Socio Cultural Environment of Delta

Delta Airlines is a U.S. airline that services primarily domestic routes, in addition to some routes between the U.S. and other countries. Because of restrictions in the airline industry, airlines are barred from servicing domestic routes in foreign countries. Thus, the U.S. is effectively closed to non-U.S. airlines for travel between American cities, and Delta cannot expand to routes that do not include an American city. The socio-cultural context for Delta is therefore almost entirely related to the American market.

For the airline industry, there is actually little difference in the relationship that consumers have with airlines. Airlines provide a service that is highly standardized the world over. Where there are consumer differnces, these are reflected in the service-price dimension primarily. In some countries, consumers prefer to pay more to get a better in-flight experience. This is true of the focus country in this report, Japan. In the United States, the market is different. People prefer low cost above all else, and are willing to make substantial sacrifices to the flying expeirnce in order to lower the cost of flying. Whether this dimension affects Delta significantly or not has yet to be determined. In one sense, bcause most of the flights out of the company's Narita hub are international, and international flights usually have higher service levels to begin with, which is an interesting difference in the service offering between Delta's American and Japanese operations.

According to Hofstede's analysis (2015) is a highly individualistic culture that is moderately masculine in nature. This manifests in a competitive business environment, and customers who wish to be expressive, and who are somewhat indulgent. The U.S. has low power distance, which has significant implications for management, in that managers are not placed on much of a pedestal above employees, and are expected to demonstrate competency in order to justify their positions. The time orientation is fairly short, which in business means that there is an emphasis on actions that lead to short-term result, rather than on building the business for the long-run at the expense of short-run profits. This is not to say that the long-run is irrelevant, but a company like Delta has to account for the quarterly results, because that is the concern of shareholders, who need to invest with the company over the long run.

In other countries, the characteristics can be quite different. Delta has three foreign hubs -- Amsterdam, Tokyo and Paris -- but two of those are in conjunction with foreign partners. Only Tokyo-Narita is a hub that Delta operates on its own, with flights to 11 different countries. The Hofstede analysis shows that Japanese culture is significantly different to that of the United States. Japan has a highly masculine culture, so is quite competitive in nature. However, Japan is nowhere near as individualistic, and has a higher power distance. This creates more of a managerial emphasis on hierarchy, but with room for greater individual expression. One key difference is with uncertainty avoidance. Where the U.S. scores moderately on this attribute, the Japanese have a very high level of uncertainty avoidance, and therefore have a significantly lower tolerance for risk than Americans do. Japanese also have a very long-term time orientation, so generally are focused on the long run, without much concern for short-term results.

That the socio-cultural environment for these two countries differs substantially has certain implications for Delta's business. Running a business in these countries can be very different. While both are highly competitive in nature, differences in attitudes towards risk and in the way that people are managed can be significant. In general, there is a high level of diversity between management styles, where cultures are diverse (Bloom et al., 2012). So Japanese management can be expected to reflect Japanese culture, and this can create conflict for American managers from Delta. As an American company, Delta may be more risk-taking (in the market) than Japanese managers are comfortable with. So there may be some adjustments that need to be made here.

It may be necessary for Delta to hire managers who have significant cross-cultural U.S./Japan experience in order to deal with the substantial disparities in management styles between these countries. This will help the company to avoid any misunderstandings that derive from the cultural differences between the countries. There are also the customers to take into account. In terms of operations, Delta needs to understand how these differences manifest in customer preferences between the different countries in which they operate. If Japanese customers are different from American ones, that can have significant impacts on the service provision that Delta offers. This is even more concerning given that Delta inherited the Narita hub when it bought NWA -- homegrown Delta managers may be tasked with operating in an environment in which they have never previously operated.