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Mnc Entering India (Vodafone)
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18 December 2009
Words: 1778 | Pages: 8
When Cross Border Mergers or Acquisitions happen the participating organizations need to understand the issue of differences in national cultural issues very well in order to set up a successful Joint Venture (JV). Each country has a different national culture and this needs to be recognized and addressed because it will ultimately impact upon the work culture of the fusion organization they are newly going to form.
Geert Hofstede developed a model which seeks to understand how values in the work place are influenced by culture. He started this study by looking at IBM operations between 1967 and 1973. Data was culled out from 50 different countries which were then extrapolated to 74 nations (the original 50 plus an additional 24). Initially Hofstede zeroed in upon four factors -
1. Power Distance (PD),
2. Uncertainty Avoidance (UA),
3. Individualism (IND) and
4. Masculinity (M).
Later on he added a fifth dimension as well. This fifth dimension arose out of his interactions with Chinese workers who as a general rule gave great weightage to their Confucian beliefs. Confucianism as such lays stress upon Long Term Orientation. Hofstede found it worthwhile to take up this fifth dimension as well since he found that this dimension is relevant in the workplace in both Confucian and non Confucian societies.
Hofstedeâ€™s view is that in strategic terms before, while and after forming the resultant organization the management needs to examine, introspect and understand that both the nations would have different scores on these five basic values in the work place. The resultant organization is the result of two different national cultures. This would help in creating and maintaining a well fused organization. We can now examine the Hofstede scores of UK and India as a means to understand likely issues faced by an organization like Vodafone where UK and India are involved.
The Hofstede Global Average on each of the five factors can be basis of reference and against this we can compare India and the UK. The Global Average is a weighted average drawn from developing and developed economies. Bearing this in mind we can develop perspective on Vodafone wanting to set up a corporate entity based in India. The Average scores are:-
Global Average India United Kingdom