Decision Theory- Cultural Differences, Cultural Negotiation

Bader Alhathal 

Cultural Differences

COLLAPSE

Cultural Differences

        Different countries around the world will differently have different cultures due to the different believes that have been created over time. Culture the social behaviors and the norms known by a certain group of people. In business especially with multinational organizations or ones where they deal with an international business partner or counterpart shall have the meaning and understand of the social behaviors and norms of the counterpart company, hence the culture of its people. This itself creates an issue of both companies tries to adjust to the counterpart culture to a limit of taking it too far where it can be communicated well and miscommunication occurs affecting the partnership (Pon Staff, 2021).

The joint venture of Wahaha between Hangzhou Wahaha Food Group (Wahaha Group), Bai Fu Qin a Hong Kong corporation (Baifu), and Danone Group a French corporation (Danone). This Joint Venture was formed in 1996 where Wahaha Group owned 49 percent of the share while Jin Jia Investment a Singapore corporation  (formed by Baifu & Danone) owned 51%. In 1998, Danone bought out the Baifu share in Jinjia by 100% ownership making Danone a controlling partner in the joint Venture per their perspective. This was considered a huge mistake gave control of a local company to an international French company. Danone later went to take over other companies within the region which was considered offensive by the Wahaha group. this led to different issues leading the two groups to work separately which doesn’t help their interest where they should have been very open as equal partners with their strategic plans which would have helped in avoiding all of these issues ( Luthans & Doh, 2018).

References

Luthans, F., & Doh, J. (2018). International management (10th ed.). Dubuque: McGraw-Hill Education.

Pon Staff. (2021). Managing Cultural Differences in Negotiation. PON – Program on Negotiation at Harvard School. Retrieved 3 March 2021, from https://www.pon.harvard.edu/daily/international-negotiation-daily/managing-cultural-differences-negotiation-2/. 

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ALI ALQUBAYSHI 

M07: CULTURAL NEGOTIATION

COLLAPSE

The joint venture between DANONE and Wahaha was formed in 1996. Upon the investment there were 49percent shares of Wahaha group and jinjia owned 51 percent share of JV. This structure of joint venture leads towards the conflicting situation among the two groups. Both of them have their own perspectives regarding their roles and responsibilities and division of shares which creates this conflicting situation. (Brief Integrative Case)

Wahaha has the point of view that there is division of ownership at 49 percent, and 51 percent is divided equally between the other two parties which are DANONE and baifu in the initial structure of his venture. They have the view that can control the whole venture. On the other hand, DANONE is the 100 percent owner of the venture. There were two mistakes that raise this conflict for this venture, one is that they have given the whole control over their trademark to this venture and a foreign company was now controlling the venture. (Bu, 2011)

After this conflict, now they have started working on the approval issue, but the trademark has refused to give them the license. The important point in this case was that Wahaha was the company who worked independently even being the part of this venture, and this has helped them to out to successes in the financial run. At the end, DANONE took the control of major competitors of Wahaha and at that time Wahaha has the view that DANONE has not followed the venture. This type of conflict can be handled only with open communication between the two companies. None of the companies has communicated openly about concerns related to this venture. Each one of them is struggling independently instead of working for this venture. (Abbas, 2010)

References:

Abbas, W. (2010). THE ROLE OF LEADERSHIP IN ORGANIZATIONAL CHANGE. 1-57.

Brief Integrative Case. (n.d.). Danone’s Wrangle with Wahaha. 255-278.

Bu, Q. (2011). Danone v. Wahaha: who laughs last? 3-4.