Cultural Conflicts in Multinational Corporations

Cultural Conflicts in Multinational Corporations

The objective of this work in writing is to examine a multinational organization that has experienced cultural conflicts both internal and external to the organization. This work will define the culture conflict and analyze intervention strategies that have been used or could have been used to deal with the conflicts and will apply a predictive model in this analysis.

Globalization has in many aspects led to a departure of cultural traditions and this may be specifically applied in the case of restaurant chains such as McDonalds and Starbucks. Restaurant chains are stated in the work of The Levin Institute entitled: "Globalization 101" to affect not only eating habits "but they also influence traditions and mores in countries where they are located. Starbucks causes cultural concerns in Italy because of the association that Italians make between coffee and leisurely sidewalk cafes. Coffee in Italy is more than a drink; it is part of the way of life and Italian mores. While in the United States it is common for people to buy takeaway coffee for drinking in the street or office, in Italy people usually prefer to relax and chat with peers while drinking coffee. Coffee shops offer a personal, friendly atmosphere that many Italians believe a large chain could not provide. Similarly, many people would prefer to frequent coffee shops that are each unique, while Starbucks offers a standard formula." (The Levin Institute, nd)

I. Components of Culture

According to the Levin Institute issues relating to culture and globalization "have received less attention than the debates, which have arisen over globalization and the environment or labor standards. In part this is because cultural issues are more subtle and sensitive, and often more confusing." (The Levin Institute, nd) In order to grasp all that is involved in a 'cultural' formation and identification and is inclusive of:

(1) Religion;

(2) Economy;

(3) Family

(4) Relation of individual to society;

(5) All aspects of human adaptation including technology, language and social roles;

(6) Civilization (includes social, political military and religious life)'

(7) Change;

(8) Ethnicity; and (9) Race. (University of the State of New York, State Department of Education, 2006)

II. Globalization and Homogenization of Culture

It is stated in the report of the Levin Institute that one of the primary concerns of globalization is that "it not only leads to homogenization of world culture, but also...it largely represents Americanization of world cultures." (The Levitt Institute, nd) Another example of such homogenization of culture is that of McDonald's restaurant in China. China is a country where children are expected to eat whatever is placed before them and in which they should not have an opinion of what they eat however, in China the marketing of McDonalds to children has resulted in children desiring to make their own food choices when eating at McDonalds. The following illustration labeled Figure 1 shows the global graph of Starbucks and McDonald Monopolies.

Figure 1

Source: (The Levitt Institute, nd)

In order to address the challenges that have presented Starbucks in its establishment of a business operation in other cultures, this work turns to a couple of reports on Starbuck's initiative to enter other cultures.

III. Active Participation, Collaboration and Cultural Involvement

The first report entitled: "Israel, Starbucks, and the New Irrationalism" states that a demonstration took place in London against the invasion of the Gaza Strip by Israel and that when the anger and violence escalated "some protestors turned their anger towards Starbucks..." reported to have been utterly decimated and even the coffee machines bashed to pieces. The reason given is a rumor that Starbucks is funding Israel's war in Gaza." (O'Neill, 2009) However, Starbucks does not fund Israel's attack on the Gaza Strip. This report highlights the need for companies such as Starbucks to become more involved in communication and interaction with the cultures in which they are located. This is because these factors are critically important in the process of removing cultural barriers relating to economic or business dealings in that many times it is a simple misunderstanding that results in ensuing conflict.

Another source of conflict is reported to have arisen between the Ethiopian market and Starbucks due to the demand of the Ethiopian market receive revenues for Starbuck's sales of its Ethiopian specialties coffee. It is reported that Starbucks cannot be thought of as economic competition" but instead is in reality a form of "cultural monopoly, and it ends up destroying cultures." (Fellner, 2008) It is important to realize that the farmers those actually are those actually growing Starbucks coffee, for example in Ethiopia, were living in conditions of poverty while those frequenting Starbucks were of a more affluent group. This is a marketing and distribution process which involves a "web of trade regulations that keep farmers in developing countries poor, even while transnational corporations in the global north prosper." (Fellner, 2008)

This highlights the need for Starbucks to more than just abruptly enter a marketplace in a culture but instead to educate their organization concerning the particularities of that culture so as to impact the culture positively rather than negatively and to create the potential for organizational success within that specific culture. The conflict further deepened in Ethiopia with Starbucks organization and there were many entanglements concerning intellectual property rights, branding and other issues as well. However, Starbucks did eventually work things out to the satisfaction of their organization and the government of Ethiopia.

Fellner (2008) states that this test was hard for Starbucks who "didn't do a very good job of handling it, but the company survived and learned something more about its role in the world..." (Fellner, 2008) It is reported that Starbucks was "thrilled with the outcome. Once we were actually able to talk with them, we were able to start resolving the problems," he told me. "It's like me sitting here with you. We haven't met before, but we get to know each other. And next time we know each other a little better, and we grow to understand each other." (Fellner, 2008)

IV. Hybridization

The work of Kaczmarczyk and Lewicki (2007) entitled: "Lost in Transformation: Cultural Encounters in Multinational corporations investing in Central and Eastern Europe" states that process known as "hybridization" involves the mixing and "complementary existence or even synthesis of various encounters and cultural background." Kaczmarczyk and Lewicki (2007) stated that the process of hybridization is one within transnational companies which involves the mixing and complementary existence of cultural and organizational patterns and behaviors." Hybridization describes "complex relations inside and outcomes of companies..." (Kaczmarczyk and Lewicki, 2007) Hybridization is used to identify a process that does not have "a prescribed and visible end or outcome therefore the term used is hybridization rather than the tern 'hybrid' which refers to a "new, accomplished entity" but instead to what is "must a glimpse" of a broader civilizing process in which what we call global and local seem to play more and more important role and seem to be at least as important as difference between Western and Eastern culture..." (Kaczmarczyk and Lewicki, 2007) Hybridization can be defined as being a "mode of behavior of MNC'c subsidiaries...which consists of relatively deep interaction of local culture, patterns of behavior and perceptional schemes and MNC's rather universal norms and tendency towards standardization." (Kaczmarczyk and Lewicki, 2007)