Transportation and communication infrastructure, for example, are not up to U.S. standards. Thus, some consideration needs to be given to working with the government of El-Pais to improve this infrastructure to the point where it can support our larger facility. The team in El-Pais is able to handle, conceptually, what we need in terms of inventory management but it will require some shifts in the corporate culture in our operations in that country. Effort will need to be made to communicate our expectations of corporate culture to the staff and management in El-Pais.
Sales and marketing efforts should be country-specific. There are often significant differences between the sales function in one country and another, and that is the case here. Selling in El-Pais is more based on personal relationships than on product attributes. Thus, the focus is going to be a long-term relationship building rather than on the initial sale. In addition, personal contacts are essential to building a network in Latin countries. Knowing that, it is important to utilize a local sales staff that already has these contacts and fully understands what it takes to build a strong customer network in Latin America.
The high degree of power distance should benefit Penwick with respect to managing the parent-subsidiary relationship. Penwick needs to assert its position as the parent company early, in order to establish its position vis-a-vis the local subsidiary. This is especially important given that the local subsidiary is expected to take on a more significant role in the future as the result of this expansion. For Penwick, the chain of command and communication needs to be established early. This will help to define the relationship between Penwick and its El-Pais subsidiary; it will also help to define the roles of Penwick corporate managers in the management structure of the subsidiary company.
The relationship that Penwick wants with its El-Pais subsidiary should be formalized in writing, so that there is no misunderstanding between the different parties as to Penwicks expectations of the relationship.
Overall, Penwick should be able to enter the El-Pais market relatively easily. There are significant differences in the business and social cultures, but these can easily be overcome by bringing in managers familiar with both Latin and American cultures. This will help to smooth over any misunderstandings, especially with respect to expectations regarding roles and with respect to conflict resolution styles, which are very different between the two cultures. In addition, Penwick can educate its managers on the differences between the two cultures, so that those differences can be understood and anticipated, which will help to avoid conflict.
There is significant opportunity in the El-Pais market if Penwick is able to bridge the cultural gap between Latin culture and American. The differences in business culture can generally be understood in context of the prevailing social culture differences, so it is important for Penwick to understand those differences before proceeding with this move. A combination of education and patience will allow the gap to be overcome more easily. It is also important that Penwick managers dealing with El-Pais understand the prevailing issues in that countrys economy and political environment, as the subsidiarys attitude towards the parent company may be substantially affected by such considerations. If the above tactics are undertaken, then Penwick should enjoy considerable success in El-Pais in the coming years.
Geert Hofstede.com (2010). Retrieved November 14, 2010 from http://www.geert-hofstede.com.