International Business 1

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International Business

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International Business 2 Introduction: United Arab Emirates is located in the Middle East. It consists of seven small emirates which were federally united in 1971. U.A.E is also known to be an oil-wealthy company and therefore most of the business prevailing there are that of oil mining or oil production or oil marketing. A major portion of U.A.Es population is dominated by the immigrants from the east. People from Pakistan, Sri Lanka, Bangladesh, India and Iran are in majority. However, Arab nationals and Americans and Europeans also live there. The culture of U.A.E mainly comprises of the Arab values and norms. It shares significant aspects of its cultures with neighboring Arab countries and the larger Arab culture. However, the emigrants try to bring their own culture to emirates and therefore the now we can see a modern and urban style of living in U.A.E. The U.A.E has adopted an urban style in its decorum with the blessing of which we can see high sky scrapers, lush suburbs, shopping malls and exquisite market places. Emblems on the banknotes, coins and stamps reflect that the people there now live in prosperity. Business companies around the globe try to expand their business by continuously setting up their offices internationally. The success of business in this emerging world today does not depend solely on advancement of technology, recognition of threats and opportunities and employment of strong, potential employees. Culture has stemmed up as an essential feature in the growth of any company. The failure of recognition of cultural aspects may lead to serious problems. Courses of management and organizational behavior help us to learn and apply theories related to culture. One such theory is represented by Geert Hofstede. He has identified 4 major

International Business 3 dimensions in his study which demonstrates the national and regional cultural groupings. The four dimensions namely are: Individualism versus Collectivism, Large versus Small Power Distance, Strong versus Weak Uncertainty Avoidance and Masculinity versus Femininity. Individualism v/s Collectivism: Individualism refers to the extent to which one stands up for himself where as collectivism shows a persons affiliation with the members of some group he belongs to. According to a study, people in U.A.E were found to have a moderate level of individualism. They greatly displayed a high level of collectivism. The score of individualism in U.A.E is 38 which is very low. The reasons are simple. As stated above dominant features of the U.A.E culture have been borrowed from the Arab culture which puts an emphasis on kinship. The majority of the population which lives there comprises of Muslims. All Muslims follow their religion Islam which greatly preaches them to stick together, view fellows as brothers and always be ready to help them. This notion has developed a family like culture in the U.A.E(Kim,Triandis,Kagitcibasi,1994)). Also, the national day symbolizes a concept of family, of strong kinship and affiliation among its people. The different colors on its flag are shared with the Arab neighbors thus strengthening their ties as a tightly knit unit. It is because of these norms and concepts that people view the needs and worries of their fellow citizens/ workers as their own.

International Business 4 Implications: In the light of the collectivist behavior evidence given above it can be said that if a company wishes to establish its operations in the U.A.E then it should venerate the behavior and attitude of people towards others. The company should try to group these people together for performing their jobs. Giving a priority to team work rather than individualistic tasks will result in greater productivity. By doing so, the company will also help them strengthen their roles as true preachers of their religion which is said to be the predominant comprehension of their collectivist attitude. Large v/s Small Power Distance: Power distance shows the extent to which the people in a society accept societal differences and un-equality in power. A large power distance indicates that people living in the area are fine with other people having more power than them. A small power distance reveals that people are not content with the idea of power in few hands. On the other hand, these people believe in being treated equally and fairly. U.A.E is said to have a power distance score of 86 which indicates a large power distance (Hofstede, 1998). The evidence that people living in U.A.E have no issues whatsoever with the distribution of power in the region come can be derived by the class hierarchy. Emiratis are divided into two social categories: the nationals and the emigrants. The nationals are further divided into: Sheikhs (the Royal ruling class), the merchants and so on. This stratification is done on the basis of power. The large power distance is acceptable. To a vast majority, this factor is also in alignment with their religious teachings. According to

International Business 5 their religion, male member is the bread winner of the family. This is practiced by people at homes and therefore when they go out in professional fields, they continue to do the same. The C.E.O, the chairman or the President of the company there has complete authority and virtually unlimited power over its employees. Implications: It can be manifested that companies who try to expand their businesses in U.A.E can feel free to establish a hierarchical system within the company as people have no problems with accepting large power distance. Strong versus Weak Uncertainty Avoidance: Uncertainty avoidance is the extent to which people in a company accept risk. High uncertainty avoidance shows their predisposition to avert ambiguity whereas low uncertainty avoidance shows peoples affinity towards risk. U.A.E has a score of 68 when it comes to tolerance for ambiguity (Cavusgil, 2007). In business, people have a firm belief that precise calculations and statistics only will help them achieve the desired outcome. They do not believe in ambiguous and uncertain ideas and are more inclined to make decisions when elements are known. In order to reduce uncertainty they have implemented strict laws, rules and procedures. Implication: For successful operation of the firm, it must negate all ideas which are risky or whose output is not easily predictable. People prefer to voluntary actions rather than instinctive.

International Business 6 Therefore, the company must make sure to make a probable estimate of the output of introducing new ideas and making decisions. Masculinity versus Femininity: Masculinity and femininity define the values and characteristics that are traditionally associated with males and females. For example traits of collectivism, peace, compromise and friendliness are seen in females. U.A.E has a masculinity index of 52 which is higher than the world average of 50. In this case too, the religion Islam is accountable for the high score. Man power is revered highly by the domestic population which is the follower of religion Islam. Women are not encouraged to work along with men. Due to modernism, women can now apply for jobs in some fields if not all. Implication: Companies should not let male members have their own way in this case. Instead they should put forward the concept of equal employment opportunities and let the women try for the same post as men do. Conclusion: Culture constitutes an essential part of the living in a certain place. Culture does not only define a lifestyle but it is a way in which people in a region think and work about. In the light of the discussion above, it can be safely concluded that cultural factors underlie a companys success. If the firm is not able to align its operations, procedures of

International Business 7 performing work with the prevalent culture of the country then there is a high possibility that the firm will fail in its operations.

International Business 8 References: Cavusgil, T. (2007). International Business: Strategy, Management, and the New Realities. Prentice Hall Cavusgil, T.(2007). Cultures and Organizations: Software of the Mind. McGraw-Hill Hofstede, G.(1998). Masculinity and Femininity: The Taboo Dimension of National Cultures (Cross Cultural Psychology). Sage Publications, Inc Kim, U., Triandis, H.C., Kagitcibasi, C.(1994).Individualism and Collectivism: Theory, Method, and Applications (Cross Cultural Research and Methodology) . Sage Publications, Inc.