Key Challenges to Cross Cultural Management: O2 Germany Case Study
Generally, culture can be viewed as the behavioural norms within a group of people sharing common ethnicity, beliefs, education, historical background, location or institutions. It is widely the accepted behaviour in a group and likely the most striking or peculiar form of behaviour noted by a foreign member new in the group. Considering this, multinational corporations (MNC) must be highly sensitive towards cross cultural management in order for them to expand, implement their strategies and achieve their goals in domains outside their home.
According to the GLOBE Project (House and Hanges, 2004, p15), leadership is the ability of an individual to influence, motivate and enable others to contribute toward the effectiveness and success of the organizations of which they are members. This implies that MNCs can expect to face several key challenges as they try to manage people from differing cultures to help them meet their internationalization goals. The acquisition of o2 Germany, then a German subsidiary of the o2 Plc Group, by Telefónica S.A, the Spanish telecommunication incumbent, in January 2006 will be used as a case-study to present some of the key cross cultural management challenges that an MNC may encounter. The rest of this paper is organized to briefly analyze and compare the German and Spanish cultural stereotypes, describe the background and impact of the acquisition and the response from management. Finally a conclusion is drawn on the importance of cross cultural management.
According to Gupta and Hanges (2002), “Germanic Europe shows higher practices of performance orientation, uncertainty avoidance, future orientation, and assertiveness than many other clusters. This region is also characterized by relatively low levels of institutional collectivism, group and family collectivism, gender egalitarianism, and humane orientation”. Comparing the indices of the cultural dimensions obtained from the GLOBE studies (House and Hanges, 2004) between Spain
According to the GLOBE Project (House and Hanges, 2004, p15), leadership is the ability of an individual to influence, motivate and enable others to contribute toward the effectiveness and success of the organizations of which they are members. This implies that MNCs can expect to face several key challenges as they try to manage people from differing cultures to help them meet their internationalization goals. The acquisition of o2 Germany, then a German subsidiary of the o2 Plc Group, by Telefónica S.A, the Spanish telecommunication incumbent, in January 2006 will be used as a case-study to present some of the key cross cultural management challenges that an MNC may encounter. The rest of this paper is organized to briefly analyze and compare the German and Spanish cultural stereotypes, describe the background and impact of the acquisition and the response from management. Finally a conclusion is drawn on the importance of cross cultural management.
According to Gupta and Hanges (2002), “Germanic Europe shows higher practices of performance orientation, uncertainty avoidance, future orientation, and assertiveness than many other clusters. This region is also characterized by relatively low levels of institutional collectivism, group and family collectivism, gender egalitarianism, and humane orientation”. Comparing the indices of the cultural dimensions obtained from the GLOBE studies (House and Hanges, 2004) between Spain
References: House, R., Hanges P. J. (2004). Cultural, Leadership and Organizations - The GLOBE study of 62 Societies. SAGE Publications. Gupta, V., Hanges, P. J., Dorfman, P. (2002). Cultural clusters: Methodology and findings. Journal of World Business, 37(1): 11–15.