Factors Regarding Cultural Diversity in a Business Organization

Factors Regarding Cultural Diversity in a Business Organization



Factors with Regard to Cultural Diversity in a Business Organization


Dunning and Lundan define multinational enterprises as “any enterprise that engages in foreign direct investment (FDI) and owns or, in some way, controls value added activities in more than one country” (2008, p. 3). Initially, international trade mainly took place between countries and the strength of these nation states dictated the manner in which they traded. The discovery of the new world only served to enhance these existing trade relationships (Pedra, 2008). In the second half of the 20th century, multinational corporations began to come up. The rise of these corporations was aided by globalization, a phenomenon that encompassed the industrial revolution and innovations in the transport and communication sectors. These multinational corporations have now grown to become one of the key forms of international interaction.

Benefits and problems related to cultural diversity in a business organization

Cultural diversity in the workplace refers to “the differences among people in a workplace owing to race, ethnicity and gender” (Pride, Hughes & Kapoor, 2012, p.246). Workplace diversity has mainly come because of globalization. Multinational companies now have target markets of different cultures and therefore need to understand those cultures so that they can produce products that will sell. In addition, globalization has allowed people to migrate from their homelands and be hired by companies in foreign lands where the cultures are different (Pride, Hughes and Kapoor, 2012).

One benefit of globalization for culturally diverse workplaces is that multinational corporations are now able to adapt and change quickly and this makes them able to support the different cultures of their employees. This ability to adapt quickly also helps the companies to react to changing market situations and provide products and services for different target groups and cultures (Pride, Hughes and Kapoor, 2012). Factors of globalization also help culturally diverse workplaces by enabling them to higher people from different cultures and integrate them into a single team.

There are certain problems that could arise from operating in a culturally diverse workplace in today’s dynamic world of business. First, operating in these circumstances could become expensive. Globalization has created a situation where the whole world is interconnected and companies from different countries compete with each other. Multinational companies now have to hire people from foreign countries. With this being the case, companies now have to dedicate some of their resources towards integrating workers within a functional team (Pride, Hughes and Kapoor, 2012). If this integration is not properly done, then it risks costing the company more money through lawsuits and other situations of a similar nature.  

Skills Needed by Managers in Culturally Diverse Workplaces

Interpersonal skills are needed if a manager is to handle cultural diversity in the workplace. According to Pride, Hughes and Kapoor, interpersonal skills “involve the ability to deal effectively with other people, both inside and outside an organization” (2012, p. 178). Managers dealing with an intercultural workplace need to respect and understand the various cultural practices and beliefs of their understudies. If they fail to do so, they risk offending or insulting their employees. If such a situation arose, morale in the workplace could plummet and the manager could lose their respect.

In addition to interpersonal skills, managers in a culturally diverse workplace also need to have excellent communication skills. It is important that they be able to speak, write and listen effectively (Pride, Hughes & Kapoor, 2012). This way they can overcome any language barriers that may exist in the workplace and communicate effectively with their subordinates. In some cases, managers may even have to be multi-lingual so that they can communicate with clients from other cultures with ease.


Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy. Cheltenham, UK: Edward Elgar.

Mead, R. & Andrews, T.G. (2009) International management. 4th ed. Chichester, England: John Wiley & Sons.

Marković, M. R. (2012). Impact of globalization on organizational culture, behavior and gender roles. Charlotte: Information Age Pub.

Parker, B. (2005). Introduction to globalization and business: Relationships and responsibilities. London: SAGE.

Pedra, M. (2008) Globalization and the rise of multinational corporations. Romanian Economic Business Review, 3 (4), 51-57.

Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2012). Business. Mason, OH: South-Western Cengage Learning.

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