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Three Management Styles and Two Company Types

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The management culture provides the developing direction of a company. It decides the characteristic and company culture in an enterprise. However, the style can be influenced by certain factors, such as, policy, history background, social system, international competition. In this essay, three management styles and two company types will be indentified and discussed. Management style belongs to management strategy; it can be composed of operation strategy, company culture and managers. To be specific, different management styles have distinct characterizations, which can be divided many particular aspects.

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For instances, Asian styles of management is originated from western styles; however, Asian styles and western styles have material difference. “It is also debatable if there is really an Asian management style, which cannot be explained by Western management theories, and that this “Asian management style” is the root cause of the economic crisis” state Pheng and Leong (2001, p127). It reflects that different cultures have different management styles. They have regional characteristics, which can influence business operations directly.

There are three common management styles: Paternalism style, Laissez-faire style and Democratic style. According to Dworkin, Gerald (2002), paternalism is the interference of a country or a person to another organization or an individual. In business aspect, it means an individual or an organization can interference a whole company and subsidiary company. This management style is very common in China, because there are many Chinese enterprises are owned by government, and these companies can be called state-owned company, such as China Mobile.

In China, paternalism style is easy to manage the large-scale companies which have plenty of employees. However, in western countries, Laissez-faire style and Democratic style are used in most companies. The laissez-faire style means fewer rules and fewer artificial controls of economic activities, including production, trading and management. It allows individual to make decisions. The benefit is if the employees are skilled, the Laissez-faire style can exert them abilities efficiently. The Democratic style is widely used in many countries. The haracteristic is all of the decisions are made by workers, and the rights of each worker are protected by the principles of company. The management styles are easily influenced by the types of enterprises. The category of enterprise can be divided into two varieties: private company and state-owned company. People are familiar with private company, which is very common in the world. According to Kroeze (2007), private company plays a pivotal role to serve economic activities and purposes, and it also can promote economic welfare. So, private company may have a necessary connection with an individual’s daily life.

For instance, almost retail trades are private, like Metro, which is very familiar in people’s life. Kroeze (2007) also mentioned that the private company needs to serve the law to maintain justice. It means the private company should make mandatory rules to serving fairness. Large-scale state-owned enterprises in western countries are less than these companies in China. Only some industries for infrastructures are owned by the government, such as Power Company, Water Company and Rail Company. The same characteristic of these companies is that they are all public facilities.

However, in China, almost the large-scale enterprises are state-owned, and most of these companies are very competitive in the global market, such as Sinopec (petroleum refining), and State Grid (power supply). As an international trade market, China is an important role in the global market and becoming the most potential place for international investment (Wang, 2010). Mixed western management styles, how China can operate the state-owned enterprises in an efficient way with an independent style. Specifically, the question is why almost Chinese enterprises are state-owned, and how it can compete with external pressure?

This situation can be explained by Chinese mood. Wang (2010) indicated that the cultural background, policy and economic conditions of the country have suffered Chinese managers to confuse the existed management styles, which requires a new way to get accustomed to modern market. Moreover, some internal and external factors should be considered between Chinese style and western style. Paternalism style is used widely in Chinese state-owned company. Firstly, the influence of management style in China is competition. Obviously, as a most potential international market, more and more western companies enter the local market, like Wal-Mart.

The external retail companies including Hong Kong companies have possessed almost retail market in China. In this circumstance, small-sized private company cannot compete with magnates; only the state-owned enterprise can rely on the policy to rival magnates in this area. The reason is that western large-scale companies have developed over many years; some of them have even existed for many centuries, such as Mercedes-Benz. It has long history, 110 years, in the automotive industry, and has a mature management style and company culture.

China also has own automotive industry named Shanghai Automotive, which has been established 30 years, but the quantity of sales are better than Mercedes-Benz in China, because the company imported the advanced technology and brand, such as Volkswagen; and it developed a new production system, which is invested from the government. Thus, it is easily to be found that a western company has traditional management style; while Chinese company does not have an original management style, but it is created by combination and policy support.

Therefore, the characteristic of Chinese state-owned style can be influenced by competition, history and national policy (Wang 2010). Next, another evidence for Chinese state-owned company is region and population. In other words, there are plenty of populations in several main cities (over 10,000,000), such as Beijing, Shanghai and Xi’an. The private company cannot provide jobs for everybody. It needs large-scale enterprise to arrange the work place for these people. In this situation, a state-owned company should solve this problem, because it is national responsibility to lead people to work for living. An effective leader possesses an ability to influence group members towards the achievement of goals” according to Pheng and Leong (2001, p131). The Paternalistic management style emphasis the leader’s decision-making; it is a typical management style of a Chinese state-owned company. Due to too many employees (1,673,000 employees in PetroChina) working in a state-owned company, the leadership is very important. Thus, the government appoints some managers to ensure the efficient company operation.

Hence, population and regional difference is other influences of management style in Chinese state-owned enterprise. In addition, the population in western countries is much less than China, so the private companies do not confront the population pressure, but the market is restricted. Therefore they should focus on an international market. It needs both individual qualitative capability and a better cooperative competence (Wellens 1980). Apparently, Chinese companies need the individual qualitative capability, because the elite are still not enough in every industry.

The advanced training should be organized more, which can improve the entire quality of the company manager. The culture difference can be also explained by management style. In Chinese market, Laissez-faire style is hard to be accepted by Chinese managers, which is not suit for Chinese conditions: suffering population pressure. Because of lacking knowledge and investigates of Chinese culture relating to the management practices, many foreign internet companies got frustrating experiences, which includes Yahoo, Google, E-Bay and Amazon (Wang 2010).

In conclusion, comparing Chinese culture and western culture, the root of influencing management style is historical problem: the development of industry in China is expanded much later than western countries. Hence, using Paternalism style to manage the state-owned companies is an efficient method to accelerate economic development. In addition, due to the different social system, the types of enterprises in these contrasting cultures are different, the one is private company, and the other is state-owned company. Furthermore, these two types management style apply to different population.

In other words, they have different points of emphasis, a Chinese company focus on a domestic market, while western company is concerned with international market, it need to use Laissez-faire style to expand the market. Moreover, Chinese state-owned enterprise can combine the western management style with the existed characteristic such as Democratic style, which is a key point for accelerating Chinese development. Finally, the national policies can stimulate the state-owned enterprise with a reasonable speed. Reference list: Gerald, D. (2002) “Paternalism”, The Stanford Encyclopedia of Philosophy (summer 2010 Edition), URL=.

Kroeze, M, J. (2007) Flexibility and Function of Private Company Statutes. European Business Organization Law Review, 8(1), pp. 121-129. Pheng, L, S. , Leong, C, H, Y. (2001) Asian management style versus Western management theories – A Singapore case study in construction project management. Journal of Managerial Psychology, 16(2), pp. 127-141. Wang, J. (2010) Understanding managerial effectiveness: a Chinese perspective. Journal of European Industrial Training, 35(1), pp. 6-23. Wellens, J. (1980) Management style. Industrial and Commercial Training, 12 (5), pp. 181-185.

Cite this Three Management Styles and Two Company Types

Three Management Styles and Two Company Types. (2019, May 02). Retrieved from https://graduateway.com/management-styles-2-447/

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