You are on page 1of 19

ASSIGNMENT

THAILAND STRUCTURE AND MANAGEMENT


SUBJECT: MANAGEMENT SUBMITTED TO: SUBMITTED BY: COMPARATIVE MR. HASHIM ZAMEER ADNAN ASLAM KHAN (MB-09-28)

PROGRAM: MBA, MOR (7th Semester)

BZU, BAHADUR SUB-CAMPUS LAYYAH


DATE 12-12-2012

Thailand
The name "Thailand" is associated with the dominant ethnic group, Thai. Thailand was never under European colonial rule. It was an absolute monarchy until 1932, when it became a constitutional monarchy. In 1939 the country's name was changed from Siam to Thailand. Military dictators ruled the nation until the early 1970s; the military remained a powerful force in national politics into the early 1990s. Since that time, its role has diminished, and a new constitution was adopted in 1997. The military governments after World War II promoted rapid economic development and attempted to assimilate ethnic minorities. Rapid economic growth continued until the late 1990s, when the economic boom of the early part of the decade came to an abrupt end. As part of a trend toward devolution of authority, the democratic governments of the 1990s adopted more liberal policies with regard to ethnic minorities. However, members of ethnic minorities continue to face many problems in regard to political rights and economic security.

Location and Geography


The Kingdom of Thailand has an area of 198,114 square miles (513,115 square kilometers). The country is commonly divided into four main regions and borders Burma, Laos, Cambodia, and Malaysia. The northern region is hilly, with much of its population concentrated in upland valleys and the flood plains of rivers; the dominant geographic feature is the Khorat Plateau. The southern region is a narrow isthmus with hills running down the center. The Thai (also known as the Central Tai) live mainly in the central region, with closely related groups of Tai-speaking peoples occupying most of the remainder of the nation. Smaller ethnic groups are scattered throughout the country, especially in the north and the northeast. Bangkok has been the capital since the late eighteenth century, when it replaced the earlier capital of Ayutthaya, which was sacked by Burmese invaders in 1767. With a population of almost 10 million, Bangkok is the most important city politically and economically. About twenty smaller regional cities have populations of two hundred to three hundred thousand.

Demography
The population estimate for 2000 is approximately 62 million. There are about 75 ethnic groups, and approximately 84 percent of the population is Thai, including people from other Taispeaking ethnic groups; the Thai, constitute about 36 percent of the population. The Thai-Lao account for about 32 percent of the population; their territory formerly was part of the Lao kingdom. The Lanna Thai account for about 8 percent of the national population. The Pak Thai constitute about 8 percent of the population. Other major ethnic groups include Chinese (about
2

12 percent of the population), Malay-speaking Muslims (about 3 percent), and Khmer (about 2 percent). The majority of the Chinese live in central Thailand, especially in urban areas. The Malay-speaking Muslims live near to the border with Malaysia. The Khmer live near the Cambodian border. There are communities of Korean- and Urdu-speaking peoples in Bangkok, and there is a small population of Mon in central Thailand.

Ethnic Relations
Thailand often is portrayed as a culturally homogeneous country, but there are approximately seventy-five distinct ethno linguistic groups. The Central Tai is the dominant ethnic group and accounts for 36 percent of the population. The Thai-Lao and Lanna Tai, who together account for about 40 percent of the population, were not assimilated into the national culture until the twentieth century. There have been Chinese in Thailand for centuries. In the nineteenth century, their numbers more than doubled until they constituted about 10 percent of the population. Along with Westerners, the Chinese merchant class dominated the economy in the nineteenth century, especially with the exportation of rice. In the early twentieth century, the Chinese established their own educational institutions, resulting in antipathy toward them under the nationalistic Phi bun regime, which blamed the Chinese for the country's economic problems. In 1938, the Phi bun government taxed the Chinese, limited the use of their language in schools, and closed most Chinese-language newspapers. Chinese immigration came to a virtual halt. While anti-Chinese sentiment remained strong, by the 1970s virtually all the Chinese had Thai citizenship. With the growth of a more open and democratic society in the 1990s, the Chinese began to express their culture openly.

Economy of Thailand
The Economy of Thailand is a newly industrialized economy. Thailand has a relatively diversified export-oriented economy that grew rapidly in the latter part of the twentieth century until the crash of 1997. Manufacturing and tourism led its growth, but agriculture continued to play an important roleemploying over 60 percent of the workforce. The country remains a major producer and exporter of agricultural products, including rice, rubber, and tapioca. Thailand's currency is called the baht. It is a heavily export-dependent economy, with exports accounting for more than two thirds of its gross domestic product (GDP). In 2011, Thailand has a GDP at current market prices of THB10.54 trillion (USD345.65 billion approx ) with the growth rate of 0.1 percent, much lower than the expected growth rate of 3.5 percent due to severe damage from the historic flood the Kingdom confronted mainly in the last quarter of the year. In 2012, the Thai economy is expected to grow by 5.5-6.0 percent, a V-shaped recovery from last years flood. The industrial and the service sectors serve as the two main sectors in the Thai gross domestic product, with the former accounting for 39 percent thereof. Albeit often seen as an agricultural country, Thailand has an agricultural sector which shares only 8.6 percent of the GDP lower than the trading sector and the logistics & communication sector which account for 13.5 percent and 9.6 percent of the GDP respectively. The construction & mining sector adds 4.3 percent to the countrys gross domestic product. In addition to this, other service sectors - which include the financial, the educational, the hotel & restaurant sectors etc. - account for 25 percent of the
3

country's GDP.[4] The Telecommunications in Thailand as well as new types of Services trade are emerging at the center for the industrial expansions and economic competitiveness for the economy of Thailand. Thailand is the second largest economy in Southeast Asia, after Indonesia. However, its per capita GDP in 2011 remains very low at THB155, 926 (USD5, 394) slightly lower than China's per capita GDP in 2011. In Southeast Asia, the Kingdom ranks midway in terms of its per capita GDP, after Singapore, Brunei and Malaysia. As of 24 August 2012, Thailand holds USD178 billion reserve money and international reserves which ranks 2nd in Southeast Asia, after Singapore. With regard to the volume of the external trade, Thailand rank as 2nd in Southeast Asia, after Singapore.

Macro-Economic Trend
In the past 31 years, the economy of Thailand has expanded quite considerably. The GDP at current prices shows that from 1980 to 2011, the size of the Thai economy has expanded nearly sixteen-fold when measured in the Thai Baht, or nearly eleven-fold when measured in the U.S. Dollar. This makes Thailand the 31st biggest economy in the world. With regard to the GDP at constant prices.

Industries
Agriculture, forestry, and fishing Developments in agriculture since the 1960s have supported Thailand's transition to an industrialized economy. As recently as 1980, agriculture represented 70% of employment. In 2008 agriculture, forestry, and fishing contributed only 8.4% percent to GDP and even in rural areas farm jobs represent only half of employment. Thailand is the world's leading exporter of rice and a major exporter of shrimp. Other crops include coconuts, corn, rubber, soybeans, sugarcane and tapioca. In 1985 Thailand officially designated 25 percent of the nation's land area for protected forests and 15 percent for timber production. Protected forests have been set aside for conservation and recreation, while production forests are available for the forestry industry. Between 1992 and 2001, exports of logs and sawn timber increased from 50,000 cubic meters to 2 million cubic meters per year. Thailand is the world's second largest exporter of gypsum after Canada, even though government policy limits gypsum exports to prevent price cuts. In 2003 Thailand produced more than 40 types of minerals with an annual value of about US$740 million. However, more than 80 percent of these minerals were consumed domestically. Services In 2007 the service sector, which ranges from tourism to banking and finance, contributed 44.7% of gross domestic product and employed 37 percent of the workforce. Thailand's service industry is prominent and competitive that contributes to its export growth. Tourism Tourism makes a larger contribution to Thailand's economy (typically about 6 percent of gross domestic product) than that of any other Asian nation. Most tourists come to Thailand for various reasonsmostly for the beaches and relaxation, although with the ongoing insurgency in the Deep South, Bangkok has seen a large increase in tourism over the past years.
4

Also, a sharp increase in tourism from other Asian countries has contributed largely to Thailand's economy even though the Baht has gained strength compared to most other currencies in the past two years. In 2007 some 14 million tourists visited Thailand. Banking and finances Dangerous levels of nonperforming assets at Thai banks helped trigger the attack on the Thai baht by currency speculators that led to the Asian financial crisis in 19971998. By 2003 nonperforming assets had been cut in half to about 30 percent. Despite a return to profitability, however, Thailand's banks continue to struggle with the legacy of the financial crisis in the form of unrealized losses and inadequate capital. Therefore, the government is considering various reforms, including establishing an integrated financial regulatory agency that would free up the Bank of Thailand to focus on monetary policy. In addition, the Thai government is attempting to strengthen the financial sector through the consolidation of commercial, state-owned, and foreign-owned institutions. Specifically, the government's Financial Sector Reform Master Plan, which was first introduced in early 2004, provides tax breaks to financial institutions that engage in mergers and acquisitions. Labour Thailand's labor force was estimated at 36.9 million in 2007. About 49% were employed in agriculture, 37% in services, and 14% in industry. In 2005 women constituted 48 percent of the labor force and held an increasing share of professional jobs. Less than 4% of the workforce is unionized, but 11% of industrial workers and 50% of state enterprise employees are unionized. Although laws applying to private-sector workers' rights to form and join trade unions were unaffected by 19 September 2006, military coup and its aftermath, workers who participate in union activities continue to have inadequate legal protection. According to the U.S. Department of State, union workers are inadequately protected. Thailand's unemployment rate lies at 1.5% percent of the labor force.[47] Land Tenure and Property In the past, all land was owned by the crown in theory, but individuals had use rights if they paid taxes on the land that they occupied. Because of the low population density, land ownership in rural areas was not a matter of concern. Large agricultural estates were rare. The commercial buying and selling of land took place in the main towns, where commercial life was concentrated. Urban land was often owned by Sino-Thais. In the 1950s, around 90 percent of farmers owned their own land. Strong nationalist sentiments influenced the 1941 Land Act, which made it difficult for non-Thais to own land. Informal means of circumventing these restrictions on land ownership helped create a chaotic system in which the title to land was difficult to determine. Under the new constitution and after the economic collapse, efforts were made to reform land ownership. Many restrictions on foreign ownership were removed, including those placed on Thais married to foreigners and their children. Trade-in the mid-1990s, exports were equal in value to about 25 percent of the gross domestic product. The most important exports are computers, integrated circuits, and related parts. Other major exports include electric appliances, garments, rubber, plastic products, shrimp, footwear, gems and jewelry, rice, and canned seafood. Major imports include nonelectric machinery and parts, electrical machinery and parts, chemicals, vehicle parts, iron and steel, crude oil, computers and parts, metal products, and integrated circuits. After the 1997 crash, the manufacturing sector declined sharply, especially the sectors that were highly dependent on imports, such as garments. By late 1998, however, manufacturing had begun to recover. The United States and Japan are the largest markets for the country's exports and suppliers of its
5

imports. Neighboring countries, especially China, have become increasingly trading important partners. The economy of Thailand in the table form on next page.

Statistics GDP GDP growth THB10.54 trillion (USD345.649 billion[2]) 3.7% (as of Q3 2012)

GDP per capita THB155,926[3] (USD5,394[2]) GDP by sector agriculture (8.6%), industry (39%), services (52.4%) Inflation (CPI) 3.8% (2011) Population below poverty 7.75% (2010) line Gini coefficient 43 (2006) Labour force 39.62 million (2011 est.)

Unemployment 0.7% (2011) Automobiles and Automotive parts (11%), Financial Services (9%), Electric appliances and components Main industries (8%), Tourism (6%), cement, auto manufacturing, heavy and light industries, appliances, computers and parts, furniture, plastics, textiles and garments, agricultural processing, beverages, tobacco Ease of Doing th Business Rank 18

External Exports USD228.835 billion (2011)[8] textiles and footwear, fishery products, rice, rubber, Export goods jewelry, automobiles, computers and electrical appliances Main export China 12%, Japan 10.5%, U.S. 9.6%, Hong Kong 7.2%, Malaysia 5.4%, Singapore 5%, Indonesia 4.4% partners (2011 est.) Imports USD228.490 billion (2011)[8] Import goods capital goods, intermediate goods and raw materials, consumer goods, fuels Main import Japan 18.5%, China 13.4%, UAE 6.3%, U.S. 5.9%, partners Malaysia 5.4%, South Korea 4% (2011 est.) FDI stock USD119.5 billion (31 December 2011 est.)

Gross external USD115.6 billion (30 September 2011 est.) debt Public finances Public debt Revenues Expenses 40.5% of GDP (2011 est.) USD65.21 billion (2011 est.) USD74.99 billion (2011 est.)

Economic aid None Standard & Poor's: A- (Domestic) BBB+ (Foreign) A (T&C Assessment) Outlook: Stable Credit rating Moody's:[10] Baa1 Outlook: Stable Fitch:[10] BBB Outlook: Stable Foreign USD178 billion (24 August 2012)[11] reserves

Political Life
Government of Thailand Thailand is a constitutional monarchy. According to the constitution, the three major independent authorities holding the balance of power are executive, legislative, and judicial. Although the King has little direct power under the constitution and Thailand categorizes itself as a constitutional monarchy, the King is more than a symbol of national identity and unity. The present monarch has a great deal of popular respect and moral authority, which has been used to intervene in political crises and influence the course of the government. The head of government is the Prime Minister. Under the present constitution, the Prime Minister must be a Member of Parliament. Cabinet members do not have to be Members of Parliament. The legislature can hold a vote of no-confidence against the Premier and members of his Cabinet if it has sufficient votes. If the votes pass, the king keeps the government and king how it is, if they don't, then everything changes. The king, on occasion, involves himself directly in political affairs when national stability is threatened. Between 1932 and the early 1990s, the government was dominated by military and bureaucratic elite. After the elections in 1992, political parties opposed to military intervention formed a coalition government, with the leader of the Democratic Party becoming prime minister. Parliament was dissolved in 1995, and the Democratic Party lost to the Thai Nation Party. That government lasted only until 1996, when a former military commander formed a coalition government and became prime minister. The economic collapse of 1997 led to the fall of that government and the eventual assumption of power by a coalition government led by the Democratic Party with its leader, Chuan Leekpai, as prime minister. A reformist constitution was promulgated in late 1997 with the intent to enhance participatory democracy. Attention has focused on eliminating corrupt political practices and devolving power. Devolution has included holding elections to a wider range of local offices. A National Counter-Corruption Commission was formed and given some powers to monitor electoral fraud. Thailand held its first national election under the 1997 constitution in January 2001. The newly formed Thai Rak Thai party led by Taksin Shinawatra, one of Thailand's richest men, defeated the Democrats and won 248 of parliament's 500 seats. The Thai Rak Thai party was joined by the smaller New Aspiration party to form a coalition with 325 seats. Voters appeared to have grown tired of Chuan Leekpai's six-party coalition government. They were lured by Taksin Shinawatra's promises of expansive economic policies, including his pledge to give every one of the country's 70,000 villages 1 million baht (about U.S. $25,000) in development funds. The election was fraught with corruption, which the National Counter-Corruption Commission proved to have only limited influence in curtailing.

Gender Roles and Statuses


The Relative Status of Women and Men Gender inequality is manifest in violence against women, societal discrimination against women, and trafficking in women for prostitution. Efforts to improve the status of women have increased, and the 1997 constitution provides women with equal rights and protections, although, some inequalities in the law remain. Domestic abuse affects women in all social classes. Specific laws concerning domestic violence have not been enacted, and the rules of evidence make prosecuting such cases difficult. Domestic violence often is not reported, since many victims and the police view it as a private matter. Women constitute forty-four percent of the labor force. Laws require employers to give women equal wages and benefits for equal work, and there are no legal restrictions on women owning and managing businesses. An increasing number of women hold professional positions, and women's access to higher education has grown. More than half the university graduates are women. Police and military academies do not accept female students. There is still a gap between the average salaries of men and women since women are concentrated in lower-paying jobs. There are no legal restrictions on women's participation in politics. While there have been improvements at the lower levels, women remain underrepresented in national politics.

Religion
Religious Beliefs About eighty-five percent of the people are Theravada Buddhists, and the monarch must be a Buddhist. Virtually all Tai-speaking peoples are Theravada Buddhists, as are members of many of the ethnic minorities. The Buddhism of Central Tais often is referred to as Lankavamsa, reflecting its origins in Sri Lanka. Thai Buddhism, however, is a syncretic religion that borrows from earlier animistic beliefs, Hinduism, and Christianity. Approximately ten percent of the population is Muslim, primarily ethnic Malays in the south. Although Christian missionaries have been active in the country since the nineteenth century, only about one percent of the population is Christian. The Christian population consists primarily of non-Tai ethnic minorities in the north and ethnic Vietnamese and Chinese. There are small numbers of animists, Confucianists, Taoists, Mahayana Buddhists, and Hindus.

Deep Rooted Culture of Corruption


Thailand has had a long history of corruption, and the types regularly seen range from extortion and bribery to use of insider information to buy land. These kinds of corruption are deeply embedded in the Thai society for many reasons. For one, officials were traditionally not paid in salaries, but instead entitled to 10-30% of expenditures for rendering their services. Traditions of giving gifts to high officials also exist. These practices are not directly corrupting, but their continuation when officials actually do receive salaries is a major basis of corruption and how it is perceived as otherwise. One big area of corruption popular in today's developing countries, including Thailand, is in the energy sector. Millions and billions of dollars are spent all over the world to develop "Clean Energy." Thailands power development planning process is premised on perpetuating gains for vested interests and designed to continue providing perverse incentives to extractive and nuclear industries. On top of wrong allocation of finances, large bribes are given to and received by
9

officials (or their families) in charge of choosing contractors for the jobs, like in the recent Suvarna bhumi Airport project, where a car park contractor allegedly gave $250 million USD to an the prime minister's sister in order to secure acquisition of the job.

Foreign relations of Thailand


Thailand's foreign policy includes support for ASEAN in the interest of regional stability - and emphasizes a close and longstanding security relationship with the United States. Thailand participates fully in international and regional organizations. It has developed increasingly close ties with other ASEAN membersIndonesia, Malaysia, the Philippines, Singapore, Brunei, Laos, Cambodia, Burma, and Vietnamwhose foreign and economic ministers hold annual meetings. Regional cooperation is progressing in economic, trade, banking, political, and cultural matters. In 2003, Thailand served as APEC host. Supachai Panitchpakdi, the former Deputy Prime Minister of Thailand, currently serves as Director-General of the World Trade Organization (WTO).

Mergers & Acquisitions


Between 1997 and 2010, 4,306 mergers and acquisitions involving Thai businesses were announced; the announcements consisted of a total known value of USD$81 billion. The year 2010 was a new record in terms of value with 12 bills. USD of transactions. The largest transaction with involvement of Thai companies has been: PTT Chemical PCL merged with PTT Aromatics and Refining PCL valued at 3.8 bills. USD in 2011.

Relationships and Respect


Thailands culture is strongly group-oriented. Asserting individual preferences may be seen as less important than having a sense of belonging to a group, conforming to its norms, and maintaining harmony among its members. Building lasting and trusting personal relationships is therefore very important to most Thai people, who often expect to establish strong bonds prior to closing any deals. People in this country prefer to do business with those they know and respect. Consequently proceed with serious business discussions only aft er your counterparts have become somewhat comfortable with you. Relationships are based on familiarity, respect, and personal trust, which can take a long time to establish. Business relationships in this country exist between people, not necessarily between companies. Even when you have won your local business partners friendship and trust, they will not necessarily trust others from your company. That makes it very important to keep company interfaces unchanged. Changing a key contact may require the relationship building process to start over. Worst case, such a change may bring negotiations to a complete halt. In Thailands culture, saving face is very essential. Harmony must be maintained at all cost, and emotional restraint is held in high esteem. Every persons reputation and social standing rests on this concept. Causing
10

embarrassment to another person or openly criticizing others may cause a loss of face for all parties involved and can be disastrous for business negotiations. Reputation and social standing strongly depend on a persons ability to control emotions and remain friendly at all times. The importance of diplomatic restraint and tact cannot be overestimated. Keep your cool and never show openly that you are upset. Thais are usually very friendly and polite. Life is there to be enjoyed and keeping a positive attitude is expected and appreciated. Never lose control of your emotions or be overly assertive. In Thailands business culture, the respect a person enjoys depends primarily on his or her age and rank. It is very difficult for Thais to have a conversation with a person whose status is unclear, since knowing whether someone is a superior, inferior, or equal strongly influences behaviors. Business leaders may have a high sense of self-reliance and can be very autocratic and authoritarian. Titles are very important. Admired personal traits include politeness, modesty, sincerity, honesty.

Communication

The official language of the country is Thai. Many businesspeople speak English, although not always well. When communicating in English, speak in short, simple sentences and avoid using jargon and slang. It will help people with a limited command of English if you speak slowly, summarize your key points often, and pause frequently to allow for interpretation. Thai people usually speak in quiet, gentle tones. Conversations may include periods of silence, which do not necessarily convey a negative message. Loud and boisterous behavior is perceived as a lack of self-control. People generally converse while standing around three feet apart. Because being friendly and saving face are so important in this culture, communication is generally indirect, though slightly less so than in other Asian countries. Direct confrontation is inappropriate, and it is better to ask open questions instead of closed ones. When responding to a direct question, Thai people may answer yes only to signal that they heard what you said, not that they agree with it. You rarely hear a direct no. Instead, they may give seemingly ambiguous answers such as I am not sure, we will think about it, or maybe. Each of these could mean no, as does a yes that sounds hesitant or weak. Alternatively, a respondent may deliberately ignore your question or pretend that he or she does not understand English. It is beneficial to use a similarly indirect approach when dealing with Thais, as they may perceive you as rude and pushy if you are too direct. Gestures are usually subtle. It is advisable to restrict your body language. Non-verbal communication is important, though, and you should carefully watch for others small hints, just as they will be watching you. Avoid any physical contact with Thai people except for handshakes. Never touch someones head, not even that of a child. Since Thais consider the left hand unclean, use it only if inevitable. Pointing with the index finger or the full hand is considered rude. Instead, gesticulate in the general direction of whatever you are referring to or point with your chin. Eye contact should be very infrequent. Thai people rarely look the other
11

straight in the eye. Restrain your emotions and avoid any facial expressions that may suggest disagreement, such as grimacing or shaking your head. Thai people do not expect foreigners to smile as oft en as they do. Smiles and laughter do not always indicate amusement or approval. Frequently, they may mask embarrassment, disapproval, and other feelings of distress. Accordingly, Westerners may sometimes observe Thai people smiling or laughing at what they might consider inappropriate moments.

Negotiation
Initial Contacts and Meetings Before initiating business negotiations in Thailand, it is highly advantageous to identify and engage a local representative who can make the initial contact. This person will help bridge the cultural and communications gap, allowing you to conduct business with greater effectiveness. Without such an agent or business partner, even seemingly simple things such as getting items through customs can become very difficult and frustrating. Choose your representation carefully to ensure that they can accomplish what you expect them to do. Conducting
negotiations in Thailand with a team of negotiators instead of relying on a single individual may speed up the negotiation process. It is vital that teams be well aligned, with roles clearly assigned to each member. Changing a team member may require the relationship building process to start over and should therefore be avoided. Worst case, such a change can bring negotiations to a complete halt.

If possible, schedule meetings at least four weeks in advance. Thais generally expect foreign visitors to be punctual. In Bangkok with its oftenchaotic traffic and resulting considerable delays, allow plenty of time to get to an appointment. Avoid being more than 10 to 15 minutes late. Displaying anger if you have to wait, which happens often, reflects very poorly on you. Academic and professional titles are highly valued and must be used. Introduce and greet older people first. Thais use hand shake only to greet foreigners. The local greeting is the wai : the hands are held together as if praying, touching your body lightly somewhere between your chest and forehead. After the introductions, offer your business card to everyone present. Not having a card as a foreigner is viewed as unprofessional, even though you may not always get one in return. Business cards should be of high quality and printed in English, with the other side translated into Thai. Show doctorate degrees on your card and make sure that it clearly states your professional title, especially if you have the seniority to make decisions. Present your card with your right hand, with the Thai side facing the recipient. Similarly, accept others cards using only the right hand. Smile while doing so, then examine the card carefully. Not reading someones card can be an insult. Next, remark upon the card and then place it on the table in front of you or into your card case. Never stuff someones card into your back pocket or otherwise treat it disrespectfully. Never write on a persons business card. At the beginning of a meeting, there is normally some small talk. This allows participants to become personally acquainted. It is best to let the local side set the pace and follow along. The
12

primary purpose of the first meeting is to become acquainted and build relationships. Business may be discussed, but do not try to hurry along with your agenda. It is unrealistic to expect initial meetings to lead to straight decisions. Frequent meeting interruptions are normal and do not signal a lack of interest. Presentation materials should be very attractive, with good

and clear visuals. Use diagrams and pictures wherever feasible, cut down on words, and avoid complicated expressions. Having your handout materials translated to Thai is not a must, but it helps in getting your messages across.

Attitudes and Styles Leveraging relationship is an important element when negotiating in Thailand. To Thai businesspeople, negotiating is usually a joint problem-solving process. While the buyer is in a superior position, both sides in a business deal own the responsibility to reach agreement. They expect long-term commitments from their business partners and will focus mostly on long-term benefits. The primary negotiation style is cooperative and people may be open to compromising if viewed helpful in order to move the negotiation forward. Maintaining harmonious relationships throughout the process is vitally important. While each party is expected to pursue their best interests, Thais disapprove of competitiveness and strive to find win-win solutions, avoiding confrontation and always leaving a way out for the other. In fact, Thais may prefer compromising even if there is no real need to compromise. However, keep in mind that there are often Chinese cultural influences that can affect negotiation styles. The bargaining stage of a negotiation can be extensive. Prices often move more than 40 percent between initial offers and final agreement.
Sharing of Information is rarely shared freely, since the locals believe that privileged information creates bargaining advantages. However, it can be advantageous to share some information as a way to build trust.

Decision Making
The countrys business culture is extremely hierarchical and superiors enjoy enormous deference. Decision making is a very slow and deliberate process in Thailand. Decision makers are usually senior executives who consider the best interest of the group or organization. They may consult with others before making the call. Subordinates may be reluctant to accept responsibility. Decision makers also rarely delegate their authority, so it is important to deal with senior executives. Gaining access to top managers can be difficult, though. You may first have to deal with layers of subordinates, many of whom could strongly influence the final decision. In Thailands still-shaky political and economic environment, company decisions are rarely independent of outside influences. Never underestimate the role of government officials, bureaucrats, and the military. All of them wield considerable influence across many industries. A number of criminal groups exist as well, many of which are led by high-ranking army officers. Doing business in the country can become extremely difficult and very unpleasant without the support of the powers- to-be. It is important to come prepared to deal with these outside forces. When making decisions, Thai businesspeople may not rely much on rules or laws. They usually consider the specific situation rather than applying universal principles. Personal feelings and experiences weigh much more strongly than empirical evidence and other objective facts do. Thais are often reluctant to take risks. If you expect them to support a risky decision, you may need to find ways for them to become comfortable with it first. You are much more likely to succeed if the relationship with your counterparts is strong and you managed to win their trust.

Agreements and Contracts


Capturing and exchanging written understandings after meetings and at key negotiation stages is
13

useful. While oral commitments may be legally binding, they are rarely enforceable and may sound stronger than what your Thai counterparts may be willing to put in writing. Do not rely on interim agreements to be final. Any part of an agreement may still change significantly before both parties sign the final contract. Written contracts are usually kept high-level, capturing only the primary aspects, terms, and conditions of the agreement.Writing and signing the contract is a formality. Thais believe that the primary strength of an agreement lies in the partners commitment rather than in its written documentation. It is recommended to consult a local legal expert before signing a contract. However, do not bring your attorney to the negotiation table as it may be viewed as a sign of mistrust. Signed contracts may not always be honored. This depends to no small degree on the strength of the continuing relationship between the contract partners. It is strongly advisable to continue staying in touch and maintaining the trust of your Thai business partner. Business partners usually expect the other side to remain somewhat flexible if conditions change, which may include agreeing to modify contract terms. Thais expect to sett le all disputes out of court.

Training programs in workplaces


Most of the selected factories used training like on the job training, formal training, work under supervision, and teamwork to form and develop skills of labors. Out-door training tended to be for soft skills, for instance- behavior skills - attitude to work, passion, motive, spirit, trait, positive thinking, leadership, trustfully, personality improvement, and time management From interviewing director, managers, the researcher found that employers needed their employees to train on: Teamwork and developed management such as QC,TQM, QA, ISO, balance scorecard; Skills for making decisions; work collaborate with colleagues; problem-solving, good communication; language, reporting & cultural understanding; Skills for using Information Technology access and interpret information; Skills for better work performance. Training programs in workplaces by outside trainers, group activities, role play, games and so on. Interviewed personnel managers on training Most of them indicated that they understood the importance of training, in particular technical skills, but mostly trainings programs which were conducted formally were behavior skills as they were easy to conduct because of the use of less time (1-2 days) and low budget. For technical training, it takes time and affects to work process. Electronics, car industrial, food processing, said that it was not easy to conduct formal training because they had to organize each shift carefully.

14

Comparison of Thais and Americans


Basic Similarities
Thailand and the United States are known as the country of freedom. Thailand is only one country in Southeast Asia that was not under western control during colonized period. At the individual or national level, both of them seem to be freedom-loving; they tend to resist outside control and have high personal independence. American pragmatism reflects practical human skill more concerned with doing the real things than creating theories. As the influence of Buddhism, Thais try to live in harmony with nature. Even Thai pragmatism parallels American approach, both people can make realistic assessments and flexible adjustments as they search for ways to solve problems of mutual concern.

Key Differences
Americans - nature as a background for mankind - humans as a part of Nature - decentralized power; distrust of power and authority - egalitarian social order - lineal concept of time Thais - control of natural environment - natural disasters beyond control - deference to authority - complex hierarchy - cyclical time sense

The relationship of land and people

Authority and power Social structure Concept of time

A horizontal orientation in American society is a constant attempt to distribute and disperse power and authority to as broad an extent as possible and an accompanying tendency to level differences in status by insisting on an informal egalitarianism in social relations. Thailand, in contrast, has more of vertical orientation, characterized by a concentration of power at the top of
15

the social structure and a hierarchical social order featuring a series of superior/subordinate relationships, involving a show of respect, obedience, or reciprocity.

Social Relations
They have similar concept about friendship that a friend must be reliable and will give honest, considered advice. There are differences in pace and perspective of social relations which can be summarized in the table below. Americans - tend to be assertive; distinguish individual from another - social status is determined by occupation, achievement, and earnings Thais - tend to be nonassertive; try to be in groups - dichotomy between two unequal positions: age difference, family role, or occupational status - tend to keep emotions under control - is it fitting, suitable, or proper? - tend to react more to the totality of other individuals - tend to diffuse their conflict - smile covers a multitude of emotions: happiness, contentment, or sadness

- tend to express emotions 100% - is it honest, correct, or accurate? - tend to be more compartmentalized - a tendency to try to make up; prefer to forget and forgive humor and laughter as a good thing

Attitudes toward Work


Americans - tend to work hard; separate time for work from time for fun Thais - tend to work and have fun in the same time
16

- life is short; men could change everything in their life - like challenging work - ambition is a good thing; tend to improve their position - risk-taking; nothing ventured, nothing gained

- no matter how much human changes thing; life is still in its cycle(birth, getting older, illness, and dead) tend to work one step below their actual capacity - wealth and power will bring only unhappiness - like comfort and security than all-out individual achievement

Relations at Work
Organization structure Americans - horizontal coordination - try to make thing well organized; often look sideways - initiate will come from the one who needs help - prefer to bring problems out and discuss in a frank manner - life centers on ones job Thais - vertical respect - try to keep things in good order; mainly look up and down - superior is side that gives - tend to avoid conflicts

Assistance Confrontation

Personal and Business

- do not consider work to be all of life; allow social or personal time within work hours

Cross-Cultural Dimensions in Business


Many firms in Bangkok adapted Western management styles but it is not easy to apply all issues to Thai company. In the following table, it is shown American and Thai approaches in Business. Thais and Americans have different perceptions of work; Americans tend to be task-oriented while Thai preference is relationship. As it was discussed before, these attitudes are based on different concepts in their cultures. Both Thai and American companies have to be aware of each other when they have to do business together. American Thai Work pattern - is based on organization - is based on order and and coordination protocol Superior subordinate - is characterized by an - paternalism; chief has right
17

relationship Appraisal and Promotion Decision making Negotiation

Easy going informality - is based on work performance - systematic, facts-oriented method - precision, directness and productive use of time; lets get down to business - fit into a schedule

to order but also has duty to protect and assist - tend to use personal relationship - is made by the leader - human relationship; the way of flexibility and congeniality - flexible

Plan

Learning from One Another


Though Thais and Americans have a common core of values, there are two basic differences: (1) different attitudes toward time and natural environment and (2) different social structures and concepts of authority. American and Thai values are the key to understanding how and why certain basic ideas are played out so differently in each of the two societies. Thais and Americans use the up-to-date technical expertise and Western management techniques but they also know when and how to adapt and apply them. These cultures complement each other, and Americans and Thais, working together as partners, can help one another pick and choose the right thing which will improve the quality of life of both countries.

Decision making, Planning, and Negotiation


According to Hofstadters research (Hoecklin, 1994), Thailand scores 64 on the high power distance side and USA scores 40 on the low power distance side. In the same way, it is mentioned in this book that American managers seem to make decision after consulting with subordinates and Thai managers seem to use their power in decision making. Planning is not common in traditional Thai companies, comparing with American companies that have both long-termed and short-termed plan. As an influence from Buddhist, Thais tend to view that everything in future can change, it is unnecessary to have a plan. Contrast with American way, they have a fix schedule and plan for the future. As the consequence from decision making and planning, American negotiation tends to get to the point whereas Thai approach is to build up a personal relationship. It is mentioned in Trompenaarss research (Hoecklin, 1994) that Thailand tends to be in particularism part and the United States is in universalism. That means Thais focus is more on relationships and Americans more on their plans and schedule.

18

19