Table of contents

Tables of contents Executive summary Chapter1. Introduction 1.1. Importance of cultural awareness in globalization 1.2. Relationship between France and Indonesia Chapter2. Business culture for negotiation 2.1. Concept of business culture 2.1.1. Study of culture and national culture 2.1.2. Effect of national culture on business culture 2.1.3. Essence of business culture study in negotiation Chapter3. Business culture in France and Indonesia 3.1. Hofstede’s dimensions of culture 3.1.1. French national culture according to Hofstede 3.1.2. Indonesian national culture according to Hofstede 3.2 Business culture in France 3.3. Business culture in Indonesia Chapter4. Conclusion and recomendation Appendix Reference

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List of figures:

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Figure 1 France and Indonesia’s Hofstede scores in graph

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Executive Summary

This report firstly examines how actually national culture indirectly affects business culture and negotiation result. The topic about culture is raised knowing that globalization comes as trend that forces business people all over the world to interact and work together in order to survive and compete. To negotiate with people from very contrast background is not similar with business dealing between executives from the same culture. Lack of cultural awareness can fail business people from achieving their aims. Culture is very sensitive matter; an insult to culture not only will ruin the deal but also the relationship. Narrowing down the topic, two countries are picked by the writers to be analyzed for their national and business cultures. The two are Indonesia and France. The reasoning of this decision is the fact that both countries keep increasing their need of doing business together over year. Besides, it is believed that actually there are lots of potential for cooperation between the two in many sectors. Inability to understand backgrounds of each other is presumed can be one of the reasons why the two countries have not done many works together. Therefore this essay will discuss further the comparisons between culture in both countries and some recommendations that can be implemented to make negotiation runs smoothly between the two. There is a hope that this understanding can trigger their tighter bilateral relationship in future.

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Chapter 1 Introduction

1.1. Importance of cultural awareness in globalization Globalization in this age makes the the whole world intertwined and interdependent. As a trend in this era, it has forced companies to go global. Big multinational companies have expanded business worldwide and intergrated subsidiaries. The rests still try to catch up and survive knowing competition is getting tighter. Doing business abroad can help firms to optimize economies of scale and scope as well as embrace beneficial markets outside the home country. Those who do not know how to utilize the trend will miss the opportunity to minimize cost and maximize market. Mayrhofer (2004) believed that to be able to succeed the process of doing business abroad, a firm has to consider not only political, legal, and economical environment but also socio-cultural environment, which is actually the most crucial one. Something as basic as language can ruin the business dealing since it might creates misundestanding. The way representative communicates under name of a company in negotiation affects the company as a whole. Without adequate knowledge, a representative can insult representative from host country, fail the agreement, and ruin company’s image. Therefore, a concern to cultural awareness is required in order to create a good crosscultural communication, gain respect and trust from partner country, and smoothen business dealing.

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1.2. Bilateral relationship between France and Indonesia Since 2001, France has been trying to strengthen its bilateral relationship with several countries in Asia, including Indonesia (Marsudi, 2011). In terms of trading, it can be reckoned that the relationship between both countries will get tighter seeing the data that the export - import value of one to the the other partner keeps increasing over year. According to Yudhoyono (2011), bilateral trade value as much as US$ 2.5 billion between the two was targeted to be doubled within 5 years. Indonesia’s value of export to France shows 25% increase from 2010 to 2011, meanwhile its import value last year jumps as much as 40%. Slightly higher than Indonesia’s, the export value of France to Indonesia increased as much as 27% in 2011 whereas its import value to Indonesia had 36% increase in 2011 (International Monetary Fund, 2011). In addition to economic relationship, both countries are also involved in many foreign direct investment (FDI) projects for more than 20 years. Reported by Xinhua (2011), France was the 13th biggest investor in Indonesia with total investment as much as US$ 2.5 billions in 2011. There are around 100 French companies established in Indonesia and the amount is predicted to grow even more (France Diplomatie, 2012). Energy will be main concern in future cooperation between both, especially in fields such as oil and gas and renewable energy (Marsudi, 2011). Last year, these two G-20 members also signed strategic partnership in political, security, economic, development, education, and cultural areas in. The cooperation in security was planned to involve production of army equipment and military strategy to tackle terrorism and piracy (Xinhua, 2011).

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Chapter 2 Busines culture in business dealing

2.1. Concept of business culture 2.1.1. Study of culture The fact that culture has very broad context makes it, as a single term, obtains numerous different meanings for different purposes (Ajiferuke and Boddewyn, 1970, p. 154). Brake et all (1995) once defined the term “culture” as various perspectives grown in mind of each society about how world works and how people. Hofstede (1980) believed that the context of culture includes norms and practices in one particular nation. In his study, he created four independent dimensions to simplify the process of comparing and analyzing culture in different nations. The 4 dimensions are power distance, individualism, masculinity/ femininity, and uncertainty avoidance (Hofstede, 1983). His study is nowadays practiced in many study fields, including business study. As each nation has its specific culture, there comes term “national culture”. Although there are many definitions of national culture, Hofstede’s explanation is most used one in numerous studies. According to Hofstede (1980, 1991, and 2001), national culture is the common idea had by group of people in a particular nation that directs the way they perceive the right and wrong value, behavior, attitude, competence, and sight.

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2.1.2. Effect of national culture on business culture The study of culture can be narrowed down into many fields; one of them is business culture. Gesteland (2010) stated, “A business culture is a unique set of expectations and assumptions about how business people are supposed to communicate, negotiate, and manage.” In brief, business culture can be simply defined as the mutual concept of values and perceptions believed in business. Usually, in very narrow comprehension, each company has its particular values, code of ethics, and regulations. Indirectly, they shape the way people inside the company behave and perceive which things are acceptale and unacceptable. Although business culture in every company can be different, generally companies from one nation conduct their business in similar way. The national culture affects the way companies run in the country because its people are rooted from same beliefs. They have same perception toward what they believe as right or wrong.

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2.1.3. Essence of business culture in negotiation Negotiation is process of interaction between parties who share common interest and mutual benefit (Ferraro, 2002). In negotiation, representatives are forced to have good communication skill so that agreement goes well for each party without any conflict follows after. Along with globalization and business goes beyond the national border, negotiation shifts from mono to crosscultural negotiation. Business people face various clients with contrast cultural background nowadays. Culture can be an obstacle in cross-country business dealing. Deficiency of information regarding how business culture is conducted in partner country will lead to failure. Zhu and Zhu (2004) believed that the misperceived communication can end up with loss in mutual benefit and even worse, loss in business relationship. Negotiation is executed distinctively in each nation as national culture affects the way it goes. Some countries with high-context culture prefer indirect communication which might be more complicated because things are said implicitly. Meanwhile countries with low-context culture have more direct communication style so it is easier and might be faster to negotiate with them (Chang, 2006). To know the right business communication style in negotiation according to the culture the partner country has can fasten business dealing and give more chance for win-win solution. Hence, business people are no longer expected to only have good basic communication skill but also adequate knowledge related to business culture in host country.

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Chapter 3 Business culture in France and Indonesia

Due to the increasing number of foreign direct investments made by French in Indonesia, more French companies built in Indonesia, more bilateral relationship plans arranged by leaders of the two, and lots of potential in many sectors for future cooperation, the importance of understanding culture and negotiation style of one another is raising. Thus this chapter talks specifically about national cultures of the two and their business cultures with aims to widen the chance of win-win solution and prevent failure. 3.1. Dimensions of national culture according to Hofstede Professor Geert Hofstede once conducted a study to simplify process of comparing national culture between various countries. There were four dimensions used in his study, they are power distance, individualism versus collectivism, masculinity versus femininity, and uncertainty avoidance. In 1991, Michael Bond added the fifth dimension, which is long-term orientation. Below are the five dimensions and their extents. Power distance: Measures how far the less powerful people accept power inequality Individualism: Measures how deep the interdependence between people in nation Masculinity/ femininity: Measures people tend to emphasize competitiveness (masculinity) or quality of life (femininity) Uncertainty avoidance: Identifies how comfortable people in nation are with unstructured situations and uncertain culture guidelines Long-term orientation: Identifies whether people in a nation are more future oriented or past oriented.

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3.1.1. French national culture according to Hofstede Power distance France is high power distance society with score 68. Superiority and inequalities exists along with presence of powerful groups that is unreachable. As highly centralized power nation, France has Paris as its centre of bureaucracy and transportation. Information flow in managerial system goes hierarchial from top to bottom. Formal attitudes in offices is expected. Individualism France has high individualism with 71 as its score. People prioritize themselves and nuclear family. In offices, individuals are pleased to speak up when they disagree over a thing. Workers are contract-oriented; they focus more on their jobs than socializing. Recognition of achievement at work is important. Masculinity/ femininity Scored 43, France is feminine nation. The welfare system it has with allowance of 5 weeks off every year and 35 working hours per week affects the way French people think about life. The determinant of success is quality of life. Competition is not really necessary. Conflict is usually ended through dialogue. Uncertainty avoidance Having 86 as its score, France has high uncertainty avoidance. The conservatism side can be seen from deductive system in training, teaching, and others. People get used to get things planned. Workers expect regulation and security at workplace. The lack of laws and loose policies somehow make them feel stressful. Long-term orientation With 39 obtained, France is a short-term oriented nation. History, tradition, and culture are respected and considered sensitive. Norms and absolute truth are held tight. In terms of consumption, people are more triggered by their short-term satisfaction, which costs their reluctance to make saving. For business, French typically values workers’ short-term results.

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3.1.2. Indonesian national culture according to Hofstede Power distance The score for Indonesia is 78. The act of powerful people in Indonesia who direct and control the less powerful ones still considers acceptable by society. Indonesian workers expect to be directed step by step. Communication style is indirect and feedback is less given. Superiority exists in offices. Individualism Indonesia is counted low for individuality. Scored 14, Indonesia has more collectivist society. The definition of ideal is determined by the group. Indonesians put family as priority. Chidren have vision to lighten burden of parents as form of devotion to those who have taken care of them since they were born. Elder people are taken care by family instead of being put to nursing house. Serious love relationship has to be known by family. Masculinity/femininity With 46 as its score, Indonesia is believed to be part of low masculine country. However, unlike other masculine countries, the competitiveness is not triggered by wealth. Indonesians see position as the symbol of their success. Uncertainty avoidance Scored 48, Indonesia is part of medium low avoiding uncertainty countries. They do not feel comfortable with controlling rules but tend to accept. Having influenced by Javanese culture, Indonesians control their anger and emotion by not showing. Harmony is important, including in the workplace. Direct communication is avoided when there is conflict while intermediary is more preferable. There is this Indonesian famous phrase Asal Bapak Senang(ABS), which literally means as long as the boss is happy. No matter how much the workers hate a situation in workplace, they prefer to stay silent and do whatever favorable for the boss so their career is secured (no uncertainty) and then they will also be happy. Long-term orientation There is no score for this dimension yet for Indonesia.

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3.2.

Business culture in France General business information The esssential thing to know before going to France for business trip is knowing their vacation time. It is not suggested to go on July or August since those are vacation time for French (Morrison et al.,1994). Other thing to be understood is red tape in France. France is known for its complicated bureaucracy. The procedures obligate you to have lots of paper filled before dealing or establishing business in France (Owen, 2007). In terms of language, Owen (2007) believed that French people respect culture and language so much; no matter how good their English is, whenever it is possible to use French, they will use it. Many French multinational companies insists usage of French for internal business language while their counterparts may use English. Meeting with French Schedule and plan might go quite flexible in France. It is common to have them changed oftentimes. Although clients are expected to come on time, hosts will come a bit late to emphasis that they are busy (Kenna and Lacy, 1994). The meeting will be started with small talk before goes to business issue. In very first meeting, there is a big chance that no decision will be made. It is usual for French to go for seveal meetings before they finalize decision. With their famous quote “c’est la vie”, French believe that life is expected to be unfair, so it is important to accept that they probably will not ask for your thought or give you turn to speak when they do (Owen, 2007). This hierarchical society respect people for their intelligent. Being rational, logical, and critical are important. Business people must be aware of in-depth questions French clients might ask during the meeting. It is better to prepare proposal text in French given to them. The key to be respected is strong argument (Owen, 2007). An academic references and good communication skill can impress them even more (Kenna and Lacy, 1994). Business dress code As a very formal society, it is expected that clients wear proper and fashionably formal outfit. French will judge clients from what they wear because suit reflects power, position, and hierarchy. Accessories are very normal to be worn by businesswomen (Owen, 2007).

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Business cards and small gifts After building interaction for quite sometimes, exchanging business cards is usually done. It is suggested to have it written in English and French with degree attached in it because as stated before, French respects intelligence (Morrison et al., 1994). Small gift is rarely given at first meeting although it is okay. Gifts with the brand attached on them are normal. It is more valuable for them when they think some considerations were made in choosing gift (Morrison et al., 1994). French business etiquette French people are very formal. Handshake is essential custom on arrival and departure. Superior initiates it; exceptionally when there is a woman, then the right to initiate is on her (“Tradition plays an,”, 1991). Sometimes, French partners also give small kisses on cheeks to everyone in the room (Kenna and Lacy, 1994). Having close contact is considered normal. Some greetings in French are better learned to start a conversation with French and get their respect before requesting conversation in English due to lack of French language skill. Surnames and titles are essential to be mentioned. A formal “vous” (you) is used when interacting with French unless the French clients initiate “tu” form of address first (“Tradition plays an,” 1991). Based on his interviews to several experts, Owen (2007) found that praising businesswoman is part of acceptable custom during a meeting. Appropriate behaviors Several behaviors that are considered impolite in France are slapping fist over open palm, chewing gum, placing hand in pocket, combing hair, and yawning. An okay hand sign means worthless in France and pointing eye means that they cannot be fooled (Kenna and Lacy, 1994). During meeting, it is important not to open legs, sit slouchy, and have arms folded (Martin and Chaney, 2006). Topics that are avoided are religion, politics, personal question, and money. “I” word is considered arrogance (Gesteland, 1999). Oral communication The politeness of French is seen from the way they talk. French chooses to speak with subtle tone. When French gives high-pitched voice tone shows interest in the topic (“Tradition plays an,” 1991). In meeting, French people are very direct, decisive, and explicit. Those statements they make should not be taken personally (Owen, 2007).

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Written communication Business letter in France is very complicated and impersonal. It is full of politeness and formality. The complete structure from introduction, body, to conclusion is used for the letter. Therefore, secretaries in France have training to write the letters (“Tradition plays an,” 1991). What should be concerned about is the formula for the end of the letter. They usually write “Je vous prie de bien vouloir agréer, Monsieur/Madame, l’expression de mes salutations les plus distinguées’. It is better to learn from the book or expert to know the formula of writing it because it might be different for various persons (Owen, 2007). Dining etiquettes One of common customs when negotiating with French is dining altogether, usually lunch. High-class restaurant is usually chosen as the place to conduct the business. Business issues are better raised after dessert while some random topics host spills are chosen to accompany the meal from appetizers until desserts with aim to initiate closer relationship (“Tradition plays an,” 1991). Rule needs to be understood in France is that a person who invites for meal is the one who is responsible to pay. Choosing traditional French dishes can give impression to the French (Martin and Chaney, 2006). During this lunch, giving some compliments toward what impressing in France are suggested while criticism are better left to oneself as they are very proud of their nation (Owen, 2007). Social life In France, business and social life rarely go along. French people are reluctant to go for social and get into personal friendship with their business partners. Regarding party invitation, Kenna and Lacy (1994) suggested that guest better come 10 – 15 minutes late when invited by host to a dinner or party to show less anxiety.

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3.3.

Business culture in Indonesia General business information Indonesia has largest Moslem population in the world. When doing business in Indonesia, it is suggested to know when Moslems hold prayers. There are five prayers in a day. To allocate time for prayer during meeting is essential (Foss, 2009). Friday prayer is held every Friday afternoon; it is better to avoid meeting during these hours. Not to drink and eat when it is fasting month in front of Moslems also leaves impression. Bureaucracy in Indonesia is complicated especially when it has to face national bureaucrats. Therefore, a connection with government officials is a plus for easier access. It is bit relieving knowing government has worked on several solutions to simplify bureaucracy system (Dean, 2000). Meeting with Indonesians Even though partners are expected to arrive on time, the Indonesian counterparts will normaly come a bit late knowing they do not perceive punctuality as priority. Indonesians make some general conversation before they get into core business negotiation. Meetings are most of the time conducted in English in big cities, but it is important to bring interpreter when the negotiation is held in smaller cities. First meeting is considered as acquintance so usually decision will not be made during it. Indonesians do not like to be hasty in considering the proposal (Foss, 2009). Foss (2009) also suggested partners to make review before the meeting is finished. Indonesians will rarely show when they do not understand, so recap is suggested to avoid mistake in the dealing. It is better to avoid pressure tactics with Indonesians since this is not a familiar thing in the country ("Indonesia - language," n.d.) Business dress code Due to the hot weather, it is better not to wear too thick outfit. The business dress code style in Indonesian is conservative. People commonly use standard western business outfit. Since it has Moslems as majority, businesswomen have to wear least revealing outfit (“Indionesian dress code,” n.d.).

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Business cards and small gifts After greeting, business cards are usually exchanged. It is better to have it in English with Indonesian version printed in reverse side if the negotiation is done with ethnic Indonesians. If it is exchanged with Chinese Indonesians, then the reverse side is better printed in Chinese. Titles and degrees are better written since they impress Indonesians. No matter what tried to be handed over, from business cards, small gifts, to food and others, it is advised to use right hand or both hands because left hand is perceived as ‘dirty’ hand so it is impolite to use it. The level of bribery is high in Indonesia. In order to avoid perception as a briber, small gift that do not cost that much is preferable. Since Moslems, Indians, and Chinese ethnics blend in Indonesia, gifts like alcohols, not halal food, leather animal products, and knives or other sharp things are better avoided. Indonesians usually have their gifts wrapped. They will not open it until the givers leave (Foss, 2009). Indonesian business etiquette Indonesians people emphasize formality. Handshake is exchanged in the beginning and end of the meeting. They usually will bit bow down act when doing it or hand placed on heart after it. A handshake between male and female is considered acceptable. Addressing Indonesian male partners as “Bapak” (Sir) and female partners as “Ibu” (Madam) during meeting is essential to show politeness and respect towards them. When introducing self to Indonesian counterparts, it has to be started from senior members because Indonesian respect elders and superiors (Foss, 2009). Appropriate behaviors What needs to be maintained in the meeting is an upright and alert body posture with no slouchy sitting style. Crossing legs and pointing the sole of shoes at someone is considered impolite (“Meetings in Indonesia”, n.d.). Oral communication Indonesians really concern about emotion. They are reluctant to show anger and highpitched tone. As high-context culture country, Indonesians tend to refuse thing in indirect ways and save opinions in public. Being aggressive is seen as something disrespectful. Gestures are rarely used (“Communicating Styles in,” n.d.). 16

Indonesians avoid confrontation. They will keep it on their own when someone insults their feeling. Since they do not say it explicitly when they dislike things, a cold act is the only sign that shows they disfavor an act ("Indonesia - language," n.d.). Written communication The only thing that needs to be exposed from Indonesian written communication is the way to address Indonesian counterparts in the letter. It is started with Bapak (male) or Ibu (female) then continued with Haji or Hajjah if the person is Moslem who have done pilgrimage to Mecca and followed with their surname and family name. If the person has academic title, it has to be put behind the family name because Indonesians are proud with their status (Taylor, n.d.). Dining Etiquettes A dining with Indonesians is not for business talk. This is done to broaden topics with them and strengthen their relationships also build trust to one each another. There are several Indonesian etiquettes need to be understood in formal dining. Always wait until the hosts please to sit or eat. Passing foods should be done with right hand. The utensils provided are usually fork and spoon. Both should be face down and crossed with spoon over fork after the meal is finished act ("Indonesia - language," n.d.). Social life To build relationship with business partners is something fine. In fact, it strengthens the trust and familiarizes self. This can help in building business relationship even further.

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Chapter 4 Conclusion and recommendation

With the rise of bilateral relationship between France and Indonesia, it is getting more essential to learn about cultural sensitivity in order to get business runs smoothly and friendship gets bounded stronger. Basically, there are some cultural backgrounds both have in common that can be seen from Hofstede’s evaluation. As countries who hold high hierarchical system, both respect superiority, seniority, and elders. Beginning a greeting and introduction from the seniors to the below levels is common thing for both sides so adaptation is not required. Both countries also have similarity in terms of exchanging handshake and business card. Degrees and titles are important for both sides so two can simply do what they usually do when dealing. Although similar, some customs also need to be taken into account especially when one becomes the guest in another nation. In matter of punctuality, although both have tendency to come late when they are the host, it is better to arrive on time when they are positioned as a guest to respect the host. Similar acceptable thing like gift giving also needs to be aware of. The two have particular stuffs avoided in each country, so it is suggested to learn the custom of the other before giving a gift. As formal countries, even though they expect formal suits, it is better for female guests in Indonesia to wear least revealing outfit for the sake of politeness. There are several differences between France and Indonesia regarding their business culture. Each country has to get adapted when they become guest in the partner country. Kissing on cheek is uncommon in Indonesia, therefore French better avoids doing so in Indonesia while Indonesian has to get used to it when dealing with France abroad. In terms of negotiating, Indonesians are usually quiet while French people are more aggressive in speaking their thought. French has least intention to request for the counterpart’s opinion. Somehow, this difference is actually a match; Indonesians are not comfortable to speak up even they have chance to.

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The last point that matters is oral communication, both need to do some adjustments and learn the other’s background. Although both use subtle tone when they speak, Indonesians do not like to show emotion and rarely speak explicitly while French people speak very direct. Indonesians should not take what French says personally whereas French people should bit more sensitive to understand Indonesians implicit communicate style. In conclusion, with similar background, there are just several things to adjust between French and Indonesian people before they negotiate. Some similarities and differences they have work together well. There are only minimal points that bit matters to learn. This is believed by the writers that when these two countries learn bit from each other’s culture, tolerate, and respect one another, then there is big possibility to have abundant partnerships established altogether by France and Indonesia in the future.

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Appendix
FIG 1. France and Indonesia’s Hofstede scores

http://geert-hofstede.com/indonesia.html FIG 1 shows the evaluation of Indonesian and French national culture. In terms of power distance and masculinity/ femininity, both have similar results

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