Business and Culture Essay The world today has become much smaller, a global village, some might

say. Inventions and improvements in science and technology, transport and communication, have changed the way we live. We have adapted ourselves to being exposed to changes around us. When an organization deals with one in another country, there are more points to be kept in mind, than just the business aspect. People from different places have different ideals, behaviors, beliefs and upbringings than those from another place. Therefore in order to maintain a good relation, we must understand that, and alter our ways and be more accommodating. In this essay, I shall briefly analyze a company, in a maturing market, namely LOreal Paris, which is one of the worlds largest cosmetic companies (worth US$ 25.8 Billion in 2009) (Perry, 2009). It concentrates on a variety of fields such as hair color, hair care, and perfumes, make up, skin care etc. LOreal operates in over 130 countries over the globe, and has 42 manufacturing plants. It was ranked 353 in the Fortune Global 500, in 2007 (500, 2007). LOreal entered India in 1997, when there was no strong structure in the hairdressing industry. The company knew that would change, and it invested heavily in training and education (Carroll, 2005). According to the Indian Cosmetic Sector Analysis (2009-2012) report, the cosmetic industry is one of Indias most rapidly growing industry. In 2009, the cosmetic sales amounted to US$ 7.1 Billion (PRLOG, 2010). LOreal as an organization has many brands under its control, and not all deal with cosmetics. It has consumer products such as LOreal Paris, Maybelline and Garnier that are sold in the mass market at competitive prices. Professional products such as LOreal Professional, Kerastase and Matrix are mostly catered to hair salons. Luxury products such as Lancome, Ralph Lauren, Biotherm, Giorgio Armani and Diesel are quite luxurious brands. They are usually available in specialty stores, department stores, and at retail travel shops. Lastly, there are active cosmetics such as Vichy and La Roche Posay. These are dermo-cosmetic in nature and are sold at special retail stores, or at pharmacies (Patel). When LOreal entered the Indian market, it mainly catered to the women, whom they assumed used only cheap products, and those that were natural, with less chemicals e.g. henna. They also catered to the poorer masses, and reduced their prices. This was a very poor start. They soon understood that they had to make some changes. They approached the market differently the second time, by forming different market segments. They noticed that the rising middle class was gaining strength, the younger generation was influenced by the west, and had different ideologies in comparison to the previous generation, and spent more. They tapped in to these markets, and were immensely successful (MBA Knowledge Base). LOreal uses good quality ingredients, therefore it is justifiable for them to have high prices, whereas local companies have low prices, but they use low quality ingredients. They wanted to capture the more affluent and educated market, which had more money to spend. Since they were new to the market, they

couldnt use familiarity as a way of building loyalty, in stead, they promised that the customers were being given the best products for the price they were paying (Singapore). The company has taken part in social initiatives, mainly to deal with women, education, and science. In 1998, they started the For Young Women in Science Scholarships in Maharashtra in India, and awarded 5 deserving girl students Rs. 2,50,000 to pursue higher education in university. In July 2009, they launched a program called Beautiful Beginnings. According to this, they would train nearly 200 unprivileged girls, who had dropped out of school. The aim was to train them, and make them employable (Singapore). LOreal learned from its mistakes, and shifted its focus from age and gender. The company has a lot of markets it caters to, but one that it has neglected the most, is that of men. It is a fact that, on average a man earns more than a women, and in this day and age, all men take care of themselves. This is a very good opportunity for the company to stick its foot in the door. The company already has a line of products for men, but those are just male versions of the female product. Not many men will want to buy a product that is feminine. The company needs to form a new brand solely for men. This will be a breath of fresh air for men, i.e. to have a good product, which is of good quality, and is masculine. As a foreign company stepping foot in to another country, LOreal must have faced more difficulties as well. India is very hierarchal in nature, and many multi national companies that come to the country, try introducing a flatter work structure. This at times is difficult for the people to adjust to, as they are used to accepting orders from the people at the higher levels (World Business Culture). Other managerial problems the company may have faced on starting out, are like mentioned before, the power distribution. The level of power and authority is well known to all in that culture. The managers give the order, and the employees do their work in accordance to that (Price, 2008, p. 99). In a free market, management may encourage competition within the firm, to increase profits, this however, according to traditional culture this is not regarded highly, but in stead prefer cooperation rather than competition (Price, 2008, p. 100). Schneider and Barsoux (2003) have divided management based on the countries assumptions, values and behaviors. This is known as the controlling model. According to this, the responsible departments come up with strategic plans for the company, and present it to the board or top managers (Price, 2008, p. 169). Culture shock could be the case for some of the employees who are exposed to a new culture. The way people interact with one another in a personal setting, and a professional setting may be different. Acceptance to do any work given from the top. There is more of a collective out look, rather than individualistic. Satisfaction and happiness are at times more important than performance. The people put most of their faith in to fate (karma and dharma). As I have mentioned earlier, the Indian society is highly hierarchical, and this impacts the style of management. The managers position is regarded as high, and his employees are treated as his subordinates. Unlike in many western

countries that follow the concepts of egalitarianism, the manager is considered superior and not expected to perform any menial job. He however, is expected to give instructions that his employees will follow completely (World Business Culture). I am now going to briefly look at the Indian market in relation to Geert Hofstedes Cultural Dimensions. Power Distance is the extent to which the powerful members of organizations and institutions accept and expect that power is distributed unequally. It is a fact that no society is equal, but some are more than the others. Indias PDI is 77 in comparison to 56.5 which is the world average. This shows that the country possesses a lot of inequality in wealth and power (itim International, 2009). Long Term Orientation deals with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance. A greater LTO score means that a country is perseverant and thrifty, and India scores 61, while the world average is a 48 (itim International, 2009). Masculinity deals with the distribution of roles between the genders which is another fundamental issue for any society to which a range of solutions are found. (itim International, 2009). India scores 56, in comparison to 51, which is the worlds average score. The greater the number, the larger is the gap between males and females. Uncertainty Avoidance Index refers to the amount people will tolerate being in ambiguous and uncertain situations. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. (itim International, 2009). India scores 40, in comparison to 65, which is the world average. This means that as a culture, they are more open to situations that are ambiguous or unstructured. As we know, communication is one of a businesses major concern. To shine some light on other cultures, we can take the help of Hofstedes model. Understanding a culture helps ease negotiations, frustration, miscommunication and conflict (LeBaron, 2003). Lets take the example of Chinese and Americans. The Chinese like taking time out for hospitality, and small talk, and building a relation, whereas Americans want to get right down to business. If either party is unaware of this, they may leave the meeting feeling unsatisfied or even bitter. Companies entering foreign countries sometimes need to adapt their products and services to the local culture and market (Marieke de Mooij, 2010). Taking the same countries i.e. China and America into consideration, if a company wanted to sell cell phones in China, they would be likely to market it as a family enjoying the phone, a collective experience. Whereas, in America they would market it to show how an individual enjoys the phone, and how it helps him/her save money (wikipedia, 2011). We can thus see that the model is very useful in analyzing a countrys culture, however it is not perfect. There are a few issues that we need to keep in mind while referring to this model.

Even though Hofstedes model is very popular and is widely used, and is often correct, we must realize that this may not be true at all times. It is applied to the general population, but not all individuals from all the regions of that country. The data collected is from questionnaires, which have their own limitations. For example, individuals from collectivist cultures may answer questions based on how their group would, where as a person from an individualist culture will answer as being an individual. Another drawback is that from the time the model was made, things have changed (Clearly Cultural, 2009). I am from India, and I have noticed that not all things mentioned about India are true anymore. The country has changed immensely. It is no longer just a collectivist country. It has started moving to the individualistic side. Exposure to the west, and growth in businesses have changed the way people perceive things, and a large percentage of people have become more global, and open to new ideas.

Cultural Dimensions of India (itim International, 2009)

Cultural Dimensions of the world (itim International, 2009)

Works Cited
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