International Business Environment

Case Study- Cultural Environment: Manager goes native

Case Summary: Uganda, a country of economic, political and cultural complexity, since gaining independence in 1962 has had a largely unhappy history with the ruthless dictatorship of Idi Amin. English is the official language but Bantu or Nilotic languages are very common. Twothirds of Ugandans are Christians and there are large numbers of Muslims and adherents of various animistic religions. Nepotism is the norm and the government is considered most corrupt in the World. Also this is the country where incomes are extremely low and there having an exorbitant payment system. The positive side is foreign companies that want to do business in Uganda aren t heavily regulated and less than 5% of population has access to electricity, in this arena Ugandan government strongly favored HG power plant project. HG, a U.S based company, specialist in power plant projects (Dams) whose values strongly built on Christian culture. The Uganda project is its first in Africa. Because dam construction involves huge amounts of capital and because many groups oppose their construction on the grounds that they typically displace large groups of people, HG wanted to build as many local allies as possible for its Ugandan project in order to prevent adverse publicity that could lead demonstrations and costly work stoppages. Employees in HG have a high degree of empowerment, being fully responsible for their actions. There is no code of conduct concerning expatriates lifestyle but its corporate culture was the one that reflected the lifestyle of a prosperous international company. Charles Martin, an American was specialist in African culture, graduating with a major in African studies and a professional experience in Kenya, Ethiopia and Tanzania. He took a job in HG with the purpose of being assigned to an African project after 2 years of training and doing business in U.S. He combines a home country corporate perspective and a deep knowledge of Uganda economic, political and cultural aspects. Martin was assigned with a Liaison role as a part of preconstruction phase of the project. He lived among middle class Ugandans and not in upscale neighborhoods where most international managers live. He didn t integrate himself within the expatriate s community. He made extra payments to local people to get things move faster. He hired staff closely related to Government officials (showed Nepotism) and participated in tribal rituals to get support from villagers affected by dam construction, although being employed in a company embedded in Christian values. Some of Martin s practices were concerning James Green, the Vice President of HG such as independent lifestyle, participation in tribal rituals, way of achieving results, unethical practices, payments which might be illegal under U.S Law, Martin s distance from the expatriate community.

Case Methodology 1. What is the main issue/problem? The main problem is Martin s role which include y independent and inconsistent lifestyle y Participation in tribal rituals y Way of achieving results through unethical practices y Payments which might be illegal under U.S law y Martin s distance from expatriate community Issues include: y Polycentrism: In Polycentric Organizations, control is decentralized so that managers feel free to conduct business in what he thinks (where Martin succeeded) and too much polycentrism may shy away the company from certain countries. y Ethnocentrism: The belief that one s own culture is superior to others. As HG is based on Christian culture, its belief would be superior towards Christian values. y Geocentrism: It is between the extremes of polycentrism and ethnocentrisms. It is the practice that include neither home operations nor the host country company s but the hybrid of two. 2. Why is this issue/problem important? It is important because it could damage Company s reputation and its operating culture in overseas. Also, Green (Vice President) worried that some of Martin s accommodations with local stakeholders might have unforeseen repercussions for the company s presence in Uganda. Also, it is important because a foreign company should understand the values and beliefs of culture and adjust to ever changing operations management. Culture refers to learned values, norms based on attitudes, values and believes of a group of people. Different people belonging to different group vary the culture. Here HG s company culture and also the problems the company was faced because of culture differences and legal entities. International companies must evaluate their business practices to ensure that their behavior accords with national norms. 3. What are the controllable and uncontrollable variables? Controllable variables: Rules, polices of a company or organization, language and religion Uncontrollable variables: Culture, Money

4. Who are all the interested parties in the issue and why? Interested parties were Liaison, Company s Top management and people of Uganda who were to be the workers for project in Uganda. y Liaison is important as he need to establish a base for the project to develop in Uganda as a part of preconstruction phase. y Company s top management as in case was CEO and Vice President who need to support and control company s operations in overseas. y People of Uganda who were of different culture when compared to HG s culture need to be molded properly in an ethical fashion. 5. What is the alternate approach? y They should employ someone whose main function is to be liaison between HG s culture and Uganda culture, without considering only Uganda s culture because culture includes norms based on learns attitudes, values and beliefs vary from one country to other country. y HG must establish clear guidelines that reflect both U.S law and corporate policy to guide the employees for their foreign operations. 6. What objectives, policies, strategies, tactics and actions would be taken with each? y The strategy could be where HG s culture should likely to be changing with respect to employees in order to attain better results. y HG s policies, tactics and actions should be changed in such a way that Ugandan people should be convinced for HG power plant project and also it should reflect the managers of HG. y Also, Government of Uganda should take necessary measures in controlling various issues like corruption, etc. 7. What are the potential effects on Project and the likelihood of those occurrences? Changes in HG s culture with respect to employees and their attitude will definitely give positive impact on the project. 8. Choose one of the alternatives and defend why your choice is best. HG must establish clear guidelines that reflect both U.S law and corporate policy to guide the employees for their foreign operations Reason: Because employees/managers are the one who need to play a very important role in foreign countries starting from a liaison role to general manager in a foreign country.

9. What are the future implications on the interested parties if your recommendation is implemented? Implication would be major on the employees of HG and there could be given much more importance to both company s and the country s values, beliefs and motives.

Conclusion: y y y y Globalization of company into international business environment requires thorough research of the country s culture. There is need for accommodation to the different standards of doing business by the host company in the foreign country. It is necessary that the company should respect other country s beliefs. People working in foreign environment should try to become geocentric.

Martin to be continued in his role but it would be at company s risk.

References: y International Business Environments and Operations by John D. Daniels, Lee H. Radebaugh, Daniel P. Sullivan, I. Prashant Salwan