Part Two: Culture and organizations
CHAPTER 9
CULTURE AND STRATEGY
• Concept 9.1: Cultural view of strategy
• Concept 9.2: Strategic alliances and business
cultures
Slide 9.1
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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)
Slide 9.2
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.3
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.4
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.5
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.6
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.7
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.8
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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):
Slide 9.9
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
Culture shock pyramid
Figure 9.1
Culture shock pyramid
Source: Marx (1999): 12
Slide 9.10
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.11
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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)
Slide 9.12
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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.’
Slide 9.13
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.14
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009
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
Slide 9.15
Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, © Pearson Education Limited 2009