Mnc Entering India (Vodafone)

Only available on StudyMode
  • Download(s) : 142
  • Published : November 26, 2007
Open Document
Text Preview
When Cross Border Mergers or Acquisitions happen the participating organizations need to understand the issue of differences in national cultural issues very well in order to set up a successful Joint Venture (JV). Each country has a different national culture and this needs to be recognized and addressed because it will ultimately impact upon the work culture of the fusion organization they are newly going to form.

Geert Hofstede developed a model which seeks to understand how values in the work place are influenced by culture. He started this study by looking at IBM operations between 1967 and 1973. Data was culled out from 50 different countries which were then extrapolated to 74 nations (the original 50 plus an additional 24). Initially Hofstede zeroed in upon four factors - 1. Power Distance (PD),

2. Uncertainty Avoidance (UA),
3. Individualism (IND) and
4. Masculinity (M).
Later on he added a fifth dimension as well. This fifth dimension arose out of his interactions with Chinese workers who as a general rule gave great weightage to their Confucian beliefs. Confucianism as such lays stress upon Long Term Orientation. Hofstede found it worthwhile to take up this fifth dimension as well since he found that this dimension is relevant in the workplace in both Confucian and non Confucian societies.

Hofstede's view is that in strategic terms before, while and after forming the resultant organization the management needs to examine, introspect and understand that both the nations would have different scores on these five basic values in the work place. The resultant organization is the result of two different national cultures. This would help in creating and maintaining a well fused organization. We can now examine the Hofstede scores of UK and India as a means to understand likely issues faced by an organization like Vodafone where UK and India are involved.

The Hofstede Global Average on each of the five factors can be basis of reference and against this we can compare India and the UK. The Global Average is a weighted average drawn from developing and developed economies. Bearing this in mind we can develop perspective on Vodafone wanting to set up a corporate entity based in India. The Average scores are:- Global AverageIndiaUnited Kingdom

PDI – 56.577 40
IDV- 4044 85
MAS- 515661
UAI- 654030
LTO- 486120

From management's point of view understanding how the country compares with the world is only an insight and of theoretical importance whereas understanding how both countries compare with each other is of greater practical value in developing strategy.

Power Distance Index (PDI):- India's score is 77 versus (Global 56.5 and UK 40) is extremely good news for Vodafone UK wanting to set up operations in India. India's history has had more of Socialism (distribution of wealth) rather than Capitalism (creation of wealth) and so Indians have not minded so far disparity in power and wealth. In terms of implications the Vodafone India office can very well have wide wage differentials between top, middle and lower management. Cabins can be of varying grandeur levels along with perquisites and cars of varying levels of grandeur. All employees need not necessarily have to wear ties or wear the same uniform. Calling everyone by their first name would not work in this corporate culture. However these Hofstede would be more acceptable to Indian nationals born, brought up and educated in India and not necessarily to Indians who have been born and/or brought up and/or educated abroad. In other words Naturalised Indians and Non Residents would behave differently in terms of values and beliefs due to their differing experience.

Individualism (IDV):- India's score is 44 versus (Global 40 and UK 85). The score means that India is more group oriented and UK is more individualistic. This cannot be generalized as being good or bad in...
tracking img