The case is about Beijing Bio-Tech Co. Ltd. (BBT), an animal feed manufacturer that looked for lecithin suppliers in the United States through the help of Bill Wright. Bill Wright, who worked for APCG, a U.S-based marketing consultancy firm, acted as an intermediate between BBT and NutriNex, a U.S lecithin producer. However, Bill never allowed direct contact between BBT and NutriNex. Instead, he used a back-to-back letter of credit to maintain operations control. That made the negotiation take more time than expected. However, immediately after the agreement was signed, a natural disaster happened, which disrupted the supply from NutriNex to BBT (Lin, & Guan, 2003). Wright found himself in between the case as he did not have a written contract from NutriNex. APCG tried to come in between, but all was in vain. Wright is facing a possibility of a lawsuit if BBT decides to file one against him.
The Major Issue Presented in The Case and The Contributing Factors
The primary issue presented in the case is a breach of faith caused by Wright by withholding information and restricting BBT and NutriNex from communicating directly, which led to a lawsuit by BBT. This issue was contributed by cultural value differences (Savović, 2017). There was no built relationship between the two parties as the Chinese people paid more attention to building a long-term Guanxi with NutriNex and making them their long-term supplier. The emphasis was to create a long-term relationship based on facts other than just a legalistic business approach. Ming Kuo wrote a letter to APCG explaining that their main reason for choosing the supplier was looking for a long-term business partner. However, this never happened as Mr. Tang never notified Mrs. Ming about the indirect deal. Hence, there was no contract between Mr. Smith and Dr. Fisher.
Cultural Theories Addressing the Major Issue
Hofstede Cultural Theory
Hofstede’s theory is used to understand cultural differences across countries and how businesses are conducted (Beugelsdijk & Welzel, 2018). The idea is mainly used to distinguish cultures in different nations, cultural dimensions, and impact from a business perspective. Based on Hofstede’s theory, the culture of any state is regarded as the mind’s collective bargaining to determine behavior, attitudes, and values. The cultural differences demonstrate implications on negotiation terms and restrict the extent to which negotiations are done. He identified six categories that clearly define culture and describe the differences and similarities: power index distance, collectivism versus individualism, and uncertainty avoidance index. Others include femininity versus masculinity, short-Term and long-term orientation, and restraint versus indulgence.
Specific Cultural Characteristics
This cultural theory dimension measures the acceptance of unequal power distribution across different cultures in different countries. America is one country that demonstrates small power distance due to its straightforward way of doing business. For instance, NutriNex had not signed any contract with BBT, so they were not bound to facilitate any shipment. Similarly, if any nation demonstrates a high value of power distance, it will affect the people living in that country. Power distance is shown by inequality in any society based on the people in that nation and its leadership.
Based on Hofstede’s theory, this dimension of culture explains the loyalty and respect one should have towards their culture. Each individual is responsible for themselves and their family’s care from this perspective. Countries that hold high values of individualism are not considered valuable in sharing information and responsibility beyond friends and family. For instance, people from the United States uphold a high value of individuality, so they tend to be more independent (Arieli & Sagiv, 2018). On the contrary, countries that demonstrate a low value of individualism display strong cohesion and loyalty towards their culture. In so, they extend their value to outside people. For example, Bill Wright displays an example of individualism as he signed the BTT contract as the executive vice-president of U.S. fortune Inc instead of his name out of manipulation by the price quotation for lecithin. In contrast to individualism, BTT displays collectivism as they value harmony and relationships.
Based on the case study, the Chinese people want to do business with a U.S based company based on trust and friendship instead of a written contract. On the contrary, NutriNex believes in written agreements to avoid legal obligations as they are very straightforward people, which demonstrates a small power distance. For instance, Bill Wright set a high-value price for the lecithin shipment, which disappointed BBT as they were looking forward to building a relationship with U.S suppliers based on trust.
Solution and Action Plan
The Potential Solutions to the Issues Discussed in This Case Study
Bill Wright, Dr. Fisher, and Mrs. Kuo had not done business with people out of their culture. Therefore, business people from different countries must be aware of cultural differences, personal backgrounds, and every cultural negotiation skill before engaging in business. If they could have been knowledgeable about cultural sensitivity, most things like misunderstanding could not have happened. Bill Wright placed an initially higher price than it was supposed to be. His choice of communication and his approach to BBT was assertive and arrogant. Also, his later effort to solve the problem was not good enough, showing that he forgot about cultural differences. Bill could have been more professional and sensitive enough when approaching BBT for an apology. Instead of using a fax machine to apologize to BBT, he could have used a video conference to show sensitivity and sincerity before things escalated. That could have fixed the mistrust problem with Mrs. Kuo.
In addition, Bill ignored the information he got from Edward tang about Chinese business culture. He should have noticed that BBT took time before initiating the next step as their way of doing business is by building a friendship first. Also, their business expectations are sincerity and reputation to foreign counterparts. All three parties could have done things differently by developing cultural sensitivity, developing some expectations during business transactions. Developing cultural sensitivity could have helped them avoid some mistakes. Coding language and sending messages helps avoid conflicts, and having face-to-face meetings could have helped Bill rebuild the broken relationship with BTT. In addition, Edward tang should have emphasized Chinese culture when informing Bill about how to do business with his Chinese counterparts.
The Advantages and Disadvantages of Each Solution within the Context of The Situation That Caused the Problem.
One advantage of understanding cultural differences, personal backgrounds, and cultural negotiation skills is that it improves the awareness about cultural sensitivity, which minimizes misunderstanding that can lead to conflicts. Also, it helps to understand how to deal with people from different cultures. For example, if Bill Wright knew how the Chinese conducted business, he could have used better communication when apologizing to BBT, which could not have led to filing a lawsuit. Another advantage is that understanding the professional way of doing business from different cultures minimizes the chances of mistrust and improves the possibility of engaging in many business deals. For instance, if Bill knew how straightforward the American people were, he would not have hidden any information between BBT and NutriNex, which caused both of them a business transaction.
However, every business transaction comes with negative impacts. If BBT signed a contract through APCG, they would have done many business transactions, and Bill would continue coning them; hence, it would take time to realize his malicious motives. Different perspectives create unique opinions and different approaches to business. If they all knew about cultural diversity, it could have made more disagreements than those presented in the case. Sometimes it is suitable for everyone to believe in their individualism that minimizes personal attacks. Another disadvantage is that diversity in business requires commitments. If they all knew about cultural differences, maybe the whole transaction could not have gone how far it went.
A Solution Supported by a Sound Rationale Based on Knowledge Learned from This Class
Based on the knowledge gained from this study, one can identify cultural conflict through confronting cultural differences, which can lead to distorted behaviors that are profoundly costly. When doing business from a culturally diverse environment, one should never assume cultural stereotypes when entering negotiations.
An Action Plan for Intercultural Conflict Resolution Process
Misunderstanding and disputes caused by cultural differences can further complicate an already complicated negotiation. The following guidelines can help resolve intercultural conflicts. Based on this case study, I would start by learning about intercultural differences as it is the critical issue in this conflict. That would help approach each party more professionally. Second, I would jump-start the cross-cultural negotiations by rebuilding the broken trust as relationships and trust are critical in business. However, that would take time, but understanding each other’s culture would be easy. Thirdly, I would look beyond culture to help understand puzzling negotiations and resolve conflicts from different perspectives. That is because most societies blend prototypes rather than pure exemplars.
The fourth approach is altering organizational practices and procedures as the organization structure reflects the norms of a specific culture. Altering methods of the organization helps one accommodate people from different cultures (Adekunle, Abimbola, & Ehimen, 2019). The final plan would be to consider the value of resolving the conflict. Conflicts can either produce positive or negative outcomes, and others can lead to more significant problems for the organization. Many people resist assimilation and maintain their cultural distinctiveness.
Adekunle, A. M., Abimbola, O. S., & Ehimen, E. J. (2019). Conflicts management strategies: A tool for industrial harmony. Izvestiya, (1), 19-34.
Arieli, S., & Sagiv, L. (2018). Culture and problem-solving: Congruency between the cultural mindset of individualism versus collectivism and problem type. Journal of Experimental Psychology: General, 147(6), 789.
Beugelsdijk, S., & Welzel, C. (2018). Dimensions and dynamics of national culture: Synthesizing Hofstede with Inglehart. Journal of cross-cultural psychology, 49(10), 1469-1505.
Lin, X., & Guan, J. (2003). Negotiating Across the Pacific. Readings and Cases in International Management: A Cross-Cultural Perspective, 230.
Savović, S. (2017). Organizational culture differences and post-acquisition performance: The mediating role of employee attitudes. Leadership & Organization Development Journal.