Complexities of Entering Foreign Markets

Microsoft Corporation is the most popular and renowned American Multinational Technology Company. The organization was established in the year 1975. It develops, manufactures, support, licenses and sells consumer electronics, personal computers and devices and computer software. The most popular software products of this organization are windows operating system and internet explorer (Microsoft.com 2018). Microsoft has wide level of international expansion, where it operates its international business in almost 646 countries. Moreover, the organization has established its international business through various ways like fully ownership, license, lease, merger acquisition and many more.

This study will discuss the possible complexities associated with entering in foreign markets. The study will also develop one possible strategy of international development for two countries namely UK and Japan. The strength and limitation of this strategy and the impact of this strategy on HR function will be discussed in this study. On the other hand, the study will evaluate the culture of United Kingdom through Hofstede’s model for the future expatriates of Microsoft. Furthermore, the issues of cultural shock for the expatriates and the motivational strategies to overcome these shocks will be discussed in this study.

a. Complexities in Entering a Global Market

Cultural Barriers

Different countries around the world have different types of culture, where the people are having different types of values and norms. According to Jackson, Schuler and Jiang (2014), the cultural differences among the employees in different countries are unavoidable, which can even lead to cultural clashes among the employees. Moreover, the employees of one country are often unable to understand the cultural perspective of the employees in other countries. Likewise, lack of cultural understanding can even result in conflicting employee relation among the employees of Microsoft on global scale.

Communication Style

The business executives from different countries can be encountered with several barriers to effective communication due to differences in language. According to Albrecht et al. (2015), the business executives of Microsoft often face communication issues in the counties having non-English background. Moreover, the managers face issues in properly communicating their business goals in the foreign language.

Time and Distance

Despite of having effective technologies like video conferencing, the business executives of Microsoft prefer to establish business relationship in international countries on personal level. Moreover, Paillé et al. (2014) opined that the differences in the time zone can make it difficult for the business executives of Microsoft to coordinate the project, when collaboration is required. 

International Development Strategy for UK and Japan

Issues in Organizational Cultural Orientation

The employees in international countries are having different sets of behaviour and code of conducts associated with them. In such situation, Microsoft faces extreme complexities shaping their foreign organizational culture as per their organizational culture of its home country.

b. International Development Strategy 

Microsoft might adopt geocentric approach as international development strategy in both United Kingdom (UK) and Japan. In this approach, the Microsoft might provide best key job to the best employees, where nationality does not matter in this approach. However, the approach is having both benefits and limitation associated with it.

Benefits and Limitation of Strategy in UK

Geocentric approach can help Microsoft to gain high level of competitive advantage in United Kingdom. In such approach, the organization will hire best employees for key positions based on their talents irrespective of their nationality. Shishkina and Barac (2015) pointed out that geocentric approach helps in developing pool of senior international manager. Likewise, Microsoft might hire the best talent for its business success irrespective of the national boundaries. On the other hand, Schmidt (2016) argued that the immigration laws of foreign countries may create issue for the organizations, where the host countries are bound to employ the local employees. Likewise, Microsoft can face the issues of immigration law in United Kingdom, where the country prefer to order for employing local employees in foreign companies.

Effect on HR Function 

Geocentric approach can have huge impact on the human resource function of Microsoft. According to Treven (2017), the human resource managers face extreme difficulties in handling the employees having different nationalities. Likewise, the human resource managers of Microsoft can face extreme difficulties in managing the employees having national differences. On the other hand, Michailova, Mustaffa and Barner-Rasmussen (2016) opined that hiring best employees from different nationalities can be extremely costly for the human resource managers. Likewise, the geocentric approach of international development can increase the human resource budget of Microsoft in United Kingdom.

Benefits and Limitation of Strategy in Japan

Sekiguchi, Froese and Iguchi (2016) opined that the geocentric approach reduces the tendency of national identification of the managers with the subsidiary units. Likewise, while Microsoft will apply geocentric approach in Japan, the key positions of its subsidiary units will be evaluated based on their talent and skills and not on their national identification. On the other hand, Lakshman, Lakshman and Estay (2017) opined that geocentric approach can be difficult to implement, as it may require increased compensation, training and relocation of the best talents from their home country to the subsidiary unit’s country. In this way, the geocentric approach can increase the overall business cost of Microsoft due to increased training, compensation and relocation cost for hiring best talents from different nationality.

Impact of Culture on HR Function

Effect on HR Function

Geocentric approach may require longer lead times for the human resource managers towards sourcing the best talent irrespective of national boundaries. Moreover, the human resource of managers of Managers need longer period of time to complete their hiring process in order to find out best talent beyond the Japan. On other hand, Verbeke and Kano (2016) opined that human resource managers may require more centralized approach in controlling the activities of the employees having different national boundaries. Moreover, managers of Microsoft may need to have a centralized supervision of the subsidiaries, when the culture of the Japan subsidiary is diluted with the employees from foreign countries.   

a. Evaluation of UK using Hofstede’s model of Cultural Dimensions

Power distance index (PDI)

PDI index assesses the degree to which less powerful organizational members accept or expect the unequal power distribution in an organization. This degree is concerned with distribution of power in organization. In case of Microsoft’s home country USA, the business executives follow centralized power distribution among the employees. However, Luo and Zheng (2016) opined that the business culture of UK follows equal power distribution system.  Moreover, the low level employees of UK organizations can easily communicate and share their opinion with high level employees. Hence, the future expatriates of Microsoft should be able to adopt such equal power distribution culture in UK in international development. 

Individualism vs. collectivism (IDV)

IDV assess the degree to which the people of an organization are integrated into groups or teams. This degree is concerned with the collaboration of the employees in an organization. USA is usually having individualist society, where people prefer to be in a loosely integrated culture. Moreover, the employees of Microsoft in USA follow individualistic approach and the managers prefer individual achievements. However, Kersiene and Savaneviciene (2015) opined that the culture of Japan follows tightly integrated relationship among each other. Moreover, the employees prefer to work in group for achieving organizational success. Hence, the future expatriates of Microsoft USA should be adaptable in teamwork culture for leading international success in Japan

Uncertainty avoidance index (UAI)

As per UAI degree, the society of USA has high degree of tolerance for ambiguity. Moreover, the managers of Microsoft in USA show high degree of acceptance for unknown and differing thoughts. However, Keller and Lewis (2016) opined that UK culture is having lack of free flowing environment towards accepting differing thoughts. Moreover, the business executives of United Kingdom prefer to follow stringent rule and regulations towards operating business. Hence, the future expatriates of Microsoft should be able to adapt themselves within stringent business regulations for leading international success in UK.

Evaluation of UK Culture using Hofstede’s Model

Masculinity vs. femininity (MAS)

As per Savaneviciene and Kersiene (2015), Microsoft in USA has equal power distribution between both male and female employees. However, despite of the progress in gender equality, the United Kingdom is still lagging behind in providing equal power to the female employees in comparison with their male counterparts. Hence, the future expatriates of Microsoft from USA may face issues in such masculine working environment of UK.

Long-term orientation vs. short-term orientation (LTO)

The society of USA is having high degree of LTO, where the managers are highly adaptive, circumstantial and pragmatic. However, the society of United Kingdom highly honor for traditional values and steadfastness. Hence, the expatriates of Microsoft USA should be able to honor for the traditional values of the United Kingdom towards gaining international success.

Indulgence vs. restraint (IND)

The managers of USA have free gratification of needs and belief to enjoy the happiness of the success. On the other hand, the businesspersons of United Kingdom also have high desire for free gratification of emotion and happiness. Hence, the expatriates of Microsoft USA need not to be faced with much difficulty in UK in regards to this aspect.

 

Figure 1: Hofstede Cultural Dimension

(Source: Luo and Zheng 2016)

b. Issues of ‘cultural shock’ and Measures to Motivate Expatriate Employees

Cultural shock is an experience, which a person may have, when he/she moves to a culture that is different from his/her own culture. It is a personal disorientation, which a person experiences in an unfamiliar life in foreign country. The following stages of cultural shock will describe the experiences of the expatriates of Microsoft in the foreign countries during completion of their overseas projects.

Honeymoon Stage and Measures to Motivate Employees

In honeymoon stage, the cultural shock is often overwhelmingly positive in the foreign countries. In this stage, the expatriates of Microsoft can be fascinated with the new culture of internal countries, while they will be sent to that country for overseas project. The expatriates may suppress the hesitation and irritation in the foreign countries for concentrating on nice thing (?or?evi? 2016). The attachment of the expatriates with the foreign employees may be friendly, but it is somewhat superficial.

The Frustration Stage

Frustration is the most difficult stage cultural shock for the expatriates in doing any overseas project. In this stage, the differences between the old and new culture become apparent to the expatriates, which leads to anxiety among them. The differences in language, tone and values can become unpleasant and frustrating to the expatriates of Microsoft, while doing any oversea project (Treven 2017). In such situation, the managers of the organizations should provide attractive reward and compensation to the expatriates for motivating them in working within foreign culture. 

Cultural Shock for Expatriates

The Adjustment Stage

After some days of frustration stage, the expatriates of Microsoft can grow and accustomed with the new culture and developed routines of the foreign culture. They can start developing problem solving skills for dealing with the culture and start to accept the culture with positive attitude. In such situation, the several benefits and allowance provided by the foreign subsidiaries can make the expatriates highly motivated to accept the cultural difference of the foreign culture and concentrate more on overseas project success.

Adaption Stage

This is the mastery stage of cultural shock, when the expatriates want to participate fully and comfortably in the host culture. However, such expatriates often keep various traits from their earlier culture like accent and languages (Luo and Zheng 2016). In such situation, the organizational managers should offer effective learning and development programs to the expatriates for fully adapting them with the foreign culture.   

 

Figure 2: Cultural Shock

(Source: Schmidt 2016)

Reward and Compensation

At the honeymoon stage, the basic compensation structure of the expatriates should be made competitive enough to motivate them in overlooking the cultural difference and focus on good factors of foreign organizational culture. Later in the frustration stage, proper cash incentive plan for the expatriates may compensate the frustration level and make them highly motivated to adjust with the foreign culture. Apart from that, the expatriates can also be motivated to lead overseas project success, where they are properly recognized for their work regardless of their national boundaries. In such projects they will be offered high bonus and extra compensation through which they will be rewarded and recognized from rest of the expatriates. From the adjustment stage, internal reward and recognition such as best expatriate award, travel allowance, family health benefits should be introduced. Finally, in the adaptation stage, through learning and development plans, the best expatriate will be rewarded who will gather the best knowledge and experience. 

Conclusion and Recommendation

While concluding the study, Microsoft faces several cultural and language barrier issues while entering in global markets. Due to cultural and language difference, it becomes difficult for the business executives to communicate with foreign employees properly. Microsoft can adopt geocentric approach for developing international business in both UK and Japan. In this strategy, the organization can hire best talent irrespective of the nationalities. This approach can create effective senior international managers but hiring the best talent from foreign countries can be highly cost effective for the HR managers. The future expatriates should be collaborative enough for adjusting with the business culture of United Kingdom. Proper and attractive compensation structure can reduce the issue of cultural shock of the expatriates, which dealing with overseas projects.

Conclusion

While recommending Microsoft, the organization should have a proper centralized approach for maintaining the effectiveness of geocentric international development approach. The future expatriates of Microsoft are recommended to adjust with the equal power distribution culture of United Kingdom. The expatriates of the company should be provided with appropriate compensation and reward structure for adjusting reducing the issues of cultural shock.  Such attractive rewards and compensation will motivate them to adjust with the different cultures of the foreign countries.  

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