Cross Cultural Issues in International Business Assignment

                        Fiat and its Chinese joint ventures

             

 

Table of Contents:

  1.  Introduction……………………………………………  3
  • Fiat………………………………………..............  3
  • Advantages and disadvantages about China…..  3
  1. Main body……………………………………………...   4
  1. Corporate Culture……………………………………..  4
  2. Italian and Chinese Culture…………………………..  5
  3. Fiat’s joint venture…………………………………….   7
  • Nanjing……………………………………  7
  • Chery……………………………………...  7
  • Guangzhou Automobile ………………....  8
  • Cultural Clash…………………………..............  8
  • Cultural Shock…………………………...  8
  • Spheres of Culture……………………….   9
  • Johnson & Scholes cultural web………...   10
  • Hofstede’s findings……………………….  12
  • The ‘cultural union’ model of Trompenaars and Hamden-Turner…………………………… 13
  • Possible problems………………………………… 15  
  • Recommendation for the future joint venture….. 17
  1. Conclusion………………………………………………...   18
  2. References………………………………………………...   19

  1.  Introduction

FIAT (Fabrica Italiana Automobili Torino), was established by the Italian government in 1899, and in 1907 was bought by Giovanni Agnelli. Fiat is an automobile manufacturer, engine manufacturer, financial and industrial group based in Turin, in the Piedmont region. The company flourished under Agnelli's leadership, in large part due to his innovative ideas concerning the structure of production as well as his experience in mass marketing strategies, particularly in foreign sales. After the World War II, in March 1945, the local court of the national liberation committee Comitato di Liberazione Nazionale accused Agnelli of collaboration with the Nazis and removed him from the firm. He died seven months later. It was a family owned business until September 2010 when shareholders approved a plan to split Fiat’s industrial business from the group. Fiat operates in 61 countries with 1,063 companies that employ 223,000 people, 111,000 of whom are outside Italy.

Advantages and Disadvantages

As of 2009, Fiat is the world’s 9th largest carmaker. In order to keep that place and even grow Fiat needs to become part of the fastest growing market in the World, China. The Italian carmaker wants not only to manufacture his cars in China, but also to sell them to the Chinese. Forming a joint-venture company seemed to be the quickest and most effective way of developing good quality relations in a country such as China. Fiat made an attempt to introduce in China with a joint-venture with a local firm: Nanjing. Unfortunately, the joint-venture failed. The aim of this assignment is to analyze the cultural reasons and differences in Fiat’s joint ventures and to analyse what are the cultural reasons for the failure of this business.

  1. Main Body:

  1. Corporate culture- “Every human society has its own shape, its own purposes, its own meanings”. (Williams, 1958). Culture is the whole way of life of a people. Culture seves as a lens through which we perceive the other. Corporate culture is something that managers have to establish and run all the way through a business, with clear values and beliefs, successful business principles and operations, and a suitable emphasis on human resources and customer satisfaction. Fiat’s corporate culture will be strongly influenced by the Italian culture. According to Huntington: ‘A civilization is a cultural entity. European communities will share cultural features that distinguish them from Arab or Chinese communities. Arabs, Chinese and Westerns, however, are not part of any other broader cultural entity. They constitute civilizations.’ Therefore Fiat’s culture will be influenced not only by the Italian, but also by the European culture, too.

  1. Italian and Chinese culture- Main things for Italian and Chinese culture are:

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  1. Fiat’s joint ventures – 
  • Nanjing- The first joint venture that car maker started was between Fiat and Nanjing. The Italian- Chinese joint-venture was established in 1999 and was based in Nanjing which 300 km. west of Shanghai. Nanjing Fiat Auto built the Fiat Palio, Fiat Palio Weekend, Fiat Siena and Fiat Perla cars. The Nanjing Automobile (Group) Corporation is a state-owned enterprise with a history that dates from 1947 making it the oldest of the Chinese automobile manufacturers. In 2005, Nanjing bought the British carmaker MG Rover. In 2006, the Italian carmaker ...

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