Coca-Cola’s Impact on the Chinese Market

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Executive Summary

Strategically investigating the cultural diversity of Coca-Cola and its impact on the Chinese market will provide the information needed to develop an effective cross-cultural training program for managers. Promoting cultural diversity is central to supporting effective management across cultures. The study will investigate the Chinese culture and propose effective strategies for addressing cultural barriers through effective education and training. Understanding the Chinese view on cultural diversity and their cultural practices will support Coca Cola’s management in leading expatriates and training U.S. personnel. 

Multinational companies must prepare their employees to work successfully in foreign cultures. The management is responsible for preparing the employee to adapt successfully to the new culture. Managing across cultures is an essential skill for leaders in multinational companies like Coca Cola. It begins with the development of a plan to implement education and training within the organization. The plan to incorporate training will address training for U.S. personnel in China. The investigation will examine concepts including management across culture, cultural identity impact on an organization, human resources across cultures in an organization, strategies to overcome cultural barriers, the management of expatriates across cultures, politics, ethics, and legal issue impacting management, value management across cultures, and discuss future challenges and trends. 

Education and Training Plan

The education and training plan will prepare the management to train U.S. personnel about the Chinese culture. The training program will include educating the management of effective internal and external cross-cultural communications. Addressing cultural and language barriers is key to properly communicating in the new environment (Okpara & Kabongo, 2017). Miscommunications can hinder business negotiations and result in miscommunications. Next, the staff in the U.S. and expatriates should be educated on business and social etiquette. Understanding the customs, traditions, and values of the country will help the manager successfully navigate the business environment. 

Training will include online modules, seminars, and one-on-one training to ensure the employee understands the culture and gains the necessary cultural awareness. The training program will also include cultural sensitivity training. Cultural sensitivity training will educate the manager/employee on the culture and business practices, create greater cultural awareness, dispel and prejudices or biases, and help improve communication skills (Lutz, 2017). U.S personnel and expatriates will learn to recognize and change insensitive remarks and behavior to enhance their cultural competence. 

Management Across Cultures

Managers at multinational companies like Coca Cola must be skilled at leading personnel to successfully adapt to the Chinese culture. To ensure Coca Cola can succeed in the new culture, the manager must educate and train staff to help them successfully adapt to the new business environment. the manager must adopt the behaviors and attitudes and model cultural sensitivity to influence the behavior of personnel. Through effective management strategies and promoting cross-cultural communications. The manager can help U.S. personnel adapt to the new culture and develop cultural awareness and sensitivity through effective education and training. Managers should embrace diversity and foster interpersonal relationships between Chines and American workers. 

Cultural Identity Impact on Coca Cola 

The cultural identity of an organization encompasses the perceptions, feelings, and thoughts about the organization. It is made up of the cultural patterns of the organization and is influenced by employee experiences and internal and external factors. The culture represents an organization’s values, characteristics, and beliefs (Lee & Shah-Hosseini, 2013). The companies identify is grounded in the organizational culture. Managers are responsible for communicating the identity to employees and modeling the expected behaviors. Workers in multicultural organizations adapt their personal and cultural values to the organizational culture. 

Coca Cola must develop an identity that embraces diversity and inclusion, cross-cultural communication and awareness, and cultural sensitivity. This begins with the development of a culturally diverse workforce. To obtain a competitive advantage in China, Coca Cola must be viewed as a company that has cultural awareness and is sensitive to cultural issues. The company must create a shared global corporate culture to ensure flexibility in different cultures (Lee & Shah-Hosseini, 2013). The culture should eliminate cultural barriers in intercultural communication and properly train and develop managers to support employees in adapting to the new culture. 

Human Resources Across Culture 

The Human resources department plays a key role in preparing Coca Cola to enter and operate in international markets. They play a central role in hiring employees in China as well as attracting U.S personnel to help operate the business in the foreign locale. Human resources activities in China will differ from those in American. The HR department will need to adapt their policies to fit the Chinese culture while still embracing the values of the organization (Sanders, Shipton & Gomes, 2014). In China, the focus of HR is on what is best for the company while HR in America is focused on the meeting the needs of the employees. 

The interaction of employees from China and America can create a challenge for the human resource department. HRM practices, policies, and procedures must be adapted for the new international environment (Sanders et al., 2014). This will require identifying what positively influencing employee outcomes, shaping policies to fit Chinese law, and mediate the performance of employees and the organization. The HR department will need to create recruitment, hiring, and selection practices to fit the culture along with establishing performance determinants for employees. 

For the company to survive in the Chinese culture, organizations must understand, manage and utilize appropriate HRM practices. “Human resources management (HRM) is defined as the implementation of policies and practices needed to carry out the “people” or human resource aspect of a management position” (Sanders et al., 2014, p. 489). They are responsible for handling all functions related to employment. Along with hiring, the HR department creates job definitions, establishes training functions, career development, and compensation and rewards programs (Sanders et al., 2014).  The department is also responsible for addressing employee satisfaction and engagement. 

Strategies to Address Cross Cultural Barriers

The first strategy is the implementation of effective cross-cultural communications. This begins with training employees to understand the culture and to provide resources to help navigate language barriers. Understanding the formality of language in China and understanding business etiquette and practices will help reduce communication miscommunications (Watkins, 2013). American employees must have a grasp of the Chinese language and culture to prevent confusion or misunderstandings. Communications are verbal and nonverbal, employees must be aware of the effect of their gestures, expressions, and body language. Displaying inappropriate nonverbal communication methods could be offensive. The best strategy is active listening and respecting the cultural differences amongst employees. When employees are culturally competent and sensitive to the Chinese culture, they can help eliminate cultural barriers. 

Another way to eliminate cultural barriers is to educate employees on the difference between Chinese and American culture. Both Chinese and American employees should be trained on the culture of each nation to ensure there is mutual understanding and respect. Intercultural communications must be effective to advance cross-cultural communications (Watkins, 2013). Next, employees should be trained to gain the skills to successfully navigate intercultural communications. Employees will learn to be open to new cultures and learn to critically evaluate the cultural practices of China to enhance intercultural communications. 

Compare and Contrast Management across Cultures

Managers in the United States are focused on performance. Employees are expected to achieve specific performance goals to keep their jobs. In China, the focus is on developing employee because they are afforded lifetime employment. For the employee to succeed, the entire organization must succeed. In America, management is focused on meeting organizational goals, but employees also act as individuals with unique performance capabilities and career goals (Chinta & Capar, 2007). The business environment amongst American employees is more competitive than employees in China. 

Chinese businesses are focused on the community, but they tend to hire family and friends for job positions. Trust is key to building important business relationships. American managers hire employees based on their skill and educational background. Hiring based on familial relationships is considered nepotism. Many American companies have policies forbidding the hiring of family members. Another key difference between the management in China and America is the expected behavior of employees. In China, managers want their employees to be humble, tolerant, moderate, and patient (Chinta & Capar, 2007). American managers expect employees to be hardworking, dedicated, self-reliant, diligent, and individuals. Coca Cola manager will need to navigate the different leadership styles for expatriates and Chinese workers. 

Politics, Ethics, and Legal Issues

There are many complexities to operating a business in China. Coca Cola must navigate the politics and ethical and legal issues. America is a democracy and China is a communist state. The two countries have opposing values and principles. Citizens in China are not afforded the same liberties as American workers which could create challenges for Coca Cola. In China, managers expect gifts during negotiations, In America, it is unethical and illegal to offer gifts which are view as bribes. Coca Cola managers must learn the key ethical differences in the business environment. Legal concerns involve navigating business law. In China, international businesses are required to join forces with a domestic partner to conduct business. 

Value Management Across Cultures 

Organizations that operate in international markets must be able to manage value across different cultures. The organization establishes values to guide the behaviors and attitudes of employees. Values educate employees and influence organizational culture (Lee & Shah-Hosseini, 2013). Conflicts in value can create delays in business for Coca Cola. Culture clashes results form competing values. the company will need to establish values that are embraced by the expatriate, U.S. employee, and the Chinese worker. The development of value-driven management philosophy and strategic planning will result in the creation of values that support the cultures of the multinational company. The culture must be the key driver for supporting the values of the organization. Managers must clearly define and model the values of the organization to ensure they are adopted by employees in both countries. 

Future Challenges and Trends 

In the future, trade tension between China and the U.S. could create problems for businesses operating in the foreign marketplace. China is reforming its state-owned enterprises to broaden the power of these businesses. This could impact the inability of international businesses to operate freely in the country. China could increase prices to American consumers or place greater restrictions on foreign countries operating in the country. The country is also threatening to increase labor costs for international businesses operating in the country. If China creates more market barriers or increases its price to operate in the country, Coca Cola could have trouble remaining profitable.

Cross Cultural Management in China by Coca Cola 

Coca Cola is a household name across the globe. Millions of people drink soda daily. Coca Cola has been successful at expanding their operations across the globe. Some countries have cultures which are easier to navigate than China. To ensure their success, the company hires culturally intelligent leaders to educate, train, and manage staff (). Leaders are trained to gain cultural intelligence so they can model this behavior for employees. Coca Cola has been a success in China because of their leadership and cross-cultural strategy. Their strategy is to learn and adapt to the culture. 

To ensure managers and expatriates are prepared to operate successfully at Coca Cola in China, the company connects them to cross-cultural training which includes culture sensitivity training, cross-cultural communication education, and developing cultural competence (Banutu-Gomez, 2013). Coca Cola has established a strong, popular brand in China. Prior to conducting research, I was not aware Coca Cole enter the Chinese market in 1928 (Banutu-Gomez, 2013). Since this time, the country has gone through many changes including political leadership changes, but the company has continued to operate successfully. 

One preconceived notion was the company in China was operated by Americans. In fact, the bottling plants, distributions centers, and business offices are run by expatriates and Chinese workers (Banutu-Gomez, 2013). Another preconceived notion is Coca Cola in China would just be like it is in America. In fact, Coca Cola adapted its brand to fit the Chinese culture. Their recognition of the unique cultural differences has helped support their immense success. They have also changed the product to suit the tastes of the people. The Chinese have different foods and customs. Changing Coca Cola to suit the target market has also supported the company’s success in the country. 

My current perception is Coca Cola has developed the necessary expertise to navigate the unique cultural aspects of the Chinese market. They have marketed their product with respect to the Chinese culture. According to the research, China is quickly becoming Coca Colas largest market even over the United States. Based on this fact, and the fact the company has operated in China successfully for over 90 years (Banutu-Gomez, 2013). Coca Cola is a good example for other companies wanting to enter this international market and successfully navigate the complex business culture of China.

References

Banutu-Gomez, M. (2013). Coca-Cola: International business strategy for globalization. London, UK: International Trade & Academic Research Conference

Chinta, R. & Capar, N. (2007). Comparative analysis of managerial values in the USA and China. Journal of Technology Management in China, 2(3), 212-224

Lee, S. & Shah-Hosseini, S. (2013). How does an international company ensure that its culture remains intact while also be flexible enough to cater to local behaviors? Ithaca, NY: Cornell University 

Lutz, S. (2017). Cultural sensitivity: Importance, competencies, and public relations implications. Knoxville, TN: University of Tennessee 

Okpara, J. & Kabongo, J. (2017). The effect of cross-cultural training on expatriates’ adjustment: Evidence from an emerging African economy. Journal of Management Development, 36(9), 1114-1124. https://doi.org/10.1108/JMD-09-2016-0166

Sanders, K., Shipton, H. & Gomes, J. (2014). Guest editors’ introduction: Is the HRM process important? Past, current, and future challenges. Human Resource Management, 53(4), 489-503

Watkins, M. (2013). Culture and society. Harvard business review. London: Fontana Press