Fade Achnaf (25364561)
Assignment 1 International marketing
Importance of Adapting corporate culture and Ethic in Indonesia for The Multinational Companies
Culture is a subjective matters because it is unique for every person, Fatehi (2008) state that culture are people’s system of knowledge and standard of perceive , behave and act. Culture keep evolving and getting bigger from time to time. Corporate culture impact behavior of employee in workplace and once a company define its corporate culture, it does not change rapidly (Fatehi 2008).
Nowadays many MNCs from developed country expand their wing span to developing country where they can get cheap labor cost and ravishing market as well. In order to be able to fit in the host country MNCs have to be able to analyze the culture and code of ethic exist in host country. A phrase said “When in Rome do as de Roman do”.
Many developing country have become a ravishing market to the developed country. One of the most ravishing market in Asia is Indonesia. With population more than 200 million people spreading in more than 17 thousands island Indonesia have a massive labor potential. Not to mention the low cost of labor that Indonesia offer, regional minimum wages for employee in Jakarta the capital city of Indonesia was around 2.200.000,- Rupiah ($220 AUD) per month (. In 2011 Indonesia have the biggest number of foreign direct investment in the South East Asia region. Foreign direct investment in Indonesia increase 20% worth $19.53 billion that year and still growing until present (Leinbach 2012).
The Essay on Culture & country
There is no country today whose culture and values are so isolated from the mainstream of the world. The preservation of their thoughts and peculiarities as people has been, not just a social phenomenon, but a proof that no culture is so exact or perfect to any community on earth. Each is tailored-fit to that specific tribe, community, or people. The Philippines was colonized by the United States ...
Why should company adapt to Indonesian corporate culture? Culture have always been a big influence in any society. In Indonesia society the awareness of local culture are highly appreciated. Despite so many culture differences across the nation, it is important for foreign company to be able to adapt to local corporate culture. For instance, because of Indonesia have various cultural differences the country are famous of high level of tolerance. Many company in Indonesia have a high tolerance culture in practice. It would give foreign investor great benefits if they can adapt and deal with this kind of issue.
Indonesia’s national culture as developing country have some differences than it appear in many developed country, the power distance level in Indonesia is 78 as shown in Hofstede website (2013) which is very high if compared to most of developing country. Unlike Australian and many developing countries culture, in Indonesia younger people should not call the older person by their first name, title is important it shows respect to the older person. However in practice it is shifting to lower level of power distance and Indonesia becoming more and more open minded society as time passes. This shifting process start when president Soeharto step down and reformation era begin. Indonesia have a very collective society. According to Hofstede (2013) research individualism level in Indonesia only shows 14 out of 100. Indonesian tent to do everything as a group , they even have a famous slogan “gotong royong” which means “do it together”. Because Indonesia like to work in group they behavior affected by what people around them think. This trend makes Indonesian a feminine society. And they also have a medium low of uncertainty avoidance level .
Indonesia’s national motto is “Bhineka Tunggal Ika” which means “Unity in Diversty”(Bhasin 2010).
With more than 300 ethnic spreading across the country Indonesians have very high tolerance level when it comes to cultural differences. As it apply in the workplace, MNCs from another countries will find it easier to apply their home country business culture as long as its not breach Indonesians code of ethic.
The Essay on Is Popular Culture Subservient To High Culture And If So, Why?
Is High Culture Superior to Popular Culture, and if so Why? For about a century, Western Culture has really been divided into two cultures, the traditional type of ‘high culture’ and a ‘mass culture’ manufactured wholesale for the market. High culture is the arts that require some form of intellect to comprehend, so therefore can only reach a tiny segment of the population, ...
Indonesia have the biggest muslim population compared to any other country in the world. Over 60.4% of Indonesia population are muslims (branine 2011).
It is important for MNCs who is planning to run a business in Indonesia to be aware of this, because hardline muslim organization are growing and spreading across the country, they make protest to the company that they think did not respect muslim religion. The hardline muslim organization even commit destructive action in order for their protest to be heard. National Police spokesman Insp. Gen. Ronny F. Sompie said there are 50 (Islamic Defender Front) FPI members who had carried out a violent sweep at Anugerah Store on Makassar, South Sulawesi, on June 19. The FPI members vandalized the store on the grounds that it sold alcoholic beverages (Jakartapost 2013).
However some rumor said that there is a way for business owner to bribe FPI for safety guarantees although there is no prove about this information and considered irrelevant.
According to Hofstede (1991) there are six dimension for corporate culture. Motivation (activities or outputs), Relationships (focus on the quality of the job being done or the person employed), Identity (corporate compliance or profession freedom), Communication (open system or closed system), Control (tight or loose) and Conduct (conventional versus pragmatic).
Because there are so many MNCs growing in Indonesia each company have different corporate culture depends of the combination result of the company’s home and host country culture.
Indonesia have high unemployment rate, rose from 8%-14% over the last two decades (Branine 2011).
This happened because there are not enough job opportunities around. Job opportunities centralized only in big cities such as Jakarta, Bandung, Surabaya. This can be considered as an opportunities for the MNCs if they want to open their business in the small cities that surrounded the big cities. In fact there are many business starting to grow in small cities near Jakarta like Tangerang. Jakarta post magazine (2013) bring up an article about Tangerang city will become the next Integrated city in Indonesia and will have its own business center in a few more years.
The Essay on Doing Business Online Poses Certain Ethical Dilemmas Selling Customer Information
Doing business online poses certain ethical dilemmas. Selling customer information, otherwise known as data mining is among the prevailing ethical issues in e-business (Z. Tobias). Ethical business practice requires protecting the confidentiality of customer information. Selling the names and e-mail addresses of its customers is obviously against business ethics. It is a betrayal of confidential ...
Because of high power distance level, it is not acceptable if the person with higher position in the organization do work “below” their level. Such as moving furniture, making fotocopies, etc (Bhasin 2010).
This kind of behavior is strongly exist in local corporate culture however Indonesia society was start to take the influence from MNCs from developed country and shifting to more modern society nowadays.
When held a meeting in Indonesia don’t put to much pressure to meeting particpants (Bhasin 2011 ) because Indonesians will feel uncomfortable even some might find it offensive, maintaining group harmony is highly appreciated by Indonesians (Bhasin 2011).
Paternalistic management pattern are commonly found in Indonesia (Branine 2011).
Indonesian put relationship harmony in priorities. Managers have strong obligation to keep a harmonies relationship towards business partner, employee, and other relatives. Collectivism values clearly sighted in this pattern.
Bribery is the next cultural issue that commonly happen in Indonesia. It is happening in every level of society, from traffic police to judge in court. Bribes arise that are placed to increase revenue (Bhasin 2011).
Recently there is a bribery case in Indonesia, Corruption Eradication Commission (KPK) investigators arrested Upstream Oil and Gas regulatory special task force (SKK Migas) head Rudi Rubiandini at his house on South Jakarta, on Tuesday night for allegedly accepting bribes totaling U$700,000 on two separate occasions from a foreign company (JakartaPost 2013).
However despite the big risk that bribery have, some MNCs who have established for a long time in Indonesia consider bribery as efficient way to make their business running smoothly. Beside bribery Indonesia also well known of its high level of corruption. According to the corruption perception index 2013 is in 111th position out of 180 countries all over the world (Coleman 2013).
The Coursework on Business Gone Green Ethical Reasoning Assignment
AB0603 Business Gone Green Ethical Reasoning Assignment Summary Page| Your name: Chia Xinying| Your Instructor: Dr. Josephine Lang| Seminar Group: 01 Word Count: 1095| Briefly lay out, in bulleted-form in the space provided within this page (i.e., do not elaborate), the content of your write-up in addressing the various criteria in the ethical reasoning rubric.| Criteria| Your points| 1. Specify ...
Jakarta post magazine recently brought up an article about corruption in academic institute in Indonesia. It happens in Bandung one of many big cities in Indonesia. Corruption committed by a faculty member of a prestigious university in Bandung, Indonesia. He was arrested for allegedly accepting a bribe from a Singapore-based multinational trading oil company (Jakarta post 2013).
Corruption in Indonesia have spread from its public official to academic institute. Corruption were found in every level of society. MNCs in Indonesia should provide a more secure system in doing their business to prevent this to happen inside their company. There are many effort conducted by the government in terms of dealing with this corruption problem. Corruption Eradication Committee (KPK) was established in 2003and President Yudhoyono said he is planning to build an anti corruption academy in the future through his official twitter account @SBYYudhoyono. (Jakarta Post 2013).
Indonesian have less appreciation of time comparing to the western culture (Bhasin 2011).
Then do not expect Indonesian to be on time every time you conduct a meeting. For foreign businessman it is better to lower their expectation of time appreciation when they doing business with Indonesian.
MNCs have to built corporate culture align with ethical values that exist in the host country. When it comes to ethics there are three thing that MNCs must consider, core values, local tradition and ethical standards. (Donaldson 1996).
Making corporate values while in the same time spare a room for individual judgment makes creating a corporate culture a hard job for every top level manager (Donaldson 1996).
MNCs in Indonesia have to deal with many core values such as family, religion, etc. This is also an important factor that MNCs must aware when conducting business in Indonesia. Because Indonesian are considered as pragmatic society. Local tradition is also important, many Indonesian have unique local tradition depends on where they root ethnics are. Javanese have different local tradition than Indonesian whose born in Sumatra island. It is better for MNCs to adapt to dominant ethnics where they run the business. Ethical standards must be established by not breaching both home and host country ethical values (Donaldson 1996).
The Business plan on Is Business Bluffing Ethical
Albert Carr stated that legality and profits are the only standard that people in business should follow. In Carrs article Is business bluffing ethical? he compared and found the rules of business to be similar with the rules of poker. In a game of poker, bluffing is a central part of the game and this is known and accepted by all the players. So bluffing in poker is not considered morally wrong. ...
Ethical standard are needed in order to conduct an ethical leadership.
In order to conduct a good ethical leadership corporate values everyone in the organization must obey corporate values at all time (Donaldson 1996).
Managers have to be able to deal with ethical conflict that surely will happen if running business in a whole different country. However this ethical conflict can be avoided if the managers are aware of local ethical culture and values.
MNCs also have the moral obligation to help the host country to develop. By bringing positive culture and perform clean business practice. With this occurred by the host country there will be mutual relationship between MNCs and its local environment. MNCs also have a positive culture from their home country that doesn’t have to be put aside when doing business abroad. A combination between two cultures can make a better corporate culture if its assembled the right way. However company still have to be aware of its local environment that may endangered their business. Indonesia is in fact a ravishing market but on the other hand also have certain cultural issues that possible to be considered as constraint for multinational companies.
In conclusion there are some cultures and ethical codes that MNCs have to adapt when doing business in Indonesia how ever foreign business partner also expected to bring some of their positive values to the country. International managers were suggested to be aware about cultural issues that happening in Indonesia that might disturb their business and provide and ethical corporate culture for their MNCs to be able to perform success ethical leadership.
References
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The Dissertation on Business Culture of Chinese
Executive Summary The purpose of this report was to provide Arthur Chawell with sufficient information about the etiquettes and cross cultural miscommunication that he may face during his business venture into Shanghai, China. In the first section of the report, shows the current etiquettes of Chinese people. Etiquettes such as the language they speak, which is Mandarin, how they greet others, for ...
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