Globalization has shrinked the entire world. With increase in the number of Multinational Companies, the issue of multiculturalism has become very significant. Multiculturalism refers to the presence of many different cultural backgrounds within an organization that leads to diversity in workforce. If the cultural diversity is not aligned with managerial functions, the organization suffers and therefore it is important to manage the cross cultural diversity. This paper aims at analyzing the ways to manage cultural diversity, culture, layers of culture and the impact of culture in an organizational performance.