2013

Module Code: MBA4645 Module Name: Management Perspectives Module Leader: Dr.Nathalie van Meurs Assignment Title: Briefing report Student Name: Kim Trang Vo (Vivian) Student ID: M00437195 Word Count: 2,748

A BRIEFING REPORT ABOUT CROSS-CULTURAL MANAGEMENT BETWEEN THAILAND AND BRITAIN

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TABLE OF CONTENTS
1. 2. INTRODUCTION .............................................................................................................. 2 THAILAND BACKGROUND .......................................................................................... 2 2.1 Political............................................................................................................................. 2 2.2 Economic.......................................................................................................................... 3 2.3 Financial ........................................................................................................................... 4 2.4 Social Climate .................................................................................................................. 5 3. BRITISH AND THAI BUSINESS CONTRAST .............................................................. 6 3.1 Thai business dos and donts .......................................................................................... 7 3.2 British business dos and donts ....................................................................................... 8 4. CULTURAL INTELLIGENCE & MANAGMENT CULTURE ...................................... 9 4.1 Hofstedes 5 dimensions .................................................................................................. 9 4.1.1 Power Distance .......................................................................................................... 9 4.1.2 Individualism vs. Collectivism ................................................................................ 10 4.1.3 Femininity vs. Masculinity ...................................................................................... 10 4.1.4 Uncertainty Avoidance ............................................................................................ 11 4.1.5 Long-term vs Short-term Orientation ...................................................................... 11 4.2 High vs. Low Context .................................................................................................... 11 4.3 Direct and Indirect Communication ............................................................................... 11 4.4 Kilmann-Thomas model of dynamic conflict ................................................................ 12 5. 6. 7. RECOMMENDATIONS.................................................................................................. 12 REFERENCES ................................................................................................................. 14 APPENDICES .................................................................................................................. 17 APPENDIX 1: Indicators of ease to doing business ranking for Thailand by Doing Business ................................................................................................................................ 17 APPENDIX 2: Individual Tax scheme in Thailand ............................................................. 18 APPENDIX 3: Corporate Tax scheme in Thailand ............................................................. 18 APPENDIX 4: Expectation of Thai employees to companys assistance ........................... 19 APPENDIX 5: Accepting outsiders attitude of Thai employees ......................................... 20 APPENDIX 6: Summary of respondents answers in Verluyten (1997) survey for the indirect criticism ................................................................................................................... 21

1. INTRODUCTION
Kingdom of Thailand is located in South-eastern Asia with the population of around 67 millions in 2013 (The World Factbook 2013). The countrys neighbours are Burma, Cambodia, Laos and Malaysia. Situated in Indochina area, which is heart of the mainland in South-eastern Asia, Thailand can be considered to be the hub for trading to the developing economic area - Greater Mekong Sub region (TCEB 2009). The foreign direct investment (FDI) in Thailand has increased over the time to be around 159 billion dollars in first haft 2012. Thailand is said to be the hub of FDI in the area due partly to the 18 th global ranking position on ease of doing business (Doing Business 2013) (APPENDIX 1). The typical Thai culture and society is formed by its Thai language, Buddhist religion and the monarchy. Thai culture then influences their politics, society and the way their residents doing business. This report emphasises on influence of Thai culture in business. Moreover, it also recognises and gives recommendations to overcome the pitfalls or challenges in cross cultural management considering British and Thais different culture and perspectives.

Figure 1: Thailands map and key figures (Source: The World Factbook 2013 and BBC 2012)

2. THAILAND BACKGROUND
2.1 Political
Thailand governmental form is constitutional monarchy which resides the ability to make and pass legislations in parliaments. The Prime Minister is the head of government who is elected in a four year term by the House of Representatives. The countrys current Prime Minister is YINGLUCK Shinawatra (The World Factbook 2013). Thai government policies is formulated and executed by 20 cabinet ministries. The cabinet is made up by five main parties included Pheu Thai, Chat Thai Pattana, Chat Pattana Phua Pandin, Palang Chon and Mahachon (Royal Thai Government 2013).
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Thailand is current member of ASEAN (Association of Southeast Asian Nations), APEC (Asia-Pacific Economic Cooperation), G-77 (Joint Declaration of the Seventy-Seven Countries of the South), PATA (Pacific Asia Travel Association) and other associations (The World Factbook 2013). Hence, the foreign trading is encouraged to and from Thailand due to the creation of free trade areas, preferential tariff schemes and intra-regional services liberalization (TCEB 2009 and The Group of 77 nd).

2.2 Economic
Thailand is one of fast growing economies in Asia and known as strong export and tourism country. The countrys GDP is projected at $645.7 billion (2012) which grew by 5.5% from 2011 before gradually expected improving to 7.5% in 2013 (IMF 2012).

Table 1: Selected Asians real GDP, Consumer Prices, Current Account Balance and Unemployment (Source: IMF 2012)
Thailand suffered the deficit of foreign trading in last few years due to the excess of imports to exports. The country mostly exports the agricultural commodities, electronics appliances, automobile products and parts as well as processed food to the main markets of United States,
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China and Japan. On the other hand, Thailands main import partners are Japan, China and Malaysia, who mostly provides raw materials, consumer goods and fuels for Thailand (The World Factbook 2013).

Figure 2: Foreign Trade Balance of Thailand from April 2010 to April 2013 (Source: BoT (2013), cited in Focus Economic (2013))
In general, it can be concluded that Thai economy is growing certainly and a promised market for foreign trade. This stable market has extremely low unemployment rate of 0.6% (The World Factbook 2013).

2.3 Financial
Thai currency is Thai Baht (THB) which is converted to be around 0.021 sterling pounds. Over last two years, Thai Baht tended to appreciate against the sterling which benefits for the British business trading to Thai due to higher competitive ability.

Figure 3: Sterling exchange rates against Thai Baht (Source: OANDA 2013)
Inflation in Thailand is insignificantly volatile between 2-4% which reflectively moving at the same direction as interest rate (averagely at 3%) from 2011 to 2013. Therefore, it indicates a stable and healthy financial performance of the country in last two years. Thailand applies the tax scheme based on four main categories of Corporate Income Tax, Value Added Taxes (or Specific Business Taxes), Stamp duty and Personal Income Tax (APPENDIX 2 & 3). The tax rates and incentives policies in Thailand can be considered to be relatively favourable as it also considers avoiding double taxation (PwC 2012).

2.4 Social Climate

Thailand is classified to have young population structure as 45.5% of their population is in the age range of 25-54. There is relatively balance in the gender of male and female in this country. The common language is used in Thai society is Thai. The major ethnic of Thailand is Thais which is broken down in various regional group such as Central Thai, Isan, Lanna Thai and Southern Thai.

Figure 4: Age and Gender structure of Thai population in 2013 (Source: The World Factbook 2013)
Buddhist (96% of population) is the most common religion in Thailand which highly respects the monks. Moreover, there also small proportions of Thai are Muslim, Christian and others (The World Factbook 2013). Being the developing country, the country still faces the problem of poverty. The poverty rate in Thailand has been improved over year and currently at 13.2% (World Bank 2013). In conclusion, Thailand is a strong economic country which has developed strongly in term of GDP, politics evolution and being the Middle-income country (MIC). However, the country still has to struggle with various problems/challenges such as corruption, poverty and climate change (annual heavy flood that significantly impacts on economic development) (UNDP 2012).

3. BRITISH AND THAI BUSINESS CONTRAST

Diversity in management practices is not the new term due to globalisation. Multinational management/leadership requires the recognition of culture difference and challenges. In this part, the business etiquette/protocol in Thailand and Britain is identified to give initial culture recognition. Hence, it is avoided the conflict in doing business between Thailand and Britain.

3.1 Thai business dos and donts

DOS Inviting Thai counterparts for social activities (eg. Having lunch) to enhance the relationship and get to know each other before doing

DONTS Planning the meetings at the begin and end of working day due to the difficulties of transportation to work place Criticising about the Thai

business Asking personal questions such as age, marital status, family and

King/Queen as it is illegal to say offensive comments about the royalty Joking or criticising Buddhist religion as Thais highly respects their religion Touching Thais head as they

background to build familiarity Thai traditional Wai greeting to business partners but not to children and service staffs Calling the counterparts with first name, preceded by the title Khun Exchanging the business card with giving and receiving by right hand. The cards should be given to the highest senior person first. Wearing formal suites for meeting Taking off the shoes when invited to colleges houses Being patient and hiding emotions in public or when business goes wrong Showing respect to seniority

considered that top part is sacred in their Buddhist religion Opening the gifts from Thai

counterparts in their presence as it is considered to be rude Expressing speaking strong emotions as it or is

loudly/noisily

disrespectful Communicating in complex/native English language which can creates misunderstanding/conflicts Causing lost of face such as interrupting/cutting counterparts speaks Creating highly competition working environment Thai

(Adapted from Communicaid 2009, Jirapornkul and Yolles 2010 and Verluyten 1997)

3.2 British business dos and donts

DOS Making business appointments

DONTS Asking personal questions such as age, marital status, occupation and salary Sitting with folded arms during the meetings as it represents boredom and not interest for the meetings applying in with

several days in advance Building good working relationships with subordinates Exchanging business cards shows professionalism Win-win negotiating approach and

discussing

British counterparts Respect personal space with British counterparts, thus it is advised to keep an acceptable distance with them It is polite and respectful to shake hands at the first time meeting. Allowing the one with higher rank to enter the room first Being on time for several minutes earlier for the meetings/appointments Communicating the objectives of the meetings in advance Bringing gifts such as

flowers/chocolate/wines when being invited to colleges house

(Adapted from Communicaid 2009)

The dos and donts analysis pointed out the main contrasts in British and Thai about personal background learning to get acquainted each other. Thai considered it as a good way but British sees it to be rude. Moreover, Thai consider more than just formal but also informal relationship. In addition, the hierarchy in workplace requires Thai to respect to their superiors, but British evaluate real boss-subordinates relationship.
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4. CULTURAL INTELLIGENCE & MANAGMENT CULTURE

For culture management, there is a requirement for cultural intelligence. Cultural intelligence is identified to include the cultural strategic thinking. For thinking and solving the problem, it is needed to understand how and why that particular people acting that way (Tan 2004). Therefore, for cross-cultural management between Britain and Thailand, it is necessary to have understanding of Thai culture which represents values, beliefs and drives Thai employees acting in particular way. After that, an appropriate adaption can help limit the conflicts between two different cultures in doing business.

4.1 Hofstedes 5 dimensions

Hofstede (1993) mentioned five dimensions in evaluating the national culture which included Power Distance, Individualism vs. Collectivism, Femininity vs. Masculinity, Uncertainty Avoidance, and Long-term vs. Short-term Orientation. Based on that theory, there is a huge gap in the scores for 5 Hofstedes dimensions for Thailand and UK.

*PDI: Power Distance *IDV: Individualism *MAS: Masculinity *UAI: Uncertainty Avoidance *LTO: Long-term Orientation

Figure 5: Hofstedes cultural dimensions scores for UK and Thailand (Source: The Hofstede Centre)
4.1.1 Power Distance The dimension of Power Distance indicates the inequality level among the relationship (Hofstede 1993). Thailand scores 64 which associates with hierarchical relationship between the bosses and subordinates. It is clearly illustrated in the requirement for high respect (krengjai) in Thai society from inferior to superior (such as elders, bosses, the King and the
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Queen). In Thai society, unequally in relationship is acceptable. The boss has the superior power over their subordinates not only in the workplace but also in informal social life (Verluyten 1997). Hence, acquiring power becomes the goal to be superior in Thai society (Jirapornkul and Yolles 2010). Unlike Thai, Britain scores very low in this dimension as there is a real relationship of boss and subordinates in British culture. 4.1.2 Individualism vs. Collectivism Thailand scores very low in Individualism which indicates an inclusion of features related to collectivism. Therefore, it is believed that Thai people tend to respect and being loyal to the groups they belong (Hofstede 1993). Hence, it is found that Thai employees are rather loyal to the company they work for. They also expect to be assisted by the company (APPENDIX 4). However, there is a balance of collectivism and individualism approach for reward, as Thai employees tend to prefer both individual and group-oriented reward systems. Moreover, it is also agreed that the decisions should be made by a group rather than individuals (Verluyten 1997). The collectivism approach in Thai culture also explains the face-saving which protects the respect and confrontation avoidance in their belonging group. Collectivism does not mean that Thai people desire to work in team. They feel more comfortable working on their own (Danai Chaiyotha (2003, p. 14) cited in Jirapornkul and Yolles (2010)). This is a contrast to British culture which highly evaluates team work. 4.1.3 Femininity vs. Masculinity The 34 score for Thai in this dimension indicates the Femininity approach in their culture. Therefore, Thai counterparts tend to care more about maintaining personal relationship, harmony and quality of life rather than competition, achievement and success (Hofstede 1993). It is explained that this approach is an influence of Buddhism which encourage the harmony. Therefore, in society and workplace, Thai people tend to avoid the confrontation and disagreement and highly evaluate patience (Jirapornkul and Yolles 2010). However, because of confrontation avoidance, Thai subordinates are also willing to work over-time or even trade off their vacation for working (Verluyten 1997).

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4.1.4 Uncertainty Avoidance Thai people prefer clear guidance and policies which shows high uncertainty avoidance. Scoring 64 for this dimension, there is not absolute stability preference by Thai people. Therefore, it is researched that it is taking into consideration of age and seniority for promotion (Verluyten 1997). However, Thai people are also likely to accept the outsiders of the company (APPENDIX 5). 4.1.5 Long-term vs Short-term Orientation According to Hofstede (1993), this fifth dimension is strongly correlated to the above four dimensions, which indicates the seeking for pragmatic future orientation rather than conventional historical short-term view. In this approach, Thailand scores 56, which is quite high compared to global scale and British score (25). It is said that Thai culture of long-term orientation is influenced by the Confucianism (Verluyten 1997). Therefore, they emphasis on building relationship with their counterparts/subordinates/business partners. In conclusion, the Hofstedes 5 dimensions analysis states the general understanding of Thai national and organizational culture for a suggestion of doing business with Thai. However, it still cannot clearly identify and describe the rich culture of Thailand. For example, Thai culture is identified to be uncertainty avoidance which indicates an unwilling towards significant change. However, from the surveys findings of Verluyten (1997), Thai people are less likely to afraid of the influence of Western culture to their traditional culture and willing to adapt the modern culture.

4.2 High vs. Low Context

Thai business culture is identified to be very high context as it considered close relationship over the time into business activities such as negotiation, meetings and cooperation. Therefore, building a good personal relationship in doing business is highly evaluated in Thailand. Moreover, respect is also another approach to build engagement and loyalty of employees in negotiation context (State 1999).

4.3 Direct and Indirect Communication

Thailand obtained the implicit communication as a way to protect their face, thus criticism and refusal cannot be expressed publicly and openly. This approach of Thailand is strongly impacted by the Buddhism which highly evaluates the harmony. It is concluded from a survey by Verluyten (1997), public criticism is avoided. Therefore, in working environment,
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feedbacks and criticisms between bosses and subordinated tend to be indirectly and privately. For example, the criticisms are preferred to deliver through median people or by attitudes (warning signs) (APPENDIX 6). Moreover, because of face-saving perspective, Thai people also face difficulty to say a refusal or rejection to offers/invitation. It is contrastive to British culture (Verluyten 1997).

4.4 Kilmann-Thomas model of dynamic conflict

Figure 6: Kilmann-Thomas model of dynamic conflict (Source: Kilmann and Thomas (1975) cited in Northouse (2011))
It is identified from the Hofstedes 5 dimensions that Thai people tend to avoid confrontation as part of their harmony approach. Therefore, the Competing option from the KilmannThomas model is an inappropriate strategy for negotiating with Thai people. The other strategic options can be fit to execute in negotiation with Thai people depending on the situation. The consideration of strategic options depends on the level of seriousness, number of people and level of management involved and outcome requirements.

5. RECOMMENDATIONS
Although there is recognition of differences between national and organisational culture, it is also undeniable the influence of national culture into the way Thai residents doing business. This analysis in both national and organizational level of culture has reached to some of recommendations/notices for cultural management between Britain and Thailand. Moreover, it is suggested to adapt or harmonise the differences of British and Thai culture.

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Respect is very important value in both Thai society and workplace. Therefore, it is suggested that the managers should show their respect the Thai counterparts in both social and workplace. The respect is one of element belongings to face-saving. Therefore, in meetings, making decision, discussion and negotiation, managers should consider not protect their face, especially high seniority. For example, the manager should not interrupt or dominate the conversation. Furthermore, keeping patience is highly appreciated in Thai working and social environment, thus the managers should keep their positive attitude towards any conflicts/problems/challenges no matter how serious situation is. Moreover, Thai people are collectivism by highly evaluating harmony and confrontation avoidance, thus, a working environment design is very important. The competition and highly individual reward system is not suggested. Moreover, team working is not desired by Thai people, thus training and slow process for adaption is needed for an effective cross-culture working. In addition, building relationship both formal and informal is crucial for getting acquainted before doing business, having meetings, and negotiation with Thai counterparts. Thai people considers on the familiarity, historic achievement, trust and respect in doing business. They also are willing for social activities such as having lunch or team building. Therefore, the managers should maintain and build relationships as well as create relationship encouraged working environment. Furthermore, although there is hierarchy in relationship, Thai people still evaluate the decision making made by groups/teams. Therefore, creating opportunities for equal involvement is favourable in decision making process. Last but not least, face-saving is again an essential element in Thai culture which encourages indirect communication. Therefore, to adapt and reduce conflict, the manager should consider giving criticism or feedback indirectly or privately to their

subordinates/counterparts. Moreover, it should be avoided to put Thai counterparts into situation of making direct refusals/rejections.

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6. REFERENCES
About the group of 77. [Homepage of The Group of 77]. [online]. no date. Available from: http://www.g77.org/doc/. [Accessed 3 July 2013]. Communicaid. (2009). Doing Business in Thailand| Thai Social and Business Culture. Communicaid. Available from: http://www.communicaid.com/access/pdf/library/culture/doing-businessin/Doing%20Business%20in%20Thailand.pdf. [Accessed 3 July 2013]. Communicaid. (2009). Doing Business in the UK | UK Social and Business Culture. Communicaid. Available from: http://www.communicaid.com/access/pdf/library/culture/doing-businessin/Doing%20Business%20in%20the%20UK.pdf. [Accessed 3 July 2013]. Doing Business. (2013). Doing business 2013: Smarter regulations for small and medium-size enterprises. Economy profile: Thailand. [online]. The World Bank and The International Finance Corporation. Available from: http://www.doingbusiness.org/data/exploreeconomies/thailand. [Accessed 18 June 2013]. Focus Economic. (2013). Trade deficit widens in April amid rebound in imports. Focus Economic. [online], 23 May, Available from: http://www.focuseconomics.com/en/economy/news/Thailand-Trade12mTrade_deficit_widens_in_April_amid_rebound_in_imports-2013-05-23. [Accessed 2 July 2013]. Historical Exchange Rate. [online]. (2013). OANDA. Available from: http://www.oanda.com/currency/historical-rates/. [Accessed 28 May 2013]. Hofstede, G. (1993). Cultural constraints in management theories. The Academy of Management Executive. [online], 7(1), 81-94. Available from: http://two.nitbj.com/nit/content/references/Hofstede,%20G..pdf. [Accessed 2 July 2013]. IMF.(2012). World economic outlook april 2012: Growth resuming , dangers remain. [online]. International Monetary Fund. Available from: http://www.imf.org/external/pubs/ft/weo/2012/01/pdf/text.pdf. [Accessed 2 July 2013]. Jirapornkul, S. and Yolles, M. (2010). Assessing values and value change in Thai organizations. Journal of Organisational Transformation and Social Change.

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[online], 7 (3), 321-347. Available from: http://search.ebscohost.com/. [Accessed 2 July 2013]. Kilmann, R.H. and Thomas, K.W. (1975). Interpersonal conflict-handling behavior as reflections of Jungian personality dimensions. Psychological Reports. [online], 37, 971-980. Available from: http://www.amsciepub.com/doi/pdf/10.2466/pr0.1975.37.3.971. [Accessed 2 July 2013]. Northouse, P.G. (2011). Handling Conflict. Introduction to leadership: concepts and practice. (2nd ed). [online]. United States of America: SAGE, 173-207. Available from: http://www.sagepub.com/upm-data/40152_Chapter9.pdf. [Accessed 2 July 2013]. Royal Thai Government. [Homepage of Royal Thai Government]. [online]. 3 July 2013. Available from: http://www.thaigov.go.th/en/index.php. [Accessed 3 July 2013]. Stage, C.W. 1999). Negotiating organizational communication cultures in American Subsidiaries doing business in Thailand. Management Communication Quarterly. [online], 13 (2), 245-280. Tan, J.S. (2004). Cultural Intelligence and the Global Economy. LIA. [online]. 24 (5). 19-22. Available from: http://www.ccl.org/leadership/pdf/publications/lia/v24n5question.pdf. [Accessed 2 July 2013]. TCEB. (2009). Thai and ASEAN Community. [online]. Thailand Convention & Exhibition Bureau. Available from: http://www.tceb.or.th/exhibition/whythailand/business-opportunities.html. [Accessed 3 July 2013]. TCEB. (2009). Thailand: Heart of Asean, gateway to Indochina. [online]. Thailand Convention & Exhibition Bureau. Available from: http://www.tceb.or.th/exhibition/why-thailand/thailand-heart-of-asean-gateway-toindochina.html. [Accessed 2 July 2013]. Thai Tax 2012 Booklet. [online]. (2012). PwC. Available from: http://www.pwc.com/en_TH/th/tax/assets/2012/thai-tax-2012-booklet.pdf. [Accessed 3 July 2013]. Thailand. [online]. (2013). World Bank. Available from: http://data.worldbank.org/country/thailand. [Accessed 3 July 2013].

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The World Fact Book. (2013). East & Southeast Asia: Thailand. [online]. Central Intelligence Agency. Available from: https://www.cia.gov/library/publications/theworld-factbook/geos/th.html. [Accessed 18 June 2013].

UNDP. (2012). About Thailand. [online]. United Nations Development Programme. Available from: http://www.th.undp.org/content/thailand/en/home/countryinfo/#Introduction. [Accessed 3 July 2013].

Verluyten, S.P. (1997). Some Cultural Aspects of Thai Companies, with Recommendations for Westerners. Centre for ASEAN Studies and Centre for International Management and Development Antwerp. [online], 14. Available from: http://search.ebscohost.com/. [Accessed 4 July 2013].

What about the UK?. [online] (no date). The Hofstede Centre. Available from: http://geert-hofstede.com/united-kingdom.html. [Accessed 3 July 2013].

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7. APPENDICES
APPENDIX 1: Indicators of ease to doing business ranking for Thailand by Doing Business

(Source: Doing Business 2013)

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APPENDIX 2: Individual Tax scheme in Thailand

(Source: PwC 2012)

APPENDIX 3: Corporate Tax scheme in Thailand

(Source: PwC 2012)

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APPENDIX 4: Expectation of Thai employees to companys assistance

(Source: Verluyten 1997)

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APPENDIX 5: Accepting outsiders attitude of Thai employees

(Source: Verluyten 1997)

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APPENDIX 6: Summary of respondents answers in Verluyten (1997) survey for the indirect criticism

(Source: Verluyten 1997)

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