International MBA

Cross-Cultural Management
Course number 101

Vishal Chandra
Kyiv, Ukraine

MBA Batch- xxxx

OUTLINE
Introduction
Background and problem statement
Objectives
Procedure

Culture of two different countries as perceived by a person from

Home country
Examples from country one
Examples from Country two

Analysis & comparison of Culture above two countries

In comparison from the home country

How shall we (our company) perform differently today after above

analysis.

Summary

Conclusion

Bibliography

1. Introduction:
International businesses are facing new challenges to their internal communication
structures due to major reforms brought about through internationalization, downsizing,
mergers, acquisitions and joint ventures.

Lack of investment in cross cultural training and language tuition often leads to deficient
internal cohesion. The loss of clients/customers, poor staff retention, lack of competitive
edge, internal conflicts/power struggles, poor working relations, misunderstandings, stress,
poor productivity and lack of co-operation are all by-products of poor cross cultural
communication.

In a global context the management and development of people inevitably leads to

considerations of diversity and related challenges. The major challenges have to be
identified so as to be able to develop practices which balance global competitiveness,
multinational flexibility and the building of a worldwide learning capability.

Achieving this balance will require organizations to develop the cultural sensitivity and
ability to manage and leverage learning to build future capabilities.

1.1 Background

Tulip Lab Private Ltd. is an upcoming pharmaceutical company from India, which has
recently started its business operations in CIS markets. For effective marketing of its
formulations the company has registered and opened representative office in Ukraine and
has employed local Marketing & support staff. The representative office in Ukraine is headed
by an expatriate –Country Manager from India.

The finished products are imported from India to Ukraine by local Ukrainian distributors
while the marketing& sales activities are being coordinated by the company’s representative
office with the support of local managers.

Among CIS countries Ukraine is the first country where Tulip Lab registered and started
marketing its products while Georgia is the second in line where the company plans to start
its operations.

1.2 Objectives

To analyse the market potential, have an initial feedback of local distribution systems
related to marketing & sales, an analysis of probable competition and to plan product
portfolio for next 2 years.

1.3 Procedure

The country manager was assigned Ukraine as the first country to set up the Representative
office, negotiate with Distributors, find the product registration procedures from the Ministry
of health(MOH), select the marketing & Support staff & subsequently go ahead within 1 year
for setting up Georgian operations on the same parameters as both the markets are from
CIS.

Culture of two different countries

(Ukraine & Georgia) in context as perceived by a person from
Home country (India)

2.1 Examples from Ukraine

In Ukraine the official language is Ukrainian however the usual conversational language
is Russian (being an ex Soviet Union country). Services of an English speaking
Secretary/office manager were taken to facilitate communication from English to Russian
and fix meetings with authorities & Distributors.

Addresses & contact numbers of 5 leading Pharmaceutical Distributors were found from
the internet and the receptionists were contacted to fix a meeting with Sales managers
of these companies for a brief presentation about our company.

The first reaction of most of the “secretaries” was to ask us if we already have met any
of the senior managers of the company before, hearing that we are first timers they
asked us to wait until one week as the senior managers are busy. Some secretaries told
us to meet the junior manager first before we try to meet senior managers.

In order to fix a meeting with the Distribution managers it took 3 months for our
company especially during the final phase with the Key decision maker the “Distribution
Manager” of the company. It was equally difficult to find the right official in the MOH
who would help us to get timely registration of the company and the products. Finally
we learnt the art of making the things happen faster and another 6 months to get the
registration certificate of the first product. The first 3 products (out of planned 6) in the
pipeline rolled out and landed at the distributors approximately one year after the first
step was taken to start the operations.

1) Instead of making a telephone call to the secretary, meet the secretary personally to
see the “Actual” schedule of junior managers. Do not expect any answers of the e-mails
or follow up letters.

2) Try to meet the secretaries or even the managers with small-small gifts like
chocolates, flowers etc.

3) Convince the junior manager first in order to reach his Boss at the earliest.

4) Organise a group meeting for all the junior managers so that everyone of them will
“See” you at one time else you will have to individually arrange yourself to be “seen” by
every junior manager, try if the Key Decision maker also joins this meeting. If not the
result of the meeting will be told to you after 1 week.

5) The Key decision maker will like to meet you in his personal cabinet or you may invite
him for a business lunch/dinner in a good restraunt.

He will always be very busy and will come late for the meeting or will make you wait
may be up to 1 hour before he meets you.

Do not forget to give him a Good Souvenir if all the formalities & paper works have been
completed.

However you should not be surprised if you are asked for another document which is
missing in your file, this will happen most of the time when you are just there to collect
the final “Approval”, so be prepared to delay your plans by at-least 1-2 weeks until all
the papers are completed, accordingly the launch plans, shipments of products should
be done keeping in mind of “missing documents” & formalities.

The things will move faster if you tie up with an agent or a mediator who has already
been working with the managers & authorities for long time.

Finally few sentences on the field force comprising of marketing executives & Managers:
 1) Extremely high amount of attrition rate has been seen; some people leave within
first two months of joining and may even join another firm offering meagre
increments in salary.
2) The people will wait for days without doing any productive work and will not take any
self initiative to resolve matters pertaining to marketing & sales if in case their team
leader (Regional Manager) has not given any specific instruction(s) or may be if their
manager is on leave or some business trip, the controls and business process may
just become haphazard.

For the same, sometimes the field force may wait for their senior managers from
Central office to call them and ask about their progress hence the need to strictly
remind every one about the systems as well as business process is very frequent.

3) Most people will show no commitment to deadlines of achieving sales plans, even the
sales review meetings & strategy meetings will very frequently run out of schedule.

In most of the meetings any collective decision cannot be made as there is no

coherence in the team, a high amount of individual variance in perception of systems
& strategy can be seen which hinders collective decision making while the whole
team of marketing executives is being trained together.

Tulip Lab being an Indian Multinational, the directors and most of the senior
management team are Indians. Ocassionaly the management tends to lose patience
over the slow proceedings, beurocratic style and delays in major decision making
processes.

2.2 Examples from Georgia

Georgia is also a CIS country that makes the gateway of Europe from the Asian continent.
Being from the same soviet background the local people of course speak the Georgian
language along with Russian. Most of the young people as well as the business community
can also understand and speak good English also.

The directors of Tulip Lab upon seeing the delays happening in Ukraine foresighted the
same to happen in Georgia also (both the countries are Ex- Soviet) hence they had
recruited an agent to help regarding the initial discussion phase with the distributors & MOH
Officials. It was a pleasant surprise to get a welcome from a junior manager from one of the
leading Pharmaceutical distributors of Tbilisi, a pick up car had also been arranged by the
distributor for the same distributor at the airport.

To an utter surprise within three days the directors of Tulip Lab were able to meet 4 major
distributors of Georgia. In the offices of all these four distributors all the senior managers
were sitting together in meeting hall. The meetings usually started at fixed schedules, all
the queries & counter queries were discussed & put up in the same meeting and collective
decisions taken by a group of managers in the meeting hall itself .The meetings ended with
a promise from both the sides to be in constant touch over the telephones and via e-mails
for further queries.

One of the directors of a distribution company in fact hosted a welcome dinner in his house
for the directors of Tulip Lab as he said that guests from other countries are second to God
for him and his family.

Within 1.5 months the contracts between the leading distributors & Tulip lab were signed
and within 5-6 months the officials have also promised to help the company to register our
range of innovative products provided all the documents are in accordance with the
Georgian MOH guidelines.
 While departing back to the from the hotel, again a car was arranged by another distributor
(other than the first one who sent the pick up car, the directors had to politely refuse to the
first one by telling them the fact that it was arranged by some other “Friend”) as a drop up
facility until the airport and a representative from a third distributor was at the airport to
wish the directors a safe flight and a souvenir from their firm.

The trip to Tbilisi was so eventful & successful and the directors of Tulip Lab returned with
pleasant memories of the country.

Analysis & comparison of Culture above two countries

(Ukraine &Georgia) in comparison from the home country (India)
As per various analysis & feedbacks of management text books India is considered to be of
A Relationship Focused culture (RF), Fluid Time in approach, Emotionally Reserved, and is
said to believe in Hierarchical formalities in the processes of business dealings.
From the perception of an Indian official who visited both Ukraine & Georgia
following analysis can be made upon comparing the cross culture differences of
these countries as compared to India.

(a)RF/DF Culture
Relation Ship Focused *_Ukraine_______*India_____*Georgia____* Deal Focused
RF-END DF-END

In Ukraine people are more RF focused, followed by India and then Georgia which is
moderately RF but certainly more inclined towards Deal focused culture than in comparison
to India as well as Ukraine. Business proceedings will certainly move at faster pace in
Ukraine and better if a person/firm has made better personal relations before the final
business terms are made.
(b) Fluid/ Rigid Time approach
Comparing on this parameter Ukrainian Business culture can be termed as more fluid Time,
followed by India while Georgia can be considered to be more inclined towards the Rigid
time approach.

Fluid Time * Ukraine * India * Georgia * Rigid Time

Approach Approach

(c)Emotionally Reserved & Expressive People:

During the business meetings always a translator accompanied the Tulip staff to bridge up the
communication gaps & language barrier. It was never seen that any of the managers from
distributors or officials from MOH would try to take an initiative to say even a “Hello” in
English, while during personal meetings some of them admitted that they could understand &
speak a fair amount of English also although it was relatively difficult for them to speak in
English as compared to understanding.

On the other hand almost every senior manager in Georgia spoke to their counterpart from
Tulip Lab in English and very seldom the services of a translator were used. The senior
managers admitted that they have specially learned English to avoid communication gaps
with their clients & friends and in case if certain immediate communication is required they
 can themselves reply to mails & Telephone calls from other countries if the language required
is English.

Certainly Indian culture is emotionally reserved but Ukrainian culture is more reserved and
during business meetings it is very difficult to read the emotions of the head of the
department/key decision maker. On the other hand Georgian people can be rated as more
expressive than Ukrainian but to a lesser extent than Indians.

Emotionally * Ukraine *Georgia *India * Emotionally

Reserved Expressive

(d)Formal versus Informal Approach

At present the “Red carpet” approach is highly seen in Ukraine, every single document &
decision has to pass through various hierarchies before it is finally approved, of course no
one dares to challenge the key decision maker and people can wait endlessly to get their set
of documents complete. Without the approval of their Head “NACHALNIK” sometimes
individual team members just cannot take small decisions which usually he would have
approved anyway as per the rules & standards which results in unusual delays if the
“NACHALNIK” is not at the working place.

Georgians are relatively less formal during work as compared to their Ukrainian
Counterparts but during a Family gathering or Business Lunch/Dinner the senior most
manager seemed to be the person in authority.

A feedback from the Directors of Tulip Lab say that Indian managers off late seem to have
received individual roles and liberty up to a certain extent to take decisions and they work
in team better than as compared to the managers from Georgia & Ukraine.

Formal Culture * Ukraine *Georgia *India * Informal Culture

4. How shall we (Tulip Lab) perform differently today after above

analysis.

Addressing the Problem:

In addressing the issues relating to developing effective team, it appears that the following
areas should be considered:

• Identifying the nature and implications of national cultural differences

within the team.
• Establishing a basis for building understanding and awareness of
cultural differences and how they may be managed.
• Formulating a framework for developing a high performing team which
takes account of cultural differences and leverages the diversity present in an
international team.

Tentative Solution to bridge up the Cultural Gap:

Four key dimensions which impact on natural cultural differences have to be identified

among the team members (According to Hofstede’s Model*1), they are:

 • Individualism/collectivism: This dimension reflect the extent to which
any individual values self-determination as opposed to its behaviour being
determined by the collective will of a group or organization.
• Power-distance: At the core of this dimension lies the question of
involvement in decision making. In low power-distance cultures, employees
seek involvement and have a desire for a participative management style. At
the other end of this scale, employees tend to work and behave in a particular
way because they accept that they will be directed to do so by the hierarchy
or the organization.
• Uncertainty avoidance: This dimension is concerned with employees'
tolerance of ambiguity or uncertainty in their working environment. In
cultures which have high uncertainty avoidance, employees will look for
clearly defined, formal rules and conventions governing their behaviour.

Table 1: High versus Low Uncertainty avoidance. What is Important?

Low uncertainty High uncertainty

avoidance(Group A)
Achievement
Leader as facilitator
Minimum rules
Open-ended learning
avoidance(Group B)
Security
Leader as expert
Emotional need for rules
Structured learning

• Masculinity/femininity: This is possibly the most difficult dimension to

use in an organization context. In highly "masculine cultures" dominant
values relate to assertiveness and material acquisition.
In highly "feminine culture", like that of Ukraine where in many offices the
key decision makers are Females, focus on relationship among people,
concern for others and quality of life have to be more stressed upon

Learning for Tulip Lab especially in context to the field force which
they have in Ukraine & the forthcoming teams which they want to
employ in Georgia: Self analysis has been done on following
parameters:

Table 2: Impact of Various Cultures in team development, where do we stand?

Again what is Important in context of every dimension?

Hofstede’s Model*1

Parameters(Dimensions) Group A Group B

Low
High
Power distance Accept
Discipline
responsibility
Individual Collective
Individual/collective Management Employee
mobility commitment
Low High
Uncertainty avoidance
Innovation Precision
Masculine Feminine
Masculine/feminine Efficiency Personal service
Mass production Custom building
 Based on above questionnaires we have already learnt that we stand in Group B in
both of above tables (in context to Ukraine Field force), hence the need is to
improvise on above parameters.

The need for such a practical approach and framework has to be reinforced furthermore to
highlight the importance of developing skills in a team and our strategy has to be custom
designed to:

• build cohesion and consistency in team working;

• develop a shared vision and understanding;
• establish quality dialogue between members;
• Establish feedback mechanisms to review and improve team processes.

In Georgia we expect to be in Group A and hence during launch phase initial

feedback will help us to analyse the situation and make our strategies and
communications more Culture oriented

5. Summary:
The growing trend to globalization of businesses is giving rise to a need for the development
of effective international management teams. For many organizations this need will entail
thinking more clearly about cross-cultural issues and more overtly and systematically
understanding and valuing the benefits of diversity in international teams. Achieving this
requires the integration of thinking and practice relating to team building, understanding of
the benefits of differing personal styles and behaviours.

Although much can be achieved by working with specific teams, the truly successful global
players are likely to be those which embed the change through integrated changes to
selection, development, reward and recognition policies and practices. We here from Tulip
Lab have learned a lot from above fundamental approach of cross culture management and
will try level best to apply above principals in real practice.

6. Conclusion:
Important business benefits will fall in line after above transformation, which will in turn
lead to
* Increased market share,
*shared knowledge,
*alignment of behaviour and business goals,
*reductions in labour cost,
*consistency of product, and
*leveraged human capital for increased innovation.

A same approach for other multinational companies operating in different locations across
the globe is suggested to reap the benefits of Cross-Cultural Management.

7. Bibliography & references:

All the examples given above have been quoted from real experiences of managers from Tulip
Lab .While the basic concept has been taken from the course book # 101 “Cross Cultural
Management” by R.R. Gersteland of Copenhagen Business School
Reference:1 .Hofstede’s Model : as perceived from www.bna.com/samples/hrdsn/crosscultural.pdf