CASE STUDY FOR LEADERSHIP CHALLENGE
INTRODUCTION
The contemporary world is a borderless community that values consistent innovation and strategies in all spheres of societal life, rapid transfer of information and goods, and extensive human exchanges. Globalization impacts the lives of people as the Internet, cell phones, and technological gadgets become the avenues for lifestyles, trends, issues and problems to flow across various locations of the globe. Thus, personal choices for living become entwined with what the rest of the world dictates. However, globalization poses greater pressure on business organizations as trade policies become less strict and trade takes place in the international context. Trade liberalization in the age of globalization paves the way for convergence of national economies and gives birth to the multi-national corporations. As the phenomenon of globalization continuous to thrive, international firms and enterprises rearrange their operations to adjust to the demand of the international market. Business expansions outside the country of origin and across national boundaries demand a new set of knowledge, skills and strategies with international orientation. The norm in international business and trade is to develop and manage people who are willing to acquire knowledge of other cultures, languages and business practices, and therefore become capable of managing cultural diversity in light of a global business operation.
ISSUES THAT THE POTENTIAL LEADERS OF CADBURY AUSTRALIA WILL FACE IN THEIR INTERNATIONAL ASSIGNMENTS
(1993) claims that going global requires transformation of managerial skills learned at the home office to enable the managers to function cross-culturally. Business firms must focus on selecting and training managers to become more attuned to different cultures, particularly in the culture of their country of assignment (). In the case of Cadbury Schweppes, the Board of Directors of Cadbury Australia have identified economy, politics, religion, value systems, and frame of reference of the Chinese consumers regarding the products of Cadbury Schweppes as the primary areas that posed distinct challenges in their expansion to China. Thus, the same aspects merit the attention of the leaders of Cadbury Australia who will be assigned at the company’s branch in China. The Chinese culture and lifestyle are different from those of the Australians and other Western nations where the company operates. Thus, the success of operation in China relies on the ability of the leaders to facilitate business operations in the midst of cultural diversity among the employees and distinct cultural characteristics surrounding the company such as laws, social norms and business practices.
The primary difference in the economies of Australia and China is the orientation. The Australian economy is an affluent, Western-oriented market economy ( 2007) while the Chinese economy adopts the economic style of Soviet Union wherein most of the economic activities are centrally planned by the government. In China, the local officials have immense authority although the economy is open to foreign investment and trade. The regulations state that Chinese firms should have at least 51 percent ownership and control of joint ventures with foreign investors ( 2007). (2003) reports that it generally takes two to three months to register a business in China with the government putting limits on the company’s business scope (). The difference in the economic orientation of the two countries poses certain challenges to the leaders of Cadbury Australia. These leaders are accustomed to a free market in the Australian economy wherein investors, consumers and producers transact free business and determine the flow of economic activities. In China, they would encounter restrictions in the various operational activities of the company such as production and marketing of certain types of products because the Chinese government pursues the interests of Chinese business organizations. Secondly, China’s transitional economy as cited by (2003) since the mid-1970s has fostered a tremendous opportunity for international firms to establish operations in the country and made international joint venture as a primary mode of foreign direct investment. However, managing joint ventures sometimes leads to cultural conflicts between Chinese managers and foreign managers. Australians are more Western and their approaches to management clash with the Chinese management approach. Chinese managers rely on interventions from the extended network outside the company to manage risks and threats rather than following the budgets and plans established in advance that are expected to guarantee success. The Chinese managers prefer particularistic and pragmatic solutions to organizational problems by analyzing causes of problems and soliciting outside intervention in problem solving while Western managers like Australians have the tendency to act in reference to a belief in an underlying principle that provides a ready matrix into which current reality and present existence can be fitted. Australians believe that future circumstances can be integrated into the ready matrix which serves as an analytic model to guide decision making processes (p. 147). Considering these differences, the Australian leaders who will be assigned to China may encounter conflicting management styles with their Chinese colleagues. Thirdly, Australia and China differ in religious beliefs. Australians follow Christianity, especially Protestantism, and believe that good works are gifts of hardwork and God’s grace in the life of His believer and not by interventions of outside forces ( 2007). Chinese are more fatalistic and believe that humans must follow their destiny by living in unity with the world of nature and pursuing social conformity ( 2001). Hence, Australian employees would perform their duties based on their personal judgments and decisions while their Chinese counterparts would consistently attempt to abide by the rules and seek opinions of other employees as they are more inclined to seek conformity. These differences in idea of independence would make the leaders of Cadbury Australia consider the outcomes and motivations of their manpower. Australian employees would be motivated to perform well if they are given sufficient freedom at work while Chinese employees may prefer to work in teams and have access to constant supervision. Fourthly, the Australian value systems relative to interpersonal relationships are in conflict with those of the Chinese. Australians as cited by Alon and (2003) value personal relationships with colleagues and supervisors but organizational hierarchy does not dictate their relationships. They equally communicate and relate to all members of the organization. Chinese employees, on the contrary, prefer a system in which coordination is hierarchical wherein the key institutional values underscore loyalty and submission to a leader whose right is to establish the goals of the group (). Accordingly, the leaders of Cadbury Australia who would be assigned to manage some operations of Cadbury China have to practice special care in dealing with their Chinese subordinates and fellow supervisors. They may encounter Chinese colleagues who would constantly consult them before they perform their responsibilities. These leaders have to recognize that the Chinese culture places much reverence to leaders while Australians prefer to work independently most of the times. Furthermore, Chinese are conservative chocolate consumers. According to (2006) most Western goods are regarded as luxuries by Chinese consumers. The average per capita consumption of chocolates in China is less than 50 grams annually which is lower than the consumption of Western countries and other developed Asian countries like South Korea and Japan. This statistics render a challenge for the leaders as they would have to come up with strategies that would make Chinese consumers appreciate chocolates more. Finally, Chinese consumers have a different frame of reference for Cadbury products. Cadbury products are widely popular in Australia and the population enjoys the chocolates and candies manufactured by the company. Presently, Cadbury Schweppes has a 55 percent share in the Australian chocolate confectionery market, leading Nestle (18% share) and Masterfoods (19% share) ( 2006) while the company has a weaker performance in China with a marketing shortfall of around 20 million pounds in 2002 (2003). Thus, the leaders of Cadbury Australia have to design marketing strategies and campaigns to increase consumer awareness about the desirability of the products.
THINGS THAT THE LEADERS SHOULD LEARN BEFORE DEPARTING
The six leaders from Cadbury Australia will be deployed in China for three years to achieve the purpose of expanding operations in the country. Before their assignment they should first obtain knowledge about the country’s culture and different aspects of business practices in China. According to (2003) in the age of globalization, information and intelligence should be the priorities of global managers. In a restrictive market like China, exhaustive research is one of the keys to success (). It is important that the six leaders should search the Internet, books, magazines, and other relevant sources to increase their knowledge about the culture, languages, business ethics and practices in China before they go on with their assignments. This way, they would be oriented on what the Chinese requires in business processes and thus, ensure that Cadbury would not deviate from what the Chinese culture dictates.
After accumulating intelligence regarding the Chinese market and culture, the leaders can now focus on specific Chinese beliefs in leadership to enable them to tailor their management approach and operational plans for the company. The Chinese culture as argued by (1996) dictates that business transactions should highlight relationships among the different parties involved in the business operation, especially between supervisors and subordinates (). (1997) elaborates by saying that a notable characteristic of Chinese leadership behavior is the concept of “Guanxi” which is the Chinese term for “relationships”. The concept of Guanxi refers to the continuous exchange of favors between persons in an organization that ensures the developing, nurturing and sustaining of interpersonal relationships. Guanxi dictates that the Chinese organization is an aggregate of people wherein the leader and his followers try to keep good relationships in order to enhance group cohesiveness and establish a shield against the uncertainties of the uninstitutionalized market economy. Guanxi dictates that the leaders of an organization should protect their subordinates in order to solicit their participation in the accomplishment of organizational objectives. Thus, employees are motivated to contribute to task performance and collective goal achievement while leaders rarely fire their subordinates. Dismissal of employees is considered as a failure of the supervisor because he has not entirely fulfilled his obligation as a “protector” (). The notion of Guanxi is a vital element in effective management at the Cadbury China office. The six leaders from Cadbury Australia should be able to depart a little from the more liberal practice in Australia wherein leaders guide their subordinates and subordinates dictate their performance in order to become effective leaders of Chinese employees. They should be able to recognize that since Guanxi is a guiding principle in Chinese business practices, they should also condition themselves to become protective leaders instead of guiding leaders. Also, the concept of Guanxi can be utilized by the six leaders in soliciting the participation of Chinese officials and other Chinese organizations that are also contributory factors in the success of a multi-national corporation. By pursuing harmonious relationships with the Chinese government, Cadbury would be able to access new business policies and requirements and therefore, adjust organizational practices thereof. This relationship with the government would also make the citizens aware that the company is compliant to the laws, and thus establish a good reputation or customer loyalty. Furthermore, (1998) states that Chinese traditions mostly emphasize group-oriented values in human interactions and business transactions. This focus on the group makes team management a significant approach in performance evaluation, personnel selection, quality control and project management. Team management has been considered by Chinese businessmen as the best approach to enhance collective culture at work (). The importance of teams or groups in managing business in the Chinese context runs contrary to the business philosophies of most Western nations and Australia for that matter. The Australian culture dictates autonomy in performing business tasks wherein the employees can exercise discretion in the performance of their responsibilities as long as they abide by the organizational processes and procedures. The Chinese culture, on the contrary, values teamwork and supervision. (1997) argues that the old Chinese saying that “the king shall be the king, and the subjects shall be the subject” applies to Chinese business practices. Leaders formulate decisions and policies which loyal subordinates comply with. This requirement bind supervisors and employees in a close relationship geared toward accomplishment of corporate goals (). In order to adapt to the Chinese culture, the six leaders of Cadbury Australia must be able to incorporate in their personalities and eventually put into practice a form of leadership style that does not eliminate the notions of Chinese Guanxi and teamwork. Studies on cross-cultural leadership practices have found out that managers and employees in all countries and cultures in the world favor democratic styles of management. Managers should direct and not persuade ( 1996). Considering the concept of democratic style in cross-cultural leadership, it is important that the six leaders of Cadbury should be able to familiarize themselves with the theories of democratic leadership. They should be able to accept that the success of any company relies on the collaborative efforts of the managers and employees. Thus, they should be able to formulate strategies on how to promote open communication and active coordination between the various departments of the company’s office in China before their actual assignment. They should also be able to design approaches that would guarantee that the employees have adequate participation in problem solving and decision making. Through the democratic leadership style, the six leaders would be able to abide by the Chinese’s emphasis on relationships and teamwork without losing the Australian orientation on autonomy.
MEASURING THE EFFECTIVENESS OF PROPOSALS
The best way to measure success in international business is through constant monitoring by the mother company. Through monitoring, the head company can gauge expatriate failure or success, and cross-cultural competence of expatriates ( 2006). Cadbury Australia must be able to implement consistent monitoring measures in the operations of Cadbury China and the performances of the employees and the six managers sent to the country. (2006) state that expatriate failure is oftentimes associated with lost opportunities, reduced productivity, and damaged relationships while expatriate success connotes the accomplishment of the opposite (). Furthermore, cultural competence is measured if the manager assigned at a foreign location possesses a strong personal identity, has knowledge of and complies with the beliefs and values of the culture of the country where he is assigned, demonstrates sensitivity to the affective processes of the culture, communicates clearly in the language of the country of assignment, displays a degree of culturally-sanctioned behavior, nurtures active social relations with the people and authorities of the country, and negotiates the institutional structures of that culture (2006). Cadbury Australia can follow the two strategies set forth above to measure the performance of the six leaders when they start their assignments in China. Basically, the leaders should be able to adapt quickly to the Chinese culture, comply with its requirements while performing their responsibilities, and gain appreciation of the unique processes of doing business in the country.
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