This assignment has been formulated such that a detailed study can be provided to the readers with respect to Cross Cultural Management. In the following assignment, Cross – Cultural Issues faced by the Airbus Consortium have been discussed, along with the various efforts they took to try and manage them. Global Leadership and Organizational Behavior Effectiveness (GLOBE) Project has also been discussed about in the following assignment, which helps to provide a better understanding so as to where exactly Airbus went wrong such that it had to face the various issues. Thus, in turn, provides a better understanding on how to tackle the various Cross – Cultural Management issues that are prominently faced in a world where globalization and urbanization are at a considerable increasing pace, especially in today’s Business oriented environments.
Introduction
In a progressively global world, business fields have people from all kinds of cultural and political backgrounds. In such a world, it is expected of different cultures to meet, conflict and blend together. Cross-cultural management helps to succeed in such a diverse environment by compiling with these differences, helps managers to contend with the challenges and opportunities of coping and handling employees in a culturally diverse organizational environment. With the increasing globalization, the need for managers towards the cultural aspects of decision-making becomes much more important than ever before.
Cross-cultural management focuses on understanding the views, beliefs and values of employees from varying cultural backgrounds. By paying attention to specific areas of communication, such as non verbal, oral and written messages, cross – cultural communication focuses on improving the usefulness of the intercultural messages. Cross cultural management and communication also concentrate on cultural dimensions which characterize distinct societies, such as the stress on collectivism versus individualism.
In short, when an individual or a group of people from a particular cultural background interact with each other, understand and deal with a person or a group from some other cultural background, it is termed as cross-cultural management.
Cross-Cultural Issues Faced By The Airbus Consortium
Airbus is a company practicing aircraft manufacturing and was formally established in 1970. With its main office located in Toulouse, France, Airbus is operating over 160 international sites. It has its 16 main development and manufacturing sites in Germany, France, Spain and UK, and is the possessor of three fully owned subsidiaries in North America, China and Japan. More than 55,000 workforces of over 80 distinct nationalities work at the Airbus, speaking 20 differing languages.
The main issue that the aircraft manufacturer faced was the delay in bringing the Airbus A380 in the market for two years, after facing a loss of euro 2 billion, which in turn lead to major cuts in the size of their manpower and the closing down of some of their plants.
In correlation with the domestic ownership stakes, the human resources of the Airbus are geographically allocated to a considerable extent. The main problem came up when the EADS company of Airbus was established, where two chief executives, headed by French and German. Even after knowing the problems that began with the development of A380, the heading of the company by the two chief executives was maintained. From the view of ‘Hofstede’s Cultural Dimensions’, the French preferred high power distance, while the Germans like low power distance. The Germans preferred collective decision making, whereas the French preferred centralized decision making. This lead to major decision making problems – while making the decisions, the Germans tended to interfere in the conversations, which was found to be distasteful by the French, unintentionally, hurting the ego of the France people, in turn creating conflicts and disputes.
One of the dominant reasons in the postponement of the launch of A380 for 2 years was because of its complex wiring system. The system had 500,000 models, which were required to be kept in sync with various countries, which created several major problems because of the different engineer workforces which were allocated at different whereabouts.
Different parts of the aircraft were also made in different locations, and assembled at a different place – different parts of the aircraft were made in France, Germany, Great Britain and Spain and were then assembled in Toulouse - creating unnecessary and easily avoidable transport and communication costs.
The second major issue was regarding the computer software knowledge. In Spain and Germany, the older version of AUTOCAD, V4 was used to design the wiring systems whereas version V5 was used in France and Great Britain, creating unnecessary problems as the data would get lost in the process of shifting the files from one system to another.
The French were more qualified with the new software technologies, whereas the Germans were more experienced. However, because of lack of integration, lack of training, lack of involvement of the Human Resource Management team in these issues, and the lack of involvement of the top management officials in the concerned issue, the result came out to be a failure in the execution of the same.
Even the top managers were busy in hassling for occupying senior positions. Here preference is given to personal goals over, they are always kept above the organizational goals. The political goals of the management lead to the failure of the project goals of the organization. The self-centered attitude here, lead to scattering of the decision making power, which could’ve been the most essential tool in a situation like this.
All these problems drove the company to be forced into a situation where it had to delay the launch of A380 for two years. Postponement in the delivery of the aircraft resulted in creating a scarred image of the company in the market, which even led to some of the airlines to scrap their orders.
Efforts Taken By Airbus to Tackle the Issues
Although Airbus did have many drawbacks in the way of its management, it does not mean that it didn’t try to tackle the issues at all.
For tackling the wiring system and software related problem, Airbus tried to invest to train its workforce with assistance of the software supplier. Intercultural sessions were also set up by the hope of generating a feeling of mutual understanding among the diverse cultured employees, however, the attempt failed to properly address the fundamentals of cooperation and introduce them to the employees.
The Managers of EADS too tried to draw attention of their workers towards the likeness over the differences and unlikeness to contend with the cross cultural differences and problems.
Airbus tended to distribute its manpower geographically, with correlation to the domestic ownership stakes, in order to grow their productivity.
GLOBE
Global Leadership and Organizational Behavior Effectiveness (GLOBE) is a research project, where the topics such as cross cultural management in different organizations, relationships between different societal cultures and organizational cultures, and research on organizational leadership is done on the basis of different cultural aspects of different nations.
The GLOBE project was originated in 1991 by Robert J. House (The Wharton School, University of Pennsylvania). It involved 170 country – co – investigators
Who worked in 62 of the world’s cultures along with a group of 14 coordinator members. Data was collected from over 17,300 managers in about 951 organizations.
The research projects consist of three main phases. Phase one included developing of questionnaires and other research tools ; In phase two, these research tools were used to study different cultures to assess and evaluate nine cultural dimensions to summarize the behavior of 62 different societal cultures. In phase three, 25 cultures were studied in substantial and extensive detail.
The 62 “societal cultures” studied by GLOBE were then grouped into 10 “societal clusters.” These clusters were made not according to the findings or the research, but were made before any information was collected. The ten social clusters are – Anglo (including England), Latin Europe (including Spain and France), Nordic Europe, Germanic Europe (including Germany), Eastern Europe, Latin America, Sub – Saharan Africa, Middle East, Southern Asia and Confucian Asia.
One of the most important things that was focused on, by the GLOBE researchers was the measurement standards that they would use so as to be accurate about the likeness and unlikeness among different organizational and societal cultures. After a major literature review, the GLOBE team came up with ‘nine cultural dimensions’ that would serve as their measurement standards to study the various cultures.
The nine cultural dimensions, or units of measurements are as follows :
1. Performance Orientation – “The degree to which a collective encourages and rewards group members for performance improvement and excellence.”
A society’s degree of performance orientation determines the effectiveness of the leadership qualities of managers. Performance orientation relates to the degree to which managers or leaders set the goals in front of their subordinates, effectively communicate to them about their expectations and motivate the subordinates so as to grow a feeling of self – confidence in self in order to achieve those expectations and goals.
2. Uncertainty Avoidance – “The extent to which a society, organization, or group relies on social norms, rules, and procedures to alleviate unpredictability of future events.”
An Alternative way of defining what this talks about is the extent to which uncertain instances are felt as threatening, that is, the degree to which methodological measures are taken and enforced in order to reduce such uncertain situations. The more a society or an organization values the ‘Uncertainty Avoidance’ dimension, the more they develop a team – oriented leadership.
3. In Group Collectivism – “The degree to which individuals express pride, loyalty, and cohesiveness in their organizations or families.”
A high value to the ‘In Group Collectivism’ lead to collaborative team work, loyalty of organizational families and noteworthy performance. The duties and obligations become key features that determine the social behavior. The stride of life however, is steadier.
4. Power Distance – “The degree to which members of a collective expect power to be distributed equally.”
High Power Distance practices convey a self – protective leadership. The society gets distinguished into many classes, and the resources get limited only to the few people of the upper classes.
5. Gender Egalitarianism –“ The degree to which a collective minimizes gender inequality.”
When Gender Egalitarianism is given high value, it helps the organization to work in a participative manner, produce efficient and effective results and even contributes to increasing the efficiency of group - works.
6. Humane Orientation – “The degree to which a collective encourages and rewards individuals for being fair, altruistic, generous, caring, and kind to others.”
Societies that value Humane Orientation reflect supportive, sensitive and generous leadership. The interests of other people are given importance. People develop a feeling of belongingness, which indirectly leads to motivation to do effective work. One key advantage of Humane Orientation is that people become sensitive towards racial discrimination.
7. Institutional Collectivism – “The degree to which organizational and societal institutional practices encourage and reward collective distribution of resources and collective action.”
High Institutional Collectivism societies generate a feeling of interdependency with the organization in the hearts of its members. It enhances the group loyalty, and the economic system of the society enhances the interests of collectives. And also, the important decisions are help to be made by collective group discussions.
8. Future Orientation – “The extent to which individuals engage in future-oriented behaviors such as delaying gratification, planning, and investing in the future.”
Value given to Future Orientation ensures long term success, ensures flexibility and adaptive quality to different situations, and provides a tendency to save the present for the future.
9. Assertiveness – “The degree to which individuals are assertive, confrontational, and aggressive in their relationships with others.”
Assertiveness helps in generating a sense of competition, which can lead to success as well as the opposite. It facilitates better communication and a better control over the environment. It helps the subordinates take initiatives and thus build trust. However, too high of assertiveness might be very bad for organizational environments.
Airbus and GLOBE
Studying the crisis that Airbus faced in context with the nine cultural dimensions of the GLOBE project, many useful inferences can be drawn out.
Between the French and the Germans, a clash relating to the ‘Power Distance’ dimension arose. The French preferred centralized decision making whereas the Germans preferred decisions to be taken collectively. Thus the Germans’ interference caused misunderstandings and with time, disputes.
Uncertainty Avoidance was definitely not taken care of. If Airbus would have analyzed the uncertain events that could’ve taken place, they might have been able to avoid the cost incurred on transferring of all the different parts of the aircraft which were manufactured at different places and assembled at a different place. Also, many problems relating to the software issues, where they lost files while transferring the data from one system to another could have been avoided.
Performance orientation was clearly not taken care of during yesteryears. The government used to provide aid to their respective partner first. This lead rise to power inequality and not all the group members were rewarded equally for improvement in their performance.
Conclusion
Now that we have studied about the advantages of Airbus, we must also discuss the several associated drawbacks in the management techniques of the Airbus. These can broadly be talked about over the ‘Nine Cultural Dimensions’ stated by members of the GLOBE project. After the above case study on the Airbus and a brief review on the ‘Nine Cultural Dimensions’, one can easily make out where the aircraft manufacturer exactly went wrong, and how the problems that arose could have been tackled much more proficiently and cost effectively.
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