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Case Study

Arnold Tanner, Western Energy Inc., and China

overview
Western Energy Management, Inc. operates as an
energy management and conservation company
Western energy incorporation conducted business in
100 countries and employed 70,000 people.
It is one of the usa ten largest energy firm.
In 1979 china introduced an open door policy

Lack of capital and technology restricted it


to exploit the abundant coal in the taibo
mine,shanxi province of north china.
Eight western firm participated three from
USA but tanner won the bid due to his
gunaxi (connections) with the Chinese
supreme leader deng Xiaoping .

Q1:What are the cross cultural influences does


company encounter when determine how and where
to conduct business in republic of chaina
Individualism /collectivism
Power distance
Uncertainty avoidance
Masculinity / femininity
Long short term orientation

Type of Logic(Relationship Linear, Spiral)


Expression of Agreement & Disagreement
Expression of Self(I,We)
The Individual(Individual Autonomy, Group)
Conflict Result(Win or Lose, {Win-Win,To
lose is to win, Lose in order to win})

Q2:
CULTURAL FACTORS
Point of reference
Languages
Guanxi(Central & Local)
Masculinity index
Class system
Religion

Q3:
POLITICAL SYSTEM
Chinese government is still very involved with
business, be it directly through state- owned enterprises
or indirectly through legislation.
A company would be successful if it built trust with
the Chinese government .
You have to prove yourself over the years as someone
the government can rely on to do what they want you
to do .

Legal system

The Chinese legal system echoes the political system in


that it is still suspicious of outsiders and therefore
supports its domestic business.

Business operations
affected
As WEI was not able to develop local guanxi
Relations with local partners .
Americans made tall promises but were not
able to fulfill them main reason such as
scale of the mine, Chinese worker salaries,
the amount of coal it cud export , it
promised to export 75% of coal and market
it itself in export market.

conti..

When Chinese negotiators decide to close the project


government and tanner would intervene and enforce a
solution.

Q4:
AS A MANAGER OF WEI
Stop the accusation and support the china
coal import/export market .
To negotiate the terms of what WEI Americans
managers wanted and what Chinese claimed.
Producing both type of coal for foreign and
local currency .
Increase cooperation's by helping the china
coal import/export cooperation's to market
the coal internationally .

Making it clear to the Chinese that the WEI


is a 50% investing partner and did not claim
to fulfill the promise after feasibility study
rather collaborate to create win-win
situation .
This would be in the favor of the chines and
the WEI .

Q:5
CHINA HIGH
CONTEXT COUNTRY
Relationship oriented
The Chinese are term
oriented.
The Chinese tends to
believe in implicit , oral
and informal
information .

USA LOW CONTEXT


COUNTRY
The WEI are
competitive
Individualistic.

Q:6
Organizational Barriers
Psychological Barriers .
Different languages
Lack of trust
High context against low context culural.

Q7:
COMPETING
As both wanted to win and defeat the others
COLLABORATIVE
Win- win situation

The cultural differences impacted on some aspects of


management in terms of
Cooperative strategies .
Conflict management .
Decision making .
Wok group characteristics.
Motivation system.