BUSM4699- Cross-cultural management Asm 2 PDF

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Table of Contents Executive Summary ....................................................................................................................... Introduction ......................................................................................................................................

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Table of Contents Executive Summary.......................................................................................................................2 Introduction....................................................................................................................................3 Issues in cross cultural management............................................................................................3 1.

2.

Cultural misunderstanding................................................................................................3 1.1.

Particularism and Universalism.....................................................................................3

1.2.

Language barrier............................................................................................................4

Change in management and adaptation...........................................................................4 2.1.

Uncertainty avoidance...................................................................................................4

2.2.

Individualism.................................................................................................................5

Case studies....................................................................................................................................5 1.

2.

Cultural misunderstanding................................................................................................5 1.1.

Particularism and Universalism.....................................................................................5

1.2.

Language barrier............................................................................................................6

Change in management and adaptation...........................................................................7 2.1.

Uncertainty avoidance...................................................................................................7

2.2.

Individualism.................................................................................................................9

Recommendations........................................................................................................................10 1.

Sense-making approach in local business...........................................................................10

2.

Change management adaptation process............................................................................11

Action plan...................................................................................................................................12 Conclusion....................................................................................................................................16

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References.....................................................................................................................................17

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Executive Summary The objective of this report is to analyze several issues related to cross-cultural management faced by L’Oréal Vietnam by outlining the problems, providing application and recommendations based on the theory as well as introducing a Gantt chart for action plans. The first dilemma of L’Oréal Vietnam comes from cultural misunderstanding due to national culture differences between Vietnam where high particularism is primarily focused, and France where high universalism is highly concentrated. The second issue is that L’Oréal Vietnam workers find it hard to adapt to new management practice that is the result of cultural differences between France and Vietnam. Since France has high uncertainty avoidance so structure and regulation are mandatory in work, which is contrary to the low uncertainty avoidance in Vietnam. To fit the setting of the project with L’Oréal Vietnam’s commitment, the company should investigate new understandings about cultural values through a sense-making approach. In terms of change management process, the role of leadership and cross-cultural adaptation process can encourage employees’ trust and cultural intelligence (CQ) including cognitive, motivational and behavioral competencies to be flexible with new organizational settings as well as avoid cultural shock. Overall, it is suggested that the company should localize the messages and campaigns that they received from the parent company as well as integrating Kotter’s eight-step model for implementing changes for maximizing employees’ involvement in decision making. The action plan, illustrated using the Gantt chart, promotes a new system of weekly training that provides employees with better understanding of new concepts under the scope of Vietnamese cultural context. The solution reduces the difficulties caused by language barriers for future projects by offering employees more opportunities to improve their English proficiency. In conclusion, the solutions provided had a high chance of success as it was widely used by other MNCs such as Starbucks, Oreo and Coca-Cola, who also emphasized localization as their focus on managing across cultures

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Introduction National culture diversity refers to the diversity in a country group of birth among members with a few or various differences of individual’s culture distinctions (Hambrick et al. 1998). The characteristic of multinational enterprises (MNE) is described as the cultural diversity within the working environment, which plays a dominant role in enhancing employee's devotion and engagement towards the firm (Sawyer & Thoroughgood 2015; Nicola & Thomas 2004). However, cultural diversity can become a source of intragroup conflicts which poses challenges within the organization such as cultural misunderstanding, language barriers, conflicts, and inefficiency of task performances (Balachandran, Wennberg & Uman 2017; Nguyen 2019). This paper aims to demonstrate the current issues that L’Oréal Vietnam is facing in a culture diversity workplace, along with theories and a case study for application. Hence, viable recommendations will critically be provided for L’Oréal Vietnam for further development.

L’Oréal was established in 1990 by Eugène Schueller - a chemist with entrepreneurial spirit who developed his first hair dyes and sold them to various hairdressers in Paris (L’Oréal n.d.). Through strategic brand acquisition and innovative global expansion, the company has achieved a strong reputation and built up into a multinational company. In 2007, L’Oréal Vietnam was established, along with 12 cosmetics well-known brands including Lancôme, Yves Saint Laurent, and Maybelline New York (L’Oréal n.d.). Owning diverse and complementary brands from drugstores to luxuries to cover various needs of customers, enabling L’Oréal Vietnam to have competitive advantages over their competitors in the market (L’Oréal n.d.).

Issues in cross cultural management 1. Cultural misunderstanding 1.1.

Particularism and Universalism

The two terms “universalism” and “particularism” are postulated in Trompenaars's model of national culture differences. The author postulated a cultural dimension of : (1) universalism as the bias of rules where the same principles are utilized in both common and special situations, and (2) particularism as the bias of relationship where the specificity of situation determines how principles should be applied in practice (Harzing & Ruysseveldt 2014; Caloria 2019). The 3

differences between the two cultures can possibly raise conflicts between employees and managers who come from different nations, which in turn directly affect employee's performances (Long & Fox 1995; Bohorquez & Andres 2017).

1.2.

Language barrier

One of these could cause communication issues is language barrier, to adapt into a multicultural workplace, where non-native speakers could interact with each other and simplify the communication between international teams, the ‘lingua franca’ was created for this purpose (Angouri 2013). Due to its presence and dominance in the global market, English was chosen as the ‘lingua franca’ due to its effectiveness of delivering messages and the popularity of English across the world. Hence, it is required for employees to speak English when applying to MNEs. Moreover non-native English speakers may struggle to comprehend advanced words or technical words in the business world, therefore misinterpreting the information could cause disruption with the workflow(Lai & Yang 2017).

2. Change in management and adaptation 2.1.

Uncertainty avoidance

According to Hofstede (2021) & Snitker (2010), uncertainty avoidance reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. French cultures have high uncertainty avoidance, their work should be planned and structured into a model, while Vietnamese with low uncertainty avoidance prefers the flexibility in the workplace and their project not placed in a mold like French. Therefore, different working cultures might have negative impacts such as uncomfortable feelings for Vietnamese workers due to strict regulations that decrease their innovation process. As a result, employees will less present their ideas to the upper management (Stower 2013). Therefore, it will demotivate their contribution to business performance.

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2.2.

Individualism

Individualism and collectivism describe that whereas at the individual or personality level it measures whether people prefer to work in groups or work individually (Bhawuk et al. 2004). Through academic research, individualism has been a part of European culture since the early modern time (Berry et al. 1997). While in East Asian cultures like Vietnam, they prioritize the value of collectivism following the path of Confucianism, where it prioritizes group interest over individuals desire (Kim 1997). Difference in cultures leads to a conflict where one culture is dominated by another one, in this case high individualism could cause overwhelming stress for employees caused by high levels of competition, making employees hard to adapt with new changes.

Case studies 1. Cultural misunderstanding 1.1.

Particularism and Universalism

The first dilemma is cultural misunderstanding between L’Oréal Vietnam and its headquarter – L’Oréal Paris. This issue arises from a culture dimension postulated in Trompenaars's model of national culture differences of the two terms “universalism” and “particularism” (Harzing & Ruysseveldt 2014).

In Vietnam, engagements between employees and managers are highly focused which attributes to enhance devotion in the working environment (Xoan & Earl 2020; Rich, Lepine & Crawford 2010). At L’Oréal Vietnam, employees and managers work under strengthened relationships which create the flexibility over discipline for minor mistakes that can considerably be tolerance. The acceptance towards employee's blunders implies that individual circumstances can be more important than certain rules within the organization (Long & Fox 1995; Lindberg, Ojakangas & Prozorov 2016). This notion has illustrated the presence of high particularism in the Vietnamese context, which is against the norms and values of L’Oréal Paris where high universalism is highly concentrated.

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In fact, the working environment in France is more formal where appointments are frequently made for all business matters and people do not mix private and public spheres in workplace context (Touron 2011). Thereby, the culture is perceived as task orientation rather than social orientation (Touron 2011). Those contradictory patterns compared to Vietnam, have created reluctance to bypass mistakes occurring in the workplace. Thereby, different levels of forgiveness from top managers towards employees can create unfairness, which possibly trigger conflicts, bullying, discrimination, or psychological distress that detrimentally affects task performances (Nguyen, Teo & Dinh 2020; Tuckey et al. 2009). Consequently, contracting culture poses challenges for L’Oréal Vietnam to transfer ideas from a global project to a domestic project, as practices are applied differently between cultures of universalism and particularism.

1.2.

Language barrier

Language barrier occurs both in the organization itself and cross-culture business, which poses complex obstacles for the organization (Henderson 2005).

Within the organization, the employees seek information and instruction from the top managers to provide clarification of work tasks (Madera, Dawson & Neal 2014). Previous studies from Mount & Back (1999) demonstrated that the manager believed their messages should be clearly and accurately conveyed by subordinates for proper process of task performance. However, at L’Oréal Vietnam where members experience linguistic diversity, communication becomes more challenging as the manager concerns that the employees do not understand their messages or highly rely on other employees' translations.

Multilingualism, which means the co-existence of more than one language in the organization, can lead to misconceive messages, since interaction is primarily orientated towards the members of one group, thereby little information is exchanged across linguistic boundaries (Tange & Lauring 2009). Furthermore, language barrier also creates ambiguity involving uncertain workrelated expectations which leads to subordinates' failure of task's responsibility (Eatough et al. 2011). 6

Regarding cross-cultural business, language barrier causes delay for the working process when the headquarter – L’Oréal Paris assigns a global project to L’Oréal Vietnam. The translating process of transferring ideas to be appropriate in the Vietnamese context may require a rigorous and systematic multistep method (Kiing, Rajgor & Toh 2016). Hence, it is frustrating to ensure the translation is equivalent, consistent and meaningful in Vietnamese language, as inaccurate translation can cause conflicts among the organization and crisis for the brand.

Dolce & Gabbana, an Italian luxury fashion brand, confronted its crisis in China when they created a controversial promotional video of a woman using chopsticks to eat pizza and pasta (Tyler 2020). The content involves a male voice asking for “sensitive" sentences, or the way the brand intentionally chose the model with “narrowed eyes” that represent the hallmark of racial stereotypes towards the Chinese (Ban & Lovari 2021). The criticism later led to a boycott from the Chinese and threatened D&G’s bottom-line as Alibaba and Jingdong excluded D&G from their online platform, attributing to the loss of 98% of market share (Shih 2018; Stevenson 2020). As cultural misunderstanding is unacceptable for the Chinese to bypass the brand's mistake (Ban & Lovari 2021). Hence, the use of “sensitive" words arising from language barriers that cannot capture the equivalence and consistency of original Italian words, leading to cultural misunderstanding between the two cultures.

2. Change in management and adaptation 2.1.

Uncertainty avoidance

The issue is that Vietnamese workers find applied management practice of L’Oréal corporation is unfeasible to adapt in local operation. Because it shows that each company has a particular organizational culture which could be difficult for someone with a completely different background to assimilate (Trindade 2015). As a result, lack of consensus is posed to the new management practice, which is the result of cultural differences proven in Hofstede dimension (Schein & Scheiner 2006). The presence of issue illustrates L’Oréal Vietnam and L’Oréal in French headquarters have different values of uncertainty avoidance and individualism(Figure 1) 7

L’Oréal Vietnam employees have a culture of low uncertainty avoidance that encounters a receptive attitude of adventurousness, synthetic thinking and openness (Nguyen & Aoyama 2013). These workers tend to enjoy flexible working styles and emphasis on the importance of experience and practices through ambiguity (Phan n.d). As unforeseen events will be perceived as opportunities for low uncertainty workers to self-improvement (Guss et al. 2012). Together with the flexible preference and comfortable feeling in an ambiguous environment, people are highly creative in the workplace.

In France, a high uncertainty avoidance society, people prefer consistency and avoid approaching uncertainty situations because they feel more stressful to handle with ambiguity that could affect their job performance and security (Stower 2013). In the workplace, managers reduce risks and maintain stability by working based on structures and strict regulations. Meanwhile, L’Oréal Vietnam employees have to follow the orders and less likely present alternative plans to the supervisors since there is a fear of breaking their expectations. Consequently, staff with limited self-decision rights might decrease management innovation, corporate creative system and adaptive ability (Shane 1995). Therefore, if L’Oréal wants to fully utilize the talents brought by new workers, its management should be adjusted to the structure of the local firm (Trindade 2015).

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Figure 1: Country Comparison between France and Vietnam (Hofstede Insight n.d)

2.2.

Individualism

L’Oréal Vietnam operation suffers conflict management which can be explained as Vietnamese workers embrace collectivism culture, while L’Oréal headquarter in Paris ties to the self-concept of individualism. Thus, the cultural values create substantial influence on particular leadership styles and working structure, which in turn impact subordinates' reaction to work differently (Yang et al. 2012).

For collectivism, L’Oréal Vietnam prioritizes the interdependence and harmony among group members where the corporation puts efforts on promoting employee’s corporation in achieving organization-wide objectives. They believe that collaboration and group support can avoid conflicts to maintain a comfortable workplace and enhance the tendency of self-improvement (Nguyen & Nguyen 2012; Goncalo & Staw 2006). Moreover, collectivism culture reflects the supportive leader behavior where employees receive and respond with such as extra role behavior, honesty and loyalty (Kececi 2017). Overall, collectivism transfers supportive management which in turn allows subordinates to promote the group's interest and organization’s performance (Graham 1989). However, in France, people tend to have high individualism which prioritizes the fulfillment of individual desire over teamwork. The empowerment of doing work individually allows intensive innovation within the organization because innovation is the outcome of a free flow of ideas generated by dissent rather than society consensus (Gacolo & Staw 2006). Meanwhile, L’Oréal Vietnam workers will suffer from frustration because lacking a group support causes them to lose direction and be isolated from organization (Manetje 2009). Moreover, high individualism is examined to have impacts on conflict management, as disengaged collaboration and overwhelming competition (Purohit & Simmers 2006).

The same situation happened to Dolce & Gabbana Group launching a misleading advertising campaign in China. The failure of advertising is the result of businesses making personal 9

decisions of using third person perception to analyze the market (Tyler 2020). Thus, cultural misunderstanding is obvious from the brand’s lack of collaboration with local employees for marketing content feedback (Gogan et al. 2014). As a result, personal decisions are characterized by the individualist culture of Dolce & Gabbana, which is not integrated w...