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

GROUP ASSIGNMENT: CULTURAL DIFFERENCES AND THEIRIMPACTS ON BUSINESS PRACTICES

Group D - IB1806Lecturer: Hồ Ngọc Hồng Phương

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

Reference List 10

Trung Nguyen Group Joint Stock Company was originally a small coffee shop owned by Mr Dang LeNguyen 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)

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 theglobal 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 adultsin Germany drink coffee regularly About 150 liters of coffee are consumed by one person per year inGermany 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 QUANHTHẾ GIỚI: ĐỨC - vinbarista.com, n.d.)

Since 2003, the Trung Nguyen Corp has had stores in international markets, but they have been primarilyin Asia - for example Singapore, China, South Korea, etc Therefore, if Trung Nguyen wants to expandinto the European market, Germany would be a good place because Vietnam is an important strategicpartner for Germany This is also an opportunity for Vietnamese companies to gain a foothold in theEuropean 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 acceptssignificant power differentials and hierarchical structures, while a low PD society strives for a more equaldistribution of power and influence.

For Germans, power distance ranks at 35 on the power distance index This means that relative to the restof the world, Germany has a low power-distance culture This also means that "in Germany, subordinatesare 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 demonstrateexperience and vast knowledge Those in management are expected to have both, while also keeping anopen mind to respectful critiques and challenges.

The power distance between Germany and Vietnam is dramatically different Vietnam has a high powerdistance compared to Germany's low power distance This means that while Vietnamese people are morelikely to see themselves as a part of a group and to defer to authority figures, Germans are more likely tosee themselves as equals and to have a say in decisions These differences in power distance are evident inboth 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 distancedifference between the two countries They need to make a special effort to build trust and credibility withGerman consumers In their communication, they might also want to provide greater transparency andopenness.

2 Individualism vs Collectivism (IDV)

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

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

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

Germany and Vietnam have very different individualistic cultures Vietnamese people are morecollectivist, whereas Germans are more individualistic Numerous facets of German and Vietnameseculture, 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 ismore egalitarian and participatory Workers from Vietnam have an increased likelihood of receivingexplicit instructions and mandates to work in a team environment than workers from Germany, so they aremore 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, buildrelationships with German businesses and consumers, and be patient and persistent in their efforts toexpand to Germany Additionally, they should localize their marketing materials, use social media toconnect with German consumers, participate in trade shows and industry events, and work with Germandistributors 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 (Countrycomparison 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 morethan German culture Vietnamese culture also emphasizes the importance of family and community, andVietnamese 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, Vietnamesecoffee company Trung Nguyen may need to adjust its communication style to be more direct and assertivewhen expanding into Germany, a more masculine culture Moreover, Trung Nguyen also needs to focusmore 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 tohave strict rules and structures to minimize uncertainty, while low UAI societies are more adaptable andopen 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 theproject can be executed successfully, using exact figures and reliable sources (Business Practices inGermany - Santandertrade.com, n.d.-a, para 8) Even in German company meetings, experts assess thecertainty 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 nothighly value principles If there is a deviation from the original plan, Vietnamese tend to accept it andadjust rather than strictly follow predetermined guidelines For Vietnamese companies, when facingunexpected domestic consumer changes, they choose to innovate to adapt rather than continue on the oldpath.

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 investmentover short-term gains High LTO societies are more inclined to build relationships and make decisionswith a long-term perspective.

Both Vietnam and Germany have a long-term orientation (the two countries' scores on this dimension are83 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, whilebecoming 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 expecta strong commitment to professional development In Vietnam, education is highly valued and individualsoften 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 toalign with strict environmental regulations While environmental awareness and sustainability efforts areincreasing in Vietnam, the primary focus may be on immediate issues like pollution control and urbandevelopment, rather than long-term environmental sustainability.

d.Family and Community

“Germans believe in maintaining a healthy equilibrium between work and personal life They valueleisure 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 beenexpanding its social safety nets, but they may not be as comprehensive as in Germany.

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 societypermits 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 positiveoutlook on life They tend to freely indulge in their impulses, enjoy leisure time, and focus on having funand living in the moment.

On the other hand, cultures with high levels of restraint tend to have strict social norms and rules Peoplein these cultures suppress their needs and regulate them through strict social norms People in thesesocieties often have a higher level of control over their desires and impulses so they always place a strongemphasis 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 valuefollowing 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 withfamily and community Vietnamese are more relaxed and spontaneous, and they enjoy entertainment andrelaxation activities.

In general, Trung Nguyen must recognize and respect the cultural differences that exist between VietNamand Germany By understanding and embracing these differences, Trung Nguyen can expand its businessto 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 andVietnam before expanding their brand there The cooperation must closely examine a number of culturalfactors, including the power distance index, individualism against collectivism (IDV), femininity versusmasculinity (MAS), uncertainty avoidance (UAI), short-term versus long-term orientation (LTO),indulgence versus restraint (IND) Trung Nguyen can produce and provide German clients withhigh-quality and distinctive products provided they can comprehend and appreciate these differences Inaddition, Trung Nguyen can adapt their marketing approach and spread their reputation by developing anappropriate communication style with Germans and understanding German culture Trung Nguyen mustalso pay close attention to designing items that value durability and sustainability.

https://www.redalyc.org/articulo.oa?id=72796004Individualism – Clearly Cultural (no date).

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

Koslowski, B (2021, August 10) Hofstede: A Peek into Vietnam’s Business Culture Retrieved October 12,2023, from