, “Culture—A Theoretical Review,” in Managing Across Cultures, ed. Joynt
and Warner, pp. 33–55
2. (Irwin Management) Fred Luthans, Jonathan Doh-International Management_ Culture,
Strategy, and Behavior-McGraw-Hill Education (2017), Chapter 4, 7,8
3. Essay of solving Coca Cola case in India:https://freeessays.club/coca-cola-in-india-essay/