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Chapter 07 - Cross-Cultural Communication and Negotiation
Communication is the transfer of meaning from sender to receiver. The key to the
effectiveness of communication is how accurately the receiver interprets the
intended meaning.
7-1
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Chapter 07 - Cross-Cultural Communication and Negotiation
There are a wide variety of tactics used in international negotiating. These include
location, time limits, buyer-seller relations, verbal behaviors, and nonverbal
behaviors. Negotiating for mutual benefit is enhanced by separating the people
from the problem, focusing on interests rather than positions, generating a variety
of options, insisting that the agreement be based on objective criteria, and standing
one’s ground.
2. How should firms that offshore service tasks address cultural gaps and improve
communication between affiliates? How do different communication mediums
such as telephone versus e-mail exacerbate cultural divides?
7-2
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Chapter 07 - Cross-Cultural Communication and Negotiation
• BusinessWeek {http://www.businessweek.com/}
Teaching Tip: There are many companies that help businesses overcome cross-cultural
communications challenges and develop cross-cultural communications strategies. An
example is PROV. Communications, Inc. {http://www.prov.co.jp}. The site contains an
excellent description of the cross-cultural communications solutions that the company
provides.
1) One way of examining the ways in which individuals convey information is by looking at
their communication styles.
2) Context is information that surrounds a communication and helps to convey the message.
a) Indirect and Direct Styles: In high-context cultures, messages are implicit and direct.
In low-context cultures, people often meet only to accomplish objectives.
b) Elaborate and Succinct Styles: There are three degrees of communication
styles―elaborate, exacting, and succinct.
c) Contextual and Personal Style: A contextual style is one that focuses on the speaker
and relationship of the parties. A personal style focuses on the speaker and the
reduction of barriers between the parties.
d) Affective and Instrumental Styles: The affective style is characterized by language
which requires the listener to carefully note what is being said and to observe how the
sender is presenting the message. In contrast, the instrumental style is goal-oriented
and focuses on the sender.
7-3
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Chapter 07 - Cross-Cultural Communication and Negotiation
Teaching Tip: An interesting article dealing with the cultural dimensions of language is
available at{http://faculty.css.edu/dswenson/web/CULTURE/SURVNOTE.HTM}.
Interpretation of Communications
Communication Flows
1) Communications flows in international organizations move both up and down.
Downward Communication
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Chapter 07 - Cross-Cultural Communication and Negotiation
Upward Communication
Communication Barriers
1) The most important communication barriers for international management include
language, perception, culture, and nonverbal communication.
Language Barriers
1) Knowledge of the home country's language (the language used at the headquarters of the
MNC) is important for personnel placed in a foreign assignment. If managers do not
understand the language that is used at headquarters, they likely will make a wide
assortment of errors.
a) Language education is a good beginning, but it is often not enough to ensure that the
personnel are capable of doing the work.
b) Written communication has been getting increased attention, because poor writing is
proving to be a greater barrier than poor talking.
Perceptual Barriers
1) Perception is a person's view of reality. How people see reality can vary and will
influence their judgment and decision-making.
a) Advertising Messages: One way that perception can prove to be a problem in
international management communication is evident when one person uses words or
symbols that are misinterpreted by the other. A failure to understand home-country
perceptions can result in disastrous advertising programs.
b) View of Others: Perception influences communication when it deals with how
individuals "see" others. Most Americans, for example, believe others see them in the
same way they see themselves.
7-5
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Chapter 07 - Cross-Cultural Communication and Negotiation
1) The Impact of Culture: Besides language and perception, another major barrier to
communication is culture, a topic that was given detailed attention in Chapter 4. Culture
can affect communication in a number of ways, and one way is through the impact of
cultural values.
a) Cultural values vary from country to country.
i) Examples: U.S. nonclass-consciousness, as in college students from all economic
groups taking similar part-time jobs to make pocket money; U.S. belief that time is
an asset not to be wasted has limited meaning in some other ountires.
ii) Various values are reinforced and reflected in proverbs that Americans are taught
from an early age. These proverbs help to guide people’s behavior.
b) Misinterpretation: Cultural differences can cause misinterpretations both in how
others see expatriate managers and how the latter see them.
i) Americans are more informal than many others when conducting business, using
first names, for example.
ii) Suggestions:
• Be careful not to use generalized statements. Work hours, vacation accrual,
general business practices, and human resource issues vary widely from
country to country.
• Since most of the world uses the metric system, include converted weights and
measures in all internal and external communications.
• Keep in mind that even in English-speaking countries, words may have
different meanings. Not everyone knows what is meant by “counterclockwise,”
or “quite good.”
1/
• Remember that letterhead and paper sizes differ worldwide. The 8 2 x 11 inch
page is a U.S. standard, but most countries use an A4 (81/4 x 111/2 inch) size for
their letterhead, with envelopes to match.
• Dollars are not unique to the United States. When referring to American
dollars, it is important to use “US$.”
Nonverbal Communication
1) Nonverbal communication refers to the transfer of meaning through means such as body
language and the use of physical space. Table 7–6 in the text summarizes a number of
dimensions of nonverbal communication.
a) Kinesics
i) Kinesics is the study of communication through body movement and facial
expressions, primarily eye contact, posture, and gestures.
ii) Oculesics refers to the area of communication that deals with conveying messages
through the use of eye contact and gaze, such as looking someone in the eye.
iii) Haptics involves communicating through the use of bodily contact. More than half
the time, gestures that are assumed by Americans to be universal are
misinterpreted.
7-6
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Chapter 07 - Cross-Cultural Communication and Negotiation
b) Proxemics
i) Proxemics is the study of the way people use physical space to convey messages.
ii) Americans use 4 distances to communicate face-to-face:
• Intimate distance is the distance between people that is used for very
confidential communication.
• Personal distance is the physical distance used for talking with family and
close friends.
• Social distance is the distance used to handle most business transactions.
• Public distance is the distance used when calling across the room or giving a
talk to a group.
c) Chronemics
i) Chronemics is the way in which time is used in culture.
ii) Monochronic time schedule is a time schedule in which things are done in a linear
fashion.
iii) Polychronic time schedule is a time schedule in which people tend to do several
things at the same time and place higher value on personal involvement than on
getting things done on time.
d) Chromatics
i) Chromatics is the use of color to communicate messages. Every society uses
chromatics, but in different ways.
ii) Knowing the importance and the specifics of chromatics in a culture can be very
helpful; such knowledge can help you avoid embarrassing situations.
7-7
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Chapter 07 - Cross-Cultural Communication and Negotiation
1) Besides improving feedback systems, another way to make communication more effective
in the international arena is through language training.
a) Those who are not native speakers of English should learn the language well enough
so that face-to-face and telephone conversations and e-mail are possible.
b) If the language of the home office is not English, this other language also should be
learned.
c) Written communication also is extremely important in achieving effectiveness.
1) It is very difficult to communicate effectively with someone from another culture unless at
least one party has some understanding of the other's culture. Otherwise, communication
likely will break down.
Teaching Tip: Many businesses provide cultural training for companies that do business
overseas. An example is a firm called Across Cultures. The firm's website provides a nice
illustration of the services that cultural training firms provide. Three items are offered: the
book Cultural Intelligence, the Peterson Cultural Style Indicator (PCSI), and cultural
presentations/consulting services. Across Cultures' website is available at
{http://www.AcrossCultures.net/}.
2) Essential starting point: Recognize and accept the inescapable subtleties and difficulties of
intercompany relationships. Then focus on the quality of the people at the interface
between organizations. Finally, require frequent, rapport-building meetings by at least
three organizational levels: top management, staff, and line management at the working
level.
Teaching Tip: The site "Your Japanese Guest" provides an excellent example of the
communications challenges that arise in international business. The site, which is
available at {http://fly.hiwaay.net/%7Eeueda/japguest.htm}, focuses specifically on the
challenges of effective American-Japanese communications.
7-8
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Chapter 07 - Cross-Cultural Communication and Negotiation
Types of Negotiation
1) People enter into negotiations for a multitude of reasons, but the nature of the goal
determines what kind of negotiation will take place.
a) Distributive negotiations refers to bargaining that occurs when two parties with
opposing goals compete over a set value.
b) Integrative negotiations involves cooperation between two groups to integrate
interests, create value, and invest in the agreement.
3) Before beginning any negotiations, negotiators should review the negotiating style of the
other parties. Be as informed as possible and thus avoid trouble before it occurs.
7-9
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Chapter 07 - Cross-Cultural Communication and Negotiation
Negotiation Tactics
1) Separating the People from the Problem: Often, when a manager spends so much time
getting to know the issue, many become personally involved. Therefore, responses to a
particular position can be interpreted as a personal affront.
a) Take the other’s perspective; avoid blame and stay positive; aim for win-win.
b) Recognize and accept emotions and tension; avoid defensiveness.
c) Really talk, listen; summarize and interpret the other side.
d) Get into discussion before issues arise.
2) Focusing on Interests over Positions: The position one side takes can be expressed
through a simple outline, but still does not provide the most useful information. Digging
deeper into the situation by both recognizing your own interests and becoming more
familiar with others’ interests will put all active partners in a better position to defend their
proposal.
3) Generating Options: Managers may feel pressured to come to an agreement quickly for
many reasons, especially if they hail from a country that puts a value on time.
a) Better to have many options
b) Form proposals: brainstorm, state problem analyze issue, ponder approaches, stategize
actions, evaluate options, discuss necessary improvements.
c) Offer proposals agreeable to other side; pinpoint their decision makers and tailor
suggestions to them; support your proposal.
4) Using Objective Criteria: In cases where there are no common interests, avoid tension
by looking for objective options. Use legitimate, practical criteria; emphasize communal
nature of process; be flexible, within reason.
5) Standing Ground: Every discussion will have some imbalance of power, but there is
something negotiators can do to defend themselves.
a) No matter how long negotiations drag on, neither side should agree to terms that will
leave it worse off than its best alternative to a negotiated agreement, or BATNA.
7-10
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Chapter 07 - Cross-Cultural Communication and Negotiation
b) If no common ground is reached, a neutral third party can come in; the third-party
person has the last word in what the true “final draft” is. If the parties decide it is still
unacceptable, walk away from negotiations.
Bargaining Behaviors
1) Verbal behaviors are critical to the success of negotiations. Make high initial offers, ask a
lot of questions, and do not make many verbal commitments until the end of the
negotiating process.
3) Promises, Threats, and Other Behaviors: Another approach to bargaining is the use of
promises, threats, rewards, self-disclosures, and other (influenced by culture) behaviors
that are designed to influence the other party.
4) Nonverbal Behaviors: Nonverbal behaviors also are very common during negotiations.
Typical examples include silent periods, facial gazing, touching, and conversational
overlaps. See Table 7–10.
7-11
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Chapter 07 - Cross-Cultural Communication and Negotiation
2. What kind of managerial relationships could you assume exist between the
American financial services firm (mentioned in The World of International
Management) and its employees in India?
Answer: Many students will suggest that the relationship between the American
firm and its Indian employees is a distant and hierarchical one in which U.S.
managers are clearly above the employees in India. It appears that the U.S. firm is
not really taking the necessary steps to ensure that Indian employees fully
understand communications from the U.S. firm, nor the context in which they are
being made. In addition, there seems to be a lack of interaction and engagement
between the two groups.
3. What kind of negotiations could help engage Indian employees and overcome some
of the cultural problems encountered? How might culture play a role in the
approach the Indian employees take in their negotiation with the financial firm?
Answer: Negotiation is the process of bargaining with one or more parties to arrive
at a solution that is acceptable to all. In this particular case it might be wise to
provide cross-cultural training to both sides to help ensure that each better
understands the other culture. In addition, it is important to stress mutual respect
and communicate to the Indian employees that their opinions are important. One
way to do this is to avoid an us–versus–them environment by making sure that the
subsidiary has some more complex responsibilities and well as less complex ones.
Teamwork and collaboration should be encouraged, and there should be an
emphasis on sharing knowledge.
7-12
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Chapter 07 - Cross-Cultural Communication and Negotiation
Key Terms
7-13
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Chapter 07 - Cross-Cultural Communication and Negotiation
Answer: Explicit communication involves directly saying exactly what you mean,
whereas implicit communication requires making inferences about meanings. The
U.S. culture makes wide use of explicit communication. For example, most
American managers are taught to set objectives in quantitative terms with
timetables for accomplishment. On the other hand, the Japanese culture makes wide
use of implicit communication. The Japanese are intentionally more ambiguous,
and no one individual carries responsibility for a particular idea. Instead, groups or
teams of employees assume joint responsibility. To convey the message in the U.S.
culture, a manager using explicit communication would probably simply say, "You
are trying hard, but you are still making too many mistakes." In the Japanese
culture, a manager might say, "Your effort is commendable," and then begin to
coach the employee on the area in which the mistakes were being made.
2. One of the major reasons that foreign expatriates have difficulty doing business in
the United States is that they do not understand American slang. A business
executive recently gave the authors the following three examples of
statements that had no direct meaning for her because she was unfamiliar
with U.S. slang: He was laughing like hell. Don't worry; it's a piece of cake.
Let's throw these ideas up against the wall and see if any of them stick. Why
did the foreign expat have trouble understanding these statements, and what
could be said instead?
Answer: The foreign expatriate had trouble understanding these statements because
she had misinterpreted their meaning. Statements that would be less likely to be
misinterpreted would be: He was laughing very loudly. Don't worry; it’s a very
simple task. Let's consider the merits of all these ideas and see if we find any that
appear to be workable.
7-14
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Chapter 07 - Cross-Cultural Communication and Negotiation
Answer: The way in which Yamamoto and the state officials see reality may vary,
and this will influence their judgment and decision making. Thus, perceptions of
the two parties can become a barrier to effective communication.
After greeting the executives from Yamamoto, the state officials may choose to get
right down to the business at hand. The Japanese executives might perceive the
behavior of the officials as being hasty and rude. In Japan, it is customary to spend
a much longer time "getting to know one another" before getting serious about
business. One of the state officials might try to create a more relaxed atmosphere by
trying to introduce a bit of humor into the initial conversation. Because of the
language barrier, the Japanese executives may not be certain as to whether the
comments were made in jest or as serious statements. To be on the safe side, the
Japanese executives will not laugh or even smile at the comments. Because of the
cold reaction to his humor, the state official may perceive the Japanese as being
cold and perhaps disinterested in the project.
Answer: The biggest cultural barriers to communication will probably stem from
lifestyle differences between the midwest and Barcelona. A prime example is
lunchtime behavior. In Chicago it is not uncommon to see managers eating lunch at
their desks purchased from the local fast food restaurant or perhaps skipping lunch
altogether. In France, lunch is usually a quite lengthy affair involving wine and
casual conversation. Also, the French managers may be unwilling to work into the
night to complete a project, whereas the Chicagoan may not think twice about a late
nighter. In any case, the outsider often has difficulty interpreting why these
culturally specific events are happening, and this becomes a barrier to effective
communication.
7-15
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Chapter 07 - Cross-Cultural Communication and Negotiation
Answer: The use of body language (kinesics) and the use of physical space
(proxemics) can account for many perceptual problems, which act as barriers to
communication. The barrier could be substantial in both cases (Yamamoto Iron &
Steel and Diaz Brothers), but the Japanese company would probably experience
more communication problems than the French company simply because the Asian
culture differs from the Western culture in so many important ways. Of course, the
individual cultural experiences of the representatives of the two companies will be
an important factor as well.
6. For U.S. companies going abroad for the first time, which form of nonverbal
communication barriers would be the greatest, kinesics or proxemics? Why?
Defend your answer.
8. What elements of the negotiation process should be done with only your group?
Which events should take place with all sides present? Why?
Answer: The first phase, planning, should be done only with your group. This is
when negotiators identify the objectives they would like to attain. Then they
explore options for reaching these objectives. The events that should take place
with all sides present are remaining steps of the process: interpersonal relationship
building, exchanging task-related information, persuasion, and the agreement.
These are done with all sides present because it is important to get to know the
other side and their goals in order to attain the goals your side has set.
7-16
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Chapter 07 - Cross-Cultural Communication and Negotiation
9. An American manager is trying to close a deal with a Brazilian manager, but has
not heard back from him for quite some time. The American is getting very nervous
that if he waits too long, he is going to miss out in any backup options due to
waiting for the Brazilian. What should the American do? How can the American
tell it is time to drop the deal? Give some signs that suggest negotiations will go no
further.
Answer: In American culture, time is considered an asset and should not be wasted.
The American manager should not let one deal ruin the chances of settling the deal
elsewhere. Americans believe it is important to be factual and objective. They often
make early concessions to show the other party that they are flexible and
reasonable. The American manager should have hammered out specific details in
the initial negotiation meetings, and also reviewed the negotiating styles of the
Brazilian manager. Researchers have found that Brazilians do better when they are
more deceptive and self-interested and their opponents are more open and honest
than they are. They are also much more prone to say no; therefore, the American
manager should move on to the backup options of the deal.
10. Wilsten Inc. has been approached by a Japanese firm that wants exclusive
production and selling rights for one of Wilsten's new high-tech products. What
does Wilsten need to know about Japanese bargaining behaviors to strike the best
possible deal with this company? Identify and describe five.
Answer: In doing business with Japan, Wilsten needs to become familiar with the
Japanese negotiating style so that the end result is a more effective negotiating
session. Patience and sincerity will go a long way in dealing with the Japanese.
7-17
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Chapter 07 - Cross-Cultural Communication and Negotiation
1. After students have completed the material assigned in the exercise, ask them to
complete some or all of the same steps for Ford, a major U.S. automaker. Ask your
students to note the similarities and differences between the way Toyota and Ford
communicate with the general public. Which of these differences in communication
styles can be attributed to differences between the ways that Japanese and U.S.
companies communicate with the public?
1. Do you think China will continue to achieve record growth? What factors could
hurt its prospects?
The Chinese economy continues to achieve tremendous growth, even during the
global economic crisis, although more conservative assessments show that the rate
of growth is slightly lower than what it is claimed to be. Advanced technology, as
well as cheap highly educated labor can enhance China’s chances to be able to
maintain its growth. WTO membership also enhances China’s growth
opportunities, as it facilitates its integration into the global economy. Increased
scrutiny of business practices may also lead to further economic growth due to
reducing risk factors for international investments.
Factors that may hurt China’s prospects include continued attempts by the Chinese
government to integrate socialist views from the past with a capitalist system;
consistent favoritism for local companies; corruption; and continued problems with
piracy, counterfeiting, industrial spying, and human rights violations.
2. Because of an abundance of cheap labor, China has been called “the workshop of
the world.” Do you think this will still be the case a decade from now? Why or why
not?
7-18
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Chapter 07 - Cross-Cultural Communication and Negotiation
3. What communication and negotiation approaches are likely to work best when
foreign MNCs experience demands from Chinese workers for higher wages?
Strikes in China point to problems that will change the profit margin for U.S.
companies manufacturing in China. As working conditions and wages improve,
China will become less attractive to U.S. companies. U.S. companies will benefit
from good experiences of negotiation between labor and management in the United
States. However, if those negotiations have gone badly in the past, the U.S.
companies may enter into negotiations with labor in China with a negative attitude.
7-19
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Chapter 07 - Cross-Cultural Communication and Negotiation
Answer: There are going to be many communication problems with the Koreans
even if things go well. There will be written and verbal communication problems
with English, Korean, and the translations. Perceptual differences in the way things
are interpreted, whether it be the advertising of the cars, contract agreements, etc.,
are bound to go wrong. The cultural values in South Korea are drastically different
from the U.S. Body language, facial expressions, or lack of them can be
misinterpreted. The Koreans show virtually no facial expression or display of
emotions and make little eye contact. This is often perceived as being cold by
Americans. Such is not the case though, if taken in the context of the culture.
Based on communication problems alone, should Hatley back away from the deal
or proceed? Give your recommendation; then defend it.
Answer: Hatley should not back away from the Korean deal simply on the basis of
communication problems. If the Korean forecasts are really true, and Hatley could
earn an ROI 50 percent higher than on the American deal, she needs to evaluate the
communication problem and see if she feels it is rectifiable. With a $50 million
dollar investment and such tremendous profits to be earned, hiring one or several
language and communication specialists would be a drop in the bucket in terms of
cost. A few specialists could identify problem areas in advance, train people in how
to deal with or prevent communication problems, and make the entire operation run
smoothly.
7-20
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Chapter 07 - Cross-Cultural Communication and Negotiation
4. What negotiation approaches may Hatley use if she wants to continue with the deal
in order to increase her confidence that it will be successful?
Should Hatley decide to pursue the deal with the South Korean company, a lot of
planning is necessary. Dealing with Asian cultures requires a tremendous amount of
relationship-building, as trust and long-term relations are necessary foundations for
successful business. Moreover, Hatley needs to extensively communicate with her
potential partners, and collect more information, not only about their current and
potential market standing, but also about their behavior in previous partnerships.
She should also be willing to travel frequently and invest significant amounts of
time getting to know her partners better both on the professional and personal levels
and familiarizing herself with the national and organizational culture, the
individuals and processes involved in decision making, and the specific strategies
and operations of the organization. Based on this information, she should have a
more detailed contractual agreement that spells out areas of potential conflict.
However, it is the continuous investment in relationship-building efforts that will
matter more than anything else in increasing the chances of success of the venture.
That is why Hatley should also start training and grooming some of her staff to act
as liaisons between the two companies, and be willing to send them often or
relocate them in Korea, in order to coordinate operations and maintain close,
positive relationships.
7-21
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Chapter 07 - Cross-Cultural Communication and Negotiation
2. How might Coca-Cola have responded differently when this situation first occurred,
especially in terms of reacting to negative perceptions among Indians of Coke and
other MNCs?
Answer: Coca-Cola probably should have responded much more quickly to reassure
consumers of the safety of Coke products. The allegations of politicians spread
rapidly through India and some even believe that the company was deliberately
targeted in an effort to bring a national problem to light. Coke was not prepared for
the situation and, in fact, spent time running tests and forming committees. In
hindsight, a quick response to consumers would have probably better served the
company. Coke was silent to its consumers, and in the Indian culture, people
interpret silence as guilt. The people wanted to hear from Coca-Cola immediately
rather than later. When the accusations of pesticide content became apparent, Coca-
Cola defended itself by accusing other companies of having similar problems.
3. If Coca-Cola wants to obtain more of India’s soft drink market, what changes does
it need to make?
Answer: Over the last decade, Coca-Cola has invested over $1 billion in India, and
now employs some 5,500 people. In addition, the company is responsible for
creating another 150,000 jobs with related companies. These efforts will help the
company gain respect and loyalty from the Indian population. In the future, Coca-
Cola needs to continue to partner with environmental affiliations and replenish the
water supply. Obviously, steps need to be taken to ensure that the water is
consumable and safe. Coca-Cola also needs to continue to invest in the nation to
show that foreign investment is safe and beneficial. The company should also take
the time to better understand India’s culture so that it can avoid costly mistakes in
the future.
4. How might companies like Coca-Cola and PepsiCo demonstrate their commitment
to working with different cultures and respecting the cultural and natural
environments of those societies?
Answer: Coca-Cola has learned the hard way that doing business is tough when the
culture is vastly different. Some of the things that Coca-Cola and PepsiCo may
want to do to demonstrate their commitment is to improve their feedback systems.
Feedback is particularly important between parent companies and their affiliates.
This will help improve the effectiveness of communication between the nations.
They also may want to provide cultural training which will prevent future
communication breakdowns. Also, effective communication requires increased
flexibility and cooperation by all parties. Coca-Cola and/or PepsiCo need to get
involved in the culture and learn the local way of doing things.
7-22
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
Answer: Danone initially entered China in the late 1980s, and since then has made
significant investments in the country, and now employs some 23,000 people in its
Asia-Pacific area. Some 57 percent of the company’s Asian sales come directly
from China. Things were not always easy for Danone in China, however. The
company’s lack of knowledge of the local market created a number of challenges
for the company. Moreover, in 1996, Danone formed a joint venture agreement
with Chinese-based Wahaha Group. The relationship between the two companies
was contentious, and fraught with numerous legal dispute initiated by Danone
which felt that Wahaha was violating the terms of the joint venture agreement. The
joint venture, despite being relatively successful, was dissolved in 2009 after a
series of rulings in Wahaha’s favor.
2. How was the Danone and Wahaha JV formed? What was its structure? Why did
Danone decide to form a joint venture rather than establish a 100 percent-owned
subsidiary?
7-23
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
3. What was the problem of Danone Wahaha joint venture that triggered the conflict
between the companies? What were the differences in Danone’s and Wahaha’s
understanding of their own respective roles and responsibilities in this venture?
What aspects of national and organizational culture affected this perspective?
Answer: The dispute between Danone and Wahaha involved differences on how the
trademarks in the joint venture were to be used, and who actually controlled the
company. Wahaha believed that it owned all rights to the Wahaha trademark and
was able to establish brands outside the joint venture that used the Wahaha name.
Danone felt that the trademark belonged to the joint venture, a company that
Danone believed it controlled. Because Wahaha did not fully understand the
implications of its decision to transfer its trademark to the joint venture, and
Danone’s subsequent buyout of Bin Fu Qin’s share of Jin Jia Investment, it felt that
it had been misled by Danone. Danone’s perspective was that because it had 51
percent control of the joint venture, it controlled the trademark. The dispute
between the two companies resulted in a series of accusations and lawsuits, all of
which were ultimately decided in Wahaha’s favor.
4. Was Danone successful in proving its claims in court? How was the conflict
between the two companies resolved? What were the key lessons for Danone about
doing business in China?
Answer: In 2006, Danone accused Wahaha of violating the terms of the joint
venture and offered to buy the company out. When Wahaha rejected the offer,
Danone immediately filed lawsuits claiming that Wahaha had used the trademark
illegally and in doing so, threatened the viability of the joint venture. A total of ten
lawsuits were ultimately filed, all of which were settled in Wahaha’s favor. In 2009,
Danone agreed to sell its share of the joint venture to Wahaha effectively ending the
relationship between the two companies. Most students will recognize that
Danone’s experience will certainly prompt the company to be more diligent in
ensuring that the legal side of any future agreements in China is fully understood
and documented. In addition, the company may decide that forming a partnership
with a Chinese company is simply too risky and that the cost of building its brand
on its own is actually less costly in the long run.
5. Did Danone follow the advice regarding JVs in China listed in the list just above?
Which aspects did it follow and which did it not?
Answer: Most students will probably agree that Danone failed to fully follow any of
the rules for joint ventures in China. The company made assumptions about how
the agreement was structured, failed to ensure that legal issues were fully
researched and documented, and was perhaps not as engaged with the day-to-day
aspects of the venture as it should have been.
7-24
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
Power distance is the extent to which less powerful members of institutions and
organizations accept that power is distributed equally. Power distance of the
American and French cultures is not distributed equally. It is derived from the
position and the level of management one has in terms of the power distance
relationship.
Masculinity exists in a culture when the dominant values in society are success,
money, and things. Masculinity is very apparent in U.S. culture, which perpetuates
individualism and materialism. In the French culture there is a tradeoff to
femininity because French culture does not emphasize materialism.
7-25
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
2. In what way has Trompenaars’ research helped explain cultural differences between
the United States and France?
3. In managing its Euro Disneyland operations, what are three mistakes that the
company made? Explain.
Answer: A mistake Euro Disneyland has made is the lack of understanding of the
French culture. The decision to offer wine in Euro Disneyland restaurants was
essential to meet the needs of this French culture. Another mistake of management
was the lack of communication with the French farmers, politicians, villagers, and
even bankers. A third mistake was excessive pricing for admission into the park,
hotels, and food purchases. This investment became a cultural Chernobyl. It was
characterized as American provincialism. The French outcry was, “Disney go
home!” French prefer a more Victorian style to the theme park. Expatriate managers
were hired to fill top management positions, where French managers should have
filled those positions.
7-26
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
4. Based on its experience, what are three lessons the company should have learned
about how to deal with diversity? Describe each.
Answer: The lesson that management has learned is to understand the need of
marketing research. Euro Disneyland ignored the data supporting the concept of
Main Street U.S.A. Instead Eisner introduced a more ornate and Victorian theme in
Euro Disneyland. Food menus offered at Euro Disneyland were American;
however, an attempt to tone down seasoning of foods was implemented. It is
important to understand food consumption patterns, and preferences of various
multi-market segments throughout Europe. Management should have adapted
restaurants to tastes, preferences, customs, and practices of the French culture. A
handbook of detailed rules on acceptable clothing, hairstyles, and jewelry, among
other things, embroiled the company in a legal and cultural dispute. Critics asked
how the brash Americans could be so insensitive to French culture, individualism,
and privacy. Disney officials insisted that a ruling that barred them from imposing a
squeaky-clean employment standard could threaten the image and long-term
success of the park. The physical environment in Paris is much different from
Disneyland or Disneyworld which have a warmer climate. Management should
have recognized that fireplaces would create a warmer atmosphere and should have
been part of the initial design. Finally, the preopening menu of spare ribs to be eaten
without silverware should have been reconsidered. The French like to use
silverware when they eat.
Answer: With its large population, and relatively low number of theme parks, Asia
is a tremendously attractive location for Disney. Already, the company has been
successful in Tokyo. While its park in Hong Kong has been less profitable, the
company believes that further expansion into the region is worthwhile. However,
the company faces a number of cultural challenges that must be overcome.
Certainly language poses a problem for the company. At Hong Kong Disneyland,
for example, the company has chosen to be trilingual. In addition to dealing with
language differences, Disney must also tailor other components to meet the local
needs. The Hong Kong location includes more covered space to allow people to
enjoy the park without dealing with the region’s rainy weather, special gardens for
picture taking that appeal to the preferences of tourists visiting the park have been
created, and the menu has been adapted to local preferences. Plans for the Shanghai
location will incorporate Chinese cultural features as well as more traditional
Disney themes.
7-27
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
2. How do cultural variables influence the location choice of theme parks around the
world?
Answer: Disney’s parks first and foremost promote Disney characters and themes.
Visitors to the parks want to experience the Magical Kingdom. In Asia, Disney has
encouraged acceptance and desire for all things Disney by exposing the population
to its characters, films, and other products over time. This type of strategy
facilitates the company’s efforts to then market its theme parks and reduces the
need to customize its products and services. Disney does adapt some aspects of its
park to meet the needs of locals, but is committed to standardizing other elements
across cultures.
3. Why was Disney’s Shanghai theme park so controversial? What are the risks and
benefits of this project?
Answer: Disney’s Shanghai park has been slow to get off the ground. Disney was
initially attracted to Shanghai because of its commercialization and
industrialization, and because it was relatively easy for large numbers of people to
get to. However, government corruption slowed progress on the park, and it was
formally put on hold in 2006. In 2009, Disney once again explored the potential for
the park, this time presenting it as an opportunity for China to be the recipient of
significant investment and new jobs. While Disney appears to have gotten the green
light to go ahead with project, the company must still contend with an uncertain
economic and legal environment for investment as well as the potential for cultural
problems. In addition, there is concern that a park in Shanghai could cannibalize
sales in the Hong Kong location, although Disney is currently downplaying those
concerns arguing that the Shanghai location will primarily attract a different group
of customers.
4. What location would you recommend for Disney’s next theme park in Asia? Why?
Answer: Many students will probably suggest that Disney explore the potential in
Singapore. Singapore has been a target for significant foreign investment over the
years, and offers a relatively welcoming environment in which to do business. In
addition, because of the Western influences that already exist, the population may
be more open to a Disney style attraction. Singapore also attracts nearly 10 million
tourists each year, and is close to the more populous regions of Indonesia and
Malaysia. Other possible locations include Malaysia or South Korea.
7-28
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
Answer: Walmart began its international expansion in 1991 when it opened its first
store in Mexico. Canada followed in 1994. By 2010, Walmart had operations in 14
countries outside the continental United States, and Walmart International was a
$100 billion business. Walmart chose Mexico as its first international destination
because of its large, growing population, as well as its proximity to the United
States. In addition, Walmart was cautious about its prospects in Europe where the
market was highly competitive and mature. While counties like China shared some
of the characteristics as Mexico like large, growing population, they were also more
distant both geographically and culturally.
2. What cultural problems did Walmart face in some of the international markets it
entered? Which early strategies succeeded and which failed? Why? What lessons
did it learn from its experience in Germany and Japan?
Answer: Walmart’s international expansion has not always been easy. While its
ASDA acquisition in the United Kingdom was relatively successful, the company
met with tremendous resistance in Germany and later pulled out of the country
altogether, and in Japan, it faced a number of challenges before it saw signs of
success. Walmart tried to duplicate its successful U.S. model in Germany, but
found that it did not work there. The chain it had acquired, Wertkauf, had stores
that were geographically distant and often in poor locations, and the U.S. managers
it installed to run its new operations made a number of cultural gaffes. In addition,
Walmart faced strong competition from local companies Aldi and Lidl which had
much more market power than Walmart. In Japan, Walmart found that consumers
equated low prices with inferior products. Moreover, Walmart’s strategy of selling
large-sized packages did not suit the needs of Japanese consumers, most of whom
had limited storage options. Walmart also had to contend with wholesalers who
typically brokered deals between buyers and suppliers taking a cut of the profits
along the way. Walmart’s entry into Mexico was marred by extensive bribes, a
practice apparently concealed from the U.S. headquarters. Both the SEC and the
Justice Department are investigating. As a result, Walmart has created a new
executive position to ensure that all Wal-Mart employees are complying with the
U.S. Foreign Corrupt Practices Act.
7-29
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Chapter 07 - Cross-Cultural Communication and Negotiation
3. How would you characterize Walmart’s Latin America strategy? What countries
were targeted as part of this strategy? What potential does this region bring to
Walmart’s future global expansion? What cultural challenges and opportunities has
Walmart faced in Latin America?
4. What group of countries will be targeted for Walmart’s future growth? What are the
attractiveness and risk profiles of these countries? What regions of the world do
you think will be vital for Walmart’s future global expansion?
Answer: Walmart will be focusing on the BRIC countries of Brazil, Russia, India,
and China for future growth. China in particular is very attractive. In 2010, the
company indicated that it would speeding up its expansion into the country and that
it anticipates that in the future China will have the most Walmarts of any country in
the world. Walmart’s presence in China has been facilitated by the country’s
membership in the WTO, and now at least one of its stores is recognized as a tourist
destination. Competition is stiff in China, but Walmart has been following a
strategy similar to the one it has used in Latin America and has been buying smaller
chains as well as offering expanded services. Brazil is another large market that
Walmart would like to develop and is attractive not only because of its growing
population, more advanced infrastructure, and wealth creation, but also because it
lacks some of the barriers to foreign investment that are challenging Walmart in
India and Russia. India’s limits on foreign retailers are making it very difficult for
Walmart, which is currently approaching the market through partnerships with local
companies. Corruption in Russia is an additional concern for Walmart. Finally,
Walmart is in the early stages of exploring the potential in South Africa. At the
moment, the company would face only limited competition in the market, as chief
competitors Carrefour and Tesco have no presence there.
7-30
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Cross-Cultural Communication and Negotiation
5. How would you characterize Walmart's response to pressure for greater ethics and
social responsibilities in its expansion strategy and supply chain? Are its responses
appropriate and adequate?
After its entry into Mexico was marred by a pattern of bribes that headquarters were
not aware of, Walmart has created a new executive position to ensure that all Wal-
Mart employees are complying with the U.S. Foreign Corrupt Practices Act.
Students will probably note other problems and will have a variety of opinions on
Walmart’s ethical responsibility in relation to the problems noted in the article and
the others raised in class.
7-31
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Another random document with
no related content on Scribd:
—Daa’s net! t’jonge … doar lait ’n lekker hoekie wind
hier! Sel d’r bloase hebbe f’murge, toen Ant d’r hier
plukt hept. Se waa’s d’r ook soo meroakels koud, dat ’t
waif hep stoan bibbere aa’s ’n koors hee? Se hep d’r
de heule murrege mit main jas anloope! Op ’t pad
hebbe se d’r aige naskraiuwt: Lamme Krelis! làmme
Krelis!
—Aa’s wai dá’ weertje nou d’r moar houê, riep ouë
Gerrit in ’t voorbij gaan tegen Dirk.
[Inhoud]
IV.
En die Piet! hep d’r nog acht sint moakt! Waa’s d’r
puur ’n meroakel! hoho! aa’s die noar stad gong.…
waa’s ’t alletait ’n kwart meer aa’s Dirk, die krek vaif
sint hoalt!
Ouë Gerrit wist zich niet goed meer te roeren. Dirk gaf
’m eerst na den grootsten worstel, de ontvangen
guldens uit den zak. De Ouë kromp van angst, als ie
’m dronken van den marktdag zag den dorsch
inschommelen, angst dat ie den heelen boel zou
verzopen hebben, of verspeeld. En als ie dan maar ’n
kik gaf, blafte Dirk hem nijdig tegen z’n hielen, dat ie
schrok, en afgebluft loenschte. Piet gaf alles dadelijk,
al gapte ie ’r later weer van weg voor de zuip, maar
Dirk hield de duiten in z’n ijzeren knuisten heet
gevangen.—Dan eindelijk, moest ie na z’n verbluffing
opspelen, schreeuwen, stompen en beuken in
bloedspuw van nijd, en traag ging de klepzak dan
eindelijk open, klefferden de morsige dubbeltjes,
kwartjes en centen naar buiten, naar hèm toe, onder
één grom en snauw. Ging hij natellen dan vloekte Dirk.
„Tel aa’s je je koarsies uitbloast”, hoonde die, en
sarrend liet ie ’m zien de notities, wel wetend, dat ouë
Gerrit toch niet lezen kon, ’n letter zoo groot als ’n
paardekop niet.—
—Gerrit goan d’r bai s’n bulle waif, sain bulle waif!
hoho!