Leading International Business - Locally

KFC entered India with Beef and Pork products, without realizing the potential retaliation from the local market. The result, it had to close shop for nearly two years. Future Group with Kishore Bayani as its first generation entrepreneur setup 80 people core team in Bangalore which visits stores, observes customers, meets them, engage with them and alike to gather what he considers core facts for his retail strategy. When Big Bazaar was started, the floors were neat and clean akin to large malls. Customers were reluctant with missing market buzz of shopping. Big Bazaar swiftly adopted the change to succeed, based on the facts gathered through their market insights. Is it business knowledge or cultural knowledge? I would attribute it to knowledge of local culture (India) as same factors may not work in another country just the same way even if other business parameters are kept similar.

Knowledge of local culture, therefore, is as much important as knowledge of business itself. This is hygiene factor, without which, chances of failures increases leaps and bounds. Leaders are expected to have this market knowledge before launching their country strategy. In an International environment, mistakes are costly, not only from financial perspective but also from the damage to the brand.

Insights here are not intended to be exhaustive, but are catalyst to generate interest and help through few guiding rules. Some insights work on the region while others work on the country.

The first exposure is to communicate in International markets. Americans and British like to crack jokes and involve humor with business while French, German, Dutch and Japanese would not mix the two, till they have become ‘friends’. It is strict ‘No’ to discuss politics, religion, family, children, and salary with Americans and Brits. Safest bet is to discuss local sports like baseball, basketball in US and Soccer in Europe apart from Weather. French likes to discuss art, wine, travel experiences and sports. It is kind of ritual in Latin America to discuss health issues in great details. French do not like to get a smile from passer by, just the opposite of Brits. It is compulsory not to discuss family and criticize king / queen in Islamic countries, else…you know best. Italy does not take discussion on Mafia, taxes and politics easily. In Australia and NZ, avoid discussion on politics, racism, labor issues, kangaroo population and highly of NZ in Australia and vice versa.

Australian, Brits, French, Canadian and Americans use chit-chat to familiarize fast. China and Hong Kong uses chit-chat just to discuss the travel experience but swiftly moves to elaborate conversation on even personal topics like family, Income etc. People in Middle East and India like to engage in conversation for a long duration. Eye contact is positive in US and Europe unlike Asian and Latin American, as it is seen as attentiveness, alertness, self confidence, truthfulness and respect. Japanese, Koreans and many Asian countries find stare quite uncomfortable, to the extent of doubting and not agreeing. Accent is very important to Brits and is able to find out educational background from the accent. Standard English were found in supervisory positions more often than were persons who speak with pronounced accent. Americans like to speak slower. In Middle East, Italy, Germany and Taiwan, they associate volume with strength and sincerity and thus speak loudly. Japanese prefer to speak and hear softly.

One of the most authoritative work as a project was carried out by Geert Hofstede (www.geert-hofstede.com) on cultural dimensions. Geert analyzed a large data base of employee values scores collected by IBM between 1967 and 1973 covering more than 70 countries, updated in 2001 with scores for 74 countries / regions.

Hofstede developed a model that identifies five primary Dimensions to assist in differentiating cultures: Power Distance - PDI, Individualism - IDV, Masculinity - MAS, and Uncertainty Avoidance – UAI and Long-Term Orientation – LTO. Values of some countries are mentioned here.

Country	PDI	IDV	MAS	UAI	LTO
Arab World	80	38	52	68
Australia	36	90	61	51	31
Belgium	65	75	54	94
Canada	39	80	52	48	23
China	80	20	66	30	118
India	77	48	56	40	61
France	68	71	43	86
Germany	35	67	66	65	31
Italy	50	76	70	75
Japan	54	46	95	92	80
Mexico	81	30	69	82
Netherlands	38	80	14	53	44
New Zealand	22	79	58	49	30
Pakistan	55	14	50	70
United Kingdom	35	89	66	35	25
United States	40	91	62	46	29

Power Distance Index (PDI) - Society's level of inequality is endorsed by the followers as much as by the leaders. Higher the number means higher the inequality.

Individualism (IDV) – This is opposite to collectivism - in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families. Higher the number, lower the collectivism bond.

Masculinity (MAS) – Distribution of roles between genders. Masculine assertiveness over feminine shows higher number.

Uncertainty Avoidance Index (UAI) – Factor to show society's tolerance for uncertainty and ambiguity. Laws and rules are stick for uncertainly avoidance in high scoring countries / regions. People in uncertainty avoiding countries are more emotional. The opposite type, uncertainty accepting cultures are more tolerant of opinions different from theirs. Long-Term Orientation (LTO) - It can be said to deal with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition and fulfilling social obligations.

Knowing cultural diversity and its impact on business is any leader’s dream. HSBC aptly characterized it in its punch line “Think Global, Act Local”. Leadership can only be better by avoiding traps KFC found itself in.