Introduction

This report would hereby review the expansion of Volkswagen’s operations in India in order to gain a competitive advantage through the efficiency of cost effectiveness and quality labor pool.

Due to rapid technology advancement the global marketplace expands. Foreign ideals and culture are easily spread and adapted by indigenous people in all corners of the globe, through "Globalisation". Industrial globalization has taken its grip and businesses are going across the cultural boundaries. The convergence enhances the communication level between cultures. On the other hand, with globalization cultural differences are also highlighted.

Overview of Volkswagen and Management

Volkswagen Germany is the largest car manufacturer in Europe and is renowned for quality cars at affordable prices.  In order to maintain its competitive advantage in the car manufacturing industry it has decided to expand its operations in Pune India. The investment will be worth 560 million euros so it is imperative that careful thought is given to ensure success of this venture.  

Volkswagen would need to critically analyze India’s Culture as they are entering a foreign market. This would provide the company with the possible problems that they would need to address through the cultural differences analysis .With this information Volkswagen’s management can use this as a proactive tool to address the problems before they even occur within the company that can adversely affect the operations and the overall success of the organisation.

What is Culture?

A single definition of culture is not enough because the concept is far too complex.
The word culture has many different meanings

Edger Schein (           ) defines culture as the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic ‘taken for granted’ fashion an organization's view of its self and its environment.  Culture has been defined under various headings including: national, organizational or corporate industry culture and occupational culture.  for the purposes of this report will be confined to national and organizational culture Geert Hofstede (1980, 1991) outline five dimensions of culture namely:

Germany and India are two distinctly different societies and countries.  Germany is regarded by the world trade organization as a first world nation whereas India is now seen as an emerging economy post 1991, when governmental restrictions to foreign investment were lifted. The cross-cultural differences between Germany and India will be analyzed this report will seek to highlight potential areas of conflict and will also suggest workable solutions.

Shalom Schwartz, culture is a "rich complex of meanings, beliefs, practices, symbols, norms, and values prevalent among people in a society" (2003). His Theory of Value Orientations comprises the following cultural dimensions:

  • Embeddedness/autonomy
  • hierarchy/egalitarianism
  • mastery/harmony

In all cross cultural value studies, individualism and collectivism as well as power distance have been identified as dimensions along which cultures differ. In the following we will be discussing these cultural dimensions.

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Cultural Analysis of German and Indian Culture

Power distance

The Geert Hofstede analysis for India shows a large power distance society and all other measures are relatively moderate. This would be indicative of the fact that India is in the midst of change. The traditional caste systems has been outlawed, however the large power distance score indicates that the attitudes still remain.
India has Power Distance (PDI) as the highest Hofstede Dimension for the culture, with a ranking of 77 compared to a world average of 56.5 ...

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