CHAPTER 6

CULTURE AND CORPORATE

STRATEGY
Prof. Dr.Jayaraman Munusamy,
DBA (USM), MBA (Bath,UK), BSocSc (USM),
Dip.Ed. (MPSK), CBB (USA).
4 March 2017

Slide 9.1 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Strategy and corporate culture

The relationship between company culture

and strategy:
- Strategy is a product of culture
- Culture is a product of strategy

Definition of culture could also be used as the

definition of strategy:
- solution to the problems of external adaptation
and internal integration
(Schneider & Barsoux, 2003)
Slide 9.2 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Cultural models of strategy

Strategic management:
- Two main types according to their behaviours,
values and assumptions:
Controlling model
- information about its environment
- quantitative and objective
Adapting model
- Information from personal sources
- qualitative and subjective
Slide 9.3 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Culturals factors of strategy (Continued)

In what way is the formulation of strategy affected by

cultural differences?
Relationship with the environment
- Mental framework of two types of person (Fatehi, 1996):
- engineering- oriented
- symbiotic-oriented
Relationship among people
- Interpersonal relationships within a company
- Differences among employees towards a company
strategy, between US and Japan

Slide 9.4 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 National culture and strategy

In what way can national culture affect

strategy?
The choice of strategy
The way it is realized:
- leadership and decision-making
Impact of national structure on strategy
- sector of products and services
Multinational and its local subsidiaries
- cultures differences in the foreign markets
Slide 9.5 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Multinational strategic decisions

Implementation of the corporate strategy

(Bartlett et al., 2003):
- the country manager
Importance of this role because s/he :
- defends the companys market decisions
- satisfies the demands of the local subsidiary
Role of cultural interpreter
- gives information about the national situation
- understands the corporate goals and values
Slide 9.6 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 International managers and strategy

The international manager has to gain

insight into:
- the attitudes of those involved in a cross-cultural
situation
- modify his/her management strategy
It means:
- Not having the same strategy whatever be the
circumstances
- Applying skills in one context to another

Slide 9.7 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Developing strategies for the global market

Advantages of strategic alliances

Merger process has three levels:
- strategic, organizational, human
There are four merger strategies:
- assimilation, deculturalization, separation,
integration
Merger between companies from different
cultures:
- culture shock can be overwhelming

Slide 9.8 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Culture shock

Culture shock refers to unpleasant experience with

other cultures
International managers experience culture shock at
three levels:
- Emotions
- Thinking
- Social skills and identity
Culture shock phase is an integral part of the
adaptation phase (Marx,1999)
The Marxs model (next slide) is adapted from an
anthropologist Oberg (1960):
Slide 9.9 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Culture shock pyramid

Figure 9.1 Culture shock pyramid

Source: Marx (1999): 12

Slide 9.10 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 International company strategy

A merger of two companies presupposes:

- A change of culture in the new organization
In addition, between companies from
different countries :
- the complexity of the exchanges of interaction
between the cultures increases
- other organizational problems rise because
- inevitable change of culture(s) involved

Slide 9.11 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Strategic of cultural issue?

What are the reasons compelling

companies to seek an alliance?
- Purely economic (according to the protagonists)
- What role does the cultural element play?
Cultural factors come to the fore when
mergers and acquisitions:
- do not meet strategic expectations
- necessitate a change of strategy
However, culture may not be explicitly referred
to (see example next slide)
Slide 9.12 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Corus (British- Dutch steel company)

However, cultural may not be explicitly

referred to:
The board of directors of the British-Dutch steel
company Corus has to offer, at short notice,
positions to Dutch directors. This was stated by
the Russian steel baron Alisher Usmavov (a
shareholder in Corus, who has a 12% interest in
the company) in an interview with the Dutch
financial newspaper FD.

Slide 9.13 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Mergers and national cultures

Cultural element in companies is to be found

everywhere (Thvenet, 1999)
Cultural problems are not solely to do with
differences in national culture:
- Example: Sony/Philips alliance
The differences in the local cultures are often
underestimated
In many cases, there are:
- cultural confrontations
- resistance to any changes

Slide 9.14 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009
 Conclusion

National culture influences a companys

strategy
Not only does the organizational culture
change but also the companys strategy
Difficulties with all kinds of co-operation on the
cultural front

Slide 9.15 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009