INTERNATIONAL MANAGEMENT:
MULTICULTURAL AND TRANSNATIONAL MANAGEMENT
CHAPTER 4: THE NATURE OF ORGANIZATIONAL CULTURE
CASE STUDY – NESTLÉ IN VIETNAM
Name of Students Hoang Thu Thao: 21051012
Nguyen Thi Thanh Huyen: 21050880
Tang Phuong Linh: 21050921
Nguyen Mai Linh: 21050915
Nguyen Duc Trung: 22051263
Tran Cao Duc Minh: 22051135
Class: INE3223-E 4
Instructor: PhD. Le Quang Minh
Hanoi, 9/2024
Table of Contents
A. DEFINITION ................................................................................................................ 1
1. Overview about organizational culture ................................................................ 1
2. Organizational Culture in MNCs.......................................................................... 1
B. CASE STUDY ............................................................................................................... 3
1. About Walmart .......................................................................................................... 3
2. About Nestlé ............................................................................................................... 4
3. Comparing swiss and vietnamese culture ............................................................... 6
4. Nestlé’s organizational culture in vietnam .............................................................. 7
4.1. Diversity and inclusion ...................................................................................... 7
4.2. Leadership, power and relationships between members ............................... 9
4.3. Training and development................................................................................. 9
4.4. Encourage, reward and resolve conflicts ....................................................... 11
5. Conclusion ................................................................................................................ 12
REFERENCES ................................................................................................................ 13
A. DEFINITION
1. Overview about organizational culture
Organizational culture has been defined in several ways. In its most basic form,
organizational culture can be defined as the shared values and beliefs that enable members
to understand their roles in and the norms of the organization. A more detailed definition is
offered by organizational cultural theorist Edgar Schein, who defines it as a pattern of
shared basic assumptions that the group learned as it solved its problems of external
adaptation and internal integration, and that has worked well enough to be considered valid
and, therefore, to be taught to new members as the correct way to perceive, think, and feel
in relation to those problems.
2. Organizational Culture in MNCs
- Three aspects of organizational functioning that seem to be especially important in
determining organizational culture:
• The general relationship between the employees and their organization.
Example: In a company like Google, employees often perceive their relationship with the
organization as collaborative and innovative. Google is known for fostering an open and
supportive culture where employees feel empowered to express their creativity, take
initiative, and contribute to large-scale projects. The company invests heavily in employee
well-being with perks such as flexible working hours, health benefits, and spaces for
collaboration, reflecting a relational, inclusive work culture.
• The hierarchical system of authority that defines the roles of managers and
subordinates.
Example: In companies like Toyota, the hierarchical system is structured and formal, with
clear definitions of authority. Managers at different levels make decisions that flow down
the chain of command. However, Toyota also encourages the involvement of employees at
all levels through practices such as: promotes continuous improvement and encourages
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workers to contribute ideas for efficiency and productivity improvements. Despite the
hierarchy, there's an emphasis on collaboration and respect for all employees.
• The general views that employees hold about the MNC’s purpose, destiny, goals
and their place in them.
Example: At Unilever, the company's commitment to sustainability and social
responsibility is deeply embedded in its corporate culture. Employees see their work as
contributing to a larger mission of “making sustainable living commonplace.” This
purpose-driven culture aligns employees’ roles with the company's goals to reduce
environmental impact, promote ethical business practices, and enhance social well-being.
Employees are motivated by a sense of being part of something larger than just profitability
— they feel their work has a meaningful impact on society and the environment.
- When examining organizational culture, Trompenaars suggested the use of two
approaches. One distinguishes between equity and hierarchy, the other examines
orientation to the person and the task. There are 4 corporate cultures:
Family culture
Family culture is characterized by a strong emphasis on hierarchy and orientation
to the person. The result is a family-type environment that is power-oriented and headed
by a leader who is regarded as a caring parent and one who knows what is best for the
personnel. Trompenaars found that this organizational culture is common in countries such
as Turkey, Pakistan, Venezuela, China, Hong Kong, and Singapore.
Eiffel Tower Culture
Eiffel Tower culture is characterized by strong emphasis on hierarchy and
orientation to the task. Under this organizational culture, jobs are well defined, employees
know what they are supposed to do, and everything is coordinated from the top.
Guided missile culture
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Guided missile culture is characterized by strong emphasis on equality in the work-
place and orientation to the task. This organizational culture is oriented to work, which
typically is undertaken by teams or project groups. Unlike the Eiffel Tower culture, where
job assignments are fixed and limited, personnel in the guided missile culture do whatever
it takes to get the job done.
Incubator culture
Incubator culture is the fourth major type of organizational culture that Trompenaars
identified, and it is characterized by strong emphasis on equality and personal orientation.
This culture is based heavily on the existential idea that organizations per se are second-
ary to the fulfillment of the individuals within them.
B. CASE STUDY
1. About Walmart
Walmart entered the German market in 1997 and stressed the idea of friendly service
with a smile, where the customers always come first. Despite some successes and good
intentions and numerous attempts to improve the German stores, the Walmart culture
proved to be a poor fit for the German market, and Walmart vacated Germany in 2006. The
reasons for the failure are given as follows:
• The pamphlet that outlined the workplace code of ethics was simply translated from
English to German, but the message was not expressed the way Walmart had
intended → misunderstanding.
For example: It warned about supervisor-employee relationships, suggesting sexual
harassment and reporting "improper behavior." Germans interpreted this as a ban on
workplace romances and saw the reporting system as a way to betray co-workers rather
than benefit the company.
• Walmart was less than willing to listen to suggestions as to how to improve
employee working conditions.
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• The policies such as smiling at customers or assisting them by bagging their
groceries presented problems in the German environment. This is because male
employees who were ordered to smile at customers were often seen as flirtatious to
male customers, and Germans do not like strangers handling their groceries.
→ Walmart learned the hard way that in the retail or service industry, local customs are
often more important than a strong, unyielding organizational culture.
2. About Nestlé
Nestlé is a Swiss multinational food and beverage company headquartered in Vevey,
Switzerland. Founded in 1866 by Henri Nestlé, the company is the largest food company
in the world by revenue. Nestlé has a wide range of products, including baby food, bottled
water, coffee, chocolate, confectionery, dairy products, pet food, and prepared meals.
Mission: "The world's premier nutrition, health, and wellbeing corporation," according to
Nestlé's mission statement. From dawn to dusk, our objective of "Good Food, Good Life"
is to provide customers with the greatest quality, most nutritional options across a wide
range of food and beverage categories and eating circumstances.
Vision: Nestlé's vision statement is "to be a leading, competitive, Nutrition, Health and
Wellness company delivering improved shareholder and societal value." This vision clearly
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outlines Nestlé’s ambition to not only be a frontrunner in the industry but also to make a
difference in society, all while providing value to its shareholders.
Core Values: "Full legal conformity, integrity, fair dealings, integrity, and respect" are
Nestlé's basic principles. Nestlé's basic principles are all geared toward becoming a
trustworthy firm. As a result of its trustworthiness, the firm can enter new markets as well
as fast-growing into a major corporation.
The company operates in over 180 countries and has over 330,000 employees
worldwide. Over 230,000 people worldwide work in Nestlé's factories, research
laboratories and offices.
Nestlé Vietnam Ltd. was established in 1995, is a 100% foreign-invested company,
belonging to Nestlé SA Group. With a total investment capital of more than 520 million
USD, Nestlé Vietnam has become one of the leading successful foreign-invested
companies in Vietnam, with remarkable contributions. Besides, Nestlé also has achieved
the following notable achievements:
• The revenue has consistently increased, reaching VND 18,000 billion in 2023,
positioning Nestlé Vietnam as one of the biggest companies in Vietnam.
• The net profit reached VND 3,000 billion in 2023, with steady growth over the
years.
• Nestlé Vietnam continued to rank in Top 3 Best Places to Work in Vietnam for a
fifth consecutive year in 20223
• Nestlé Vietnam also won Vietnam HR Awards 2022 in two important categories
including Excellence in Employee Wellness and Best Talent Management Strategy
(encompassing workforce planning and total rewards).
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3. Comparing swiss and vietnamese culture
Vietnamese and Swiss cultures have many differences based on Hofstede’s model.
These differences affect how people in each country interact with each other, organize
society, and perceive the world
Power Distance (PDI): Vietnam has a high PDI score (70), indicating a hierarchical
society where authority is respected, and subordinates rarely question leaders. This can
hinder creativity and participation. In contrast, Switzerland’s low PDI (34) suggests a more
egalitarian approach, where leaders guide rather than command, and employees are
encouraged to contribute to decision-making processes, fostering cooperation and mutual
respect.
Individualism (IDV): Vietnam’s low IDV score (30) highlights a collectivist culture where
family and community come before individual needs. People value mutual support and
group cohesion. Switzerland, with a high IDV score (79), leans towards individualism,
where personal responsibility and independence are emphasized. Swiss employees are
proactive, expressing personal views and making decisions based on individual merit.
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Masculinity vs. Femininity (MAS): Vietnam’s moderate MAS score (40) shows a balance
between masculine values of success and feminine values of care, with both men and
women playing leadership roles. The Swiss, with a higher MAS score (70), focus on
achievement, competition, and success. However, gender equality is becoming more
prominent in both societies, with increasing female participation in the workforce.
Uncertainty Avoidance (UAI): Vietnam’s low UAI score (30) reflects a more relaxed
attitude towards uncertainty, with openness to change and risk-taking. This is evident in
business, where companies often experiment with new models. Switzerland, with a
moderate UAI (58), is more cautious and prefers stability, though recent trends show an
increase in job changes and a growing acceptance of change.
Long-Term vs. Short-Term Orientation (LTO): Vietnam and Switzerland have quite
similar LTO scores, with Vietnam at 42 and Switzerland at 47, indicating a balance between
focusing on immediate goals and planning for the future. Both cultures value present-day
enjoyment but also set long-term strategies in businesses and personal development.
Indulgence vs. Restraint (IVR): Vietnam’s low IVR score (35) indicates a culture of
restraint, where people emphasize self-discipline, responsibility, and hard work. In
contrast, Switzerland’s higher IVR score (66) shows a culture that values freedom, leisure,
and self-expression, encouraging employees to voice their opinions and maintain a balance
between work and life.
4. Nestlé’s organizational culture in vietnam
4.1. Diversity and inclusion
Diversity and inclusion are an integral part of Nestlé Vietnam’s culture. The
company encourages the inclusion of all communities, cultures and ages in its workforce
and seeks to promote diversity of thought to drive innovation and creativity.
When Nestlé started its branch in Vietnam, the company institutionalized its core
values from the very beginning. First, Nestlé translated two important documents, Nestlé
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Management and Leadership Principles, and Nestlé Corporate Business Principles, into
Vietnamese, but some concepts could not be translated literally but needed to be explained
with Vietnamese metaphors and symbols, such as the metaphor of family to express team
spirit and teamwork. Thus, a document was created especially for Nestlé Vietnam that
encapsulated the Nestlé core values in the local idiom. This document is given to every
employee who joins the branch.
One of Nestlé’s core values is that employees must have intercultural competencies
and be able to interact effectively with people from all over the world. Therefore, the
recruitment process at Nestlé Vietnam assesses the candidate’s attitude towards foreigners
and people from other parts of the country. Preference is given to those who are tolerant,
liberal thinking and have experience of associating with people from diverse backgrounds.
The company is committed to promoting gender equality and providing equal
opportunities for all, with no discrimination accepted. This principle is reflected in human
resources policies from recruitment, training to development and promotion. At Nestlé, the
proportion of women holding senior management positions is always equal, and sometimes
even exceeds that of men. The company also extends its commitment to the entire value
chain and the community. Since 2020, the company has cooperated with the Vietnam
Women's Union to implement the program "Nestlé accompanies women" and orient future
activities.
Changing Nestlé's corporate culture to adapt to the national culture of Vietnam
requires flexibility in adjusting internal policies to the culture and working habits of
Vietnamese people, specifically the culture of taking a lunch break, the culture of giving
gifts on holidays, etc. Nestlé always respects local culture and values, aiming to organize
cultural activities and traditional festivals of Vietnam to connect with local culture,
encourage employees to participate in community activities, contribute to the development
of Vietnamese society, respect and promote traditional Vietnamese cultural values in the
working environment.
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4.2. Leadership, power and relationships between members
Nestlé Vietnam’s management style focuses on inspiring employees rather than
focusing on hierarchy, but there is still a clear decentralization of authority. The working
environment follows the framework of “Nestlé Management and Leadership Principles”
with a clear view of the desired results of the work. This environment facilitates unbiased
feedback and promotes continuous improvement.
At Nestlé Vietnam, power is distributed in a balanced and organized manner. Each
employee has specific responsibilities and authority according to their role. The Director
plans strategies and assigns tasks to subordinates. When there is a problem, the Director
receives information from subordinates to find solutions. Although there is discussion
between the parties, the final decision-making power belongs to the management board.
The management board oversees the daily business operations, with members managing
different departments of Nestlé Vietnam.
At Nestlé, authority is given based on each employee’s ability to perform the
assigned tasks. The company creates conditions for every individual to develop their
potential through fair promotion policies, regardless of their tenure or current position.
Nestlé provides comprehensive development opportunities, including intensive training
programs, personal guidance, and rotation plans between departments or international
offices, to help employees expand their knowledge and skills.
Between employees at Nestlé Vietnam, relationships are established based on trust,
integrity and honesty, maintaining respect for basic values, attitudes and treatment of
people, and respecting employees' personal freedom.
4.3. Training and development
Nestlé is not just a workplace, but also a big family. The company always creates
conditions for employees to develop their full potential. From encouraging creativity and
innovation to investing in training.
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Ms. Truong Bich Dao, Human Resources Director at Nestlé Vietnam affirmed: “At
Nestlé, people are the most valuable asset of the company and the key factor for sustainable
development. That is why the company wants to ensure that every employee has the
opportunity to contribute, develop and advance in the long term at Nestlé”. At Nestlé,
everyone has the opportunity to assert themselves, break through the limits thanks to
policies that create promotion opportunities without seniority or rank; comprehensive
development through mentoring and intensive training programs combined with
department rotation plans or international working environments. In 2022, the company
invested 17 billion VND in training, education and improving the professional
qualifications and skills of employees. In addition, the company also expanded
opportunities for young talents nationwide through the programs "Manager Trainee" and
"Lighting up Vietnamese Talent".
Nestlé Vietnam is still building a clear career development plan by rank to promote
the development of members. Nestlé focuses on nurturing and promoting leadership
potential so that employees have the opportunity to become future leaders. This not only
helps employees develop themselves but also contributes to the overall development of the
company.
Nestlé highly values adaptability and willingness to experiment with new ideas,
from product research and development to market approaches. The company promotes an
inspiring, creative, transparent and open working environment where each employee is
respected, and is free to participate and contribute ideas. Here, your voice is heard,
appreciated and has a real impact, because experience shows that together we achieve more
than we do alone. Creativity and innovation are important factors that help Nestlé maintain
its competitiveness in the food industry and meet the changing needs of customers.
Nestlé members are provided with favorable conditions, enjoy good remuneration
policies, have many career development opportunities and receive continuous training.
However, you must also work according to the principles: dynamic, honest, hard-working
and trustworthy. Continuous change, improvement and learning are also prominent factors
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in Nestlé's corporate culture. Each different member will take on a different task but also
need to improve their knowledge and skills.
4.4. Encourage, reward and resolve conflicts
As one of the most desirable working environments, Nestlé has “won” people’s
hearts with its rules: meeting the necessary needs of health and nutrition, while respecting
the different cultures and core values of all employees. All managers at Nestlé always
encourage and cheer up their subordinates whenever they encounter difficulties. Not only
stopping at words, they also seek to improve work, create a fun atmosphere, and always
promote innovation.
At Nestlé, tasks are often used as a basis for evaluating employees’ performance and
personal development. Nestlé employees are encouraged to complete their tasks effectively
and achieve the best possible results. Successful completion of tasks can lead to
opportunities for promotion and career development within the organization.
Nestlé Vietnam develops a flexible and comprehensive salary and benefits system
that is competitive in the market, including salaries and short-term and long-term bonuses,
additional benefits in addition to salaries and social security for employees. Rewards are
applied based on the quality and skills of work.
Nestlé builds a positive working environment, encouraging reconciliation, support
and consensus, from respecting different views to encouraging cooperation and teamwork.
Therefore, conflicts are considered inconsistent with the culture of teamwork and
cooperation.
Nestlé has clear procedures for resolving conflicts, including clarifying the issue,
collecting information and using tools such as arbitration or fair, non-discriminatory
assessment. The company also has its own feedback management system, allowing
employees to submit feedback anonymously or publicly. In some cases, conflicts can be
resolved through the intervention of managers or higher-level executives in the
organization.
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5. Conclusion
In the current context of globalization, building a multicultural working
environment is becoming an inevitable trend. Differences in values, concepts and working
attitudes between different cultures in different countries create barriers in optimizing the
business operations of MNCs. To be successful, MNCs must balance and integrate the
national cul-tures of the countries in which they do business with their own organizational
culture.
The contrast between Nestlé's success and Walmart's failure is a testament to the
importance of understanding and respecting local business culture. While Walmart failed
when imposing its rigid American business model on a market with completely different
cultural characteristics like Germany, Nestlé, on the contrary, took the time to research and
change to suit the Vietnamese corporate culture. Nestlé encourages cultural diversity in its
organization as well as respects local cultural values. At the same time, the company still
maintains its core values such as quality, food safety, and sustainable development. It is
this flexibility and adaptability that has helped Nestlé achieve significant success in its
business operations in Vietnam.
Thus, changing corporate culture to adapt to the national culture of the host
countries is not only necessary but also the key for MNCs to achieve success and expand
their markets in the future.
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