Maximising competitiveness for international companies

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Evaluate the value of Hofstede’s framework in maximising competitiveness for international companies Geert Hofstede conducted perhaps the most comprehensive study of how values in the workplace are influenced by culture and his research has been used by companies globally to combat the challenges of working with different cultures. The importance of understanding cultures is increasingly important with more and more trade being carried out on a global level leading to an increase in international relations.

In Hofstede’s theory he approaches understanding other cultures in five succinct dimensions; relationships, risk avoidance, authority, individualism and orientation. The element of attitudes towards relationships focuses on how important the buyer-seller relationship is and how masculine or feminine a culture is. A masculine organisation is one which the management style is competitive and assertive, as opposed to the female approach, which is more modest and receptive, Japanese organisations for example has a very masculine approach to management where as the Swedish approach is more feminine.

The focus on attitudes to relationships also differs greatly between cultures where in Japan a lot of importance is place upon knowing those who you work with, it is usual for traders to socialise and build rapports prior to business deals being made. In contrast, in western cultures there is a much more direct approach to business where negotiations start very quickly.

Understanding these concepts when working with organisations from other cultures is key to having a competitive advantage as it will open up opportunities to better agreements and new markets. Attitudes towards risk is another key concept in Hofstede’s theory, understanding the extent to which a business is prepared to take risks is vital in business as it indicates how the organisation or individuals should be approached and their attitudes towards work.

This can range in different cultures from lots of set rules and procedures to an extremely relaxed atmosphere with a very laissez-faire approach where individuals will naturally be less anxious about uncertainty, the benefit of this of course is that deals and transactions can be made quickly as agreements can be made on main principles dealing with the fine print later, as opposed to a detailed specification that is signed prior to arrangement.

The French culture is generally more averse to risk and uncertainty is very much avoided and despite this method of business being more time consuming it can be beneficial in the future as there is less chance of errors later such as unforeseen hassles and overspending due to more planning.

Hofstede’s theory also recognises different attitudes to authority in different cultures in countries such as in South America and Scandinavia for example; where in South America countries there is an expectation that some individuals hold larger amounts of power than others- in other word, managers are thought to be above employees, this therefore may be reflecting in pay, bonuses and privileges such as separate canteens or even specified parking spaces. This attitude to authority differs from a Scandinavian organisation where there is more of an mind-set towards team-work and equality of status regardless of job title.

The ideology of Individualism is another aspect of Hofstede’s approach, where cultures vary due to there being an either collectivist society such as in Latin America where individuals act predominantly as members of a group and everyone looks out for one another, this is also reflecting in their approach to making negotiations as there will be lots of ‘team members’ involved apposed to where an organisation with an individualistic culture would be more inclined to have a one-to-one negotiation.

In individualistic societies such as the UK or the USA, everybody is expected to look out for themselves and individual achievements are more recognised and rewarded explaining therefore why one-to-one deals are more common.

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