Introduction and Literature Review
Globalization has changed the face of the business world. In the past, companies worked, by and large, within their own local sphere of influence; the largest companies worked on a national scale, and only a select few worked on a global scale. However, as technology advanced and times changed, so too did the nature of business: today, it is more important than ever for businesses to make alliances in the global marketplace. These alliances are particularly important insofar as technological companies are concerned, because it is so common to have a lack of infrastructure compatibility between nations (Mendenhall and Punnett et al., 2000).
There are a wide range of different reasons why firms would choose to collaborate on a global scale, but in the end, profit is the main goal of all business ventures, and making a good profit is the goal of all firms. However, the methodology that a firm uses in the global market may be markedly different from the methodology used in its domestic market, and the personnel used to manage strategy and operations effectively in a foreign market will be different than the personnel used in the domestic market (Culpan, 2002).
Culpan (2002) also notes that the global marketplace presents a unique challenge for businesses. On the one hand, Culpan (2002) writes, business is designed to be a fiercely competitive environment between firms; however, the global business world demands that firms set aside their competitive natures quite frequently. The global marketplace, according to Culpan (2002), necessitates that firms participate in collaborative ventures for the betterment of both their firm and the global marketplace as a whole.
The literature regarding cross-cultural management strategies and practices is quite useful, even insofar as the out-of-date material is concerned, as the out-of-date material presents a shift in both management strategies and schools of thought regarding global management strategies as technologies have advanced and hierarchical structures within firms have changed. Culpan (2002) writes convincingly regarding the positive aspects of global business alliances for multinational corporations. Culpan (2002) writes, “On one hand, the traditional view of interfirm competition suggests that businesses are naturally involved in fierce competition with their rivals. On the other hand, today’s firms-- especially multinational players-- recognize the benefits of collaborative ventures multinational corporations have adopted a variety of new and flexible approaches for achieving competitive advantages” (Culpan, 2002). This suggests that the very nature of international business has changed on some level; no longer are firms merely competitive, but they are competitive on a new and different level that does not exclude cooperation and alliances from forming within the business world.
Creating and maintaining competitive advantage in a niche market is a much more complex task in the globalized world, as markets are much more complex and all-encompassing than in domestic markets. This is particularly true of industries that require high levels of technological sophistication in their manufacturing processes (Culpan, 2002). Industries like the automotive industry, for instance, as well as the pharmaceutical industry and the high-tech computer and electronics industries are particularly specialized, and require some degree of collaboration between firms for mutual success in the global marketplace (Culpan, 2002).
The new globalized world presents unique challenges to businesses, not the least of which is competition and cooperation with other firms within the same niche. However, businesses must also contend with cultural differences within a firm when working on a global scale. Rosenzweig and Nohria (1994) write, “The degree of similarity to local practices is significantly influenced by the method of founding, dependence on local inputs, the presence of expatriates, and the extent of communication with the parent. In addition, sharp differences are revealed among affiliates suggesting strong country effects. Together, these findings support the view of MNCs as composed of differentiated practices, which in turn are shaped by forces for local isomorphism and for internal consistency” (Rosenzweig and Nohria, 1994). Essentially, Rosenzweig and Nohria (1994), although writing a paper that is relatively out-of-date, recognize and quantify the cultural differences that can arise within a single corporation between employees of different cultural backgrounds and histories. Rosenzweig and Nohria (1994) go on to suggest that management must play a significant role in mediating cultural differences and moderating issues that may arise as a result of cultural differences.
Within a firm that is collaborating on a global level with other firms, there are a variety of different strategies that are utilized effectively. Most texts utilize a specific set of principles when discussing cross-cultural management and the problems that arise as a result of people of different cultures working in close proximity to each other. Child, Faulkner, and Tallman (2005) write that cooperative strategy necessitates a strong but not authoritarian leader, particularly in environments where cultural differences are causing friction (Child, Faulkner et al., 2005). In addition, Harris, Moran and Moran (2004) write that the most important aspect of corporate culture, particularly corporate culture where employees all come from different cultural backgrounds, is something that they term “synergy.” Synergy in corporate culture is, at the most basic level, working together; however, it is much more complex than merely cooperation on the basic level (Harris, Moran et al., 2004).
In a synergistic environment, people are forced to utilize and capitalize on their differences rather than allowing those differences to cause strife between members of the group. This means that members of the group must be simultaneously culturally-sensitive, but also capable of following the instructions of and trusting the leader of the group when it comes to making decisions and concessions between members of the group (Harris, Moran et al., 2004). Harris, Moran and Moran (2004) write, “the objective is to increase effectiveness by sharing perceptions, insights, and knowledge Cultural synergy builds upon similarities and fuses differences The diversity of people can enhance problem solving” (Harris, Moran et al., 2004). However, while the idea of synergy in the workplace sounds good in theory, it can be problematic in practice. This is why Harris, Moran and Moran (2004), Culpan (2002) and Clegg, Ibarra-Colado, and Bueno-Rodrigues (1999) suggest utilizing a strong leadership figure that is adept in moderating cultural disputes in the workplace.
Cross-Cultural Management Strategies
Harris, Moran and Moran (2004) suggest that to create a synergistic work environment where all employees are used to the greatest benefit of the company, attention must be paid to the cultural differences of the employees in question. Harris, Moran and Moran (2004) suggest that cultural dominance is often utilized during an inter-firm alliance, and this is not an effective method for developing cultural synergy within a firm.
Developing synergistic procedures within an organization improves the functioning of an organization. During a time when an alliance or acquisition occurs, many people are experiencing fluctuations in their daily routines and their set patterns. This deviation can lead to added stress and further deviation from a synergistic environment in the workplace. To avoid this issue, a team leader with good cultural sensitivity and a solid understanding of how to improve team synergy in the workplace must be on hand to address all the problems and concerns of the cross-cultural team.
Organizational synergy is about more than just profits, however; it is about employee morale and the benefits of high employee morale and investment in the firm for the organization. Harris, Moran and Moran (2004) write:
Just as there are high and low-synergy societies, there are high- and low-synergy organizations. A high-synergy corporation is one in which employees cooperate for mutual advantage because the customs and traditions of the corporation or organization support such behavior. In this noncompetitive atmosphere the individual works toward his or her betterment as well as that of the group. Employees work to ensure that mutual benefits are derived a low-synergy business is one that is ruggedly individualistic, insisting on going it alone. It avoids partnerships and agreements with other entities and finds it difficult to adapt quickly to change. Employees are not empowered Managers impose “their way” on the organization” (Harris, Moran et al., 2004).
What does this mean for an organization? It means that employing a manager or managers that understand the importance of synergy in an organization is fundamentally important, and without that understanding, there can be no true cross-cultural alliance.
In addition, managers must understand the steps necessary to develop a synergistic organization. There are strategies that are commonly used by companies and organizations that demonstrate a high level of synergy in their structure; these strategies have been broken down and analyzed for use across any number of different situations in any type of firm imaginable. The literature suggests that firms that have highly synergistic culture demonstrate a number of different characteristics. First, and perhaps most importantly, in a synergistic culture, all cultural differences are respected and integrated as far as possible without favoring one particular culture or a particular cultural practice infringing upon other cultural beliefs or practices (Child, Faulkner, and Tallman, 2005).
The next step that should be taken when a problem emerges-- or when a good leader who knows his or her team feels a problem could potentially emerge is to discuss the situation in depth with the team. If a member of the team is not as well-versed in the primary language that is spoken on the team, then other forms of communication may be necessary-- whether translation or written descriptions of the situation are provided to that particular team member. It is also the job of the leader and manager to interpret any cultural issues that may arise from a particular situation. This means that the manager must be culturally-sensitive to the sensibilities of his or her team (Child, Faulkner and Tallman, 2005). Finally, a good leader will recognize cultural differences and make attempts to integrate those differences into the corporate culture, making people feel more welcome within the corporate environment and also engaging everyone creatively with the different cultures present in the team or group (Harris, Moran et al., 2004). Problem solving when people of different cultures are present and engaged in the problem-solving process can be much more effective and much more creative than problem solving in a single-culture environment.
The Open Handset Alliance: A Case Study
The Open Handset Alliance (OHA) is a Google project that was designed to challenge the superiority of the iPhone in the smartphone market, although no official statement has ever been released to suggest that this is the case; the literature suggests that the OHA was a strategic move by Google and a number of telecom companies to split the market away from Apple (Brockman, 2008). According to the Open Handset Alliance (OHA) page, “The Open Handset Alliance is a group of 84 technology and mobile companies who have come together to accelerate innovation in mobile and offer consumers a richer, less expensive, and better mobile experience. Together we have developed Android™, the first complete, open, and free mobile platform. We are committed to commercially deploy handsets and services using the Android Platform” (Open Handset Alliance, 2013). Because Android is a major competitor for Apple’s iPhone, these technology and mobile companies came together in the hopes of cornering the market from Apple.
Apple arguably uses an innovation strategy combined with a differentiation strategy when it comes to cornering the market with their competitive advantage. This means that Apple makes attempts to provide customers with technologies that they cannot get from other providers-- essentially, Apple creates a mini-monopoly in the market, because their products are unique enough and recognized so widely by brand name that they are desirable to the consumer. When combined with the brand name recognition that Apple commands, particularly when it comes to their line of iPhones, it was very difficult for any other mobile or technology company to begin to offer any kind of competition to Apple.
However, that all changed when Google proposed the Open Handset Alliance in 2007 (Brockman, 2008). Although the first phones that Google and its partners introduced into the market did not fare as well as hoped, Google and its partners in the Open Handset Alliance pushed forward, helped by Google’s deep pockets, and began to control the entire supply chain insofar as handsets were concerned (Open Handset Alliance, 2013). There are many benefits to this alliance; the Open Handset Alliance (2013) writes, “Consumers will see cheaper and more innovative mobile devices and services, which will inevitably feature more engaging, easier-to-use interfaces — as well as a rich portfolio of applications.The overall cost of handsets will be lower and mobile operators will have complete flexibility to customize and differentiate their product lines they will see much more rapid innovation in handsets and in services” (Open Handset Alliance, 2013). Thus, the alliance between 84 different firms that would otherwise be in competition with each other have decided to stand together to take on the Goliath of the telecommunications and smartphone industry, Apple. Whether or not this alliance will be successful in the long run remains to be seen, but Google and its partners have been making significant improvements on handset and cellular technologies that would not have been possible without the alliance.
Today, the Android platform is the only real mobile platform that has ever come close to challenging the iOS platform in the smartphone market (Brockman, 2008). Android is similarly desirable for programmers, and because it is much less proprietary and much more open-source, it is easier for many programmers to work on the Android platform and app store than on the iOS platform and app store (Brockman, 2008). Rather than designing a multi-domestic business strategy-- that is, rather than designing a business strategy for every nation that they would operate in, Google and the Open Handset Alliance group designed a global business strategy that opened up many avenues for the group to explore.
Google’s development of the Android platform demonstrates a keen understanding of synergistic business practices. Although Google is heavily associated with Android, they have not taken over the branding of the platform; Android is also associated with a number of other key companies, both in the United States and outside of the United States (Brockman, 2008). For instance, one of the most popular phones that utilizes an Android platform is a Samsung phone, which is a Korean company. Despite the multitudes of different independent firms and organizations working on the Android project, the Open Handset Alliance maintains good organizational synergy and high levels of motivation and innovation within the participating companies and the alliance as a whole.
Best Management Practices
There are a number of management practices that are often associated with high levels of synergy in a global organization such as the Open Handset Alliance. The first is to find and implement effective leaders into the groups associated with the alliance. Assuming that all of the participating firms have working teams within their own companies that handle technological advancements, there also need to be teams in place that handle coordination and cooperation between the different member firms of the alliance.
Harris, Moran, and Moran (2004) suggest that one of the largest causes of a lack of synergy in an organization is associated with structural change, such as acquisition or alliance between firms. When employees no longer have a good sense of their place or purpose in an organization, the levels of synergy within the organization can easily begin to fail. Structural and environmental change can cause disruptions in the natural rhythms of a workplace, and it is up to management and other leaders within the organization to ensure that employees maintain their ability to work effectively on teams, regardless of the cultural makeup of the team in question.
Teambuilding is an important concern for any leader within the alliance, particularly if that leader is responsible for a number of employees from varied cultural, academic, and even professional backgrounds (Harris, Moran et al., 2004). Building a team environment in an environment such as the one that Google created with the Open Handset Alliance is particularly difficult, as Google’s primary goal was to create an entirely new mobile platform. There was a lot of complex interaction between different firms and individuals that had to be done to ensure that the new mobile platform was functional; interaction between different technological teams and managerial teams-- as well as effective communication between these teams-- was fundamentally important.
Having good team synergy is very dependent upon having a leader that is willing to take into account the different cultures of the people on his or her team. Cultural dominance is something that often seeps into leadership, but it is a trap that must be avoided by leaders; in addition, ignoring cultural issues or kowtowing too heavily to individuals who are having cultural issues are two problems that leaders also often face. Harris, Moran and Moran (2004) suggest that certain cultures are more prone to certain types of managerial mistakes than others; specifically, Harris, Moran and Moran (2004) suggest that Asian managers are more likely to ignore cultural issues or pretend that they do not exist, while Americans are prone to cultural dominance (Harris, Moran et al., 2004). This suggests that even the best leaders are not immune from the problems of cultural clashes, and that everyone, regardless of status within an organization, must be very aware of the potential problems regarding cross-cultural teamwork (Harris, Moran et al., 2004). Without taking special care to avoid pitfalls like ignoring cultural differences and allowing them to get out of control without offsetting the potential fallout, managers may fall into habits that they are culturally conditioned to.
Managers who work on the global scale will often run into problems where cultural issues are concerned. Google’s Open Handset Alliance presented unique problems to Google and the participating firms, but the problems were offset by the goals and the planning that went into the project. Managing a global alliance takes significant skill and attention to a variety of different factors, and creating a synergistic working environment is fundamental to the success of any global team. Synergy has become a buzzword in business in recent years, and many people may scoff at the use of the word to describe the goals of managing a global business alliance, but the theory of organizational synergy is fundamentally and theoretically very sound. Synergy is a term that merely refers to the way a team functions; creating structural supports to encourage cultural inclusivity and integration into the team is a way to make all team members as productive as they can be in any specific environment, which should be a primary goal for all individuals in managerial positions, regardless of the cultural makeup of the organization they belong to or are employed by.
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