Businesses have gone increasingly global today constituting a diverse workforce due to which cross-cultural management has become increasingly important for organizations today. Globalization is important for companies in order to attain competitive advantage and cross cultural management is important for staying competitive in global business. Cross-cultural management ensures that different cultures can coexist together with their own unique cultural identity. It makes businesses learn to live with other cultures while doing business internationally around the world. Diverse cultures are able to mesh together due to cross cultural management techniques employed by the companies around the world. It is the international practice that companies should accept the culture and environment of the region where they operate for successful integration of their business.
Culture differences come into place when companies do not adjust with the cultural values, habits and communication processes of a particular region. Culture varies from place to place along different dimensions. For example, some cultures are individualistic while others are collectivist; some are masculine while others are feminine. Differences also come in the orientation style and the power distance that exists in organization in different regions. When businesses are not able to integrate themselves with the culture of the country, the workers face trouble and the company bears losses in terms of competitive advantage (Levitt, 1983). The research paper is an attempt to provide an integrated study of cross-cultural management at Nissan Corporation. The paper will start by presenting a literature review on cross-cultural management in diverse cultures and then the research methodology will be explained. Finally, the research done on the cross-cultural management at Nissan Corporation will be presented and the paper will end with a conclusion.
In the 21st century, there has continuously been a trend in business to go overseas and establish business internationally for which cross cultural management is an important concept to be studied. This has given a boost to competition among different countries and attaining competitive advantages is important to exist in the global market. In order to do so, a company should be able and competent enough to interact in the global market through effective cross cultural management in organizations (Soderberg, Marie & Holden, 2002). Cross Cultural management basically refers to the management of diverse cultures, attitudes, habits, values in order to achieve success and competitive advantage in business. In more sophisticated words, it means transcending cultural differences in a global marketplace (Thomas, 2008). There are activities which are common in all businesses but the meanings and interpretations of these activities become different due to different cultural values.
For example, recruitment for USA is selection while for India it is rejection. Cross cultural management takes place when people or business executives from different cultures meet, interact and understand each other’s perspective for carrying out business together (Thomas, 2008). Cross cultural management is a sort of management style implemented at organizations so that the business should learn to work with people from diverse culture, understand their perspective and priorities and tolerate the differences as far as possible. Most importantly businesses should realize the differences that exist in the behavioral communication styles for proper negotiation (Muller, 2004). A research done by Evans and Doz stated that attaining successful competitive advantage internationally does not lies in designing the strategy, structure, technologies or products accordingly but in understanding the complex demands of global business and possessing the capability to cope with these demands and cultural differences (Tung, 2008).
The research on the cross cultural management at Nissan Corporate was done with the help of online resources and books. Information relating to the cross cultural management techniques employed at Nissan Corporation was found in several online articles, news clippings and cases found in the books. All the information has been linked to provide an integrated study of Cross Cultural management at Nissan Corporation. Since Nissan operates globally, it was not possible to arrange for interviews with their management but the interviews found in the newspaper articles given by the higher management have been taken into consideration to present this integrated study. Moreover, the case studies found in the books provide sufficient information on cross-cultural techniques employed by Nissan Corporation globally.
CROSS-CULTURAL MANAGEMENT AT NISSAN CORPORATION
Nissan Motor Company headquartered in Tokyo, Japan is a famous name in the automotive industry. It is a company that operates globally in various parts of the world and has regional offices in North America, Switzerland, France, UK, Spain, UAE, Iran, South Africa, Kenya, Egypt and various countries of Asia. Diversity is among the core values recognized by the organization and people working at the corporation come from diverse backgrounds, lifestyles, nationality, culture, geography, education and preferences. The company believes that diversity is a value which gives strength and competitiveness to the organization since the diverse employees offer more ideas and creativity for the success of the organization. The company puts diversity to its advantage since it allows them to cater to the diverse needs and desires of the customers through which the company attains better growth. Diversity is respected by the management and employees of the organization so that they all strive to achieve competitive advantage (Company website, 2008).
The person responsible for bringing his cross-cultural approach to Nissan is Carlos Ghosn since he himself had a cross-cultural background. He believed that when there are cross-functional teams in an organization there is emphasis on new ways of thinking and challenge existing practices. The cross cultural integration of Nissan was shown by their deal with Renault in 1999 to form an alliance for exploring possible synergies. The technique used by Ghosn for efficient cross cultural management was the formation of cross functional teams within Nissan. The teams along with their leaders and pilot were responsible for identifying the problems and making recommendations. This was done so that the employees get accustomed to deal with the other company having a different culture and background. For the alliance to work, there were several internal and external changes introduced by the Carlos Ghosn so that the culture and structure of the organization can integrate with that of Renault.
Internally, the culture of Nissan Motor Company was attacked and changed so that it constituted basic elements of Japan’s national culture. There were certain policies and traditions followed by the company which hindered the progress of Nissan Corporation. Such policies and traditions were replaced with modern values so that the company could progress to great heights globally. Painful steps were taken which even involved the closure of one plant so that the corporate culture at Nissan Motor Company could be one integrating cross cultural management. Moreover, the structure of the organization was also changed from one placing emphasis on decision making to the one emphasizing innovating thinking. Another change was seen in more authority being given to the middle management so that decisions could be taken immediately without wasting much time in obtaining permission from the higher authorities. New management techniques were put into place so that the partners did not lose face. Moreover, for Nissan to attain competitive advantage globally and make a successful alliance with Renault, the working language of the company was changed from Japanese to English since communication problems can be solved through this language. This made easier for the Japanese and French executives to interact and communicate in the most efficient manner discussing the issues and devising workable solutions for them (OECD staff, 2005).
At the external side, the company reduced its procurement and supply of goods and parts from keiretsu companies. There was a competitive bidding process adopted through which one-third of the company’s supply started coming through outsourcing. Through global establishment, it was also able to obtain price discounts when purchased in large volumes. With the Nissan-Renault alliance, the purchasing, production, and distribution costs reduced since they all were shared now. With effective cross-cultural management of the Nissan-Renault Alliance, the company was able to revive successfully from a financial failure and the profits were raised considerably. Changing the cultural norms was the most strategic change which allowed the company to address its problems effectively. If proper cross-cultural management techniques had not been employed, the Japanese-French alliance would not have worked in the desired manner due to conflicting cultural and regional differences (OECD staff, 2005).
Carlos Ghosn being the President and CEO of Nissan Corporation was awarded the second annual award for Transcultural Leadership because he headed the Nissan-Renault Alliance of bringing Japan and France to work together on a single platform. He was a person who realized the importance of business working across borders and created an organizational climate capable of operating in diverse cultures. He was awarded since he believed that recognizing cultural diversity is important for the future success, profitability and competitive advantage of the organization. Cross-cultural management at Nissan Motor Company was merely as a result of the principles and beliefs of the President and CEO of the organization, Carlos Ghosn which were promoted throughout the company among each every employee developing respect and empathy for diversity (INSEAD, 2008). The employees at Nissan come from diverse cultural backgrounds which the company believes is important for an innovative and creative work environment. For working cross culturally, Nissan developed an understanding of every country and culture in which they operated worldwide so that the employees are aware of the strengths and weaknesses.
The company embraced the dynamics of cross cultural management since it was important for the long-term success of Nissan Corporation. The CEO worked for the development of an organizational culture which respects regional differences and serves as an opportunity for growth in the emerging markets of the world. Though Nissan and Renault operate together as an alliance but the two companies have their unique corporate culture and brand identity. Infact, the Nissan-Renault Alliance has been termed as a successful experiment in cross-cultural management. The alliance has a worked as a result of Nissan’s strategy to work with people from diverse cultures and respecting corporate and cultural differences of each company. The company believes that it was diversity which revived Nissan from a failure after establishing an alliance with Renault (Magee, 2003).
There are also certain events and programs initiated by the Nissan Motor Company which promote cultural diversity and allow for cross-cultural management. This is important since Nissan’s products are sold among huge customer bases which come from different cultures and understanding their different needs and wants is required for the success of the organization. A training session is held in cultural diversity so that there is smooth cross cultural communication across the organization’s employees. These training sessions are especially held for the Renault employees so that they learn to negotiate and collaborate with their Japanese colleagues in a better way. Moreover, there are also events organized in which employees from different cultures represent themselves to foster better understanding amongst themselves. For example, there is an event organized every year on cultural diversity in Canada where they organize a Multicultural week in order to increase awareness about various cultures and respect them. In this event, the employees bring various clothing, artifacts, and other items with which to represent their culture so that they can celebrate the cultural diversity existing within Nissan Canada, Inc. There is also a ‘Diversity Site’ initiated by the Nissan Corporation where information is available on Japanese and French cultural habits, norms and business practices to enhance communication and collaboration (Company website, 2008).
The cross-cultural management at Nissan Corporation has made it possible to reach new heights after its failure during the 1990s. The management style employed at the company ensured that the company can exist in different countries between different cultural values and business practices.
Globalization has become an integral part of every business and businesses today have to take several initiatives to exist successfully and competitively in a global environment. Cross-cultural management the basic requirement for global businesses today without which they would not be able to achieve competitive advantage and sustainability. Efficient cross-cultural management practices should be implemented by the management of the organization in order for them to work among diverse cultures. Employing people from culturally diverse backgrounds too requires proper management so that they can address the needs and issues of a wide customer base. Such employees should be trained in cultural diversity so that through them cross-cultural management can be implemented in organizations.
Company website (2008). Making the most of cultural diversity. Retrieved October 15, 2008, from Nissan Corporation Web site: http://www.nissan-global.com/EN/COMPANY/DIVERSITY/CULTURE/index.html
INSEAD Honours Carlos Ghosn with Second Annual Transcultural Leadership Award. (2008, Apr 28). INSEAD.
Levitt, T (1983).The Globalization of Markets. Harvard Business Review. 61(3), 91-102.
Magee, D (2003). Turnaround: How Carlos Ghosn Rescued Nissan. Collins Business.
Muller, N (2004). Cross Cultural Management in the 21st century and how it effects Negotiations with an example of HP. Retrieved October 15, 2008, from GRIN Web site: http://www.grin.com/e-book/28506/cross-cultural-management-in-the-21st-century-and-how-it-effects-negotiations
OECD staff, (2005). Trade and Structural Adjustment: Embracing Globalization. OECD Publishing.
Soderberg, Marie & Holden, N (2002). Rethinking Cross Cultural Management in a Globalizing Business World. International Journal of Cross Cultural Management. 2, 103-121.
Thomas, D.C (2008). Cross-Cultural Management: Essential Concepts. Sage Publications, Inc.
Tung, R.L (2008).The cross-cultural research imperative: The need to balance cross-national vis-à-vis intra-national diversity. Journal of International Business Studies. 39(1), 41-46.