Morale was high at the Florida based construction & contracting company. They had just been invited to join a consortium of companies that had pre-qualified for a big public works tender in the Near East. The lucrative offer had come via e-mail. After concluding the initial round of correspondence with their counterparts in Naimistan, a two man team made up of a senior engineer and a business development executive flew to Naimistan to meet up with their potential partners and sign the consortium agreement. Communicating across cultures can be extremely difficult. What the beginning is for one culture can well be the end for another.

1. Copyright Jim Kayalar 2013 Page 1

2. The Challenges of Succeeding in International Business
An Asian Case Study
Jim Kayalar, DBA (ABD), MBA
Morale was high at the Florida based construction & contracting company. They had just been
invited to join a consortium of companies that had pre-qualified for a big public works tender in
the Near East. The lucrative offer had come via e-mail. After concluding the initial round of
correspondence with their counterparts in Naimistan, a two man team made up of a senior
engineer and a business development executive flew to Naimistan to meet up with their
potential partners and sign the consortium agreement.
The cross Atlantic trip had gone well, and they had been well received by their hosts at the
airport, taken to their hotel and were pleased to see that a well planned itinerary awaited
them. Two mid- level managers took them out to dinner that night, and a jovial relationship
was established.
The next day, still dazzled by the late night and effects of jet lag the Florida team met with the
senior executives of the consortium and gave a strong power point presentation as to their
capabilities, past business performance and key deliverables. Everyone was all smiles at lunch,
and things were very cordial in the afternoon during the contract negotiations. The US team e-
mailed the tentative consortium agreement for final approval to their Florida offices late in the
afternoon and were treated to a special evening of entertainment and fine dining "Asian" style
by the corporate execs. Nothing was off limits they were told. They could have any and all
forms of entertainment that night, whatever their hearts and minds pleased.
Next morning, they had received confirmation from the legal department at corporate
headquarters that the agreement was acceptable and that they could go ahead and sign. The
agreement was signed, pictures were taken and small gifts were exchanged. After having
generated so much good will in such a good time, it was decided that the new consortium
partners should visit the government office which was organizing the tender in order to
introduce the U.S company. You had to build relationships before you could do business they
were told.
Up until that time, the whole process had been extremely professional. The meeting with the
local government authorities went ahead as planned, but it was not possible to gauge the
results of the meeting from the U.S. company's point of view. They had also received some
conflicting news from the government officials. The pre-qualification for tender that had been
won by their new business partners had apparently been cancelled and the process would start
over again.
Copyright Jim Kayalar 2013 Page 2

3. Their new partners assured them that this was a normal occurrence for this part of the world.
Other disturbing news started to trickle down as comments of the need to make facilitation
payments arose. The U.S team automatically countered with their need to abide by the Corrupt
Foreign Practices Act, but their hosts assured them that it would be they who would take care
of things, not the American's, but that the American's should know that such a arrangements
existed and were a part of everyday life if you wanted to do business in this part of the world.
The trip was concluded with a lavish good bye dinner and further entertainment, "Asian" style.
The team was in a jovial mood when they arrived back in Florida and were congratulated by the
CEO for their accomplishment.
Their Asian counterparts meanwhile prepared for the new pre-qualification process and asked
for intensive documentation. A joint project team was established for the project and earnest
work commenced to supply their consortium partners with the necessary materials to win the
pre-qualification bid. At the same time hints that certain facilitation expenses were being made
to government authorities were being relayed to the American company over the phone. But,
never in writing. After a while, these vague remarks became very much clearer as their foreign
partners started to talk numbers.
The US stance was the same. We cannot be involved, we don't want to know about it.
Two months after the signing of the consortium agreement, the new pre-qualification bid was
held, and their consortium failed to qualify.
Their Asian counterparts blamed them in part for not assisting them in paying up the facilitation
fees, and claimed that they would have won had the size of the payment been larger! They
vowed to have the pre-qualification tender cancelled and the process renewed once again.
Surprisingly within two weeks they had actually managed to do just that and the tender process
was restarted. This was apparently a business tactic that was used frequently to disrupt and
delay the tendering process.
But by this time, the American company had lost faith in their partners having allocated
resources freely against the promise of lucrative rewards and had decided to withdraw from
the project.
The Asian partners accused the American's of being short sighted, inflexible, and shallow. The
American's accused the Asian's with being untruthful, slow, and not results oriented. Both sides
threatened each other with law suits and asked for damages. Lawyers wrote letters back and
forth, but even they had problems communicating. Both sides refrained from going to court
because the cost of litigation would have been too expensive, but wrote letters of complaint to
their respective embassies.
The culture gap between the companies had played an important role in how this project went
bad. Communicating across cultures can be extremely difficult. What the beginning is for one
Copyright Jim Kayalar 2013 Page 3

4. culture can well be the end for another. If you enjoyed this case study please review some of
the other cases by Jim Kayalar which come with instructive teaching notes.
Academic Publications by Jim Kayalar
Jim Kayalar's Academic Publications distributed in North America by Aspen Institute, Harvard
Business Review & Ivey Publishing. In Europe by CCMP France & ECCH United Kingdom. In Asia
by National Chengchi University, Taiwan.
1. Mount Rundle Hotel Banff: A service delivery failure in the Mount Rundle
Hotel escalates into a full-fledged confrontation between hotel management
and the customer. The hotel general manager has an inward focus and is more
intent on managing internal company systems and processes than catering to
customer needs. The delay in responding effectively to the service failure leads
to the involvement of the Better Business Bureau of Alberta, the Banff Lake Louise Tourism
Development Board and the Banff mayor's office. Read More:
2. Regal Carnation Hotel, Guam:In the spring of 2007, a vacationer is upset by
the poor hotel experience he has had on the island of Guam. At the onset, the
reasons for the bad experience seem to point to seemingly minor issues: bad
management, poor service and old rooms. The value of the case lies in the
analysis of the symptoms and arriving at the root causes of the problem,
particularly the profit maximization strategy of the hotel's owners in a mature industry. The
case uses a different method of analysis, starting with micro indicators and moving to macro
indicators: the analysis of symptoms, arriving at root causes, determining company strategy and
finally assessing the company's position using the Product Life Cycle Model. Read More: Now
Featured on Harvard Business School Hospitality Curriculum: Read More:
3. Guam Visitors' Bureau:The general manager of the Guam Visitors' Bureau, a
destination marketing organization, faces the challenge of running the island's
tourism industry. There are strong interest groups, who have structured the
competitive field in Guam, and the island's mature industry faces ever-
increasing competition from rival destinations. The general manager must
formulate a realistic strategy that acknowledges the internal and external constraints his
organization faces and safeguards the competitive position of Guam. Read More: Now
Featured on Harvard Business School Hospitality Curriculum: Read More:
Copyright Jim Kayalar 2013 Page 4

5. 4. Pro Clean Tennessee: The owner of a carpet cleaning operation in Tennessee
is urgently looking for solutions, after his business expansion project has failed.
The owner has emulated the business model of a well-established competitor,
hoping that what has worked for his competitor would also work for him. The
business is churning cash fast as a result of the additional cost of personnel and equipment and
could face bankruptcy in the near future. Read More: Special Citation: Pro Clean, Tennessee
chosen by Harvard Business Publishing, Teaching Materials Newsletter 2009, in the field of
Competitive Strategy & Entrepreneurship. Read More:
5. MIA, Philippines: The newly appointed country director of MIA Philippines, a
non-profit organization with a mandate to alleviate poverty in developing
countries, is faced with the challenge of designing and managing a development
assistance project that would establish a go-to-market supply chain for a remote
Filipino fishing village. The country director has to enter a new country, launch the project, deal
with the constraints of a foreign culture, manage the expectations of major stakeholders whilst
trying to manage a multi-cultural team and conclude the project on time. The value of the case
lies in the realistic assessment of stakeholders' motivation, their capabilities and assets, and
project constraints during the design and implementation stages. Value chain analysis, value
added analysis and stakeholder analysis are used to assess the applicability of project design,
impact and long term success. Read More:
6. Otoyol Motor Company: Otoyol Motor Company, a large commercial vehicle
manufacturer, is on the verge of being liquidated by its shareholders. Despite all
efforts to maintain its competitive position, the company has been caught in a
downward spiral. Erosion of its first mover advantages, shifts in industry core
competencies and changes in consumer preferences have depreciated the company's value
proposition and deteriorated its market share. Utilizing empirical data, this case illustrates the
evolution of the commercial vehicle industry in Turkey, changes in industry conditions, and
competitive strategies employed by the incumbent and its Japanese rivals in various life cycle
stages. Puppy dog ploy, market penetration, product strategy, long term market share
acquisition stratagems employed by challengers, and the incumbent's counter moves are
chronicled. Read More:
Copyright Jim Kayalar 2013 Page 5

6. 7. Bon Star Hotel: A management consultant is dispatched to a Central Asian
Republic to conduct an operational analysis of an underperforming hotel.
Initially the objective of the assignment is to turn around the business. The
scope of the intervention, however, changes dramatically as the consultant
finds himself in the midst of a high stakes stakeholder standoff with numerous
parties vying for ownership of the business. Based on an actual consulting assignment, the case
will present insight into the management consulting profession, relay a realistic account of the
onsite operational analysis and business audit process, and impart the challenges managers and
entrepreneurs confront in international business settings. Read More (English): Read More
(Chinese):
8. The Generics Pharmacy: The price of pharmaceuticals in the Philippines is
second only to Japan in Asia and one of the highest in the world despite the
Philippines being a less developed country and nearly half of its population living
on US$2 a day. The case illustrates how The Generics Pharmacy a local
pharmaceutical company challenged the existing industry business model and became the
largest pharmaceutical retailer in the country within a period of only three years. Under the
strategic leadership of CEO Benjamin Liuson, The Generics Pharmacy succeeded in formulating
a superior value proposal by focusing on the supply and demand side constructs at the bottom
of the pyramid and bringing affordable high quality medicines within reach of low income
individuals. Superior leadership, management and strategic initiative succeeded in integrating
and balancing tenets of corporate social responsibility, entrepreneurial foresight and resource
based strategy to catapult the company into a leadership position. Read More (English): Read
More (Chinese):
9. We Are So Sorry: Sedang Premier Resort: North American and European
branded hotel chains in their quest to maximize shareholder wealth have
recently shed ownership of assets and freed up capital to focus on their core
businesses with the help of strenuous contracts. The ensuing pursuit of further
business development has expedited the internationalization process and a
new business model of franchising the brand/value proposition in international locations has
evolved. Globally accepted brands hold the promise of global quality. It is widely believed that
Western brands deliver more value than brands from emerging nations, such that they can
charge global prices to global customers. Service delivery failure is encountered frequently in
the accommodation and food services industry. Such failures can act as an important
performance measurement criteria. Managers are taught how to recover from service delivery
Copyright Jim Kayalar 2013 Page 6

7. failure and address loyalty issues of existing customers. They fear losing them as the cost of
acquiring new customers may exceed the cost of keeping existing customers. The case
illustrates how a globally branded North American hotel chain disregarded the basic tenets of
maintaining the global brand promise, ignored generally accepted North American customer
service standards, failed to instigate delivery failure recovery and leveraged firm specific
capabilities to maximize shareholder wealth. The reaction of the local counterpart, the reaction
to countermand the imbalance in the ensuing business relationship and adaptation of the value
proposition are told from the perspective of a vacationing couple that experienced the diluted
brand firsthand. Read More:
10. Wujiang Motor Company: Wujiang Motor Company a large cash flush
Chinese commercial vehicle manufacturer is getting ready to realize its first
overseas acquisition in Europe. WMC is assessing the purchase of Hispano
Commercial SA, a shuttered commercial vehicle operation in Spain in its quest
to expand its overseas operations in light of the surplus manufacturing
capacity in its domestic market. WMC plans to break into the European
automotive market and use Spain as a stepping stone to launch its foray into the American
market place. The case can be best used in a strategic management, mergers and acquisitions
or operational analysis class.
11. The Fish Whisperer: This case depicts the start-up and business
development challenges faced by a streetwise entrepreneur who has
invented a unique fishing rod. The capabilities necessary to invent, prototype
and bring to market a limited quantity of product versus the challenges of
larger scale product commercialization and managing a growing business are
illustrated chronologically. The case primarily addresses why some
entrepreneurial ventures succeed and grow to become large-scale corporations whereas others
stay small and insignificant and why a majority of entrepreneurial initiatives eventually fail.
Indigenous constructs such as entrepreneur and organization specific factors and exogenous
constructs such as industry, location and time specific factors that may predetermine the
outcome of an entrepreneurial venture are illustrated. A business plan, which has attracted
angel investment, is presented for critical assessment. The background storyline subtly depicts
that all businesses, regardless of size, face resource constraints and trade-offs and that
managers must continuously adapt and upgrade their business models, competencies and
management style to match the evolving threshold market standards. Read More:
Copyright Jim Kayalar 2013 Page 7

8. 12. Green Hills Hospital - Leading Change Management: Performance
measurement research indicates that most organizations actually destroy
rather than create value as a result of their operations. The new global
competitive order requires that organizations adapt, change and restructure
business models quicker and with less mistakes than ever before in order to
maximize value for shareholders. Most organizational change initiatives only deliver subpar
results necessitating yet further rounds of restructuring initiatives which destroy yet further
value and negatively impact the organization. Private healthcare has become a lucrative
business and the Hippocratic oath "Primum non nocere" (First do no harm) may be eroding to
be gradually subjugated to "Primum lucrum" (First make profit). The case presents a change
initiative at a large healthcare facility that aims to maximize shareholder value by introducing
lean healthcare. Whereas change management performance can be measured in financial
terms, what happens when a mishandled change initiative starts to endanger the lives of
patients and change starts to kill? Read More:
Books
Marketing Strategy: Standardization and Adaptation
Practices in the Commercial Vehicles Industry
The globalization of markets has disrupted the existing status quo,
delineated the first mover advantage of incumbents and their
entrenchment strategies. Changes to the auto industry have been
especially drastic in the traditional North America and European markets
where the very existence of industry icons, such as General Motors, Ford
and Chrysler have come into question. Japanese manufacturers with
their seemingly unbeatable innovative approaches to time-to market,
process and product design have achieved superior performance
standards and taken global leadership. A new era of competition is on the auto industry
dictating the way value is created for customers and shareholders. Incumbent firms with
decades of heritage and legacy must adapt to the new competition or be faced with a grim
future of gradual decline. This book utilizing a resource based perspective analyzes how
competition between American, European and Japanese companies evolves historically in
emerging market settings, illustrating competitive marketing strategies and the use of
standardization and adaptation practices in the pursuit of competitive advantage.
Now Available on Amazon
Copyright Jim Kayalar 2013 Page 8

9. Visit my blog at:
http://www.provisium
.com
Jim Kayalar, DBA(ABD), MBA is a C-Level executive, management consultant, Professor of business
and Internationally published author with over 25 years of business expereince in 28 countries and
has over a dozen publications distributed by Aspen Institute, Harvard Business Review, Ivey
Publishing, CCMP France, ECCH England, National Chengchi University Taiwan and numerous other
publishing houses.
Contact Us:
Web: http://www.provisium.com
Email: info@provisium.com
Linkedin: http://www.linkedin.com/in/jimkayalar
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Copyright Jim Kayalar 2013 Page 9