BTL Quản trị đa VH FINAL ASSIGNMENT: Doing Business in Vietnam: A MultiCulturalCrossCultural Management Approach (LOREAL)

In todays globalized business landscape, organizations often operate in multicultural or crosscultural environments, where employees from diverse cultural backgrounds come together to work towards common goals. While such diversity can bring immense creativity and innovative perspectives, it also presents unique challenges in managing cultural differences, communication styles, and work practices. One company that has faced and addressed these challenges is LOréal Vietnam, a subsidiary of the renowned French beauty and cosmetics giant, LOréal. This report explores the multicultural and crosscultural management approach adopted by LOréal Vietnam to effectively navigate the complexities of a diverse workforce. The report will analyze the challenges faced by the company, the strategies implemented to overcome these challenges, and the outcomes achieved through these solutions. By examining LOréal Vietnams cultural training and sensitization initiatives, establishment of cultural conduct guidelines, communication and language support programs, adaptive management approach, and multicultural collaboration strategies, this report aims to provide valuable insights into how companies can create inclusive and harmonious work environments in diverse settings. Through a comprehensive analysis of the companys solutions, this report will shed light on the effectiveness of LOréal Vietnams multicultural management approach and offer valuable recommendations for organizations seeking to embrace diversity, foster effective crosscultural collaboration, and excel in todays globalized business world

VIETNAM NATIONAL UNIVERSITY

UNIVERSITY OF ECONOMICS AND BUSINESS

(Faculty of International Business and Economics)

MODULE: INTERNATIONAL MANAGEMENT, CROSS-CULTURAL AND TRANSNATIONAL MANAGEMENT (222-INE3223-E *-01)

Hanoi - August 2023

TABLE OF CONTENTS

TABLE OF CONTENTS 1

TABLE OF IMAGES 1

INTRODUCTION 2

CONTENT 3

1 OVERVIEW OF THE CASE STUDY (COMPANY) 3

2 DEFINE THE PROBLEMS 4

2.1 Cultural misunderstanding 4

2.2 Change in management and adaptation 6

3 HOW DID THE COMPANY OVERCOME THE PROBLEMS 9

3.1 Cultural Training and Sensitization 9

3.2 Establishing Cultural Conduct Guidelines in a Multicultural Environment 9

3.3 Communication and Language Support 10

3.4 Adaptive Management Approach 11

3.5 Multicultural Collaboration 12

4 ANALYSE THE COMPANY'S SOLUTIONS 14

4.1 Analyse the “Cultural Training and Sensitization” solution 14

4.2 Analyse the “Establishing Cultural Conduct Guidelines in a Multicultural Environment” solution 15

4.3 Analyse the “Communication and Language Support” solution 16

4.4 Analyse the “Adaptive Management Approach” solution 16

4.5 Analyse the “Multicultural Collaboration” solution 17

5 SUGGESTIONS FOR THE COMPANY 18

CONCLUSION 21

THANK YOU 23

REFERENCES 24

TABLE OF IMAGES Figure 1.1: Logos of L'Oreal Group and L'Oreal Vietnam 3

Figure 2.1: Country Comparison between France and Vietnam (Hofstede Insight n.d) 8

Figure 3.1: L'Oreal's employer commitment 10

INTRODUCTION

In today's globalized business landscape, organizations often operate in multicultural or cross-cultural environments, where employees from diverse cultural backgrounds come together to work towards common goals While such diversity can bring immense creativity and innovative perspectives, it also presents unique challenges

in managing cultural differences, communication styles, and work practices One company that has faced and addressed these challenges is L'Oréal Vietnam, a subsidiary

of the renowned French beauty and cosmetics giant, L'Oréal

This report explores the multicultural and cross-cultural management approach adopted by L'Oréal Vietnam to effectively navigate the complexities of a diverse workforce The report will analyze the challenges faced by the company, the strategies implemented to overcome these challenges, and the outcomes achieved through these solutions

By examining L'Oréal Vietnam's cultural training and sensitization initiatives, establishment of cultural conduct guidelines, communication and language support programs, adaptive management approach, and multicultural collaboration strategies, this report aims to provide valuable insights into how companies can create inclusive and harmonious work environments in diverse settings

Through a comprehensive analysis of the company's solutions, this report will shed light on the effectiveness of L'Oréal Vietnam's multicultural management approach and offer valuable recommendations for organizations seeking to embrace diversity, foster effective cross-cultural collaboration, and excel in today's globalized business world

CONTENT

1 OVERVIEW OF THE CASE STUDY (COMPANY)

L'Oreal Paris is a French cosmetic brand founded in 1909 by a French chemist named Eugène Schueller The company's first product was only hair dye Through strategic brand acquisition and innovative global expansion, the company has achieved

a strong reputation and built up into a multinational company After more than 100 years

of development, L'Oreal is now one of the top-class cosmetic brands in the world, with diverse product lines from hair care, makeup, and skin care

In 2007, L'Oreal Paris officially opened a branch in Vietnam, named L'Oreal Vietnam, and quickly led the beauty market here Up to now, L'oréal has brought to the Vietnam market 10 cosmetic brands in 4 categories: Luxury goods (Lancome, Yves Saint Laurent, Kiehl's, shu uemura), Consumer goods (L'Oréal Paris and L'Oréal Paris) Maybelline New York), Professional Hair Industry (L'Oréal Professionnel and Kérastase), and Cosmetics Industry (Vichy and La Roche-Posay) Owning diverse and complementary brands from drugstores to luxuries to cover various needs of customers enables L’Oréal Vietnam to have competitive advantages over their competitors in the market

Figure 1.1: Logos of L'Oreal Group and L'Oreal Vietnam

In 2019, L'Oréal Vietnam was honored with the HR Asia award for "Business with the Best Working Environment in Asia." This recognition was based on a survey conducted among employees at 265 large-scale and high-growth companies in Vietnam,

affirming L'Oréal's commitment to providing an excellent work environment in the country

However, the characteristic of multinational enterprises (MNEs) is described as the cultural diversity within the working environment MNEs face many challenges in governance caused by cultural diversity such as: cultural misunderstanding, language barriers, conflicts, and inefficiency of task performances; and L'Oreal Vietnam is not

an exception

How have they faced these challenges to excel at receiving prestigious awards for

a desirable working environment, becoming a famous case study in cross-cultural management?

2 DEFINE THE PROBLEMS

2.1 Cultural misunderstanding

2.1.1 Particularism and Universalism

The first dilemma is the cultural misunderstanding between L’Oréal Vietnam and its headquarter – L’Oréal Paris This issue arises from a culture dimension postulated

in Trompenaars's model of national cultural differences of the two terms “universalism” and “particularism” (Harzing & Ruysseveldt 2014)

In Vietnam, engagements between employees and managers are highly focused which attributes to enhance devotion in the working environment (Xoan & Earl 2020; Rich, Lepine & Crawford 2010) At L’Oréal Vietnam, employees and managers work under strengthened relationships which create flexibility over discipline for minor mistakes that can considerably be tolerance The acceptance towards employee's blunders implies that individual circumstances can be more important than certain rules within the organization (Long & Fox 1995; Lindberg, Ojakangas & Prozorov 2016) This notion has illustrated the presence of high particularism in the Vietnamese context, which is against the norms and values of L’Oréal Paris where high universalism is highly concentrated

In fact, the working environment in France is more formal where appointments are frequently made for all business matters and people do not mix private and public

spheres in workplace context (Touron 2011) Thereby, the culture is perceived as task orientation rather than social orientation (Touron 2011) Those contradictory patterns compared to Vietnam, have created a reluctance to bypass mistakes occurring in the workplace Thereby, different levels of forgiveness from top managers towards employees can create unfairness, which possibly trigger conflicts, bullying, discrimination, or psychological distress that detrimentally affects task performances (Nguyen, Teo & Dinh 2020; Tuckey et al 2009) Consequently, contracting culture poses challenges for L’Oréal Vietnam to transfer ideas from a global project to a domestic project, as practices are applied differently between cultures of universalism and particularism

2.1.2 High-context and Low-context Communication

The second challenge related to cultural misunderstanding is the difference in communication styles between high-context and low-context cultures In Vietnam, communication is considered a high-context culture where people rely heavily on non-verbal cues, implicit communication, and contextual understanding to convey messages (Hall 1976) Subtle gestures, facial expressions, and tone of voice are significant in interpreting the meaning behind words (Nguyen & Barling 2012)

On the contrary, France, as a low-context culture, emphasizes direct and explicit communication with a focus on clarity and precision (Hall 1976) In a low-context culture, messages are usually conveyed through explicit language, and people expect clear and straightforward communication

This cultural difference in communication style can lead to misunderstandings and misinterpretations between L'Oréal Vietnam and its headquarters Employees in Vietnam might not be accustomed to the direct communication style of their French counterparts, leading to confusion and potential conflict in decision-making processes and project implementations

2.1.3 Language barrier

Language barrier occurs both in the organization itself and in cross-culture business, which poses complex obstacles for the organization (Henderson 2005)

Within the organization, the employees seek information and instruction from the top managers to provide clarification of work tasks (Madera, Dawson & Neal 2014) Previous studies from Mount & Back (1999) demonstrated that the manager believed their messages should be clearly and accurately conveyed by subordinates for the proper process of task performance However, at L’Oréal Vietnam where members experience linguistic diversity, communication becomes more challenging as the manager concerns that the employees do not understand their messages or highly rely on other employees' translations

Multilingualism, which means the co-existence of more than one language in the organization, can lead to misconceive messages, since the interaction is primarily orientated towards the members of one group, thereby little information is exchanged across linguistic boundaries (Tange & Lauring 2009) Furthermore, the language barrier also creates ambiguity involving uncertain work-related expectations which leads to subordinates' failure of task responsibility (Eatough et al 2011)

Regarding cross-cultural business, the language barrier causes delay in the working process when the headquarter – L’Oréal Paris assigns a global project to L’Oréal Vietnam The translating process of transferring ideas to be appropriate in the Vietnamese context may require a rigorous and systematic multistep method (Kiing, Rajgor & Toh 2016) Hence, it is frustrating to ensure the translation is equivalent, consistent, and meaningful in the Vietnamese language, as inaccurate translation can cause conflicts among the organization and crisis for the brand

2.2 Change in management and adaptation

2.2.1 Uncertainty avoidance

The issue is that Vietnamese workers find the applied management practice of L’Oréal Corporation unfeasible to adapt to local operations Because it shows that each company has a particular organizational culture which could be difficult for someone with a completely different background to assimilate (Trindade 2015) As a result, a lack of consensus is posed to the new management practice, which is the result of cultural differences proven in Hofstede's dimension (Schein & Scheiner 2006) The

presence of the issue illustrates L’Oréal Vietnam and L’Oréal in French headquarters have different values of uncertainty avoidance and individualism (Figure 1)

L’Oréal Vietnam employees have a low uncertainty avoidance culture that encounters a receptive attitude of adventurousness, synthetic thinking, and openness (Nguyen & Aoyama 2013) These workers tend to enjoy flexible working styles and emphasis the importance of experience and practices through ambiguity (Phan n.d) As unforeseen events will be perceived as opportunities for low-uncertainty workers to self-improvement (Guss et al 2012) Together with the flexible preference and comfortable feeling in an ambiguous environment, people are highly creative in the workplace

In France, a high uncertainty avoidance society, people prefer consistency and avoid approaching uncertain situations because they feel more stressful to handle with ambiguity that could affect their job performance and security (Stower 2013) In the workplace, managers reduce risks and maintain stability by working based on structures and strict regulations Meanwhile, L’Oréal Vietnam employees have to follow orders and are less likely present alternative plans to the supervisors since there is a fear of breaking their expectations Consequently, staff with limited self-decision rights might decrease management innovation, corporate creative system, and adaptive ability (Shane 1995) Therefore, if L’Oréal wants to fully utilize the talents brought by new workers, its management should be adjusted to the structure of the local firm (Trindade 2015)

2.2.2 Individualism

L’Oréal Vietnam's operation suffers from conflict management which can be explained as Vietnamese workers embrace collectivism culture, while L’Oréal headquarter in Paris ties to the self-concept of individualism Thus, cultural values create a substantial influence on particular leadership styles and working structures, which in turn impact subordinates' reactions to work differently (Yang et al 2012) For collectivism, L’Oréal Vietnam prioritizes the interdependence and harmony among group members where the corporation puts efforts on promoting employee corporation in achieving organization-wide objectives They believe that collaboration

and group support can avoid conflicts to maintain a comfortable workplace and enhance the tendency of self-improvement (Nguyen & Nguyen 2012; Goncalo & Staw 2006) Moreover, collectivism culture reflects supportive leader behavior where employees receive and respond with such as extra-role behavior, honesty, and loyalty (Kececi 2017) Overall, collectivism transfers supportive management which in turn allows subordinates to promote the group's interest and organizational performance (Graham 1989)

However, in France, people tend to have high individualism, prioritizing the fulfillment of individual desires over teamwork The empowerment of doing work individually allows intensive innovation within the organization because innovation is the outcome of a free flow of ideas generated by dissent rather than societal consensus (Gacolo & Staw 2006) Meanwhile, L’Oréal Vietnam workers will suffer from frustration because lacking group support causes them to lose direction and be isolated from the organization (Manetje 2009) Moreover, high individualism is examined to have impacts on conflict management, such as disengaged collaboration and overwhelming competition (Purohit & Simmers 2006)

Figure 2.1: Country Comparison between France and Vietnam (Hofstede Insight n.d)

3 HOW DID THE COMPANY OVERCOME THE PROBLEMS

3.1 Cultural Training and Sensitization

To address the cultural misunderstanding between L'Oréal Vietnam and its headquarters, the company implemented cultural training and sensitization programs for its employees These programs aimed to create awareness and understanding of the cultural differences between the two countries and their respective work environments Employees were educated about the concept of universalism and particularism and the implications of these cultural dimensions on their work practices and interactions with colleagues from different cultural backgrounds

One exemplary program is the L'Oréal SEEDZ Management Trainee Program Launched in July every year, the program lasts for 18 to 24 months and serves as a postgraduate program that allows trainees to experience rotational positions across various business functions, including Sales, Marketing, Digital, Supply Chain, Finance, Corporate Communications, and Human Resources These diverse roles provide them with opportunities to explore the company, its culture, brands, and products on both local and international scales

Through cultural training, L'Oréal Vietnam encouraged its employees to adopt a more open and inclusive mindset, respecting different cultural norms and practices The company organized workshops, seminars, and cross-cultural exchange programs to foster a greater appreciation for diversity and promote effective communication across cultures By promoting cultural sensitivity, L'Oréal Vietnam aimed to reduce misunderstandings and conflicts arising from cultural differences and create a more harmonious work environment

3.2 Establishing Cultural Conduct Guidelines in a Multicultural Environment

For the management environment in Vietnam, L'Oreal has published a dedicated Code of Ethics called "The Way We Work." Under the section "As an Employer", L'Oreal emphasizes the responsibility to "Promote diversity, equity, and inclusion (DE&I)” as managers." With the aim of fostering fair treatment, access, promotion, and opportunities for everyone, the company is committed to creating an inclusive and

cohesive culture that provides employees with space to develop and unleash their potential

Accordingly, employers at L'Oreal "are not allowed to discriminate on the basis

of gender, gender identity, sexual orientation, disability status, age, political or philosophical opinions, religion, trade union membership, ethnic, social, cultural, or national origin, or any other status prohibited by national law." Furthermore, employers are expected to "expect and promote an inclusive workplace, thus reinforcing respect and understanding among individuals with different personal or cultural backgrounds," and "facilitate the professional integration of people with disabilities and those from economically or socially disadvantaged backgrounds and/or minority groups."

Figure 3.1: L'Oreal's employer commitment

3.3 Communication and Language Support

To address the challenges related to high-context and low-context communication styles and the language barrier, L'Oréal Vietnam implemented various strategies to improve communication effectiveness The company invested in language support programs, providing language courses in Vietnamese, French and English to enhance the language proficiency of its employees

Additionally, L'Oréal Vietnam encouraged the establishment of language exchange programs within the organization, where employees proficient in one

language could assist their colleagues in learning the other language This initiative aimed to foster better communication and understanding between employees of different language backgrounds

Moreover, the company implemented communication training programs that emphasized the importance of clear and direct communication in certain contexts while also encouraging employees to pay attention to non-verbal cues and contextual understanding in others By improving communication skills and language proficiency, L'Oréal Vietnam sought to bridge the communication gap between its Vietnamese workforce and the French headquarters, thereby minimizing misunderstandings and improving collaboration

3.4 Adaptive Management Approach

To address the challenges of uncertainty avoidance and individualism, L'Oréal Vietnam adopted an adaptive management approach The company recognized the need

to strike a balance between the global management practices from the French headquarters and the local adaptation necessary for effective operations in Vietnam L'Oréal Vietnam promoted a more flexible and empowering management style that allowed employees to participate in decision-making processes and contribute their insights and ideas This approach aimed to encourage innovation and creativity within the organization, leveraging the strengths of the Vietnamese workforce's low uncertainty avoidance and collectivist tendencies

This flexibility is further enhanced by the new global “Work Together” policy Eligible employees may work remotely up to two days per week, on a voluntary basis,

by agreement with their line manager, and in accordance with the team's organizational structure Not only L'Oreal Vietnam, all of the Group's subsidiaries have now adopted this policy, wherever practicable, due to the local health situation In addition, L'Oreal Vietnam has now established a flexible working time policy, allowing employees from all selected job categories to choose to work part-time

By adopting an adaptive management approach, L'Oréal Vietnam sought to create

a work environment that valued both individual initiative and collaborative efforts,

facilitating better conflict management and aligning its management practices with the cultural values of its diverse workforce

3.5 Multicultural Collaboration

A Multicultural Collaboration strategy involves partnering with various

stakeholders to foster mutual growth and understanding L'Oreal has successfully

implemented this strategy, helping the company enhance its image in Vietnam, strengthen collaborations, and especially attract top talent Below are some recent exemplary projects under this strategy:

L'Oreal Professionnel with the development program for top hair artists in Vietnam After over 10 years of presence in the Vietnamese market, L'Oreal

Professionnel officially introduced the Collaboration Strategy with Hair Artists in Vietnam on July 7, 2020

The team of Hair Artists invited by L'Oreal Professionnel to participate in the hair industry's development strategy consists of exceptional hair stylists with extensive experience, in-depth knowledge of hair, and the use of professional and modern hair products to ensure optimal customer satisfaction This team also has close relationships and a certain influence over other salons in the market

From here, L'Oreal has established close cooperation with the leading hair artists

in Vietnam, creating opportunities to share knowledge and enhance skills Through workshops and seminars, the company provides these artists with access to the latest techniques and global hair fashion trends As a result, these artists not only improve their creativity but also elevate the quality of hair services, contributing to the strong development of the hair industry in Vietnam Simultaneously, L'Oreal successfully consolidates its competitive advantage by understanding local market preferences and trends, and holding quality cooperative relationships with top hair artists in Vietnam

The Central Committee of the Vietnam Women's Union and L'Oreal Vietnam Co., Ltd implemented a program to support economic development and digital capacity for women (2022) The Central Committee of the Vietnam Women's

Union and L'Oreal Vietnam Co., Ltd have implemented a program to support women's economic development and digital capacity