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The document discusses several examples of how cultural differences can impact business if not properly understood or considered. It provides examples of companies that encountered issues by failing to account for cultural norms in areas like product names, marketing images, and business practices in other countries. The document emphasizes the importance of understanding differences in areas like communication style, etiquette, work-life balance, and gender relations to avoid missteps when conducting business globally.
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- 1. W INTERCULTURAL CHALLENGES HOW TO COME TOAN AGREEMENT For Asian companies in partnering with European companies Christian Hofer
- 2. DINNER at home likea case study on intercultural differences • American wife • Trilingual Children: speaking German at dinner, English with my wife and French with each other How did I learn about cultural differences ? BUSINESS TRAVEL CONSULTING Germany, Hungary, Czech Republic, Poland, Russia, Denmark, Sweden, Finland, England, France, Italy, Spain, Switzerland, US, Pakistan, Thailand, South Korea, China, Thailand, Japan, Hong Kong, Singapore Worked in different countries and in different corporate cultures. Necessity to manage differences between companies, Divisions and even teams
- 3. ABOUT ME Personal info andbackground WHY? Importance of understanding differences HOW? Understanding the concept of cultural differnces OH NO! Corporate „bloopers“ PERSONAL Examples of interpersonal nature BUSINESS Examples of corporate nature MACRO Examples of rules & regulations AHA! How to prepare FULL CIRCLE Understanding and applying What is the road that we are going to travel together today and where will it take us?
- 4. Despite the Euro wecannot see Europe as one homogenous zone – vast differences exist Cultural differences may not be as visual as in the picture but in daily life you will find them quickly They effect everything from personal interactions to how people think and act and finally to laws und regulations Not knowing them or ignoring them exposes you to the risk of failed relations and missed business opportunities Doing business in “Europe” ? Treat Europe as one homogeneous market at your own risk! Stereotype or truth?
- 5. SEEMINGLY SMALL THINGS CAN CREATE SIGNIFICANT ISSUES Businesses are becoming increasinglyglobal exposing them to new cultures/issues Some people, even corporations are ignorant to the cultural differences and the impact they can have We must not judge from our own perspective, but rather think how other people might perceive our behavior Ignorance can easily destroy your personal and corporate image in the eyes of your business partner Why is the knowledge of intercultural differences so important for today’s business ?
- 6. Ignorance You have noknowledge that any differences exist at all “Bad surprises” Limited awareness You know that differences exist but have very limited knowledge – you just know that there is an issue but cannot quite understand it Limited competence You know some of the differences and try to adjust your behavior. It does not come naturally yet. You have a feeling for how you come across Subconscious competence Cultural appropriate behavior is second nature to you. You can trust your instincts The 4 stages of intercultural awareness
- 7. What aspects ofbusiness are cultural differences affecting ? Long vs. short term thinking Table manners Personal space Greeting people and saying goodbye Body language and eye contact Communication style Language barriers Negotiation tactics How to motivate people Feedback and coaching Target setting Meetings and presentations Corporate cultures The role of government Sexual harassment Environmental laws Labor laws and unions Data protection Buying and selling businesses Regulations Accounting standards Macro levelBusinessPersonal
- 8. When to sitdown? Protocol on who sits where? Wait to be seated? Men besides women? How to use knife and fork? Finish everything on plate? Asking for more? • Wait for the host’s toast before drinking • Lady of the house puts napkin in lap first • Place bread on tablecloth or bread plate but not on normal plate • Tear bread into bite sized pieces • Leave your hands above the table • Pour wine glasses only ¾ full FRANCE • Remain standing until told where to sit • Look people in the eyes when toasting • Do not begin eating before the host • Everything on plate should be eaten • Fork in left hand and knife in right hand without switching like in US GERMANY Elbows on Table? Hands above or below table? Placing your napkin in lap? Conversation during dinner? Business during dinner? How animated? Cross cultural dining etiquette Personal
- 9. Carrying yourself andbody language • Ok to give and receive things with whichever hand is available (right is better) • Stand straight up - bowing is not necessary • When you greet someone look them in the eyes • When you speak with someone look them in the eyes • When you toast someone look them in the eyes • This is irrespective of status and seniority • Otherwise you appear insecure and insincere EUROPE GENERAL • Very animated while speaking • People will judge you on how you carry yourself (“Bella figura”) • Appearances are very important • Smaller personal space ITALIANS • Appearances are very important • Fashion conscious like the Italians • Smaller personal space • Language and logic is very important FRENCH • Quite reserved/private and not very animated • Don’t show emotions - “stiff upper lip” • Bigger personal space BRITISH Personal
- 10. Greeting & sayingGood Bye • Handshake is quick and firm • Generally rather formal • Last name and title • Slight bow of the head • Wait for host(s) to introduce you • Some kissing on cheeks for younger generation • Differences between South and North GERMANY • Handshake is light • Generally rather formal • Last name and title • Even casual acquaintances kiss on cheeks • Usually 2x but 3x in Provence, 4x in Nantes and only 1x in Finistere • Good male friends kiss on cheeks as well • Old fashioned – kissing a woman’s hand FRANCE • Firm Handshake • “How do you do?” as question and answer • In business highest rank meets others in order of their position • No touching and kissing • First name basis is more common – like in the US UK Personal Shaking hands vs. kissing
- 11. Importance of food •Business lunches are preferred to dinner; if dinner then relatively late • Eating (well) is a priority in France • Business is not supposed to be discussed – establish a personal relationship • Several courses • Wine served with lunch • The person inviting is expected to pay • Be careful about adding salt, pepper and ketchup FRANCE • Dinner discussion often turns to business – not much small talk in Germany • No business decisions made during meals • Don‘t expect to be taken out every night – Germans clearly separate business & private life • Entertaining is not often at peoples homes • The person inviting is supposed to pay • For private invitations don‘t expect to be served GERMANY • Food scene is one of extremes • High likely hood to be invited to a private dinner party • Dinner is mostly for sociable or celebratory entertaining • Business entertaining in restaurants, pubs and cafes • Invite people of the same background /professional level • Business culture is informal – often socializing in pubs UK
- 12. cultural differences BRITAIN, AUSTRALIA, NEW ZEALAND,MALTA: Up yours! USA: Two GERMANY: Victory FRANCE: Peace WESTERN COUNTRIES: Number 5 EVERYWHERE: Stop! GREECE AND TURKEY: Go to hell! EUROPE: Two BRITAIN, AUSTRALIA, NEW ZEALAND: One USA: Waiter! EUROPE AND NORTH AMERICA: OK MEDITERRANEAN, RUSSIA, BRAZIL, TURKEY: insult; sexual insult TUNISIA, FRANCE, BELGIUM: Zero; worthless Be careful signalling with your hands or you will run into troubles Personal
- 13. Alcohol and Tobacco •Wine is the most widely drunk alcoholic beverage • You can expect to be served wine at business lunches • The French drink responsibly • If bringing wine to a dinner party it should be foreign • Many French smoke • Smoking is illegal in all enclosed work places FRANCE • Alcohol consumption is amongst the highest • Drinking culture includes also business (dinners) • Hard liquor (Vodka) is one of the favorite drinks • There is considerable peer pressure to join drinking • A limited smoking ban was just introduced RUSSIA • Beer is the most widely consumed drink • Alcohol consumption is amongst the highest • No need to drink during lunch but at dinner there is some “pressure” to join in • When invited to a pub buy a round of drinks • Smoking is illegal in all enclosed work places UK
- 14. Differences in communicationstyle • Direct and factual • Not much small talk • Put truth and directness before diplomacy • Speak up • Get straight to the point • Not much humor in business – there is a place and time for everything • Very diplomatic language • Non confrontational • Use of first names • Equate directness with open confrontation • Humor is persuasive in business; especially to diffuse tensions • Better to be self deprecating then self promotional GERMANY • Form is very important • Love for elegant use of language • Moving process forward by drawing distinctions – might appear controversial • Interruptions are accepted part of business etiquette • Admire logical, well defined ideas UKFRANCE
- 15. I Sales people wereembarrassed to learn that “Fresca” is slang for "lesbian.” REASON Animals are considered to be a form of low life and no self respecting Thai would wear anything worn by animals “Matador” meant “Killer” which was a bad omen considering the country’s treacherous streets It had to be mixed with water, needed to be sterilized, poor mothers where using less then prescribed – leading to malnutrition and poor health SOFT DRINKS The soft drink Fresca led to lots of laughter in Mexico. EYE GLASSES An international manufacturer failed trying to promote its products in Thailand by advertising featuring cute animals wearing glasses. CARS American Motors failed with its new car called “Matador” in Puerto Rico. IMPACT OF CULTURAL DIFFERENCES Examples of companies that got into trouble because they did not consider cultural differences (1 of 2) INFANT FORMULA Nestle was boycotted for promoting it’s infant formula in Africa.
- 16. Dealing with theother gender • Men earn about 40% more then women (20% pay/hour and 20% more hours) • Many women work (80%) • France is a much more „flirty“ culture including kissing on cheeks and generally appreciating the other gender • Business women may invite a french man for lunch or dinner and have no problem picking up the bill FRANCE • Women should extend their hand first when greeting • Men should hold a door for a women and stand when a woman enters the room • British like their personal space • Hugging, kissing and touching is reserved for family and very close friends • For women: Don’t be insulted if called love, dearie, or darling. These are commonly used UK • More traditional picture of women in society • When introduced to a women wait if she extends her hand • Men should walk to the left of a women • Traditionally a men should go ahead of a woman when entering a public space • Don‘t be offended when „he“ or „she“ corrects your behaviour – policing each other is a social duty GERMANY Business
- 17. Differences in feedbackand coaching • Society is factual and very to the point • Feedback is tough, critical and to the point • You don’t single out specific accomplishments or offer praise unless it is truly extraordinary • German professionals expect high-level, expert performance GERMANY • Feedback is difficult since it is a diplomatic and non- confrontational culture • Almost a third of employees never get feedback • Almost 50% give their bosses low people management skills • Feedback is hidden in diplomatic language UK • Steep hierarchies make 360° and upward feedback ineffective • If it is part of a performance appraisal system the system must be approved by the works council • High number of French employees are disengaged • Recognition, praise and caring is not natural to the (business) culture FRANCE Business
- 18. Disgruntled employees Loss ofkey staff (Head of R&D) Delayed product launches Layers of bureaucracy Cost overruns and inefficiencies Ouster of CEO PROBLEM IMPACT Case Study 01 WHAT DID UPJOHN DO? SITUATION • Upjohn Company of the US and Pharmacia AB of Sweden (ops in Italy) merged in 1995 • Upjohn more dominant • US scheduled meetings in the summer • Implemented non-smoking, testing policies • Command and control management system • Strict reporting, budget controls, staffing updates • Very centralized, top down management • R&D HQ in London PROBLEM NATIONAL CULTURE CLASH Swedes : • Take off July • Open, team based management • Consensus behind decisions Italian's: • Take off August • Workers (unions) vs. managers • Value on Family (childcare, sick relatives)
- 19. Motivating in differentcultures • Competence is highly valued – superiors must understand what employee is doing • Dedication by superiors • Motivation does not always translate into productive action – hierarchical culture • Social events brings together and motivate people • Starting to use US style loyalty programs FRANCE • Many people are self motivated – commitment and loyalty are important • Money is important but not all • Good working conditions are expected • Factual culture: being clear and giving understandable targets is important • Praise is only expected for extraordinary things GERMANY • Education, experience and ability to maintain good office climate is valued in boss • Ability to communicate and interact is important • Concept of punctuality is rather relaxed • Subtle approaches are important – feedback in private • Social events are appreciated ITALY Business
- 20. Long term versusshort term thinking • Prefer to build up long term relationships • Don’t like a “hard sell” • Don’t like people going after a quick deal • Appreciate businesses that have grown over time • Younger generation is changing quickly though • Quite some public discussion about more short term thinking (cutting funds, financial institutions) UK • Generally very short term • Chasing next quarters profits • Pulling in sales from the next period to make this periods numbers and bonus • Sometimes short time profit taking on the expense of long term sustainable success • “Throw away culture” • Houses are bought to build equity or flipped for a profit USA • Germans have a planning culture so things are rather long term • The planning with several options should something happen and Plan B’s give a sense of security • High pressure tactics to get a deal quickly are counter productive • Houses are (often) bought for a life time GERMANY Business
- 21. PROBLEM Chrysler key executivesresigned or replaced Conflicting values, goals, orders Departments heading in different directions Share price collapsed in 4 years from 95 to 40 IMPACT PROBLEM SITUATION Merger of German Daimler with US Chrysler Was at its time one of the biggest and most famous mergers German “engineering company” together with a company with a huge distribution network IMMENSE CORPORATE CULTURAL CLASH Daimler: • Hierarchical, chain of command, authority • Conservative, efficient, safe • Reliability, highest quality • Dominant and imposing Chrysler: • Team oriented, egalitarian • Daring, diverse and creative • Catchy designs, competitive prices Case Study 02 1998 Daimler payed $ 38 Billion 2007 Cerberus payed $ 7.4 Billion
- 22. Language barriers andhow to overcome them • Be conscious about areas where small differences are important (negotiations, contracts etc.). • Hiring of a local service provider (attorney, translator) may be the safest route • A lot of people in management positions speak very good English BUT there are exceptions! • Avoid colloquialism and jokes – they often don’t “travel well” GENERAL • English language skills are generally very good • German communication is formal and people are suspicious of hyperbole • As the culture is direct you should answer yes or no – ambiguities are disliked • Be careful of jargon • Be specific GERMANY • While many managers speak English it tends to be weaker then in other countries and sometimes non existent! • Don’t use slang, colloquialism and difficult vocabulary • Speak slowly not louder • Learn at least a few words and key phrases and people will appreciate your effort ITALY Business
- 23. Importance of hierarchyin different countries • Most of the power is in the hands of a few managers • Large companies have a supervisory board which appoints the management board • The management board is the final decision maker on policy matters that affects management • Below the board strict hierarchical approach with roles and responsibilities tightly defined GERMANY • Very flat organizations • Non hierarchical • Collaborative decision making • Pay differentials between levels are very low • Structures defined to be pragmatic and to reduce interruption • Matrix management works well in Sweden SWEDEN • Rigid hierarchy and functionality with lots of power for PDG (CEO) • The PDG determines the future direction of the company • Vision is disseminated across the organization for implementation • Management style is directive and top down FRANCE Business When problems arise and flexibility, speed and quick changes are needed Openness of communication and freedom of information might look anarchic to you WEAKNESS LOOK OUT
- 24. IMPACT PROBLEM Japanese reluctant totake orders from “guests” Negative impact on overall efficiency Cross department communication was very weak Daimler refused to make any more investments IMPACT PROBLEM SITUATION • Daimler wanted foothold in Asia • Created an alliance with Mitsubishi • Ignored local practises and principles • Imposed their own terms MAIN DIFFERENCE WAS IN NATIONAL CULTURE German: • Strictly fact based, pragmatic, dry • Hierarchical, structured, clear authority • Giving orders • Dominant and imposing Japan: • Value personal relationships • Long term oriented • Were seeing German managers as guests Case Study 03
- 25. Differences in presentationstyles and techniques • Very factual and numbers oriented • Supporting details are very important – if not enough it weakens your argument • Putting truth and directness above all • Directness is seen as sign of respect and fundamental to finding correct solutions GERMANY • Formal presentations less used than in other countries • Presentations can seem stiff and academic • Usually smaller less formal meetings • Showing a lot of emotion and being theatrical gives importance to the issue • Being reserved can be misinterpreted as disinterest ITALY • Very important to start with details to show audience that you have mastered the subject – building credibility • Love and respect for elegance of language and sophisticated presentation of ideas • Admire logical well defined ideas • Drawing of distinctions is almost an intellectual goal FRANCE Business
- 26. Deal making in- don’t try to negotiate with a German like with a French • Small talk and building relationships are not priorities • Negotiations have to be supported by detailed evidence backing up your case • Decisions are not made based on sales technique or charm – cold hard facts! • Decisions are formed methodically • Do not try to rush or apply pressure GERMANY • Italians prefer to do business with someone they know – introductions are key to success • Negotiations are slow • Showing a sense of urgency is seen as a sign of weakness! • A typical tactic is to dramatically change demands at the very end to unsettle partners or test heir flexibility ITALY • More emphasis on relationship building • Direct, probing questioning • Negotiations can become passionate • Argumentation is a means to analyse your case • Avoid exaggeration • In a stalemate French will just re-state their position – it is up to you to take apart their argument FRANCE Business
- 27. Unfortunately it soundeda lot like a VERY vulgar word in several countries The firm received complaints from many organizations and individuals as it was the name of the gas used by the Nazi regime to murder millions of Jews in concentration camps CARS Honda had to rename a car called “FIT” in Nordic countries VACUUMS Electrolux, a Scandinavian manufacturer failed by promoting his product in the US with the slogan: “Nothing sucks like an Electrolux” FURNITURE Ikea, a Swedish furniture company advertised one of its workbenches in Canada as “Fartfull” Customers had a lot of fun embarrassing the sales people SNEAKERS Umbro the UK sports manufacturer had to withdraw its new sneakers called the Zyklon. Examples of companies that got into trouble because they did not consider cultural differences (2 of 2) REASONIMPACT OF CULTURAL DIFFERENCES
- 28. Business etiquette • Goodmanners and courtesy are prized in Italy • 15 minutes delay is normal • Small talk is important • Your conduct and the presentation of yourself has to be polished at all times • There are etiquettes and protocols for many situations • However, Italians rate considerateness above behavioral formulas • Dress to impress ITALY • Punctuality is important • Humour is sometimes part of business • Business is rather formal • Like to be rather understated in their communication • Feel most comfortable interacting at their hierarchical level • Older statesmen are very well respected for their aura authority UK • Punctuality is a serious issue • Don’t “waste peoples time” – be direct, short and to the point • Emotions and unnecessary content have no place in conversations • Small talk is to be avoided • Humour has generally no place in business • Meetings are functional and stick to an agenda with start and finish times GERMANY Business
- 29. The role ofGovernment in daily life and how it can impact your business • Government is heavily involved in many aspects of life • Nutrition for schoolchildren and vending of junk food is regulated • National mandatory healthcare of very high quality • 24 months unemployment insurance • Stepping in when firms want to close plants • Stepping in for mergers/take overs of or with French firms FRANCE • German federal Government plays a crucial role in the economy • Several ministries are involved (like Bundeskartellamt) • Government policies have wide ranging effects • National mandated healthcare supplemented by private insurance GERMANY • Government involvement is in between continental Europe and the US • It has mandatory national healthcare • Very limited unemployment benefits • Government is sometimes stepping in when there are takeovers of firms UK macro
- 30. Data protection standardsin different countries • The collection, processing and use of personal data are strictly regulated • Takes data protection extremely serious • Many organizations appoint a Data Protection Officer • German law is unfortunately not always clear • Failure to comply with the law can have significant ramifications GERMANY • Subject needs to give permission to the usage of data • Subjects can request to review and correct held data • Subjects can require that information may not be used for direct marketing • Data must not be transferred out of the EU unless country ensures protection for the rights and freedoms of data subjects UK • Allow users to understand the processing/use of their personal data • Define how long personal data will be retained • French authority launched enforcement action against Google (June 2013) • Increased inspections of organizations transferring data into and out of France • Coordinated action with 6 other countries FRANCE macro
- 31. PROBLEM Key personal stayedin JLR High motivation level Trust between the companies JLR was well integrated IMPACT WHAT DID TATA DO DIFFERENTLY? SITUATION Indian TATA acquired Jaguar Landrover (JLR) • Despite being acquirer it did not impose itself • Respected corporate and national culture • Left existing management structure in place • Motivated managers by giving goals and challenging them but also working with them • Help was given when requested • Statements that it was Tata’s responsibility to take care of JLR • Willing to make investments if needed • Tata visited JLR locations and requested feedback Case Study 04
- 32. Accounting Systems • Somewhatcloser to the US model but still stricter • Reports are geared toward sophisticated users rather then regulatory bodies • The auditors judge whether the statements demonstrate a "true and fair view” • “True and fair view” concept is broader then US GAAP UK • Banks heavily influence the accounting rules as they are the main investors • Accounting system is extremely conservative • Reporting system is geared toward workers and investors • Dividends are constrained because of strict requirements for significant reserves • Disclosure of vast amounts of information about firms (social reporting) GERMANY • The government is involved in the standard setting for accounting • Requirements for auditors are quite stringent • Executives can be held accountable for a firms bankruptcy • Accounting rules are very conservative • Apply the "true and fair view" like the British FRANCE macro
- 33. Cost of doingbusiness 45% 66% (up to) 47.5% UK GERMANYFRANCE 24%-20% (21% IN ‘14) 34% 30% UK GERMANYFRANCE 5.6 weeks (incl. Bank holidays) 9.5 weeks (worst case) 5 weeks (plus 9 public holidays) UK GERMANYFRANCE 21.9% 34.9% 31% UK GERMANYFRANCE Corporate Tax INCOME Tax VACATION LABOR COST
- 34. Cop What kind ofdue diligence should you do before any business trip? Research company and people you will meet. Opportunity to: • ask informed questions and amaze people • build good relationships Do you need a translator? Do you need specialized service firms (attorney, bank, consultans etc)?Business What is of interest to you? What do you want to get out of it? Be in control: • show your hosts that you are interested • tell them of personal time needed Think of loved ones at home Personal Visa required? Vaccination needed? Not needed for Europe! Weather - clothing Formality of culture General web research on peculiarities of culture „Look-outs“Basics Every trip is an opportunity to expand our horizon and learn something new!
- 35. GENERAL INTERNET INFORMATION GOVERNMENT OTHER SOURCES • Expatriate organisations •People having lived in that country for some time (info via Embassy) Where can you get information about specific countries and the peculiar differences in culture between them?
- 36. Bringing it fullcircle How you can succeed in a different environment • At first glance terribly complicated und frustrating • Difficulty of remembering behavior that go against who we are • Fear of making a mistake • Danger of appearing either uneasy, low on self confidence or fake SUMMING IT UP Treating Europe as one culture? Why knowing culture is important Stages of awareness Companies that got into trouble Case studies Details on country specific differences in many different categories
- 37. How to useyour knowledge of cultural differences to your advantage? • Age old truth: People prefer to do business with people they like • Being sensitive to their “quirks” will help you to be accepted as a trusted business partner • Since people like you it will be easier to meet outside of business and gain inside knowledge • You can understand people and know how to approach difficult topics • Where your competitors will give up you will persevere • You know how to succeed in the long term because you know how to make it work with local people GENERAL BUSINESS
- 38. How to useyour knowledge of cultural differences to your advantage? • Understanding people gives you the power to look through posturing • Knowing what to expect will prevent surprises • Understanding culturally ingrained behavior will prevent you from falling into negotiation traps • You suddenly have the power to fine tune your offer/presentation to make it more appealing to your counterpart • Do you have to be introduced via a business partner or does your offer stand on its own because of facts and figures? • Should you take it slow or try high pressure tactics? NEGOTIATIONS
- 39. Is there amagic bullet to help you solve this complicated understanding of differences? There is no magic bullet or secret recipe you can follow Accept that you will make some mistakes/ avoid the big ones Learn as much as you can about the country you will do business in Realize that things that appear bizarre to you will be just that way the other way around Pick out the things that interest you personally and show interest about it to your host – everyone loves to show off something about their own country Get trusted local help Show passion about the business rather then the money
- 40.