Question

Case Study #2: Cultural Considerations—Know Before You Go

Note: This case study is based in part on the FITT Going Global Workshop: An Introductiono the Cultural Aspects of International Trade

tcase study, Beamer and Varner, pp. 216-217

Canadians “Hit the Wall” in China

A team of two top executives of a Canadian equipment manufacturer had just arrived in China to negotiate a sale with a local manufacturer who needed new equipment to increase production. The Canadians had never sold in Asia before, but based on the communications that had taken place over the past several months, were confident they could provide the right solution for the prospective new customer and get a deal done quickly. If all went well, they would save the last day to visit the Great Wall of China.

The Canadians were in for a few surprises. Review the following and consider what they could have done differently.

Planning

While the Canadians scheduled a full week for their visit, they were surprised to find that for the first 3 days, no business was discussed. Their Chinese hosts took them out for elaborate dinners with top management and high ranking officials, and to night clubs for entertainment. They were taken on a tour of the city to view historical and industrial sights and eventually for a factory tour. Business discussions did not start until the 4th day. The Canadians were perplexed. The clock was ticking and their time was running out. Any attempt for them to initiate business discussions were repeatedly thwarted by the Chinese.

Translation and Interpretation

The Canadians used an interpreter supplied by the Chinese company. They found that translation slowed down communication and they were making little progress. The interpreter didn’t seem to understand some of the more technical terms and hesitated frequently, or just shrugged her shoulders. There were elaborate exchanges between the interpreter and the Chinese company since they knew each other well, and quite often the Canadians were left wondering what was being said.

The sales presentation

When they were finally able to make the sales presentation they had prepared, they were surprised to find a team of ten Chinese facing them across the table. However, their hosts were cordial and frequently nodded, smiled, and said yes. They were not really surprised that a final agreement was not made that day, but were confident they could wrap things up the next day once their prospective customers had had the night to sleep on it. The next day they were asked to explain again the things they had covered the previous day, but this time to six new people. This time the questions were highly technical, and they were concerned about giving away too much information, so they answered in general terms. They returned to their hotel exhausted, made worse because again they didn’t feel as if they had made much progress. Although they now knew that their planned tour of the Great Wall was out, they began to wonder if they would be able to close the deal on the last day they had planned to be in China. They had pressing commitments at home and could not afford the time to extend their stay.

The negotiation

They arrived Friday irritated they had spent Monday touring the city instead of working and were determined to get a deal done, but in the meeting, they were asked again about the technological details. This time one member of the first-day team pointed out discrepancies between what they had said and what had been promised in earlier communications about technical support. The Chinese were reproachful about the discrepancies, and the Canadians were becoming increasingly anxious about making an agreement. The tone had cooled, but everyone remained polite.

Discussions resumed with the same questions being asked yet again. The Chinese appreciated the high quality of the Canadian product but worried they wouldn’t be able to fix the equipment if it broke down. They suggested—delicately, so as not to imply they expected breakdowns—that perhaps the Canadians could give them some help with maintenance training. The Canadians pointed out the expense and difficulty of keeping someone in their city for several weeks or months and expressed confidence there wouldn’t be any problems that could not be worked out over the phone.

Finally, before lunch, the technical discussions turned to price. The Canadians began to think they might get the deal done soon after all, but were shocked when the Chinese asked for a 20-percent price discount. The Canadians barely contained their irritation since they knew their original price was fair, but offered a 5% discount to try to get the order quickly. Further, the payment schedule could not be guaranteed because of apparent deadlines and requirements of the municipal officials. After lunch the Canadians began to ask pointed questions in an attempt to focus on the remaining unresolved points, but the Chinese seemed reluctant to do so.

Although some minor progress was made, a number of issues remained unresolved that afternoon. At the end of the day, the Chinese manager smiled and spoke of mutual cooperation for the future, past Chinese-Canadian relations, and the great amount he and his factory could learn from the Canadians. They signed a general letter of intent, and the Canadians left with expressions on both sides of willingness to continue to discuss the sale.

The Canadians were shocked to learn the following week that the factory had decided to buy from a Japanese equipment manufacturer.

© FITT 2 FITTskills: Global Business Environment Case Study #3: Cultural Considerations—Know Before You Go

Case Study Discussion Questions

1. How could the Canadians have more effectively prepared for the negotiations with their Chinese counterparts?

2. The negotiating parties seemed to have different expectations about the time needed to complete the process. What were some of the key reasons that caused negotiations to last longer than the Canadians anticipated?

3. In communicating with the Chinese what was the key problem? What could the Canadians have done to avoid this problem?

4. Reviewing how negotiations took place from the arrival to the departure of the Canadians, do you think the Chinese orchestrated the negotiations to put their Canadian counterparts at a disadvantage? If so, how?

5. What key competencies were missing that caused the venture to fail?

Answer 1

THE FOLLOWING SOLUTIONS ARE GIVEN BELOW:-

1) Canadians might have a lot of effectively ready for the negotiations with the Chinese counterparts. the foremost vital issue to be considered would be to develop relationship with the negotiating party and develop a respect and trust for every alternative before a successful relationship is designed. they may have revered the local practices and customs and learn acceptable ways of conduct. Another side would be to grasp the values and culture of the opposite party so the Canadians might supply a deal keeping in mind the core values. This way, the deal might have been more effective and reliable. Canadians might even have shared more relevant data and their position with the Chinese and gathered data from them when developing a mutual relationship. this might have helped them understand a lot of concerning the company’s background so they may perform in keeping with the status. they may have additionally asked open-ended queries which would have helped them improve their areas to succeed in the agreement and persuade the party in keeping with their cultural background. Also, they may have ready themselves and have information relating to the shopping for habits and also the background of the Chinese company. This way, the Canadians would have more effectively conducted the negotiations with the Chinese counterparts.

2) The purpose of negotiation is different for each and every individuals. Some individuals need good quality product as well as cheap price. Some individuals need less price of the product by customers point of view. According to sellers point of view sometimes they have old stock they want to sell there old stocks so they provide some discount to attract the customer and then if the individuals buy then sellers get the profit. There are different cases according to the persons perspective.

Some of the explanations that caused negotiations to require longer than what the Canadians had anticipated, was that they'd spent weekday progressing to recognize and going round the town, rather than doing a lot of productive work, like getting ready themselves for after they long-faced the Chinese. Since they didn’t have the time to win their counterpart over, they'd to scramble in everything for Friday, since weekday was wasted as a result of the translator that the Chinese brought, caught up the communication method and therefore the Canadians created little or no progress that evening. the design was sloppy, and it absolutely was what affected the Canadians. If they'd ready a stronger set up or associate degree agenda and bestowed that to the Chinese, then the negotiation would are with success done on time and Canadians would are able to shut the deal they expected. associate degree agenda or schedule provides organization and might facilitate a gaggle of employee’s operate as an efficient team.The variations that associate degree agenda will create once it involves negotiations square measure huge. Without it, it will mean disorder, loss of vital facts that might facilitate the negotiation, confusion and not a lot of success, conjointly associate degree agenda/schedule facilitates to understand to recognize to grasp that production is essential and conjointly help with belongings the participants know that the meeting are attended in an exceedingly thorough manner. Businesses have conferences to determine new concepts discuss new data, gift accuracy, kind choices and record progress. The agenda makes bound that the meeting is not off course, still as organized and therefore the tasks and procedures progress as planned. Also, associate degree agenda will profit the individuals gift as a result of they will work as associate degree operative grouping, which is able to facilitate them accomplish the goal that they set for themselves or the corporate. The negotiations conjointly lasted longer as a result of the Canadians didn’t speak or very place their purpose across within the most convincing manner, that created the Chinese question a great deal quite they'd to, that created the Canadians involved concerning creating a trot out the Chinese. The vital key to each negotiation is to grasp what you wish, what the previous party desires and what you'll be commercialism and create the simplest approach to win over the customer that your product is that the best choice for them within the market. If this isn’t established throughout the negotiation, then you and therefore the counterparts won't be able to come back to associate degree agreement. it's essential to grasp your motive before coming into the negotiation, that manner you'll have a prospering meeting.

3) Buried below the headlines regarding the continuing trade row between the U.S and China, the occurrence of tensions within the South China Seas, and therefore the port demonstrations, the dispute between Canada and China continues to simmer beneath the surface.

Although tensions at first emerged over Canada’s detention of Huawei Govt. Meng Wanzhou in Vancouver, it currently affects nearly all aspects of the 2 countries’ bilateral relations, due to China’s call to detain 2 Canadian voters, archangel Spavor and archangel Kovrig, on charges of stealing state secrets still as imposing a ban on Canadian agricultural product. The dispute represents one among Canada’s most serious policy challenge since 9/11. If there's a consolation, it’s that Canadian policy makers and therefore the public could realize themselves in a very scenario to higher perceive the country’s world position and totally value the international challenges on the horizon.

China’s actions return from a well-worn play book, however one that Canada is unacquainted with. In 2010, Japan detained a Chinese fishing smack captain once he rammed a Japanese coast guard vessel close to the controversial Senkaku/Diaoyu islands. In response, China halted exports of group metals to Japan and later command four Japanese contractors on suspicion of spying. Beijing solely relented once Japan discharged the captain. different countries, as well as Bharat, Vietnam, Republic of Korea, and therefore the Philippines have intimate with variations of this belligerent Chinese behaviour.

Canada, but is unacquainted with these ways, and is troubled to develop a good policy response. Its position is sophisticated by the shocking irresponsibleness of its highest ally, the u. s.. President Donald Trump’s pattern of undermining antecedently bedrock assumptions regarding yank security, as well as U.S. alliance guarantees, has caused severe anxiety at intervals Canada. matters has junction rectifier some commentators, most notably former Prime Minister Jean Chrétien and former Ambassador to China John McCallum, to advocate that Canada ought to come Meng so as to de-escalate the conflict.

Their position follows a sceptical read of Canada-U.S. relations. It additionally presents (in their minds) a chance for North American nation to become a neutral broker between the two countries. The consequence of this position would be devastating to North American nation and would represent a elementary misunderstanding of the country’s position within the world. A failure to understand Canada’s strategic position, as associate degree exceptionally shut ally to the us associate degreed an intrinsic a part of the U.S.-led Western alliance, is that the terribly vehicle that the Chinese government has up to now exploited. A reversal of the surrender order would be associate degree inconceivable policy coup, with significance so much on the far side that of Meng’s come. it'd decision into question Canada’s commitment to its nearest ally at the terribly time it's provided the best dividend.

Of note, Canada’s temperament to continue the surrender method and endure the ensuing economic consequences has solely increased support in Washington, notably in Congress and policy communities. it's earned Ottawa each a name for being a steadfast ally and valuable political capital, that square measure clearly a lot of vital to Canada’s national interest than its relationship with China. This numerous support bodes well for long-run security and economic relations between the 2 countries, which is able to extend on the far side the Trump administration’s term.

Unfortunately, the long read on Canada-U.S. relations can have bottom impact on state of affairs with China, particularly with this inhabitant of the White House. Ottawa’s response to national capital ought to be measured, consistent, and firm. On the last purpose, the government’s approach has been lacking to date. Given the statements from McCallum and Chrétien, the Liberal government should seize the instant by going on the far side just distancing themselves from the remarks and instead toughening Canada’s position. Otherwise, national capital are left to wrong believe that Ottawa – and especially, the ruling party – could also be near to acquiescing to their campaign of intimidation. Conversely, capitulating to Beijing’s demands would set a fair a lot of dangerous precedent for future relations with China. they'd conclude that by applying enough powerful pressure, Canada would assent to any demand. Finally, providing a transparent rejection of the Huawei’s inclusion in Canadian 5G networks, a transparent vulnerability to national security, would eliminate another potential lever the Chinese government might pull.

Canada’s diplomatic efforts should conjointly avoid superficial efforts and move toward a lot of substantive measures. The Liberal Government has tried to corral allies to pressure China over the detention of Canadian voters. However, considering Beijing’s utter dismissal of criticism associated with human rights abuses in Sinkiang, or its perspective toward the port demonstrations, it's unlikely the campaign can force associate degree amendment of policy. what is more, Canada’s allies have very little incentive to try and do over issue infirm worded de-marches to China, because it isn't a very sturdy or reliable ally for countries within the Indo-Pacific. though Ottawa has slightly augmented Canada’s military presence within the region and improved ties with Japan and Singapore, these square measure immensely low to the challenge at hand.

Therefore Canada should still expand its diplomatic engagement and defence ties with key allies and partners. Not solely can this sustain diplomatic support, it'll send a solid signal to national capital that its actions have real consequences. as an example, Canada’s recent cross-servicing agreement with Japan represents a potential model that might be adopted elsewhere. It might conjointly participate a lot of actively in a number of the joint infrastructure developments comes being LED by Japan, the U.S, and India. Such efforts might facilitate facilitate larger Canadian engagement with the Quad – a casual security grouping that consists of the U.S., India, Japan, and Australia. it might even be a transparent, however tag, response to China, act that any powerful efforts can solely push Canada into nearer relation with similar allies.

4) Nagotiations can ne'er go disagvantage, as each square measure vast nations within the world, nagotioations can get sensible advantage. China is that the third largest country within the world (Canada being the second-largest), and it's usually the case that folks operating during a explicit town aren’t born and raised in this town. therefore an honest topic of spoken language for a primary meeting would be "What a part of China square measure you from?" The "hometown" is commonly a subject of pride and it’s conjointly a vital means for a non-local to grasp the variety and interests of individuals from China.

Depending on the non-local’s work relevancy the person being asked, work could be a sensible discussion topic. If the non-local is functioning during a position of authority (i.e., a remote manager or colleague) don’t expect direct answers concerning the organization below discussion. On the opposite hand, China has undergone unimaginable social and economic changes within the past twenty years, changes that elicit abundant general discussion and interest.

The family could be a vital organisation in China. However, it’s higher to not raise an issue like "Are you married?" since legal status will be somewhat sensitive for the person being asked (although there's an honest probability you'll be asked such an issue, and in this case asking such an issue would be no problem). A general question like "Do you have got family during this city?" could be additional applicable for a primary meeting.

Food could be a sensible topic of dialogue.. just like the topic "hometown," China has terribly varied and wealthy cookery traditions as well as town and regional variations.

Politics ought to be avoided on a primary meeting. There square measure several sensitive political problems in China best avoided on a primary meeting. Political, like cultural views, take it slow to induce wont to.

Humour is very important and far appreciated in China. For a non-local in China, misunderstandings abound, and there's lots of cause for reticent anecdotes that highlight the typically awkward position of a freshly arrived foreigner.

5)There are some key competencies were missing that caused the venture to fail are:-

i) Unhealthy business concept:-

Nobody likes to speak concerning it, however the most reason why business plans fail is unhealthy concepts. Most concepts look nice on paper—but only too usually, corporations understand they need endowed during a unhealthy plan once it's too late.

To avoid this, good businesses square measure exploitation “user-driven development” (UDD) to create new businesses. variant concepts appear nice till you work out that the market doesn’t truly need your product. so as to confirm that a business plan is sound, entrepreneurs ought to seek for product validation by reaching bent their target shoppers before sinking immense amounts of your time and cash into the project.

At Stanford University’s d-school, the designers use UDD to develop merchandise that square measure user-centered. corporations that need to introduce with a spotlight on customers usually hold tiny conferences with the potential finish users wherever they describe the project then raise users for his or her opinions.

After the primary spherical of dialogue, the firm will return to the starting stage to include the useful feedback. Second and even third rounds will enhance the ultimate product’s quality. for instance, The Embrace hotter was created by asking mothers with premature babies what they dislikeable concerning ancient child incubators in hospital maternity wards.

The mothers responded that not having the ability to carry their baby was the worst a part of the expertise. By that specialize in the wants of the end-user, the developers of The Embrace—who were conjointly students at Stanford—were able to produce a extremely demanded and no-hit business arrange. Avoid dawdling on a foul business arrange by gauging the market sentiment toward your project before investment a major quantity of your time and energy.

ii) Employee compensation isn't incentive compatible:-

Business plans will fail as a result of staff don't seem to be salaried in an exceedingly method that aligns the goal of the worker with the goals of the corporate. In scientific theory, a contract is associate degree incentive compatible if “every participant can do the most effective outcome to him/herself simply by acting per his/her true preferences” (Nisan and Roughgarden, 2007). for instance, if associate degree worker is paid with annual or monthly bonuses then the worker can solely do what's smart for the corporate within the short run.

In 2015, Forbes free a pleasant article on totally different pay packages for various company goals. One possibility is to supply tailored edges to the worker. Start-ups and tiny businesses offers additional bespoke pay packages than giant transnational companies.

For example, rather than giving a typical pay package of retirement plans, child-care help, savings program, verify what the worker needs the foremost. for instance, senior staff might not be driven by child-care help, therefore don’t specialise in that in their package. Secondly, rather than giving associate degree direct payment of two p.c of the company’s stock, provide a pay that pays that two p.c over many years to confirm that the worker stays committed within the long.

iii) No exit strategy for firing lazy co-founders:-

World Health Organization has started a corporation is aware of that team conflicts are inevitable. an honest business set up ought to have a piecemeal procedure for handling internal disputes. First of all, every co-founder ought to have a particular set of responsibilities with deadlines and consequences for failing to fulfils those deadlines.

Choosing the correct co-founder is as necessary as selecting the correct married person. throughout the primary few years, you will find yourself defrayal longer with the co-founder than anyone else. First, you've got to understand what are your own strengths and weaknesses. attempt to realize a partner that diversifies your talent set. Also, en kindle references. attempt to resolve World Health Organization they worked for antecedently, however they got along side their co workers, and why they left.

Another way to assist alleviate this drawback is by delineating roles and relegation tasks. However, if a team member simply doesn't have the time or the competency to attain the goals specific to their role, then the corporate ought to have a polite however fast technique for ending the link. Mentioning however these varieties of things are going to be handled within the business set up is very important as a result of hurt feelings and vindictive ex-owners will injury the firm’s name and profitableness.

iv) The team isn't balanced:-

Company culture is associate typically underestimated challenge. I even have scan many business plans that gift a compelling argument for a replacement product; but, the bulk of arranges fail to place along a team that has the competencies needed to really execute the business plan.

For example, I recently scan a technical school business arrange that was creating a health application for smart phones. However, the team failed to have one developer or IT specialist concerned. If the business plan needs 80% of the labor hours to be performed by a computer code engineer, then the team desires a minimum of one developer aboard. it's necessary to stay in mind that venture capitalists generally refuse to fund corporations that solely have one founder or have unbalanced groups.

v) Lack of elaborate money projections area unit:-

The majority of business plans that I actually have been asked to edit have handily unnoticed the record, income statement, profit and loss statement, and statement. The “numbers” are literally the foremost fascinating a part of the whole document for many investors. Break-even and return-on-investment (ROI) calculations are components of an honest business arrange.

My favourite tool for guaranteeing that I actually have tight estimations and nice charts area unit the business calculators here on Bplans. make certain to contemplate however legal prices and taxes can deduct from all-time low line.

Do not forget to consider future expenses. as an example, if the corporate has to purchase new workplace instrumentality each 3 years, then the discounted price of these expenses ought to be enclosed within the forecast money projections. Of course, the figures area unit solely estimates, however they're vital benchmarks which will be wont to live the company’s progress toward achieving their goals.