International business environments are rapidly changing and “the cause of yesterday’s success may be the cause of tomorrow’s failure”. Every country or region has a specific culture which is due to similarities in religion, language, beliefs and values. This could result in a “cultural challenge for international management” caused due to varying cultural features of different countries (Harris and Moran, 1996). Managing people from distinct cultures requires knowledge of their distinct value systems, traditions and the manner in which they perceive goals and strive to achieve them. These differences could lead to specific problems in a local or regional (host) companies in which strategic policies are drafted by the management of the parent company without considering the specific local or regional culture of the people.
Businesses need to function in accordance with these cultures in order to succeed which is the reason why it is becoming increasingly important for multinational companies to trade effectively by becoming “culturally sensitive and globally minded” (Kim, 1999). Research indicates that management techniques used in one nation by management teams could be the reason for success in a particular country but these techniques are “not portable” necessitating a desperate need for “cultural-specific training” in multinational companies (Kim, 1999). Therefore it is vital for multinational businesses to “think globally and act locally” by applying and implementing business tactics depending on the culture of the country or region in which the business is placed, rather than the culture of the parent company. Regional or cultural dimensions are extremely important in the success of multinational organizations and the ways in which national and regional factors impact HRM strategies in multinational companies.
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Culture can be explained as a specific way in which groups, tribes or a collection of people from nations or regions live and function according to particular behaviors and attitudes which have been passed on from generation to generation by social institutions including families, educational systems, governments and business entities. Culture includes several aspects which shape human behavior such as “conscious and unconscious values, ideas, attitudes and symbols” which make every culture distinct from the others (Kim, 1999). Cultures in similar geographical locations or regions have “unique cultural heritages” which shapes values and directly influences the manner in which business is conducted in particular regions (Kim, 1999). Researchers have studied that this regional or national variance in cultures and communities dramatically impacts several core business issues such as “goals of the firm, attitudes towards risk, dealings with employees, and the ability to curtail unprofitable operations” (Kim, 1999).
An arms dealer of Thailand had substantial financial resources and wanted to utilize these to settle four of his daughters in a global business. He decided to bring the American ‘Big boy’ franchise chain to his country and took the help of an Australian businessman to advise him. The business was a huge flop and had no customers following which the Australian investor took over the franchise from the daughters and conducted a research by interviewing numerous customers. In his survey he found several reasons why the Thais were not considering Big Boy. He found from the people tat the Big Boy statue “spooked customers” and people preferred cheaper Thai meals available at “one fifth the price of a greasy burger”. He soon realized that he was “trying to get a 3,500-year-old culture to eat 64-year-old food” and decided to give it one last attempt by making several strategic changes. The décor of the restaurant was changed to Thai, and the image of the statue was made softer. Additionally, cheaper Thai dishes were included in the menu in addition to European items to appease some workers at a nearby factory. American food was completely eliminated from the menu and today the business is extremely successful with four outlets in Thailand, without American food.