Planned Walmart Entry into the United Arab Emirates.
Preparation for market entry: An analysis of the target culture
As Walmart plan to enter the UAE market, there is a need to invest a lot of time and resources in understanding more about the culture of the people of the UAE. There is a great difference between culture in Walmart’s home market, USA, and the culture in the target market (UAE). This cultural difference may become a barrier to business performance if it is not handled well. Walmart should therefore study UAE culture exhaustively before it sets foot there. This includes an understanding on how culture influences consumers ‘decisions. Previous research has shown how culture affects various aspects of business. For example, investigations by Sorensen (2015) support the claim that culture plays a key role in consumer decision-making behavior. This is in agreement with the findings of Trompenaar, Hampden, and Turner (Gutterman, 2010). On their part, Wursten and Fadrhonc (2012) pointed out that customizing business approach to each target market is effective despite prohibitive costs, but cautioned that standardizing one marketing approach to all target markets is efficient but ineffective. They suggest that any multinational company ought to tailor its business approach to target region or country. Their argument is that because regions/countries have different cultural setups, the best approach which offers a solution for a multinational corporation is the one which is based on cultural differences. To them, such an approach is not only efficient, but also create the most effective impact. Previous research showed that countries/regions can be classified into cultural clusters.
The concept of cultural clusters is a theory advanced by Hofstede (2011) and also by Hofstede, Hofstede, and Minkov (2011). In this concept, there are six dimensions of culture: power distance, uncertainty avoidance, individualism versus collectivism, masculinity versus femininity, long term versus short term orientation, and indulgence versus restraint. The score of each country or region on each dimension has been obtained by positioning each country relative to another country. Hofstede pointed out a multinational corporation planning to enter new markets, such as Walmart, should be aware of the position of each country with regards to all the six cultural dimensions. Hofstede’s six dimensions of world cultures has been used to create a cluster of world cultures.
Each cluster exhibit certain characteristics. One of the cluster of world cultures is the Middle East. Because UAE is in the Middle East, the cluster of culture in the Middle East applies for UAE. Walmart management should be aware that the UAE has a high score on in-group collectivism. However, they score low on uncertainty avoidance, future orientation, and gender egalitarianism. As a result, people in the Middle East tend to show great pride in not only their organizations but also their families. People in the UAE are also loyal and devoted to their own people. In addition, it is common for the people of UAE to treat distinctively people of different gender. For example, men are accorded a higher status than women. Women in higher authority are also relatively few when compared with women in higher authority in a country like USA. In the UAE, consistency and orderliness are not stressed. It is also common to find people not placing heavy reliance on procedures and policies. Instead of attempting to control the future, people in the UAE have a tendency to focus more on current issues (Northouse, 2013).
Specific Cultural Challenges after Entry
Issues which may occur in the future and how they might be overcome: Teamwork
Globally, all regions have different cultures and subcultures. Evidence has shown that cultures and subcultures influence the way people think and do things. Investigations by Singh and Kogut (1988) supports the claim that national culture has an effect on the entry mode. Given the significant cultural differences between UAE and USA, Walmart is very likely to encounter cultural challenges upon entering the UAE market. At Walmart, the culture of teamwork runs deep and employees are known as associates. Associates work individually and also with other associates to advance the overall goal of Walmart (Walmart, 2016). Teamwork is highly regarded at Walmart.
Walmart management might wish to entrench a culture of teamwork once they start operating in the UAE. However, this might not work. Teamwork is not highly regarded in the Middle East and any attempt to instill teamwork among the local employees might be met with a lot of resistance. Ethnocentrism has been defined as one’s perception that his/her culture is superior to others’ culture (Northouse, 2013). Because of cultural differences, UAE people might exhibit ethnocentrism towards people from other cultures. For example, local UAE Walmart employees might reject the notion of other foreign employees on the basis of cultural differences. Ferraro and Brody (2013) contend that ethnocentrism prevents people from recognizing that other people finds that their culture as equally irrational and strange. This ethnocentrism might become a great barrier for teamwork. For example, if people in the UAE have treat female gender as low status than men, it might be difficult for local men to accept a female as their leader. To a westerner, female and males are equal and deserve similar treatment. However, a Middle Easterner might reject this view due to their culture. Although this is a big issue with teams who work physically in the UAE, it will also affect virtual teams. Global geographical dispersion of multinational corporations have endeared them to embrace virtual teams as part of cost reduction, improving speed of operations, and enhancing adaptability. But despite these benefits, Heller et al (2010) noted that organizations intent on developing virtual teams encounter challenges such as the formation and development of global virtual teams. In virtual teams, it is no longer about two cultures, but will involve multicultural context where Walmart employees working in various parts of the world engage each other for a number of reasons. Scott and Wildman (2015) also pointed out that global virtual teams face a myriad of challenges associated with conflict and communication due to the cultural differences among the team members. This multiculturalism might further accentuate the issues of ethnocentrism and further degrade Walmart way of doing things as a team.
Cultural clusters have been also studied to show how it affects leadership profile and this largely affects the tenets of teamwork in the work environment. This is very important for Walmart. For example, Leadership profile of the Middle East has been shown to be significantly different from the leadership profile of other cultural clusters. A Middle Eastern leader put more emphasis on self-assurance. To such a leader attributes such as status and face saving are regarded important characteristics for effective leadership (Northouse, 2013). In addition, such leaders also value being familial and independent. The Middle Eastern leadership also finds participative decision making, value-based/charismatic, and team-oriented are not very important for effective leadership. All these suggest the probability of forming and developing efficient and effective teams in UAE is very challenging.
Overcoming challenges in virtual teams require the employment of different strategies. Heller et al (2010) suggested that one approach is to create an enabling environment for virtual teams. This can be achieved by assisting team members to develop mutual trust and a shared understanding about their goals as well as processes to achieve them, and tasks. Further, it involves helping team members to understand each other’s abilities, skills, and knowledge. Further, Heller et al pointed out when identifying leaders to lead virtual teams, emphasis should be placed on those adept in cross-cultural leadership, communication skills, interpersonal relationships, and cross-cultural intelligence. Solutions to management of multicultural teams have been suggested by Brett, Behfar, and Kern (2006). According to them, challenges to effective teams in a multicultural setup are usually associated with trouble with accents and fluency, differing attitudes toward authority and hierarchy, direct versus indirect communication, and conflicting norms for decision making. They therefore suggested that competent manager can solves such problems by employing four broad approaches, including adaptation, structural intervention, managerial intervention, and exit (eliminating a team member after all options have been exhausted). These are some of the solutions Walmart management ought to consider in the future to overcome teamwork challenges in UAE.
References
Brett, J., Behfar, K. and Kern, M.C., 2009. The Essential Guide to Leadership: Managing multicultural teams. Harvard Business Review, p.85.
Ferraro, G. and Brody, E.K., 2015. Cultural Dimension of Global Business. London: Routledge.
Gutterman, A.S., 2010. Trompenaars’ and Hampden Turner’s Seven Dimensions of Culture. Organizational Management and Administration: A Guide for Managers and Professionals. Available at: http://alangutterman.typepad.com/files/cms---trompenaars-seven-dimensions.pdf[Accessed 5 Mar 2016]
Heller, R., Laurito, A., Johnson, K., Martin, M., Fitzpatrick, R., and Sundin, K., 2010. Global Teams: Trends, Challenges and Solutions. Available at: https://est05.esalestrack.com/eSalesTrack/Content/Content.ashx?file=4578f59e-21b3-4a2c-bbfe-63e53af3f5dc.pdf[Accessed 5 Mar 2016]
Hofstede, G., 2011. Dimensionalizing cultures: The Hofstede model in context. Online readings in psychology and culture, 2(1), p.8.
Hofstede, G., Hofstede, G.J., Minkov, M., 2011. Cultures and Organizations: Software of the Mind. New York: McGraw-Hill.
Kogut, B. and Singh, H., 1988. The effect of national culture on the choice of entry mode. Journal of international business studies, pp.411-432.
Northouse, P.G., 2013. Leadership: Theory and Practice. London: SAGE Publications.
Scott, C.P. and Wildman, J.L., 2015. Culture, Communication, and Conflict: A Review of the Global Virtual Team Literature. In Leading Global Teams (pp. 13-32). Springer New York.
Sorensen, J., 2015. Understanding how culture influences emotions in consumer decision-making. In Finding Solutions for the Challenges of Internationalization. Aalborg Universitetsforlag.
Walmart. 2016. Working at Walmart. Available at: http://corporate.walmart.com/our-story/working-at-walmart[Accessed 5 Mar 2016]
Wursten, H. and Fadrhonc, T., 2012. International marketing and culture. Available at: < http://geert-hofstede.com/tl_files/Marketing_and_Culture_itim_International.pdf>[Accessed on 5 Mar 2016]
