Key Challenges to Cross Cultural Management: O2 Germany Case Study

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Generally, culture can be viewed as the behavioural norms within a group of people sharing common ethnicity, beliefs, education, historical background, location or institutions. It is widely the accepted behaviour in a group and likely the most striking or peculiar form of behaviour noted by a foreign member new in the group. Considering this, multinational corporations (MNC) must be highly sensitive towards cross cultural management in order for them to expand, implement their strategies and achieve their goals in domains outside their home.
According to the GLOBE Project (House and Hanges, 2004, p15), leadership is the ability of an individual to influence, motivate and enable others to contribute toward the effectiveness and success
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The biggest differences come in terms of family collectivism and uncertainty avoidance, where the Spanish appreciate having strong ties in a group (family collectivism) and the Germans show a strong distaste towards change (uncertainty avoidance).
Before the acquisition, o2 Germany had a hierarchical management organization composed primarily of Germans under the leadership of German CEO Rudolf Gröger, where the internal reporting, communication and meetings were mainly in the German language. The functional divisions such as HR, Sales and Marketing were tailor-made for the German market, pointing that o2 Plc used a decentralized and polycentric approach for its German subsidiary. Only certain functions and processes such as corporate finance, board of directors reporting, and corporate strategy were kept uniform across o2 Plc subsidiaries and the communication was in English. Conveniently for o2 Germany at that time, Telefónica had an established branch (Telefónica DE) since 2003 in Germany as a wholesale Internet Carrier providing network infrastructure services to Internet Service Providers (ISP) such as Freenet and HanseNet/Alicey. The top management of o2 Germany tried to convince its employees that Telefónica was anyway its preferred partner to help it achieve its aspirations of becoming an Integrated Communications Service Provider (fixed/ cellular telephony and internet surfing) and hence its
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