Case studies
International Business
Communication is both verbal and non-verbal, with many cultures placing greater importance on the non-verbal. This case study illustrates the impact that miscommunication can have on international business.
Kali is a large Korean car interior manufacturer in Seoul with strong historical ties with Lazer, a leading car manufacturer in the US. The CEO’s of Kali and Lazer are keen to minimise production costs and are seeking to formalise a relationship between the two organisations. In order to compliment Lazer’s state-of-the art production facilitates in the US, Kali commits to build, own and operate a plant in the vicinity of Lazer’s assembly plant. The agreement is announced with great pride in Korea and in the international press, heralding a new era of international relations. In order to maintain company heritage and work ethic, Kali staffs the key positions with a minority of Korean nationals from Seoul, with the balance staffed with US nationals, some ex-Lazer or employed under a sabbatical arrangement between Kali and Lazer.
Within the first weeks of full operation, it becomes clear that there are serious concerns, particularly within the Engineering Division. This division is staffed with a higher proportion of American senior personnel than others, with the strategic aim of ensuring that Lazer’s exacting requirements are communicated clearly to the Kali production division. The Head of Engineering was a Korean national, with international experience in contract negotiation that made him the chosen candidate for this sensitive position. However, information exchange had come to an abrupt halt both vertically through his department and horizontally with other Korean and non-Korean peers. He was replaced over a single weekend by the Board of Directors in Seoul with a second Korean Head of Engineering; to be replaced with a third within the year. Relationships, both horizontally and vertically never improved. Amongst the US nationals employed at Kali, there was a 30% turnover of staff within three months, and 100% turnover of staff within the year.
Within two years, Kali had pulled operations out of the US and continued to supply Lazer from Seoul. The international reputation of both organisations had suffered.
What happened to cause the failure of this apparently well-thought out investment?
Religious Sensitivities
One challenge in international business is accounting for religious beliefs: this case study presents such a challenge.
MultiCo has spent extensive time and resources developing a training course that is a key element of graduate induction. This course aims to develop familiarity with financial language and tools and modelling skills, supported by practical exercises. This training course is to be delivered in MultiCo’s MENA head office in the Dubai Financial Centre. In September the course began with a new graduate intake: initial feedback from the course facilitator during the theoretical sections of the course is extremely positive. The fourteen new hires are getting on well and the demographic composition is varied.
On the day of the practical role-playing exercises, you receive a fraught call from John, the course facilitator. He tells you that he has had to suspend the practical exercises due to one of the graduates refusing to participate, and who, after some heated exchange, had walked out of the class. John asks you for advice on whether he should exclude the graduate in question from all further training and continue the class.
Upon further inquiry, the section of the practical exercises was financial modelling, where the students were asked to choose a portfolio of existing company resources and work through forecasts of profit and loss for the next five years. John assures you that this topic had been taught last week in a lecture-style environment and had not caused any negative reaction. However, when he had explained to the students that the day’s exercises required the practical application of the theoretical knowledge, it appeared to have caused a serious and apparently insurmountable problem with one individual.
What would you recommend?
Specific situations – what would you do and why?
Arabian Gulf
It is December 21st, and you are in Jeddah negotiating a major contract for your organisation with Saudi nationals. There appears to be an impasse in negotiations, and the counterparty suggests that you meet up the following day to continue. However, you are aware that it will be impossible to rebook your flight to get you back to your family in time for Christmas, and you suspect that it is a bargaining ploy to weigh up your commitment to your negotiating position. What would you do?
- Make your apologies and reschedule negotiations for after the New Year;
- Address the non-availability of flights directly with the counterparty;
- Stay to continue negotiations as the contact is of key strategic importance to your organisation.
Japan
You are at a formal lunch in Tokyo with a colleague who you have just noticed is heartily dipping his tempura into his tea. You are unable to speak to him across the table to draw his attention to his mistake, and you are unable to gauge your host’s reactions to this breech of etiquette. What would you do?
- Apologise for him to the closest member of your host party
- After the lunch inform your colleague of the inappropriateness of his actions, and ensure that he apologises to the most senior Japanese present.
- After the lunch inform your colleague, and do not address it publicly.
Mediterranean countries (Europe)
You have successfully completed negotiations in Athens, and the President of the Greek corporation invites you for dinner at his house at 22:00 to celebrate. However, you have a flight the following morning at 06:00. What would you do?
- Make your apologies and make sure you get your flight
- Thank him for the kind invitation, but suggest an earlier time because of your flight.
- Accept the invitation, being conscious that you will probably have little or no sleep before the flight.
Arabian Gulf
Your organisation is in discussions with a company based in Abu Dhabi, and you believe that it would be of benefit to your negotiations to explain your intentions to a member of the ruling family who has an interest in the outcome. You have been told that you are to attend his Majlis to discuss the situation. Upon arrival at the Majlis, the room is full and you notice that each person is called upon to sit beside His Highness and discuss their concerns. You are unwilling to share such sensitive details in a public arena. What do you do?
- Discretely ask his private secretary for a private meeting, and then leave.
- Wait to be called upon, and set out the generic concerns to His Highness.
- Wait to be called upon, give the background to the negotiations and ask for a private meeting.
Hong Kong
You are appointed to head a team based in Hong Kong. Your team members are made up of Europeans and one Hong Kong Chinese national, Wen Lin. The project you are working on is advising a government body, and you are concerned that you are not fully aware of all the cultural nuances in the negotiations. You call a team meeting and ask Wen Lin his opinions and insights on the negotiations to date. He refuses to answer both in the meeting and when you try to tackle the same subject in a private meeting. Furthermore, he will not explain why he will not provide any insight. What would you do?
- Bring him into your office and share your disappointment and disapproval of his unwillingness to cooperate with the team.
- Ask your Hong Kong Chinese secretary to find out what the problem is
- Confront him again in a team meeting: if he refuses to cooperate again, you will be forced to reconsider his future.
