Greek And British People Regarding Business Culture example essay topic

1. INTRODUCTION Globalization involves a variety of links expanding and tightening a web of political, economic and cultural inter-connections. Most attention has been devoted to merchandise trade as it has had the most immediate (or most visible) consequences, but capital, in and of itself, has come to play an arguably even larger role than the trade in material goods. Human movements also link previously separate communities.

Finally, there is the cultural connection. All the individual data would indicate that we are undergoing a process of compression of international time and space and an intensification of international relations. The separation of production and consumption that is the heart of modern capitalism appears to have reached its zenith. Globalization is not just another 'buzz-word', but very much a real and significant phenomenon. But, what does it mean? What does a globalized world look like?

Despite the extensive discussion on globalization and international interdependence, we still have a relatively limited idea of what this new world looks like. We understand that there are more international connections taking place, that a wider variety of goods and services are being exchanged across boundaries, that more and more people live their professional, family, and intellectual lives in more than one country, and that cultural autarky is no longer possible. At its most basic, there is nothing mysterious about globalization. The term has come into common usage since the 1980's, reflecting technological advances that have made it easier and quicker to complete international transactions-both trade and financial flows. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity-village markets, urban industries, or financial centers. Markets promote efficiency through competition and the division of labor, the specialization that allows people and economies to focus on what they do best.

Global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports, and larger export markets. 2. REASONS FOR GOING ABROAD Generally, the reason for even considering an international expansion fall into four separate areas: 1. Market size (leading to product effectiveness and competitive advantage) 2. External influences (Economic healthiness or less intense competition than home markets) 3.

Geographical diversification 4. Product longevity (Paul Gibbs, 1992) It is extremely important to understand the direction and the stability of the environment that we try to get in. This environment consists of socio-cultural, political, economical, legal and government traits. Awareness of social and cultural norms has helped major multinational companies such as Coca-Cola, IBM, Marlboro and Pepsi succeed in being recognized as truly international brands. (Paul Gibbs, 1992) In this assignment, we aim to investigate in which extent an organisation must appreciate cultural differences before entering a market.

For that, we chose Tesco a very well established multinational company. Our goal is to expand Tesco's operations in Greece. 3. TESCO A MULTINATIONAL ORGANISATION (source: web) Tesco is one of Britain's leading food retailers and has 586 stores. From 1992, Tesco has grown greatly and has increased its market share from 10.4% to 15.2%. This increase in customers has also given Tesco a large amount of profit.

Tesco has 164500 shareholders and its profit is about 505 million pounds after the tax has been deducted. Fifty per cent of its profit is distributed to the shareholders as dividends and the rest is held back for investment in stores and improving services for the customers. Tesco's group capital expenditure is 841 million pounds. This was mostly ploughed back into Great Britain. Great Britain 737 million pounds Ireland 63 million pounds Europe 41 million pounds Although Tesco has started an over seas investment program since 1994, success did not come. For example, the first investment in France in 1994 was not of great success, as the expenditure was not recovered as quickly as the management has aimed.

The competition and the cultural differences was for Tesco the main reason of failure. Before entering the Greek market we will therefore investigate all the cultural differences and focus on how Tesco will benefit from this investment 4. TESCO IN GREECE Our vision is to bring Tesco in Greece mainly because Tesco is a profitable company, which has seen steady growth over the years in UK and is now expanding worldwide. Moreover, Greek people like British products a fact that is proved from the great success of Marks & Spencer and other companies. Paul Gibbs, in his book 'Doing Business in the European Community's tates that in Greece households spend about twice the average proportion of their income on food, drink and tobacco. The above also proves that the Greek market might be an opportunity for Tesco.

The fact that the Olympic games of 2004 will take place in Athens is also a positive factor for any investment in the area. Our entry option will be a foreign direct investment through Joint Ventures. Tesco aims to cooperate with the Greek supermarket chain 'Sklavenitis'. Sklavenitis is the key to success because if its substantial experience and its extensive sales and service network. 5.

THE GREEK ECONOMY (web) Fundamental economic changes are altering lifestyles, increasing incomes and heightening demand for food convenience and variety. Greece has a population of 10.6 million, a workforce of about 4 million and an unemployment rate of roughly 10.5%. Per capita gross domestic product (GDP) reached $12.480 in 1999. Although lower than that of many members of EU, this figure shows a considerable gain from the country's year earlier figure, $11.335. Like many of its neighbors, Greece is making the transition from a centrally planned, largely government-controlled economy to one that is more market oriented. 6.

COMPETITION With the emergence of new international chains and mergers of existing companies, the retail food sector in Greece is changing rapidly. So far Greek Supermarkets number 2,700 including 88 cash and carry operations, big shops selling products in large packages to whole sales supermarkets and their smaller branches are replacing more traditional stores. Discount chains are also reshaping the market. French retail giant Carrefour entered the market in 1999, acquiring the Greek firm prom odes and Collaborating with Marinopoulos, Greece's biggest chain.

A long tradition of culinary excellence and a culture laced with glowing references to food and meal-taking has for decades made the corner grocer one of the most important vendors to practically all Greek households. With the rapid advent of the supermarket-style of grocery shopping, therefore, it was only natural that several major European supermarket chains have penetrated the small, but lucrative Greek retail foodstuffs sector. At present, among the largest foreign investors in Greek supermarkets and department stores are French chains, followed by German, Dutch and Belgian retailers. In 1992, the Belgian chain Delhaize Le Lion (active in eight countries) bought a majority share in the Alpha Beta (AB) Vassilopoulos chain, known for its speciality items and upmarket pricing. After the buy-out, the supermarket chain retained its Greek name while its new management implemented a development policy, which focused on expanding throughout Greece, rather than remaining only in affluent suburbs of Athens. The new management also lowered prices so as to attract middle-income consumers.

These policies proved to be successful, as AB Vassilopoulos is the only supermarket chain in Greece to have entered the Athens Stock Exchange. In 1998, AB Vassilopoulos grossed 129.8 billion drachmas in sales and 2.27 billion in profits, making it the fifth most profitable supermarket chain in the country as well as the sixth largest business in Greece. During the '90's, additionally, a number of foreign-owned department store and cash & carry outlets set up shop in Greece, among them the large Dutch wholesale chain Makro and the German hardware store Praktiker. Conversely, Makro introduced its policy of low prices on a wide selection of products, sounding the alarm for the numerous small- to medium-sized local merchants. In 1998, Makro - the fourth largest chain store in the county - grossed 116, 5 billion drachmas in sales and 4.4 billion in profits (with actual profits reaching 3.8 per cent), making it the most profitable chain in Greece. On the other hand that same year, Praktiker (part of the German group Metro AG) grossed 33.8 billion in sales and 2.28 billion in profits.

7. FINANCIAL STATUS OF THE INDUSTRY (source: Greek ministry of economics) In 1998, the annual turnover for supermarkets in Greece reached 1.4 trillion drachmas (a 9 per cent increase compared to 1997) despite the fact that per capita consumer spending dropped by 15 per cent. The discount chain Dia had the highest increase in sales (65 per cent) for 1998, indicating the prospects for the development of discount stores in Greece. Greek supermarkets, as more developed western chains have seen over the course of several decades, operate on a profit margin that in 1998 was listed at 1.4 per cent against 1.2 per cent in 1997 (the largest profit was announced by the Pente chain with 5.3 per cent). Gross profits as a percentage of turnover reached 18.6 per cent in 1998 against 18.2 per cent in 1997. The greatest yield of own capital for 1998 was announced by the Argo chain (part of the Pente-Galaxies Group) with 171 per cent followed by Sklavenitis with 70 per cent.

One of the reasons for supermarket chains' limited profits is their steep advertising costs (in 1998 costs total led 14 per cent of their total sales). On a whole, supermarkets and department stores are the largest sector (their sales surpassing 1.72 trillion drachmas in 1998) of Greek trade, followed by the petrol industry (1.66 trillion) and the automobile / auto parts industry (1.44 trillion). In fact, with 25.8 billion drachmas in total profits, the supermarket and department store industry is the fourth most profitable sector following pharmaceutical and beauty products (38, 6 billion), the automobile / auto -part industry (37.5 billion) and office and computer equipment (29.2 billion). The Greek supermarket / department store market is becoming more and more concentrated, as the continuous mergers and buy-outs, which were occurring until 1997, have stopped. In comparison to other European countries, however, the Greek market is less concentrated.

Overall, the three largest supermarket chains in Greece (Marinopoulos, Sklavenitis and Veropoulos) control 25 per cent of the market, against 40 per cent in France and Italy. Similar trends in which a few 'players' will come to control the Greek supermarket industry are expected for the future. 8. THE LARGEST GREEK SUPERMARKET (source: web) In 1998, the Greek supermarket chain Sklavenitis built the largest Greek hyper-market (12,000 square metre's in size) in Nea Halkidona, on the outskirts of Athens. The entire investment cost approximately 8.5 billion drachmas. Sklavenitis is the most competitive chain in Greece, with only 32 stores that are all located only in or around Athens, whereas its competitors are have stores throughout Greece.

This Greek supermarket chain has the highest profits (total ling 4 billion drachmas in 1998) and came second in annual turnover (163 billion in 1998). In fact, Sklavenitis is the fifth-largest business in the country, following the three petrol companies (BP, EKO-ELD A, and Shell) and the supermarket chain Marinopoulos (Niki S.A.) We therefore believe that the cooperation with Sklavenitis (joint venture) will be really beneficial for Tesco. 9. JOINT VENTURES AND CULTURE Cross-border mergers and acquisitions, joint Ventures and alliances seem to share at least two characteristics with the marriage trends of the post World War II 'Baby Boomers' generation: They have grown explosively during the 1980's. In the case of international joint ventures, they have experienced substantial growth during the late 1980's and the 1990's, to the point of being perceived as the dominant organisational form of global businesses. Although by the end of the 1980's these types of co-operation agreements were still rare in certain countries, minority joint ventures were already becoming a particularly favoured inter nationalisation mechanism by companies based in the USA and other developed economies.

(Morosini Piero, 1998) Thus, during the same years, out of approximately 25000 foreign affiliates of US-based companies worldwide, minority equity affiliates had already outnumbered both majority and fully owned affiliates put together. (Perlmutter H V, Hennan D A, 1986) However, extensive evidence suggests that their performance was far from successful. Those evidence consist of empirical studies made by management academicians and practitioners with the purpose to cover subjects like diverse industry sectors, time periods and country samples, and embracing both domestic and cross-border types of deals. A significant part of these findings has drawn attention to the implementation phase of these agreements, highlighting cultural and organisational complexities as critical factors behind their rather mixed economic results.

(Seth A, 1990) So the answer to the question 'Why so many Joint Ventures fail?' is simple. They fail because people do not understand the important role of culture or cultural differences. Empirical evidence suggests that technical issues are less likely to lead to conflicting situations compared to interrelationship problems during the implementation of international Joint Ventures. (Morosini P, 1998) In general, too much emphasis is given on setting the strategic objectives of the Joint Venture.

As a result they ignore personal interaction aspects involving people from different national cultures. To remedy these drawbacks, general attitudes and skills favouring 'inter-cultural' effectiveness and international adaptation of company executives have been widely studied and proposed, but often outside their practical context and the relevant business issues. (Lane H W, Beamish P W, 1990) 10. HOFSTEDE'S MODEL OF CULTURE brief introduction to a key model of culture is required to properly describe the effects of national cultural differences on cross-border acquisition performance.

During the late 1970's, the Dutch academician Geert Hofstede developed an empirical model of national culture, which has widely utilised by management researchers and practitioners. This model is based on a large statistical survey of the employees of one multinational organisation across forty countries, showed that national cultural values vary significantly across four dimensions: power distance, uncertainty voidance, individualism, masculinity. Power distance is '... the extent to which society accepts the fact that power in institutions and organisations is distributed unequally'. (Hofstede G, 1980) Within organisations as units of society, we inevitably find inequality of members' abilities and inequality of power.

An unequal distribution of power over members is the essence of organisation. (Hofstede G, 2001) Without it, we get something like 'a flock of birds, in which the only rule of behaviour for each bird is to change the direction of its flight so that, relatively, it always sees its fellows in the same position and thus never leaves the group. (Cotta A, 1976) Inequality of power in organisations is essential for control and for temporarily overcoming the law of entropy, which states that disorder will increase. (Cotta A, 1976) In Greece, the majority of organisations experience high inequality of power, as hierarchy is strong and based on the experience, abilities and education of the organisational members. Uncertainty voidance is '... the extent to which a society feels threatened by uncertain and ambiguous situations by providing career stability, establishing more formal rules, not tolerating deviant ideas and behaviours, and believing in absolute truths and the attainment of expertise'. (Hofstede G, 1980) The term uncertainty avoidance derives from US organisation theorists Richard M. Cyert and James G. March, who use it in their book 'A Behavioural Theory of the Firm' (1963).

According to them, organisations avoid uncertainty in their environments in two ways. ' They avoid the requirement that they correctly anticipate events in the distant future by using decision rules, emphasizing short-run reaction to short-run feedback rather than anticipation of long-run uncertain events. They solve pressing problems rather than develop long-run strategies. Second, they avoid the requirement that they anticipate future reactions of other parts of their environment by arranging a negotiated environment. They impose plans, standard operating procedures, industry tradition, and uncertainty-absorbing contracts on that situation by avoiding planning where plans depend on prediction of uncertain future events and by emphasizing planning where the plans can be made self-confirming by some control device'. Furthermore, according to Hofstede individualism implies '... a loosely knit social framework in which people a re supposed to take care of themselves and their immediate families only, while collectivism is characterised by a tight social framework in their in-group (relatives, clan, organisations) to look after them, and in exchange for that they feel they owe absolute loyalty to it'.

(Hofstede G, 1980) The level of individualism or collectivism in society will affect the organisation's members' reasons for complying with organisational requirements. Relevant is the work of Etzioni. Etzioni distinguished between 'pure' and 'social' moral involvement. He assumed that the first occurs in vertical relationships, such as between teachers and students and the second, social involvement, develops in horizontal relationships, such as in various types of primary groups. (Etzioni A, 1975) The level of individualism will also affect the types of person who will be admitted into positions of special influence in organisations. (Merton R K, 1968) It also depends on the employee's educational level, the organisation's history, size and technology.

Finally, masculinity '... expresses the extent to which the dominant values in society are 'masculine' for example assertiveness, the acquisition of money, and things, and not caring for others, the quality of life, or people'. (Hofstede G, 1980) The opposite pole of masculinity is of course femininity. The duality of the sexes is a fundamental fact with which different societies cope in different ways. The issue is what implications the biological differences between the sexes should have for the emotional and social roles of the genders.

Of course social roles of both genders vary across countries. Since the sample size of the survey was small, Hofstede's empirical study cannot be interpreted as general applicable. But it provided us with interesting information on several aspects of organisational culture. Culture differences between countries were considered to be a major factor influencing the degree of success in the international transfer of critical technologies or managerial techniques between organisations. Cultural Differences can lead to unresolved conflict or to lack of compatibility between the partners. We can understand this when Western executives are faced with day-to-day complications resulting from working in difficult and unfamiliar national cultural environments.

Lack of sufficient local knowledge of a foreign country's peculiar cultural and political context is another critical factor leading to flawed partner selection criteria. (Morosini P, 1998) 11. THE ROLE OF HUMAN RESOURCES MANAGEMENT It will be enormously advantageous for businesses to have personnel who cannot only negotiate successfully in a customer's own language, but who are also sensitive to cultural differences. These people need not necessarily be in senior management positions.

Recruiting practices may change in response to the facility to recruit across borders. Organisations will need to overview their training programmes in the light of the new opportunities. 12. GREEK CULTURE IN BUSINESS Before entering the Greek market, Tesco must consider the cultural differences that exist between Greek and British people regarding business culture. As Paul Gibbs states in his book 'Doing Business in the European Community', the Greeks are proud of their history and role as the first center of European civilization. This pride is reflected in their manner of doing business.

They are always trustworthy, although they can be erratic. The Greek is also sometimes covered or even insecure, which is shown in his tendency to play his cards close to his chest, keep a few tricks up his sleeve, play-act, bargain, call bluffs and generally make a business associate feel like a co-conspirator. Suspicion of the state is another trait to the Greeks; the state is not a partner in national development, but a foe to outwit at every turn. Gibbs continues by emphasizing the fact that Greek mentality has little preference for long-term industrial projects and is more suited to trade. Most manufacturing companies are family owned and, although likely to have well trained business people on the staff, they will still react best to business propositions put to them by people who have spent time establishing a relationship with them. The Greek temperament is complex.

Thucydides describes the Athenian character, as 'one man's success is tolerable only when others feel they could have done it themselves'. Never exert too much pressure on the Greeks. They will react at their own pace and as they see fit. The Greeks object to gross exhibition of money or personal discussion of the subject. The Greeks are friendly people, speak good English, and even have an ancient god of hospitality to foreigners. Greeks are expansive and individual as corporate entertainment takes on every personal character.

Finally, women in Greece are seen as a very powerful influence behind the scenes and at home. Women who graduate are usually directed towards medicine and the carrying professions. In Greece today, the main role of women is still considered to be as wives and mothers and career women are treated with suspicion. (Paul Gibbs, 1992) So we can therefore say that in relation to Hofstede's model, masculinity is a reality in Greece. 13. TESCO APPROACHING SKLAVENITIS An introduction from an acceptable institution, company or associate is the key to doing business in Greece.

Where this is not immediately available organisations such as the British Hellenic Chamber of Commerce in Athens can facilitate the introduction. This introduction can be personal or in the form of a letter to be presented at the first meeting. (Paul Gibbs, 1992) When the introduction is secured, Sklavenitis can be approached by telephone or letter. The letter could be in Greek, but the Greek businessperson is aware of the complexity of the language and will be prepared to accept a letter written in English. Once a meeting has been set up, it is best to keep the discussion formal in nature. Tesco's representative must be fully prepared for the meeting and know business well.

As Gibbs mentions ' The Greeks, if they have time, like to get to know the person with whom they are doing business, and they may spend some time in small talk, effectively summing you up'. Contracts are better left to lawyers but all the other details of the agreement must be discussed in details. Tesco's representative must analyze the reason why Sklavenitis was chosen and what are the benefits of the joint Venture for both companies. Moreover, he must present the strategy for winning competition, which is of high levels in the area.

CONCLUSION International business has proved in recent years to be the most dynamic area of business studies. The world economy is becoming globalized, as new blocs and relationships emerge to create a radically different business environment. We have seen the increasing importance of the European Union, the opening up of most of the former centrally planned economies, and a phenomenal growth in emerging markets. All these changes present new challenges and opportunities for organisations.

In this assignment, our role was to prove that cultural differences not only exist but also play an important role to the expansion of organisations. Tesco, which aims to cooperate -through Joint Venture- with the Greek 'Sklavenitis', must consider all the cultural differences in terms of the management style, behavior and attitudes of Greek businesspeople. Business society is full of cultural obstacles that can destroy investment opportunities. The key to success is the research of all the cultural aspects, which we have already, present with the help of Hofstede's model.

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