Cultural challenges

With five offices located in three different continents it is important to have an in-depth knowledge and understanding of cultural dimensions as it can affect the effectiveness of Norgas. The differences between the home and the host countries’ environment can create a liability of foreignness for Norgas. Norgas need to understand how to best deal with differences between home and host countries/markets. This will facilitate better cooperation between different departments and amongst employees. In Norgas’ case, cultural differences involve differences between the Western culture and the Eastern business culture, as Norgas is a Norwegian company operating in Asia. To be able to identify these cultural differences, we have used cultural theories and a concept called liability of foreignness, as well as information

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from Norgas. In addition we have used what we experienced and learned at our excursion to the Wintergas ship: Norgas Pan (see appendix).

Norgas’ shipping services are no longer being operated from Norway. Like so many other shipping companies, operations are moved abroad to international markets. The differences between Norway and Asia can create a liability of foreignness for Norgas. Norgas employ local people for reasons such as lower labour cost and local knowledge. The mix of cultures in both the offices and on board the vessels represents challenges for Norgas. There are of course also opportunities evolving from a cultural diverse organization. Opportunities to learn from each other, to develop cultural understanding and cultural intelligence are examples of positive aspects. But more importantly cultural differences represent challenges, which international companies must deal with. The challenges mainly represent issues in terms of communication and information flow within the company.

Knowledge about culture diversity will help Norgas become more effective and overcome communication difficulties (Geert Hofstede,2008). Hofstede describes values as the foundation of cultures, and culture as “the collective programming of the mind which distinguishes the members of one human group from another” (Geert Hofstede,2008). Consequently, Norgas must be able to adapt to local values and norms of behaviour when operating in foreign countries. The liability of foreignness represents three environmental factors that can affect Norgas in Asia; the political landscape, the legal landscape and the social landscape. We will in this analysis focus on the challenges regarding Norgas’ social landscape as the external environmental factors are covered in the PESTEL analysis. Norgas will need to understand how to deal with differences regarding the cultural dimensions, social norms and social practices between Norway and Northeast Asia. Cultural dimensions will help us determine cultural differences between east and west, which Norgas faces. Communication is a vital part of business, but the way we communicate will vary over cultures. Language barriers are the first part that needs attention when a company is doing business in foreign countries. Different languages can make the communication challenging for both parts, although English is the

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business language in most of the shipping industry, as well as in Asia where Norgas operate.

Norgas has multicultural employees that can handle several languages, which is an advantage for the company. However, speaking a language does not mean you will overcome cross-cultural challenges regarding communication. We have discovered numerous of the areas where most westerners struggle when interacting with Asians, and vice versa.

The context of the communication will differ over cultures. The Westerners tend to have a directly approach and their partners in the East tend to have a low context communication style. People from Asian countries also have a natural way of communicating, while many western countries are expressive. This may cause misinterpretations and challenging situations in communication and information flow between Western and Eastern departments.

Furthermore, cultures from the East tend to be more relationship focused, while cultures from the West are often more deal-focused. This means they will start talking business before they think of building relationships. This can be regarded as rude in Asia, where it is essential to build relationship and trust before discussing any deal. Another characteristic that separates the two cultures is the power distance. The power distance tends to be higher in Asia, meaning that employees expects and are comfortable with authority and hierarchical organization structures.

We experienced the high power distance during our excursion to the Norgas Pan. It was quite clear that the Captain represents the top of the hierarchy and the employees expect the authority and the formal structure. Moreover, Western organizations tend to have a more flat and egalitarian organization structure, with a lower level of power distance. Western employees will need to observe and adapt to the power distance to retain harmony, which can be a challenge. It can also be challenging for Asians when Western companies like Norgas continue with flat organization structures while operating in their host counties.

Another difference is how business is carried out in the West compared to the East. Business done in Asia tends to be more formal than in the West, and international companies like Norgas will need to consider adapting to local norms and practices when operating in their host countries. Norgas can further overcome all of the mentioned challenges by understanding the

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foundation of the differences, adapting to local norms and values, as well as making efforts to increase their knowledge about cultures and cross-cultural behaviour.