3 Impressive Examples of Cross-Cultural Management
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Cross cultural management refers to managing businesses and work teams in a way that balances differences in culture, values and practices. With the rise of globalization and economic interdependence, it is more important than ever for leaders to have cross cultural management skills.
Here are three examples of multinational companies that have seen impressive results thanks to cross cultural management.
The Coca-Cola Company’s distribution strategy in African countries
An impressive example of successful expansion to new territories using cross-cultural management is the multinational conglomerate The Coca-Cola Company.
Of course, Coca-Cola is renowned worldwide and has extended its reach to nearly every country on Earth. This success was not guaranteed, but rather a result of creative and masterful international management.
When Coca-Cola entered the African market in 1929 it was apparent that much adaptation would be needed. Especially when it came to distribution, the same tactics and channels that worked in other markets would not work in African countries.
Two big challenges were apparent:
Retail landscapes made up mostly of micro businesses
Underdeveloped infrastructure (roads, urban areas, etc.)
One of Coca-Cola’s biggest franchise partners in Africa, Coca-Cola Beverages Africa headquartered in South Africa, has helped develop key distribution strategies in the region.
The Micro Distribution Centre (MDC) model was launched in Ethiopia in 1999, in order to get product to small mom-and-pop shops, street cart vendors and other micro businesses. Coca-Cola recruited entrepreneurs to run these distribution centers, who in turn employed dedicated salespeople responsible for servicing retailers within the area.
Distributors would use any means necessary to deliver the product to micro businesses. Small batches would be taken by hand, pushcart, and even canoe to their destinations. Salespeople were locals who had crucial know-how and were trusted by the community.
The MDC model has been very successful over the past 20 years and is currently used in 19 African and Asian countries. Coca-Cola’s willingness to adapt and incorporate new management practices that fit the needs of the local area has established it as a strong brand even in difficult markets.
Alibaba’s blended company culture
This e-commerce giant is one of the top 10 most valuable companies in the world. Alibaba was founded by Jack Ma in 2001 in Hangzhou, China.
The company’s six core values are rooted in Chinese culture and embody ideals that have been guiding themes throughout the country’s long history. The 6 values are as follows:
Customer first
Teamwork
Embrace change
Integrity
Passion
Commitment
Jack Ma and his team even dubbed these values their ‘Six Vein Spirit Sword,’ a term taken from a Chinese kung-fu novel with heavy influences from Buddhist philosophy.
Alibaba is a multinational company which operates globally and exports to more than 240 countries.
Despite strong Chinese cultural undertones, the company has achieved success due to its ability to adapt to other cultures. It then incorporates those outside influences into the company culture.
Andrew Teoh, a former company executive explains, “Alibaba is not like a Chinese company, it’s a blend of the good parts of East and West.”
Savio Kwan, formerly a General Electric executive, is credited with implementing a Western-style rewards system at Alibaba that was very foreign to Chinese workers at first.
Half of the employee annual review was to be determined by performance, while the other half depended on how well they embodied Alibaba’s six core values.
The blended management approach encouraged innovation in the company and allowed Alibaba to excel around the world.
Rakuten, Inc. adopts a global language policy
Originating in Japan, Rakuten, Inc. is an online retail and web services company which operates in 29 regions and countries.
Japanese businesses have a reputation for their distinct management style.
Certain practices, such as keiretsu or kanban, are highly effective and universally respected. However, there are some disadvantages to Japanese management styles. For example, strict levels of hierarchy create a lot of bureaucracy which can slow down processes.
Rakuten made headlines in 2010 when its CEO, Hiroshi Mikitani, departed from rigid Japanese norms and changed the company’s official language from Japanese to English. The decision prompted resistance from Japanese employees and criticism from other Japanese companies. But Mikitani was confident in the choice to mandate a global language of operation.
The reasoning behind adopting English as the official language was Rakuten’s long-term goal to drive expansion globally. In order to grow quickly, the company hoped to recruit top talent internationally, and needed to make internal communications between teams in different countries smoother.
Despite the complicated challenges that came from such a move, Rakuten has achieved good results with their multicultural approach. The company now has a more diverse workforce, with a ratio of half international executives to half Japanese executives.
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