Results of Poor Cross Cultural AwarenessWritten by Neil Payne
Having a poor understanding of influence of cross cultural differences in areas such as management, PR, advertising and negotiations can eventually lead to blunders that can have damaging consequences.It is crucial for today’s business personnel to understand impact of cross cultural differences on business, trade and internal company organisation. The success or failure of a company, venture, merger or acquisition is essentially in hands of people. If these people are not cross culturally aware then misunderstandings, offence and a break down in communication can occur. The need for greater cross cultural awareness is heightened in our global economies. Cross cultural differences in matters such as language, etiquette, non-verbal communication, norms and values can, do and will lead to cross cultural blunders. To illustrate this we have provided a few examples of cross cultural blunders that could have been avoided with appropriate cross cultural awareness training: An American oil rig supervisor in Indonesia shouted at an employee to take a boat to shore. Since it is no-one berates an Indonesian in public, a mob of outraged workers chased supervisor with axes. Pepsodent tried to sell its toothpaste in Southeast Asia by emphasizing that it "whitens your teeth." They found out that local natives chew betel nuts to blacken their teeth which they find attractive. A company advertised eyeglasses in Thailand by featuring a variety of cute animals wearing glasses. The ad was a poor choice since animals are considered to be a form of low life and no self respecting Thai would wear anything worn by animals. The soft drink Fresca was being promoted by a saleswoman in Mexico. She was surprised that her sales pitch was greeted with laughter, and later embarrassed when she learned that fresca is slang for "lesbian." When President George Bush went to Japan with Lee Iacocca and other American business magnates, and directly made explicit and direct demands on Japanese leaders, they violated Japanese etiquette. To Japanese (who use high context language) it is considered rude and a sign of ignorance or desperation to lower oneself to make direct demands. Some analysts believe it severely damaged negotiations and confirmed to Japanese that Americans are barbarians. A soft drink was introduced into Arab countries with an attractive label that had stars on it--six-pointed stars. The Arabs interpreted this as pro-Israeli and refused to buy it. Another label was printed in ten languages, one of which was Hebrew--again Arabs did not buy it.
| | Splitting the Roles of CEO and ChairmanWritten by Jessica Klein
Traditionally, in American businesses, same person occupies role of chairman of board and chief executive officer, though this is gradually shifting to European model. In most European, British, and Canadian businesses, roles are usually split, in an effort to ensure better governance of company, and in turn bring higher returns to investors. Combining roles does have its advantages, such giving CEO multiple perspectives on company as a result of their multiple roles, and empowering them to act with determination. However, this allows for little transparency into CEO’s acts, and as such their actions can go unmonitored, it paves way for scandal and corruption. According to Ira Millstein, an expert in corporate governance, an effectively independent board is a shareholder’s best protection. Separating roles allows chair to check up on CEO, and in turn company’s overall performance, on behalf of stockholders. Separating roles also allows CEO and chairman to focus on different, equally vital aspects of company’s performance. “We think it is an appropriate segregation of duties. As a business grows, CEO can focus on business and chairman can help with ever-growing regulatory requirements,” noted Lino P. Matteo, CEO for Montreal-based management accounting firm Mount Real. Ultimately, when chair does not also occupy role of CEO, they are able to govern board in a more impartial manner, meaning that investor returns could potentially be higher. However, a new survey by three consultants for international management consulting firm Booz Allen Hamilton found that companies that divided roles actually had smaller shareholder returns, leading some to rethink CEO-chairman split. A survey by Christian & Timbers showed that 97% of European executives believe that roles should be split. However, stockholder returns were nearly 5% lower in European companies that implemented split, when compared with companies that had same CEO and chairman.
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