The clash of cultures in the boardroom

A Clash of Cultures in the Boardroom

A case study focusing on international corporations and their business methods is The Clash of Cultures in the Boardroom. The rise of multinational firms has resulted from the globalization of the international economies. Notwithstanding the numerous benefits and opportunities that globalization has provided for businesses, multinational corporations confront a number of obstacles. These businesses must deal with ethical difficulties, cultural disparities, political and economic variances, and a rigid work environment. Almond Chemical is a German firm with a Chinese joint venture. The German company has expanded its chemical business into China, and it is dealing with cross-cultural challenges as well as other business ethics concerns. This paper analyzes the factors of the case study using PEAS methodology as outlined in the case study co-authored by Xin, K., & Haijie, W. (2012).

Problem

The problem faced by the German Almond chemical in expanding its business in China mainly is cultural differences. Though there are other factors that contribute to the many challenges faced by the company, culture is the main problem because different countries have different beliefs and customs. The German tradition believes in straightforward and honest business dealings while the Chinese custom believes in the flexibility of values to suit their business deals. These cross-cultural relations have contributed to challenges in doing business between the Almond chemical and its joint ventures leading to ethical dilemma (Xin, K., & Haijie, W. 2012).

Evidence

According to the authors, a cultural difference is the main root of the problem between Almond chemical and its joint ventures. The German culture does business in a straight forward way, and that is why they want to uphold their business ethics even through challenges. Almond chemical believes in business ethics, and that is why they believe it is good to have Health and Safety measures for the business while the Chinese people see such measures as a waste of money and resources.

The German culture believes in long-term strategies that will bring profit to the business while in China, the Guanxi concept is mainly used to get business deals done quickly and in any manner even if it means going against their rules for example, Cheng Dong proposes a commission of 1% to be issued so as not to lose business deals. Besides, Wang and George of the Joint Venture want to give in to the demand of working in a flexible environment so long as they benefit. On the other hand, Liu Peijin of the German firm says that he will not concede as that is against the business practices and values of the firm which displays two different business cultures.

Assessment

In the assessment section, the focus would be to generate three alternative solutions which will aid in arriving at the best solutions. Here are the three alternatives. One, German Almond chemical should discuss with its joint ventures on the business culture to follow for consistency of making decisions. This will help reduce the business wrangles due to cultural diversity. Two, provision of good corporate governance to ensure that companies follow the rules and regulations in making decisions. Three, outlining of the best ethical business practices to be maintained by the parent and joint ventures.

Solution

The best solution would be for the parent company to discuss with its joint venture the terms of doing business and outline the best ethical practices to be followed by each company. This will reduce problems due to unclear laws and differences in culture. The parent company should prepare a legal framework which will guide the businesses.

Importance of the Guanxi Concept

The authors explain that a Guanxi concept is important to the Chinese people as it makes business deals be made more smoothly and quickly. The concept ensures that business deals are closed even if it means going against the values of the company. The person with the best deal wins the business leading to many orders (. The Guanxi concept encourages networking between people as they help in getting favors and business deals even through corruption and bribery.

Primary conflict between the Germans and the Chinese

The Germans value straight forward dealings while the Chinese are flexible on their dealings depending on the situation. For example, Liu stands for ethical business practices in which he objects any bribes and corruptions while Wang and Chess want the laws to be flexible and even bribe to remain in business and get more orders (Xin, K., & Haijie, W. 2012).

Conclusion and Recommendation to the companies

Almond chemical and its joint ventures should discuss a legal framework that will help them in conducting their business to avoid cultural clashes. Besides, the businesses should formulate the best business practices to help solve ethical dilemma among them.

Reference

Xin, K., & Haijie, W. (2012). CASE STUDY-Culture Clash in the Boardroom. Harvard Business Review, 129.