The Role of Cross-Culture Awarenss in Online Business Management in China (Research Paper Sample)

The role of Cross-culture awarenss in Online business management in China: A case study of Taobao and ebay
Chapter 1: Introduction
1.1 Research Background
Culture plays a significant role in the development, growth and expansion of organisations, markets and industries. A previous study by Batonda and Perry (2003) on the Australian and Chinese firms’ operations evidenced that the existing market culture influenced not only the organisational products and services offered, but also the business models, operations structure and corporate cultures respectively. Therefore, this implies that in order for an organisation to succeed in the global market it should align its operations with the existing market culture. Although this was easier in the traditional domestic market set ups, increased internationalistion has increased the challenge of organisational practice and foreign market cultures alignment (Trompenaars and Hampden-Turner, 2012). Therefore, as Batra and Kazmi (2008) noted, a majority of the internationalising organisations faces market challenges due to the cultural differences between their domestic and foreign markets, which often influence the consumers’ behaviours and attitudes.
A study by Zheng, Hyland and Soosay (2007) while evaluating the need for multinational ventures, training in foreign markets established that culture differences caused business failures. As such, a that a large proportion of multinational failures in the Asian market are a result of a mismatch and conflicts between the market culture and the organisations strategies’ and operational frameworks. In this context, the thesis aims to provide a framework through which to analyse the market cultural differences between China and the Western culture with USA as a case study and evaluate the process through which the cultural change’s impact on consumer behaviours and how organisations can differentiate operational strategies to meet the diverse culture based consumer needs.
One such organisations internationalising for the USA to China was the eBay e-commerce venture. Ebay was established in California, USA in 1995 as an e-commerce venture serving an auction centre. Although an established C2C (consumer to consumer) e-commerce venture in the USA and other EU markets, the venture failed to exact a similar impact in China. As Wang (2013) noted, although it ventured into the Chinese market in 2002, a year before its Chinese based e-commerce industry rival Taobao, it failed to effectively compete with Taobao. Thus, the research chooses Ebay China as a case study to analyse how culture impacts on its business performance.
The e-Bay Company is an American Multinational corporation in the internet sales industry. The organisation established in 1995, has evolved to a multinational venture through its consumer to consumer (C2C) and business to consumer (B2C) business platforms. As such, it has expanded to the global markets in the USA and European markets. However, besides its market success in the Western nations’ market, it failed to stamp its establishment success in China, which led to its eventual failure in the market although the acquired EachNet had a high market share as of 2003 (Berniker, 2003).
On its part, the Taobao Company was established by the Alibaba Group in 2010, as an online sales platform. The organization focus was on the consumer to consumer (C2C) business operations in the Chinese market, as well as in other Chinese speaking markets such as Hong Kong and Taiwan among others. The venture has since its establishment expanded to the global market platform, although its primary focus and consumer base remains the Chinese and the Asian online sales market by extension. As of 2013, the Taobao Company had over 760 Million product listings, making it among the top 10 most visited websites globally (Taobao Focus, 2015).
1.2 Research Rationale
Globalisation has been a key driver of market growth and expansion in the Chinese market. In this case, despite the slowing rate of economic growth and population growth rates expected to decline in the future, China is expected to emerge among the global economic giants by the year 2050 (Foure, Benassy-Quere & Fontagne, 2012). This future forecast has attracted a large number of multinational organisations, especially from the USA and EU, which share the Western Culture. Unfortunately, as Ferraro (2010) noted, there exist huge cultural differences between the Western and the Asia, Chinese culture, which accounts of the multiple cases of multinational business failures in China. In this context, this thesis offers a strategic evaluation of the process and practices adopted by eBay that contradicted with the Chinese market culture, leading to its eventual market failures. The study focus on eBay will enable the formulation of market and culture driven recommendations for the venture. In this case, the findings and recommendations will provide a strategic and market research basis on which the eBay China management can formulate business strategies and operational framework to increase its market performance in China through benchmarking the domestic market leader Taobao operations.
Theoretically, the study will contribute by adding knowledge to the existing literature on the impacts of culture on business performance. In this regard, although previous studies focused on the impact of culture on consumer behaviour. Few have focused on the e-commerce industry that is not only a growing industry, but bound to dominate the global international market in the future. In particular, the Chinese e-commerce industry has been the focus of even fewer research studies. Moreover, although previous studies focused on the impact of culture conflicts on business performance of multinational organisation. But most of them are based on the perspective of how the culture conflicts influence employee performance (Soederberg & Holden, 2013). Therefore, the study findings will enable filling in the existing literature gap on how culture influences on e-commerce venture performance in China based on consumer-facing operation practices.
1.3 Research Aim and Objectives
The research study aimed at conducting an in-depth analysis on how eBay can improve its cross-cultural management to increase business performance. This required a review of the organisational business performance and practices against a peer in the Chinese market. Thus the study created a comparative analysis between eBay and Taobao. The specific study objectives were:
To analyse the consumer-facing operation practices of eBay and Taobao in China
To assess the impact of operation practices of eBay and Taobao on their business performance in China from cultural perspective
To gain the implications regarding how to get good business performance in the cross-cultural environment
Chapter 2: Literature Review
2.1 Introduction
This second chapter of the dissertation provides a critical review and analysis of existing literature. In this case, the chapter focuses on a critical evaluation of models, theories, and empirical studies on cultural conflicts and impacts on business performance and global market competitiveness. The chapter analysis evaluates the respective study objectives, including the e-commerce business operations, business performance, culture, and consumer behaviours, as well as the impacts of cultural conflicts on consumers’ behaviour and organisational market performance. Thus, the chapter analysis focused on developing a literature framework and basis through which the subsequent study data collection and analysis was based on.
2.2 Business Operations of E-commerce Platform Firms
The e-commerce business system is an emerging approach through which business transactions are conducted online. This involves advertisement, display, and transaction practices respectively.
Although there are different forms of e-commerce business forms, the C2C (customer to customer) model is among the emerging forms (Clifton, 2008). In this case, as illustrated under figure 2.1 below, the consumers interact through a dedicated website. The selling consumer places the advertisement for a product, and the buying consumer transacts the product.


Figure 2.1: Consumer to Consumer e-commerce Model
Source: Cudjoe (2014)
Salam, Iyer, Palvia and Singh (2005) evaluated the factors influencing the success of an e-commerce business in the market. In this regard, the study evaluated two main activities, namely payment and e-commerce transactions. In its analysis, it concluded that party trust between the sellers and buyers, as well as trust of the host market place influenced the transaction rates. This study was complemented by Saini (2014) in a study that evaluated the different payment models applied by e-commerce ventures to boast confidence and trust among players in India. It established that some e-commerce ventures relied on commissions or subscriptions raised by members who participated in their market places. On the other hand, others developed advertisement platforms to raise additional revenues as part of their profit maximisation strategies.
With respect to the logistics responsibilities, the e-commerce ventures have minimal responsibilities as compared to their physical market peers. In this regard, unlike the other business models where the organisation lists its own products and plays an active role in the transactions, the e-commerce business model allows for a dormant role (Cudjoe, 2014). Thus, the hosting companies do not list, advertise or sell their own products, but rather serve as a facilitating opportunity. An evaluation on the merits of e-commerce business over the traditional approaches illustrated that it reduced business operational costs, as well as increased consumer choice varieties, and shopping convenience...