Part A: A Case Study of National Culture And Offshoring Services
The article is a research report into the role of national cultures in offshoring services, by investigating the specific decisions through which national cultures influence operational implementation in offshore facilities. This is crucial not only because globalization has made it necessary for organizations to fully leverage the cost/technological opportunities available across the world, but also because “with globalization, the impact of cultural adaptation will need to be central to our study of (many) operational topic areas” because it has an impact on the respective organizational cultures. Metters (2008) used an ethnographic research design and drawing on secondary data from archival records, to study the national/organisational cultures in US services processes outsourced to the Dominican Republic and Barbadoes.
The study was focused on the influence of national cultures on the implementation of three key operational models i.e. location, shift work and total quality management (TQM). Metters (2008) builds on literature reviews arguing that cultural diversity in outsourcing operations is critical as a strategy compared to strictly cost-cutting decisions. Asserting that cultural differences are more emphasized in service processes compared manufacturing operations, the study finds that cultural classes occasioned multiple operational difficulties for a company that outsourced the same processes to the said countries. Success at one site was only made possible by complex/difficult operational adaptations in order to avoid adverse cultural influences on the processes.
Metters (2008) compares the failed and successful offshore ventures despite the similarity of strategies, establishing that organizational contexts, nature of projects, teams, and tasks offshore uniquely influence the outcomes, and are in turn shaped by the respective national cultures (p. 742). The researcher details specific decisions and/or outcomes realized on the choice of the country, specific locations inside the choice country, quality implementation strategies and shiftwork, which heavily draw on the cultures in the specific environments. This is a possible limitation since the findings may be argued to be limited to the specific locations. Effectively, different offshore locations require equally unique solutions since “studies conducted in one country may not be generalizable to others because of national culture effects”.
Part B: Jensen Fine Furniture
Jensen Fine Furniture is an Australian-based, niche manufacturer of handmade, high quality, hardwood furniture, which runs into difficulties keeping costs down following the tightening of the regulatory environment that increased the input costs. With its key artisans also retiring, the company decided to outsource its operations to a Vietnam-based Century Furniture, which had the best capacity of other firms across China, Bangladesh, Thailand and Thailand. Substantive operational issues were hammered out with the partner firm to ensure it had the capacity to manufacture high-quality furniture including the provision of training to the employees. However, the partnership ran into difficulties from the start with Century Furniture struggling to meet the order by a major department store, Montague. Among the problems included the delayed delivery of raw timber to Vietnam, communication and communication among the employees, difficulties and time required in training offshore employees among other challenges. Jensen Furniture received the Montague order three months behind schedule. Even so, the finished product fell short of the Jensen Furniture’s standards, so much so that Montague rejected the furniture, which had to be sold as seconds to a clearing warehouse without bearing Jensen’s name. Jensen sent a team to Vietnam in an attempt to shore quality, which proved unfruitful, effectively forcing the company to return its manufacturing onshore incurring AUD$450,000 in losses.
Part C: Linking the Case to the Article
Offshoring decisions are mainly driven by the need to cut costs (labor and other inputs), but these decisions barely consider the cultural implications of these decisions, which is not unlike Jensen Fine Furniture decision. Offshoring marries different national/organizational cultures, which is both an opportunity that may be leveraged as a competitive advantage and a risk. Metters (2008) points to the difficulty to assure service quality as the challenge in offshoring ventures. Jensen Fine Furniture’s decision to move its operations offshore, including its choice of Vietnam was solely driven by the need to cut costs, even in the face of Century Furniture’s glaring experience and skill deficits. The company’s universalist belief that training and capacity-building were the only gaps to be overcome, fails to take into consideration the fact that specific quality standards may differ across cultures (Metters 2008, 738).
According to Metter (2008), national cultures affect the decision making and implementation processes, which in turn influence the respective outcomes in a unique way (Metters 2008, 742). For instance, Jensen did not expect the possibility of slow port clearing process, corruption, language barriers, employee teamwork and cooperation to affect its operations. Despite the fact that the company recognized that experience and craftsmanship were critical to the production of quality (its experienced craftsmen retired), the company failed to anticipate that it could need much more time to train foreign employees to achieve the same level of skill/experience. Jensen Fine Furniture should have comprehensively assessed the associated offshoring risks more carefully, tailored its corporate communication strategies to fit in with the Vietnamese culture. Offered proper training and knowledge transfer programs to the Century Furniture employees, besides instituting a comprehensive disaster recovery plan.
Metters (2008)’s comparative analysis between offshore activities in Barbadoes and the Dominican Republic is also helpful for Jensen to understand the fact that management practices are translatable across cultures. An analysis of destination country’s cultural issues (including possible compatibility with the home country culture and organizational culture) is just as important as the assessments for the technical and other capacity. This assessment also provides a structured manner to determine which processes remain in a high-wage country in order to avoid a complete failure. In order to ensure success, Jensen Fine Furniture must set up rigorous and adaptable mechanisms identified in Metters (2008) to ensure that offshoring operations work seamlessly across cultures.
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