SOCIAL AND SOCIAL AND CULTURAL FACTORS CULTURAL FACTORS

IN BUSINESSIN BUSINESS

Week 2Week 2

The Command EconomyThe Command Economy

Enterprises governed by “the plan”Enterprises governed by “the plan” Annual quotas broken down toAnnual quotas broken down to QuarterlyQuarterly MonthlyMonthly WeeklyWeekly

The Command EconomyThe Command Economy

Each enterprise told what to produce withEach enterprise told what to produce with What materialsWhat materials What labourWhat labour What financeWhat finance At what priceAt what price Where to be deliveredWhere to be delivered And at what priceAnd at what price

Principal management skillsPrincipal management skills

Bureaucratic bargainingBureaucratic bargaining Understating production capabilitiesUnderstating production capabilities Overstating requirementsOverstating requirements

Hofstede Analysis – 4 Hofstede Analysis – 4 ParametersParameters

POWER DISTANCEPOWER DISTANCE Degree of inequalityDegree of inequality INDIVIDUALISMINDIVIDUALISM Reinforcement of individual achievementReinforcement of individual achievement MASCULINITYMASCULINITY Society’s reinforcement of masculine work role Society’s reinforcement of masculine work role

modelmodel UNCERTAINTY AVOIDANCEUNCERTAINTY AVOIDANCE Degree society reinforces uncertaintyDegree society reinforces uncertainty

Copernicus project – East/West Copernicus project – East/West DivideDivide

France, Germany & UK have similar France, Germany & UK have similar valuesvalues

Bulgaria, Poland & Czech Republic have Bulgaria, Poland & Czech Republic have similar valuessimilar values

Similarities “group” into East and WestSimilarities “group” into East and West EXCEPT Poland is similar to FranceEXCEPT Poland is similar to France

Comparative scoresComparative scores

USAUSA Great Great BritainBritain

GermanyGermany JapanJapan PortugalPortugal

Power Power DistanceDistance

4040 3535 3535 5454 6363

IndividualismIndividualism 9191 8989 6767 4646 2727

MasculinityMasculinity 6262 6666 6666 9595 3131

Uncertainty Uncertainty

AvoidanceAvoidance 4646 3535 6565 9292 104104

Graphical representationGraphical representation

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USA Great Britain Germany J apan Portugal

Power Distance

Individualism

Masculinity

Uncertainty Avoidance

Hofstede's analysis

Comparative scores - 2Comparative scores - 2

RussiaRussia BelarusBelarus UkraineUkraine

Power Power DistanceDistance

4343 4444 2323

IndividualismIndividualism 3131 5858 5151

MasculinityMasculinity -5-5 -3-3 1313

Uncertainty Uncertainty AvoidanceAvoidance

103103 100100 5757

Graphical representationGraphical representation

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Power Distance Individualism Masculinity Uncertainty Avoidance

Russia

Belarus

Ukraine

Hofstede's analysis

Factors to consider in cross-Factors to consider in cross-cultural developmentcultural development

Cultural boundaries inhibit Cultural boundaries inhibit acceptance of western management acceptance of western management techniquestechniques

Cross-cultural adaptation processCross-cultural adaptation process

Trans-national managerial Trans-national managerial leadership (TML)leadership (TML)

Cross-cultural insightCross-cultural insight Relational trackingRelational tracking Relational skillsRelational skills Long-run optimisational pathwayLong-run optimisational pathway

Marketing as a managerial skillMarketing as a managerial skill

Marketing practices in less developed countries often Marketing practices in less developed countries often prove to be much more efficient by serving the local prove to be much more efficient by serving the local markets, than marketing transplants from their markets, than marketing transplants from their developed counterpartsdeveloped counterparts

In transition economies:In transition economies: Many of the most successful entrepreneurs Many of the most successful entrepreneurs

concentrate their efforts on how to beat the system, to concentrate their efforts on how to beat the system, to find loopholes in legislation and not develop a strong find loopholes in legislation and not develop a strong sense of satisfying the customer.sense of satisfying the customer.

Importance of marketingImportance of marketing

The whole notion of marketing is The whole notion of marketing is important because the transition important because the transition toward a market-led company puts a toward a market-led company puts a strong emphasis on the pioneering strong emphasis on the pioneering role of marketingrole of marketing

The difficulty of transitionThe difficulty of transition

Although probably no one had illusions about the Although probably no one had illusions about the changes in Eastern Europe, its length and changes in Eastern Europe, its length and complexity has probably been underestimated.complexity has probably been underestimated.

To guide and support this process careful To guide and support this process careful monitoring is needed. monitoring is needed.

This monitoring can include different This monitoring can include different measurements and descriptive research might measurements and descriptive research might also help to shape the perceptions and generate also help to shape the perceptions and generate knowledge about transitionknowledge about transition

The role of marketingThe role of marketing

Marketers can play an important part in Marketers can play an important part in the transition process, by providing a the transition process, by providing a better customer service what was better customer service what was experienced before. experienced before.

They can contribute to increase technical, They can contribute to increase technical, and hopefully non-technical efficiency, and hopefully non-technical efficiency, leading to higher customer satisfactionleading to higher customer satisfaction

The responsibility of marketingThe responsibility of marketing

Marketers also carry social responsibility. Marketers also carry social responsibility. Their practices, the delivered values and Their practices, the delivered values and role models can shape people's role models can shape people's expectations and choiceexpectations and choice

Entrepreneurial SpiritEntrepreneurial Spirit

ENTREPRENEURIAL “SPIRIT” OR ENTREPRENEURIAL “SPIRIT” OR UNDERSTANDING DRIVES BUSINESS UNDERSTANDING DRIVES BUSINESS PROGRESS IN TRANSITION PROGRESS IN TRANSITION ECONOMIESECONOMIES

Human Resource Management Human Resource Management (HRM) – The Russian Experience(HRM) – The Russian Experience

One of the key internal challenges faced One of the key internal challenges faced by foreign firms in Russia has proved to be by foreign firms in Russia has proved to be management of human resourcesmanagement of human resources

HRM in Russia – main findingsHRM in Russia – main findings

A key challenge is understanding what A key challenge is understanding what adjustments are neededadjustments are needed

It is important to understand traditional It is important to understand traditional human resource management practices human resource management practices in Russia prior to the end of in Russia prior to the end of CommunismCommunism

HRM in Russia – main findingsHRM in Russia – main findings

Viewed employees as a cost rather than as a Viewed employees as a cost rather than as a resourceresource

Little attention was paid to skill developmentLittle attention was paid to skill development The labour market has also historically been The labour market has also historically been

inefficient... limited career progression... inefficient... limited career progression... salary differentials were very small... jobs salary differentials were very small... jobs were created to ensure full employment... were created to ensure full employment... less attention was given to finding ways to less attention was given to finding ways to motivate employeesmotivate employees

HRM in Russia – main findingsHRM in Russia – main findings

When the government was privatizing a When the government was privatizing a firm, a key consideration was often job firm, a key consideration was often job securitysecurity

Firms encountered a problem with the Firms encountered a problem with the acquired employeesacquired employees

In order for firms to be able to survive In order for firms to be able to survive competent employees are essentialcompetent employees are essential

HRM in Russia – main findingsHRM in Russia – main findings

Being flexible and willing to adapt to the Being flexible and willing to adapt to the Russian environment has been found to be a Russian environment has been found to be a key success factor for operating in Russiakey success factor for operating in Russia

Most foreign firms operating in Russia felt Most foreign firms operating in Russia felt that their HRM practices were more similar to that their HRM practices were more similar to their parent firm's HRM practices and other their parent firm's HRM practices and other foreign firms operating in Russia than to foreign firms operating in Russia than to HRM practices of local Russian firmsHRM practices of local Russian firms

HRM in Russia – main findingsHRM in Russia – main findings

Foreign companies try to keep careful track Foreign companies try to keep careful track of the Russians who are studying abroad as of the Russians who are studying abroad as they are attractive candidates to recruitthey are attractive candidates to recruit

More than 50% of firms use headhunting More than 50% of firms use headhunting firmsfirms

Personality and previous work experience Personality and previous work experience are the two most important hiring criteria that are the two most important hiring criteria that companies mentioncompanies mention

HRM in Russia – main findingsHRM in Russia – main findings

A company can teach or train any A company can teach or train any person to do some specific job, but if person to do some specific job, but if the attitude is wrong that person the attitude is wrong that person wouldn't be a good employeewouldn't be a good employee

People who are highly trained even for People who are highly trained even for simple jobs can be hired for a relatively simple jobs can be hired for a relatively low salary highly educated people are low salary highly educated people are more adept at changing their mindset more adept at changing their mindset and working style...and working style...

HRM in Russia – main findingsHRM in Russia – main findings

Interviews were the most important Interviews were the most important mechanism used in selecting new mechanism used in selecting new employees. employees.

Some managers were sceptical of what Some managers were sceptical of what insight test results could give since insight test results could give since most of these tests were developed for most of these tests were developed for the West there were problems with their the West there were problems with their applicability in Russiaapplicability in Russia

HRM in Russia – main findingsHRM in Russia – main findings

Training and competence development Training and competence development are keyare key

Before one undertakes training, it is Before one undertakes training, it is important to identify what important to identify what competencies are neededcompetencies are needed

Having a good fixed salary is important Having a good fixed salary is important to Russian employeesto Russian employees

HRM in Russia – main findingsHRM in Russia – main findings

Firms with non-competitive salaries will have Firms with non-competitive salaries will have difficulty attracting, motivating, and retaining difficulty attracting, motivating, and retaining employeesemployees

Bonuses were found to be a useful Bonuses were found to be a useful complement to straight salary... in motivating complement to straight salary... in motivating employeesemployees

Managers found that with a bonus system in Managers found that with a bonus system in place they had to spend less time making place they had to spend less time making sure employees were working hardsure employees were working hard

HRM Study in Croatia - HRM Study in Croatia - problemsproblems

No future planning concerning the workforceNo future planning concerning the workforce Surplus employeesSurplus employees Lack of qualified experts and skilled shop-Lack of qualified experts and skilled shop-

floor workersfloor workers Lack of profitability so failure to attract good Lack of profitability so failure to attract good

staffstaff Reduced contacts with schools / universitiesReduced contacts with schools / universities

HRM Study in Croatia - HRM Study in Croatia - problemsproblems

Potential employees usually interviewed and Potential employees usually interviewed and selected by selected by oneone person person

Minimal access to professional improvementMinimal access to professional improvement Limited promotion prospectsLimited promotion prospects Low motivation. Main motivational factor is Low motivation. Main motivational factor is

salary and this is generally low.salary and this is generally low. No methods of appraisal / evaluationNo methods of appraisal / evaluation Autocratic management style hinders Autocratic management style hinders

development of co-operation and teamworkdevelopment of co-operation and teamwork

Knowledge and NetworksKnowledge and Networks

Existence of economic capital is vital for business Existence of economic capital is vital for business developmentdevelopment

There are other forms of capital which can be There are other forms of capital which can be converted into economic capitalconverted into economic capital

These are:These are: CULTURAL CAPITAL = access to educational CULTURAL CAPITAL = access to educational

facilitiesfacilities SOCIAL CAPITAL = network of relationships and SOCIAL CAPITAL = network of relationships and

support systemssupport systems This is the only form of capital which is common to This is the only form of capital which is common to

allall societies irrespective of level of development societies irrespective of level of development