Some time ago the Competitiveness Division of the Department of Trade and Indust

Question

Some time ago the Competitiveness Division of the Department of Trade and Industry (DTI) in the British government commissioned research on British small- and medium-sized enterprises (SMEs) that had managed to set up successful businesses in Japan, one of the toughest (though lucrative) global markets to break into for foreign firms. Numerous success stories from the study show how some firms managed to adapt to the differences in culture, society, and business practices that can act as barriers to foreign firms. But there are also numerous tales of the blunders that some managers made that undermined their efforts to establish themselves in Japan.

Meishi is Japanese for “business card,” but has a deeper significance in Japan than elsewhere as a representation of the employee’s allegiance to and respect for his or her company. The strong emphasis placed on loyalty and obligation between employees and their firms, lifetime employment based on a moral contract (rather than a price-based contract), and a manager’s position as a member of a collective all have a strong influence on his (sometimes her) behavior when interacting with others. Kaisha-in literally means “company person,” but it also denotes the individual as a representative of “our company” in the sense of a shared group consciousness. The company name comes first, before the individual’s name on the meishi and when making introductions. The exchange of meishi also establishes relative rank within the strict corporate and social hierarchy and therefore guides the correct behavior and even form of language used for interacting. Overall for the Japanese exchanging meishi is an important symbolic ritual.

A senior technology manager from Scotland on his first assignment to Japan was attempting to establish a strategic alliance with a local firm as a starting point for marketing and selling his firm’s products locally. In his first meeting, he faced six senior executives from the Japanese firm, ranged across a boardroom table traditionally in order of seniority. Almost the first act of the Scottish manager was to throw his newly printed meishi across the table to each of the Japanese executives in turn!

There is no way of knowing how significant this single act was in undermining this firm’s market entry in Japan. It failed in its attempt to forge an alliance with this particular Japanese firm and with others, eventually leading it to abandon its attempts. What we can say for certain is that a small amount of preparation by this manager to build even a basic understanding of business etiquette in Japan would have improved this company’s chances of building a successful business in Japan.

The overall study, including 30 detailed case studies of successful British firms in Japan, demonstrates very clearly that managers need to understand the cultural and social norms that underpin business practices in different countries if they are going to do business in those countries. The lesson applies to firms engaged in cross-border mergers and alliances, expanding into new markets through foreign direct investment activities, or even at the simple level, when hiring new recruits from overseas, outsourcing to foreign countries, or selling products and services abroad. Cultural awareness is critical to making business relationships work, at the face-to-face level or at the company-to-company level.

What steps could the Scottish firm have taken to avoid this kind of mistake?

Explanation / Answer

In this era of globalization businesses tend to grow outside their home country to other geography’s in order to maximize profits & expand their brand image. This has led to increase in multicultural & cross culture working conditions resulting in diverse knowledge base & innovative business solutions to problems. We need to understand the broader meaning of culture in order to gain deep insight in to it. Culture is defined as sum total of beliefs, rules, techniques, institutions, practices, values & attitudes of a population which gives them a unique character.

Though there are several benefits as discussed earlier, it is difficult to address different cultural & business practices as what is considered common & accepted in one culture may not be acceptable in other countries. Culture has a significant impact on behavior and preferences of clients and customers.

Despite the effects of globalization differences in business practices & culture still remain important. Almost in all of the business context ignorance of cultural differences represents a common stumbling point for international managers. The challenge lies in recognizing differences & adapting different local styles & approaches in order to succeed.

In the case of Scottish manager he was not able to identify differences in culture & attitudes of people. He was not aware of the sensitivity attached to exchanging of “meishi”, which resulted in his failure to forge an alliance with Japanese firm.

So what he should have done? .Below are some points which could have helped him.

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