Doctorate in Business Administration

Academy of Business of Switzerland

COLOMBIA

Adriana Ospina

International Management

COLOMBIA

1

1. The value and benefits of studying culture dimensions prior to doing business.

2. Develop the negotiating techniques you will use in this setting.

3. Which areas of communication you view as being critical to your success.

4. Do you anticipate recruiting assistants to travel with you?

5. What steps will you take to insure those in your team are briefed and well trained in the areas of cross-cultural communication?

1. The value and benefits of studying culture dimensions prior to doing business.

Before doing business one must understand and how to relate to the people one is doing business with, with whom. The customs people have in order to have a proper communication and understanding to establish a successful and fruitful business relationship.

The culture of a group of people, as it is usually understood, stands for the values and beliefs the people share.1 That it’s really important because all cultural values internationally must be respected sometimes embraced. In the country I choose to do my research there are different cultural values customs and holydays that could affect business transactions and business.

The country at hand it’s Colombia it’s a country in the top of South America, It’s culture it’s very heterogeneous each particular region has it’s own set of customs, accent, food, lingo and they could be very different from one another.

Colombian people are very business active; they drive hard bargains, usually in popular markets it’s very common and since people are little the entire society is used to negotiate and get the best bargains for their money, that in all social classes it’s a strong cultural mark. Foreigners are treated with closeness, they are charmed with business lunches, dinners and drinks hence financial centers in Colombia In Bogota, Medellin Cartagena have wonderful top of the line restaurants, bars etc.

1 Klamer Arja, TheValue of Culture On the relationship between economics and arts, Amsterdam. University Press, Amsterdam, 1996.

2

Colombia geographic map

Image 1. http://www.investincolombia.com.co/regional-information.html

Marked on the map are the biggest cities for foreign investment in Colombia. There are many reasons to invest Colombia that people from abroad find attractive, like having a diverse culture that is a product of its unique history, and its African, European and Native Indian influences. Due to its rich heritage, Colombia is rich in diversity of cultural expression but also diverse customs and behaviors.

To understand the value and benefits of understanding Colombian culture, the value starts in what’s gained from knowing the Colombian kind of living, the way they do business and how do they relate to visitors, is not a country like Japan where cultural differences in Business are far more different from the western countries, but it does have facts that must be taken on account for behaving the proper way with the hosts. The better the cross-cultural negotiations the better the value gained. Colombian will take visitors as hosts most of the time warm way. So, to not loose a profitable business with Colombian the most important thing is not to hurt any kind of sensibilities, as hosts people try to give a certain attentions to the foreign visitor, depending on the region and city it may vary, food may vary too and Colombian food should be eaten with care not to drop sick in the middle of business

3

negotiations. Drinks are also customary after a long day of business, the local drink “aguardiente” it’s also no wine, it’s distilled hard liquor, and some people may invite the foreign negotiators for a tasting. All attentions it is advised to attend all of them with extreme politeness and diplomacy.

A harmonious relationship with the fellow local negotiator will make any business transaction more effective, efficient and the less problems you have less risks of losing monetary capital and the ways to think about both parties making the most profit and acquiring the most benefits of the business at hand will run smoothly.

These facts should give an idea about the background of Colombian people.

Over 87 indigenous ethnic groups that represent 1.5 percent of the country’s total population and speak 64 native languages that belong to 22 linguistic families.

Several million Afro-Colombians who represent nearly 16 percent of the population.

Over 30 million mestizo inhabitants with an immense variety of cultural traditions.

Nearly 12,000 gypsies who descend from Colonial times, and several other non-traditional immigrant groups in different regions of the country.

The country is extremely rich in ethnic diversity, each region has a set of different customs, food diversities, kinds of music, weather, cultural heritage is very abundant and all those different aspects are among the most important things people have to embrace and respect, also holydays, public celebrations etc. Bonuses are given in the middle of the year and in for December, to all people employed it’s customary. It maintains the employees motivation to work at a company and it should be taken on account when making a budget.

Colombians are a post-colonial people; there fore they have independence and historical holydays. Being one of the third world countries or countries in development, the culture is defined by historical and socio-economical behavioral legacy. The first inhabitants of modern day Colombia arrived in 10,000 BC, and lived in the area that is now the capital city of Bogotá. However, it was around the first millennium AD that over 12 more advanced indigenous groups settled in the Colombian territory – prior to the Spanish

4

Conquest – and left vestiges of the surprising level of development they had attained. The trickery of the conquistadors and the hardship of political history have marked Colombian politics and government turmoils. It’s the country with the oldest guerilla of Latin America and all that political ailment has a direct impact on Colombian social life that gave form in general to the idiosyncrasy. It’s very beneficial to know that political aspects can affect business negotiations, due to regulations, taxes, permits, or in gravid manner eventual strikes that can affect prices, transport systems, bancs.

It is also beneficial to know that due to history when in business comments or jokes about drugs a re considered a serious offense and a total lack of respect and education.

2. Develop the negotiating techniques you will use in this setting.

From the University of Stanford, I researched a list of negotiation practices and I encountered some of them would be great benefit to adapt in a Colombian setting. I’m making an adaptation of the listing to be applied as negotiation techniques. In the listing below I elaborate in the local context about the important characteristics of each one of them.2

1. Top leadership commitment—demonstrated and communicated throughout an organization by top-level management. Top level management should set the example in unfolding international management techniques, embrace diversity and culture. Colombia it’s a very liberal country many women are in business and it’s important to maintain that diversity and accept people from different regions. It’s is noted that It’s common sometimes for people in Colombia only choose to use people from a specific geographical background and it’s seen by other as discriminatory.

2. Flexibility as part of an organization’s strategic plan of negotiations—a diversity strategy and plan that are developed and aligned with the organization’s strategic plan. Different points of view will enrich the possibilities of making work more diligent and efficient. Being flexible and able to adapt to the local circumstances is very important.

3. Diversity linked to performance—the understanding that a more diverse

2 Kreitz Patricia A., Director, Technical Information Services Stanford Linear Accelerator Center, Stanford University, Best practices for Managing Organizational Diversity, http://www.slac.stanford.edu/cgi-wrap/getdoc/slac-pub-12499.pdf

5

and inclusive work environment can yield greater productivity and help improve individual and organizational performance. The business negotiators should be ready to make business with all kinds of people race, gender and religion is very important people with some kind of prejudice, that prevents them from relating to persons of different beliefs or customs in a close, polite and free way are not recommended to approach international negotiations.

4. Measurement—a set of quantitative and qualitative measures of the impact of various aspects of an overall of the business. Clarity in numbers is substantial for successful business a vague proposal won’t be taken seriously or people might think they are wasting their time. There’s even a popular saying in Colombia: “Las cuentas claras y el chocolate espeso” which translated means “the accounting clear and the chocolate thick”.

5. Accountability—the means to ensure that leaders are responsible for their proposal by linking their performance assessment and compensation to the progress of financial outcomes. It is a priority locally that people wont take blind risks without prior knowledge of an expected positive financial result.

6. Succession planning—an ongoing, strategic process for identifying and Developing a diverse pool of talent for an organization’s potential future leaders. This is very important prospective future planning if it’s a long-term business planned in the country.

7. Recruitment—the process of attracting a supply of qualified, diverse applicants for employment. A planned recruitment technique that shows expertise will give security to engage in business with people from abroad.

8. Institutional training—organizational efforts to inform and educate management and staff about the benefits of starting international negotiations.

There are 6 points to take on account when doing International negotiations in business, international business can be compared to what domestic politics are in relation to International politics and diplomacy.3 Understood by diplomacy the practice of cultivating relationships around the world in order to resolve issues an advance in interests. The role of a diplomat is also the role of a manager, “An effective ambassador has to be a strong leader—a

3Glaser Tanya, This article summary: "A Beginner's Guide to International Business Negotiations" by Jeswald Salacuse Conflict Research Consortium. University of Colorado, 2005.

6

good manager, a resilient negotiator…”4

The first point to take on account is that in international negotiations both of the involved negotiating parties must understand the laws and their function in business also the policies and political authorities of more than one nation. With these laws and policies it is possible to have inconsistencies from one country to another. In Colombia for commerce businesses depends from which country taxes could apply or free commerce treatises. International business agreements must include measures to solve move negotiations forward even with law or political inconsistencies. Such measures typically include arbitration clauses, specification of the governing laws, and tax havens.

Second item that affects only international business is the existence of different currencies and the need to manage accounting according to international exchange rate. With different currencies to two problems appear: First the actual value of the prices or payments may vary, and it may result in unexpected losses or gains, since the relative value of different currencies varies over time. Another problem that any international business must overcome is that each government generally seeks to control the flow of domestic and foreign currencies across their national boundaries. Unexpected changes in such governmental currency policies can have dramatic effects on international business deals. International money transfer may vary in taxes from the sending country to the recipient. It’s also in a cultural manner that banks do international business transfers with their individual policies and charges they can charge different rates and take different amounts of time so that should be really clear when doing business negotiations and prospects.

The third factor that should be prioritized when doing international negotiation is the participation of governmental authorities. Governments often play a much larger role in foreign business than Americans are accustomed to. The presence of sometimes often-extensive government bureaucracies can make international negotiation processes more difficult than in an American private sector for example. In Colombia depends on the type of business, and the type of product or service, the kind of different procedures and stages the development of project may vary in time and price. State-controlled businesses in Colombia usually not always have the same goal in mind as private business, services are not seen as social benefits but as profitable business and that is part of the cultural idiosyncrasy, and

4 http://diplomacy.state.gov/discoverdiplomacy/diplomacy101/people/170341.htm, Discover diplomacy, US department of State website, 2014.

7

also the reason of many socio-economical problems where everybody wants a piece of the cake, sometimes even sacrificing the quality of service at the expense of the profit. Corruption is one the biggest Colombian problems the country has.

Fourth, in Colombia international projects do not suffer drastic changes in their circumstances. The country is a very stable, agent such as reactionary citizens or changes in government do not affect substantially the general economy. It’s hardly unlikely that a war or revolution may occur, or sudden currency devaluation. Although the risks could be evaluated by employing political risk analysts, investment insurance, and terms that allow for contract cancellation under certain conditions.

International business negotiators should present their proposals in ways that are adequate and eloquent. Colombians are open to new ideas and the culture has no-exotic rarity that might interrupt efficient ways of communication. A crucial element for international negotiations are Cultural differences, it’s very important to avoid misunderstandings or a wrong comprehension due to different connotations, it’s primordial to avoid local slang and keep the concepts clear. Neutral the language should be used, to narrow signifiers and impede metaphorical or allegorical open meanings that could lead misinterpretation and achieve correct perceptions of the proposals.

3. Which areas of communication you view as being critical to your success.

Eloquent means of communication require more than words. Facial gestures, hand movements, posture, eye contact, even silence… all these attitudes send messages about perceptions, opinions, emotions, status and levels of relationships.5

There are several areas of communication in which an international manager should be prepared to perform, personal, hierarchical, establish a non-threatening work environment, and encourage teamwork and collaboration.

The points listed below should be taken on account for efficient communication strategies with Colombian business people.

Prior culture preparation, salutations, timing, be as nice as possible,

5 Diversity Tip Sheet Cross-Cultural Communication Translating Nonverbal Cues, Diversity council, diversity tool-kit for business, http://www.diversitycouncil.org/toolkit, 2008.

8

Colombian people are usually warm so that would be expected to on a foreign negotiator.

Handshaking is the customary greeting when making business or formal presentations. Punctuality is very appreciated although it could be a little flexible due to other circumstances.

Knowing the language if possible, Spanish is a very complex language so basic comprehension of the project at hand is extremely important. Not all-Spanish words can be translated to English. Each region of Colombia has different customs and local slang for the language. Colombians that deal with international business and commerce will always speak English.

Attend business lunches and dinners, not attending could be seen as un-polite. Try to make all appointments in advance.

Find a good recruiter for the project, one needs the best qualified people it’s very common that for blue collar jobs some people end up not being apt for their jobs, due to the lack of employment and bad customs of some unemployed workers, check all Curriculum references.

Check facts, any Colombian company gives you to avoid unpleasant surprises.

Usually people do not work during the weekends, people do not want to be disturbed during their family time or late at night.

Colombians can be strong negotiators and drive hard bargains but you should remember to avoid “high pressure” sales tactics. These can be viewed as confrontational.

4. Do you anticipate recruiting assistants to travel with you?

For recruiting I do anticipate having recruiting assistants, It would seem to me more objective to find the person qualified for the task, but I would also hire local recruiters as they know the local culture better, they could advise which is the better preparation for the vacant needed, they would have the knowledge on which are the best universities, the most competent companies, also help in verifying curriculum references.

Getting to know each person background, schooling and work trajectory would help in hiring the best candidate for each job. Local recruiting people

9

would collaborate together with the foreign staff to arrange interviews for the best possible candidates and in agreement hire the best staff. A staff that can perform in excellence working as a team and that will be able to perform to the best expectations, that would save on problems and delays related to the work force that way the work will be done with diligence and efficiency.

It is of supreme importance to hire people that can follow deadlines and punctuality, bilingual knowledge should have assessment at the work interview since sometimes curriculums can enhance those capabilities in order to get the job without that being not true.

The candidates should have excellent skills of communication in both languages in order to have a tangible communication that will develop into collaboration, performing tasks because to work as a team with communication problems is very difficult.

5. What steps will you take to insure those in your team are briefed and well trained in the areas of cross-cultural communication?

To insure the preparation for the accomplishment of intercultural negotiations, in anticipation the team should be briefed in knowledge of the Colombian culture, preferable basic knowledge of the language Spanish, possession of legal knowledge, knowledge of the negotiation context: company location and business field.

In order to efficiently negotiate internationally for a Colombian context, the negotiating, briefing and training will have several phases:

Get the team prepared in Macro and micro information6

“Macro information

Politics, economics, language, decision-making, the government, the legal system.

Micro information

Objectives, bargaining range, the legal agreement, financing, profit sharing, management structure, life cycle, closing negotiations.”

6 Peleckis Kęstutis, International business negotiations: innovation, negotiation team preparation, Contemporary Issues in Business, Management and Education 2013. Pg. 70.

10

7Colombian government type: Republic; executive branch dominates government structure, has a legislative and a judicial branch.

Cabinet: Appointed by the president

Legal system: civil law system influenced by the Spanish and French civil codes

For the rest of government, political and economical facts almost to the date, a through summary can be found at the CIA website for consult https://www.cia.gov/library/publications/the-world-factbook/geos/co.html

It’s should be known some basic information, about general culture, such as population, heritage, collective behavior, issues of security.

The team members should know:

Business Etiquette and manners8 this site has the basic things people should take on account for cross- cultural negotiations http://www.cyborlink.com/besite/colombia.htm from the site the most relevant aspects the team should be concerned about of Colombia to behave with business associations from Dr. Geert Hofstede IBM psychologist, in which it ‘s relevant to know Colombians are a collective society that tends to associate in groups where people generate strong relationships, more than half of the population is catholic, hence there is tendency to practice catholic values, he also mentions a few norms of etiquette common in all western countries.

To add, although it’s getting better there’s a lot of gender inequality, due to male chauvinism common in Latin American societies, that derive from colonial customs and has passed historically from generation to generation. Despite that fact women have an important participation in politics and the society is evolving through cross-cultural transfers and education to disposes themselves from chauvinist forms of behavior.

The briefing should be done with the aid of information websites that describe facts about cultural behavior focused in international negotiations. After identify potential resources and load relevant industry and company information, depending on each business.

Included in the training the know how to prepare all presentations to be as

7 https://www.cia.gov/library/publications/the-world-factbook/geos/co.html, 2013, revised 2014.8 http://www.cyborlink.com/besite/colombia.htm revised 2014. 998-2012 InternationalBusinessCenter.org - Dr. Geert Hofstede.

11

eloquent and clear as possible and lead the negotiation to successful arrangement.

To coordinate travel arrangements safety in Colombia should be the main concern, there’s a lot of insecurity, but not all geographical sectors suffer from that in gravidness. Consider the recommendations of the local Colombian team for that purpose. And practical information for arrival, stay and departure, there are specific sites for that purpose.

http://www.colombia.travel/en/international-tourist/practical-information, this one is the one of pro-export Colombia, done precisely for business. Knowledge about airports, safe taxis for transportation.

Colombia Basic cultural facts on cultural expressions:http://www.colombia.travel/en/international-tourist/colombia/culture

It’s impossible to know profoundly a culture, in a short period of time and know perfectly how to merge with it, the keys to successful cross cultural negotiation, would be respect , communication and diplomacy, to perform all those task good prior knowledge of the culture and negotiation conditions, geographical, socio-economical, political and historical, because history will explain a lot of the advancements of a contemporary society.

References

Glaser Tanya, Article summary: "A Beginner's Guide to International Business Negotiations" by Jeswald Salacuse Conflict Research Consortium. University of Colorado, 2005.

Klamer Arja, The Value of Culture On the relationship between economics and arts, Amsterdam. University Press, Amsterdam, 1996.

Kreitz Patricia A., Director, Technical Information Services Stanford Linear Accelerator Center, Stanford University, Best practices for Managing Organizational Diversity, http://www.slac.stanford.edu/cgi-wrap/getdoc/slac-pub-12499.pdf

12

Diversity Tip Sheet Cross-Cultural Communication Translating Nonverbal Cues, Diversity council, diversity tool-kit for business, Resources_TipSheet_NonverbalCrossCulturalCommunication-libre.pdf, 2008.

Peleckis Kęstutis, International business negotiations: innovation, negotiation team preparation, Contemporary Issues in Business, Management and Education 2013.

http://diplomacy.state.gov/discoverdiplomacy/diplomacy101/people/170341.htm, Discover diplomacy, US department of State website, 2014.

https://www.cia.gov/library/publications/the-world-factbook/geos/co.html, COLOMBIA revised 2014, 2013.

http://www.cyborlink.com/besite/colombia.htm revised 2014. 998-2012, Business Etiquette and manners, InternationalBusinessCenter.org – Indicatives of Dr. Geert Hofstede. 2012.

http://www.colombia.travel/en/international-tourist/practical-information, Procolombia, Investment country guide, Official travel guide, 2014.

http://www.colombia.travel/en/international-tourist/colombia/cultureProcolombia, Investment country guide, Official travel guide, 2014.

13