Global Shippers, Inc Case File Discussion

MBA 630 Professor Robert Goodwin: International Business

 Transcript

I’m Robert Goodwin, I have been with UMUC since 2005. And prior to that was engaged in the private practice of law as well as engaged in business. And in both contexts, was heavily involved in international transactions. Later in this course we’re going to dig into cultural issues in some depth and talk about the cultural differences in various countries and how they can impact us when we’re doing business in those countries. I wanted to give you an introduction to these cultural issues now so you can be thinking about them, and also to explain a relationship with some of the legal issues that we’ve already looked at.

From the overall business perspective, culture is not simply in differences of which fork to use at dinner and those kinds of things, but actually reflects different ways of thinking about some very significant issues that impact on business. Just to give a couple of examples, in many countries in the world when you engage in the hiring of personnel for your organization, there’s a preference given for family or trusted friends. That’s simply the way in which they go about looking for those with whom they want to work. Course in the United States, that would represent a problem, a conflict of interest in many cases. The issue is if you are going to do business in a country that has that orientation, may you do it? And the answer is on that issue is, of course. You can decide to follow those kinds of personnel practices.

Other significant differences are teamwork versus individualism. In many countries in the world, an we’re all familiar with Japanese teamwork practices where there is no credit given to individuals for accomplishments, it’s all focused on the team. In the United States it’s the opposite of that, the individualism is very important. And so if you’re a personnel manager in Japan, you want to be careful about what your incentive program looks like, and how it’s structured. And, you want to pretty much follow the local practice on something like that.

There are differences in contracts and how they are perceived in different countries. In some places, a contract is like an advisory rather than a firm, legal commitment, and you need to know what the case is in the country in which you’re going to be doing business. And you can adjust to that. And so, you can adjust to virtually all of the cultural practices in a foreign country with a significant exception. And that exception is related to the practice of gift giving, which is very common in many countries, but the United States has a firm statute that prohibits the giving of anything of value (money or anything of value) to a government official for purposes of obtaining a contract award. What that means is that if the practice in the country in which you’re doing business is to give bonuses, or awards, or subtle bribes if you will to government officials, and you participate in that; then you could be subject not only to substantial fines, but also to jail time. It’s called the Foreign Corrupt Practices Act and it’s relatively, aggressively enforced by the US Government.

Culture and adjusting to the cultures abroad, it’s important to know and understand what they are. And to be able to adjust to their way of doing business, but do not adjust to their way of business when it relates to gift giving.