Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.1 Part Two: Culture and organizations Concept 9.1: Cultural view of strategy Concept 9.2: Strategic alliances and business cultures CHAPTER 9 CULTURE AND STRATEGY

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.2 Strategy and corporate culture The relationship between company culture and strategy: - Strategy is a product of culture -Culture is a product of strategy Definition of culture could also be used as the definition of strategy: -solution to the problems of external adaptation and internal integration (Schneider & Barsoux, 2003)

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.3 Cultural models of strategy Strategic management: - Two main types according to their behaviours, values and assumptions: Controlling model -information about its environment -quantitative and objective Adapting model - Information from personal sources - qualitative and subjective

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.4 Culturals factors of strategy (Continued) In what way is the formulation of strategy affected by cultural differences? Relationship with the environment - Mental framework of two types of person (Fatehi, 1996): -‘engineering- oriented’ -‘symbiotic-oriented’ Relationship among people -Interpersonal relationships within a company -Differences among employees towards a company strategy, between US and Japan

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.5 National culture and strategy In what way can national culture affect strategy? The choice of strategy The way it is realized: - leadership and decision-making Impact of national structure on strategy - sector of products and services Multinational and its local subsidiaries - cultures differences in the foreign markets

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.6 Multinational strategic decisions Implementation of the corporate strategy (Bartlett et al., 2003): - the country manager Importance of this role because s/he : - defends the company’s market decisions - satisfies the demands of the local subsidiary Role of ‘cultural interpreter’ - gives information about the national situation - understands the corporate goals and values

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.7 International managers and strategy The international manager has to gain insight into: - the attitudes of those involved in a cross-cultural situation - modify his/her management strategy It means: - Not having the same strategy whatever be the circumstances - Applying skills in one context to another

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.8 Developing strategies for the global market Advantages of strategic alliances Merger process has three levels: - strategic, organizational, human There are four merger strategies: - assimilation, deculturalization, separation, integration Merger between companies from different cultures: - culture shock can be overwhelming

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.9 Culture shock Culture shock refers to unpleasant experience with other cultures International managers experience culture shock at three levels: -Emotions -Thinking -Social skills and identity Culture shock phase is an integral part of the adaptation phase (Marx,1999) The Marx’s model (next slide) is adapted from an anthropologist Oberg (1960):

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.10 Figure 9.1 Culture shock pyramid Source: Marx (1999): 12 Culture shock pyramid

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.11 International company strategy A merger of two companies presupposes: -A change of culture in the new organization In addition, between companies from different countries : -the complexity of the exchanges of interaction between the cultures increases -other organizational problems rise because -inevitable change of culture(s) involved

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.12 Strategic of cultural issue? What are the reasons compelling companies to seek an alliance? - Purely economic (according to the protagonists) - What role does the cultural element play? Cultural factors come to the fore when mergers and acquisitions: - do not meet strategic expectations - necessitate a change of strategy However, culture may not be explicitly referred to (see example next slide)

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.13 Corus (British- Dutch steel company) However, cultural may not be explicitly referred to: ‘The board of directors of the British-Dutch steel company Corus has to offer, at short notice, positions to Dutch directors. This was stated by the Russian steel baron Alisher Usmavov (a shareholder in Corus, who has a 12% interest in the company) in an interview with the Dutch financial newspaper FD.’

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.14 Mergers and national cultures Cultural element in companies is to be found everywhere (Thévenet, 1999) Cultural problems are not solely to do with differences in national culture: - Example: Sony/Philips alliance The differences in the local cultures are often underestimated In many cases, there are: - cultural confrontations - resistance to any changes

Browaeys and Price, Understanding Cross-cultural Management, 1 st Edition, © Pearson Education Limited 2009 Slide 9.15 Conclusion chapter 9 National culture influences a company’s strategy Not only does the organizational culture change but also the company’s strategy Difficulties with all kinds of co-operation on the cultural front