Oct 3, 2018 in Case Studies

The case study “Eurochem Shanghai: Corporate Policy or China Practice” is a great example of the differences in business views and company’s policies regarding the cultural differences and some other peculiarities. There are major characters in this case study and each of them has an important and a significant role in company’s future and development.

Mr Olsen is the head of the Eurochem’s oversea branch that is presented in China. Some time earlier Olsen used to be the general manager and had worked for a Swiss chemical company. However, some time later he became a Eurochem worker as he showed great knowledge of Chinese and business. Olsen managed to create a good client base after a rather short time that brought constant and stable income to the company. Olsen devoted much time to the company’s image and status in the international market. Mr Li is the deputy manager in the company and he is the most trusted person for Mr Olsen due to their strong cooperation and great understanding. Mr Wu works in the marketing department. He is also one of the most reliable employees of Mr Olsen. Paul Paus is a young professional who had been pointed for the position of a marketing manager in the Eurochem office in Shanghai. He used to work in Eurochem head office in Belgium and then he was chosen to take care of the marketing activity in China. Moreover, as it was found out later, he was the only expatriate in that branch establishment. Paul Paus is a rather young professional aged 30; however, he has already managed to gain great reputation of a real professional and a respected person in business. Paul Paus’s experience in the marketing sphere and the combination of such qualities as ambitiousness, firmness of purpose and dedication helped him to single out from the whole management team.

Nowadays nearly everyone is involved in international trade and it is very important

to know its basic rules and peculiarities. Every culture and nation has some significant features that should be considered in business. Neglect of cultural differences can result in great failures and losses in business. That is why it is very important to be aware of all the cultural peculiarities before starting a business.

Although the development of various technologies and computer-mediated communications is very rapid, still there are certain cultures and societies that prefer face-to-face communication to emails and chats. Such an approach is quite typical for China. It is believed that it is very important to know personally whom you are going to work with. Chinese think that face-to-face communication is far more effective, and it helps to understand and know the partner or the client better. Such a method also helps to find out and use personal approach when dealing with a new person. Successful businessmen know the real price of every meeting and contract, and they want to be sure that the chosen client or partner is reliable and prosperous.

One more reason for face-to-face communication in this country is the desire to create solid business relations and trust. These aspects are essential for successful cooperation. One more detail about the Chinese is that they prefer using first names when they address somebody. Face-to-face communication is very widespread in this country due to its effectiveness and opportunity to indicate many details and important information about the communication partner with the help of the analyses of gestures, appearance, and some other uncontrolled and unconsciously revealed signs.

It is possible to imagine two ways of finding out information you need: you can read a book or solve a quiz. Reading the book is absolutely reliable, however, you may require much time or it can be difficult for understanding sometimes. Solving a quiz can be an easy way, one minute job, or you can spend years on finding the right approach. In this example, getting information is doing business, reading the book - doing business in the US, solving a quiz - making it in the Chinese business market. Chinese business everywhere relies on personal networks and relationship; there should always be something more than business when two men are partners. From one side, there is always an easy way - if relationship gets along really smoothly with key decision makers, and business will grow fast; from the other side, human nature is volatile, and, for example, when you are dealing with monopoly supplier, it can be rather challenging in finding the right approach to deal with the quiz you cannot solve. Chinese culture is unique, for example, it is not close to German economy based on trust or existing market economies in western markets. It is important to be a good psychologist and to have excellent interpersonal skills in order to flawlessly deal with this issue.

Mr Olsen knows a lot concerning the structure of the company and relations between its members. In my opinion, it is very important to show Mr. Paus the importance of cultural differences and some ethical requirements that are important for business. The main issue that comes to light nowadays is that ethics is inseparably linked with business and economy. Whether we want it or not, but ethics influences our daily life and our decisions a lot. The main task nowadays is to form a team within every company that can respect values more and become a significant power. Respecting ethical principles and laws, it is also possible to improve your business and avoid undesired failures. The global financial crisis that happened recently is a bright example of underestimating ethics.

Almost everyone asks himself a question of what is ethical and what is unethical, right or wrong, good or evil, and so on. But different people have different opinions. That is why ethics is a moral value determining what is right or wrong depending on the situation. It is human nature. We are selfish because we want to survive. Thereafter management nature should be selfish in order to guarantee an increasing profit. And moral values have adjusted to standards of contemporary life. Business executives must pay attention to certain problems that transform into conflicts among managerial responsibilities that contradict a “business as usual” resolution. Managers can make successful business decision considering general principles of promise-keeping, commitment, obeying the law, and avoiding harm. Each person will accept this situation and problem individually. It is important for a company to have ethical regulations and rules to be stable and to control flow of funds. It is naïve to think that all the companies work similarly. The main aim is to make a company successful and this should be the primary aim of the top management.

A lot of people suppose that it is not possible to succeed in managing a business without acting unethically. That is why while running a business, moral values are almost always considered but to a certain extent. The moral means that you should treat others as if they were a part of your family. If you do something, you should believe it is not against someone’s morals, and you should act to unveil actions. Ethics is very important not only to worker, but to the consumer as well. Customer relationships are very important for any organization to achieve long-term benefits. Ethics is the main point on which business needs to be based. It helps to create long-term relationships with customers and achieve customer return for the business. Business ethics contains the business solvency, its customer service and customer care, its way of dealing with customers and its cause to retain their old clients. Business ethics attracts new clients while retaining the older ones.

I think most people would prefer a job with management that cares about its workers, treats them with fairness and honesty. It is not pleasant to work for much money when there are no ethical standards. Speaking about ethical business standards, we need to know what ethics is. Ethics is a set of norms that regulates the behavior in the society and guides the standards of organizations and professional occupations. Ethics can be compared to moral principles and values that show whether the deed is right or not. Workplace ethics is the same as it is outside the professional environment. This ethics shows how the executives down to the employees should function and behave professionally.

Many developing or newly industrializing countries have financial markets that are described as emerging markets. China has become a part of the Eurochem not so long time ago. That is why it is important to work hard at the initial stage in order to create and prove good reputation of the whole company. In countries with the developed markets, there is a great reliance upon a utilitarian ethics, usually implicit. In less industrially developed countries with emerging financial markets, the development of financial market mechanisms may not have reached the stage where it can be assumed that these market mechanisms will automatically allocate resources to the best economic use.

As for Mr Li and Mr Wu, I guess I would tell them about both some aspects concerning leadership and how it should be implemented in the company. Our society is a rather complex unit and leadership style should also be constantly improved and changed in order to suit the circumstances. It may be difficult to suit a new boss or some client, but it is very important to find a proper approach to everyone. Moreover, it is very important to be ready to experience certain changes and get rid of old approaches. Business absorbs new approaches every day and it is very important to be aware of all the innovations. I consider transformational leadership to be the most effective style nowadays due to its constant development and absorption of other styles. 

An open system organization structure must be always aware of all the changes in order to maintain itself in a dynamic environment. Such a demand is essential to be able to respond effectively to the ever-changing environment. An organization cannot be understood without considering the information-generating environment in which it operates. And this feature is extremely important for open systems. Open systems are rather complex units and this organization structure requires quite a complex approach and a combination of several leadership theories. In my opinion, success depends upon a number of variables including such aspects as the leadership style, qualities of the followers, and aspects of the situation. In open systems, objectives can be achieved with the help of various inputs and different approaches. Open systems require an interaction with the environment and contingency theories are the most appropriate means for this situation.

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