Blunders

 

  What is a Blunder?

  What is a Market Blunder?

  General Blunders

  Blunder Examples:

 

 

  Blunder Definition:

 

A decision affecting the foreign operations of a firm that results in a greater than necessary loss to the firm.  The loss can be either monetary or loss of reputation or image.

top

  Market Blunder Definition:

 

A blunder that results from offering an inappropriate product or service that has negative economic impact on the firm or from how the product/service is offered.  This occurs when a product or service offered does not meet societal needs or cultural norms.

top

  General Blunder Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A manager could have foreseen the negative results of a blunder, but did not because of a lack of familiarity with the culture in which the firm was dealing with.


Reasons Firms Blunder:

  1. Deficiency in a decision maker’s attitudes and skills
  2. A person’s cultural responses are unconscious and automatic

Americans are seen throughout the world as being rude because in the past Americans tended to act as if they were in the U.S. when dealing with other cultures.  Americans believe that everyone is else is like them and they interact with others abroad as they would with Americans at home.

U.S. corporate management is not adequately prepared for global business realities.  This is generated by their inability to deal with cultural diversity.

In order to be skillful in cross-cultural communication, managers must have knowledge of each culture they are dealing with.  They will never be totally successful no matter how hard they try because this is not their native culture.

Ethics come into play a big part of cross-cultural communication.  What is considered unethical or illegal in the U.S. may not be considered the same with other cultures.

top
  Examples:

 

 

 

 

Example 1

Americans tend to be legalistic and adversarial.  They defend themselves with legally binding contracts which is not only tolerated by Americans, but they consider it an essential business practice.  However, the Japanese do not follow this practice.  In Japan, they do business with people the Japanese know and trust rarely using the law to handle conflicts between the two parties.  One American firm arrived in Japan to negotiate a joint venture with a contract in their hands.  In the first meeting, the Americans put the 50-page contract in front of the twelve Japanese negotiators.  The meeting took the entire afternoon and none of the Japanese negotiators opened the contracts and they only talked about general business conditions in both countries.  After the meeting, the Americans could not get the Japanese to the negotiating table again and had to leave the country empty-handed.  The Japanese saw having the contract at the first meeting rude and decided not to do business with such an inept firm.

top

Example 2

Another example is of an American firm trying to get an acceptable price for their product from a Japanese buyer.  The Americans presented a very detailed presentation and offered what they felt was a reasonable price.  After a few moments of silence, the Americans thought the Japanese were going to reject the offer so they lowered the price.  There was more silence by the Japanese.  The Americans then said they would lower their price one last time and that this was the lowest they could go.  The Japanese accepted this offer after a brief silence.  The Japanese later said the first price was within an acceptable range, but it was their custom to consider the proposal silently before giving their decision.  The Americans lost a lot of profit by jumping the gun and believing the Japanese respond just like other Americans.

top

Example 3

Frederick W. Smith, who is the founder of Federal Express, had an aggressive, take-charge, and confrontational interaction with others.  He liked competition and enjoyed seeing who would blink when standing neck and neck with his adversaries.  Smith tried to combine several independent European companies into one company under the Fed Ex culture, but he ran into several problems.  Many executives quit and several customers took their business elsewhere.  Many of his colleagues took him aside and told him that his confrontational style went against the tradition-steeped European business culture and he was going to ruin the market for any other American companies.  He could not build his hub.  The company admitted that they believed doing business in Europe would be like doing business in the U.S.

top

Example 4

An American manager in Korea knew a little bit about the culture and spoke the language fluently.  He was assigned to Seoul to be in charge of his company’s office in Korea.  The manager was uncomfortable with the deference his Korean subordinates gave him since he was used to a democratic and egalitarian leadership style.  He asked his subordinate to treat him as an equal just as he would with his subordinates in America.  In Korea, deference in the office setting was part of professionalism of office conduct.  By removing the obligatory deference, he in essence removed the required office professionalism.  The office became an environment of relaxed familiarity with a lot of non-business conversations.  Many deadlines were missed and the office’s work contained a tremendous amount of mistakes.  The American system can have its employees use a first name basis and maintain professionalism, but this is not the case with the Korean culture.  The manager was never able to regain the same efficiency of the office.

top

Example 5

American makes mistakes with their products.  One American company tried to sell 29-inch tables in Japan when the average table height is 21 inches due to fact that the Japanese sit on the floor at the table and do not use chairs.

top

Example 6

Parker Pens had a decentralized marketing department with ad agencies in more than 40 countries developing ads for them.  A new team of executives were hired and wanted to centralize all their marketing decisions in the company’s headquarters in Janesville, Wisconsin.  They wanted to standardize the promotion, packaging, pricing, promotional materials, and advertising.  They believed the difference in the cultures were less important than the similarities.  They wanted to use one ad agency to develop one ad to be used around the world.  They did not want the ad too long so it would be easier to translate.  Subsidiaries complained that the pens may be similar, but the markets were not.  They wanted flexibility in the local markets.  The company centralized everything against these complaints.  The same ad was used in all countries.  The ads tried to say something to everyone but ended up saying nothing to no one.  The company’s campaign floundered.  They were developing a second campaign when the CEO was forced to resign and the rest of the team either quit or were fired.  The company then returned to a decentralized marketing system.

top

Example 7

General Motors introduced the Nova in Latin America.  Nova means, “it doesn’t go” in Spanish.  The car had terrible sales.   G.M. finally figured out the problem, renamed the car Caribe, and the sales increased to the company’s expectations.

top

Example 8

McDonnell Douglas wanted to produce an aircraft brochure for its products to be distributed in India.  The artist selected photos from an article in National Geographic.  After the brochures were distributed, the company found out that the turbans worn by the people in the brochures were Pakistani Moslem whom the Indians do not get along with.

top

Example 9

U.S. firms have to abide by the Foreign Corrupt Practices Act of 1977.  This spells out acts that are not only unethical but also illegal.  If states that firms cannot give payments to foreign candidates, officials, or political parties who are in decision making positions that the payments may induce a favorable outcome for the firm.  Grease money is used in several cultures to get business dealings rolling.  An example is of an American who was working in Africa’s tourist industry when he concluded a business deal in East Africa.  He was asked very respectfully to give a significant amount of money and a radio to the individual he was working with.  The American stated that this was morally wrong and that he did not pay bribes.  He left the meeting never to return.  After he became more aware of the East African culture, he found out that he had insulted the East African businessman.  The money was to be used to provide a feast in his honor and he would be introduced to everyone in the community of importance.  The radio was to be used for background music and entertainment.  It was to be the beginning of an ongoing profitable business and social relationship where he would have been part of an inner circle of business associates.  He acted as if he was doing business in America and offended his colleagues in the process.

top

Return to Homepage