Friday, February 22, 2019

Regarding intercultural management...

by A_Pietro (writer), , April 06, 2018

Regarding intercultural management, a shared vision works better than a go-it-alone strategy

Very few companies address a homogeneous market, and most must deal with the complexity of the world. The most common dichotomy lies between selling to companies and selling to individuals, but many more chasms exist, be they economic, legal, cultural or social. The same product will be well received in one land, and refused in the next one, and it is up to each business to figure out why. And what better resource for a company to address the world’s complexity than the diversity within itself?

Half a century ago, transnational business was reserved to a handful of gigantic companies - how times have changed. “The United States has more than 150,000 small manufacturers, companies with fewer than 400 employees and less than $70 million in annual revenues”, the National Association of Manufacturers reported at the turn of the century. Economist Louis Uchitelle added: “A decade ago, such an evolution was unthinkable at most small companies. Overseas operations were the domain of the Fortune 500 corporations, while small companies kept production close to home. And even now, the small manufacturer - the sort of company that employs 200 people in a one-story factory in an industrial park - is expanding abroad reluctantly.”

Be it to chase new markets, or because modern day communications have made cross-border expansion less of a challenge, the fact is that more and more companies, big and small, are going international. Which means more opportunities, but also more challenges linked to differences in cultures, regulations, and simple lay of the land.

“Even as an SME, it is worthwhile including members of the culture and intercultural marketing professionals in the design of printed brochures, websites, corporate videos and other communication products, says intercultural marketing expert, Jörg Wenzel. But even if your company is a large corporate, you cannot do without a cultural prism. Here’s how Wenzel explains it: “large companies occasionally find that the campaigns that run brilliantly on their home market do not take off abroad. Companies that focus too much on the domestic market and only later – once sales are high – think about the feasibility of using the product name in other languages will need to be prepared to make considerable extra efforts. It is therefore worth thinking about possible associations right from the start. This will also save money in the long term”.

But intercultural stakes go far beyond the very marketing issues. Jeyanthi Srinivasan is Intercultural Professor at Bosch University. On this matter, she considers that “many times, the lack of (inter) cultural awareness can create challenges that range from simple misunderstandings to severe conflicts. Cross-cultural differences have often been identified as the most critical factor when it comes to international projects, collaborations, and joint ventures.” The key to this challenge is often already in the company, but often overlooked. And if the employee isn’t present, the company should ask itself if it has promoted diversity enough in its past.

Regarding intercultural management, B-to-B services companies also rediscover the virtues of geographical segmentation. Duff & Phelps, a rapidly-growing U.S.-based consulting firm specializing in corporate finance - and a worldwide leader in valuation services -, made the choice to dedicate a self-governing head office in EMEA markets, earlier this year. The firm has been developing over Western Europe and in the world for some time, and nourishes the ambition to continue its growth out of America. Yann Magnan, who opened the french office in 2007, was appointed market leader for Europe and Middle-East. He now has strategic management powers to influence decisions and is no longer confined to implementing transatlantic choices.

In a 2017 interview, he stated : “There are best practices and methods which vary from one jurisdiction to the other. They would also vary whether you look from a US perspective, or a French one. When I opened the Paris office, in 2007, we were 30 people or so; now, our team has 700 people across Europe. We initially ran valuation services only, and today we deploy 6 service lines across the continent (…) This became more complex to manage, naturally. It became clear to the firm that having local management to manage that complexity makes sense.” After observing that American work processes and advertising campaigns were not applicable for Europe in all things, the commonsensical choice of handing over Europe to a European was hence made. For all that, intercultural considerations can also take place within the European unit itself. And this is precisely what led Yann Magnan to consider that “there’s no need for micro-managing... Our managing directors perfectly know their markets, and they fully embrace the culture of the firm which relies on cooperation across services.”

Goods-selling companies are just as exposed to the phenomenon as service providers. The Coca-Cola company is recognized as one of the best marketing teams in terms of vision-sharing and culture approaches, using a two-pronged approach: speaking to the people and listening to them. “The first one was created for a domestic audience, making members of diverse cultural groups feel included in the advertising message. The second method was to use the members of a foreign culture about which Coca Cola didn’t know much to provide them with social marketing and cultural data to further the company’s penetration of that country’s soft drink and beverage market.”, reports Transfluent. Because Coca-Cola, almost since its inception, decided to take the global market, it knew that it would encounter a major cultural challenge: how do you speak to people you don’t know. Even with the highest performance marketing department, no company can know how to speak in a way which will resonate in all cultures. The Coca-Cola marketing strategy, which relies on the inclusion of the targeted populations within the marketing approach, is built to be relevant worldwide, and has never changed.

The question of identity, finally, must be addressed: when many cultural identities interact, should one prevail? If so, which one? Laurent Tiersen, who heads Ikea for the UK, is aware of the risk of imposing the Northern culture of his employer to his customers, not all of whom are Northerners. He says: “Our role as a brand is not to be autocratic, it’s to listen to people. The point of view we came up with is based on talking to people about what they would like to see more of." He is just as aware of the risk of diluting Ikea’s strong Northern identity, which customers like. So, Swedish or not Swedish? Ikea’s answer is declination. Annabel Eliott reportsfor the daily mail that “Ikea released 203 million copies of its 324-page catalogue at the end of July, with 72 different region-specific editions - a painstaking process which takes 18 months to complete. First, ethnographers are hired to visit real homes and research the nature of domestic life in countries all over the world. Having shot all the furniture, Photoshop is used to tweak various layouts according to the target audience.” By tweaking images in such a subtle way that customers don’t even notice it, Ikea takes into account cultural differences without compromising itself, a strategy which has earned it success for decades.

The centralized approach to global marketing, in which headquarters will make all decisions, has three main flaws. The first is that the decision-maker has no visibility over the territories in which his decisions are being carried out and, short of being the best-travelled and cultivated manager in the world, doesn’t know the target market intimately. The second is that it overlooks that many solutions to development challenges are already within the company’s range, or even in its walls. The third is that, by neglecting the value of diversity, employees will tend not to feel recognized and are therefore likely to let their loyalty falter. Three reasons, with few or no counterparts, which lead companies to accept that mono-national business is somewhat a thing of the past.

About the Writer

A_Pietro is a writer for BrooWaha. For more information, visit the writer's website.
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