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Culture and business practices

We recognise that diversity, which is a product of cultural difference, will affect business and management. Which aspects or functional activities do you think will be affected by diversity?

Walker et al. (1992) may provide the answer. Their book, Doing Business Internationally: The Cross-cultural Challenges, examines five business activities:

  1. Planning
  2. Organising
  3. Staffing
  4. Directing
  5. Controlling

In this step, we will focus on the first stage (planning) which is interpreted as corporate strategy. We will discuss the other activities later in the course.

Culture and corporate strategy

When examining the relationship between culture and strategy, we first need to ask ourselves: is strategy a product of culture or is culture a product of strategy?

Gringer and Spender (1979) thought that culture affects the development of strategy (see figure below):

This figure shows the role of culture in the development of strategy. The first step is tighter control, which is then implemented and if the impact on corporate performance is unsatisfactory we move to step two, reconstruct or develop a new strategy. We then move from the development of the strategy to implementation. If the impact on corporate performance is unsatisfactory, we move to step three, which is to abandon the paradigm and adopt a new one. This is where we look at culture, which feeds into the development of strategy, followed by implementation and, finally, corporate performance.

Adapted from Gringer and Spender (1979, p. 203)

Fatehi (1996) explains that culture affects the formulation of strategy in two ways:

  • Relationship with the environment
  • Relationship between people

In the first dimension, a corporate entity builds a mental framework of two types of person: engineering-oriented or symbiotic-oriented. Engineering-oriented means that people will change the environment for the benefit of organisations. Whereas symbiotic-oriented means that organisations will adapt their strategy to the environment.

Culture also impacts on the interactions and interpersonal relationships within a company. For example, employees from US or employees from Japan may exhibit considerable differences when working together, such as in communication styles and approaches to group work.

Your task

What is your opinion about the relationship between culture and strategy? Do you think that strategy is a product of culture or the other way around?

Share your opinions with your fellow learners.


References

Fatehi, K. (1996). International management: A cross-culture and functional perspective. Prentice Hall.

Gringer, P. H., & Spender, J. C. (1979). Turnaround: Managerial recipes for strategic success: The fall and rise of the Newton Chambers group. Associated Business Press.

Walker, D. M., Brake, T., & Sullivan, K. (1992). Doing business internationally: The cross-cultural challenges. Princeton Training Press.

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This article is from the free online course:

Business Management: National and Organisational Cultures

Coventry University