Danone’s Wrangle with Wahaha
This week’s discussion will focus on cultural decision-making using the case study about Danone in China (p. 255 in the textbook).
This case focuses on the cultural differences and management styles of the French company Danone Group in its joint venture with its Chinese company partner, Wahaha Group. In this situation, Wahaha established other companies outside the joint venture that Danone Group claimed infringed on Danone’s interests. These infringements were alleged to be in violation of a non-compete clause and unauthorized use of the “Wahaha”’ trademark owned by the joint venture. Danone sued Wahaha and the lawsuit eventually resulted in Danone Group accepting a cash settlement from Wahaha Group to the “Wahaha” trademark.
After reflecting on this situation involving cultural differences, as a leader, how might an international company enter into a joint venture in Saudi Arabia with a domestic company and demonstrate the commitment to working together well, respecting the Saudi Arabian culture and management style to resolve such a conflict?
What types of decisions would you need to make? Would there be bias in the decision-making process? Can you give an example?
Embed course material concepts, principles, and theories, which require supporting citations along with two scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
Be sure to support your statements with logic and argument, citing all sources referenced. Post your initial response early and check back often to continue the discussion. Be sure to respond to your peers’ posts as well.
You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post’s answer. Normal course dialogue does not fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.
Required:
Chapters 4 & 5 in International Management: Culture, Strategy, and Behavior
Chapter 5 PowerPoint slides
in International Management: Culture, Strategy, and Behavior
“Brief Integrative Case 2.2: Danone’s Wrangle with Wahaha” (p. 250) in International Management: Culture, Strategy, and Behavior
Hinson, J., Whitney, P., Wilson, C., & Nusbaum, A. (2019).
Working memory loads differentially influence frame-induced bias and normative choice in risky decision making.
PloS one, 14(3), e0214571.
Borrero, S., Acosta, A., and Medina, A. (2020).
Culture, strategy, and firm performance: a meta-analysis
. Academia Revista Latinoamericana de Administración, 33(1),147-176.
Caputo, A., Ayoko, O., Amoo, N., & Menke, C. (2019).
The relationship between cultural values, cultural intelligence and negotiation styles
. Journal of Business Research, 99, 23-36.
Cover Slide
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Chapter 5
Managing across Cultures
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Learning Objectives
Examine the strategic dispositions that characterize responses to different cultures
Discuss cross-cultural differences and similarities
Review cultural differences in select countries and regions, and note some of the important strategic guidelines for doing business in each
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3
Strategic Predispositions
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Ethnocentric
Firm allows values and interests of the parent company to guide strategic decisions
Polycentric
Company makes strategic decisions tailored to suit the cultures of the countries where the MNC operates
Regiocentric
Firm blends its own interests with those of its subsidiaries on a regional basis
Geocentric
Company integrates a global systems approach to decision making
Table 5.1 – Orientation of an MNC under Different Profiles
Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.
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Table 5.1 – Orientation of an MNC under Different Profiles (continued 1)
Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.
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Table 5.1 – Orientation of an MNC under Different Profiles (continued 2)
Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.
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Globalization Imperative
Belief that one worldwide approach to doing business is key to efficiency and effectiveness
Effective multinational companies (MNCs) should make efforts to address local needs
Regional strategies can be used effectively to capture and maintain worldwide market niches
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Need for Unique Strategies for Different Cultures
Diversity of worldwide industry standards
Continual demand by local customers for differentiated and locally-sourced products
Difficulty of managing global organizations
Local units should be allowed to use their own abilities and talents unconstrained by headquarters
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Delivery of Marketing Message
Nationality Nature of advertising
Germans Factual and rational
Spots feature a standard family of two parents, two children, and grandmother
French Avoidance of reasoning or logic
Emotional, dramatic, and symbolic
Spots are viewed as cultural events and reviewed as if they were literature or films
British Laughter is valued
Typical broad, self-deprecating commercial mocks both the advertiser and consumer
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Challenges Faced by MNCs
Staying abreast of local market conditions and not assuming that all markets are same
Knowing the strengths and weaknesses of its subsidiaries and assisting them in addressing local demands
Giving more autonomy to the subsidiary
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Barriers to Cross-Cultural Management
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Parochialism
Tendency to view the world through one’s own eyes and perspectives
Simplification
Process of exhibiting the same orientation toward different cultural groups
Table 5.2 – Six Basic Cultural Variations
Note: *Indicates the dominant U.S. orientation.
Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.
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Table 5.2 – Six Basic Cultural Variations (continued)
Note: *Indicates the dominant U.S. orientation.
Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.
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Cross-Cultural Similarities
Russia and U.S.
Traditional management, communication, human resources, and networking activities
Organizational behavior modification interventions
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Cross-Cultural Similarities (continued)
Korea and U.S.
Organizational commitment relates to employees’ position in the hierarchy, tenure in their current position, and age
Commitment increases with positive perceptions of organizational climate
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Cross-Cultural Differences
Examples Human resource management differences
Mexico Concept of an hourly wage plays a minor role
Austria and Brazil Employees with one year of service are automatically given 30 days of paid vacation
Some jurisdictions in Canada Legislated pay equity between male- and female-intensive jobs
Japan Compensation levels are determined by age, length of service, and educational background
United Kingdom Employees are allowed up to 40 weeks of maternity leave, and employers must provide a government-mandated amount of pay for 18 of those weeks
Majority of large Swedish companies Head of human resources is on the board of directors
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Approaches for Formulating Effective Compensation Strategies in Different Clusters
Examples Strategies
Pacific Rim countries Incentive plans should be group-based
Japan, Hong Kong, Malaysia, the Philippines, and Singapore High salaries should be paid to senior-level managers
Italy and Belgium Higher salaries should be paid to local senior-level managers
Portugal and Greece Profit-sharing plans are effective
Denmark, the Netherlands, and Germany Personal-incentive plans are useful
Great Britain, Ireland, and the United States Compensation plans should provide opportunity for earnings, recognition, advancement, and challenge
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GLOBE Project
Provides an extensive breakdown of:
How managers behave
How different cultures can affect the perspectives of managers
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Business in China
Primary criterion – Technical competence
Value is placed on punctuality, patience, guanxi networking, and reciprocity
Guanxi: Good connections
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Business in Russia
Building personal relationships with partners is important
Working with local consultants can be valuable
Gift-giving is considered ethical when engaging in business transactions
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Business in India
India has become a desirable market because of unsaturated consumer markets with cheap labor and production locations
Bureaucratic restrictions have been lifted to attract foreign investment and raise economic growth rate
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Business in France
Social interactions are affected by class stereotypes
French organizations tend to be highly centralized and have rigid structures
Management is autocratic in nature
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Business in Brazil
Brazilian businesspeople tend to have a relaxed work ethic
Face-to-face interaction is preferred
Patience is key when managing business
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Business in Arab Countries
Arab businesspeople:
Follow a fatalistic approach to time
Tend to attach a great deal of importance to status and rank
Business-related discussions may not occur until the third or fourth meeting
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Review and Discuss
Define the four basic predispositions MNCs have toward their international operations
If a locally based manufacturing firm with sales of $350 million decided to enter the EU market by setting up operations in France, which orientation would be the most effective: ethnocentric, polycentric, regiocentric, or geocentric? Why?
Explain your choice
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Review and Discuss (continued 1)
In what ways are parochialism and simplification barriers to effective cross-cultural management?
Give an example for each case
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Review and Discuss (continued 2)
Many MNCs would like to do business overseas in the same way that they do business domestically
Do research findings show that any approaches that work well in the U.S. also work well in other cultures?
If so, identify and describe two
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