Management Case Study on Dancom

I would like to start by saying that the case study of Dancom speaks about the primary activity of Dancom in Russia. One begins to learn how the Russians view themselves when working for a foreign company as well as how they see the international company operating in their motherland. In the following essay, I will point out different problems that took place in Dancom in Russia and will comment on the reasons why they problems might have indeed taken place.

The case study showed us that in the Russian branch of Dancom, people would get informally divided into the two groups, “hosting insiders” and “hosting outsiders” (hosting meaning, local Russian employees). The difference between these groups is showed by the level of attachment to the company and the Dutch staff as well as the view of oneself in the organization. Insiders prefer to remain with the company longer, attend social events, communicate with each other.

Outsiders, on the other hand, view the work only as a source of income and hardly ever interact with other workers outside Dancom; they also leave early all the social events organized by Dancom. Insiders prefer informal communication, while the outsider relies on more formal (written) ways of communication. The outsiders, on the other hand, viewed the presence of the Danish supervisors as essential for the proper corporate functioning, since they believe there would be a more open conflict if the Danes were absent. For the outsiders, it is not considered appropriate to resolve problems in front of foreigners. Apparently, the hosting insiders represent the people who remain longer with the Dancom and consider themselves to be the founding fathers of Dancom in Russia.

Problems of Dancom:
The problem depicted in the case study and supported by both the insiders and the outsiders was the relationship of the Russian Dancom office with the Danish headquarters. The communication was viewed as too formal with the Danish leaders not caring much about the Russian market and the employees (Infante, 1997). Many viewed it as a lack of respect for a foreign subsidiary. The headquarters of Dancom, on the other hand, believe that the formal communication with the Russian base is essential for the proper operations of the branch. The political and economic instability in Russia plays a vital role in such formalization (Schon, 1983).

The decision making was viewed by Russian employees as highly inefficient simply because the head office did not want to delegate any authority to Russians. Still, It appears that the suggestions made by Russians indeed were reasonable and profitable. The Danish agency declined the rent vs. buy decision as proposed by the Russians. Then it appeared that the Russians were correct.

Explanation of problems:
The primary differences between the Russian and Danish offices were cultural. The Russians did not want to discuss things collectively and viewed such decisions as very inefficient, slow and unproductive. In the fast-paced Russian economy, the Danish collective way of thinking appears to be inappropriate as noted by the Russians in the case study. The Danish, on the other hand, insisted on discussing the same issue several times and by the time they came to a ‘good’ decision, the environment changed in a way that the decision was outdated. While the Russians were directed solely to the results regardless of the ways these results are achieved, the Danish viewed a discussion and general satisfaction of participants as more important than the results. The Russians viewed the discussion with the colleagues, especially with the subordinates as a waste of time and considered the job to be either done or not done. The Russians viewed the collective decision making as proposed by the Danes as a desire to diffuse responsibility and hide lack of knowledge or professionalism (Kemmis, 1990).

Another reason why there are many problems in communication is that the Russians prefer to use their intuition rather than search for as many proofs as possible to convince their western partners. As the case stud noted, often, the Russians would tell their Dutch partners about something they believe will happen as having heard through the grapevine somewhere on the streets or from their friends. The Dutch would not accept such proposition since it apparently lacks logical explanation or proof. It does not take long to see that what the Russian employees overheard somewhere indeed starts to take place and the logical decisions made (or not made) by the Dutch often are inferior to the proposals made by the Russians. Going back to the rent vs. buy decisions, the Russians advised purchasing buildings way before the prices for real-estate grew. The Dutch saw no logical proof that real, estate in a third world country such as Russia will appreciate. They did not have a logical explanation when the price of real estate in Russia skyrocketed and became more expensive than in Europe or North America, thus causing the company to lose money on ever-increasing rent costs. Dancom lost money on IT services when it chose a Danish IT company over Russian IT companies.

The Russians in the case noted that the Dutch consult the Russians only when they do not know anything themselves and often when it is already too late. They view planning only as a short-term tool and plan for the next 2-3 months, while the Danes insist on planning for the next 5 to 10 years. Ultimately the Danes understand that due to a great number of variables, their planning long-term does not work in Russian at all (Tayeb, 2005).

Theoretical explanation:
Fons Trompenaars would define a culture as a mean of people’s solving their problems which possess several different layers (Trompenaars, 1993). Just like Hofstede, Trompenaars would compare a culture with cabbage or onion, so for a person to understand well the culture one has to follow each of the layers of the culture. Importantly, one needs not skip layers yet rather meticulously go one by one and ‘peal’ the layers.

The outmost layer is called the explicit layer or the layer that possesses the manifestation of a particular culture, artifacts and other apparent or observable things such as the dress code, greetings, language, art, music, and acts of people and the society as a whole.

All the artifacts and observable things represent a deeper layer, called the middle layer which is all about country’s norms, values, habits, and customs of the country/culture. It is the values that determine what things are good and what things are bad for people and the society.

The innermost layer is called the core or implicit layer. This layer represents the subconsciousness and the basic assumptions which represent the culture on the higher layers (Griffin, 2000). This inner layer directly relates to the nature in which the social lives and the environment that caused people behave in a certain way. The reason why cultures developed differently from each other is simply that they appeared to different environments and people had to behave, think and act differently to survive in that environment.

One culture can be distinguished from another in a way how it treats some fundamental problems in the society. These problems are the person’s relationship with the environment, nature, other humans, time, and wealth. These problems are viewed as common since every person needs to deal with these problems.

Causes of communication problems of Dancom in Russia:
Based on the way how cultures chose to solve different fundamental problems, Trompenaars identified six different cultural dimensions with the first five dimension dealing exclusively with other people. Please refer to these dimensions as shown below:
Universalism vs. Pluralism. This dimension assesses the cultural rules, procedures, and regulations that guide human relationships. The Russians viewed the intuition/gut feeling short-term ad planning as the way to do business in Russia. The Danish considered their western practices superior to the Russian business practices and thus experienced problems when the western practices did not work in the east (Russia).

Individualism vs. communitarianism (collectivism). This dimension shows how people to prefer to solve problems:

  1. Individually or collectively. The Danish managers appear to be more collectivist since they preferred to spend a great amount of time on discussion of different issues. The Russians appear to prefer individualism and a strong leader (tsar) who just tells the Russians what needs to be done, while it is the Russians who develop the ways to get the things done (Mezirow, 1981).
  2. Specific vs. Diffuse. This dimension show how people treat the relationships: either superficially or on a deep level. How people treat each other and how frequently they change partners. The Russians treat relationships deeper compared to a more shallow level as preferred by the Danes. As a result, the Russians did not see any trust from their Danish supervisors and thus did not trust them either. The business relationship was also viewed as a more intimate thing than a formalized communication. Failure by the Danes to engage in more informal communication where possible to appear more specific to the Russian would build more trust and commitment (Littlejohn, 1999).
  3. Neutrality vs. Affectivity. This dimension show how people prefer to show their emotions: either openly and freely or prefer to remain stoic. The Russians do not show their emotions much in public compared to the westerners. Whenever they are not heard or ignored, the Russians would not openly object especially in the presence of foreigners, yet they would start to work unproductively and avoid the offenders altogether (Hall, 1990).
  4. Status. This dimension shows the importance of having a title, a good name or a reputation. For the Russians, the status is extremely important, yet status involves power and knowledge.

Therefore, the managers and top leaders of the company were supposed to be authoritarian and know-it-all. The team just has to get the order and get it done. The Danish managers spent a lot of time communicating and discussing issues rather than doing them, as noted in the case study.

As a result, the top management was viewed as highly incompetent, asking for advising low-level employees and constantly doubting what to do next. The Russians believe that if the top management spends most of its time discussing issues with the middle-level Russian employees, then such top management needs to be replaced with the more competent middle-level employees who get consulted all the time (West, 2000).

The relationship of a particular culture with nature (Wood, 1997). This dimension shows us if people view themselves as stronger than nature and the environment and try to control it or if they consider the nature to be absolute and obey it. It appears that both the Russians and the Danes view themselves as stronger than the culture. Still, the Russians do view the role of fate and superstitions as important in the decision-making process. They often rely on intuition which gets never heard by the Danish managers due to the lack of logical explanation.

From the theory of Trompenaars, we can see why different problems appear in Dancom between the Russians and the Danish managers. The employees from Denmark and Russia have different cultural backgrounds and thus view the business environment differently. The Russians prefer to be consulted and then having their pieces of advice being implemented. The Danish focused on the discussion to assure satisfaction around the company rather than the actual decision. When the Russians expressed their decisions and then saw the Danish do things their way, they typically close on the communication and prefer not to give more advice which is never heard. The top management in Russia is viewed as competent when it knows what to do and who to order what. In the case study, we see that ultimately the top management of Dancom is viewed by the Russian subsidiary as incompetent, disrespectful and detached. The Russians, thus viewed themselves as inferior to the Danes who never used the bits of advice of the Russians and preferred to do things their way even when it meant losses to Dancom.

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