Assignment 7.7: Toivonen Paper in the U.S.

: Human Resource Implica ons of

Foreign Corporate Ownership (Case Study)
The case explores the adapta on of a non-American company, Toivonen Paper, to the U.S. environment
a er acquiring the Treelin paper plant. It highlights the influence of parent company culture on the
opera ons of the American subsidiary. As globaliza on has prompted U.S.-based companies to expand
overseas and foreign-owned companies to enter the U.S. market, understanding how organiza ons
navigate cultural differences and integrate into new environments is crucial for success.

Key points addressed in the case include:

Parent Company Culture Influence: The case underscores the significance of parent company culture
in shaping the human resource policies and prac ces of the subsidiary. It suggests that na onal culture
plays a pivotal role in determining HR policies, and organiza ons o en impose their home-culture
prac ces on foreign subsidiaries.

Challenges of Cultural Integra on: The case reflects the challenges associated with cultural integra on
when a foreign-owned company enters a new market. It highlights the need for organiza ons to
understand and adapt to local customs and norms to enhance their likelihood of success.

Balancing Local and Parent Company Prac ces: It discusses the importance of striking a balance
between local customs and parent company prac ces. While incorpora ng aspects of the parent
company's culture, it's essen al to respect the exis ng norms and expecta ons of the local workforce
to foster a harmonious transi on.

Employee Engagement and Performance: The case emphasizes the importance of maintaining or
improving performance levels while implemen ng cultural changes. It suggests that effec ve
communica on and engagement with employees are essen al for successful integra on and
alignment of organiza onal goals.

Cultural Differences in Decision-Making: American companies o en priori ze individualism and

hierarchical decision-making structures, whereas Finnish culture tends to emphasize consensus-
building and flat organiza onal structures Williams contemplates the poten al imposi on of Finnish .
decision-making norms on the exis ng American organiza onal structure, raising concerns about how
this might affect opera ons at Treelin.

HR Policy Discrepancies: Treelin's exis ng HR policies reflect American norms, such as hiring based on
skill requirements and market surveys for determining pay raises. Kempainen's insistence on gradually
aligning HR policies with Toivonen's Finnish culture raises ques ons about how these changes will be
received by the 280 employees at Treelin, who may be accustomed to the exis ng American-centric
policies.

Organiza onal Structure and Communica on Styles: Treelin's flat organiza onal structure contrasts
with Toivonen's emphasis on employee empowerment and self-directed work teams, reflec ng
poten al differences in communica on styles and decision-making processes. The introduc on of
Finnish communica on prac ces, such as the appointment of a "communica on guru" and the use of
intranet pages for addressing employee concerns, may require significant adjustments for the exis ng
American workforce.

Cultural Impact Beyond HR: Williams considers how Finnish cultural values, such as priori zing group
outcomes over individual achievements, might influence opera ons and management prac ces
beyond HR policies. He acknowledges the likelihood of Finnish cultural norms permea ng various
aspects of Treelin's opera ons, poten ally impac ng decision-making, communica on, and
organiza onal dynamics. These examples highlight the nuanced challenges associated with cultural
integra on in mul na onal acquisi ons. The case underscores the importance of understanding and
naviga ng cultural differences to facilitate a smooth transi on and ensure the success of the acquired
subsidiary within the broader organiza onal framework.

Understanding of Hofstede's Model of Cultural Dimensions:

The response demonstrates a solid comprehension of Hofstede's model by applying it to the analysis
of cultural differences between American and Finnish workplaces. It iden fies key dimensions such as
individualism vs. collec vism, power distance, uncertainty avoidance, masculinity vs. femininity, and
long-term orienta on. The explana on is clear and concise, providing a framework for understanding
cultural varia ons in organiza onal behaviour.

Understanding of Cultural Differences Between American and Finnish Workplaces:

The analysis effec vely contrasts American and Finnish workplace cultures based on Hofstede's
dimensions. It highlights differences in values, a tudes, and behaviours, illustra ng how they manifest
in organiza onal prac ces. Specific examples are provided to support the comparison, enhancing the
depth of understanding.

Ar cula on of the Problem in the Case and Protagonist's Perspec ve:

The response accurately iden fies the central problem of the case: the poten al imposi on of Finnish
culture on Toivonen's U.S. subsidiary. It delves into the protagonist's perspec ve, Sco Williams, the
HR manager, who an cipates cultural clashes and is concerned about the impact on employees and
organiza onal effec veness. Williams' approach of wai ng for the Finnish representa ves' arrival
before making judgments reflects a cau ous yet op mis c stance, demonstra ng his awareness of the
complexi es involved. The analysis effec vely captures the nuances of cultural integra on in
mul na onal corpora ons and the protagonist's role in naviga ng cultural differences.

Differences in American and Finnish Workplaces According to Hofstede's

Model:
Hofstede's cultural dimensions theory provides a framework for understanding cultural differences
between countries. The dimensions include Power Distance Index (PDI), Individualism vs. Collec vism
(IDV), Masculinity vs. Femininity (MAS), Uncertainty Avoidance Index (UAI), Long-Term Orienta on vs.
Short-Term Orienta on (LTO), and Indulgence vs. Restraint (IND). Let's analyze the differences between
American and Finnish workplaces using this model:

Power Distance Index (PDI):

The U.S. typically has a lower PDI compared to Finland, meaning there is less hierarchical distance
between superiors and subordinates in American workplaces. Employees in the U.S. are more
comfortable with ques oning authority and expressing their opinions openly.

Finnish workplaces may have a higher PDI, indica ng a more hierarchical structure where superiors
are respected and decisions are made by top management without much input from lower-level
employees.

American workplaces typically have a lower power distance, meaning there is less hierarchy and a
more egalitarian approach to authority. Employees feel comfortable challenging authority and
contribu ng ideas.
Finnish workplaces also exhibit low power distance, with a preference for flat organiza onal structures
and decentralized decision-making. Employees expect to have access to leadership and par cipate in
decision-making processes.

Individualism vs. Collec vism (IDV):

The U.S. tends to be more individualis c, emphasizing personal achievement, autonomy, and
compe on. Employees may focus on personal goals and advancement within the organiza on.

Finland, while s ll rela vely individualis c compared to some cultures, may lean slightly more towards
collec vism, valuing group harmony, consensus decision-making, and loyalty to the organiza on.

American workplaces tend to priori ze individualism, where employees are expected to work
independently and focus on personal goals and achievements.

In contrast, Finnish workplaces lean towards collec vism, emphasizing teamwork, collabora on, and
group cohesion. Employees are more likely to value the success of the team over individual
accomplishments.

Masculinity vs. Femininity (MAS):

American workplaces o en exhibit a more masculine culture, emphasizing compe on, asser veness,
and achievement.

Finnish workplaces may lean towards a more feminine culture, valuing quality of life, work-life balance,
and coopera on.

Both the U.S. and Finland are considered moderately masculine cultures, emphasizing success,
achievement, and asser veness. However, the expression of these traits may vary in degree between
the two countries.

Uncertainty Avoidance Index (UAI):

American workplaces tend to have a lower uncertainty avoidance, embracing change and innova on.
Employees are comfortable with ambiguity and are willing to take risks.

Finnish workplaces also have a low uncertainty avoidance, but there may be a preference for stability
and predictability. While they are open to change, there may be a desire for clear guidelines and
procedures.

Finland generally has a lower UAI compared to the U.S., indica ng a higher tolerance for ambiguity,
risk-taking, and innova on. Finnish workplaces may be more adaptable to change and less rule-bound
compared to American workplaces.

Long-Term Orienta on vs. Short-Term Orienta on (LTO):

American workplaces typically have a short-term orienta on, focusing on immediate results and
outcomes.

Finnish workplaces may have a longer-term orienta on, priori zing sustainability, investment in
employee development, and maintaining long-term rela onships.

Both the U.S. and Finland tend to have a shorter-term orienta on, priori zing immediate results and
gra fica on over long-term planning and sustainability.
Indulgence vs. Restraint (IND):

Both cultures are rela vely indulgent, valuing enjoyment of life and leisure me. However, the U.S.
may lean slightly more towards indulgence compared to Finland.

Success of Toivonen Paper in the U.S.:

Whether Toivonen Paper was successful in the U.S. depends on various factors, including its ability to
effec vely integrate Finnish cultural values with American workplace prac ces, navigate cultural
differences, and achieve its business objec ves. Some points to consider:

Cultural Integra on: Toivonen's emphasis on employee empowerment, long-term rela onships, and
collabora on may have resonated well with American employees, leading to improved morale and
engagement. However, resistance to change and differences in communica on styles could have posed
challenges.

Opera onal Performance: Success can be measured by the subsidiary's opera onal performance,
including produc vity, efficiency, and profitability. If Toivonen Paper managed to enhance opera onal
processes, innovate, and adapt to local market condi ons, it could be deemed successful.

Employee Sa sfac on and Reten on: High levels of employee sa sfac on, low turnover rates, and
posi ve feedback from employees would indicate success. If Toivonen Paper effec vely addressed
employee needs, provided opportuni es for growth and development, and fostered a posi ve work
environment, it likely achieved success.

Financial Performance: Ul mately, financial performance is a key indicator of success. If Toivonen

Paper's U.S. subsidiary met or exceeded financial targets, contributed to overall corporate profitability,
and demonstrated sustainable growth, it can be considered successful.

Overall, the case underscores the complexi es involved in interna onal business opera ons and
highlights the role of cultural factors in shaping organiza onal prac ces and performance. It provides
insights into the challenges and opportuni es faced by non-American companies entering the U.S.
market and offers lessons for effec ve cross-cultural management. these differences in cultural
dimensions between the American and Finnish workplaces can significantly impact
organizational structures, leadership styles, communication patterns, decision-making
processes, and employee motivations and expectations. Understanding and navigating these
cultural disparities are essential for effective cross-cultural management and successful
international business operations. Success in the U.S. would involve a combina on of cultural
adapta on, effec ve leadership, opera onal excellence, and financial achievement. Without specific
data on Toivonen Paper's performance in the U.S., it's challenging to conclusively determine its
success. However, by aligning with Hofstede's cultural dimensions and evalua ng key performance
indicators, one can assess Toivonen Paper's success in naviga ng the complexi es of the American
workplace.