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Business Culture Environment - Essay Example

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The TNT manager holds a very strong personal viewpoint that to succeed in an international joint venture with the Chinese for the long-term, one needs to stick to one's principled stand at all costs. As a result of this personal belief, the TNT manager makes a protracted negotiation over the terms and conditions of employees' compensation, and it costs the joint venture a delay of eighteen months.
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Business Culture Environment

His mission does not include trying to transform the Chinese business culture or their society. So taking a very hard and principled stance is never a great business strategy. A sound business strategy is one that is pragmatic, realistic and with a clear profit motive and wealth maximization for the company's stakeholders. [Ref. 2: "Profit Motive" by Murphy Warren.]
This is even more so, because by winning one moral victory at a very high cost, there is no guarantee that it will bring greater benefits to the joint venture in the future. There is no guarantee that it will lead to a change of heart and a change of culture of your Chinese partners. There is no guarantee that even the same people with whom you negotiated this protracted conflict, will even be there by the time the joint venture moves forward into its next stage of progress, considering that most of the key employees belong to the state and the communist party, and can be re-shuffled or transferred to other positions at any time.
The problem with a joint venture is that the more time you lose in the beginning over smaller issues, the lesser time you are left with by the time you confront larger issues. [Ref. 3: "Effective International Joint Venture Management" by R.C. Wolf] Since the joint venture was already off to a bad start with an eighteen-month delay, the pressure was bound to increase as the negotiations progressed to other areas of the venture.

During negotiations, the TNT manager must take it into account the experiences of his competitors, and how they are dealing with such problems. In business, you cannot afford to ignore your competitors' behavior and their strategies, while you remain trapped in your own personal beliefs or biases. Excessive loss of time gives opportunities to the competitors to occupy the space that has been left vacant by you.

The fact that the negotiations of TNT with the Chinese lasted five years before the joint venture could see the light of the day, speaks eloquently about its dismal performance. There is no way to justify such an inordinate delay merely by explaining the extremities of the Chinese culture.

The TNT manager learned about the Chinese culture the harsh way, which proved too expensive for the joint venture. He ought to have done his homework well in advance, and been fully aware of what to expect from the Chinese. Without a thorough knowledge and understanding of the Chinese culture, it would waste a lot of time in gathering one's learning and experience, which is what happened with the TNT manager.

The biggest strategic error of TNT was to put such a man in-charge of the negotiations with the Chinese, who had apparently no past experience in dealing with them. Such a valuable joint venture definitely needed such people on the team of TNT who had either worked for many years in China, or alternatively, who were men of Chinese origin working in the west for many years. In other words, the joint venture needed negotiators who understood both sides intimately.

ANS. 2:

The TNT case is an outstanding example of cultural misunderstandings and miscommunications. Its ... Read More
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