|Mexican-Austrian Business Communication |
|VSE |
|3MA638 |
|Managerial Communication |
|Richard Brunet-Thornton |
|June 2012 |
|Written by: Nikolas JONAS |

Introduction

This paper aims to explain and illustrate the cultural relations between two countries, Mexico and Austria. To be more precise, the topic is a business negotiation between two companies, a Mexican car parts producer and an Austrian car parts designer. This paper will highlight all the differences and similarities in culture and conduct of business.

Description of Industry

In order to provide a credible and realistic scenario I have chosen to work with the automotive industry. In Mexico for example this sector is one of the most important of the economy, representing 3% of the Gross Domestic Product in the year 2011, 17,3% of all manufacturing, and 21,4% of all exports. In total, 84% of all participants are suppliers of goods, whereas 16% assemble cars (Wirtschaftskammer Österreich). As can be seen above, a substantial part of Mexico´s industry focuses on research and development activities, an example is that up to 70% of all components and parts for the new Volkswagen Jetta model are designed in Mexico (CNNExpansion.com).
In Austria on the other hand the automotive sector represents an even more significant part of the general economy, totaling 15% (also taking into account all sub-contractors) in the year 2006. The most important partners are for example BMW, Daimler-Chrysler, M.A.N., Saab and Magna (export.by).
For this paper, however, I will assume that the Mexican company is the producer, while the Austrian company is responsible for the parts design.

Austrian company

Now that this is settled, I start by looking at my own company. For the sake of simplicity, I assume that the company that I represent is a medium sized business with GM, BMW and Ford as its main partners. We are listed on the Austrian stock exchange, thus we have a lot of responsibility towards our shareholders. Our current project is to design new body parts for each of GM´s, BMW´s and Ford´s new flagship models that are destined for the U.S. Market. We have already finished and optimized the design, and now we were also assigned the task to find a suitable producer that delivers high quality products at low manufacturing and delivery costs. Consequently, our focus was drawn to Mexico, a country whose constitution of 1917 does regulate minimum wage yet has a price level a lot lower than the United States (Mexconnect.com). Furthermore, Mexico is building its reputation of being able to deliver high quality products. Last but not least, logistics costs can be minimized by using a manufacturing company so close to the final market.

Choosing the right partner

As the official representative that is also responsible for selecting a feasible partner, my first step is to contact the Mexican embassy in Vienna, Austria. Customarily, embassies are able to provide a detailed list of all participants of a certain industry or segment of economy. In this case the embassy is well organized and the day after my initial investigation I am told that the requested information has been forwarded.

As soon as the information is readily available, due diligence examination starts. We are looking for a partner that, as previously mentioned, is able to provide a very high service level, is very reliable, respects deadlines, has no financial troubles and has a substantial amount of experience in this area. Most of these points can be checked and verified by directly contacting the customers and suppliers of the listed companies. The financial status of the potential partner can be examined by having a finance expert go over the published information (e.g. Balance sheet, notes to financial statements). Despite careful consideration, however, it is vital to inspect the premises directly at the location, in order to get an understanding of the overall condition of the facilities. Another important piece of information to find out beforehand is whether the company endorses English as the second language of business. If not, a translator has to be present at all times.

Initial Contact

Assuming that a suitable partner has been identified, it is time to make the initial contact. Mexico is a culture that, in some aspects, greatly differs from ours, while in others there are staggering similarities. A general rule of thumb, however, is that the initial contact should be done by telephone, preferably respecting the typical Mexican habit of taking a noon break (siesta). Smaller companies, for instance, allow their employees to take a siesta break, while some big international companies reject it. The usual work day starts at 9 am, siesta is at 1-4 pm, and then the work day continues until 8pm (City-data.com). Concluding, the perfect time to make the initial phone call would either be at 5pm, making sure to not call during the siesta break, while also not missing the responsible person due to not taking a siesta, or before noon.

The headquarter of our potential partner is located in Mexico City, which means looking from central Europe, there is a time difference of 7 hours. When it is 10:00 a.m. in Mexico, it is 5 p.m. in central Europe. This would be the most suitable time for both parties to make the initial contact.

The first phone call

At this point it becomes crucial which language you want to communicate in. As mentioned before, English would be convenient for both parties. If, however, the Mexican company does not speak English it is crucial to include a person to the initial contact that is fluent in Spanish. While some business people and officials in Mexico may have only limited exposure to other cultures, many are reasonably familiar with and prepared for doing business internationally (Negotiating International Business, Katz, 2008).Another important point is to talk to the correct person, which might not be as easy as it sounds. Finding out who, in fact is the decision maker, is another part of the initial due diligence examination and should have been settled by now.
The obvious things that have to be stated during the first contact is information about who I am and who I represent, the reason for calling, where I got the information from and the first hint of the suggestion we want to make. It is important to give the Mexicans enough information in order to intrigue them, but not too much to make it look like a done deal already. Mexican ways of doing business differ from the Austrian way. In Austria, business people would like to get started with the negotiations as quickly as possible and would have sketched out almost the entire process in advance. Not so in Mexico, where business is slow and the approach is long term. Business relations are based on trust. There is a tendency to postpone matters that are pending. Furthermore, when Mexican businessmen are pressured to do something they might respond by expressions such as “ahora” which translates into “right now”, which cannot always be taken seriously. In fact, Mexican culture dictates that confrontation should be avoided, and that in many cases it is easier to give the supervisor the answer he or she is expecting rather than to get into an open confrontation and thus possibly undermine their authority (Globalnegotiator.com).
The outcome of this initial conversation should be to get acquainted and warmed up with each other, to exchange names and contact data, the most basic information as to whether there is even time and space for cooperation, and settle on the next steps.

The next steps

This part ultimately depends on the initial contact. If both parties have decided that this matter is worth pursuing, the next steps can be conducted via email. Among other things information about the respective companies will be exchanged. Furthermore, this part also serves as additional warming up time. As soon as both parties feel comfortable with each other (bear in mind, Mexican culture takes longer to gain trust, the north of Mexico is more business-focused than the south, where the stereotypical “mañana” attitude still prevails (Negotiating International Business)) it would be a suitable time to propose the first face-to-face meeting. As it was our company that initiated the first contact it seems appropriate that we invite the responsible people from the Mexican production company to Vienna. By doing this, we are taking the whole process to another level, increasing familiarity and trust.

Hofstede Cultural Dimensions

Before I start explaining a detailed schedule for the first face-to-face meeting, let me bring forward several cultural differences that will have a very big impact on how this meeting will be conducted. According to Hofstede, there are 4 dimensions that distinguish cultures: Power Distance, Individualism, Uncertainty Avoidance and Masculinity. Let us see how the Mexican and Austrian scores compare:
[pic]
(Geert Hofstede, http://geert-hofstede.com/mexico.html)

Interpretation and implication:
Mexico´s highest Hofstede dimension is Uncertainty Avoidance with a score of 82. This means that the population of Mexico is highly adverse to uncertainty and risk. Furthermore, this figure suggests that this culture feels comfortable with a very high level of regulation, policies, laws and strict rules. Complete satisfaction can only be achieved by a sense of control over every variable. Austria compares very well to Mexico in this case, with a slightly lower score of 70. Austrians, too, like to plan as much as possible in advance in order to minimize volatility and uncertainty. The implication of this figure is quite obvious: starting with the due diligence, Austrians and Mexicans want to know exactly what and whom they are dealing with. This really works in our favor; all we need to do is tell our Mexican counterparts what we intend to do in approximately what time horizon. For example, after the initial contact, during the constant communication and also before the first face-to-face meeting, it would be advisable for us to always try come up with a plan what the expected outcomes should be. It goes without saying, however, that although Mexicans are similarly uncertain about the future, they might very well have a different time horizon. The plan for the cooperation hence should not pressurize the Mexican business too much.

Mexico has a low Individualism score of 30, which is still slightly higher than most other Latin countries with an average of 21 (Cyborlink.com). This implies that the Mexican people see themselves as a “part of the whole” rather than a “whole that is just made up by individuals”. Effects of that can also be seen in groups or families, where loyalty overrides almost any other societal rules (Cyborlink.com). Austria, on the other hand, has a much higher individualistic score, resulting in culture that rather revolves around the “I”. There are numerous implications for our business negotiation: during the pre-negotiation stage it would be sensible to include several people on the Mexican side in order to create the sense of a team, and during the first face-to-face meeting it would be highly advisable for teams to be involved on both sides as well.

The next very important cultural dimension is Masculinity. Mexico has the second highest score in Latin America (69), pointing out that still there is a high degree of gender differentiation of males and females. In order to overcome this gap, the female part of the population has also become more assertive. Surprisingly enough, Austria´s Masculinity score is even higher, ranking at 79. A possible consequence of these figures is that both countries perceive business as a male domain. Consequently, the majority of both teams should mostly consist of men. However, in order to not appear chauvinistic, women should definitely be part of the team as well, especially when dealing with a country that has a lower level of Masculinity than Austria. Lastly, we should also be prepared to not discriminate should the Mexican team consist of more women than we are used to.

Last but not least there is the 4th dimension, Power Distance. Again, Mexico (81) ranks higher than the Latin American average (70) (Cyborlink.com). This score points to a huge inequality of distribution of wealth and power in Mexico. Moreover, this situation is more or less accepted by the population. This dimension is where the difference between the two countries is the gravest. The Austrian Power Distance level is 11, demonstrating an almost equal distribution of wealth and power. Power Distance, however, can also be interpreted as how managers treat their subordinates. A High score indicates that those in authority openly demonstrate their rank, subordinates are given low-skilled jobs with little relevance and responsibility, and openly blame their employees for mistakes. Low Power Indices are associated with mutual respect and no rank pulling, delegation of important assignments, socialization between managers and employees, and a rather democratic decision making system (Cyborlink.com). Since it was us who initiated the communication process (and it is us that will gain a lot from the cooperation) it falls to our company to overcome this glaring contrast in management style. Choosing a team leader who externally displays a high level of authority should be sufficient to counter this problem.

Face-to-face meeting

The first question that comes up is where the meeting should take place. Regarding the fact that Mexican culture dictates a longer warm-up period it is sensible to assume that at least two face-to-face meetings will be required. Hence I suggest inviting the Mexican delegation to Vienna for the first meeting so as to gain their trust and increase the depth of the relationship. Additionally, the only time a meeting could pose a problem for the Mexican team is winter. Consequently I suggest that the meeting be held during the other seasons (unless they want to witness low temperatures and big amounts of snow).

Things to consider:
When greeting in social situations, women pat each other on the right forearm or shoulder, rather than shake hands. Men on the other hand shake hands until they know someone well, at which time they progress to the more traditional hug and back slapping. When it comes to names it is considered appropriate to keep addressing each other with family names until you are invited to go to a first name basis (Kwintessential.com). In our case it can be considered apt to make the introductions by shaking hands and naming family names.

Gift giving is also subject to a certain social protocol. Wrapping itself does not follow any special rules. If you are invited to a Mexican´s house or it is considered a social norm to bring gifts such as flowers or sweets. If you do receive a gift, open it and react enthusiastically (kwintessential.com). This premise also applies to a business meeting, preparing a small gift as a token of appreciation certainly will appeal to Mexican habits.

Another thing to consider is dining etiquette. As mentioned before, there are some deviations between northern and southern Mexicans that have an impact on their perception of punctuality. However, it is safe to assume that if you receive a dinner invitation to a Mexican´s home and arrive 30 minutes late it is perfectly acceptable, if not expected. In our situation I would advise to always set a meeting point and time where our team has the possibility to comfortably wait in order to give the Mexican team the possibility to arrive whenever they deem it appropriate (Kwintessential.com).
Furthermore, at larger gatherings it is suitable for every person to introduce him/herself, while at smaller meetings it is suitable to wait for the host to take care of the introductions (Kwintessential.com). The best course of action for us would be to have the team-leader make the introductions, and wait for the Mexicans to respond, which will also immediately give away their internal power structure.
What is more is that table manners are very important to the Mexican culture. The main mistakes to avoid are: starting eating before the hostess/host does, women giving toasts, hiding your hands, and sitting down before you are told to do so (Kwintessential.com).

Business etiquette:
A general rule of thumb of doing business in Mexico is that the right connections tremendously facilitate doing business. Hopefully, the Mexican company we chose as a partner has a well-established network.
We will immediately be judged by the person who introduced us. Changing this first impression is next to impossible.
Since the first meeting is generally with someone of high stature, it is important that our delegation includes an upper-level executive. This basically is a simple sign of respect and appreciation. After the initial face-to-face meeting it is perfectly acceptable for the senior executive to excuse himself. In fact, this is seen as a sign to get down to business. My proposal is that the senior manager makes time for the first afternoon and evening of getting to know each other.
Demonstrating trustworthiness, sincerity and integrity are considered to be crucial to building relationships. Furthermore, our group has to be ready to answer personal questions that might also concern family and other life interests (Kwintessential.com).
In general business meetings should be scheduled at least 2 weeks in advance, which goes hand in hand with the UAI of both Austria and Mexico and hence will not cause any problems. Nevertheless, such meetings ought to be confirmed again approximately a week before the appointment.
The Austrian delegation should be strictly on time, but once again should be prepared to wait for a delay of up to 30 minutes by the Mexicans.
For the initial meeting that is usually held in a formal way it is important to have all written material in both English and Spanish. Additionally, agendas for meetings are not common and if given, they are not always followed (Kwintessential.com). Also, if no team member is fluent in Spanish an interpreter always has to be present at meetings, but not essentially at informal getting-to-know gatherings.
When it comes to the negotiation process itself, face-to-face meetings are much preferred over telephone or mail communication. Mexicans consider communication as high-context, which means that the things being said only make a small part of the entire message. Also, negotiations take a long time due to a fair amount of haggling that has to be expected and to the fact that deadlines are seen as flexible (Kwintessential.com).
Moreover, information sharing may pose a problem. Many Mexicans believe that withholding certain privileged pieces of information add to the negotiation position. This can only be answered by a generous obligingness from the Austrian side, thus creating enough trust to get rid of this issue (Negotiating International Business, Katz, 2008).

Dress code is very similar to European social conventions, dictating a conservative dark suit for men, and business suits or also conservative dresses for women (Kwintessential.com).
Last but not least, business cards are exchanged with everyone during introductions and should be printed in both Spanish and English, and while being handed over the Spanish side should face the recipient. Furthermore, they should contain both professional and educational backgrounds (Kwintessential.com).

If all these factors are carefully considered, at least the first face-to-face meeting should be successful.

Fictitious schedule:
01.07.2012: Departure: 08:20 a.m. Mexico City. Arrival: 01.07.2012, 18:40 p.m. Vienna, business class: 2.651,98 Euros per person (Fluege.de), assuming that a team of 3-4 people is going to come.
Check in hotel Astoria, 4 single bed rooms, at 650 Euros each for 5 nights (Booking.com)

02.07.2012: Give the guests enough time to sufficiently recover from the jet lag. Set a meeting point at the hotel lobby at around 3 p.m. for a guided tour of the center of Vienna. Next, a quick stop for small refreshments (maybe a piece of the famous Sacher Torte at Hotel Sacher). For the early evening of the first night I would like to suggest either a short opera in the gorgeous Vienna Opera House or a short theatre play in one of the many vintage theatre houses. Afterwards, with consideration for the Mexican habit for a late dinner and their physical recovery from the long flight, might be the perfect time for a casual dinner in one of the numerous restaurants in the center of Vienna.

03.07.2012 – 05.07.2012: Visit of our Vienna headquarter with the design laboratories. Furthermore, this is the day the negotiations start. If the senior manager was not present the night before, this is definitely the time to show appreciation and respect for the Mexican delegation. As mentioned before, it is important to ease into business negotiations with a gradual and indirect approach. Also, an interpreter should be present at all times. On the contrary, if a lawyer is nearby he would greatly disturb a free exchange of ideas and information from the Mexican side. Among the things that have to be sorted out are compatibility, finance, legal system, measurement, quality control and so on. It would be too complicated to settle all these issues in detail in this paper.

06.07.2012: Departure: 07:40 a.m. Vienna. Arrival: 19:50 p.m. Mexico City (Fluege.de).

The next steps & Contractual Agreement

As mentioned above, the first face-to-face meeting took place in Vienna. However, several meetings will be required in order to fully gain trust and respect from our Mexican partners, and also negotiations will be slow going.
As a consequence, another face-to-face meeting will be necessary, this time at the Mexican manufacturing plant, so as to giving us a careful look at their production facilities.

As dictated by the high PD score, most companies in Mexico have a tendency to be very hierarchical, and consequently people are happy to act in a well-established environment of rules and practices. Furthermore, communication is most effective if it takes place between similar levels of authority (Negotiating International Business, Katz, 2008).
Relationship building, information gathering, bargaining, and decision making may take considerable time. Thus, efforts to speed up the negotiation process are pointless. Especially when dealing with Mexican culture, be prepared for lengthy communication that serves to figure out the small and numerous details that are supposed to be in the contract. Attempts to rush the process are unlikely to produce better results and may be viewed as offensive. Throughout the negotiation, be patient, control your emotions, and accept the inevitable delays (Negotiating International Business, Katz, 2008). However, once all that has been sorted out, a contractual agreement is quickly reached and signed.

If the Austrian team has prepared well enough for the interaction with the Mexican counterpart, a successful agreement should have been reached, although it may have consumed a lot of time and effort on both sides.

Lessons learned

Doing business internationally always is subject to a huge number of variables where it all can go wrong. There are numerous trapdoors one can fall through, and a lot of faux-pas one can commit. Preparation, due diligence and a natural understanding that no two cultures are alike is indeed the most promising way that leads to a successful outcome of the business negotiation process.
In this particular case, the most interesting things I learned while researching definitely are the different perceptions of time and power. Despite all that, however, it was very interesting to find out how much our two cultures have in common, such as the Masculinity and the mutual love of rules and laws.

Sources

Description of Industry

• Anon (2012) Wirtschaftskammer Österreich: Mexico: Automobilindustrie. Anon. [online]. Available from World Wide Web: http://portal.wko.at/wk/format_detail.wk?AngID=1&StID=247358&DstID=0&BrID=503 [cited 7 June, 2012]

• Anon (2010) CNN Expansion: VW hara auto del Bicentenario del Pueblo. Anon. [online]. Available from World Wide Web: http://www.cnnexpansion.com/negocios/2010/07/06/vw-hace-auto-del-bicentenario-en-puebla [cited 7 June, 2012]

• Anon (year unknown) Information Export Support Web-Site: Automotive in Austria. Anon [online]. Available from World Wide Web: http://export.by/en/?act=s_docs&mode=view&id=1723&type=by_country&country_id=171&mode2=archive&doc=64 [cited 7 June, 2012]

Austrian Company

• Anon (2006) Mexconnect: Mexico´s labor market and laws. Anon [online]. Available from World Wide Web: http://www.mexconnect.com/articles/196-mexico-s-labor-market-and-laws [cited 7 June, 2012]

Initial Contact

• Db108108, Stevenvillatoro (2010) City-Data: Siesta in Mexico? Db108108, Stevenvillatoro [online]. Available from World Wide Web: http://www.city-data.com/forum/mexico/994217-siesta-mexico.html [cited 7 June, 2012]

The First Phone Call

• Katz (2008) Negotiating International Business – The Negotiator´s Reference Guide to 50 Countries Around the World: Negotiating International Business – Mexico. Katz [online]. Available from World Wide Web: http://www.globalnegotiationresources.com/cou/Mexico.pdf [cited 7 June, 2012]

• Anon (year unknown) Global Negotiator: How to Negotiate and Do Business in Mexico [online]. Available from World Wide Web: http://www.globalnegotiator.com/tienda/doing-business-in-mexico.html [cited 7 June, 2012]

Hofstede Cultural Dimensions

• Hofstede (year unknown) National Culture - Countries - Mexico in Comparison with Austria. Hofstede [online]. Available from World Wide Web: http://geert-hofstede.com/mexico.html [cited 7 June, 2012]

• Nicol, Taylor (year unknown) Cyborlink: Mexico Business Etiquette, Culture and Manners. Nicol, Taylor [online]. Available from World Wide Web: http://www.cyborlink.com/besite/mexico.htm [cited 7 June, 2012]

Face-to-Face Meeting

• Anon (2012) Flüge: Mexico – Wien. Anon [online]. Available from World Wide Web: http://www.fluege.de/flight/encodes/sFlightInput/b9e753c5b5e066a11190b3427279c7bf/ [cited 7 June, 2012]

• Anon (2012) Booking: Wien – Hotel Astoria. Anon [online]. Available from World Wide Web: http://www.booking.com/hotel/at/astoria-wien.de.html?aid=311092;label=hotel-70019-at-njux7v73kgbigRRxVuYc_QS3722189394%3Apl%3Ata%3Ap1%3Ap2%3Aac%3Aap1t1%3Aneg;sid=4e53418cc51c1c6d98cb91c1a3de4a97;dcid=4;checkin=2012-07-01;checkout=2012-07-06;srfid=baa802c10684224bad4425f6e154df93X11 [cited 7 June, 2012]

• Anon (year unknown) Kwintessential: Mexico – Language, Culture, Customs and Etiquette. Anon [online]. Available from World Wide Web: http://www.kwintessential.co.uk/resources/global-etiquette/mexico-country-profile.html [cited 7 June, 2012]

• Anon (year unknown) Kwintessential: Power Distance Index. Anon [online]. Available from World Wide Web: http://www.kwintessential.co.uk/intercultural/power-distance-index.html [cited 7 June, 2012]

The next steps

• Katz (2008) Negotiating International Business – The Negotiator´s Reference Guide to 50 Countries Around the World: Negotiating International Business – Mexico. Katz [online]. Available from World Wide Web: http://www.globalnegotiationresources.com/cou/Mexico.pdf [cited 7 June, 2012]