Intenational management 1

ROYAL BUSINESS COLLEGE

DIPLOMA IN BUSINESS MANAGEMENT
Level 7

ASSIGNMENT FOR INTERNATIONAL MANAGEMENT
IML8092

ASSESSMENT COPY OF

Student Name: Nisha Chudji
Student ID: A7553
Date: 17th November, 2014
Level: 7

Contents
1. Which are the biggest management challenges for international firms? 3
2. What are some of the forms of political risk? 4
3. How should multinationals deal with human rights abuses by foreign governments? 6
4. What is the effect of cultural context in cross-cultural inter actions? 7

1. Which are the biggest management challenges for international firms? What can firms do in response (1.1)?

Answer:
International management is defined as a process of accomplishing the global objectives of a firm by:
Effectively coordinating the procurement, allocation, and utilization of the human, financial, intellectual, and physical resources of the firm and across national boundaries, and effectively charting the path towards the desired organizational goals by navigating the firm through a global environment that is not only dynamic but often very hostile to the firm’s very survival.
International firm’s biggest management challenges are
Macro environmental:
1. The major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the economic factors, demographics, legal, political, and social conditions, technological changes, and natural forces.

Economics: Economics is the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods. Economics explains how people interact within markets to get what they want or accomplish certain goals. Since economics is a driving force of human interaction, studying it often reveals why people and governments behave in particular ways.

2. Politics: Politics itself is a mixture of the high and the low. Politics is the realm in which we attempt to realize some of our highest aspirations: our desire for political freedom, our longing for justice, our hope for peace and security. At the same time, politics is laced with individuals and groups seeking their selfish interests at the expense of others.
3. Infrastructure laws: Infrastructure generally refers to the most basic level of organizational structure in a complex body or system, upon which the rest of the structure is based. In economic terms, it often refers to basic public services, such as power and water supplies, public transportation, telecommunications, roads, and schools. Precise definitions will vary by local law and governing entity. The following is an example of a school's definition of infrastructure: For the purposes of this program, infrastructure is defined to include those activities of purchasing, building, furnishing, reconstructing, repairing, improving or remodelling a schoolhouse or schoolhouses and additions to schoolhouses, gymnasium, field house, and procuring a site or sites therefor, or purchasing land to add to a site already owned.
4. Culture: Is a concept that has been used in several social science disciplines to understand variation in human thought processes in different parts of the world. Culture is to a society what memory is to an individual.
Firms responsibilities
A. Firm’s structure
B. Firm’s strategies
C. Implementation and
D. Controls
Firm should response to the challenges in following ways
1. Communication: Two-way process of reaching mutual understanding, in which participants not only exchange (encode-decode) information, news, ideas and feelings but also create and share meaning. In general, communication is a means of connecting people or places. In business, it is a key function of management--an organization cannot operate without communication between levels, departments and employees.

2. Leadership: Leadership in the business world requires harnessing the energy and efforts of a group of individuals so that their outlook is advanced from an unremarkable Point A to a very desirable Point B from bad to good, slow to fast, red to black. During that process, leadership manifests in projecting your expertise in a way that gains the confidence of others. Ultimately, leadership becomes about trust when that confidence inspires them to align their vision and level of commitment for the betterment of the company.

3. Motivation: Motivation is defined as the process that initiates, guides, and maintains goal-oriented behaviors. Motivation is what causes us to act, whether it is getting a glass of water to reduce thirst or reading a book to gain knowledge.It involves the biological, emotional, social, and cognitive forces that activate behaviour. In everyday usage, the term motivation is frequently used to describe why a person does something.

4. Negotiation: Negotiation is a dialogue between two or more people or parties intended to reach an understanding, resolve points of difference, to gain advantage for an individual or collective, or to craft outcomes to satisfy various interests. Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers.

5. Responsibilities: The state or fact of having a duty to deal with something or of having control over someone.

2. What are some of the forms of political risk? What steps can firms take in order to deal with this risk (1.2)?
Political risk is the likelihood that political forces will cause unexpected and drastic changes in a country’s environment that significantly affect the opportunities and operations of a business enterprise
Followings are some of the forms of political risk
Country-Specific
Is manifested in the mutual hostility between Israel and Syria. One would expect that Israeli companies would find little support in Syria, and the same would apply for Syrian companies in Israel
Company-Specific
Invokes either a favorable or unfavorable response aimed at a particular company
Project-Specific
Involves special treatment bestowed on a certain type of project
Transfer Risk
Is the change in the degree of ease or difficulty experienced in making transfers of capital, goods, technology, and people in and out of a country
Operational Risk
Is the impact on the operations of a firm caused by changes in the government’s policies
Ownership Risk
Involves a change in the proportion of equity owned by a company in a foreign subsidiary
Firm should take following steps to deal with political risks
A. Defensive steps

1. Legal Action
2. Diversification
3. Risk Insurance
4. Contingency planning
5. Home country government puts pressure on host country government

B. Proactive steps

1. Joint ventures
2. Licensing agreement
3. Other host partners
4. Promote host goal
5. Try to put influence on home and host government
6. Corporate citizenship in host country

3. How should multinationals deal with human rights abuses by foreign governments? Bribery attempts? Other questionable practices? Should they involve themselves in the issue at all? Why (1.3)?
Who
The FCPA applies to any individual firm, officer, director, employee, or agent of the firm and any stockholder acting on behalf of the firm
Corrupt Intent
The person making or authorizing the payment must have a corrupt intent, and the payment must be intended to induce the recipient to misuse his official position in order wrongfully to direct business to the payer
Payment
The FCPA prohibits paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value
Recipient
The prohibition extends only to corrupt payments to a foreign official, a foreign political party or party official, or any candidate for foreign political office
Business Purpose Test
The FCPA prohibits payment made in order to assist the firm in obtaining, or retaining business for or with, or directing business to, any person
The Foreign and Corrupt Practices Act is a United States Federal law which contains a provision which relates to bribery of foreign officials.
The Act prohibits making use of interstate commerce corruptly, in furtherance of an offer or payment of anything of value to a foreign official, foreign political party, or candidate for political office, for the purpose of influencing any act of that foreign official in violation of the duty of that official, or to secure any improper advantage in order to obtain or retain business.

New Zealand has signed and ratified the following international treaties in relation to anti-bribery and corruption:

1. OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
2. United Nations Convention against Transnational Organised Crime.

In addition, New Zealand has signed the United Nations Convention against Corruption and is currently taking steps to ratify the agreement.

4. What is the effect of cultural context in cross-cultural inter actions (2.2)? In addition to the role it could play in communication itself, what might be the effect on negotiations, in meetings in general, and for a firm’s human resource practices as a whole? You may take an example of one country in your answer.
Cross-cultural communication is a field of study that looks at how people from differing cultural backgrounds communicate, in similar and different ways among themselves, and how they endeavour to communicate across cultures.
Cross-cultural management originally evolved around two general lines of inquiry, arguing either that culture matters, or that culture is largely overruled by other conditions. Culture matters because individuals have different values and different preferences with regard to management and leadership, that are related to their cultural background. Cultural assumptions and values describe the nature of relationships between people and their environment, and amongst people themselves. Given little or no other information about an individual’s values and behaviour, culture provides a good first impression of that person.
The globalization of the world economies had made it important for marketing managers to understand how to do business in different cultures. The ability of marketers and consumers to communicate cross-culturally is critical for success. Business communication is two way interactive communications. Marketers deliver information to the market, and they gather and collect, interpret, and put the information they gather from the markets to use. Failure to do either may lead to a loss of business. The observation of a young professional businessman in China supports this point (Tian, 2000b). In the late 1980’s and the 1990s the Japanese made color TV sets which dominated the imported TV set market in China. In the early 1980s Japanese and European TV manufacturers made comprehensive studies of the Chinese market. Based on their research, the European marketers decided not to market their products in China. They concluded that, given the low gross domestic product (GDP) per capita in China, it was unlikely that the Chinese people would be willing to buy luxuries like color TV sets. The Japanese TV set marketers decided otherwise, based on their research and observations that the Chinese have a cultural tradition of savings being handed down from generation to generation. In addition, the Chinese save money for future consumption, unlike western culture where people spend future money for present consumption. Almost every family in China had been saving for two to three years to realize their dream of owning a color TV set. Moreover, their research revealed that although Chinese companies manufactured color TV sets, Chinese consumers had more confidence in imported products. Accordingly, the Japanese marke- ters concluded that the Chinese families would buy high quality Japanese color TV sets. As a result, the Japanese color TV marketers profited greatly in China because they understood a facet of Chinese culture that their European competitors did not. In an intriguing research study, Sheer and Chen (2003) examine the extent to which Chinese and Western international business negotiators note the influence of cultural and professional preferences on the process and outcomes of their interactions. The results of the investigation showed some rather significant differences between Chinese and Western negotiators’ expectations and strategies. For instance, westerners expressed more emphasis on adaptation than did Chinese negotiators. Such examples are endless. For instance, Martin reports that to succeed in the Persian Gulf most American franchisers have had to put some adaptability and flexibility in their Middle Eastern operations. American franchisers have had to be culturally sensitive, making sure that their operations and policy are adapted to the culture and flexible (Martin, 1999). The impact of culture on business is obvious. To study these impacts, we need to study culture itself first. Marketing scholars define culture as that which gives people a sense of who they are, of belonging, of how they should behave, and of what they should be doing. It provides a learned, shared, and interrelated set of symbols, codes, and values that direct and justify human behavior (Harris and Moran, 1987). In marketing and consumer behavior research, the concept of culture has traditionally been minimal; commonly, marketers and consumers have ignored the depth and importance of the concept and its place in analyzing human behavior (Douglas and Craig, 1995; Griffith and Ryans, 1995). The continuum of culture runs from tradition-based to modern-based. This classification incorporates the related dimensions of economic and cultural bounde- dness. African, Asian and Middle Eastern societies are categorized as tradition-based, being centralized, cooperative, agrarian, pre-industrialized systems. Economically, modern-based cultures are characterized as market-driven, competitive, post-industrialized econo- mic systems. The United States, Canada, and other Westernized societies are examples of modern-based cultures. Regarding cultural boundedness, tradition-based cultures emphasize their history, traditions, and established conventions. By contrast, modern-based cultures have weaker ties to their history and traditions. Conventions are ever-shifting (Bandyopadhyay and Robicheaux, 1993; Harris and Moran, 1987). The cultural boundedness of tradition-based societies produces market systems that differ markedly from modern cultures’ market systems. Samiee (1993) suggests that economic and social factors influence the development and adaptation, of marketing institutions. A business’ understanding of cultural boundedness (that is, the degree to which a culture is unwilling to relinquish its traditional methods and adopt new ones) is imperative for successful international business communication and for marketing to ethnic populations domestically (Reese, 1998). Research conducted by one of the authors (Tian, 1987) in a minority region in China (a tradition-based culture) demonstrates that culture influences consumer behavior in the area of product distribution. Tian (1987) noted that the cultural orientation of the ethnic group consumers helped establish and maintain, through vendor loyalty, plenty of small retailers supported by inefficient, multi-tiered distribution networks. This makes the Chinese state-owned retail business and foreign commercial institutions less profitable than they could be.
[1] Key issues in cross-cultural business communication - Retrieved November 17, 2014, from https://www.samk.fi/download/25854_Tian-Trotter_Eng.pdf
[2] Impact of globalisation in cross culture communication - Retrieved November 17, 2014, from http://www.intechopen.com/books/globalization-education-and-management-agendas/the-impact-of-globalization-on-cross-cultural-communication#SEC5

5. Explain why both spoken and written cross-cultural communication presents many challenges to non-native communicators (2.3)?

6. Identify and explain the cultural causes of conflict in international management (2.4)?

The management of culture has become increasingly important to many organisations and business disciplines, particularly multicultural and international project management. Cultural differences often result in varying degrees of conflict and require careful consideration
Keywords: Culture, Conflict
Culture: The term business culture has become increasingly used since its introduction in the 1980’s and its importance and effect upon all manner of organizations has achieved considerable significance especially as those organizations have engaged in more international exploits. While internationalisation of business provides opportunity in terms of economies of scale and growth for example, it also presents special managerial difficulties. Failing to handle the diversity and complexity of host cultures and their integration with existing or intended organisational culture can be catastrophic. Poor employee motivation, low staff retention, marketing ineffectiveness and loss of competitive advantage are the potential results. On the other hand, successful cultural management can foster innovative practices, organisational knowledge creation and become a potential source of competitive advantage
Conflict: Conflict management is the process of limiting the negative aspects of conflict while increasing the positive aspects of conflict. The aim of conflict management is to enhance learning and group outcomes, including effectiveness or performance in organization Despite the immediate connotation of conflict being a destructive or inhibitive force it can in fact be healthy for an organisation if managed constructively. It may bring to light previously unseen pressures or discontents; it promotes problems to be addressed and may improve individuals’ understanding of the goals and motives of others Poor management however leads to the inevitable loss of team and organisational trust and bonds, and reduced motivation. A multi-cultural team is exposed to many of the sources of conflict to an even greater degree than a mono-cultural team, because of the different value systems among its members. Thus the multi-cultural project manager must be capable of managing cultural conflict and be able to handle the conflicts effectively in order to improve the team’s performance. It identifies potential sources of conflict in a project including scheduling, managerial and administrative procedures, communication, goal definition, resource allocation, reward methods, personalities, cost, technical knowledge, politics, leadership style and presence of ambiguity.
Much of the current conflict management research stems from the work of Blake and Mouton who identified five main conflict management approaches, namely problem-solving, smoothing, forcing, withdrawal and sharing. Subsequent authors have built on this framework with subtle changes to terminologies such as the Thomas-Kilmann model which is based on five conflict management methods of competing, collaborating, compromising, avoiding and accommodating. The survey is used to identify an individual’s conflict management behaviour, but also to demonstrate that the individual can increase his/her effectiveness through deliberately choosing a mode in conflict situations. Thomas and Kilmann maintain that we are all able to use each of the five approaches to conflict management though we may naturally prefer one style above another. Furthermore, this preference may change depending upon the specific circumstances of an instance of conflict, or it may change in response to our own personal disposition at that particular time.
Book: Conflict Management: A Communication Skills Approach.
Author: Borisoff & David.A Victor.

7. Explain the five steps in the process of developing international strategy (3.1)?

1) Identify the company’s objective in its foreign market entry
2) Preliminary country screening
3) What are the opportunities and constraints in the target market?
4) What capabilities, resources, and skills are needed to succeed in the foreign market?
5) Does the company have the core capabilities and resources to score high on the key success factors? What are our strengths and weaknesses on the key success factors?

8. Outline the advantages and disadvantages of various foreign market entry options (3.2)?

Advantages
Control over selection of foreign markets and choice of foreign representative companies
Good information feedback from target market, developing better relationships with the buyers
Better protection of trademarks, patents, goodwill, and other intangible property
Potentially greater sales, and therefore greater profit, than with indirect exporting.

Disadvantages
Higher start-up costs and higher risks as opposed to indirect exporting
Requires higher investments of time, resources and personnel and also organisational changes
Greater information requirements
Longer time-to-market as opposed to indirect exporting.

Reference:
[1] Foreign market entry modes - Wikipedia, the free encyclopedia. (n.d.). Retrieved November 11, 2014, from http://en.wikipedia.org/wiki/Foreign_market_entry_modes

9. What are the pros and cons associated with various organization structures used by international firms? (4.2)

An organizational structure defines how activities such as task allocation, coordination and supervision are directed towards the achievement of organizational aims.[1] It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.
Pros and cons in various organisational structure used by international firms
1. Barrier free organisational structure
Pros.
Enable Quicker response to market changes through a single-goal focus.
Improve cooperation, coordination and information sharing among functions, divisions, Stretegic Business Units and external areas.
Leverage the talent of all employees.
Can lead to coordinated win-win initiative with key suppliers, customers, and alliance partners.
Cons
Difficult to overcome political and authority boundaries inside and outside of organisation.
Needs powerful leadership and common vision, which can lead to coordination problems.
Time consuming and difficult to manage democratic processes.
Needs high level of trust, which can slow down performance.

2. Pros and cons of modular organisational structure
Pros
Achieves Best in Class performance at each link in the value chain.
Directs a firm’s managerial and technical talent to the most critical activities.
Maintains full strategic control over most critical activities.
Leverage core competencies by outsourcing with smaller capital commitment.
Encourage information sharing and accelerate organisational learning.

Cons
Decrease operational control and potential loss of control over a supplier.
Increases the difficulty of bringing back into the firm activities that now add value due to market shift.
Leads to an erosion of cross functional skills.
Inhabits common vision through reliance on outsiders.
Diminish future competitive advantages if critical technologies or other competences are outsourced.
3. Pros and Cons of Virtual type organisational structure
Pros
Enable the sharing of costs and skills.
Enhances access to global markets.
Increases market responsiveness.
Create a “Best of everything” organisation since each partner brings core competencies to the alliance.
Encourages both individual and organisational knowledge sharing and accelerates organisational learning.
Cons
Require new and difficult to acquire managerial skills.
Results in loss of strategic control over emerging technology.
Leads to potential loss of operational control among partners.
Harder to determine where one company ends and another begins, Due to close interdependencies among players.
[1] Organisational Structure – Business Directory. Retrived November 16th 2014, From http://www.businessdictionary.com
[2] Strategy, Structure, and Control - Organisational Structures. Retrieved November 16th 2014, From http://wweb.uta.edu/management/Dr.Mcgee/EMBA/Module%209%20(continued).doc.

10. Describe the difficulties faced by multinationals with regard to cross-cultural leadership issues (4.1)?

Multinational companies face a number of different cultural problems Many of those problems are internal cultural problems, but some may of an external nature also. Given the nature of the global environment, multinational companies will increasingly find themselves having to make decisions that are based on cultural problems created by the global market.

Organizational Culture
One of the main cultural challenges faced by multinational companies is the diversity of cultural perspectives found within the organization. They face the difficult task of developing a unified organizational culture from within. Because of the different cultural perspectives represented within the organization as a whole, company leaders have to create a workplace culture to which all employees can adhere. Concepts of teamwork and unity may have different meanings across the national boundaries, making it far more tricky to develop a unified company perspective.
Human Resources
Companies of a multinational variety will also face problems when it comes to human resources operations. For instance, when it comes to recruiting, human resources managers may find themselves having to overcome cultural barriers to find qualified candidates for positions abroad. In some cases, management professionals may find themselves facing a lack of qualified talent to fill important positions that require advanced degrees and training. Finding employees at home who are qualified or willing to step in and fill such positions in a context outside of their home country may also prove problematic. Some employees may simply not want to serve in certain parts of the world. Benefits packages may also be more challenging to create and manage, as can tax withholdings and other issues caused when employees move back and forth between domestic and overseas offices.
Sales
Another problem that multinational companies may face in a global environment is the ability to develop products and market those products in a way that appeals to a wide segment of the world's population. Companies run the risk of developing products and strategies that run contrary to the cultural norms of the people to which they are attempting to market the products. Multinational companies face the challenge of developing and marketing products that have global appeal.
Communication and Cultural Norms
Another significant issue faced by multinational companies is how business is conducted across international lines. Differences in communication, for instance, make it essential to understand cultural norms in the countries in which these companies operate. For instance, John Hooker at Carnegie Mellon University points out that some forms of communication have implied and understood meanings that only make sense within a culture's context. This form of "high context communication" requires knowledge of the culture and its understood traditions.
Etiquette and Customs
Multinational companies also have to have representatives and leaders who know how to avoid violating or ignoring cultural practices and customs in business meetings. For instance, sending a woman to conduct business negotiations in the Middle East might be offensive to some Middle Eastern businessmen who typically don't socialize in public with women. In some Asian cultures, bowing, rather than shaking hands, is a more acceptable form of greeting. Other etiquette concerns can include eating customs in business dinners, bringing and giving gifts when appropriate, differences in body language and dress and even methods of negotiation.

[1] Cultural Problems – Retrived November 16th 2014, From http://www.ehow.com/info_12199203_cultural-problems-encountered-multinational-companies.html
[2] Cross Cultural leadership Problems – Retrived November 16th 2014, From prezi.com/.../cross-cultural-leadership-in-multinational-organizations
11. What are some of the problems in evaluating employee performance, and how are these problems complicated by an international setting (4.3)?

The process by which a manager or consultant examines and evaluates an employee’s work behaviour by comparing it with preset standards, documents the results of the comparison, and uses the results to provide feedback to the employee to show where improvements are needed and why.
Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.
Most multinational companies use multiple appraisers. Performance is appraised by supervisors from both parent and host country. Some multinationals adopted a process where international employee’s performance is appraised by various stakeholders like customers, bankers, customers, government, supplier, trade unions, subordinates, human resource professionals, superior in parent company, superior in the subsidiary company appraise the performance of the employee.
Performance appraisal of international employee is critical and a challenge due to
Content Bias: Most multinational companies view international performance management on the line of domestic performance management and focus on task factors at the cost of culture and environment factors when the latter play a dominant role in the performance of international employees.
Ineffective appraisers: Multinational companies use several appraisers for evaluation of foreign employees, but the ratings of the appraiser from the parent company only are considered for decisions relating to promotion, revision of compensation packages or renewal of contract. The appraiser from parent company, sadly, is unaware of the culture of the host country or that of the foreign national.
The appraisers generally remember the recent action of the employee and do not weigh on employees performance for the period under review.
Distant work place: Foreign employees working on the projects can’t be directly observed even by the host country supervisor. Similarly, the performance of the other employees working in the field in different place cannot be directly observed by the appraiser. Added to this the parent company superior who never observes the employee at work rates the performance.
Due to distance factors many appraiser do not conduct any interview with employee to be appraised. Failure of supervisors in conducting appraisal interview.
Use of performance data: Foe making major decision like promotion, revision to wage package or renewal of contract, personal opinions or network is used by multinationals instead of the data derived from appraisal. [1] Problems in performance evaluation – Retrived November 16th 2014, From http://www.businessdictionary.com/definition/performance-appraisal.html#ixzz3JFihveFG [2] Effective International Performance Appraisal – Retrived November 16th 2014, From http://cbr.sagepub.com/content/37/4/70.abstract [3] Performance appraisal of international employee – Retrived November 16th 2014, From https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0CDAQFjAD&url=http%3A%2F%2Fuserwww.sfsu.edu%2Fnyang%2FIBUS%2520618%2F618.01-GRP6PPT.ppt&ei=8nBoVJqEAs6huQSSioCQCA&usg=AFQjCNG_IXT5jKYb4hi0MDmJSBy3zhfPRA&sig2=m7Umvd-_Jb9y8dvaVh8Ebw&bvm=bv.79142246,d.c2E 12. List some of the advantages and disadvantages associated with cultural diversity in groups (4.4)?

Advantages
Contribute positively to sales, customers and profits
Positively influence market share
Companies often can increase their creativity by encouraging diverse opinions and perspectives.
Company recruiters can also widen the talent pool if they recruit employees based on relevant qualifications and experience, rather than limiting their search on race, gender, age or other grounds that are not central to the role.
Increased adaptability
Organizations employing a diverse workforce can supply a greater variety of solutions to problems in service, sourcing, and allocation of resources. Employees from diverse backgrounds bring individual talents and experiences in suggesting ideas that are flexible in adapting to fluctuating markets and customer demands.
Broader service range
A diverse collection of skills and experiences (e.g. languages, cultural understanding) allows a company to provide service to customers on a global basis.
Variety of viewpoints
A diverse workforce that feels comfortable communicating varying points of view provides a larger pool of ideas and experiences. The organization can draw from that pool to meet business strategy needs and the needs of customers more effectively.
More effective execution
Companies that encourage diversity in the workplace inspire all of their employees to perform to their highest ability. Company-wide strategies can then be executed; resulting in higher productivity, profit, and return on investment.

Disadvantages
A company that recruits and employs a diverse workforce must create a culture that promotes dignity and respect to avoid tension between employees.
Communication may be adversely affected if employees' first language is not English.
Existing employees may leave the organization if their personal prejudices prevent them from working with colleagues from a different background.
The investigation of employee complaints regarding negative attitudes and harassment can take up a considerable amount of management time.
Communication - Perceptual, cultural and language barriers need to be overcome for diversity programs to succeed. Ineffective communication of key objectives results in confusion, lack of teamwork, and low morale.
Resistance to change - There are always employees who will refuse to accept the fact that the social and cultural makeup of their workplace is changing. The “we’ve always done it this way” mentality silences new ideas and inhibits progress.
Implementation of diversity in the workplace policies - This can be the overriding challenge to all diversity advocates. Armed with the results of employee assessments and research data, they must build and implement a customized strategy to maximize the effects of diversity in the workplace for their particular organization.
Successful Management of Diversity in the Workplace - Diversity training alone is not sufficient for your organization’s diversity management plan. A strategy must be created and implemented to create a culture of diversity that permeates every department and function of the organization.

[1] Negative effect of cultural diversity on work place – Retrived November 16th 2014, From http://smallbusiness.chron.com/negative-effects-diversity-workplace-18443.html

[2] Diversity in work place – Retrived November 16th 2014, From http://www.multiculturaladvantage.com/recruit/diversity