Intercultural Management Case study

1. Brief summary of the case The text describes the business activities and the development of a sevenheaded Taiwanese family named Teng. Their field of activity includes a drygoods store from the very early beginning and later on the family business was accredited as official dealer of products of a Swedish motor manuacturer (Swedsa) in Taiwan who brought richness and success for the Tang family. In general the educational levels between the family members are completely different but everyone tries ones best. After a business study one son proposed to reorganize the family business in order to progress the bad financial situation by giving fixed areas of responsibility to each member who did not bring the expected success. // The case talks about a family business in Taiwan having problems to adapt to changing conditions concerning business thinking, globalization and modern strategies. They arent competitive anymore. On the one hand they form a corporate business with a Swedish company on the other hand they miss to open up their strict traditional views so in the end they have to face that profits stagnate. 2. Problem statement The problem in this case is the difficult compatibility of business and family in one company. // Family vs. business Family is more important than the success of business The organigram of the company structure underlines this statement because all leading positions are equally divided among the family members. 3. Situational Analysis 3.1 Country Specific Cultural Issues In Taiwan it is a typical phenomenon that family and friendship counts more than courses of any businesses. A formal structuring is less common as well as formal job titles or to be tied to a single area of responsibilities. At first the family business was not structured at all. After the reorganization every member had a specific function. -> Hofstede Using the Hofstede model the Power Distance in the Teng business is after the reorganization still very low because most members of business and family stands at ground level. Just Mr. Teng as President and Mrs. Teng as Managing Director and Financial Controller are upgraded. The Taiwanese culture is a culture that accepts unsecurity, is tolerant, have less rules and they can be changed in case of doubt. As the mother mentioned in the case, friendship overtrumps rationality in business agreements. That is the reason why the index of Uncertainty Avoidance is low.

As readable in the case, collectivism is a fixed part of culture. The IDV index is low because in Taiwan the sense of unity is more important than individualism. The behaviour of the described people is more feminin than masculin because of the high willingness of care and cooperation. Competitiveness is missing. The organization of the Teng business is long term oriented. It is remarkable that every person perseveres strictly with their area of responsibility after the restructuring, as a dialog between two brothers at the end of the case study. Flexibility is missing at all. -> Trompenaars The second model which can be used to analyze the case is he Trompenaars model. Referring to this, at first time the particularism that means, concentrating on relationships and believing in exceptions was dominant and now, after the reorganization, universalism, which concentrates on following rules became more important. By answering the question if individualism or communitarianism is appropriate to the case, we came to the conclusion that the solution must be a middleground, because emotions are not obvious but noticeable concerning family ties. By answering the question if the case is specific or diffuse the answer is that family Teng takes less part in social life, but rather within their group. By answering the question if achieved statuses or ascribed statuses in order to enter the family business it is noticeable that a combination is fitting. All of the Teng-children are working in the company but also Joanne, the fiancee of Xia-ming had no real problems to come into the system. -> Hall The last model was developed by Edward Hall. He separates communities or businesses concerning high and low context as well as polychronic and monochronic understanding of time. After balancing both sides it is obvious that the Tang business has a high context reference according to their communicational behaviour. It is less common to name things directly because the knowledge about those things is assumed and the naming could cause negative associations. You can find cultures with a high context level mostly on the Asian continent. In order to differ, the Tang family has in general a polychronic unterstanding of time, because the family set priorities in relationships and of secondary importance is the fulfillment of tasks. The areas of responsibility were at first time not defined at all, now, after the reorganization they were influenced a bit by the monochronic understanding oft time, which doesnt fit in their cultural surrounding. 3.2 Boundary Conditions -> The restructuring caused conflict within the family Before Mein-wing proposed to organize the family business, everybody was good with each other. There were no arguments between the family members. But with the actual situation nobody is happy. The success

didnt come so they are not persuaded of the new structure and the trust and communication had suffered. -> No trust in external employees, means no help to do better Like it is usual in Taiwan, there is a close relation between the family members and some close friends. When you are not a close friend it is a long way to be respected an even longer way till they trust you. Thats why all the laboureurs they had once in a while where either dismissed or left themselves. -> booming economy, successful neighbors Another boundary condition is that it is not helpful for the motivation, when the economy is booming and the companies around you report an excellent year. 3.3 Key Issues -> the business strategy is not profitable The most noticeable problem is that the Teng family is in a bad financial situation. Even after the reorganization that Wei-ming had initiated, the turnover is still not satisfying. The habit of Taiwanese culture to help out all good friends and not to say no is in the long term not working in business life. They think a good relation to their customers can only be reached by giving them credit. This kind of thinking has to change and they should have a look at the strategy the other successful competitors run. -> Different education levels separate the family Another problem is that some of the family members do not have any kind of education and others are well educated. This causes different point of views and different knowledge about how to run a business. The family business is having problems to adapt to changing conditions concerning business thinking, globalization and modern strategies. They arent competitive anymore. Therefore those who are educated like Wei-ming and Joanne should overtake more responsibility. 4. Alternatives - Family first -> Traditions more important than business - Reorganize and replace Management Team - Corporation with neighboring companies - Train the Senior Managers 5. Analyses Family first One alternative could be to put Family first and to see Traditions more important than business. Positive would be that there wont be and costs because things will stay the same and they will not have to change anything. Negative is that if things stay the way they are and they will not realize that they need to put business before family that in long term they will not be able to make any profit anymore because they arent competitive anymore with the current structures. Corporate with neighboring companies

Positive: Generally the economy is booming so there is potential to make higher profits again. With a corporation they would be able to save costs and to profit by the success of the neighbors. Negative: They will lose their independence because they will have to stick to the rules and agreements with the cooperating partners. Training the Senior Managers Positive: To open up the mind of Mr. and Mrs. Teng to be more open minded for globalization, competition and chances. Negative: This alternative is the most unrealistic because they are too old for big changes and closed minded to change their day to day business. 6. Recommended Solution Reorganize and replace Management Team The most realistic Alternative is to reorganize and replace some of the Management Team. This means that Wei-Ming who spent a year in Australia taking an MBA degree will be appointed President of the company and there will replace Mr. Teng. Mr. Teng will not longer have an active part in the company. Ya-yuan will get the position as Managing Director and Financial Controller. Mrs. Teng will assist her. This decision is based on the aspect that Ya-yuan made an accounting course at the local technical college. Also she is one of the most open minded family members concerning changes and flexibility. The two now open positions will be replaced by employees from the labor market. Comparison The new Deli Tea Company Problem: old-young generation bzw. Globalization vs. family business. The older generation stresses family over everything. The young generation sees the importance of globalization. They dont separate business and family. In order to be successful and to be competitive they need to adapt to changing conditions. If not other companies will overtake them. They started as a small family business and grew quickly. They just missed to adapt to changing times and conditions. In general the problems are the same!! The swiss-Thai joint venture Swiss Company establishes a joint venture with 2 Thai partners. Eva has the role as project manager to communicate between the Taiwanese and Swiss company. Problem: Taiwanese stick to themselves. In the beginning they dont trust her and keep her at a cool distance. They dont talk to her if there are problems. Also language problems. Eva first has to earn the confidence and their trust. When she starts learning Thai the atmosphere starts to change.

 Similarities: The Taiwanese stick to their social network and it is hard for an outsider to find its way into the group and to earn their trust. Developmental Model of Intercultural Sensitivity (DMIS) Wai-ming: In between Adaptation to Difference and Integration of Difference. Took his MBA degree in Australia, therefore lived in Australia for a while. Wants to maximize the benefit of the company, but also understands and respects traditional structures of his home country, wants to use his competence from Australia ( new values and priorities ) Mrs. Teng: (and the rest) Minimization of Difference At the beginning it seems that Mrs. Teng tends to be more defensive of Difference. She doesnt want to accept and see the critisism of Wei-ming who sais that the company is technically bankrupt. She was laughing about that (as where the other family members). With her declaration You are forgetting this is Taiwan. We trust our friends. This is a very close minded view. During the case she becomes more open minded and moves toward Acceptance of Difference as you can tell because she agrees on a company structure and sees the benefits her son describes. Also she Sends Wei-Ming to Australia for his MBA degree. Because she is in between those two options I would way she has the position of minimizing difference Ya-yuan: Acceptance of Difference In general you can say that Ya-yuan makes process in changing her attitudes. In the end she realizes that it is time for a change and that the business needs to adapt to the changing conditions. The business has grown and times have moved on. In order to be successful they need to be more open-minded and flexible. And they need to be able to separate family and business. Ya-yuan realizes that it is important to accept these differences in order to be successful.