Group Assignment Cultural Differences And Their Impacts On Business Practices.pdf

Trung Nguyen today has become the largest coffee group in the Vietnamese market.. Therefore, if Trung Nguyen wants to expand into the European market, Germany would be a good place becau

IBI101 GROUP ASSIGNMENT: CULTURAL DIFFERENCES AND THEIR

IMPACTS ON BUSINESS PRACTICES

Group D - IB1806 Lecturer: Hồ Ngọc Hồng Phương

TABLE OF CONTENTS

Overview of Trung Nguyên Corp 2

Overview of Germany 2

Hofstede’s Cultural Dimension 3

1 Power Distance (PD) 3

2 Individualism vs Collectivism (IDV) 4

3 Femininity vs Masculinity (MAS) 6

4 Uncertainty Avoidance (UAI) 6

5 Short-Term vs Long-Term Orientation (LTO) 7

a Economic and Financial Planning 7

b Education and Career 7

c Environmental Sustainability 8

d Family and Community 8

e Social Welfare and Safety Nets 8

f Suggestion 9

6 Indulgence versus Restraint (IND) 9

Conclusion 10

Reference List 10

Trung Nguyen Group Joint Stock Company was originally a small coffee shop owned by Mr Dang Le Nguyen Vu, established in mid-1996 Trung Nguyen today has become the largest coffee group in the

Vietnamese market (Nhung, n.d., para 1)

Field of activity:

Currently, Trung Nguyen operates mainly in the fields of: coffee production, processing and trading, and

franchising the Trung Nguyen coffee brand (Nhung, n.d., para 1)

Export:

Up to now, Trung Nguyen's product lines have reached consumers in more than 60 countries around the world, appearing in demanding markets such as the USA, Canada, Russia, the UK, Germany, Japan,

China, Asean, etc (Nhung, n.d., para 1)

Franchising:

Regarding the field of franchising, Trung Nguyen established a separate company in 2011 called Trung Nguyen Franchising to perform the function of managing its store chain To date, Trung Nguyen has

successfully franchised in two extremely developed markets: Singapore, China and Japan (Nhung, n.d., para 3.3)

Production scale:

Currently, the Group's production scale has been developed into 3 factories, including 1 coffee factory in

Ho Chi Minh City, 2 instant coffee factories in Bình Dương and Bắc Giang (Nhung, n.d., para 1)

Overview of Germany.

Germany has always been known as a country Top 4th economy in the world With its position in the global market, almost all companies which want to expand internationally set Germany as a destination

In 2012, there was a survey on coffee drinking in Germany, which reported that more than 86% of adults

in Germany drink coffee regularly About 150 liters of coffee are consumed by one person per year in Germany That makes Germany surpass Italy and France, becoming one of the countries that consumes

the most coffee in Europe, even more than beer and mineral water (VĂN HÓA CÀ PHÊ VÒNG QUANH THẾ GIỚI: ĐỨC - vinbarista.com, n.d.)

Since 2003, the Trung Nguyen Corp has had stores in international markets, but they have been primarily

in Asia - for example Singapore, China, South Korea, etc Therefore, if Trung Nguyen wants to expand into the European market, Germany would be a good place because Vietnam is an important strategic partner for Germany This is also an opportunity for Vietnamese companies to gain a foothold in the European market

Hofstede’s Cultural Dimension

Figure 1 Comparison of Hofstede’s Dimension Cultures of Germany and Vietnam

(Country comparison tool, no date)

1 Power Distance (PD)

This dimension measures how a society deals with inequalities in power A high PD society accepts significant power differentials and hierarchical structures, while a low PD society strives for a more equal distribution of power and influence

For Germans, power distance ranks at 35 on the power distance index This means that relative to the rest

of the world, Germany has a low power-distance culture This also means that "in Germany, subordinates are expected to be consulted The ideal boss is a resourceful democrat, privileges and status symbols are

frowned upon, and inequalities should be minimized."(World View, 2003) Rather than valuing positions

that are based on family connections or age, Germans prefer to put trust in those who demonstrate experience and vast knowledge Those in management are expected to have both, while also keeping an open mind to respectful critiques and challenges

The power distance between Germany and Vietnam is dramatically different Vietnam has a high power distance compared to Germany's low power distance This means that while Vietnamese people are more likely to see themselves as a part of a group and to defer to authority figures, Germans are more likely to see themselves as equals and to have a say in decisions These differences in power distance are evident in both nations' business cultures Vietnamese businesses tend to be more hierarchical and paternalistic, whereas German businesses tend to be more egalitarian and participative

In order to expand their name to Germany, Trung Nguyen should be aware of the power distance difference between the two countries They need to make a special effort to build trust and credibility with German consumers In their communication, they might also want to provide greater transparency and openness

2 Individualism vs Collectivism (IDV)

IDV describes whether a society emphasizes individual interests and autonomy or group cohesion and cooperation Individualist cultures prioritize personal freedom, while collectivist cultures prioritize the well-being of the group

Wealthier nations, according to Hofstede, tend to be more individualistic Germany, which scored 67, is among the world's most individualistic nations, scoring 56% higher than the average This shows how highly valued an individual's accomplishments and rights are to Germans

Individuality, independence, and self-determination are valued in individualistic cultures like German culture In Germany, taking care of oneself and one's immediate family is highly valued However, they also value cooperation and teamwork These people are prepared to cooperate in order to accomplish shared objectives, but they also demand the freedom to express their own opinions Even though it occasionally results in disagreements and negotiations, this step in the decision-making process is regarded as beneficial

Germany and Vietnam have very different individualistic cultures Vietnamese people are more collectivist, whereas Germans are more individualistic Numerous facets of German and Vietnamese culture, including business practices, demonstrate the difference between individualism and collectivism

In contrast to Vietnamese firms, which tend to be less hierarchical and paternalistic, German business is more egalitarian and participatory Workers from Vietnam have an increased likelihood of receiving explicit instructions and mandates to work in a team environment than workers from Germany, so they are more free to make their own decisions while working on their own

Overall, Trung Nguyen should emphasize the quality and uniqueness of their products or services, build relationships with German businesses and consumers, and be patient and persistent in their efforts to expand to Germany Additionally, they should localize their marketing materials, use social media to connect with German consumers, participate in trade shows and industry events, and work with German distributors and retailers

This dimension reflects the extent to which a society values traditionally masculine traits like competition, assertiveness, and material success, as opposed to traditionally feminine traits like caring, quality of life, and cooperation High MAS societies tend to prioritize competition and success

Vietnam has a more feminine culture than Germany, according to the Hofstede Insights (Country comparison tool, no date) Femininity vs Masculinity scale, with a score of 40 compared to Germany's 66.

This means that Vietnamese culture values interpersonal relationships, teamwork, and quality of life more than German culture Vietnamese culture also emphasizes the importance of family and community, and Vietnamese people tend to be more collectivistic, prioritizing the needs of the group over the individual Germany is a more competitive, materialistic, and individualistic culture than other cultures Thus, Germans tend to be assertive and direct, and they highly value hard work and efficiency, personal

achievement is also set at high place ((Work culture in Germany: Your 10 rules guide, no date)

The Femininity vs Masculinity dimension does affect the business in some ways Therefore, Vietnamese coffee company Trung Nguyen may need to adjust its communication style to be more direct and assertive when expanding into Germany, a more masculine culture Moreover, Trung Nguyen also needs to focus more on competition and achievement to be successful in the German market

4 Uncertainty Avoidance (UAI)

UAI measures how comfortable a society is with risk and uncertainty Societies with high UAI tend to have strict rules and structures to minimize uncertainty, while low UAI societies are more adaptable and open to risk

According to Figure 1, Germany scored much higher on uncertainty avoidance than Vietnam, by exactly

35 This shows Germans tend to avoid uncertainty and are thoroughly prepared in their work Germans

have a systematic approach including careful planning and attention to detail (Business Culture Germany | Doing Business Germany, n.d.) They often write down details to ensure all aspects are considered and the project can be executed successfully, using exact figures and reliable sources (Business Practices in Germany - Santandertrade.com, n.d.-a, para 8) Even in German company meetings, experts assess the certainty and safety of plans before deciding to follow them (Business Practices in Germany -Santandertrade.com, n.d.-a, para 8).

Also based on Figure 1, Vietnam scored low on UAI at 30 points This reflects that Vietnamese people

have a high tolerance for risks, innovation, and creativity They are more relaxed at work and do not highly value principles If there is a deviation from the original plan, Vietnamese tend to accept it and adjust rather than strictly follow predetermined guidelines For Vietnamese companies, when facing unexpected domestic consumer changes, they choose to innovate to adapt rather than continue on the old path

Therefore, if Trung Nguyen decides to expand its business to the German market, it must switch from

"flexible" to "disciplined" to match the German cultural avoidance of risks and uncertainties

5 Short-Term vs Long-Term Orientation (LTO)

LTO represents the extent to which a society values long-term commitments, planning, and investment over short-term gains High LTO societies are more inclined to build relationships and make decisions with a long-term perspective

Both Vietnam and Germany have a long-term orientation (the two countries' scores on this dimension are

83 and 57 respectively)

a Economic and Financial Planning

Germans are known for their strong long-term financial planning Being pragmatic, they tend toward

thriftiness, saving and investing, and persevering to achieve their goals (Business Culture Germany | Doing Business Germany, n.d.-b) Similarly, Vietnamese individuals often focus on short-term financial

goals, such as saving for immediate needs or family support Long-term financial planning, while becoming more common, may not be as widespread as in Germany

b Education and Career

Germans highly value education and consider it a long-term investment in their careers They may expect

a strong commitment to professional development In Vietnam, education is highly valued and individuals often invest in education to secure better job prospects and financial stability

c Environmental Sustainability

Germany has a strong commitment to long-term environmental sustainability Businesses may need to align with strict environmental regulations While environmental awareness and sustainability efforts are increasing in Vietnam, the primary focus may be on immediate issues like pollution control and urban development, rather than long-term environmental sustainability

d Family and Community

“Germans believe in maintaining a healthy equilibrium between work and personal life They value leisure time, family, and personal interests and encourage employees to prioritize their well-being” (Cheung, 2023) This balanced approach to work and life contributes to overall employee satisfaction, happiness and productivity

e Social Welfare and Safety Nets

Germany’s welfare system is one of the most comprehensive in the world (Strong Welfare State, n.d.) with

a strong focus on long-term well-being and security, including for employees Vietnam has been expanding its social safety nets, but they may not be as comprehensive as in Germany

f Suggestion

Companies vying for a share in the German market should prioritize building long-term relationships and

creating products that prioritize sustainability and durability (Team, 2023, para 8)

6 Indulgence versus Restraint (IND)

Indulgence versus Restraint (IND) is a cultural dimension that measures the extent to which a society permits the gratification of basic human desires related to having fun and enjoying life

Cultures with high levels of indulgence tend to have people who are more laid-back and have a positive outlook on life They tend to freely indulge in their impulses, enjoy leisure time, and focus on having fun and living in the moment

On the other hand, cultures with high levels of restraint tend to have strict social norms and rules People

in these cultures suppress their needs and regulate them through strict social norms People in these societies often have a higher level of control over their desires and impulses so they always place a strong emphasis on traditions and social norms

Germany and Vietnam have distinct cultural differences that affect how people interact and approach life

In Germany, individuals are taught to be self-disciplined and focused on productivity They value following rules and norms, and their leisure time is often organized and structured Conversely, Vietnam, which is known for its indulgent culture, emphasizes socializing, enjoying life, and celebrating with family and community Vietnamese are more relaxed and spontaneous, and they enjoy entertainment and relaxation activities

In general, Trung Nguyen must recognize and respect the cultural differences that exist between VietNam and Germany By understanding and embracing these differences, Trung Nguyen can expand its business

to Germany by adapting Germany’s culture and applying it into Trung Nguyen ‘s operation and services

In conclusion, Trung Nguyen should be mindful of the cultural differences between Germany and Vietnam before expanding their brand there The cooperation must closely examine a number of cultural factors, including the power distance index, individualism against collectivism (IDV), femininity versus masculinity (MAS), uncertainty avoidance (UAI), short-term versus long-term orientation (LTO), indulgence versus restraint (IND) Trung Nguyen can produce and provide German clients with high-quality and distinctive products provided they can comprehend and appreciate these differences In addition, Trung Nguyen can adapt their marketing approach and spread their reputation by developing an appropriate communication style with Germans and understanding German culture Trung Nguyen must also pay close attention to designing items that value durability and sustainability

Reference List

Business Culture Germany | Doing Business Germany (n.d.).

https://platform.globig.co/knowledgebase/DE/landscape/business-culture-in-germany

Business practices in Germany - Santandertrade.com (n.d.).

https://santandertrade.com/en/portal/establish-overseas/germany/business-practices

Cheung, C (2023, July 28) Navigating German Work Culture in 2023: Insights & Future Perspectives | NNRoad NNRoad.

https://nnroad.com/blog/german-work-culture/

Country comparison tool (no date).

https://www.hofstede-insights.com/country-comparison-tool

Foster, Brock,"How culture makes a difference in management: Applying Geert Hofstede's cultural

dimensions to management in Germany and China" (2015) Senior Honors Theses & Projects 448.

https://commons.emich.edu/honors/448

Gouveia, Valdiney V , & Ros, María (2000),"Hofstede and Schwartz models for classifying individualism at the cultural level: their relationship to macro-social and macro-economic variables." Psicothema, Vol.

12, no.Su1, pp.25-33.

https://www.redalyc.org/articulo.oa?id=72796004

Individualism – Clearly Cultural (no date).

https://clearlycultural.com/geert-hofstede-cultural-dimensions/individualism/