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Analysing the Cultural Diversity in MNCs

Paper Type: Free Essay Subject: Business
Wordcount: 2939 words Published: 1st Jan 2015

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Culture diversity includes acceptance and respect. It means understanding that each individual is unique, and recognizing the individual differences. These can be along the dimensions of race, ethnicity, gender, sexual orientation. It clearly says people of diverse origins, cultures and ways of life living along each other without one getting in the way of the other and difficult to force their ways on other people.

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Success with the globalization of business markets, more organizations are turning to multinational corporations to gain a competitive edge, to gain skills, labors, improve technologies or to increase their market share. Cultural diversity makes country stronger and enhanced able to compete in the new global economy.  Multicultural environment is a very important strategic task thus link the different work attitudes with different cultures working for a new unit, However, these differences in behavior, work values, attitudes and culture also makes challenges for MNC companies. Issues can soon transform into factual troubles working in a multi diverse cultures, clash occurs in a work situation because of culture diversity. This is often the case in a globalised work.

There are basic standards in every culture for social relations such as personal space distance, eye contact, body languages in public, negotiation, etc. simply American have eighteen inches apart when engaged in normal conversation, prefer direct eye contact , affectionate with body language and negotiate very directly. In other cultures they may stand closer or further than we are comfortable, may view direct eye contact as rude, but be more or less open to displaying body language and negotiate more indirectly specially in Asian. To clear, American males view assertive responses as appropriate social behavior, whereas Japanese males perceive nonassertive responses are socially appropriate.

A MNC may be active in several countries as such it needs to be sensitive to accepted norms of behavior and culture in the different countries. These differences might exist in terms of age, gender, race, education, social status and other terms. To manage this diversity MNC’s had to implement strategies that knit all employees together into a dynamic workforce (Miller, Dollar, 1950).

Because of this enormous diversity one of the key success factors of MNC’s is the recruitment and selection of labor who offer valuable individuality. These individuals are forming the values and beliefs of an organization (Mullins, 2007).

One important challenge under culture is language barriers. Communication is essential for management. So far communication relies upon a shared language, a requirement that does not exist in many international business situations and that is when the problems start. The most pronounced expression of the language barrier at work can be found in the relationship between a multinational parent company and its network of international subsidiaries.

From cultural and linguistic diversity, spiritual diversity; gender balance and sexual orientation can provide the organization. Cross-cultural challenges are in managing culturally diverse markets by MNC. The main challenge for Globalized business having challenges how to deal with other operators in decision-making processes, it is a challenge to do with a different culture and perhaps in a different language. This is why communication must form the basis of any international business. The exchange of employees is also important, and it is a good way to spread knowledge and company-norms. This is a good indication is thought to be a count of the number of languages spoken in a region or in the world as a whole. By this measure, there are signs that we may be going through a period of precipitous decline in the world’s cultural diversity. Language and cultural differences among subjects and investigators may also necessitate staffing changes to accommodate differences in culture20 -25% speak English as a native or second language. There are 300 million Chinese studying English and many more from India, Korea and the Arab world. There are about 200 languages that have a million or more “native” speakers. Mandarin Chinese is the most common, being spoken by around 874,000,000 people as a native language. English is a distant third with approximately 341,000,000 native speakers. On average, adult Americans believe that just over half (52%) of the whole world’s population speak English

 If we consider inter personal skill in working place is an important for efficient productivity. Due to our education system, persons are widening their team spirit from individualizing them self. Even though higher studies probably little bit are broadening but it also again widening the team spirit because of competition in their studies. So far it’s create problem for them to enhance their interpersonal skill in working place than non Asian.

The Southwest is distinctive because of its historical ties to colonial Spain, its Native American populations, and its regional cuisine, which has been influenced by Native American and Spanish cultures. Apparently different elements and measures accomplish different things in different national settings. Thus it is difficult to evaluate the contribution of employee participation to Innovation-orientated corporate culture. The Asian population (including Pacific Islanders) is defined as people of Chinese, Filipino, Japanese, Indian, Korean, and Vietnamese origin. It is estimated that there are eleven million Asians, making up about 4 percent of the population.

In America its often issue that most foreign employers says employers provide not sufficient help and assistance them to integrate into their community. Understanding American English is the major challengers for the foreign employers in American multinational companies. American conversation generally puzzled with truism, slang, regionalism and emotional expression that probably can’t understand by non Americans. In other countries most of people enjoys and wish to benefit a certain degree of achievement and self esteem but when u practice in American culture u again pulled down to the bottom line of Maslow’s hierarchy of needs (Appendix-1), which is psychological needs. They give top priority for those psychological needs.

If we come across with the management and leadership style there is less freedom of actions for executives and boards in America than in Asia. In Asia, progression usually is passed to the siblings. In Li’s case, he is handing it to his two sons, while Jack Welch developed a talent machine to groom CEOs for General Electric. To a significant degree, large American firms are at a later stage of development than many Asian firms. It is possible, but not certain, that Asian firms will follow this evolutionary path. But not yet common in our literature and discussion of business, to distinguish among leadership, management, and administration, better companies have complicated programs for developing executives within the firm, and ordinarily choose a next chief executive officer from among them.

 Again consider about the empowering leadership is relatively new, and stresses delegation of responsibility to subordinates. American companies that operate with largely autonomous divisions employ this style of leadership. Asian business leaders now espouse this style (for example, the CEO of Banyan Tree Resorts).

American and European are mostly emotional character, the ability to grasp what motivates others and appeal effectively to it, and they give priority for time, often work at time efficiently. But in Asian gives more important for living standards improvement, knowledge workers become more important, professional management gets greater demand, and CEOs have to compete for managerial talent. And generally they won’t give priority for time and work for it and strict to their schedules. Often clash with the time in many Asian companies generally in Sri Lanka and India can observe this attitude. It is often conflicts on projects and proposals to enhance on their dead line and their commitments. It occurs conflicts on postpones activities with Asian co-workers and business people. Once MNC companies and foreign culture came to practice some companies started to practice these things to compete with them thus become a major development for those countries.

Organizationally, Google maintains a casual and democratic atmosphere, resulting in its distinction as a “Flat” company. The company does not boast a large middle management, and upper management is so hands on, it’s hard to qualify them in a separate category. Teams are made up of members with equal authority and a certain level of autonomy is maintained. “We’re a highly collaborative culture,” said Karen Godwin, the office’s online sales and operations manager and a former Kodak executive. “There’s no top-down hierarchy

And Political connections and family control are more common in Asian businesses than in the United States. The political connections and influences are so important for top business leaders in Asia. But in Europe and America even though political involvement is still a route to business success in America, but it is much less common than in Asia.

And it is a tendency is easily understand with members of their own culture and not to belief or understand co-workers who are from different cultures, it takes some time them to understand and negotiate. May distrust occurs because of different culture groups, it may be arise conflict with counter parts. And if first impression is failed within them it may also occurs conflicts.

And Asian culture most probably not willing to discuss their problems and come up with compliments, they are typically negotiate with the situation , but others are do not negotiate with the problems generally straight forward and often deal with conflicts and managed. Non Asian give priority for competences and informality is an important but for Asian status, protocol and rank is an important, thus differs when recruit employees and working together.

Self-knowledge is important in avoiding the sort of over-reach so common in America; it is less common a high merit in America than in Asia, and is strength of the Asian executives.

Clear describing; a research by Hofstede (1980, 2001) with 116,000 employees of IBM says a giant MNC in 50 countries and 3 regions identified four cultural values in the workplace: (a) individualism-collectivism, (b) power difference, (c) uncertainty avoidance, (d) masculinity-femininity. Individualism refers to the culture emphasizes individual identity and goals, whereas collectivism refers to the culture stresses on group identity and goals. Power difference indicates if the members of a culture values hierarchy or unequal distribution of power in the workplace or not. The uncertainty avoidance dimension refers to the extent to which the members of a culture are threatened by unknown situation. Finally, the members of a masculinity culture hold distinct gender roles, whereas the members of a feminine culture believe no gender roles in the workplace. According to his research, the United States was the uppermost. Malaysia was the highest and Austria was the lowest in the power distance values. Greece was the highest and Singapore was the lowest in the uncertainty avoidance values. Japan was the highest and Sweden was the lowest in the masculinity values. There have been extensive amount of intercultural and cross-cultural studies with these cultural values, and verified the relationship between communication styles with some of these values.

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And also examines typically people in an individualistic culture (e.g. -U.S.) tend to use the low-context communication style, and people in a collectivistic culture (e.g. – Japan) use the high-context communication. Low-context (e.g., bold and direct) communication is not effective for collectivistic Japanese workers who prefer high-context communication. As discussed above, these communication styles are totally opposite. Thus, as expectancy violations theory predicts, when members face the opposite communication style from their style, they will experience violation, which will, in turn, produce consequences. Further, these differences in communication styles would also affect feedback behavior. Organizational members may receive feedback directly through performance appraisal; in this case Low-context people favor direct feedback received. But high-context workers wish indirect feedback received. And organizations in an individualistic culture tend to provide individual-focused feedback, whereas organizations in a collectivistic culture tend to provide group-focused feedback. European Canadians as individualists seek individual feedback when it is positive, but Chinese people as collectivists do not wish any individual feedback. Similarly, newcomers from the United States as individualists are more likely to look for feedback than those from Hong Kong as low-individualists.

And there is a issue in Asian countries that comparably graduate than men in Sri Lanka and India but if we see in professional side and higher position male are simply more percentage than female especially in higher position. Simply this happens was they are tending to have their home responsibilities after them getting married. This is how those countries productivity goes down rather than other countries. Sri Lanka often compare them with India for their professional and economy but if we consider our population is very low than them. There are over million students are graduating in an every year in India , but in Sri Lanka approximately there are 20,000 students only graduating in an every year because of our population and education system. So when MNC companies operating here with Sri Lankan employees it is hardly find graduates.

These are the darker sides of the culture diversity in MNC but if we see the brightening side, of course it helps to gain more market share and aim to improve technology. It brings better education or enhanced technology and cultural diversity. Like Mass Holding, HSBC are providing continuous improvements for their workers, In HSBC they provides Diploma in International Trading and International Banking for their workers continuous improvement and creates positive work place environment from creates team spirit activities and casual activities. Example HSBC in Sri Lanka I observed that they are having a card box called ‘Machan’ (it means friend in Tamil and Sinhala), anyone can put their ideas for HSBC include leisure activities in that box, they feel free to express their own idea and enjoying. This is how they creates the positive work force environment and develop employees’ relationship and communication to avoid conflicts where multi cultural employees are working together (Appendix – 2). In Google also they practices these friendly environment to avoid conflicts from different culture diversity. From this MNC s now many local companies are adopting this culture to compete with them.

Also some countries and local companies are started to practices these MNC s work practices, Example: Mc Donald’s work practices (Clean toilet and organized vehicle park, Mass Holdings and Toyota (continuous improvement) and Google (positive work force culture) Appendix – 3. Among the positive it can support mutual understanding, that we as people are not that different from one another and better communication politically, economically and academically.                                         

Cultural diversity makes country a much more interesting place in which to live for all of its inhabitants.  If we all thought alike imagine how boring the world would be!  In most of the countries there is lack of cross culture awareness to deal with diversity of culture while working in a MNC.


Competitive market is changing.  In many countries, the population growth of the ethnic minorities is skyrocketing.  Internationally, we now live in a global market, and any business that wants to do business overseas must develop the resources in its workforce and suppliers in order to compete.  Although having positive sides from culture diversity in MNC and there are more darker sides and issues to be deal with culture diversity.MNC are mostly focusing on gaining market share and earning profit there is lack of cross culture awareness to deal with diversity of culture every company should have a strategic plan for culture diversity to enhance their business.


What percentage of the world speaks English, Answer Bag [online] Available at: http://www.answerbag.com/q_view/53199

[Accessed 29th March 2011]

Diversity culture – Benefits, Diversity culture [online] Available at: http://www.referenceforbusiness.com/encyclopedia/Dev-Eco/Diversity-Culture.html

[Accessed 30th March 2011]

The World & I Diversity in America, Diversity in America [online] Available at: http://www.worldandischool.com/specialcollection/special-collection-diversity.asp

[Accessed 1st April 2011]


Appendix – 1

Appendix – 2


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