Case Report on National Australia Bank (NAB)

Introduction

Analyzing case study “Australian Banks in Asia,” it is necessary to say that Australian business begins to integrate into Chinese market. National Australia Bank (NAB) is one of the most active players in the Chinese market. However, the main challenge of NAB is management issue that is connected with cultural differences between Australian and Chinese markets. Cultural differences between markets concern many banks at the present time; therefore, it is important to regard this management issue. Management issue is a problem that prevents the company from the development and growth in the market. Management issues can be connected with strategic renewal, structure, governance, communication, culture, and leadership, especially when it concerns international market.

Cultural differences between markets should be studied due to globalization of business and its integration into international market. This report will reveal peculiarities of NAB operating in the Chinese markets and recommend the ways of solving the management issues concerning cultural differences. The report aims to prove that the cultural difference is the main barrier that prevents NAB from successful integration into Chinese market. The main purpose of this report is to identify management issue and evaluate development and strategies of NAB in the Chinese banking market.

Issue Identification

For NAB, the Chinese market appears to be challenging since there are numerous regulatory limitations as well as cultural differences in many areas. The Chinese market has tough conditions for all kinds of business and thus, even such successful Australian bank as NAB requires additional investment to employ Chinese human resources and attract Chinese customers. Understanding cultural differences is a must for global business. Indeed, NAB runs business in other nations such as China, Britain, or the USA as it is a wonderful opportunity to get large profits and win the respective market (Staniuline, 2009).

From the case study, it is evident that cultural implications have an impact on reception and longevity of a new brand regardless of bank's services, experience, and size. Another management issue is that NAB cannot operate in Chinese market of other domestic banks and impose its values. It means that NAB should save its cultural identity and be respectful to Chinese traditions of business. International business practices require knowledge of cultural differences to avoid misunderstanding and conflicts. Besides, it is important for NAB to be tolerant of Chinese management styles to gain new opportunities and agreement (Raspin, 2007).

Critical Discussion

The case study shows that cultural differences can be both driving and restraining force while operating in the global business community such as China. However, it has been argued that the management issues of NAB are connected with differences between Australian and Chinese values.

Hofstede's theory of organizational culture is applicable in this particular case and it helps to show the differences between Australian and Chinese markets. The argument centered on whether Hofstede's theory of organizational culture may solve the problem of cultural differences between Chinese and Australian markets (Alvesson, 2002).

Power distance concerns social inequality including the issues of race and gender. “In countries with high power distance, subordinates have high dependency to superiors and don't disagree with superiors directly” (Khastar, 2011, 321). In Australia, power distance is not so evident and thus, social inequalities and discrimination are not typical for NAB. The huge Chinese market is attractive, but its culture is a major issue for NAB. China has high power distance.

Uncertainty avoidance is another factor that defines organizational culture. It develops good corporate strategy and strategic leadership (Brooks, 1997). Uncertainty avoidance index (UAI) is high in both China and Australia. “In cultures with high UAI, people try to be structured, and behave what they are expected and want to know that will happen in the future” (Khastar, 2011, 321). This cultural aspect proves that NAB has all opportunities of being successful in Chinese market.

Another cultural difference between Chinese and Australian banking markets concerns individualism and collectivism. “Individualism versus collectivism is regarded with the degree of people feeling belonged to a group and the identity of relations between group and people” (Khastar, 2011, 321). Chinese culture is collective, while Australian culture is individual. It is a crucial gap between them.

Masculinity versus femininity is another cultural barrier for Australian bank in Chinese market. In Australian society, both women and men share the same set of values and have equal rights. On the other hand, China is a masculine society, where men have more rights than women, and the latter are treated with injustice. NAB can provide equal rights for men and women, and this will help to improve customers’ responsiveness. The strength of NAB is that it is not afraid of cultural differences with China and it does not look for easy ways such as European and American banking markets.

Hofstede's theory of organizational culture is not always ideal and relevant. It does not presuppose the variety of human societies. It is necessary to take into consideration that within a Chinese society, there can be other cultural groups that also have their peculiarities. The limitation of Hofstede's theory of organizational culture is that it does not consider different cross-cultural behavioral patterns. It is evident that this theory does not help to solve the main management issue of NAB. In China, NAB has the problems employing local managers in order to double the amount of branches (Rasmussen and Wangel, 2006).

On the contrary, it is evident that Hofstede's theory of organizational culture is still relevant because cultural issues remain unsolved. Moreover, globalization of domestic organization is a must for its transfer on the international level, and Hofstede's theory shows the obstacles that it should remove in order to operate in the international environment (Raspin, 2003). Moreover, it has been determined that in modern international market, banks are ready to implement cultural management to avoid disagreement and conflicts with their customers. It is argued that Hofstede's theory of organizational culture is still applicable in current business world because globalization and internationalization are the two driving forces that destroy boundaries between cultures (Schermerhorn, 2013).