Cross Cultural Management

CASE STUDY
Home Furniture ltd.
In 1970, the company Home Furniture was set up. The headquarters are located in Tampere, Finland. Over a number
of decades the company has been very successful at producing affordable furniture which is especially favoured by
youngsters and families with a small budget. While the company was initially most successful in European countries it
is heavily expanding in other regions of the world, like North America and also Arab and Asian countries. The stores of
the company are rather independent in their sales policy and differences can be found in the type of products and
marketing policies. At the same time the company attempts to create economies of scale with high volumes and by
implementing the same formula of logistics where customers assemble the product. The major advantages are low
costs for both storing of products and low labour costs.
The parent company employs 1750 employees, made up of skilled and semi-skilled employees. Two hundred
employees work in design and development and other highly skilled jobs like strategic management and marketing.
With the slow recovery from the recession in many countries across the world the company intends to expand further in
some other, emerging economies like China and India.
The company’s international growth has until now been organic, first expanding in Europe and then the US and Asia.
When entering a market, Home Furniture will attract a small number of local managers at the level of middle
management and an expat would guide the initial 4 years. Training would be provided locally. There is however still a
need for a consistent expat programme with centrally defined objectives in terms of management development.
With the expansion some problems came up, like the working in teams and providing incentives for individual
employees. Management in the US promotes performance pay while the parent company emphasises other aspects of
employment relations, like participation of employees having voice through works councils.
In the US both management and local unions hold the opinion that work and organisational matters should be
negotiated upon when labour interests are at stake. When management from the parent company attempted to
introduce teamwork, local management of subsidiaries in the US had a different perception of teamwork – facilitating
the rotation of jobs and increasing flexibility rather than creating more autonomous work groups.
Until 2007 the CEO of Home Furniture was Finnish. Since then, a new British CEO a different style of management has
been implemented throughout the company. Not only the language of communication changed to English throughout all
operations of the company; also the way in which policies are developed and implemented changed. The new
approach to decision making and the change of organisational culture does not always appear to be in line with the
management style in some other countries, like the home country of the company but also in other countries like India
and other Asian countries.
While the top management aims to develop a strong global culture with expats being sent to these countries, there are
numerous problems in the implementation of such a policy. Local management in the subsidiaries in Asian countries
tends to adopt different practices of recruitment, where management is rather recruited from the local plants. Also,
employment conditions are different and the role of employee representatives is not the same across the various
countries where the company has operations. When such problems are discussed between the top management and
the local management there are frequently issues mentioned that relate back to various ways of communication and a
lack of common understanding of the problems.
Around the globe there is an increasing number of problems reported with employment relations. The Finnish press
reported on cases of union busting in some US branches. One of the first decisions the new CEO took was the start of
an investment in a training centre in Tampere. Both the HR executive and the CEO are aware of the need to create a
corporate training programme. HR is also aware of the problems the company may experience as the result of variation
Cross Cultural Management
2
in reward schemes across countries. The CEO feels that there is a strong need for the development of leadership at
various levels in order to be able to establish and maintain a strong performance of the company in various markets.
CASE ANALYSIS:
Please apply the structure of an essay and essay style of writing for which instructions can be found on Moodle.
Introduction
In the first part of the assignment, the emergence of cross-cultural management and globalisation should be
discussed to provide the context and framework for the essay. Students have to ‘briefly’ discuss the advantages and
disadvantages of the company working in different countries and the relevance and importance of cross-cultural
management for a multinational company. This part can be looked at as the introduction to the main body of the
assignment.
The second part should address the operating in various countries and employing people from various countries.
The sophisticated nature of logistics and the innovation and development of products at Home Furniture implies that
its employees are required to work in teams. Forming multi-cultural teams from various countries where Home
Furniture has offices, stores, and production units, will pose challenges for the management of how to manage those
teams. What problems could be expected when working across the countries mentioned in the case?
The analysis should cover the influence of national cultures on the following aspects of organisations: leadership,
decision making and HRM. Although students are allowed to vary their focus with regard to other aspects of
organisations that may be relevant from a cross-cultural perspective, they are expected to cover in some way the
topics mentioned above.
For example, when it comes to leadership:
Leadership is different in various cultures as some cultures emphasise more hierarchical relations and others more
egalitarian relationships. Leadership styles will differ and in some cultures particular leadership styles will be more
effective than others because there is a match between what members of the organisation expect from their leaders and
the style of leadership leaders expose. The question is what cultural differences can be found across the countries
where the company operates and how they impact on the most suitable style of leadership. Appropriate research using
theoretical models should be used to illustrate your answer.
For other topics, like cross cultural teamwork, decision making and HRM, we expect you to rely on the lecture slides,
class tutorials and additional reading (which, of course, also applies to leadership).
Refer to various theoretical concepts and outcomes of research on management across
cultures.
NB: although the perspective may be practical the students are required to refer to various theories. This should be
done with the use of proper Harvard referencing – with both a list of references and in-text referencing. All other
requirements apply, like building up an argument and linking practices and policies to theories.
Students are recommended generally NOT to use internet sources, as most of them contain unreliable, and usually
very poor information.
2000 words

Make inferences
E.g why foreign subsidiaries do their own HR practise .

Identify problem
Is individualism V. Collectivism a problem ?
Relevant theories? Leadership (GLOBE) communication (Hall’s high v. low context Hofsted ) International HRM (MNC approaches )

Further explanation:
Leadership differs between different cultures as individuals are differently oriented depending on their background from their national

cultures. Leaders should therefore address the expectations of their followers in order to increase the level of motivation. HRM involves the

management of people where cultures also impact the needs of employees and expectations differ regarding the operating of organisations and the

way decisions are made. HRM may be more top-down in some cultures while in other cultures a bottom-up approach may be more effective and useful.

Companies trade across borders, but with the globalisation and the move of labour, many members of the workforce are from a different cultural

backgrounds. The question is then how the cultures involved impact on the operating of business with the particular cultures mentioned in the

case. The case analysis could finalise with some recommendations on the case. The emphasis, however, has to be on developing a sound argument

showing evidence of wide reading around the topic using theories and research outcomes on cross cultural management.

REQUIREMENTS

Generally students must demonstrate:
A clear understanding of the concepts of cultures and issues concerned with the topic;

– The skill to analyse various issues of cultural differences related to organisations and individuals;

– Students should be able to compare cultures with regard to perceptions of organisations and business;

– Demonstrate a comprehensive understanding of implications of national differences for HRM and national and international regulation of

employment;

– An understanding of the implications of cultural differences for the management of human resources within multinational corporations;

– The skill to apply the key concepts and critically assess issues of cultural diversity;

– The skills to write an essay according to the academic standards, like the acknowledgement of all sources of information, and adequate in-text

referencing.

– A limited amount of useful information may be retrieved from the internet. However, the writing should generally not contain material from the

internet as this is unreliable in most cases and often concerns obscure information. However, only in cases where websites contain reliable

information students are allowed to include websites as their source of information.
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