Cross Cultural Management in Indonesia
Introduction
In setting their analytical and business priorities, it is essential for entrepreneurs and businessmen to recognize and make use of cultural advantages to propel and achieve success in their business. It to a large extent involves the ability to take advantage of cultural differences and in this particular case between Indonesia and Australia. Entrepreneurs and Australian business leaders should indulge in plans of seeking opportunities and conduct their businesses in an advantage seeking manner to predict demand for products that are novel to consumers in Indonesia and other parts of the world (Basri and Indonesia Update Conference. (2004, p. 42). Therefore, this paper effectively undertakes a secondary research on the key challenges threatening business between Australian and Indonesian entrepreneurs. The primary focus of this research is challenges in the areas of Indonesian business environment, leadership, culture, and political and regulatory risks. These challenges potentially threatens and hinders the Indonesian Prime Minister, Kevin Rudd's vision of bringing the two community together and forging a great future in terms of business, political, and education issues. This paper also aims to provide Australian business leaders skills of integrating into Indonesian market and the primary factors that they put into consideration. Managing refers within this context to keeping the company's fiscal health and reputation in check. It is because integration into new global markets calls for good management and ethical practices. Business leaders need to put some emphasis on honoring contracts, avoiding negative media attention, responsible accounting, and responding to customers' needs. Successful business integration and expansions across the globe requires a commitment that extends beyond managing routine task as leaders should be respectful, accountable, open to communication, and consistent in their approach. Integrating these leadership skills with solid management skill ensures that the company maintains ethics and a climate of social responsibility.
Indonesian Business Environment
The Indonesia's economy has over the recent past been on the rise, and this saw it take rightful position as the primary destination in terms of foreign direct investment. Previously, it was significantly overlooked in favor of some Asian countries such as China and India. However, Indonesia is now difficult to ignore when it comes to business, and investment as the country is unique in several ways because it is the biggest archipelago across the world. In addition, Indonesia is the largest Muslim majority State, the leading exporter of various high value goods like thermal coal and palm oil as well as the globe's third largest democracy. Its unique characteristics include self reliance, political stability, and robust economic growth that saw the nation shielded from the economic crisis of the world. Indonesia is now at a fundamental point in the transition from low income economy to a middle income economy as well as from a primary exporter to a value added producer and knowledge based economy. Opportunities for investment are also readily available in almost all the sectors which range from manufacturing and services to infrastructure. This represents a great window of opportunity for investors all over the world to engage in a market in the fastest growing region across the world that is greatly poised to flourish and exhibits strong fundamentals (International Labour Office, 2011, p.27).
Indonesia's advantages as an investment and business destination flows from the current political and global environment that highlights several core parameters essential in an emerging markets. Its potential in food security and renewable energy together with the vast natural resources provides a sustainable buffer to the escalating prices in foodstuffs and oil which is causing social discontent to other markets. The country's potential as feedstock for large-scale manufacturing is also vital in steering Indonesia through its transition to developed and middle income economy. The growing population also serves large consumer market and highly skilled production capacity as the country moves towards the sixth largest economy in the world.
Culture
Consumer needs vary from one foreign and from one group to another which the company or a business leader must address. This involves the consideration of relevant cultural tendencies and macro-environmental factors. Consequently, business leaders should develop new images, design, and packing as well as other marketing strategies that correspond to the culture or cultural practices of the consumers or their target population. This also sometimes extend to addressing the issues to do with product liability and it is one of the precautionary measures that will attract more consumers to a particular product (Usunier and Lee, 2009, 53).
There are two primary challenges that Australian leaders must grapple with in order to successfully invest and sell their products in Indonesia. These are the relevant cultural tendencies and macro-environmental factors inherent in these two countries. The leaders should compare the local commercial customs and national marketing systems in both countries to achieve large sale of the product in both countries. This should focus on the intercultural interaction between consumers, distributors of the company and other business people who have different cultural and national backgrounds. The relevant cultural characteristic shared among Indonesians revolve around symbols, heroes, rituals and shared relationship with nature, God and others. The sources of culture which determine whether a product will sale in Indonesia and which the marketing strategy ought to appeal to include language, ethnicity, sex, social class, religion, profession and organizational cultures among others. The adaptation elements that determine whether a product will be fully integrated in the global market are brand name, packaging, labeling, colors, sales promotion, advertising themes, materials, execution and media. Furthermore, Market research revealed that marketing programs work best when focused to each target group and the companies strive to achieve endless customer attraction, satisfaction and retention.
There was also a strain in business and political relations between Indonesia and Australia that emerged from East Timor and it was a clear result of cross-cultural misunderstanding. This influences the economic and political interests of the two countries with regards to democracy, human rights, and transparency. This is essential because they cross-cultural misunderstanding influences decisions and actions of leaders and it is a clear indication that people from these countries have different historical and cultural backgrounds. To Australia, Indonesia's future democracy implies that greater attention must be given to the cultural aspects that affect them in terms of political and economic aspects resulting from past authoritarian regime in Indonesia.
This calls for Australian business leaders to explore some key cross-cultural issues that challenges Australia's capacity to foster and rebuild future business relationship with Indonesia. This includes value and cultural differences between the two countries as well as implications of the system of belief in Indonesia. The first and far fetching challenge to Australian business leaders is recognition of differences in value practices and orientations between Indonesia and Australia. Indonesia culture simply involve speaking Bahasa Indonesia, playing Javanese Gong, and several different languages and belief among others. The people of Indonesia belief systems, religion, as well as technology and education greatly shape their views in terms of politics and economics.
As a result of the global competition in Indonesia because of its ballooning market, Australian business leaders must develop new set of values, insights, and guidelines as marketing involves strategic business concept. Studies demonstrate that marketing is increasingly becoming complex as a result of influx in new products, high cost of distribution, self space and product extension in new world markets like Indonesia. Expansion of retailer power and control, overload of information, array of communication avenues and changing media habits require entrepreneurs to employ excellent strategies in their marketing. The factors that will dictate how Australian leaders will integrate their businesses and products in Indonesia in terms of culture are also numerous. This involves the business culture in terms of technology, free markets, market needs, driving forces, driving forces, cost, peace, economic integration and social culture in terms of cultural practices, heritage, and religion.
Leadership
Leadership requires that the Australian business leaders do the right thing in the management of their companies or firms. This is because doing the right things in business management is an essential factor in achieving success in businesses and companies. Therefore, it is essential for business leaders involved in the management of companies or organizations to adopt the use of management strategies such as corporate social responsibility and green marketing strategy to enter into the Indonesian market and acquire high profits. As people involved in the management of their businesses, Australian business leaders have a role to influence other fellow executives and employees to see that doing the right thing is the perfect way to achieve business success hence high profits to the company. Green marketing strategy refers to the use of environmental biases to produce products that are more environmental friendly. Public opinion recently indicated that consumers in Indonesia prefer green products over less friendly products (Saxena, 2009, p. 42).
The best way to influence the executives and employees is to share with them on the impacts of doing the right thing such as social corporate responsibility and green marketing strategy on the overall performance of the business. Consumers in Indonesia are always willing to pay more for green products and Australian business leaders can minimize the production of goods and services. The perception that green products are low quality are misguided and with no justification. Executive will also be able to evaluate how other competing companies in the Indonesian market purse their potential segments. It is essential that businesses respond to consumers varying degree of environmental concerns. Corporate social responsibility initiatives are also essential in addressing the needs of the country's diverse consumers. For this reason, must executive directors or leaders of Australian companies do the right thing of giving back to the society in various ways. For instance, corporate citizenship committees are used to oversee the integration and alignment of corporate social responsibility with various business units.
As an entrepreneurial strategy, a commitment of interacting directly with employees, the community, other stakeholders, and customers is the hallmark of ethical leadership. Stakeholders value transparency and consistency, so leaders, must perform well by communicating to them. This should take the form of open-door policy for employees, annual reports for the company, and social networking website where customers to give their feedback. In fact, all levels of management should emphasize ethical and moral behavior in ensuring ethical leadership. As a strategy, it is essential that business leaders develop responsibility towards customers. The managers and other employees should see that they treat customers with attention and respect. Arguably, being responsible for customers positively impacts on the company's profit. However, the company has the responsibility of providing good consideration for the money. As part of ethical leadership, the business leaders must ensure that it produces safe and durable goods or services to consumers. They may also offer after-sale services, adequate supply of goods or services, courteous and prompt attention to complaints and queries, fair standards trading and advertizing as well as unambiguous information to customers (Doole and Lowe, 2008, p. 112).
It is evident that many global companies or organizations nowadays do the right things to be socially responsible. As a result, these companies usually make reports on social responsibility such as environmental issues and health and safety measures that businesses have in place to mitigate any risk that may occur during operations (Saxena, 2009, p. 51). It is, therefore, essential that the Australian business leaders attract customers who have social concerns in Indonesia. By doing this, the business leaders will ensure that companies yield high profits by attracting a large pool of consumers who feel that the company addresses their concerns. In addition to helping the community in which organizations operates, Corporate Social Responsibility is an essential tool in driving innovation on how organizations manage employees, products and customers.
Political and Regulatory Risks
According Horrigan (2010, p. 44), legal and regulatory considerations are one of the fundamental aspects of that business leaders should take into account. Therefore, failure to take into consideration legal dimensions of business operations increasingly weakens the possibility of making meaning outcomes from corporations or companies. It ensures that there is a proper balance between business, civil society, and government with regards to their roles and responsibilities. Access to information and transparency on environmental and social aspects of corporation performance are primary themes of political and regulatory frameworks (Parkinson, 2000, p. 67). Indonesia has mandatory legislation on several aspects of companies' transparency as part of environmental regulation. In addition, voluntary approaches to social responsibility now have a legal dimension and regulations on false advertising and misrepresentation are nowadays common in Indonesia and other business worlds.
Failure to adhere to legal and regulatory considerations results to campaigns against companies that conduct business in countries linked to abusive regimes. Also, subsidiary companies have experienced related set of legal actions against their parent companies in their home countries. This was to test the circumstances under which companies can be held liable for violating legal requirements. This means that both business leaders at both local and international level must mitigate regulatory risks by adhering to legal and regulatory rules. According to Parkinson (2000, p. 61), the implications for the future of a business environmental and social reporting are significant. This is because there appears to be fewer regulations and controls regarding cross-border trading, and in this case between Australia and Indonesia. No single company has the authority to control or regulate global trade in medium or short term. It creates the need for the government to develop robust laws, regulations, and guidelines to control and regulate companies that are in some instances bigger than the government itself. There is also tension between Indonesia and Australia over migrant patrols. Australia increased maritime security patrols to return boats carrying migrants. This is complemented by fact that Indonesians applying for entry visas to Australia undergo strict scrutiny and this is a reflection of different cultural values. In addition, it raises political challenges in terms of government's obligation to asylum seekers (Lusher and Haslam, 2007, p. 103).
As a business strategy, Australian business leaders must integrate reputational risk management with legal risk management so that their company's reputation is not damaged by the response to legal risk. This will also ensure that litigation does not result from management of reputational risks. It will further ensure that the company's leadership learns issues of health and safety, environment, and community affairs. Another essential aspect is that, it will encourage the company to include information on political and regulatory risks in company's annual financial report. This includes information on socially responsible investments, company's policy regulatory framework, and future management plan with regards to controlling political and regulatory risks. If a company does not prepare their policy on regulatory requirements, they might be required to state their position in the annual financial report.
The Australian business leader are also required to adopt a conduct of conduct which will provide for the standards of care which are legally required of a company. The code of conduct will also address the issue of agreements such as the collective bargaining agreements between the company and the trade union. This will be essential in ensuring that the company meets its obligation on employees as stipulated in government and public institutional regulations (Idowu and Leal, 2008, p.55). Finally, to ensure that legal and regulatory considerations geared at achieving rights of employees and interest of the Indonesian government are adhered to, the business leaders will be required to operate within the political and regulatory framework laid down by the government.
Recommendations
Australian business leaders should employ the use strategies such as causation and effectuation as this will help entrepreneurial contingency. Causation will require these business leaders to make predictive decisions while effectuation calls for logical control of businesses. This will assist the Australian entrepreneurs to balance the need to predict and identify new opportunities in Indonesia as well as controlling competitive advantages required to exploit those opportunities. The Australian business leaders should also show cultural awareness where they should be exposed to different cultures in Indonesia. They must also have knowledge foreign language, values and practices of a culture in Indonesia (Gelder, 2005, p. 29).
Australian business leaders should also control competitive advantages as it is essential in handling analytical task in new business ventures and this should be done in stages in order to justify investment in Indonesia and the next stage the business should adopt. The business leader should the plug holes quickly by providing solutions for the potentially identified challenges and risks. For instance, rather that kill the innovative idea because of lack of capital, it is essential that business leaders creatively look for that capital. Evangelical investigation should also be done to avoid blurring the line between selling and research as customers are willing to help entrepreneurs test early version of their products especially across cultures. Therefore, it is important that business leaders explore ideas and evolve in their entrepreneurial strategies in action and analysis as they realize that cross-cultural or cross-border business requires missions and ideas planned prior to the investment (Usunier and Lee, 2009, p. 48).
The Australian business leaders should also employ the use of business strategies such as strategic management of resources, entrepreneurial mindset and leadership as well as developing a business culture that is responsive to the Indonesian business environment, leadership, culture as well as political and regulatory risks. Integrating action and analysis is the best way in which these business leaders will achieve the majority of these strategies. This will also imply that the Australian business leaders apply standard operating procedures as well as make a clear distinction in terms execution and analysis. They should also ensure that individuals working for the business are equipped with appropriate skills required during the change process. They should ensure that required organizational structures are provided for implementing the expansion strategy. They should ensure they adopt a system that evaluate change readiness of employees and leaders though assessments (Doole and Lowe, 2008, p. 98).
Conclusion
The analysis indicates that the company should also effectively address the issue of product liability as a marketing strategy to attract more customers. This is because in both cultures uncertainty avoidance was relatively high, and therefore precautionary measures are essential to mitigate liability for misuse. To create consistent and continuous customer value, the company should evaluate customer expenses versus customer benefits, and the ultimate goal of marketing the product. Therefore, these marketing strategies may be costly for the company at first glimpse; however, the benefits that the company derives will be essential in investing and establishing businesses in Indonesia (Mooij, 2010, p. 75).
The Australian business leaders must also emphasize selection, reliability, quality, availability and lower prices to get advantages such as lower advertizing and marketing costs in control and planning, economies of scale and exploiting the company's ideas on a worldwide scale. They should enter the Indonesian market either through direct export by handling their own products or through indirect exports by distributors handling their goods and services. However, to maximize the sale of their products and achieve maximum profits, business leaders should license other company in Indonesia to use trademark, trade secret, and the manufacturing process for royalty or a fee. As demonstrated by research, the principle of integrated marketing achieves a lot in business as it makes the company a marketing community and the business of everyone in the company. For instance, Coca Cola and British Airways greatly achieved as a result of the principle of integrated Marketing. All the department in the company should work together to serve the interest of the customers. In addition, even though the department will work on different level, all the various marketing functions such advertizing, public relations, sales promotion, sale force, marketing research and product development must work together (Usunier and Lee, 2009, p.32).
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