Business Law Question

Project 5: Managing a Global Business
Step 6: Review the Norms and Nations Case
The task force is doing great. Your team has managed to successfully analyze two complex cases
arising from NBD operations and is now ready to move on to the third case file the CEO Yoon
provided you, the Norms and Nations case file. This case involves an internal dispute among
three of NBD’s executive board members—the VP of manufacturing, the VP of marketing, and
the VP of product design—arising from a series of mistakes made when distributing a product.
The CEO has asked the task force to write a report with its findings and recommendations for
how NBD should handle this situation. Specifically, the report needs to answer the following
questions:
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Was the Chinese supplier ethical in shipping more than 300,000 cases made of real
leather instead of the requested faux leather material, even though the supplier was not
charging NBD anything extra for the higher cost of real leather? Explain why or why not
using ethical theory and principles.
When the manufacturing VP contacted the Chinese supplier to complain, the supplier
could not understand why NBD was not pleased about receiving a real leather case, given
that NBD was still paying for the less expensive faux leather one. Is there a cultural
difference between customer expectations and business transactions in the West and in
Asia? Explain.
As an organization, what strategic errors did the task force observe in the decision
making by various individuals in this situation? By the design VP? By the manufacturing
VP? By the marketing VP?
What is the appropriate strategy going forward? Conduct a SWOT analysis and PESTEL
analysis to decipher what NBD should do in light of these strategic errors.
To answer these questions, you realize that you will need to gather information about the cultural
factors that are in play in this situation, by reading about managing in a global environment,
country cultural differences, and cross-cultural ethical business decision making. Although these
sources are a great introduction, you realize that you may need to do some additional research on
the internet and in the library to fully answer the CEO’s questions. The task force wants to back
up its responses with information about relevant differences in cultural expectations in China,
South Africa, and the United States and will conduct further research on cultural differences and
their impact on global business transactions.
In the next step, you will write your report on the Norms and Nations case.
Project 5: Managing a Global Business
Step 7: Prepare Your Norms and Nations
Report
Using your outline and research notes write a report for the CEO. Be sure to meet the following
requirements:
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Include APA-formatted in-text citations and an APA-formatted reference list (do not
format the body of the report using APA style, just the reference list). See references and
citations for details.
Include a specific recommendation on what action, if any, the CEO should take based on
your analysis and conclusions.
Support your conclusion with references to cultural norms, strategy, and the principles of
SWOT and PESTEL.
The report should be no more than five pages (double spaced, 12-point font; the reference
list does not count towards page limit).
Title your file using this protocol: teamName_NormsandNations_date.docx.
When you have finished, submit your report to the Assignments folder. You should try to have
this report complete by the end of Week 10.
In the next step, you will read about the fourth and final case the CEO needs the task force to
analyze.
Norms and Nations
Notice: Contains Confidential Information
Colossal Corporation maintains a subsidiary in Serafini, a small country in Eastern Europe. This
subsidiary is incorporated in the state of Delaware as New Brand Design, Inc. (NBD), a company
that designs, brands, and manufactures innovative electronic products and markets and
distributes them for resale across the globe. NBD has been admitted to conduct business in
Serafini.
NBD’s executive board is composed of ten members from three different countries, including a
vice president of design, a vice president of marketing, and a vice president of manufacturing.
Due to recent conflicts among the board members, communication among them has been less
than efficient, and they are regularly blaming each other for mistakes made by NBD.
The design vice president’s staff originally proposed two alternative materials for laptop cases
that are packaged and sold with certain high-end laptops manufactured by NBD, such as its bestselling product, the Dualplex 360: real leather (pig skin) and faux leather made from a synthetic
material (polyurethane). Both laptop cases were very similar in appearance, although the real
leather case was a little heavier than the faux leather case. Both cases could be sourced from an
established supplier in China, with whom the design VP had a long-term relationship. The
marketing VP evaluated the cost of the two cases from this Chinese supplier and decided that he
would go with the faux leather case because it was available at a 20 percent lower cost in
comparison to the real leather case.
An initial order of 500,000 faux leather cases was placed with the Chinese supplier, and within
about a month, the shipment of cases arrived at NBD’s South African facility, where the laptops
were assembled and packaged for sale all over the world. When the newly delivered cases were
inspected by NBD’s product team in South Africa, they discovered that more than two-thirds of
the cases were actually made of real leather. After NBD’s VP of manufacturing contacted the
Chinese supplier to complain about the cases being “out of spec,” he was told that it was not an
error—the supplier was aware of the fact that over 300,000 cases in the shipment were made out
of real leather. After some persistent questioning, the supplier revealed that as a result of an order
cancellation from another customer, they had suddenly found themselves overstocked with an
inventory of pig leather. Rather than let this extra inventory go to waste, the Chinese supplier
decided to use up that inventory toward fulfilling a major part of NBD’s order!
The Chinese supplier was not willing to apologize for their decision to ship over 300,000 real
leather cases to NBD without first obtaining approval for the switch. In fact, the supplier did not
feel that NBD had any grounds to complain because the supplier was willing to accept the lower
payment as per NBD’s original order of faux leather cases. Instead of insisting that the supplier
take back the 300,000 or so cases that were out of spec, the manufacturing VP accepted the
entire shipment and then conveyed this news to the marketing VP in an internal company memo.
Upon receiving the memo, the marketing VP realized it was too late for the real leather cases to
be returned to the supplier in China, and he would have to make the best of out of an undesirable
situation. He made a decision that the faux leather cases would be packaged for laptops shipped
to Europe and North America, given that they were lighter in weight. The real leather cases
would be used for laptops packaged and sold in Africa and Asia. Previous marketing surveys
conducted by NBD had revealed that consumers in the West preferred lighter laptop cases, while
consumers in Africa and Asia equated heavier cases with better quality and longer life. Of
course, the marketing VP forgot that the advertising materials and product inserts for the laptop
had already been printed in multiple languages and all of this product literature stated that the
laptop case was made of synthetic material.
The laptop cases were shipped to retail outlets, and within a couple of weeks, the marketing VP
had a potential crisis on his hands. Tech writers and product reviewers from two well-known
South African and Kenyan newspapers had called and emailed to inquire about what they rightly
suspected was a pig leather case and not the synthetic material that was specified in NBD’s
product literature. They informed the marketing VP that if they revealed the truth about the
origins of the case material in their reviews, it would have a tremendously negative impact on
NBD’s sales in Africa and Asia, where a significant number of consumers opposed the use of
pigskin in products on religious grounds. They wanted to know how the company was going to
resolve this issue before they went to press.
The marketing VP contacted the manufacturing and design VPs to find out what they should do
to get the company out of this potential crisis. After a lot of finger-pointing and talking past each
other, the three individuals arranged a conference call with Colossal’s CEO and brought the CEO
up to date. The CEO promised the three VPs that her international task force would research and
address the issue.
Managing in a Global Environment
Print
Managing in a global environment presents particularly difficult challenges as well as the
potential for significant rewards. A manager must be acutely aware of all possible cultural,
linguistic, legal, and ethical issues when managing a diversified workforce. There are many tools
available to the international manager for engaging stakeholders, strategizing, and learning about
how different cultures do business.
Country Cultural Differences
Print
In workplaces, as in communities and nations, people spending time together are likely to share
certain values, attitudes, and beliefs. Because of this established culture, people at work may
have developed certain preferences or orientations in the following situations:
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interacting and communicating with others
working in teams
making decisions
responding to and evaluating risks and opportunities
managing or attempting to resolve disagreements and conflicts
interacting with those at different levels in the organization
engaging in numerous other workplace activities
Those who have studied and compared societal cultures and their possible implications for the
workplace have identified some differences that can be important for success.
Perhaps the leading expert on cultural differences and their potential implications for business is
Geert Hofstede, a Dutch scholar who worked for IBM in the late 1960s. Hofstede’s early research
(1980) examined, compared, and categorized the culturally derived preferences of IBM
employees in many countries. He, and other scholars who have followed in his path, created a
classification scheme that differentiates country cultures across what were originally four
dimensions, though they have since been expanded to include six.
In what is probably his best-known book, Cultures and Organizations: Software of the Mind
(published first in 1991 and revised and republished in 2010 with his son Gert Jan and Michael
Minkov), Hofstede presents a careful explanation of his work and its implications. Hofstede
reminds his readers that “culture is learned, not innate” (p.6), and introduces the analogy of
culture as “software of the mind.”
Hofstede uses the layers of an onion to help convey the way culture manifests itself. Values are
deep at the core or center of the onion and are very slow to change compared with the other
manifestations of culture. Examples of common core values in US businesses include integrity,
accountability, fairness, and excellence. Other layers of culture include our rituals (e.g., greeting
with a firm handshake and direct eye contact), the heroes we honor (examples include Warren
Buffett and Steve Jobs), and on the outside of the onion, the symbols that have special meaning
for societal members.
Examples of U.S. Business Cultural Manifestations
Created by Christina Hannah
Using an analogy of culture as mental programming, Hofstede explains that we are each
conditioned (or programmed) by multiple societal levels: national, regional, ethnic, religious,
linguistic, gender-oriented, generational, socioeconomic, and professional. Values associated
with these levels may or may not be in harmony. One consequence of these multiple sources of
programming is that it can be difficult to predict what will influence a person’s response or
behavior in particular situations.
Our present interest is not in delving deeply into the causes and consequences of individual
differences in values, attitudes, and beliefs, but rather to learn about those shared at a societal
level. Hofstede explains that his extensive research, and that of others who have studied culture,
make it possible to differentiate between and among national cultures using a set of dimensions.
He originally proposed the first four dimensions in the list below, then added a fifth—long-term
orientation (Moskowitz, 2009)—and later added indulgence as a result of further research by and
insights from collaborators.
Here is a simple explanation of Hofstede’s current six dimensions:
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Power distance (PDI)—In countries with a high power distance dimension score, we can
expect those in lower level positions to respect or defer to those who outrank them. In
other words, power is thought to come with position. In such cultures, employees may
expect managers and leaders to make decisions and might be surprised or uncomfortable
when asked for input. In countries with a low power distance score, we are likely to find
that employees treat those they report to more as colleagues and hold the view that
respect must be earned. There may, of course, be exceptions to this model (for example in
military and paramilitary organizations). Not surprisingly, the United States’s score on
this dimension is relatively low at 40. The score for France is is 69. In comparison, the
scores for Malaysia, Slovakia, Guatemala, Panama, the Philippines, and Russia are all
above 93 (Hofstede, Hofstede, & Minkov, 2010, pp. 57-58). This means that, in general,
we can expect employees in the United States to expect a more egalitarian workplace
than may be true in other societies.
Individualism or collectivism (IDV)—In countries with high scores for individualism
(like the United States), you are likely to find a shared belief in developing strong
individuals who are comfortable working and making decisions on their own. In such
workplaces, you will probably find an emphasis on the importance of developing,
recognizing, and rewarding individual contributions. In countries that score low on the
individualism dimension, you are likely to find an emphasis on the community, team,
group, or department (i.e., the collective). People may be embarrassed if they are singled
out publicly for praise or recognition, because they strongly believe their success depends
upon the support and work of others. For this dimension, the US score is the highest, at
91. The score for France is 71. The country with the lowest score is Guatemala, with a
score of 6 (Hofstede, Hofstede, & Minkov, 2010, pp. 95-97).
Masculinity and femininity (MAS)—The label used for this dimension may not be the
best. The basic idea is that some country cultures place a relatively high value on
competitiveness, assertiveness, achievement, etc. Such countries are given a high score
for masculinity because these preferences and traits were historically associated with men
more than women. Other country cultures place greater value on caring for others,
cooperation, quality of life, etc. Such countries are given a high score for femininity on
this dimension. Despite the problems with these unfortunate gender-based labels, when
you step back and compare countries you will probably recognize that there are some
where businesses seem to value competition over cooperation, achievement and success
over quality of life, and so on. Japan has a masculinity (MAS) score of 95. The US score
is moderate at 62. The score for France is 43. Sweden has the lowest score for this
dimension, with a 5 (Hofstede, Hofstede, & Minkov, 20110, pp. 141-143).
Uncertainty avoidance (UAI)—This dimension recognizes that there are differences
among countries, which results in differences among the leaders of businesses that
operate therein and the extent to which they are willing to take risks. In countries that are
low in the uncertainty avoidance dimension, business leaders might be very comfortable
exploring new opportunities and see this as the likely path to success. In other countries,
this may not be the case. Sometimes those in country cultures that are highly risk averse
(with high uncertainty avoidance scores) have a very good reason for their responses.
There may be, for example, significant legal penalties for failure, including the possibility
of being sent to jail in the event of bankruptcy or reneging on debts. The country with the
highest score for uncertainty avoidance (UAI) is Greece at 112. France is relatively high,
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with a score of 86, and the US score is 46, indicating a tolerance for uncertainty and
acceptance of risk-taking to achieve success (Hofstede, Hofstede, & Minkov, 2010, pp.
192-194).
Long-term versus short-term orientation (LTO)—In countries with a high long-term
orientation score, shared work values emphasize learning, accountability, and selfdiscipline. Patience and waiting to make a profit are acceptable. Creating and nurturing
lifelong networks is valued. In contrast, those favoring a shorter-term orientation tend to
focus on “the bottom line” and value achievement, freedom, and independent thinking.
Quarterly and annual profitability are important. Korea, Japan, and China have high longterm orientation scores (100, 88, and 87, respectively). France has a moderate score of
63. In contrast, the US LTO score is low, at 26 (Hofstede, Hofstede, & Minkov, 2010, pp.
255-257).
Indulgence versus restraint (IVR)—In countries with high scores on indulgence, you
are likely to find people who value having fun and enjoying life. In the United States, for
example, it is common to find that employees emphasize the importance of a good worklife balance and quality of life. The IVR score for the United States is relatively high (68)
and for France is moderate (48). Pakistan has the lowest score (0) among the countries
studied. Territories with the highest indulgence scores are Venezuela (100), Mexico (97),
and Puerto Rico (90) (Hofstede, Hofstede, & Minkov, 2010, pp. 282 – 285).
A very important caveat when reading and thinking about Hofstede’s work is to remember that
the comparisons are at the societal level, rather than the individual level. In other words, in any
country you will find individuals who are different from what you see suggested as the norm for
the country culture. In fact, for any given dimension you may find yourself thinking “but this
isn’t what I’m like” or “this doesn’t explain what happens in my organization.” Those who have
studied and compared country cultures ask you to suspend these responses temporarily and to try
instead to look at a country as a whole, and then consider how it compares on these dimensions
with other countries. When you adjust your imaginary lens to consider cultural differences from
a broader perspective, you are able to discover things that may be helpful when explaining what
happens when companies do business abroad, when people work together on country teams, and
when they work together in multicultural, multinational organizations.
One challenge is that we are often less knowledgeable about our own shared country culture than
we are about the cultures of others (Hofstede, 1980). This is because our culturally derived
values and preferences are so deeply embedded that we may not be aware of how they influence
our decisions and behaviors. Those who have worked or studied in a country other than their
own are likely to have developed higher levels of cultural intelligence than those who have not
had this experience.
The United States has traditionally tended to place strong emphasis on equality, individualism,
risk-taking, assertiveness, achievement, and the opportunity to enjoy life (pursuit of happiness).
This brief introduction to the comparative work on country cultures and their potential
consequences for individuals and their organizations, along with the Resources below, should
help you understand the possible sources of confusion or conflict that could, if not anticipated
and well-managed, result when multinational and multicultural team members work together.
These issues may include training, coaching, mentoring, and effective leadership. Remember to
consider as well the possible advantages associated with building and using teams with members
who bring different country cultural perspectives to their work (Chakrabarti, Gupta-Mukherjee,
& Jayaraman, 2009).