Introduction
When analysing both the USA and Wal-Mart, it is crucial to discuss both national culture and organisational culture. Culture is an extremely diverse topic to evaluate; this is because there is no real consensus as to what the true definition of culture is. Culture can be seen as a mental programming that inhabitants of a nation will generally follow. It has been described as the “software of the mind” (Hofstede, 1991, 1997, 2005), with each national culture different to the next, owing to diversity of the inhabitants.
The United States is regarded one of the most multi cultural and diverse nations in the world, it is home to the world’s largest population of immigrants, leading to the USA being referred to as a melting pot of culture. The USA is both of great diversity and of great size, owing to this; the culture in one area of the US may be completely different to another area. This means that analysing the population and culture of the United States is a complex matter.
Wal-Mart Stores Inc. is one of the largest retailing corporations in the world. Owned by the Walton Family, the organisation has almost 12,000 stores in 28 countries and employs around 2.3 million people all across the world. In 2017, the organisation had revenue of $485.9 billion USD (Wal-Mart, 2017); highlighting Wal-Marts dominance within the US supermarket industry, with their nearest competitor, The Kroger Company having a revenue of $109.8 billion USD. (“Financial Statements For Kroger Co – Google Finance”, 2017).
Culture is extremely important to both on a national and organisational level. Culture has a significant impact on people as a whole. “It influences their views, their values, their humour, their hopes, their loyalties, and their worries and fears” (Marya Axner, 2017), meaning that it can have a significant impact when working or building relationship with those of a different background.
In this report I will be identifying and analysing the ways in which National Culture has an impact on a multi-national organisation. This report will include in depth analysis of the multinational organisation Wal-Mart Stores Inc. and how it’s origins in the USA have had an effect on the operations and management practices of their business.
Analysis and Discussion of National Culture in chosen country
In order to analyse national culture, Geert Hofstedes Dimension’s are used. There are six dimensions in Hofstede’s framework: Power Distance Index (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS), Uncertainty Avoidance Index (UAI), Long Term Orientation versus Short Term Normative Orientation (PRA), and Indulgence versus restraint (IND). Together these six dimensions are in place in order to better analyse national cultures when looking at management and the actions of businesses as a whole.
Power Distance (PDI)
PDI highlights “the degree to which the less powerful people in society accept and expect that power is distributed unequally” (Hofstede, 2017). A nation that exhibits a high PDI is one that accepts the fact that there is a ‘class/tier’ system to where everyone has his or her own place in society whether that be at the top or bottom end.
With regard to PDI, the United States showed a relatively low score of 40. This lower score suggests that equality is inclined and encouraged in their society. The suggestions can be deemed somewhat true based on the principles of the American Dream, an ideal that the country was built upon. The American Dream suggests that any person from any background should be able to be successful and be able to thrive in the United States. This ideal suggests that everyone has an equal opportunity to strive for and gain power. However, due to many US organisations choosing to adopt highly hierarchical structures, the opportunity to gain power can often be limited. Often subordinates find that it is hard to progress in large US organisations as many top-level managers enjoy the majority of the power, as this is common amongst US firms, leading me to suggest that the power distance of the USA should be considerably higher than it currently is.
Individualism versus Collectivism (IDV)
A high score in this dimension would result in an individualist society, where as a lower score refers to a collective one. A society of individualists would show preference to a “loosely-knit social framework”, (Hofstede, 2017) where people will care for only themselves and those who are extremely close to them. An individualist population are much more likely to speak of “their” successes or achievements rather than a collective success.
The United States is considered a very individualist society, with an extremely high score of 91. A study carried out by Pew Research Center in 2015 showed that “57% of Americans disagreed with the statement ‘Success in life is pretty much determined by forces outside our control’ ” (George Gao, 2017) this is a significantly higher figure than most other nations (see figure 1 overleaf) as the global median was 38%. This evidence highlights that Americans believe that success in life is down to the individual, suggesting an individualist society.
Masculinity versus Femininity (MAS)
A nation with a high (masculine) score will be one which is “driven by competition, achievement and success” these values will be instilled during childhood and carried on to into education as well as the workplace.
The United States has a generally high masculine score of 62, this can be explained by traditional American values such as “striving to be the best they can be” and “winner takes all”, these attitudes and beliefs are adopted from a young age, this has lead processes such as gaining entry to university as well as getting a job highly competitive in the US. American organisations are also very masculine in their operations, heavily based upon meeting set targets as well as ensuring the organisation grows ‘bigger and better’,3 these strong beliefs can often lead to general stereotypes about US culture, which can sometimes be hard to overcome when building business relationships.
Uncertainty Avoidance (UAI)
UAI refers to how a population “deals with the fact that the future can never be know” (Hofstede, 2017). This brings society to question whether we can or can’t control the future, with the questioning brought about due to being anxious or feeling threatened. The Uncertainty Avoidance reflects to what extent individuals in society feel threatened, as well the measures that have been taken to overcome these feelings.
The USA scores a fairly low score with regards to Uncertainty Avoidance with a score of 46. This low UAI reflects the more relaxed attitude of the USA towards future issues, however this score may have been higher in the past. Prior to the 9/11 attacks, 3the USA were very relaxed and in some cases naive towards potential issues, it could be said that many Americans had the attitude that “nothing bad could happen to them”, leading to such adverse effects after the attacks. More than a decade on from 9/11, fear amongst Americans is still very relevant with the government increasing efforts to monitor the population with the use of security organisations such as the National Security Agency (NSA).
Long-term Orientation versus Short-term Orientation (PRA)
PRA refers to whether or not a culture shows a “pragmatic future-oriented perspective or a conventional historic point of view” (Hofstede, 2011). A society with a high score, long-term oriented, will focus on the future, with areas such as education set up to ensure forthcoming success. Those with low scores are seen to be normative societies, with short-term focuses often centered on keeping true to traditions and cultural norms, also looking skeptically towards change.
The USA has a very low (normative) score of 26, suggesting that as a society, many look towards historic ‘American’ views in order to solve potential problems. This also means that many are reluctant to change, this has been seen more often in recent years as other countries have looked towards their long-term future. One example surrounds gun laws in the United States. This is a topic many feel extremely passionate about due to its importance within the second amendment within the United States Constitution. The second amendment, protecting the right to bear arms, was adopted in 1791. Despite numerous issues surrounding the law, including school shootings and massacres, the constitution has not changed highlighting the short-term or historical outlook of the USA.
Indulgence versus Restraint (IND)
IND refers to the extent to which societies allow gratification. Indulgent cultures will aim focus towards the happiness and general well being of society, with time for recreation and relaxation important. On the other hand, in a restrained culture, individuals are regulated and restricted “by strict norms” (Hofstede, 2017).
The USA has an Indulgent score of 68; this suggests that individuals are encouraged to enjoy themselves whenever possible, and those they are not many restrictive measures. This is supported by the United State’s “work hard, play hard” mentality. For many in the US, “Monday through Friday was set aside for school, [work] and professional events” (Trampe, 2014), meaning that weekends are set-aside for leisure and recreation.
Analysis and Discussion of the relationship between national culture and its influences on business and management practices.
Another framework that can be used to analyse culture is Trompenaar’s Cultural Dimensions. Developed by Fons Trompenaars and Charles Hampden-Turner, the framework suggests that those from different cultures are not different due to some random reason; “they differ in very specific, even predictable, ways” (Mind Tools, 2017). Trompenaars and Hampden-Turner concluded that how one culture measures against another could be analysed based on their preference to the following seven dimensions, however in the case of this report I will be using the following four dimensions which can be best used to analyse Wal-Mart with regards to US culture. They are: Universalism versus Particularism, Individualism versus Communitarianism, Specific versus Diffuse, and Achievement versus Ascription.
Universalism refers to a society who view rules, laws and obligations with high importance. The United States can be considered a Universalist society, due to the fact that often rules and regulations come before relationships in this culture. Universalism has a profound effect on the decision making of individuals and organisations. Wal-Mart is no different to other organisations with origins in the United States, in that they also place great importance on following the company’s operation processes. Having processes such as the ones present at Wal-Mart ensure that sub-ordinates know how their work links to the common goal due to the provision of clear instructions, suggesting that US culture has an impact on Wal-Mart with regards to Universalism.
Similar to Hofstede’s dimensions, Trompenaars also includes Individualism as one of the dimensions in his framework. With regards to Trompenaars, the USA is a Individualist society much like with Hofstede’s, meaning that people believe in their own freedom and achievement. In organisations such as Wal-Mart, there are many characteristics that suggest that it is an individualist one, one of which is the praise and in many cases, financial reward based on individual performances. In 2016, “Wal-Mart handed out cash bonuses of up to $500 to almost a million workers”, after sales rose by 3% and market share rose by 12% (Smith, 2016). Wal-Mart has also been known to pay out massive bonuses to those in management positions for completing and exceeding objectives. This suggests that Wal-Mart generally follows what would be expected by a US organisation, highlighting the impact of US culture on Wal-Mart
Trompenaars dimension of Specific versus Diffuse refers to what extent individuals will get involved with their allocated tasks and their job in general. Individuals are hired by employers in order to be part of an efficient team and help make the organisation make money; Wal-Mart is no different with regards to this. There is often great pressure on individuals working for Wal-Mart, due to the burdens high efficiency and cost cutting being placed upon middle managers. This can obviously have severe impacts on the way in which the organisation operates. Despite making large amounts of money, employees lack motivation with finance and bonuses offering little incentive. This sort of approach has lead working at Wal-Mart to have negative connotations amongst society. The low morale of staff leads to a high turnover of staff; in 2015 Wal-Mart had an annual staff turnover rate of 66%, similar to others in their markets. (Weber, 2015).
Rewarding achievement is also a key with regards to US business culture. It can be said that due to the hard working mentality instilled in American society, it would be expected that organisations value performance. In addition to cash rewards mentioned previously, Wal-Mart also undertakes other activities in order to reward staff. An example is “associate appreciation day”, where Wal-Mart show the how much they value all members of the Wal-Mart team. Furthermore, in 2006, Wal-Mart introduced My$hare, which rewarded employees with shares of the organisation based on performance (Wal-Mart, 2007). Rewarding associates for their contributions to the organisation suggests that Wal-Mart believes in achievement rather than ascription, following what would be expected in US culture.
Identification and discussion of effectiveness of firm in international context
Wal-Mart is the largest company in the world with regards to revenue; this is owing to its financial success both domestically and internationally. Wal-Mart is proud of their story, referring to themselves as “A true American success story” (Wal-Mart, 2013), starting from humble beginnings and transforming into the multinational organisation it is today. Initially established in 1962, the first stores were extremely successful priding themselves on low prices and great customer service. The organisation progressively grew with larger stores in more locations. By 1990, Wal-Mart became the largest retailer in the United States, thanks to new superstores that allowed ‘one-stop’ shopping, and in 1991 Wal-Mart looked to expand their business into Mexico, initiating the development of Wal-Mart globally (Wal-Mart, 2017).
In recent years as the value of US sales has slumped, the Mexican Subsidiary, known as Wal-Mex, has grown exponentially. It is the top private employer in the country (Bussey, 2006); however, it has not all been plain sailing for Wal-Mex.
In the case of Wal-Mart, the lack of cultural awareness caused issues with regards to the opening of a store near to the cultural landmark, the Teotihuacán pyramids. This lack of cultural awareness could be attributed to the masculine nature of US. In October 2004, angry protesters burned ceremonial incense in front of the headquarters of the National Institute of Anthropology and History. They were against the concept of Wal-Mex building of a superstore just mile away from the historic site (Haner, 2012). The protests and outrage led to the some boycotting the supermarket in Mexico, the ignorance shown in Mexico led to the already worsening reputation of Wal-Mart due to the issues surrounding low wages and sex discrimination in the US.
In the early 2000s, Wal-Mart came under fire regarding sex discrimination against female employees. The largest ever civil rights action against a private employer followed. The lawsuit was led by seven women standing for up to 1.6 million current and former Wal-Mart employees, with regards to the unequal treatment of women in the workplace, leading to a worsening of the organisation’s reputation worldwide (Harris, 2004). When looking at instances such as this one it must be said that the often-straight forwards approach of American organisations, can lead to issues surrounding equality, as often profit margins are often preferred to high employee satisfaction and morale.
However despite issues in America and Mexico, Wal-Mart has been extremely successful in other nations such as China, and is now reaping the rewards. Wal-Mart entered Chinese markets for the first time in 1996, opening two stores in Shenzhen – a Wal-Mart Superstore and a Sam’s Club (similar to Costco). One way in which American culture benefitted Wal-Mart in this situation was with regards to the hunger for profit the organisation had. Local and regional competitors proved tough competition in the early days of Wal-Mart China. Wal-Mart was able to overcome these competitors due to the sheer size of the organisation, often using strategies such as price undercutting to force competitors out of the marketplace. Wal-Mart continues to be a key player in Chinese markets and plans to further expand their business, with intentions to add an additional 115 stores by 2017. However, Wal-Mart faces emerging challenges with regards to the international context with the global expansion of online shopping (D’Innocenzio, 2016)
Conclusion
As seen through the content of this report, it can be said that there is a distinct relationship between the culture of a country and organisation from that country. Through the use of Hofstede’s and Trompenaar’s Cultural Dimensions, clear similarities can be seen with regards to the culture of the USA and to the culture of Wal-Mart. When looking at Wal-Mart it is hard to deny the organisation of the extreme success it has had all over the globe, often in part to the effect that US culture has had on the business. However, Wal-Mart’s hard hitting, straightforward approach to operations has not only lead to high profit margins but has also lead to issues with regards to the ethics of the organisation. In the past, Wal-Mart’s profit oriented approach has brought about problems with other international cultures as well as with the general poor treatment of certain groups of employees. Despite this, it must be said that the culture of the United States has had a successful impact on Wal-Mart, allowing the organisation to become one of the largest in the world.