Challenges Walmart Faces Expanding Their Territory To China Management Essay

Challenges Walmart Faces Expanding Their Territory To China Management EssayBusiness operations across national borders atomic number 18 becoming the trend in the current era. And this trend continuously grows because of orbiculateisation and transnational operation. In response to this sphericisation issue, transnational smokes like Wal-Mart tend operate in other countries to charter excellent advantage. According to Amponsah (2001) globalisation and the eagerness of a certain duty organisation to operate across borders involves two dimension i.e. change in economic operations of respective(a) countries, and change in the participants of global economic operations. Several muckle believe that the globalisation of economic formivities of every country would hasten the bid against p everyplacety (Macarov 2003, p. 103).But like other companies that atomic number 18 operating in local scale, Wal-Mart a multinational company also faces different opportunities and contends i n the unusual market. With this, this paper will be discussing the opportunities and altercates that Wal-Mart faces in venturing the Chinese territory.OpportunitiesA business venturing to a foreign market creates good opportunities. As for Wal-Mart venturing in China, a bran-new foreign market like China might provide opportunities for new growth. Aside from this, Wal-Mart uses global amplification to baseborner be of goods, accelerate speed to market, improve quality of products and of course to cut their overhead costs considering that China is a low cost country whereas the labour is cheap compared to other countries in the westward (Walmartstores, 2010). more or less MNCs are essaying subsidiaries in other nations to reduce costs, mainly by means of the use of cheap foreign labour in developing countries. Like other MNCs, Wal-Mart can hold down costs by shifting some or all of its production facilities abroad. Although Wal-Mart are not claiming that they using the oppor tunity of global working out to escape the protectionist policies of an importing country, it is remains the motives of most MNCs. Through direct foreign investment, a corporation like Wal-Mart can bypass tall tariffs that prevent its goods from being competitively priced. For example, when the European Common commercialise (the predecessor of the European uniting) placed tariffs on goods produced by extraneousrs, U.S. corporations responded by setting up European subsidiaries (Multinational fellowship 1998). Venturing in China is also a good opportunity for Wal-Mart to prevent competition. The most certain method of preventing actual or potential competition from foreign businesses is to acquire those businesses ((Multinational Corporation 1998).Despite of the opportunistic cause of global expansion, Wal-Mart holds that they create employment, create wealth, and improve technology in countries that are in dire take of such(prenominal) development. Critics, however, point t o their inordinate political influence, their exploitation of developing nations, and the loss of jobs that result in the corporations ingleside countries.ChallengesCulturesMaddox (1993) claims that going global require transformation of managerial skills learned at the home office to change the managers to function cross- paganly. Business firms must focus on selecting and training managers to become more than attuned to different kitchen-gardenings, peculiarly in the culture of their country of assignment. In the case of Wal-Mart, their Board of Directors should have identified delivery, politics, religion, value systems, and assemble of reference of the Chinese consumers regarding the products and services that they offer as the firsthand areas that posed distinct challenges in their expansion to China. Thus, the same aspects merit the attention of the leadinghip of Wal-Mart who will be assigned at the companys branch in China. The Chinese culture and lifestyle are dif ferent from those of the Wal-Marts home country i.e. USA and other western nations where the company operates. Thus, the success of operation in China relies on the ability of the leaders to facilitate business operations in the midst of cultural diversity among the employees and distinct cultural characteristics surrounding the company such as laws, sociable norms and business practices.In evaluating the culture of China as part of Wal-Marts business operation, Hofstedes dimensions culture was used. Actually, Geert Hofstede is a Dutch organisational anthropologist who divided culture into four dimensions at culture level- antecedent distance, individualism/collectivism, masculinity/femininity, and disbelief turning away (Dahl, 2004). It is important to be aware and comprehend these cultural dimensions for these have an influence on the natural and external workings of organizations that operate on an intercultural level.Power Distance. Power distance is described as the termin ation to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally (cited in Hofstede 1991, p. 28) more simply, it is concerned with how equal, or unequal, the people are in a specific society or nation. In China, they have high power distance i.e. 80 PDI, this means that there is significant heart and soul of inequalities in power and wealth within China. As a result, it is quite likely that that society employs a caste system and does not permit significant development for its people (Geert Hofstede cultural dimensions 2010).In the corporate-oriented context, firms with a high power distance employ a tall organizational structure because there is greater and higher rigidity in terms of hierarchy. Also, there is a large proportion of managerial employees to the boilersuit human resource population, high job ranking for white-collar work, large compensation differentials, and low requirements for entry- level positions (Earley, 1997, p. 147). individuality versus Collectivism. Individualism is how a society perceives achievement and personal relationships, whitethorn it be individually or collectively. Furthermore, correspond to Hofstede (1991), individualism is a set of values that concern the relationship of a person to his or her collectivity in the society (as cited in Earley, 1997, p. 144). In China, the individualism was low i.e. 20 IDV which indicates that China is a nation with low individualism and has a collective nature wherein close bonds exist among the people (Geert Hofstede cultural dimensions 2010). Moreover, collectivistic people also perceive themselves in relation a societal and cultural context. This is a great challenge for Wal-Mart considering that their mother country United States has high collectivism as can be observed with the nature of their families. People who reside in such locations live in nuclear families, as fend for to highly collective Asian individuals who normally live with members of their extended families.Masculinity versus Femininity. Masculinity versus femininity refers to the sexual practice differentiation, or more specifically, the extent of how a society applies the traditional perception of man as a model of success, control, and authority. In nations with high masculinity, men control a major part of the society and power structure, composition females are restrained because of such male supremacy (Geert Hofstede cultural dimensions 2010). In China, they have high masculinity i.e. 66 MAS. Actually this is important for Wal-marts operation since it relates to achievement, industrial strife, high growth, aggression, work stress, and conflict. To be more specific, firms that are more masculine are fast-paced, aggressive, and focus more on development and growth over harmony and stability (Earley, 1997, p. 164). On the other hand, a feminine-oriented company is more concerned on the companionable interaction and operations among human resources. Moreover, such firm has a considerate and nurturing nature, which means that there is more focus on interpersonal functioning and harmony over personal gain (Earley, 1997, p. 164). Hence, the employees welfare is the maiden concern, because this results to the companys ability to establish the capability of an individual to contribute to interpersonal welfare in the organization.Uncertainty Avoidance. As was defined by Hofstede, uncertainty avoidance is the extent to which the members of a culture feel threatened by uncertain or unknown situations (cited in Hofstede 1991, p. 113). As seen in the index, China has low uncertainty avoidance which indicates that the country was less rigid when it comes to change, could handle risks, and have less rules and regulations, since they could effectively endure diverse opinions (Geert Hofstede cultural dimensions 2010).For Wal-Mart, uncertainty may come from the internal and external environment. An orga nizations response to such ambiguities, through the use of rules, rituals, and technology, affects its physique of high or low uncertainty avoidance. This could be a great challenge for Wal-Mart since China custom easily embrace the change they would bring in the country.A Fifth Cultural Dimension. After extra studies which were mainly focused on Chinese managers and workers, Hofstede introduced a fifth cultural dimension, which is the long-term orientation. This focuses on how nations apply, or do not apply, long-term devotion to conventional, forward thinking principles (Geert Hofstede cultural dimensions 2010). Countries with high levels of long-term orientation recommend a strong work ethics and anticipate long-term rewards as a bit of todays hard work. Thus, long-term commitments are emphasized and traditions are respected (Geert Hofstede cultural dimensions 2010). This is a great challenge for Wal-Mart since they came from countries with low levels of long-term orientatio n that are capable to experience change because long-term customs and behaviours are lessened, and change is no longer hindered.PoliticalThe primary difference in the economies of West and China is the orientation. Most of the west countries economy is affluent while the Chinese economy adopts the economic style of Soviet Union wherein most of the economic activities are centrally planned by the government. In China, the local officials have colossal authority although the economy is open to foreign investment and trade. The regulations state that Chinese firms should have at least 51 percent ownership and control of joint ventures with foreign investors (Economy of China 2010). Ramsay (2003) reports that it generally takes two to terce months to register a business in China with the government putting limits on the companys business place setting (p. 8). The difference in the economic orientation of China and Wal-Marts home country USA poses certain challenges to the leaders of said company. These leaders are accustomed to a free market in the USA economy wherein investors, consumers and producers transact free business and determine the flow of economic activities. In China, they would encounter restrictions in the various operational activities of the company such as production and marketing of certain types of products because the Chinese government pursues the interests of Chinese business organizations. Secondly, Chinas transitional economy as cited by Alon Shenker (2003) since the mid-1970s has fostered a tremendous opportunity for international firms to establish operations in the country and made international joint venture as a primary mode of foreign direct investment. However, managing joint ventures sometimes leads to cultural conflicts between Chinese managers and foreign managers. Wal-Marts leaders are more Western and their approaches to management clash with the Chinese management approach. Chinese managers rely on interventions from the e xtended network outside the company to manage risks and threats rather than following the budgets and plans established in come on that are expected to guarantee success. The Chinese managers cull particularistic and pragmatic solutions to organizational problems by analyzing causes of problems and soliciting outside intervention in problem solving while Western managers like Wal-Marts managers have the tendency to act in reference to a belief in an underlying principle that provides a ready hyaloplasm into which current reality and present existence can be fitted. As an American, Wal-Marts managers believe that future passel can be integrated into the ready matrix which serves as an analytic model to guide ratiocination making processes (p. 147). Considering these differences, the Western leaders who will be assigned to China may encounter contrary management styles with their Chinese colleagues. Thirdly, USA and China differ in religious beliefs. USA follow Christianity, esp ecially Protestantism, and believe that good works are gifts of hardwork and Gods grace in the life of His believer and not by interventions of outside forces (Christianity-Protestantism 2010). Chinese are more fatalistic and believe that humans must follow their muckle by living in unity with the world of nature and pursuing social conformity (Religion in China 2001). Hence, Western employees would perform their duties based on their personal judgments and decisions while their Chinese counterparts would consistently act to abide by the rules and seek opinions of other employees as they are more inclined to seek conformity. These differences in idea of independence would make the leaders of Wal-Mart consider the outcomes and motivations of their manpower. Western employees would be motivated to perform nearly if they are given sufficient freedom at work while Chinese employees may take to work in teams and have access to constant supervision. Fourthly, the Western value systems relative to interpersonal relationships are in conflict with those of the Chinese. Western people as cited by Alon Shenker (2003) value personal relationships with colleagues and supervisors but organizational hierarchy does not dictate their relationships. They equally communicate and relate to all members of the organization. Chinese employees, on the contrary, prefer a system in which coordination is hierarchical wherein the key institutional values underscore loyalty and ledger entry to a leader whose right is to establish the goals of the group. Accordingly, the leaders of Wal-Mart who would be assigned to manage some operations of China have to practice special care in dealing with their Chinese subordinates and fellow supervisors. They may encounter Chinese colleagues who would constantly consult them before they perform their responsibilities. These leaders have to recognize that the Chinese culture places much reverence to leaders while Western people prefer to work one by one most of the times.ConclusionThe best way to measure success in international business is through constant observe by the mother company. Through monitoring, the head company can gauge ban failure or success, and cross-cultural competence of expatriates. Wal-Mart must be able to implement consistent monitoring measures in their operations and the performances of the employees and managers sent to China. Venture failure is oftentimes associated with lost opportunities, reduced productivity, and damaged relationships while expatriate success connotes the accomplishment of the opposite. Furthermore, cultural competence is measured if the manager assigned at a foreign location possesses a strong personal identity, has knowledge of and complies with the beliefs and values of the culture of the country where he is assigned, demonstrates sensitivity to the affective processes of the culture, communicates clearly in the language of the country of assignment, displays a degree of cu lturally-sanctioned behavior, nurtures active social relations with the people and authorities of the country, and negotiates the institutional structures of that culture. Basically, the leaders should be able to adapt quickly to the Chinese culture, comply with its requirements while performing their responsibilities, and gain appreciation of the unique processes of doing business in the country.