How the American Multinational Controls Its Mexican Subsidiary

How the American Multinational controls its Mexican subsidiary

Drawing on relevant modules and concepts from the field of international HRM

BY: SUNDAY ILEKHOMON 2010

Table of content

Abstract........................................................................................1

Introduction..................................................................... 1

How the American multinational controls its Mexican subsidiary........................................................................... 4

Conclusion..........................................................................10

Reference............................................................................11

Abstract

This Essay presents the importance of the international human resource management practices as a mechanism that facilitates the implementation of management strategies on how the US multinational company controls its Mexican subsidiaries. Interestingly, while some of the human resources practices adopted were standard practices that would be implemented regardless of the country, others were culture-specific and yet other practices were translations of U.S. Human resources practices to be sensitive to the values of the country.

Introduction

Culture has been defined as a way of life of people. It is a collective programming of a group that distinguisher them from another human group. Hofstede (1980)

In order to critically illustrate the question, I am going to draw upon two main theories of cross cultural management. The first theory is that of Hofstede (1980) which was based on a survey carried out on over 40 countries. He used this survey to produce him five cultural dimensions which are, Power distance, Individualism versus Collectivism, Uncertainty Avoidance, Masculinity versus Femininity and Long time orientation versus Short term orientation.

According to Hofstede theory dimension Mexican culture is high in power distance, this mean that the level of degree of inequality in the society is high and it's authoritarian. Meaning authority is legitimate and accepted. Another feature of Mexican culture is the collectivist nature of the culture. This is where the "group" is more important than the individual. Collectivism is a bit different in Mexico because they are loyal to the family unit and the extended family, and not to the work group. The work group is considered to be competing with the family for the employee's loyalty (case study page 2).

Mexican culture also scored high in uncertainty avoidance, this means that they are uncomfortable with ambiguous and uncertain situation; they will rather know what is going to happen. Mexican culture is also high in masculinity in Mexico the male gender dominants in the society and they are the ones in power.

The American national values on the other hand is more individualistic, everyone look for ways to better themselves, but the American culture is similar to Mexican culture in that it is also masculine in nature and they also do not like ambiguous situations. Americans had an average ranking of power distance; it is not authoritarian in the sense that authority can be challenged by the employees.

The other theory of cross cultural management is that of Trompenaars and Hampden Turner (1997). It is the most recent of the theories and they have seven dimensions of culture which are Universalism versus Particularism, Communitarisnism versus Individualism, Specific versus Diffuse, Neutrality versus Affectivity, Ascription versus Achievement, Internal versus External, and Sequential versus Synchronic.

However, the theory that I feel is more relevant in answering the question is that of Hofstede, therefore I shall concentrate on that.

How the American multinational controls its Mexican subsidiary Human resource management practices are based on cultural beliefs that reflect the basic assumptions and values of the national culture in which organisation are embedded. There are clear differences between the Mexican culture and the USA culture. In order to facilitate and implement its strategies, and direct towards the path you want. Furthermore the ideas attitudes and technical skills of the people that were employed were assessed to ensures that they were similar or in line with the ideas of the multinational.

Management strategies were easies to implement because of the steps that were taken to change the hierarchical structure i.e. the power distance, to a more flat structure, a flat organisation structure is known as horizontal organisation. It is a level wherein there is no level between the staff and manager, in such an organisation the most trained employees are involved in the decision making process. The hierarchical structure is particular to Mexican culture and this is not believed to be congruent with the learning approach which is what the US multinational wanted to implement. A flat structure eliminate unnecessary authority figures (case study page 7) and help to open up dialogue and communication between employees and management. And ensures that both managers and employees both participate and get involved with the organizations operations.

A collectivist aspect was introduce with the organisation of Equipos, The Mexican culture is a collective culture i.e. its more family orientated, it's a culture that believe family is more important than money, the management decided to include the employee's families into building the teams. Mexican culture as was stated earlier in the case study is more loyal and family oriented collectivistic culture. Steps were taken in Equipos on how management accomplished this goal. The Japanese culture was implemented in this case, the Japanese culture is a collective culture but instead of family orientated it's more based on the work environment therefore it's a more collective work based culture. Team work was encourage, every week different individual were put into teams and every individual each week took turn in being team leader. This improved efficiency, the workers were more motivated, learning new things and were more self satisfied therefore leading to better productivity.

Management did not automatically assume that because there were differences between both US multinational