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International Business Management

Essay by   •  October 12, 2012  •  Research Paper  •  7,303 Words (30 Pages)  •  1,749 Views

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International Business Management

As ABC Bank looks to move into international territory, the company is looking into serving a large portion of businesses that want to or have established a presence in the Asia Pacific region of the globe. A strategic stepping off point for ABC's operations in the Asia Pacific market would be Australia. This would establish an ABC Bank home office in the region for our current clients and those looking to expand not to mention new clients from the region. In viewing Australia as the company's flagship so to say Australia offers many benefits but also will come with a fair share of challenges, but with any venture into a foreign area be it domestic or international there will be challenges.

Have you ever had that feeling of just knowing you were in the right place at the right time, the knowledge that your instincts and knowledge have paid off while others neglect to view and seize the obvious? Despite all of the economic turmoil over the last decade, businesses that have ventured to the shores of Australia and registered with the Australian government are steadily growing. With a population of about twenty two million people in an area of three million square miles the opportunity to grow abounds. Based at the edge of the Pacific Rim with clear access to all the Pacific and Asian open markets, business in Australia is poised to be the benefactor of the boom in Chinese as well as developing markets throughout the area for decades to come, (Moore, 2010).

The challenges the bank will face appear to be those of any business opening up or expanding a business overseas. However, Australia offers many of the same business principles and cultural traits of both the United States and Great Britain yet different in their own way. With that in mind launching into this market ABC Bank needs to analyze some of the components of the cultures in these countries' to understand from a business standpoint if it is practical for the company and its stakeholders, (Task List 4, 2012).

Understanding that Australia has their own unique and in some cases, similar components to their culture will be paramount if ABC Bank is to make the move internationally into this market successfully. When in Australia the practices utilized by management may need to be modified from traditional ways used in the United States of America in order to meld with the local traditions, customs and culture. International business dictates that differing cultures be approached by management of business in differing ways and formats. In this new globalized age with the technological advances of the past couple decades eliminating traditional borders, there is no one-way of transacting business. Therefore, it is imperative for ABC's management to look at Australia and the Asian Pacific markets cultures with a focus on sensitivity to how the operations in these other countries are operated in general and in particular in Australian business.

To get a clear picture of the ethnic, cultural, social and educational (Task List 4, 2012) characteristics within Australia ABC can utilize the Hofstede research studies. A world-renowned Dutch organizational sociologist, Geert Hofstede performed one of the most intensive and complete studies on how culture influences values in the workplace, (Plante, 2012). Hofstede conducted research in fifty-three countries primarily over the course of five years beginning in 1978 and concluding in 1983 by conducting detailed interviews with thousands of employees at IBM, (McCulligh, 2010). However, he continued to study and develop his research in the following years creating a database of statistics that he was able to use in determining what he concluded were five dimensions of culture. These five main dimensions are individualism versus collectivism, power distance, uncertainty avoidance, and achievement versus nurturing and long-term orientation, (Wild & Wild, 2012, p. 67-70).

Individualism versus collectivism looks at the extent an areas culture puts on individuals behavior toward community or the group. Power distance looks to address how a society treats inequalities and how those of less stature within an organization perceive power is distributed equally or unequally. Uncertainty avoidance refers to the need for a level of structure. Certain cultures with high uncertainty avoidance tend to look for being personally assertive and put an emphasis on accumulating wealth. Achievement versus nurturing is also termed masculinity versus femininity, (Plante, 2012) or quality of life versus quality of life. This is because masculine cultures (female or male) value assertiveness, have a high drive for ambition, place an emphasis on their wealth and material possessions as opposed to a feminine society (female or male) that places their values on the quality of life and the relationships that they develop. Long-term orientation refers to whether the society puts long-term or short-term value on the traditions, customs and values of the area. Typically in a high long-term orientation a country will place great significance on the importance of family, obligations to society and discipline, (McCulligh, 2010).

This is not to say all societies will fit neatly into Hofstede's results and there are surely subgroups within each society for instance the hippies of the sixties or bikers, radicals, zealots and so forth but it gives an understanding of the Australian culture in comparison to the United States in general. Looking at Australia the Hofstede analysis shows a relatively high score on individualism versus collectivism. Scoring at ninety it is almost a mirror image of the United States, which scored ninety-one. The fundamental issue that Hofstede addresses in this dimension is an individual's extent of mutual support a society upholds with its participants. By both countries, scoring somewhat high it can be acknowledged that Australians much the same as Americans are an individualistic society. Individualistic societies tend to be loosely knit with expectations of people looking after their own. In business, the Australians are very comparable with the United States believing that initiative and self-reliance breed moving ahead with merit being the sustenance of promotions, (Hofstede, n.d.).

The power distance ratings are also very comparable. Australians slightly lower than Americans with a score of thirty six compared to a score of forty for the United States This facet deals with the equality of individuals within a society and the distribution of power within an organization, particularly how individuals "expect and accept that power is distributed unequally", (Hofstede, n.d.). These scores signify that hierarchy in business is more a convenience of structure and not a rigid mandate. Communication is open and

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