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Name of the University

Course Name, Number, and Code

Managing Across Cultures Assignment

Author Name

Date
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Managing Across Cultures Assignment

Introduction

This report will evaluate the mistakes made by international business organizations while

expanding into new global markets. It will also compare and contrast Diversity and Inclusion

between two culturally distant countries. Lastly, the paper will analyze the benefits of increasing

personal cultural competence.

Task 1: Mistakes Companies Made While Expanding Overseas

Expanding overseas can be daunting for companies, especially if they need to consider

different countries' cultural, linguistic, and regulatory differences. Some of the most common

mistakes companies make while expanding overseas include the following:

Lacking Cultural Research

One of the companies' biggest overseas expansion mistakes is failing to conduct adequate

cultural research. Each country has its unique culture, customs, and language, and businesses

must adapt their strategies to fit the local market (Snaphunt,2019). Companies that fail to do so

risk offending potential customers and damaging their brand reputation. One of the most well-

known examples of a company that failed to contact thorough cultural research is Home Depot,

which attempted to expand its operations in China (YEC Council Post,2021). In 2006, Home

Depot, the American home improvement retailer, tried to expand its operations in China.

However, the company struggled to gain a foothold in the Chinese market due to a lack of

cultural research and understanding of the local market. Home Depot assumed that China's fast-

growing middle class and rising housing rates make it a perfect need for its Do-It-Yourself (DIY)

brand. This assumption was based on data from 2006. On the other hand, Home Depot should

have considered how people in China bought, why they started buying homes, or the general
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absence of a culture of do-it-yourself projects in the country (YEC Council Post,2021). Home

Depot could not create even the tiniest footprint in the Chinese market within six years, leading

to the company's decision to withdraw fully from that market (YEC Council Post,2021).

Another good example is the Walmart company, which, when constructing a store in

Germany in 1997, did not consider cultural variations, notably personal space (Khan, 2020). To

compete in the frugal country's very lucrative discount department store industry, the company

opened up 85 new outlets. But, the American retail juggernaut discovered that breaking into the

market was significantly more challenging than anticipated. This was due to the industry's

stringent labor restrictions, restricted operation hours, and numerous layers of regulatory red

tape. The cherry on top was that customers at Walmart were alarmed by the store's greeters and

their tendency to bag customers' purchases for them, both of which are unusual practices in

Germany. Walmart pulled out in 2006, resulting in a one billion dollars loss.

Localizing Services After an Expansion

Another mistake that companies make is failing to adapt their products or services to the

local market after expanding overseas. Customers in different countries have different needs,

preferences, and purchasing habits, and companies must tailor their offerings to meet these

requirements. The point is responsible for carrying out a significant amount of research, which

often includes observing how customers understand and use their service. Frequently, a company

will assume that its product has been "localized" to a new location merely because they have

established the foundations of that product. Nevertheless, there are other cases in which the

company has yet to reach that far.

A good example of a company that localized its operations after the expansion is the

tagline that Electrolux used for its vacuums when they first launched them to the market in the
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United States; this reflects the possible problems that could arise from rushing through the

process of localization. They spent time and effort translating every one of their messages. Still,

they could have spent the same time and effort conducting sufficient focus groups or consulting

with cultural experts (YEC Council Post,2021). That their initial marketing tagline, "Nothing

stinks like an Electrolux," was not well received by audiences in the United States should not

come as a surprise to anyone.

Being Too Rigid in Their Sales Channels

Companies that expand overseas often assume that the sales channels that work in their

home market will be equally effective in other countries. However, different needs have different

distribution channels, and companies must be flexible in adapting their sales strategies to fit the

local market (GoCardless 2022). Businesses typically need to remember how individuals in other

countries prefer to be marketed to, and how they purchase can sometimes decide whether

commercial operations in those other countries are successful. A nation's culture and history have

a significant impact on the preferences of its people in the manner in which they go shopping for

goods (Kelly,2015). For example, it is commonly believed that businesses will have a better

chance of success in most Asian countries if they introduce their services through regional

partners and stores that customers already trust. This is because customers are likelier to buy

from businesses they have already done business with. This is a widespread misconception

(Cletus et al., 2018). Also, shoppers are beginning to develop their shopping styles. Consumers

in India are more inclined to buy things through online marketplaces, but consumers in France

and Italy are more likely to purchase items directly from the websites of merchants

(Snaphunt,2019).
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Inefficient Planning- Starbucks Failed in Australia

Getting a business up and running requires a significant amount of prior planning and

preparation. The same level of attention to detail is required throughout the expansion process. It

is possible that if a company does not have it, it will be doomed to failure (Austin,2020).

Business needs the plan to deal with staffing levels, costs, and schedules. Depending on how the

business expands, prices can increase, stay the same, or even decrease (Abdullayevich and

Abdullajanovich, 2021). In this scenario, maintaining the current price structure enables the

business to increase sales and pay off the costs associated with expanding the business. A

temporary increase in pricing may be required to fund growth due to adding a new product or

purchasing a new firm. This causes a ripple effect in demand, margins, sales volumes, and

profitability (White, 2019). When Starbucks first attempted to establish a presence in Australia in

2000, the company was met with a significant quantity of melted iced macchiatos (Khushman,

2019). The naivety with which Starbucks entered the Australian market is analogous to that

which led to Target's failure to enter the Canadian market. However, the local movement

dominates the Australian coffee business, and Starbucks proved to be too expensive for

individuals who desire to frequent chain coffee shops (MacLellan, 2022). The caffeine retailer

abruptly liquidated 61 outlets in 2008, which resulted in a loss of approximately $143 million,

which marked the beginning of the slow burn. Starbucks managed to hold out until 2014 before

selling the remaining 24 outlets to the Withers Group, responsible for operating 7-11 franchises

in Australia.

To prevent these mistakes, companies should invest time and resources in researching the

cultural norms, values, and beliefs of the countries they plan to expand into. Companies should
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also conduct market research to understand the local market's needs and preferences. They

should also consider working with local partners or hiring local staff who have a deep

understanding of the local market and can help to adapt the company's products or services.

Companies should also research to understand the local market's distribution channels and adapt

their sales strategies accordingly. They should also be willing to experiment with different sales

channels to find the most effective approach.

Task 2: Diversity and Inclusion between two culturally distant countries

In the United States, diversity refers to the presence of people from different racial,

ethnic, cultural, and religious backgrounds (Microsoft Inclusion Journey Library | Microsoft.

com,2023). The focus is on creating a workplace or community that reflects the diversity of the

population and promotes equal opportunities for all individuals. Conversely, inclusion focuses on

creating a sense of belonging for all individuals, regardless of their background or identity (UAB

Institute,2017). Inclusion involves creating a culture where everyone feels valued, respected, and

supported.

In Japan, the concept of diversity is still relatively new, and the focus is often on

homogeneity rather than diversity (JAPANGOV,2017). However, there is increasing recognition

of the need for diversity in the workplace, particularly with the aging population and the need for

more women. Inclusion is also a relatively new concept in Japan, and there is a greater emphasis

on creating a harmonious workplace where everyone works together for the common good.

In Saudi Arabia, diversity primarily focuses on nationality and ethnicity, favoring hiring

Saudi nationals. Inclusion is also focused on creating a sense of belonging for Saudi nationals,
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while non-Saudi workers may feel excluded from the workplace. Gender diversity is also a

significant issue in Saudi Arabia, with limited opportunities for women in the workforce.

Comparison between two countries:

Japan and Saudi Arabia have populations that are similar to one another. In contrast to

Saudi Arabia, which has a population that is predominantly made up of Arabs, Japan is primarily

made up of Japanese nationals (Alcantara and Shinohara,2022). This population homogeneity

has repercussions for how both nations approach diversity and inclusion in their societies. In

addition, although both countries have comparatively similar populations, they approach

diversity differently. The idea of diversity in Japan is centered on promoting the inclusion of

people from various backgrounds, including gender, race, and age.

On the other hand, Saudi Arabia places a significant emphasis on nationality and

ethnicity when it comes to diversity, and the country strongly prefers recruiting Saudi citizens

(DeArmond et al.,2022). Even though they address the issue differently, Japan and Saudi Arabia

have acknowledged the importance of diversity in the workplace. Japan has been experiencing

several demographic problems, including an aging population and a decreased number of people

actively seeking employment. Consequently, there has been a growing awareness of the

necessity of recruiting and retaining a diverse pool of personnel to address these difficulties

successfully. Similarly, Saudi Arabia has acknowledged the importance of diversity, particularly

gender diversity, and as a result, the country has taken a few steps to further the cause (Utami et

al.,2022).
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Most importantly, the governments of both countries acknowledge the efforts being made

by each other to foster diversity and inclusion. With legislation such as the Act on Promotion of

Women's Participation and Advancement in the Workplace, the Japanese government has been

making concerted efforts to advance diversity and inclusion in the country's working

environments. In addition, the government has established goals to boost the proportion of

women in managerial roles (Alcantara and Shinohara,2022). On the other hand, the government

of Saudi Arabia has come under fire for its lack of support for diversity and inclusion,

particularly regarding gender equality (Aljohani,2020).

The restrictive gender segregation rules in Saudi Arabia reduce the number of

employment options available to women (Turak,2019). Another significant distinction is the

government's involvement in activities fostering diversity and inclusion. With legislation such as

the Act on Promotion of Women's Participation and Advancement in the Workplace, the

government of Japan has been making concerted efforts to advance diverse perspectives and

inclusive practices in the country's workplaces. On the other hand, the government of Saudi

Arabia has come under fire for its lack of support for diversity and inclusion, particularly

regarding gender equality. The prevalent cultural norms and values influence both countries'

approaches toward diversity and inclusion. There is a significant emphasis on getting along and

working together as a team in Japan, which helps ensure that all workers are included. The

cultural traditions in Saudi Arabia tend to be more traditional, which can restrict the

opportunities available to women and people from various backgrounds. One such distinction

concerns leadership's role in fostering diversity and inclusion. Numerous companies in Japan

have top leadership roles that are held by women, which means that there are role models for

women in Japan to aspire to be like (Alcantara and Shinohara,2022). In contrast, the ratio of
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women holding leadership positions in Saudi Arabia could be higher, which reduces the number

of visible role models available for women and other people from various backgrounds.

In a nutshell, both Japan and Saudi Arabia acknowledge the importance of fostering a

diverse workforce; nevertheless, their approaches to inclusion and the degrees to which their

respective governments back diversity and inclusion initiatives are somewhat different. Whereas

the goal of inclusion in Japan is to foster a sense of belonging for all employees, the purpose of

inclusion in Saudi Arabia is to promote a sense of belonging for Saudi natives, with limited

chances for those from various backgrounds (Alcantara and Shinohara,2022). In addition,

cultural norms and leadership play important roles in determining how both nations tackle issues

of diversity and inclusion.

Task 3: Analyze the benefits of increasing your cultural competence

Cultural competence is communicating effectively and interacting with people from

diverse cultural backgrounds (Indeed Editorial Team,2021). Increasing cultural competence

could benefit me in many ways as a student, personally, and workplace.

First, increasing my cultural competence will enhance my communication with others in

school, the workplace, and other countries when I visit. In a diverse workplace, cultural

competence can help me communicate more effectively with colleagues from different cultural

backgrounds. I can avoid misunderstandings and build stronger working relationships by

understanding their cultural norms, values, and communication styles (Kaihlanen et al.,2019).

For instance, if I am working with a colleague from Japan who is more reserved, I may need to

adjust my communication style to be more indirect and polite, which will help ensure that we
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understand each other (de Guzman et al.,2016). Also, as an international student, I may need to

communicate with people who speak a different language or have different customs.

Understanding their culture can help me communicate more effectively and avoid

misunderstandings.

Moreover, increasing my cultural competence will increase my creativity; a diverse

workplace can lead to greater creativity and innovation, as people with different backgrounds

and perspectives bring fresh ideas and insights. Being culturally competent, I can tap into this

diversity and collaborate more effectively with colleagues from different cultural backgrounds.

For example, I am working on a project that requires input from people with different cultural

perspectives. In that case, I can develop more creative solutions by leveraging my cultural

competence. It will also lead to improved Customer Relations in business; in today's global

economy, many companies interact with customers from different cultural backgrounds. By

being culturally competent, I will be able to understand better and connect with my customers,

which can lead to increased customer satisfaction and loyalty. For example, I work in a customer

service role and interact with customers from different cultures. In that case, I may need to adjust

my communication style and be mindful of cultural differences to ensure a positive interaction.

Cultural competence will also lead to better decision-making as it can help me make

better decisions by considering the perspectives and experiences of people from different cultural

backgrounds (García Ochoa et al.,2020). By considering a variety of viewpoints, I can make

more informed decisions that consider the needs and preferences of a diverse workforce. For

instance, if I decide on a new product launch, I may need to consider how the product will be

received in different cultural markets. It also leads to Improved Teamwork as culturally

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competent individuals can work more effectively in diverse teams, as they can appreciate and

leverage each team member's strengths. Understanding cultural differences allows me to work

collaboratively with colleagues from different backgrounds and nations and build a more

cohesive team. For example, suppose I am working on a team project with colleagues from

different cultural backgrounds. In that case, I may need to be mindful of cultural differences in

decision-making, conflict resolution, and communication styles to ensure a successful outcome.

In today's globalized world, many businesses operate internationally and require

employees who can work effectively with people from diverse backgrounds. Improving my

cultural competence can enhance my employability and open new career opportunities

(Sahara,2021). For instance, if I am fluent in multiple languages and deeply understand different

cultures, I can secure a job in international business or diplomacy. Additionally, being culturally

competent involves respecting other people's cultures and ways of life. It helps develop empathy

toward people with different values, beliefs, and traditions (Hong (2022). I can become more

compassionate and tolerant by understanding and appreciating cultural differences. I will also

develop meaningful relationships with people from diverse backgrounds (Grosser,2020).

It is also important to note the role of cultural competence in traveling; traveling can be

an exciting and enriching experience, but it can also be challenging if one is unfamiliar with the

culture and customs of the country they visit. Increasing my cultural competence can make my

travels more enjoyable and rewarding (Chau,2020). For instance, at the end of this year, I intend

to visit China, and understanding Chinese customs and etiquette can help me avoid cultural faux

pas and make a positive impression on your hosts.

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