Culture Clash in the Boardroom Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

Almond Chemical was the German parent company, which started its operation in 1999, in China. Almond Chemical was involved in two joint ventures with the local chemical companies in China, this was the best approach that foreign companies followed in conducting their business operations in China. Almond Chemical was having 70% stock in one of the company and 51% stake in the other company which was Chongqing. The key players of Almond chemical were; Liu, the president of Almond Chemical and Schulman, the vice chairman of the venture of Almond Chemical. Whereas, in Chongqing, Wang was the Vice President of Sales, Ho was the financial director and Chen Dong was the chairman of the joint venture.

There were differences in Almond Chemical and its joint venture Chongqing. Almond Chemical was German based Company so the policies of Germany were followed in the company. Whereas, Chongqing was a local company and the policies followed in the company were Chinese based. Therefore, Almond Chemical was facing problems with its venture regarding the differences it had with Chonqing.

Problem Statement

The major problem in the case was that the culture was proving to be an obstacle in a joint venture between the German based company and China. The cultural differences were causing issues for the joint venture in terms of generating sales and profits hence, declining in their performance.

Case Analysis

Key Issues

Many issues arise when the business is been conducted abroad, different countries are targeted and there are many differences in the culture which cause many problems for the foreign countries. Similarly, problems arose with the joint venture between Almond Chemical, a German based company and Chongqing, local company in China. The German based company was trying to expand its reach in China and wanted to gain a perfect position in the market. The main issue that the company faced while expanding its market was cultural differences.

In Chinese culture, the business decisions were made quite smoothly and effectively. The business decisions were made on behalf of the network connections or relations. It was a trend in the Chinese market that the company having good connections with a vendor than another company, the company good connections with a vendor was supposed to win the deal. This was the normal culture of Chinese business. There was a small amount of bribe involvement necessary for doing business smoothly.

It was a normal way of doing business in China, to play golf together, presenting gifts to the clients and giving the purchase manager of the other company some percentage of the business deal. The Germans realized that this was totally against their entire culture and their values. The German company was destined to do business in a formal and in a straight path manner. All the decisions were, according to the German standards and policies. Considering the Chinese culture of doing business, it was totally against the corporate culture of Almond Chemical. Hence, it was a vital problem that whether the Chinese culture of doing business was perceived or staying with the true German culture of doing business.

Culture Clash In The Boardroom Case Solution

One of the critical issue was that the Germans were quite formal and disciplined. They had standards for everything and made them compulsory in their business environment. In case of Chongqing, the Germans had built the production facilities according to their standard and culture. The production facility created in Chongqing included all the safety equipment such as helmets, shoes, protective clothing which was directly imported from Europe. These were safety measures which German company took for the safety of workers working in the production facility in Chongqing. According to the Germans, the safety tools and equipment are very necessary for the workers in production facilities as anything can happen in the production facility and to avoid any incidents and injuries Germans took care of the safety measure necessary in production plants.

But, according to the Chinese, these safety measures were totally “wasteful” and “frivolous”. The cost that incurred in the installment of these safety measures and import of the protective clothing, was considered to be wastage of the money by the Chinese. They took this in negative way regarding the company. Chinese thought that these safety measures were “luxurious expenditures.........................

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