INT 316: The Cultural Environment of International Business

Term Paper: Intercultural Issues and the Poor Performance affect Auto.Icar Business Operation in Nigeria

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TABLE OF CONTENTS
1.0 INTRODUCTION 1.1 Overview of Nigeria

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2.0 CULTURAL ASPECTS OF NIGERIA 2.1 Definitions of culture 2.2 Different cultures in Nigeria 2.3 Nigeria moral and cultural values 2.4 Cultural influence on business in Nigeria

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3.0 CONCLUSSION & RECOMMENDATION

REFERENCES

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1.0 Introduction This report is an assignment from a U.S. company called Auto.Icar that is located at Redwood City, California. The Company manufactures a product called LeaKFree, used for the repair of car engine radiators, cracked engine blocks and metal water cans. The product has been in existence for decades and has proved to be efficient. The product was first manufactured in the USA by "Producers Ltd" in form of a sugar cube before it was manufactured in U.S. by Auto.Icar in powder sachets. Auto.Icar has 10 trading partners in Europe including Poland, Hungary, Romania, Czech Republic, Slovakia, Australia, New Zealand and three others partners. The chemicals for the LeaKFree are imported from the Japan and Germany, most of the production process is done through outsourcing. For example mixing of the chemical is done by a different company while packaging of the product is done by another company. This research thesis will explore the possibilities of doing business in Nigeria for Auto,Icar by giving a comprehensive overview of the Nigeria market in relation to its cultural diversities and also recommendations on necessary steps to be taken to explore the opportunity in the Nigerian market.

1.1 Overview of Nigeria Nigeria encounter one-third larger than Texas is a country located on the Gulf of Guinea in West Africa. Its neighbors are Benin which located on the West, Niger on the North, Cameroon in the East, and Chad on the Northeast. It is Africas most populous country and the biggest and richest country in Africa and the tenth largest country in the world, with population of about 149 million and total land area of 356,669 square miles (923,773 square kilometers). The country is highly blessed with natural resources such as timber, column bite, rock salt, gypsum, lead/zinc, bentonite and baryte, gemstone, kaolin, tantalite, talc, iron ore, tin, oil and agricultural farm land for both crop and arable farming.

2.0 Cultural Aspect of Nigeria In todays business, it is an established fact that culture plays a vital role on the attitude, perception and decision making process of an individual. Culture is like an unavoidable state of rules and regulations that defines peoples daily life in a particular environment or society. Hence Nigerian culture will be analyzed and more understanding about the culture management.

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2.1 Definition of culture According to Geert Hofstede, culture is the acquired knowledge that people use to interpret experience and generate social behaviour. This knowledge forms values, creates attitudes, and influences behaviour. Hofstede well-known dimensions include power distance, uncertainty avoidance, individualism/collectivism, and masculinity/femininity.

2.2 Different culture in Nigeria There are three largest and most dominant ethnic groups for Nigeria in which are Hausa Tribe, Ibo and Yoruba Culture. Among the three, Hausa Tribe is the biggest tribe in the major inhabitants of about 10 states with traces in several other parts of the country. The Hausas are mostly peasant farmers and herdsmen and live mostly in their villages for easy access to their farms and cattle. The culture of the Hausas permits them to be governed by the Emirs who are so powerful and influential that their words are laws and the Emirs are selected from a ruling linage by cleric council known as "Mallamai". The Hausas are viewed to be most honest and transparent in business dealings in Nigeria than other tribes but have little quest to venture into business at international levels especially with the Western countries. The Hausa culture is highly influenced by the Muslim Religion, with the present integration and practice of Sharia law in Hausa culture, the business atmosphere in Hausa land can be compared to that of Saudi Arabia, and other Islamic countries in the world. Yoruba Culture is the second amongst other Nigeria tribes. The Yorubas are known for their agricultural activities, fishing and also business. They are highly respectful and see age as an advantage (the older you are the more respect you earn). Family is of great importance and the extended family system is highly appreciated. Today the Yoruba culture is infiltrated by both Christianity and Islam in nearly equal proportion. Ibo Culture is the third largest tribe in Nigeria. They are the Nigeria agriculturists as most of the families especially in the villages survive through subsistence farming. Apart from farming, they also knew for their astuteness in trading and business. The majority of Ibos in present day are Christians though there is also the existence of other religions especially the African Traditional Religion. In this case the Ibos of today are characterized with Christian life and virtues.

2.3 Nigeria Moral and Cultural values The value of Nigerias family is backbone of the social system. Family is highly valued in Nigeria culture. Unlike the Unite Stated family is viewed as nuclear family, typically small and often has great distance from

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their children. Nigeria perceived family as the bedrock of human creation. Family relationships are guided by hierarchy and seniority. The man is head of the families and has responsibility of catering the welfare of his family members. When dealing with an individual family man in Nigeria is like dealing with his entire family because all a man strives for is to get his entire family going. Corruption is often attributed to Nigerians family system due to the pressure to meet family obligations transferred to them when leaving the village to the city in search of job or school. Corruption is linked to the strong family values involving intense feelings of obligation. If employee is not properly rewarded, he will frustrate and corruption set in mind. Poor reward system is the factor that cause Nigerian involve in corruption. Worker in the society are not paid regularly. Therefore, employee without getting paid would devise ways to meet their family obligation even if it involves breaking law. Thus, lack of economic opportunity is a serious problem in societies whose citizens is achievement oriented, but have relatively low access to economic opportunities. Therefore, Lipset and Lenze (2008) note that the cultures of societies "that stress economic success as an important goal but nevertheless strongly restricts access to opportunities will have higher levels of corruption." Nigeria is a hierarchical society. In general, Nigeria is part of has much respect and value for old age. In Nigeria it is believed that the words of the old people are as strong as amulets and they are seen as representatives of God in the society. The oldest person in a group is revered and honored. In social situation, they are greeted and served first. Old age employees have the most impressive job titles to them and often the most responsible jobs. Old members of organizations enjoy great freedom and authority. They have the responsibility to make decisions that are in the best interest of the group.

Besides that, there are many religious followed in Nigeria. Africa culture perceived religion as an integral part of culture and not as an independent institution. The constitution guarantees religious freedom. Christianity and Muslims are predominant in Nigeria. Religion to an African entails practical and peoples behaviors and attitude reflect their religious beliefs, concepts and practices. The major Christian celebration of Christmas and Easter are recognized as national holidays. Muslims celebrate Ramadan, the Islamic month of fasting, and the two Eids. Therefore, working hours in the north that are predominant of Muslim are often different from the south. They do not work on Friday which is their holy day.

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2.4 Cultural Influence on business in Nigeria Nigeria both business and social culture is heavily influenced by its politics. There are three major cultures in Nigeria which are Igbo Culture, Yoruba Culture and Hausa Culture. Igbos are located in the South-East part of Nigeria. Most of the families survive through subsistence of agricultural. Besides farming, the Ibos are known for their astuteness in trading business. When you talk about business in Nigeria, then it is referred to mostly the Ibo tribe as they are very versatile in trade. There are five cultural dimension of Hofstede which included power distance, individualism versus collectivism, and masculinity versus femininity, uncertainty avoidance index and long-term orientation versus short-term orientation. Power distance is the extent to which the less powerful members of organization and institutions accept and expect that power is distributed unequally. In Nigeria, power distance is higher than in United State. Its mean United State is low-power-distance country and Nigeria is high-power-distance country. So our company, Auto.Icar in United Stated generally is decentralized and has flatter organization structures. We also have a smaller proportion of supervisory personnel, and the lower strata of the workforce often consist of highly qualified people. By contrast, Auto.Icar in Nigeria tends to be centralized and have tall organization structures. In addition, we have a large proportion of supervisory personnel, and the people at the lower levels of the structure often have low job qualifications. This latter structure encourages and promotes inequality between people at different levels (Advameg, 2011). Furthermore, individualism versus collectivism, collectivism can be describes as the degree which the individuals are integrated into groups. While, for individualism every individual is expected to look after themselves and their immediate family. Nigeria culture is more towards collectivism. They stay among their groups. Meanwhile, in United State, employee usually practices individualism rather than collectivism. So Auto.Icar in Unites State counts their achievement by individually. And also motivate employees by offering individual reward. Each employee will perform effectively by competitiveness. However, Nigeria encourages group work or team work rather than individual work. It will give Synergy effect which is effect greater than the sum of their individual effect by interaction of two or more people. (Geert Hofstede - itim , 2009) Masculinity versus femininity can be defined as distribution roles between genders which is another fundamental issue. Masculinity is a culture in which the dominant values in society are success, money, and things. Femininity is the term used that a situation in which the dominant values in society are caring for others and the quality of life. Some countries still have a gap between mens value and womens values. Higher masculinity in United State compare to Nigeria, this is because the gap between mens value and womens value in Nigeria is still very huge. Therefore, our managers in United State tend to keep their employees under some degree of control. In contrast, our company in Nigeria tends to place great important on cooperation, a friendly atmosphere, and employment security (Geert Hofstede - itim , 2009).

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Uncertainty Avoidance index deals with a society's tolerance for uncertainty and ambiguity; it ultimately refers to man's search for Truth. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth. The opposite type, uncertainty accepting cultures, they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. Uncertainty avoidance is higher in Nigeria compare to United State. Our company in Nigeria have a great deal of structuring of organizational activities, more written rules, less risk taking by managers and less ambitious employees. In other hand, Auto.Icar in United State tends to embrace of the change to less written rules (ClearlyCultural.com, 2009).

3.0 Conclusion and Recommendation Nigeria being the most populous black nation on earth is full of business opportunities, and also problems which stem from cultural diversities and this makes business operation challenging. An understanding of these diversities and the business atmosphere and environment is very important. The manner in which business is done in the Northern part of Nigeria is different from how it is done in the south, also business strategies and principles to adopt differs in different parts as a result of cultural differences. Car Radiator leakage is always associated with old age and Auto.Icar have ascertained that there is market for its product in Nigeria and needed to know how to handle the cultural problems related to do business in Nigeria. In view of this, Auto.Icar has analyzed the different cultures in Nigeria using the three major cultures (Ibo, Hausa, and Yoruba), giving an overview of their history, economy and political structure and also their religious identities. Besides, Auto.Icar must put into consideration the cultural differences while doing business in Nigeria to determine successful business operation in Nigeria. Furthermore, Auto.Icar has makes a comprehensive comparison of U.S. culture and Nigerian culture. This is to give Auto.Icar an insight of the difference in doing business in an organized market like U.S. and in a less organized market like Nigeria. Communication is one of the major problems in doing business in another culture. The breach in communication will bring chaos and failures for an organization. Despite the fact that the Nigerian market is not organized and lacks comprehensive information about consumers, we recommend that Auto.Icar operation in U.S. should modify its management system in order to adapt in Nigeria. Our company need to get a trusted employee in Nigeria that will take care of logistics in Nigeria. By doing this, we recruit our home country skilled worker with well trained of local language.

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References Clearly Cultural: Making Sense of Cross Cultural Communication. (n.d.). Retrieved July 30, 2011, from http://www.clearlycultural.com/2009/06/12/relaunch-clearlycultural-com/

Infoplease:Nigeria. (2009). Retrieved July 28, 2011, from http://www.infoplease.com/ipa/A0107847.html#ixzz1TcBrkCIX

Inside the culture Nigeria: Nigeria Tribes and People. (2010). Retrieved July 28, 2011, from http://www.total-facts-about-nigeria.com/nigeria-tribes.html

Itim International: Geert Hofstede Cultural Dimensions. (2009). Retrieved July 30, 2011, from http://www.geert-hofstede.com/

Reference of Business: Organzational Structure. (2011). Retrieved July 28, 2011, from http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html

Victor E. Dike. Corruption in Nigeria. (2008). Retrieved july 29, 2011, from http://www.africaeconomicanalysis.org/articles/gen/corruptiondikehtm.html