Entrepreneur Journal

Purple Gift Wrap, eh?: Doing Business Across Cultures

Scenario You are preparing a business trip to Italy for your Human Resource Managers. Prepare a five minute briefing about cultural differences and how important it is for them to take the cultural differences into account if they want to succeed on their business trip.

Cultural differences and cultural sensitivity will hold strong importance on business trips across cultures. Recognizing the difference through the following concepts will allow the team to effectively communicate information and build strong relationships:

1) Understanding the difference between high-context cultures and low context cultures;

2) Applying Hofstede’s power distance theory when comparing cultures;

3) Complying with the proper business etiquette in the new target market

Eighty-five percent of communication is non-verbal. Haptics, posture, and kinesics all contribute to the manner in which a message is conveyed and how an audience may perceive the message. Non-verbal communication can be intentional or unintentional. Different communication styles require consideration when communicating across cultures. Through building solid foundations on different cultural differences, one can become more successful in social interactions when in a new cultural environment. As you prepare for a business trip in a foreign country, it is essential the team acknowledges the cultural differences in order to fully take advantage of this market. Failing to recognize and adapt to differences may result in miscommunication, leading to incorrect assumptions. Miscommunication may also lead to your party unintentionally disrespecting your counterparts, or your party appearing overly aggressive or uninterested. Such interpretations may occur through the use of the use of slang, excessive use of gestures, poor dress sense, and indirect language. Exploring the targret market’s high-context culture or low-context culture will shed light on the major differences between the two countries’ communication styles. Understanding Hofstede’s main cultural dimensions, focusing on power distance will make certain differences more prevalent. The knowledge of common business etiquette will ensure operations flow smoothly during the business trip, allowing our team to build a strong relationship with your counterparts.

It is important to understand how the target market’s culture differs from that of the Canadian culture in terms of how ideas and thoughts are most effectively shared. Canada possesses a low-context culture. Low-context cultures tend to communicate in a manner which is concise and direct. Generally, the presentation of information will include well-researched facts to support a position, it will be clear, and will include limited use of gestures, long-winded explanations or examples, and indirect or implied messages. Evidence and support will include technical information and be based on logic and mathematical theories. Low-context cultures are associated with the western world. In comparison, high-context cultures will appear to look at situations through the perspective of a relativist. High-context cultures tend to communicate in a manner which may involve more indirect messages and implied messages. When the presenter is sharing information they may tend to share information with no clear implication. Positions will be supported on evidence which is based on emotions and feeling that are non-rational. The high-context culture is associated with the east. Seeing that there are major differences in the delivery of information, the Management Team will require to understand the perspectives their counterparts will have. As technical evidence involving mathematics and logic may not be as appreciated, therefore; less valuable, when presenting ideas, two perspectives require consideration: the emotional/intuition and rational side.

Hofstede created concepts in relation to relationships within organizations to better understand the self as well as others. Though the compilation of the data collected was from a corporate population, the finding very well relate to society at every level. The dimensions he studied included: Power Distance, Masculinity, Uncertainty Avoidance, and Individualism. For now, let us focus on the power distance dimension. Power distance measures the equality distributed amongst people carrying different roles in society on a hierarchical basis. For example, a boss and a subordinate. The data Hofstede complied shows that Italy possesses a value of 50, while Canada only, 39, illustrates Italy has greater power distance. In cases of high power distance, power tends to be greater at the top of the pyramid. Subordinates may feel uncomfortable addressing their boss by their first name and may feel uncomfortable having a informal conversation with the boss due to the inequality of status and power. In contrast, areas where power distance is less, power tends to be distributed more and groups members tend to have flat hierarchies wherein members hold equal power. As power distance is greater in Italy, when dealing with those with notable positions in an organization, addressing them with proper respect and formalities would allow you to assimilate. Not only would you require to address your Italian counterparts accordingly, it would be as important to regard co-workers with equal respect in the presence of your Italian client and colleagues.

Blending into Italy’s business environment requires knowledge of the business etiquette followed. Dress sense, conversation, how you address your Italian counterparts, negotiating styles, and gift-giving will all contribute to your success. Professionalism is greatly valued in the Italian culture, this is also displayed through the dress sense. Formal, business clothing is crucial during business interactions as it insinuates your, “social standing and relative success, as well as your competence as a businessperson.” Style and elegance should be studied should you be out-of-touch in the fashion world. (Endnote 1) Engaging in general conversation is very welcome. Conversation regarding the weather, Italian landscape, sports are examples of welcome topics. (Endnote 2) Using titles and surnames is a business norm in Italy. Unless one is invited to do so otherwise, addressing your Italian counterpart by their title or surname would be strong business etiquette. Gift-giving is welcome; however, more appropriate upon receiving one first. Good gift ideas include: quality, vintage wine, a fine pen, calculator. Gifts to avoid: chrysanthemums as they are used at funerals, red flowers as they indicate secrecy, yellow flowers as they indicate jealousy. Also, please note: do not wrap gifts in black or purple, as black is traditionally a mourning colour, while purple is a symbol of bad luck. (Endnote 3)

Acknowledging and respecting the cultural differences in Italy will allow one, new to the culture, to better relate to their Italian counterparts and ultimately display a higher degree of cultural sensitivity. Failing to see a difference and behaving without monitoring the audience may result in the formation of incorrect interpretations by your counterparts, giving them the wrong impression. Appraising the environment to recognize the cultural differences and similarities between Italy and Canada will allow you to realize the appropriate etiquette. Adapting to the high-context culture through the addition of emotional evidence, along with technical data, while presenting information will allow for stronger relationship building through more effective communication. In addition, status and power must be respected. Effectively utilizing this knowledge the Italy culture will ensure strong relationships with your Italian clients and colleagues and a overall successful business trip.

Endnotes:

(1) http://globaledge.msu.edu/CountryInsights/culture.asp?countryID=59&CategoryID=2,1

(2) http://globaledge.msu.edu/CountryInsights/culture.asp?countryID=59&CategoryID=3,1

(3) http://www.kwintessential.co.uk/resources/global-etiquette/italy-country-profile.html

Prepared for: Professor Peter Koppel

Prepared by: Esha Abrol CITP (Candidate)

Date: January 29, 2009

Copyright © Esha Abrol, Canada. 2009

January 8, 2010 Posted by Esha | Entrepreneurial Culture, International Management, Marketing | | No Comments Yet

International Marketing Plan

Copyright © Esha Abrol, Canada. 2009

January 8, 2010 Posted by Esha | Entrepreneurial Culture, International Management, Marketing | | No Comments Yet

International Trade Training

The world is becoming a smaller place. Not only are large corporations exporting, but also SME’s. A lot of them. These businesses are involved in many aspects of international trade, including: outsourcing, global supply chains, international subsidiaries, etc.

If you’re a domestic business: How do you know when it’s time to expand to a foreign market? What expertise are required? What types of risk mitigation tools are available? 

The Certified International Trade Professional (CITP) Designation through The Forum for International Trade Training (FITT) provides the ins and outs of international trade. The program allows individuals and businesses to fully comprehend all aspects of trade.

Learning topics include:

International Marketing, International Trade Logistics (Supply Chain), International Finance, International Law, International Distribution, International Research, Cultures, Geo-politics

I received my international trade training at Algonquin College (through the Business Administration, International Business major). I would highly recommend the program to all considering global expansion or joining a global business.

I will be posting excerpts from projects I worked on, covering various areas of international trade  including an International Marketing Plan, a SWOT Analysis, and more. Stay tuned, please.   

Copyright © Esha Abrol, Canada. 2009

December 23, 2009 Posted by Esha | Entrepreneurial Culture, International Management | | No Comments Yet

What I’m currently reading

The Curious World of Probabilities

November 24, 2009 Posted by Esha | Uncategorized | | No Comments Yet

Twitter Poll

Follow me on Twitter: www.twitter.com/eshacitp

 

Copyright © Esha Abrol, Canada. 2009

October 12, 2009 Posted by Esha | Uncategorized | | No Comments Yet

Terry Matthews Tips on Competing with Outsourcing & Persistence vs. Success

“Persistence is the single most important word in success.” – Terry Matthews

He’s started 80 companies. He’s been directly involved in all of them. Terry Matthews was one of the keynote speakers at the Eastern Ontario Economic Showcase, along with W. Brett Wilson and Donald Trump.

Matthews started his talk with a quote from Darwin,

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” – Darwin
Matthews allocates his success to change and his ability to adapt. He says, “Act in times of change, or be acted upon.”

“Where there’s change, there’s opportunity.” -Terry Matthews

Competing with Outsourcing

As Asia continues to prosper, global competition continues to intensify. India and China have been able create a strong presence in the technology industry, further increasing competition. Many have realized the strong resources available across the globe at a fraction of the cost -– the amount of organizations outsourcing, have clearly reflected this.

Matthews points out, in Shanghai, the highest paying jobs pay $18,000/year. His key competitive advice: the first-mover advantage.

How does the first-advantage work?

Being the first to kick-off a new strategy to create a presence and build a reputation in an area no business ever has, creates an image the consumers’ mind. Successful strategies will be copied – naturally, everyone will want their piece of the pie. It’s important to remember pioneers will benefit from repeat business as customers loyalty remains to be a major advantage in the first-mover concept.

-Esha

Copyright © Esha Abrol, Canada. 2009

October 6, 2009 Posted by Esha | Entrepreneurial Culture, International Management | | No Comments Yet

Donald Trump and W. Brett Wilson in Ottawa

I had the opportunity to attend a talk with The Donald himself while he was in Ottawa yesterday. At the event, other keynote speakers included: W. Brett Wilson (Dragon on CBC’s Dragon’s Den, co-founder of FirstEnergy Capital Corp.), Terry Matthews (Chairman of Mitel Networks, has started 80 companies).

Brett Wilson’s talk: Brett shared his definition of success. His talk was personal. While he spoke, everyone listened. In the end, he discovered the core sources of his happiness were entrenched in: his health, kids, and community. The standing ovation he received by 4000 + audience members reflected the quality and passion of the content he shared. Powerful speaker.

Donald Trump and Ottawa Mayor, Larry O'Brien

Donald Trump and Ottawa Mayor, Larry O'Brien

Near the tail end of the event, Trump graced us with his presence. Trump talked a bit about himself, real estate, his thoughts on luck, and more – with that same “you’re fired!” kind of attitude. Funny guy. Here’s a bit of what he spoke about:

Real Estate:

As real estate price tags have dropped dramatically during the economic downturn, investing in real estate has become more attractive. Trump imparted some wisdom on the subject, as he, as well, has been taking advantage of low prices. He only does deals based on seller financing. If no such option is offered — no deal for Trump. There are many advantages to seller financing, including:

1) No points
2) Low interest
3) No down-payment (or a reduced down-payment)

Success – The secret sauce:

“If you’re successful in one area, you can be successful in another because it takes certain ingredients to be successful.” – Trump

His recipe for success: lots of passion, ability to handle pressure, a dash of luck, and persistence.

Luck:

He started off the topic talking about a sadly accident-prone friend. The story made us believe in ‘unlucky’.
He then recalled a golf friend mention: “the harder you work, the luckier you get”. He shared an example from his own life. He talked about his struggles with repaying debt in the early 90’s, with bankers constantly calling. One night during this time, he ended up attending a black-collar event where bankers would be present. He didn’t want to go, but did anyway. He snuck in as he didn’t want the bankers to witness him getting out of a limousine, while they arrived in yellow cabs. Not to mention, he owed them millions. As he networked, he met a banker to whom he owed money to. They didn’t quite hit it off immediately. By the end of the night, they developed a friendship with one another and were able to negotiate terms in which the loan could be paid back. He assigned the strength to get up and attend the party to work and persistent attitude, while meeting that banker and winning him over, to luck. He said that night saved himself from drowning in debt and he wouldn’t be where he is if it weren’t for that party.

Pressure and how to cope with pressure:

Trump spoke about an event wherein a friend approached him for advice. She had an upcoming speech, where important people would be in attendance. She was extremely nervous and had even enrolled herself in a course to help develop her public speaking skills. He told her to forget about it, that it means nothing. He referred to recent natural disasters wherein thousands lost lives. In comparison, the speech means nothing –- “nobody cares what you say”. Now, I wasn’t expecting that, but the objective of this way of thinking = telling us to reduce pressure as much as possible and your mind will be able to focus on the ultimate goal. Find ways to take off the pressure.

“Many of the people I know, the smartest people, are not the most successful. You have to have the ability to handle pressure.” – Trump

 
-Esha

Copyright © Esha Abrol, Canada. 2009

September 26, 2009 Posted by Esha | Entrepreneurial Culture, Real Estate | | 1 Comment

I’m back

I apologize for the absence. I will be undertaking a new initiative. That is, to blog more often!

-Esha

September 26, 2009 Posted by Esha | Uncategorized | | No Comments Yet

Entrepreneurs and Silicon Valley

How do you measure success in start-up?

I’m going guess that the most popular answers would include: sales, profit, and cashflow.

But what about personal gain? Experience, contacts, character development, and knowledge gained.

Why is Silicon Valley, California a region of such commendable innovation? Is the region populated with only ambitious entrepreneurs that never make mistakes? That would be great. Although Silicon Valley is made up of many intelligent, ambitious people – of course, everyone makes mistakes. Many projects fail, businesses fail. So how does Silicon Valley do it? This culture is open about talking about mistakes and lessons learned in business. Upon unfavorable implementations, entering a state of hibernation to avoid comments like, “I told you so” from cynical friends is not an option. Rather than hiding or fearing competitors moving ahead with knowledge of what ‘not-to-do’, the idea of the industry moving forward has been adopted. As competitors learn of ineffective strategies, leapfrogging becomes a great benefit for the industry as a whole and the consumers. Change and improvement is embraced with a sense of pride for start-ups that flop. I suppose you can say these flops are digested with a healthy dose of salt. The lessons learned hold a high importance, ultimately… making flops respectable…

A couple of years ago, during a conference with Mr. Michael Dell, the words that stood out most for me were: “Learn from your mistakes”. We’ve heard this before, realizing the importance of these words is major.

Personal gain, in terms of lessons learnt is something that can not be taught or fully understood through the exchange of words.  Compensation in the form of experience as an entrepreneur and character development is often underrated with entrepreneurs that do not succeed with one specific project. Many may not realize that it is not unusual if it takes more than one try to finally create the winning product/service.  All entrepreneurs I’ve had the opportunity to meet, persistence, passion, and discipline have been three common attributes - in my opinion, the three most important attributes.

A part of Silicon Valley’s success comes from the strong network of like-minded people and experiences shared. The skills that entrepreneurs bring to the table are valued and respected. Creating an open network, allowing entrepreneurs to embrace ideas and concepts that work and concepts that don’t, is essential to the success and development of a region.

The importance of learning from a mistake is not easy. I think it’s important we remember that, moving forward and using the knowledge, experience, and network gained to re-strategize is an opportunity to be capitalized on.

-Esha
Copyright © Esha Abrol, Canada. 2009

February 26, 2009 Posted by Esha | Entrepreneurial Culture | | No Comments Yet

International Trade Law: The Differences between an Anti-Dumping Case and a Safeguard Case

           International trade provides countries with mutual benefits. It promotes globalization and allows businesses all over the world to achieve economies of scale by purchasing goods and services, which may be more cost effective, from other countries and capitalize on selling goods which involve low (labour) costs.  Trade measures are required to enforce laws and obligations so all countries can benefit and grow. The Geneva based organization, otherwise known as The World Trade Organization (WTO), helps international trade flow smoothly by imposing rules and regulations pertaining to tariffs and trade between member nations. The system attempts to remove trade barriers worldwide, promotes world peace, stimulates economic growth, encourages good government, and the basic principles to make life easier for all.(1)  The organization includes agreements such as: GATT, GAT, TRIPs, Anti-Dumping Agreement, Subsidies & Countervailing Measures Agreement, SPS Agreement, and an Agreement on Safeguards. These agreements allow all WTO member countries to have a fair shake when playing on the big field. Focusing on two agreements of the WTO, The Anti-Dumping Agreement and the Agreement on Safeguards are used as protective measures which promote fair trade while protecting the domestic market against imports. Although they have the same purpose, there are many differences between the two measures. A safeguard may be imposed when trade is working too well, wherein anti-dumping measures are taken when trade is not working.

            Safeguards are considered “emergency actions”(2), “here, the injury has to be serious”(3) This measure applies to all WTO members wherein the restriction against certain goods applies to all WTO members importing this good to, for example Canada. Safeguard actions are used in situations where trade is fair; however, can be requested by the Canadian government to restrict certain imports because despite being fair, the imports are injuring the Canadian industry. Although the goods are not being dumped nor are they being subsidized, a safeguard can be put into place when a good is being flooded into the domestic market and jeopardizing it. A safeguard would be considered in this type of situation in hopes to buy time so the domestic company can still exist. The restriction of the particular good is temporary and only for a short time with the option to file another safeguard after 24-months (upon approval). However, if a safeguard remains for more than 6 years, compensation must be provided to the importing countries (unlike with anti-dumping measures). The prime objective for a government to take on such an action would be to give domestic companies time to adjust and catch up to the imported “technology” and become more competitive.

 

            To commence a safeguard case, it must be requested by either the domestic company or the government. In regards to the CITT’s role, only recommendations can be made in a safeguard case wherein it is not binding until government approval whereas automatic measures are taken in an anti-dumping/countervailing case.  For a safeguard to apply there must be an increase in imports which are unforeseen and harm should be caused by the sudden surge. The domestic company should be able to provide evidence proving the harm with information such as: lose of market share, dropping sales, etc.   

 

            Dumping is an illegal act wherein a country fails to abide by the WTO agreement.  It occurs when a product is flooded into a market, causing injury to the domestic industry due to unfair trade practices.  Dumping can cause damage and be identified in one of three forms, which include causing: injury, threat of injury, or retardation. To file a complaint against this form of unfair trade and commence an anti-dumping case, firstly, the Canadian company (assuming the Canadian company is the complainant) must be able to present evidence of material injury as reduced sales, market loss, lower inventory turnover, etc. Once it is clear that material injury has been caused due to the imports from the developing country which is offering their goods at extremely low prices, the complaint is taken to the Canada Customs and Revenue Agency. At this point, investigation is done and if unfair is suspected, a preliminary duty is levied. The CCRA is responsible for conducting a questionnaire and collect information regarding both parties involved: the importer and the exporter. If dumping is occurring, SIMA determines the margin of dumping in order to increase the duty levied accordingly. At this point, all information gathered is sent to the CITT for the final verdict, which is determined by the tribunal. If in fact, dumping was evident, duty would be, most likely, increased which ultimately will cause the importing company to higher prices to make up for this additional cost. This promotes fair trade and if dumping was actually the case, the Canadian company should be able to get back up. In an anti-dumping case only one other source is inquired. The two parties involved are the respondent and the complainant. 

 

            An example of anti-dumping is demonstrated in the relatively, recent case involving Canada and the U.S. Although the dispute has now been settled, in 2002, Canada was accused for flooding the U.S. market with softwood lumber. Investigators found that Canadian softwood lumber was being unfairly subsidized by the government and then being dumped in the U.S. at prices which were below normal value. The selling of lumber below normal value created issues, in which it was claimed that the effects of Canada’s lower priced lumber was causing material injury to the United States’ industry. Once this was discovered, the U.S. government imposed import tariffs in order help eliminate/lessen the effects of Canadian competition by creating a barrier as it, “raises the price in the importing country relative to the price in the exporting country and it reduces the volume of trade.”(4) This protection measure was put into place to defend the American lumber industry by significantly marking-up the Canadian softwood lumber prices through import tariffs. Ultimately eliminating Canada’s lower price advantage.   

            In conclusion, the key differences between anti-dumping and safeguards are that anti-dumping is enforced to eliminate illegal trade which causes injury to the domestic industry whereas safeguard measures are imposed to protect the domestic industry against an unforeseen increase in imports which does not involve any illegal acts. Another difference is the number of sources involved, an anti-dumping case involves only one source, for example, Canada (complainant) and the dumping country whereas safeguards require inquiries of many different countries and all sources of imports must be studied to truly understand the nature of the global industry.

-Esha   

Copyright © Esha Abrol, Canada. 2008
 

References:  

 (1) Global Entrepreneurship book. FITT Skills. Version 4.1. Version 4.1. Forum for International Trade Training Inc. 2002.

(2) WTO. Retrieved March 1, 2007 Web site: http://www.wto.org/english/tratop_e/safe_e/safeint.htm

(3) WTO. Retrieved March 6, 2007, from UNDERSTANDING THE WTO: THE AGREEMENTS Web site: Retrieved February 26, 2007, from UNDERSTANDING THE WTO: THE AGREEMENTS Web site: http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm

(4) WTO. Retrieved March 4, 2007, from DISPUTE SETTLEMENT: DISPUTE DS277 Web site: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds277_e.htm

Legal Aspects of International Trade book. FITT Skills. Version 4.0. Forum for International Trade Training Inc. 2003.

Thompson, Robert (2007).Globalization and the benefits of trade. Chicago Fed Letter.Chicago . Iss. 236, pg. 1, 4 pgs.

WTO. Retrieved March 1, 2007, from Agreement on Safeguards Web site: http://www.wto.org/english/docs_e/legal_e/25-safeg.wpf WTO. Retrieved March 1, 2007, from AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES Web site: http://www.wto.org/english/docs_e/legal_e/24-scm.wpf

December 13, 2008 Posted by Esha | International Management | | 1 Comment