Cultural problems encountered by multinational companies

Written by frank luger Google
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Cultural problems encountered by multinational companies
Multinational companies build business opportunities across cultural divides. (Photodisc/Photodisc/Getty Images)

By definition, a multinational company is already a successful enterprise. However, different national working practices, ethical issues and language barriers can all have an impact on a multinational company’s progress. The more successful multinational companies are aware of the potential problems and work to overcome them before they get in the way of their future development.

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Working practices

According to Professor of Psychology Colin Patric Silverthorne, when an American parent company took over the running of a British car factory, it sparked a long strike. Trying to apply US working practices in a British workplace, which Silverthorne calls “absolute ignorance of or blindness to cultural behaviours,” proved very costly and the Americans were forced to rethink their overbearing strategy. Tea breaks were reinstated and American brusqueness, which some people see as bad manners, had to be reigned in and moderated with politeness and respectful working relations.

Ethical issues

The University of Michigan’s Charles W. Lamb et al., describe how multinational companies sometimes have to face ethical dilemmas. Whether or not to fall in with local custom and give an official a backhander is often a difficult choice. Bribery, grease payments and kickbacks are all too common in some parts of the world, according to Lamb. Under UK law, The Bribery Act 2010 makes such things illegal but it might be naïve to imagine they do not still happen.

Language barriers

Languages have a rich range of options for expressing subtle differences of meaning. Two native speakers of the same language can therefore communicate intricately and precisely. Two people with only a little understanding of each other’s native languages often struggle to convey the finer points of their argument. This can be detrimental to relationship building between companies of two different nationalities and this can mean business plans never get off the ground.

Homesick managers

Business psychologists John Walter Jones et al. refer to the phenomenon of derailment. This is where upper-level managers, sent abroad to lead foreign expansion initiatives, fail to make an impact and instead administer a period of decline. Although dynamic and focused in their home country, they seem unable to thrive in a foreign culture, and end up costing the company dearly because of business blunders. Lack of motivation and homesickness are thought to be two of the causes.

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