Managing Cultural

Differences

Minh-Thi, Alexandru, Raphael, Katharina, Silje

„L’Oréal Masters Multiculturalism“Hae-Jung & Doz 2013

“The Perils of Partnering in Developing Markets“Thompson 2012

„L‘Oreal Masters Multiculturalism“

Written by Hae-Jung & Doz

• published in 2013 in „Harvard Business Review“

Company Background

• Founded in 1909

• Since 2004: revenue has increased by half & net profit

almost doubled

• Offices in over 130 countries

• 2012: half of its sales from emerging markets

↑18,4 % in Asia-Pacific region

↑17,6 % in Africa & Middle East

• World leader in skin care, make up & hair color

Portfolio of brands

FranceUSA

Great Britain

ItalyJapan

Global businesses

• Product development and marketing: TENSION HIGH

o Consumer-products division most critical

Product innovation of 20 % each year

3,5 % of revenues in R&D

Internationalization of management team

Tensions between :

Global integrationEconomies of scale & scope

Local responsivenessAdaption of local preferences

A. B.

C. D.

Between global interventions and local ratification

Between global interpretation and local analysis

There is no tensionBetween global integration and local responsiveness

What kind of tension do companies face when doing

global businesses that is never fully resolved?

International Talent

• Late 1990´s began to hire executives from mixed

cultural backgrounds

• Developing a new product takes a year of knowledge

exchange

• Réunion Internationale

International Talent

• Multicultural managers:

o International subsidiaries

o Other global companies

o Graduates

• Increasing multiculturals in senior management

Advantages

• Differences in communication

• Recognizing New-Product Opportunities

• Analogies between cultural groups

A. B.

C. D.

Réunion Internationale Congrès du Paris

León ConferenceParis Interchange

At which event does thedevelopment team have to

present their concept?

Preventing losses in translation

• Stereotyping of new members

• Multiculturals can help integrate

newcomers

• Confusion caused by cross-

cultural semantic differences

• Change in meaning after

translation

Integrating outsiders

Mediating with Bosses

• ”We will do our best” = ”yes” or ”no”?

• Multicultural managers’ knowledge from different

cultures help avoid open conflicts

”My French boss never starts meetings on

time. So whenever we have a meeting

planned with him, we can get frustrated if

we are not flexible.”

Bridging Differences between

Subsidiaries and HQ

Recommendations

• For a global company to deploy multiculturals strategically,

HR should appoint a manager to lead a program for

developing and nurturing them.

• Need to learn how to learn from their peripheries

• L’Oréal’s strategic use of multicultural managers provides a

shortcut

A. B.

C. D.

Polycentric approach Ethnocentric approach

Regiocentric approachGeocentric approach

For a company to become successful globally, it should

move away from the:

„The Perils of Partneringin Developing Markets“

Written by Steven J. Thompson

CEO and Founder of Johns Hopkins Medicine

International

The Market Entry

• A new state-of-the-art medical center

• Success depends on the executives

• Managers must be Turkish by law

• Qualified Turkish executives non-existent

- „How could we manage a large, complexe project in a country whose laws

prevented us from hiring the right people for key leadership roles?“ -

Approaching the problem

• Not expected problems

• Reality in today‘s global markets

• Developing economies seek for Joint Ventures

• JP Morgan/Union Bank of India, Googel/UOL Busca

• Partneships eases entry into market

• Failures and challenges

• Highly flexible model

Filling the Local Talent Gap

• Quality problems needed better management

• CEO must be turkish

• Top managers can be non-citizens

• Often local partners insist on it

• Solving the problem

• Technical compliance with law

• HR-Perspective

• Expatriate-assignments are difficult

• Two-pronged solution

Non-Equity Alliance

A. B.

C. D.

Joint Venture Equity Strategic Alliance

Partnership resulting in a friendly takeover

Which type of alliance implemented “JHI” with

“Anadolu” in Turkey?

• Midlevel providers avoid

challenging decisions of senior

physicians

• Need to tackle the culture?

• Goal accomplishment within the cultural constraints

• Extreme situations => no compromise

When Best Practices Collide with Culture

Mitigating Risk

• Choosing the right partner: learning to read signs from

the first meeting

• Being aware of signs about defaulting on duties

• RESULT:

o No project fully under way has been terminated

o JHI providing quality local managers for Government

health ministries

A. B.

C. D.

An internationally active partner

A partner which is seeking high financial returns

A partner that focuses on multiculturalism

A partner that focuses on sustainable quality

With whom does Hopkins normally develop its projects?