Adam Zwain 1/26/09 Thought Paper 1: “A Jumping Off Place” The Business Situation A medium sized, Ohio based, U.S. manufacturing firm is opening a plant near Madrid, Spain. This will be the U.S. firm’s first foreign direct investment venture into the EU, entering as a partnership with a Spanish firm. The U.S. firm seeks to expand into other parts of Europe, but started in Spain due to lower labor costs. Cultural Differences The most important cultural differences to consider would be the Uncertainty Avoidance Index (UAI) versus Career Success/Quality of Life and the Task and Relationship orientation. Cultural Impacts The UAI vs. Career Success/Quality of Life are two elements in which American and Spanish cultures differ a lot. This will impact the hiring process as well as the managing style of the U.S. firm. The U.S. and Spain fall on opposite ends of the spectrum in regards to these two measures of cultural differences, with Spain lying in the realm of strong uncertainty avoidance and high quality of life (directly opposite to both American positions). Spanish employees are therefore more likely to favor a lower paying job that provides many benefits and high job security. Both of these factors are very different to a typical American’s desires: a high paying job with high mobility. Also when managing Spanish workers, it would be difficult to motivate them with extra income incentives. Management style would be the next major difference between Spanish and U.S. firms due to the Task and Relationship orientation of the two countries. Spain has a more relationship oriented culture, emphasizing hierarchies in organizational structures that stress a high managerial role. Again both of these elements are opposite to American culture. Spanish employees are more likely to prefer precise answers and strict guidelines from their managers; when not given this support, they will feel lost and uncertain of what to do. In contrast, Americans prefer to be able to bypass the hierarchical line, making decisions without the direct approval of their manager. Though there is the risk of angering one’s manager, American’s emphasize the reward of impressing one’s manager and the hope of promotion. Recommendations When analyzing the above cultural differences, the U.S. firm needs arrange an organizational structure much different from the typical American company. When hiring Spanish employees, the firm needs to emphasize the future of the company and the stability of selecting such a job. It should also provide adequate benefits for employees, including long vacation times and maternity leave for both male and female workers, even if it means lower income. Next, the firm needs to set strict guidelines for the company as a whole; ones both the managers and employees can follow. Any employee, regardless of status, should always know his or her given responsibilities; not knowing their duties will lead to confusion and lack of efficiency. The U.S. firm most importantly needs to realize the benefits of investing with a Spanish partner. The U.S. firm should follow the Spanish cultural norms, asking for precise advice from the Spanish firm, and considering the Spanish firm’s opinions to be more valuable than American ones. Bibliography Adler, Nancy J. (2008). International Dimensions of Organization Behavior. Mason: Thompson South Western. Cateora, Philip R. (2008). International Marketing. New York: McGraw-Hill.