Saudi Electronic NAFTA Tomato Wars International Business Case Discussion Learning Outcomes: Identify major components of international business management

Saudi Electronic NAFTA Tomato Wars International Business Case Discussion Learning Outcomes: Identify major components of international business management (CLO 1.1)Discuss the reasons for and methods of governments’ intervention in trade (CLO 1.4)Understand processes of exporting and importing (Lo:7) Critical Thinking Read the Management Focus on, “NAFTA’s Tomato Wars,” available in your e-book (page no. 620), and answer the following questions: Assignment Question(s):(Marks: 5) Was the establishment of a minimum floor price for tomatoes consistent with the free trade principles enshrined in the NAFTA agreement?Who benefits from the importation of tomatoes grown in Mexico? Who suffers? Give arguments in support of your answer.Do you think that Mexican producers were dumping tomatoes in the United States? Give reasons.What do you think will be the impact of the new higher floor price? Who benefits from the higher floor price? Who suffers? Give logics.What do you think is the optimal government policy response here? Explain your answer. www.hbr.org
BEST PRACTICE
Knowing what makes groups
tick is as important as
understanding individuals.
Successful managers learn to
cope with different national,
corporate, and vocational
cultures.
Cultural Intelligence
by P. Christopher Earley and Elaine Mosakowski
•
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Knowing what makes groups tick is as important as understanding
individuals. Successful managers learn to cope with different national,
corporate, and vocational cultures.
BEST PRACTICE
Cultural Intelligence
by P. Christopher Earley and Elaine Mosakowski
COPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
You see them at international airports like
Heathrow: posters advertising the global bank
HSBC that show a grasshopper and the message “USA—Pest. China—Pet. Northern Thailand—Appetizer.”
Taxonomists pinned down the scientific definition of the family Acrididae more than two
centuries ago. But culture is so powerful it can
affect how even a lowly insect is perceived. So
it should come as no surprise that the human
actions, gestures, and speech patterns a person
encounters in a foreign business setting are
subject to an even wider range of interpretations, including ones that can make misunderstandings likely and cooperation impossible.
But occasionally an outsider has a seemingly
natural ability to interpret someone’s unfamiliar and ambiguous gestures in just the way
that person’s compatriots and colleagues
would, even to mirror them. We call that cultural intelligence or CQ. In a world where crossing boundaries is routine, CQ becomes a vitally
important aptitude and skill, and not just for
international bankers and borrowers.
harvard business review • october 2004
Companies, too, have cultures, often very
distinctive; anyone who joins a new company
spends the first few weeks deciphering its cultural code. Within any large company there are
sparring subcultures as well: The sales force
can’t talk to the engineers, and the PR people
lose patience with the lawyers. Departments,
divisions, professions, geographical regions—
each has a constellation of manners, meanings,
histories, and values that will confuse the interloper and cause him or her to stumble. Unless,
that is, he or she has a high CQ.
Cultural intelligence is related to emotional
intelligence, but it picks up where emotional
intelligence leaves off. A person with high
emotional intelligence grasps what makes us
human and at the same time what makes each
of us different from one another. A person
with high cultural intelligence can somehow
tease out of a person’s or group’s behavior
those features that would be true of all people
and all groups, those peculiar to this person or
this group, and those that are neither universal
nor idiosyncratic. The vast realm that lies be-
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Cultural Intelligence •• •B EST P RACTICE
P. Christopher Earley is a professor
and the chair of the department of organizational behavior at London Business School. Elaine Mosakowski is a
professor of management at the University of Colorado at Boulder.
tween those two poles is culture.
An American expatriate manager we know
had his cultural intelligence tested while serving on a design team that included two German engineers. As other team members floated
their ideas, the engineers condemned them repeatedly as stunted or immature or worse. The
manager concluded that Germans in general
are rude and aggressive.
A modicum of cultural intelligence would
have helped the American realize he was mistakenly equating the merit of an idea with the
merit of the person presenting it and that the
Germans were able to make a sharp distinction between the two. A manager with even
subtler powers of discernment might have
tried to determine how much of the two Germans’ behavior was arguably German and
how much was explained by the fact that they
were engineers.
An expatriate manager who was merely
emotionally intelligent would probably have
empathized with the team members whose
ideas were being criticized, modulated his or
her spontaneous reaction to the engineers’
conduct, and proposed a new style of discussion that preserved candor but spared feelings,
if indeed anyone’s feelings had been hurt. But
without being able to tell how much of the engineers’ behavior was idiosyncratic and how
much was culturally determined, he or she
would not have known how to influence their
actions or how easy it would be to do that.
One critical element that cultural intelligence and emotional intelligence do share is,
in psychologist Daniel Goleman’s words, “a
propensity to suspend judgment—to think before acting.” For someone richly endowed with
CQ, the suspension might take hours or days,
while someone with low CQ might have to
take weeks or months. In either case, it involves using your senses to register all the ways
that the personalities interacting in front of
you are different from those in your home culture yet similar to one another. Only when
conduct you have actually observed begins to
settle into patterns can you safely begin to anticipate how these people will react in the next
situation. The inferences you draw in this manner will be free of the hazards of stereotyping.
The people who are socially the most successful among their peers often have the greatest difficulty making sense of, and then being
accepted by, cultural strangers. Those who
harvard business review • october 2004
fully embody the habits and norms of their native culture may be the most alien when they
enter a culture not their own. Sometimes, people who are somewhat detached from their
own culture can more easily adopt the mores
and even the body language of an unfamiliar
host. They’re used to being observers and making a conscious effort to fit in.
Although some aspects of cultural intelligence are innate, anyone reasonably alert, motivated, and poised can attain an acceptable
level of cultural intelligence, as we have
learned from surveying 2,000 managers in 60
countries and training many others. Given the
number of cross-functional assignments, job
transfers, new employers, and distant postings
most corporate managers are likely to experience in the course of a career, low CQ can turn
out to be an inherent disadvantage.
The Three Sources of Cultural
Intelligence
Can it really be that some managers are socially intelligent in their own settings but ineffective in culturally novel ones? The experience of Peter, a sales manager at a California
medical devices group acquired by Eli Lilly
Pharmaceuticals, is not unusual. At the devices company, the atmosphere had been mercenary and competitive; the best-performing
employees could make as much in performance bonuses as in salary. Senior managers
hounded unproductive salespeople to perform better.
At Lilly’s Indianapolis headquarters, to
which Peter was transferred, the sales staff received bonuses that accounted for only a small
percentage of total compensation. Furthermore, criticism was restrained and confrontation kept to a minimum. To motivate people,
Lilly management encouraged them. Peter
commented, “Back in L.A., I knew how to handle myself and how to manage my sales team.
I’d push them and confront them if they
weren’t performing, and they’d respond. If you
look at my evaluations, you’ll see that I was
very successful and people respected me. Here
in Indianapolis, they don’t like my style, and
they seem to avoid the challenges that I put to
them. I just can’t seem to get things done as
well here as I did in California.”
Peter’s problem was threefold. First, he
didn’t comprehend how much the landscape
had changed. Second, he was unable to make
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Cultural Intelligence •• •B EST P RACTICE
Cultural intelligence:
an outsider’s seemingly
natural ability to
interpret someone’s
unfamiliar and
ambiguous gestures the
way that person’s
compatriots would.
his behavior consistent with that of everyone
around him. And third, when he recognized
that the arrangement wasn’t working, he became disheartened.
Peter’s three difficulties correspond to the
three components of cultural intelligence: the
cognitive; the physical; and the emotional/
motivational. Cultural intelligence resides in
the body and the heart, as well as the head. Although most managers are not equally strong
in all three areas, each faculty is seriously hampered without the other two.
Head. Rote learning about the beliefs, customs, and taboos of foreign cultures, the approach corporate training programs tend to favor, will never prepare a person for every
situation that arises, nor will it prevent terrible
gaffes. However, inquiring about the meaning
of some custom will often prove unavailing because natives may be reticent about explaining themselves to strangers, or they may have
little practice looking at their own culture analytically.
Instead, a newcomer needs to devise what
we call learning strategies. Although most people find it difficult to discover a point of entry
into alien cultures, whose very coherence can
make them seem like separate, parallel worlds,
an individual with high cognitive CQ notices
clues to a culture’s shared understandings.
These can appear in any form and any context
but somehow indicate a line of interpretation
worth pursuing.
An Irish manager at an international advertising firm was working with a new client, a
German construction and engineering company. Devin’s experience with executives in the
German retail clothing industry was that they
were reasonably flexible about deadlines and
receptive to highly imaginative proposals for
an advertising campaign. He had also worked
with executives of a British construction and
engineering company, whom he found to be
strict about deadlines and intent on a media
campaign that stressed the firm’s technical expertise and the cost savings it offered.
Devin was unsure how to proceed. Should
he assume that the German construction company would take after the German clothing retailer or, instead, the British construction company? He resolved to observe the new client’s
representative closely and draw general conclusions about the firm and its culture from his
behavior, just as he had done in the other two
harvard business review • october 2004
cases. Unfortunately, the client sent a new representative to every meeting. Many came from
different business units and had grown up in
different countries. Instead of equating the
first representative’s behavior with the client’s
corporate culture, Devin looked for consistencies in the various individuals’ traits. Eventually he determined that they were all punctual,
deadline-oriented, and tolerant of unconventional advertising messages. From that, he was
able to infer much about the character of their
employer.
Body. You will not disarm your foreign
hosts, guests, or colleagues simply by showing
you understand their culture; your actions and
demeanor must prove that you have already
to some extent entered their world. Whether
it’s the way you shake hands or order a coffee,
evidence of an ability to mirror the customs
and gestures of the people around you will
prove that you esteem them well enough to
want to be like them. By adopting people’s
habits and mannerisms, you eventually come
to understand in the most elemental way what
it is like to be them. They, in turn, become
more trusting and open. University of Michigan professor Jeffrey Sanchez-Burks’s research
on cultural barriers in business found that job
candidates who adopted some of the mannerisms of recruiters with cultural backgrounds
different from their own were more likely to
be made an offer.
This won’t happen if a person suffers from a
deep-seated reservation about the called-for
behavior or lacks the physical poise to pull it
off. Henri, a French manager at Aegis, a media
corporation, followed the national custom of
greeting his female clients with a hug and a
kiss on both cheeks. Although Melanie, a British aerospace manager, understood that in
France such familiarity was de rigueur in a professional setting, she couldn’t suppress her discomfort when it happened to her, and she recoiled. Inability to receive and reciprocate
gestures that are culturally characteristic reflects a low level of cultural intelligence’s physical component.
In another instance, a Hispanic community leader in Los Angeles and an AngloAmerican businessman fell into conversation
at a charity event. As the former moved
closer, the latter backed away. It took nearly
30 minutes of waltzing around the room for
the community leader to realize that “Ang-
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Cultural Intelligence •• •B EST P RACTICE
Diagnosing Your Cultural Intelligence
These statements reflect different facets of cultural intelligence. For each set,
add up your scores and divide by four to produce an average. Our work with
large groups of managers shows that for purposes of your own development,
it is most useful to think about your three scores in comparison to one another.
Generally, an average of less than 3 would indicate an area calling for improvement, while an average of greater than 4.5 reflects a true CQ strength.
Rate the extent to which you agree with each statement, using the scale:
1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree.
Before I interact with people from a new culture, I ask
myself what I hope to achieve.
If I encounter something unexpected while working in a
new culture, I use this experience to figure out new ways
to approach other cultures in the future.
I plan how I’m going to relate to people from a different
culture before I meet them.
+
Total
When I come into a new cultural situation, I can
immediately sense whether something is going well
or something is wrong.
÷4=
Cognitive CQ
It’s easy for me to change my body language (for
example, eye contact or posture) to suit people from
a different culture.
+
Total
I modify my speech style (for example, accent or tone)
to suit people from a different culture.
I easily change the way I act when a cross-cultural
encounter seems to require it.
÷4=
Physical CQ
I have confidence that I can deal well with people from
a different culture.
I am certain that I can befriend people whose cultural
backgrounds are different from mine.
I can adapt to the lifestyle of a different culture with
relative ease.
+
Total
I am confident that I can deal with a cultural situation
that’s unfamiliar.
÷4=
harvard business review • october 2004
Emotional/
motivational CQ
Copyright © 2004 Harvard Business School Publishing Corporation. All rights reserved.
I can alter my expression when a cultural encounter
requires it.
los” were not comfortable standing in such
close physical proximity.
Heart. Adapting to a new culture involves
overcoming obstacles and setbacks. People
can do that only if they believe in their own
efficacy. If they persevered in the face of challenging situations in the past, their confidence
grew. Confidence is always rooted in mastery
of a particular task or set of circumstances.
A person who doesn’t believe herself capable of understanding people from unfamiliar
cultures will often give up after her efforts
meet with hostility or incomprehension. By
contrast, a person with high motivation will,
upon confronting obstacles, setbacks, or even
failure, reengage with greater vigor. To stay
motivated, highly efficacious people do not depend on obtaining rewards, which may be unconventional or long delayed.
Hyong Moon had experience leading racially mixed teams of designers at GM, but
when he headed up a product design and development team that included representatives
from the sales, production, marketing, R&D,
engineering, and finance departments, things
did not go smoothly. The sales manager, for example, objected to the safety engineer’s attempt to add features such as side-impact air
bags because they would boost the car’s price
excessively. The conflict became so intense and
so public that a senior manager had to intervene. Although many managers would have
felt chastened after that, Moon struggled even
harder to gain control, which he eventually did
by convincing the sales manager that the air
bags could make the car more marketable. Although he had no experience with cross-functional teams, his successes with single-function
teams had given him the confidence to persevere. He commented, “I’d seen these types of
disagreements in other teams, and I’d been
able to help team members overcome their differences, so I knew I could do it again.”
How Head, Body, and Heart Work
Together
At the end of 1997, U.S.-based Merrill Lynch
acquired UK-based Mercury Asset Management. At the time of the merger, Mercury was
a decorous, understated, hierarchical company known for doing business in the manner
of an earlier generation. Merrill, by contrast,
was informal, fast-paced, aggressive, and entrepreneurial. Both companies had employees
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Cultural Intelligence •• •B EST P RACTICE
People who are
somewhat detached from
their own culture can
more easily adopt the
mores and even the body
language of an
unfamiliar host.
of many nationalities. Visiting Mercury about
six months after the merger announcement,
we were greeted by Chris, a Mercury personnel manager dressed in khakis and a knit shirt.
Surprised by the deviation from his usual uniform of gray or navy pinstripes, we asked him
what had happened. He told us that Merrill
had instituted casual Fridays in its own offices
and then extended the policy on a volunteer
basis to its UK sites.
Chris understood the policy as Merrill’s attempt to reduce hierarchical distinctions both
within and between the companies. The intention, he thought, was to draw the two enterprises closer together. Chris also identified a
liking for casual dress as probably an American
cultural trait.
Not all Mercury managers were receptive
to the change, however. Some went along
with casual Fridays for a few weeks, then gave
up. Others never doffed their more formal attire, viewing the new policy as a victory of
carelessness over prudence and an attempt by
Merrill to impose its identity on Mercury,
whose professional dignity would suffer as a
result. In short, the Mercury resisters did no…
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