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Bonazzi Indo Joint Venture: Culture Clash or Pure Economics?

Presented to: Professor Chantal Westgate

Cross Cultural Management


September 21st, 2014
Cynthia Travaglini

Bonazzi and Indo were fighting because there was a cultural clash and
imbalance of power between the two companies. India falls in the middle of Hofstedes
individualism collectivism scale, putting more emphasis on interdependent roles
(Guirdham, 2011). Italy is a more individualistic culture and prefers self-sufficiency.
Bonazzi did not understand Indias traditions and means of communication. Angeli
neglected to inform Indo that volumes were declining in India and did not want Indo
involved in the day-to-day management of the joint venture (Bajaj & Warrier, 2013).
Makhijas was shocked and concerned at all the issues that were arising and Angeli
made sure Makhija always had a minimal amount of information. Bonazzis secretive
exclusive nature was foreign to Indo causing further distance and tension between the
two companies. Bonazzis overall performance in the joint venture demonstrated
competitiveness, which was viewed negatively by the Indians who preferred a more
collaborative approach.
Italy is one of the top five most masculine countries while India ranks in the
middle of Hofstedes masculinity/femininity scale (Guirdham, 2011). Bonazzi sold a large
number of shares to a PE fund and then to Angelis nephew, without informing Makhija.
This caused Makhija to feel betrayed and disappointed. When Makhija expressed his
disappointment, Angeli did not even respond. The way Angeli handled the situation
insulted Makhijas cultural values, as trust and loyalty are two very important parts of the
Indian culture. Fighting occurred due to Bonazzis independent decision-making,
assertiveness and aggressive success (Guirdham, 2011), which conflicted with Indos
co-operative success and compromising nature. Indos more collaborative approach to
business mismatched Bonazzis one-sided goals. Indo was always willing to financially

help Bonazzi, offering to step in at any time, which Bonazzi completely ignored. The two
companies fought because of Italys competitive nature and need to solve problems
without Indos involvement. Additionally, Indo took a more feminine approach to
problem solving. Indo was dissatisfied with Bonazzis plant utilization (Bajaj & Warrier,
2013, p. 6) and displayed their dissatisfaction via letters rather than taking a more
action-oriented approach. Bonazzi was much more aggressive and took action whether
it was with the shares, or problem solving, which was an unknown concept to Indo.
India is higher on Hofestedes power distance scale than Italy. Indos constant
checking up on Bonazzi, complaints about poor performance, and requests to be
involved in weekly performance reviews was relatively new to the Italians. Likewise,
Bonazzis unrestricted information flow and egalitarian nature conflicts with a high power
distance culture. All of Angelis responses to Makhija included the involvement of
employees below him, joint venture management (Bajaj & Warrier, 2013) versus Indian
cultures, which tend to have a barrier between the employer and employees (Sharma,
2013). Fighting occurred due to Makhijas constant need to be informed and Angelis
complete disregard for what the Indian culture wanted. Relationships continued to
deteriorate as the two companies fought over their expectations of Mehta. Bonazzi
wanted to give him time and independence and Indo pushed for projected numbers
(Bajaj & Warrier, 2013). Mehta refusing to accept coffee from Menon was yet another
argumentative factor. Mehta should not have rejected Menon as he was showing
respect and trying to build their relationship together. This joint venture would have been
successful if both companies made an effort to understand each others culture.

The process used to appoint Mehta as a CEO was not correct. In joint ventures,
the position of a CEO has to be jointly agreed between the two companies involved,
since the CEO will be working with both companies equally. Indo was not part of the
decision making process as Mehta was chosen solely by Bonazzi. Not including Indo in
the decision-making process made Indo feel left out which started the joint venture off
on bad terms and imbalanced power. Unlike the Italians, the Indian culture has a much
more collaborative hiring process. This example demonstrates Italys highly masculine
culture and individualistic nature. It also validates how one needs to be familiar with
their partners culture to ensure success. A better hiring process was possible. Angeli
and Makhija should have sat down with the board and discussed the key traits
necessary for the CEO position. Angeli and Makhija should have then held interviews
together and collaboratively decided the perfect candidate to equally represent both
companies.
Mehta should have also reported to the chairman of Indo. In high power distance
cultures, such as India, the CEO is accountable for reporting to the board. Many
communication issues would have never arose if both Bonazzi and Indo collectively
selected Mehta. Mehta was sending weekly reports to Angeli and made no effort to
share any information with Makhija. This is problematic because the CEO of a joint
venture is responsible for reporting to both companies equally. The secrecy and lack of
shared information caused Indo not to trust Bonazzi. Trust is very important in Indian
cultures. If the two companies made the effort to understand each others cultures,
worked collectively and promoted transparency there would have been fewer cultural
clashes and the overall morale and relationships would have been much stronger.

Bibliography
Bajaj, G. & Warrier, N. (2013). Bonazzi indo joint venture: Culture clash or pure
economics. Ivey Publishing, 1-8
Guirdham, M. (2011). Cultural differences at work. Communicating across cultures at
work (3rd ed., pp. 42-77). Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
Sharma, P.G.(2013, October 27). Understanding the world business culture. The Times
of India. Retrieved from
http://timesofindia.indiatimes.com/lifestyle/relationships/work/Understanding-the-worldbusiness-culture/articleshow/17191117.cms