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Transcript of CCM
Arnold Tanner, Western Energy Inc., and China
Hina Sajjad (15855)
PRESENTED TO:-Sir Yasir Ali Soomro
PRESENTED BY:- Natasha Ahmed (12705)
Western Energy Incorporation(WEI) conducted business in 100 countries and employed 70,000 people.
It is one of the USA's ten largest energy firm.
In 1979, China introduced an open door policy.
Lack of capital and technology restricted it to exploit the abundant coal in the Taibo mine, Shanxi province of North China.
Eight Western firms participated three from USA but Tanner won the bid due to his gunaxi(connections) with the Chinese supreme leader Deng Xiaoping.
Q1. What are the cross cultural influences does company encounter when determining how and where to conduct business in Republic of China?
Q2. What cultural factors actually affected the operations of WEI?
Point Of Reference
Q3. Explain some cultural contrast or differences between China and USA (Political systems, Cultural norms, Legal systems? How might they impact cross cultural business operations of WEI?
Chinese government is still very involved with business, be it directly through state-owned enterprises or indirectly through legislation.
A company would be successful if it built trust with the Chinese government.
“You have to prove yourself over the years as someone the government can rely on to do what they want you to do.”
The Chinese legal system echoes the political system in that it is still suspicious of outsiders and therefore supports its domestic businesses
BUSINESS OPERATIONS AFFECTED:-
As WEI was not able to develop local guanxi relations with local partners.
Americans made tall promises but were not able to fulfill them main reason such as scale of the mine, Chinese worker salaries, the amount of coal it cud export , it promised to export 75% of coal and market it itself in export market
Due to falling coal prices WEI started to ask for various concession from Chinese side, WEI forced China Coal Import/Export Corp to buy coal on international price and market the coal itself.
When Chinese negotiators decide to close the project government and tanner would intervene and enforce a solution.
Q4. If you were the manager of the WEI and given the responsibilities of China country operations. What would you do to adjust the management orientations?
AS A MANAGER OF WEI
Stop the accusation and support the china coal import/export cooperation to market the coal in the export market.
To negotiate the terms of what WEI Americans managers wanted and what Chinese claimed.
Producing both type of coal for foreign and local currency.
Making it clear to the Chinese that the WEI is a 50% investing partner and did not claim to fulfill the promise after feasibility study rather collaborate to create win-win situation.
Increase cooperation by helping the china coal import/export cooperation to market the coal internationally
This would be in the favor of the Chinese and the WEI.
Q5. What role does the low context culture and high context culture plays in the case study?
CHINA - HIGH CONTEXT COUNTRY
THE CHINESE ARE TEAM ORIENTED
THE CHINESE TENDS TO BELIEVE IN IMPLICIT, ORAL AND INFORMAL INFORMATION.
USA - LOW CONTEXT COUNTRY
THE WEI ARE COMPETITIVE
Q6. What communication barriers are noticeable in the case? Give evidence from the case?
Lack of trust
High Context against Low context culture
Q7. In your opinion the negotiating style was appropriate in the cross cultural business deal between both companies?
COMPETING- as both wanted to win and defeat the other
COLLABORATIVE: Win-Win situation
The cultural differences impacted on some aspects of management in terms of
Work Group characteristics