This report would hereby review the expansion of Volkswagen's operations in India in order to gain a competitive advantage through the efficiency of cost effectiveness and quality labor pool. Due to rapid technology advancement the global marketplace expands. Foreign ideals and culture are easily spread and adapted by indigenous people in all corners of the globe, through "Globalisation". Industrial globalization has taken its grip and businesses are going across the cultural boundaries. The convergence enhances the communication level between cultures. On the other hand, with globalization cultural differences are also highlighted.
Overview of Volkswagen and Management
Volkswagen Germany is the largest car manufacturer in Europe and is renowned for quality cars at affordable prices. In order to maintain its competitive advantage in the car manufacturing industry it has decided to expand its operations in Pune India. The investment will be worth 560 million euros so it is imperative that careful thought is given to ensure success of this venture.
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Volkswagen would need to critically analyze India's Culture as they are entering a foreign market. This would provide the company with the possible problems that they would need to address through the cultural differences analysis .With this information Volkswagen's management can use this as a proactive tool to address the problems before they even occur within the company that can adversely affect the operations and the overall success of the organisation.
What is Culture?
A single definition of culture is not enough because the concept is far too complex. The word culture has many different meanings Edger Schein ( ) defines culture as the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic 'taken for granted' fashion an organization's view of its self and its environment. Culture has been defined under various headings including: national, organizational or corporate industry culture and occupational culture. for the purposes of this report will be confined to national and organizational culture Geert Hofstede (1980, 1991) outline five dimensions of culture namely:
Germany scored 67 points on individualism, the tendency of people to look after themselves and their immediate family only. That score is 56% higher than the world average score for individualism, where as India has a score of 48 points. Alfons Trompenaar agrees that Germans place high priority on looking after themselves and their immediate family. At work, however, Germans jointly assume responsibilities and achieve goals in groups. Cited in German Business Culture; Trade Intelligence from Geert Hofstede Cultural Model on Germany Daniel Workman February 20, 2008 "Trompenaar conducted a survey that asked managers from different cultures: "Do you prefer working in a group or working on your own?" A majority of 88% of Germans favour working in a group over solo efforts."
It can be seen that even though Hofstede's analysis illustrates that Germans are strongly individualistic , Tromenaar's survey have shown that the cultural distance between the two are converging as the Germans may in fact favour working in groups. Masculinity vs. Femininity Germany scored 66 points on masculinity, a cultural characteristic in which success, money and material possessions form the dominant values in society. That score is 32% higher than the world average score for masculinity. India can be termed as moderately masculine in nature as they scored 56 points
Germany scored 65 points on Hofstede's uncertainty avoidance index. This index measures the extent to which people feel threatened by ambiguous situations and have created beliefs and institutions to avoid such risks. That score is only 2% above the world average score for uncertainty avoidance. Germans insist on written rules and detailed codes of conduct that counteract their need for security as they work "by the book" Long Term V Short Term Brendan McSweeney is one of the many that argued against Hofstede's findings. He insisted that Hofstede's findings were all assumptions and that these assumptions are all flawed and therefore makes his national cultural descriptions invalid and false.
In my opinion, you can't base culture and behavioral attributes on findings from just one company, over 100,000 people and forty different countries compared to the billions of people in the world. The fact that one person acts a certain way under certain circumstances does not mean that others from the same country act the same way. The current scenario has changed. The bosses are not authoritative they used to be five years ago. In the recent past, a good number of multinationals have commenced their operations in India.
The work culture at these offices is almost the same as in America. The salaries have risen to the extent that the recent survey suggests that India received the maximum salary hike compared to all other Asian countries. This made finding the right human resource for the organization very difficult. Now, the offices operate with less staff providing ample of opportunities to do major work and handle responsibilities to the staff members. Though the class divisions that had been embedded in the society is getting extinct as people are accepting equality for all the way of their life.
India's Long Term Orientation (LTO)
Dimension rank is 61, with the world average at 48. A higher LTO score can be indicative of a culture that is perseverant and parsimonious. The economy growing at the rate of over 8% per annum and the agriculture production being excellent in the last few years has created a lot of wealth for rural as well as urban India. The average Indian is on the spending spree viz the entry of five low frill airlines has assisted more than 500,000 first.
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