Managing Across Cultures

Group 2 – G5

LI Zhi

RAMANCHADRAN Prashanth

SHAMANOVSKYI Serhii

MAFUBE Masilo

Group 2 – G5 2

Table of Contents

Table of Contents ...........................................................................................................................................2

Introduction ...................................................................................................................................................3

Compatibility of Brazil .....................................................................................................................................4

Value addition: Brazil vs. UAE ..........................................................................................................................7

Analysis of the Brazilian Market.......................................................................................................................9

Time Optimization to Adapt to Brazilian Culture ............................................................................................. 10

Procedural Harmonization – Easiness and Feasibility ...................................................................................... 12

Recommendations on Staffing ....................................................................................................................... 14

Conclusion.................................................................................................................................................... 15

Sources ........................................................................................................................................................ 16

Group 2 – G5 3

Introduction

Companies that are involved in processing raw food materials, packaging and distributing food come under the

food and beverages industry. This includes fresh, prepared foods along with packaged foods, and alcoholic and

non-alcoholic beverages. Products that are meant for human consumption, aside from pharmaceuticals, ideally

pass through this industry.

This Year

Last Year

Company 2013 Food

Sales 2012 Food

Sales

1 1 Pepsico Inc. 37806 37618

2 2 Tyson Foods Inc.

(9/28/13) 32999 31614

3 3 Nestle (U.S. & Canada) 27300 27200

4 4 JBS USA 22140 20,979

5 11 Coca-Cola Co. 21600 21656

The food and beverage industry overall has been doing well in Brazil and UAE as per the 2013 financial reports of

top public companies. Success often deals with how to handle difficult issues and following trends, but most

important of all is being ahead of the next. Doing business or trading with another country requires the

company in overall to adapt business practices to local sensibilities. Brazil clearly has been relatively performing

well in the food beverages industry when compared to UAE.

51212.3556048.68

62847.6769208.15

76338.6283384.03

2193.21 2337.88 2513.94 2723.61 2952.01 3191.88

0

10000

20000

30000

40000

50000

60000

70000

80000

2009 2010 2011 2012 2013 2014

Packaged Food market size comparison, million EUR

Brazil

UAE

Group 2 – G5 4

Compatibility of Brazil

Political Factors

Brazil France India Canada New Zealand

Government

system

Democracy

(president)

Democracy

(president)

Democracy

(parliament)

Democracy

(parliament)

Democracy

(parliament)

Policy Cut interest

rate at 10%

Common custom tariff

4.2%

Encourage free

business

Free trade

agreement

Business

Freedom 99%

As we can see from the comparison chart of Brazil with four other countries, it does have similar government

system, as well as free business and trade policies related business environment. As a result, Brazil preserves

high degree of similarity in government system and business environment with other 4 countries. Besides,

corruption is often a subject when talking to foreign businessmen that want to spread their activities to Brazil.

Economic Factors

Brazil France India Canada New Zealand

GDP(USD) 2245.6 billion 2734.9 billion 1874.8 billion 1825.1 billion 1858 billion

PPP (USD) 2.416 trillion 2.337 trillion 4.99 trillion 1.518 trillion 0.13 trillion

GDP

Gross Rate 2.5% 0.2% 5% 2% 2.5%

Population 0.2 billion 0.06 billion 1.3 billion 35.5 billion 0.004 billion

Inflation rate 6.5% 0.5% 8.9% 2% 4%

The purchasing power ranks the first among 5 countries while GDP ranks the second. Due to a large population,

which ranks first, Brazil’s potential for economic growth is extremely high. This is the evidence of huge

commercial value of starting business here. Additionally, the Central Bank has successfully reduced the risk of

currency devaluation and has also brought inflation under control although its inflation rate is far larger than in

France, Canada and New Zealand.

After the analysis, we concluded that the service sector occupies a dominant part of Purchasing Power Parity in

all 5 countries and is highest in France, which is being followed by industry sector while agriculture sector takes

over a tiny percentage. We can make a conclusion that the percentage is nearly the same for the five countries.

Group 2 – G5 5

Social Factors

Brazil France India Canada New Zealand

Language Portuguese

French English

Indian

English

French

English

Religion Catholicism Catholicism Hinduism Catholicism Catholicism

Population

America

Indian

African

European

European

African

Algerians

Indian aborigines

European

Asian

European

African

European

Maori

Regarding the religion and population, there are also a lot of similarities between these 5 countries that provide

favorable environment to create new operation in Brazil. Brazil shares the same religion with three counties that

have Catholicism as their primary religion. The official language of Brazil is Portuguese, and therefore it can be

noted that the other four departments do not have this language as their main means of communication.

However, English is the foreign language most used by the business community in Brazil. However, it can also be

noticed that there is a language barrier between Portuguese and English.

5.80%2%

18.50%

2.20% 2.60%

26.80%

18.50%

26.30% 26.40% 24.90%

67.40%

79.50%

55.20%

79.40%72.50%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Brazil France India Canada New Zealand

Sector contribution to economy by countries

Agriculture

Industrial

Service

Group 2 – G5 6

Technology Factor

Brazil France India Canada New Zealand

Innovation

Rank

61

(36.3 score)

22

(56.7 score)

76

(33.7 score)

12

(56.1 score)

18

(54.5 score)

Internet user

Rank

5

(0.1 billion)

10

(54.7 billion)

2

(0.3 billion)

21

(29.7 billion)

52

(15.5 billion)

When comparing Brazil to the other 4 countries especially to Canada, Brazil possesses a weak technological

infrastructure with an innovation rank of 61. However, Brazil has taken several steps and measures to boost the

development of technology centers all over the country. With Brazil considered to be the next global IT hub, the

overall ranking will improve in the years to come

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Value addition: Brazil vs. UAE

Hofstede’s Cultural dimensions: Brazil & UAE

Power distance

Hierarchy in Brazil should be recognized and inequalities amongst people are acceptable. However in

the UAE, hierarchy is mandatory wherein everybody has a place and requires no further justification.

Power holders in Brazil have more benefits in society than the less powerful, which is similar to the UAE.

There is one boss who takes complete responsibility.

Centralization in the UAE is high: subordinates expect to be told what to do and the ideal boss is a

benevolent autocrat.

Individualism

Brazilian people from birth are integrated into strong cohesive groups and protect their members in

exchange for loyalty.

UAE is considered to be a collectivistic society wherein loyalty is paramount and overrides most other

social rules and regulations.

Older and powerful member of a family in Brazil is expected to “help” a younger relative to be hired for

a job in his own company.

In collectivist societies like the UAE offence leads to shame and loss of face, employer/employee

relationships are perceived in moral terms (like a family link), hiring and promotion decisions take

account of the employee’s in-group.

Building up trustworthy and long lasting relationships in Brazil is important.

Preferred communication style in Brazil is context-rich.

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25

50

80

0

10

20

30

40

50

60

70

80

90

100

Power Distance Indvidualism Masculinity Uncertainity

Avoidance

Brazil

UAE

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Masculinity

UAE societies are neither driven by competition, achievement, and success nor by the dominant values

of societies, which include caring for others and quality of life.

In Brazil, value system starts in school and continues throughout till the organizational level.

Uncertainty avoidance

Societies in Brazil show a strong need for rules and elaborate legal systems in order to structure life.

Arab emirates have high preference for avoiding uncertainty: rigid codes of belief and behavior are set.

Individual’s need to obey laws in Brazil comes as a given, however, is weak due to which additional rules

are dictated.

Arab emirates express an emotional need for rules, “time is money”, people have an inner urge to be

busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an

important element in individual motivation.

Group 2 – G5 9

Analysis of the Brazilian Market

Role and Value of Marketing

Brazil, being one of the few Portuguese-speaking nations, flourishes with its own big national and international

partners. Brazil has also become the hub of advanced Marketing and Advertising techniques. MNC’s like

Unilever, Colgate, Palmolive and Nestle to name a few have been deeply associated with the country of Brazil

for over decades.

Brand value is very important and it is the one that drives the growth and value . Dove, for example, with its

award winning global campaign of how women are portrayed with sketches from a FBI artist was created and

produced by Unilever.

Key trends in marketing and media

Media in Brazil is the biggest source of information. Brazil under law states that all media agencies need to be

represented by a creative agency partner, which for makes it difficult for marketers to survive due to heavy

competition.

Social media amongst Brazilians play a crucial role. Brand development, content marketing thrive on Social

media due to the love of sharing and socializing by Brazilians amongst family and friends. Brazilian consumers

are open-minded and are willing to try on new products and services. Close to 60% of the Brazilian population

embrace new product launches and this number is the highest in Latin America according to a research carried

out by Nielsen.

Conclusion on the market strengths of Brazil

With a culture so complex, a landscape driven by media and the mindset of consumers, marketers focus on the

forces that shape of the Brazilian society by following the trends in political, economic and social shifts. Brazilian

market is growing with the FIFA world cup that was a grand success in Brazil and also with the possibilities of

Brazil hosting the Olympics.

Group 2 – G5 10

Time Optimization to Adapt to Brazilian Culture

The assessment of the optimizations that are needed to adapt expatriates to the cultures of Brazil and UAE are

based on the assumption that cultures that belong to the same clusters, and/or share the same cultural

dimensions are traded off relatively easy.

Brazil, India, France and UAE are high context countries, whilst New Zealand and Canada are low context

countries (Appendix 5). A person that moves to the country of different context needs to take time to

acclimatize to the indigenous business conditions. Since both Brazil and UAE share the same context, staff from

New Zealand and Canada has to respect the following attributes: higher context cultures involve relatively

closed groups with strong coherence that are hard to get into; professional relationships tend to grow into

personal relationships, and, therefore, mesh with each other; in order to successfully complete the necessary

tasks, personal relationships should be developed; individual problems are solved with participation of others.

According to Simcha Ronen and Oded Shenkar cultural dimensions, Brazil represents Latin American cluster,

France − Latin European cluster, Canada and New Zealand − Anglo cluster, India – Far East cluster, and UAE –

Arab cluster.

The table below represents the adaptation of the information based on Fons Trompenaars’ five cultural

dimensions.

Universalism versus

Particularism

Individualism

versus

Communitarianism

Specific versus

Diffuse

Neutral

versus

Affective

Achievement

versus Ascription

UAE PART COM DIFF AFF ASCR

Brazil UNIV IND SPEC AFF ASCR

Canada UNIV IND SPEC NEU ACH

New

Zealand UNIV IND SPEC NEU ACH

France UNIV COM SPEC AFF ASCR

India PART COM DIFF AFF ASCR

Source: Trompenaars (1994)

As it can be clearly seen from the table, countries can be divided into two groups: the first one is UAE and India,

and the second one is Brazil, Canada, New Zealand and France. On the whole, first group represents countries

with flexibility in decision-making (particularism), preference of collective outcomes over personal

(communitarianism), focus on personal relations (diffuse), acceptance of showing emotions during work

Group 2 – G5 11

(affective), and stress on the status and value of a particular Individual (ascription). Thus, the drawback of

expanding business in UAE can be illustrated by the concept of ‘wasta’, which implies “powerful social

connections that an individual has”1 that can be used in to obtain personal and work benefits.

From the other side, Brazil shows more affinity with Latin European and Anglo cluster. It tends to be more

universalistic than particularistic which indicates that rules and laws are valued more than relationships;

personal performance and freedom is dominant (individualism); division of personal and work lives is sharp

(specific). The differences include usage of emotions to meet objectives and gain trust (affective) and inclination

towards admiration of the status and position.

In view of the aforesaid, we can come to the conclusion that expanding into the UAE would eventually lead to

lose-lose or compromise situation. On the contrary, developing operation in Brazil may require milder strategy

like reconciliation that is not time consuming and leads to the appeasement between cultural differences and

advances organization’s business.

1 http://www.macmillandictionary.com/open-dictionary/entries/wasta.htm

Group 2 – G5 12

Procedural Harmonization – Easiness and Feasibility

A document called “Doing Business in Brazil” shows that sales of prepared foods almost doubled, with the

inclusion of soft drinks, and hot and cold beverages in the last year. The Brazilian food consumer market is

growing with a shift towards products with higher added value (Doing Business in Brazil, 2013)

Brazil’s sheer size compared to other neighbouring countries can partly explain its attractiveness to foreign

investment, since it is the largest and most dominant country in its continent. Even though such investment

from outside is accepted, investors still need to pay attention to some legislature. When operating a business

one of the main impediments to smooth operations in the Brazil is the administration and legislature. Both are

intricate, and criticisms are made of the red tape where countless of forms must be completed in order to do

business. Brazil’s bureaucratic structure is also a big issue, especially the lack of sureness concerning rules and

regulations.

In order to understand or predict the most likely results pertaining to easiness and feasibility of harmonisation

of procedures (e.g., reporting, performance reviews, etc.) between the new location and the four existing

partners, Hofstede’s dimension’s can be a very useful tool. It is notable that Brazil ranks almost exactly the same

as France in terms of power distance dimension. Therefore it is expected that it is will be very feasible for the

French department to have procedures followed in Brazil in this regard. India also is rated very high in this

regard unlike Canada and New Zealand. Therefore it would seem that for the MNC in Brazil, it would be mostly

easy for harmonization of procedures between them and French & Indian subsidiaries. In terms of masculinity,

all the countries involved in this business seem to be averaging around 50, which leads to the assumption that

Brazil subsidiary would work very well with the other four subsidiaries since the culture is almost the s ame

pertaining to masculinity. Brazil, France and India all have very high uncertainty avoidance it can be expected

therefore that the Brazilian subsidiary will experience a high level of red tape. Brazil is less individualistic

compared to the other countries in question and this could pose a matter of concern.

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Power distance Individualism Masculinity UncertaintyAvoidance

Hofstede's Dimensions

Brazil

France

Canada

India

New Zealand

Group 2 – G5 13

Power Distance

Individualism

Masculinity

UncertaintyAvoidance

Hofstede Cultural Dimensions

Brazil

France

Canada

India

New Zealand

Group 2 – G5 14

Recommendations on Staffing

The requirement of having 60% of the workforce as local proves ideal for Brazil. The Brazilian Labor

Code (CLT) states that ratio between foreign and local employees are required to be ⅓ to ⅔. With this

law, we recommend to have 67% of the workforce as local employees and the remaining 33% as

foreign in order to maximize diversity, and, therefore, creativity of the staff and teams. CLT in Brazil

acts as the governing body of all employer-employee relationships, which states that employers and

employees are not required to have any written employment agreements. However, the employer will

have written instruments for the governance of certain factors of the relationship that is required for

the employer to explicitly mention. In the event of a litigation, and if clear and precise instruments

have not been set place, Brazilian labor courts usually favor the employee who is considered as the

weaker party of the agreement. Brazilian employers also will need to adhere to the statutory labor

rights which include a national minimum wage of US$300 per month, 30 days of vacation per year with

vacation bonus, enrolment of Social Security, overtime payment to name a few.

In order to facilitate operations in Brazil, managers from the currently operational countries will need

to rope in their knowledge and expertise of make a smooth rollout. From Hofstede’s point of view it is

evident that Brazil is collectivist country, which is in contrary with Trompenaars research where it

claims Brazil to be more individualistic. Hence, we suggest having a diverse managerial team in order to

avoid cultural issues in the workforce.

Managers from high context countries like India and France will add value to the Brazilian team so that

they work with closed groups in order to build an inter personal/professional relationship with the new

Brazilian employees. Since the industry directly involved with how time is managed effectively, at the

end of the day it is vital that the said tasks are completed without any problems or issues.

We also recommend that the HR professionals of the company be from Brazil. Labor Laws, Employee

rights, Salary structures to name a few, requires additional time for the HR department to analyze and

come up with a logical and feasible structure on how to handle employees of their Brazilian operations.

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Conclusion

Taking into consideration the abovementioned analysis, it is clear that Brazil is the optimal choice to expand

MNC’s operations. During the research we have been using such models: PEST, Hofstede's and Trompenaars’

cultural dimensions. Since most of the countries where operations are held are high context, it wou ld be easier

to adapt company’s procedures to Brazilian culture. According to the PEST analysis, Brazil has low interest rates,

which will trigger the purchasing power of the country to a higher level. Brazil shares a lot of common

characteristics with the other four countries. Furthermore, Brazil plans to amend its employment regulations in

order to attract more skilled foreign employees. This can be regarded as an opportunity for the company.

Group 2 – G5 16

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(2002) 383–391

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world-cup

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brazil/

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14. Ronen, Simcha, and Oded Shenkar. "Mapping world cultures: Cluster formation, sources and

implications." Journal of International Business Studies 44.9 (2013): 867-897.

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emirates." (2008).

16. http://www.mindtools.com/pages/article/seven-dimensions.htm

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