Ray Betzell, the general manager of a joint venture between Rocky River Industries and Shanghai fabrics Ind. , was being torn between the two companies. After many years of production Rocky River’s President Paul Danvers wasn’t satisfied with the annual return of 5%. Chui Wai, deputy general manager, believed that Shui was generating just the right level of profit not too much and not too little. Although Chui Wai believed production and profits were well, his partner didn’t agree.
Paul Danvers desired an annual return of around 20% based on the amount of years in service. During a phone conversation Ray Betzell and Paul Danvers discussed the production of the company and the output of that production. The investment in the company wasn’t producing sufficient profits. Paul mentioned that greater efficiency and incorporating sophisticated technology would allow Shui to reduce its workforce substantially and in return provide a better ROI (return on investment).
After stating his alternative methods, he also gave the option of terminating his contract with Shui or everyone coming to an agreement on how to generate better ROI. 1. How would you characterize the main economic, legal-political, sociocultural differences influencing the relationship between partners in Shui fabrics? What GLOBE Project dimensions would help you understand the differences in Chinese and American perspectives illustrated in the case? The infrastructures between the two companies differ because of the fact that one company is from China and next is from the United States.
China’s economic development is not the same as the United States. China is attractive for low-cost manufacturing of goods, “Management, Richard Daft, chpt 4. ” In the online encyclopedia “Wikipedia” the United States have the highest income per hour worked. “This is the value of all final goods and services produced within a nation in a given year, divided by the total annual hours worked” (Wikipedia). The GDP (PPP) per hour worked is a measure of the productivity of a country. Below is a link. wikipediahttp://en. wikipedia. rg/wiki/Economy_of_the_United_States The United states have The Laws and regulations In the two companies differ which makes coming to an agreement difficult because if the Chinese law support low wages and the United States support higher wage than a disagreement is bound to happen. There is also the differences in beliefs, values, language and religion, which makes coming to a resolution difficult. The United States rank high in the assertiveness and performance orientation. China ranks high in the Gender Differentiation dimension.
Toughness and competitiveness; high performance and rewards for service is the attitude of the United States. Gender role differences are important to China. The fact that one country supports the man as being the sole of leadership and the other country supports women and men shows that the two countries have totally different values. Different values between two partners usually involve conflict between the two. 2. How would you define Shui’s core problem? Are sociocultural differences the main underlying cause of this problem?
Why or why not? How would you handle the conflict with your boss back in the United States? Shui’s core problem is technology. The case states that better resource and technology will reduce its workforce which will in turn generate better ROI. Technology will cut back on costs and save the company money. Sociocultural differences seem to be the main underlying cause of the problem because when two people have different social values, beliefs, language, religion, and education. The outcome will ultimately be disagreements and frustrations.
The two companies will have difficulties in making decisions together because of their social values. If one person has a certain set of beliefs and another a totally different set of beliefs than the result is disagreement. One believes that if you take this risk than the outcome is good and the other believes that if you take that risk than the outcome is bad. What the two companies regard as true may be true in their own sight but they will most likely be in conflict. Language barriers make it extremely difficult to communicate as well as come to an agreement.
Spiritual beliefs of the two partners will bring confusion as to whom to trust. There are many different religions and often people seek spiritual advice in making business decision which can prove disappointing to the partners within the company. The educations in two different countries are most likely going to be different. Learning ways of operating a business in China is going to be somewhat different than the educational training in the United States for operating a business. I would respect the sociocultural differences in our partnership.
All partners will come to an agreement as to what is required and how business should be conducted. 3. If you were Ray Betzell, what other options to the 50-50 joint venture would you consider for manufacturing textiles in China? Make the argument that one this option is more likely to meet Rocky River’s expectations than the partnership already in place. I would argue that the company holds him as valuable asset to the partnership. All partners will have a meeting scheduled to review the possibilities of technology advancements, reducing the workforce, better ROI, and overall production.
China and United States partners will be advised to come to the best agreement to suit all parties. All partners will be updated on all business communications. The above options will likely be more appealing. A skillful manager must possess the ability to meet the needs of all partners. Developing ways to adapt to different cultures and understanding their ways will produce good leadership skills. Those leadership skills will assist in decision making and best of all making the right decision.
The better way of conducting business is ensuring all partners and employees are fairly treated. Fair treatment involves good compensation. Making sure that proper adjustments are made and all wages are fair than the surety of the company is well. Mangers must develop the skills to successfully accommodate important people within the company. It is important to come to an agreement and follow up with the agreement. Paul’s expectation’s will have been met and the most generous way. We would work hard at getting the best out of the situation.