5-GP-Sociology

Besides ethics, companies need to respect the culture and the way of life of the community. Vedanta, an Anglo-Indian mining company is one of those companies that have suffered major losses for engaging in culturally irresponsive business operations. Vedanta’s problems began in 2000s when it initiated a project to produce and refine aluminum in the State of Orissa, India (No ethic, 2013). Vedanta’s operations included aluminum refinery and a bauxite mine. Nevertheless, Vedanta’s main problem was that the company violated the cultural rights of the Dongria Kondh tribe. For example, Dongria Kondh accused Vedanta for constructing the aluminum plant on Niyamgiri Hills, a sacred place for Dongria Kondh (No ethic, 2013). In addition, Niyamgiri Hills provided water, firewood, medicine, and other resources to the local community. As a result, Dongria Kondh accused Vedanta of failing to negotiate with the community before launching the project. Dongria Kondh also accused Vedanta for issuing threats to the local community and giving false information to the authorities regarding the project.

In spite of having received permission from the Ministry of Environment and Forests, local NGOs compelled the Supreme Court to stop Vedanta’s project because of environmental concerns in 2005. In addition, after a series of closures and reopening of the aluminum plant by the Supreme Court and the Ministry of Environment and Forests, Survival International launched a campaign against the Vedanta’s mining activities in the Niyamgiri Hills. Survival International’s argued that Vedanta’s activities threatened the survival of the Dongria Kondh tribe (Novethic, 2013). Later on, Amnesty International joined the campaign. In 2010, the Indian government halted the operations of the company. However, in 2013 Orissa Mining Corporation took the Indian government to the Supreme Court to demand the reversal of the Indian government’s directive. The Supreme Court rejected Orissa Mining Corporation’s appeal on the ground that Vedanta’s miming activities threatened the survival of the communities that bordering Niyamgiri Hills.

Company employees may engage in cultural miscommunication with the host community whenever the former fail to appreciate the latter’s culture. For example, Vedanta failed to pay attention to the cultural issues of the local Dongria Kondh tribe. Similarly, some business organizations may fail to appreciate the way of life of the community affected by their business operations. For instance, Vedanta’s management failed to realize that the Dongria Kondh tribe relied on the environment for survival. That is, Vedanta relied on the western perception that everyone had an independent life. That is, Vedanta’s management failed to acknowledge the fact that Dongria Kondh obtained food, water, and firewood from the Niyamgiri Hills. Instead, the management may have assumed that Dongria Kondh tribe were using gas to cook and relied on piped water for their domestic use. Nevertheless, Vedanta’s management was supposed to carry out environmental and cultural impact assessment before starting the operations in the area. Vedanta should was also suppose to involve the local community leadership into the project. This is because evidence shows that company operations become sustainable whenever the company involves the locals in implementing its plans (Elaydi, & McLaughlin, 2012). In particular, the firm was supposed to study the culture in the area to determine the cultural impact of the project before its inception.

Lack of proper cultural intelligence often influences the outcome of business transactions. That is, employees with additional cultural knowledge succeed in their business negotiations compared to those without such knowledge (Ahern, Daminelli, & Fracassi, 2012; Imai, & Gelfand, 2010). Negotiations take various forms such as the once involving the firm and the government over licensing. For example, if a company plans to negotiate with a Chinese government to be granted a license to manufacture plastic toys in China, the company’s negotiating team should learn how to approach the Chinese authorities with respect. This is because Chinese cultural values and emphasizes the importance of respect (Sŏng, & Kim, 2009). In other words, the negotiating team should bend their heads a bit lower than the Chinese government officials to show respect. However, members of the negotiating risk losing the deal if they are not able to respect senior Chinese government officials. This is because the officials will regard failure to bend one’s head as a sign of disrespectful. Therefore, the company’s negotiators need to know how to use the local symbols of communication to succeed in the negotiations.

In addition, language barriers influence cultural communications (Stull, & Broadway, 2012). For example, Indians and western’s body languages conflict in meaning; that is, Indians’ shake their head when they agree over an issue; however, the Americans and Africans often nod when to imply an agreement (Sebenius, 2002). Such conflicting cultural meanings might be costly to the business organization when making business deals. For example, a German negotiator might confuse an Indian rejection for an acceptable deal thereby making premature judgments before reaching consensus over the business deal.

In conclusion, business organizations appreciate the fact that failure to appreciate cultural diversity may damage one’s business fortunes. Culture contains both symbolic and non-symbolic aspects that shape people’s reasoning. The case of Vedanta signifies why firms should respect the stakeholders’ cultural values and traditional lifestyle. In addition, employees of particular organizations may misinterpret the cultural symbols and mannerisms of their clients thereby making certain concession without their will. Therefore, business organizations planning to expand into global market should conduct research to determine the cultural and economic impact of the business projects. At the same time, organizations should involve the local communities in implementing projects to help identify areas of cultural conflicts. Additionally, company’s employees should learn the basic verbal and non-verbal communication skills of their customers to enhance their bargaining skills.

References

Ahern, K. R., Daminelli, D., & Fracassi, C. (2012). Lost in translation? The effect of cultural values on mergers around the world. Journal of Financial Economics. Retrieved 6 November, 3013, from, http://www.sciencedirect.com/science/article/pii/S0304405X12001602

Imai, L., & Gelfand, M. J. (2010). The culturally intelligent negotiator: The impact of cultural intelligence (CQ) on negotiation sequences and outcomes. Organizational Behavior and Human Decision Processes, 112(2), 83-98.

Elaydi, R., & McLaughlin, J. S. (2012, December). Relational capacity and firm performance. In Proceedings of the International Association for Business and Society (Vol. 23, pp. 229-239).

Novethic. (2013). Controversial companies: Do investor blacklists make a difference? Retrieved 6 November, 3013, from, http://www.novethic.fr/novethic/upload/etudes/2013_controversial_companies_study.pdf

Top of Form

Stull, D. D., & Broadway, M. J. (2012). Slaughterhouse blues: The meat and poultry industry in North America. Belmont, Calif: Wadsworth.

Sebenius, J. K. (2002). How to negotiate “yes” across cultural boundaries. In The Hidden Challenge of Cross-Border Negotiations, Harvard Business Review, 80(3).http://hbswk.hbs.edu/item/2878.html

Top of Form

Sŏng, K., & Kim, B. J. (2009). Respect for the elderly: Implications for human service providers. Lanham: University Press of America.