Cross-Cultural Issues In International Business: A Case Study On Expanding BP Plc's Production In India Essay.

Communicating Centrality in International Business

The paper demonstrates an inclusive report for the senior management of a UK based company to address the concerns associated with the differences in the cultural sensitivity and cultural expectation from one country to another. In order to address the requirement, the chosen organization of UK that is willing to expand its production in the developing country is BP Plc, which is the energy company and delivers energy solutions across the world. The chosen developing country where the company intends to expand its production is India and the reason for choosing India as the destination is that the country is being transformed into a global design and manufacturing hub (Bl.uk 2022). MNC’s are keen to conduct business in India because the market has increasing global significance. However, culture poses a significant challenge and barrier to carrying out the business successfully across the borders. Management of human resources in the international business faces challenge due to the cross-cultural issues (Assets.publishing.service.gov.uk 2022). Hence, the report details out the evaluation of cultural sensitivity of doing business in India by the application of relevant theories.

The communicating centrality in the international business cannot be denied. International business is guided by the trend of the intersection of communication and culture in the context of global work interactions. Communication is at the core of the operations of international business as it plays a major role in the maintenance and development of relationship, exchange of knowledge, negotiation of deals, preservation and establishment of partnerships. A critical factor for the operations of MNC at the group, interpersonal and organizational level is successful communication. Increased understanding and attention of the communication processes is required due to increasing global mobility, types and level of business internationalization and new technologies of global communication. The research of the international business in communication is focused on cross cultural that compares behaviour of individual and communicative style preferences from different cultures (Ukibc.com 2022).  

India is a populous, vast and diversified nation encompassing various different languages, identities, religion and cultures. Location of India lies in the south side of Asia and is surrounded by Bay of Bengal, Arabian sea and Indian ocean. It is the seventh largest country with the area of 3,287,263 km. In the richest country of the world, India is ranked fifth with a GDP of 2.265 trillion USD. Majority of the countries are the trade partner of India. Majority of the export products of the country includes manufacturing and IT products to the countries such as USA, China, Europe and Hong Kong. On the other hand, main import products of the country include mining, petroleum products, oil from the countries such as Europe, USA and UAE. Education and training are fundamental to the culture of India and the know-how of education, knowledge and competitiveness comprehends economic effectiveness (Bhattacharyya 2019).

Businesses in India are structured hierarchically and business relationship are of utmost importance. Position of authority and power are highly revered and valued and represents the largest world’s democracy. In order to conduct business in India, the key success factors require learning and understanding the culture, be flexible and adaptable, insider knowledge holds of great importance, practice due diligence and build relationship with key decision makers (Gupta et al. 2019). It is important for the foreign business to be aware of the generalizations and cultural diversity.

India's Cultural Landscape and Business Practices

It is important for the MNC such as BP Plc to study and compare the global cultural gaps because behaviour and culture are e inexorably linked to the business success due to the impact culture and behaviour has on the business environment. Ability of business to recognize cultural differences and respond accordingly in the engagement of intercultural business would prevent hostility, miscommunication, intolerance and anger that do not have any contribution to the productive business environment and also helps in minimizing the errors that is nt related to the business negotiations (Irwin 2020).

Research of communication in the international business tends to reply on the theory such as the framework of Hofstede that broadly defines the cultural values pattern. The primary reference point to compare the communication pattern and operationalize culture is served by the cultural dimension and influential work of Hofstede. In this section, culture of the chosen developing country India can be assessed and examined by the application of Hofstede cultural dimension theory. The Hofstede cultural dimensions reflected cultural characteristics of a nation using five dimensions namely individualism, power distance, uncertainty avoidance, masculinity and long-term orientation (Rana 2018).

Individualism- The relationship between the individuals in a society is measured under this dimension and it addresses the degree of interdependence maintained by society amongst its members. Unlike, collective society where people look after each other in exchange of loyalty, individualist society looks after their direct family and themselves. With a score of 48, India can be considered as a mixture of both collectivist and individualistic society. Individuals belongs to a larger social framework and various concepts influence the action of individual and such concepts include work group, neighbour, extended family. Promotion and hiring decisions in the organization depends on the employee loyalty and employer familiar protection. Decision making have been a collective exercise in India and people have always been conscious of the status and social order relative to other people. However, in the recent times, there have been a cultural shift towards personal achievement and individualism due to fast urbanization and increasing globalization (Hendrith 2018). 

Power distance- It is the degree to which the power is allocated disproportionately and the fact is accepted by less powerful people in the organizations (Sent and Kroese 2022). On this dimension, India scores 77 indicating that top down and hierarchy structure in the organization or society is appreciated. Power is centralized and rests with the top management in the organization and communication flows from upper to lower management and is directive in style and any negative feedback is often never escalated up the ladder. 

Uncertainty avoidance- This dimension explains the degree to which the individual has the feeling of threat due to unstructured and ambiguous situation (Tmf-group.com 2022). In addition to this, the way control is perceived by the individual and how it is managed is explained by this dimension. For avoiding uncertainty, with a score of 40, people in India have medium low preference. People accept imperfection and the level of tolerance for any unexpected is high. People are generally are not compelled and driven to take initiatives of action and they have the tendency to settle in the established routines and roles. In order to bypass the system, people rely on the methods of innovation.

Key Success Factors for Doing Business in India

Masculinity- In this dimension, the preference of masculinity traits over the feminist traits is explained and identifies how society emphasizes on the gender issue and their particular roles. If the score is high on the masculinity, it implies that the achievement, competition and success drive the society. India is regarded as a masculine society with a score of 56 and the masculinity is defined in terms of power and success. It focuses on the achievement and success that is validated by the materialistic gains and the success symbol at the workplace is considered to be very important. 

Long term orientation- As per this dimension, in order to deal with the future and current challenges, it is important for the people in society to have some connection with its own past. Two existential roles are prioritized by the society differently. A low score on this dimension implies normative society where norms and time-honoured tradition is maintained by the people and on other hand, society takes a pragmatic approach if they score high on this dimension. India scores 51 on this dimension and hence it is not possible to determine dominant preference. Moreover, time is not considered linear and people greatly tolerate religious views. The pragmatic approach of Indian society typical forgives the one lacking punctuality and is involved in discovering the fated path rather than playing exact plan (Cletus et al. 2018). 

India is a multilingual and multi-ethnic society with significant cultural differences and having a thorough understanding of underlying values and belief of local culture is crucial for the success of foreign business. Deal focused culture of the business where people are direct, task oriented and sometimes aggressive and intending to do business in India and create successful business partnership need to have an insight into the fact that for Indians having trusting relationship is regarded more important than any form of contractual compliance. They prefer working with the people they know and can trust and the global enterprise such as BP Plc needs to be patient and flexible in fostering personal relationship that would help them keep doing business in the country. Since, relationship is considered more important than contracts and the orientation of foreigners to focus excessively on contracts indicates a lack of trust for Indians. Being an extremely diversified nation, the cultural sensitivity is significant high for the foreign businesses. Some of the factors that come in the way of expatriate success in India is their failure to correlate with the organizational and individual level factors such as motivation, personal differences, inability of spouse to adjust, unsystematic selection in the cross-cultural environment (Miao et al. 2018). Without adapting to the local culture, the established model of western management would not be effective and despite English being the working language, effective communication cannot be presupposed. Adjustment of expatriates to the culture of host country is also regarded as the critical success factor.

Successful collaboration of the business cannot be ensured by the English-speaking population. It is because hurdles might be created due to the huge differences between the styles of communication and resulting business failures. Furthermore, the cultural sensitivity can also be inferred to be associated with the lack of effective development, training, retention and recruitment programmes for the managers of the host country. Foreign subsidiary company with a distinctive cultural orientation would make it difficult to transplant the managerial practices such as appraisal system and reward similar to their home country. Management of human resource in India has to be applied and understood in the context of economic, social and political background and therefore, the legal, political and socio-cultural aspects of India should be considered by the foreign business. Moreover, in India, the most important levers in improving the performance of company are the professional HR practices, compensation and recruitment and this has implications for the foreign business intending to do business in the country (Kawaguchi et al. 2019).

Importance of Recognizing Cultural Differences in Intercultural Business

Cultural characteristics shapes the practices of communication and it strongly influences the communication strategies. The way business operates depends on both the communication and culture. International businesses face different communication barriers when dealing with the other countries due to cultural differences. Intercultural communication faces various barriers and the organization starts facing issues with the leadership, interpersonal issues, language barriers differences in technology, subordinate-supervisor problems (Bonsu et al. 2018).

In India, due to the cross-cultural communication resulting from diversified culture results in conflict and disagreement. In the multicultural environment like India, the foremost barrier to communication is misunderstanding. People from different cultural background whose beliefs and values vary faces common problem of misunderstanding. Cultural variation results in high level of uncertainty and anxiety and resulting in misunderstanding (Contractor et al. 2020).

Roles and norms are another barrier to effective communication and people often fail to understand other culture norms and act accordingly when they work in a multicultural, environment. Norms and roles vary from one culture to another and there can be various violation of rules when working in a multicultural team and this results in the interruption in the process of communication (Suifan et al. 2018).

Employees become diversified geographically with the international expansion of businesses and their shares norms and assumptions are lost. People in different countries communicate differently, react to inputs in different manner and make decisions differently and the corporate culture organically grown starts to break down and making miscommunication quite frequent by eroding the trust factors. Moreover, with the international expansion of business, implicit communication stops working and employees fall victim to inefficiency and misunderstanding (Munin and Efron 2020).

For the success of any business venture, effective communication is extremely essential and the communication is specifically critical when there exists a risk that actual message would get lost in translation. English is the de factor business language in many international companies and along side the language, the style of conveying the message is also of great importance. Indian professionals can be more nuanced and indirect in their communication (Jenifer and Raman 2015).

Challenges faced by the foreign companies in India can be reduced when they start shaping the practices of HRM in accordance with the resource-based view. Human resource is one such source possessed by the organization that is unique, valuable and inimitable. Attrition can be reduced by giving rewards and customized feedbacks as there exist a positive relationship between organizational performance and strategies of HR (Gupta and Bhaskar 2016).

Managers or the professionals of the foreign business should make themselves well equipped with the interpersonal skills. It incorporates social skills covering how well an individual can communicate with others. Employees can work together towards achieving a common organizational goal when they are efficient in their interpersonal skills (Szkudlarek et al. 2020).

Managerial communication is important as it implies the manner in which the information is conveyed by the superiors to the subordinates. Managers in order to sustain the cultural differences communicate with each other as well as with the employees. It is important for the employees to know what is expected from the manager because employees are differently managed in the different culture. For instance, in India, all the decisions are taken by senior managers and therefore, it is important to build the relationship and displaying the high power through titles and introduction. Therefore, it is recommended that effective communication should be sustained by the managers with their subordinates or employees. Employees might experience cultural shock in the international business and it is important for the organization to maintain strong support so that they can communicate better with the particular culture. It is the responsibility of the top-level management to develop the organizational climate without any conflicts results from the communication barriers (Nazir et al. 2019).

Application of Hofstede Cultural Dimension Theory to India

Conclusion:

In conclusion, it can be said that the business intending to expand in the developing country such as India faces the issue of communication incompatibility and is the reason hindering the business effectiveness. When conducting the business overseas, it is important to acknowledge the fact that the effective communication acquisition would be of strategic advantage. Company such as BP Plc can be provided with various prospects of the global market if they are potentially culturally aware and have effective technology of global communication. For the cross-cultural population in the workplace, insisting on the policy of mutual benefit and improving the cross-cultural competence of employees by way of cross-cultural knowledge and training is considered to be a win-win situation.

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