In this assignment I will attempt to explore the concept that despite the spread and influence of the globalization of business and industries on our world’s economies and cultures, a large multinational firm is still influenced in a fundamental way by its home country’s institutions and culture. I will illustrate this discussion with an analysis of the strategies employed by the multinational energy company BP plc (formally British Petroleum). Firstly I shall introduce a tool by which cultural attributes and values pertinent to business can be measured and compared through the study of Geert Hofstede. Then I will introduce the firm BP plc, discussing the firm’s history and current competitive environment. BP plc’s recent and current strategic management actions will be outlined and I will analyse any correspondence between the firm’s strategy and cultural biases as revealed by Hofstede.
When considering the effect a firm’s home culture may have upon those firms’ operations we must first find a standard methodology that can be applied to measure the value of said culture or indeed all cultures because without comparison with another culture’s values then our measure becomes arbitrary.
Measuring Cultural Values
Fortunately the work of Hofstede has provided us with such a measure. He drew on analysis of data gathered from employees of one of the largest multinational companies at the time, IBM (1967 to 1973) these results have since been supported by several more independent studies. Hofstede produced results that showed different culture’s values in the workplace in terms of four (initially) ‘cultural dimensions’ which was extended to five after a further study designed by Chinese academics:
Power Distance Index (PDI) is the extent to which it is accepted in a society that there is an uneven spread of power distribution. Specifically as viewed by those with the least power in any given society. A culture with a high PDI shows that it is an accepted and even expected element of that society that a very few people will retain a large proportion of power influence and wealth.
Individualism (IDV) which can be contrasted with collectivism. The inference being that individualistic societies have a less integrated group dynamics, the emphasis on looking after oneself and perhaps your own nuclear family. Whilst collectivist societies tend to be viewed as having tight group cohesion with the emphasis on the ties between members of extended families and those in one’s community.
Masculinity (MAS) opposed to femininity. Best described as behavioural opposites, a masculine culture will be more assertive and domineering, a feminine culture more inclined to progression through discussion and mutual cooperation.
Uncertainty Avoidance Index (UAI) refers to a society’s ability to withstand levels of uncertainty and risk. A society with a low tolerance to uncertainty is more likely to favour structured situations with known and accepted boundaries. It is also less likely to be accepting of new ideas and methods, as these again may constitute an unknown risk.
Long-Term Orientation (LTO) is the additional dimension. It refers to values derived from culture’s time perspective. Those with a long term orientation i.e. those who value perseverance and those with short term orientation who value more immediate results.
Viewing the combined results of these dimensions for each country goes towards establishing that there are indeed very different cultural biases in each society concerning attitudes in the workplace and in business. When the relative scores are viewed side by side we have a powerful visual tool for exploring how...