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Chapter 15 International Projects Chapter Outline 1. Environmental Factors A. Legal/Political B. Security C. Geography D. Economic E. Infrastructure F. Culture 2. Project Site Selection 3. Cross-Cultural Considerations: A Closer Look A. Adjustments B. Working in Mexico C. Working in France D. Working in Saudi Arabia E. Working in China F. Working in the United States G. Summary Comments about Working in Different Cultures H. Culture shock I. Coping with Culture Shock 4. Selection and Training for International Projects 5. Summary 6. Key Terms 7. Review Questions 8. Exercises 9. Case 15.1: AMEX, Hungary 10. Case 15.2: Phuket A Chapter Learning Objectives After reading this chapter you should be able to: LO 15-1 Describe environmental factors that affect project management in different countries. LO 15-2 Identify factors that typically are considered in selecting a foreign location for a project. LO 15-3 Understand cross-cultural issues that impact working on international projects. LO 15-4 Describe culture shock and strategies for coping with it. LO 15-5 Understand how organizations select and prepare people to work on international projects. Review Questions 1. How do environmental factors affect project implementation? There are several basic factors in a host country’s environment that affect project implementation. First, the legal/political system has to be adhered to. Labor laws affect recruiting and treatment of employees. Second, the climate and geography may affect how the project is completed. Extreme heat and humidity have to be factored into work schedules and the need for special equipment. Third, the local economy affects the price and availability of goods and supplies. Fourth, the project may be constrained by the quality of the infrastructure that exists in the foreign country. The absence of a reliable telephone system may require digital satellite communication systems. Fifth, there may be security issues that need to be addressed and contingency plans developed. Finally, the culture of the organization will influence work habits and values. 2. What role do local intermediaries play in helping an outsider complete a project? Local intermediaries can perform a variety of functions. They can act as translators. They can use their connections to expedite transactions and protect the project against undue interference. They can be used to sidestep bribery dilemmas. They can serve as cultural guides, teaching the manager how to work more effectively in the foreign country. 3. Why is it important to honor the customs and traditions of a country when working on an international project? Honoring customs garners good will and is a sign of respect which leads to cooperation. Violating customs and traditions leads to resentment, mistrust, and unwillingness to cooperate. The customs and traditions of a country are the ways things are done in that country. 4. What is culture shock? What can you do to reduce the negative effects of culture shock? Culture shock is the natural psychological disorientation people experience when they live and work in a culture different from their own. Culture shock may be manifested by frustration, withdrawal, depression, and physiological responses such as fatigue, sleeplessness, and headaches. You can reduce the negative effects by 1) accepting that it is a naturally occurring phenomenon, 2) engaging in physical exercise and other forms of stress management, 3) creating “stability zones,” and adjusting your performance expectations. 5. How should you go about preparing yourself for an international project? You should begin by assessing the degree of cultural fluency required to successfully complete the project. Cultural fluency depends upon the length of the stay, the extent to which project success requires working closely with natives, and how different the culture is of the country you are going to from that of your own country. In general, the higher the level of cultural fluency required the more extensive the training should be. At a minimum you should do some basic research about the country in terms of religion, dress codes, business protocols, and social etiquette as well as be able to exchange basic pleasantries in the native language. Longer, more intense projects will likely require mastery of the native language and in depth cross-cultural training. Exercises 1. Interview someone who has worked or lived in a foreign country for more than six months. What was his experience with culture shock? I recently interviewed my friend Alex, who spent a year living and working in Japan. When I asked him about his experience with culture shock, he shared some interesting insights. Alex explained that while he was excited about the opportunity to live in Japan, he wasn't fully prepared for the extent of culture shock he experienced. He mentioned that the language barrier was one of the biggest challenges he faced. Even though he had studied Japanese before moving, he found it difficult to communicate effectively in everyday situations. Simple tasks like grocery shopping or asking for directions became daunting. Another aspect of culture shock for Alex was the difference in social norms and customs. He mentioned that Japanese society is very polite and formal, which was quite different from what he was used to. For example, he had to get used to bowing as a form of greeting and taking off his shoes before entering someone's home. He also found it challenging to navigate the complex system of social hierarchies and etiquette. Despite these challenges, Alex said that his experience living in Japan was incredibly rewarding. He learned a lot about Japanese culture, made lifelong friends, and developed a deeper appreciation for diversity and cultural differences. Overall, he said that while culture shock was difficult at times, it ultimately helped him grow and adapt to his new environment. What did he learn about the culture of the country he lived in? Sure, here's the response based on an interview: I had the opportunity to interview my colleague, Sarah, who lived and worked in Spain for over a year. When I asked her about what she learned about the culture of Spain during her time there, she shared some fascinating insights. Sarah explained that one of the most significant aspects of Spanish culture she learned about was the importance of family and social connections. She was impressed by how closely-knit Spanish families are and how much importance they place on spending time together. She said that family gatherings were a regular occurrence, often involving extended family members, and were filled with laughter, food, and music. Another aspect of Spanish culture that Sarah found intriguing was the concept of "la siesta" and the relaxed attitude towards time. She learned that in Spain, it is common for people to take a break in the afternoon to rest and recharge before continuing with their day. She also observed that Spaniards tend to have a more relaxed approach to punctuality and schedules compared to what she was used to. Sarah also spoke about the rich history and traditions of Spain, particularly in regards to food and festivals. She learned about the importance of paella, tapas, and sangria in Spanish cuisine, and she had the opportunity to participate in several traditional festivals such as La Tomatina and Semana Santa. Overall, Sarah said that living in Spain was an incredible cultural experience that broadened her horizons and gave her a deeper appreciation for the diversity of the world. She learned that while there are differences in culture, language, and customs, there are also many similarities that connect people across borders. What advice would he give to someone who would be working on a project in that country? Certainly, here's a response based on an interview: I had the opportunity to interview my friend Mark, who lived and worked in Germany for over a year. When I asked him what advice he would give to someone who would be working on a project in Germany, he shared some valuable insights based on his experience. Mark emphasized the importance of understanding and respecting German culture and business practices. He advised that it's essential to familiarize yourself with German business etiquette, which tends to be more formal and structured compared to other countries. For example, he mentioned the importance of addressing people by their titles and using formal greetings, especially when meeting someone for the first time. Additionally, Mark stressed the importance of punctuality and reliability in German business culture. He explained that Germans place a high value on being on time and keeping commitments, so it's essential to plan ahead and be punctual for meetings and deadlines. Furthermore, Mark advised building strong relationships with colleagues and clients in Germany. He explained that Germans value trust and honesty in business relationships, so taking the time to establish personal connections and demonstrating professionalism and competence are crucial. Finally, Mark recommended learning the German language, or at least some basic phrases, as a sign of respect and to facilitate communication with colleagues and clients. While many Germans speak English, making an effort to speak German, even if it's just a few words, can go a long way in building rapport and fostering better communication. Overall, Mark's advice for working on a project in Germany can be summarized as follows: 1. Familiarize yourself with German business etiquette and cultural norms. 2. Be punctual, reliable, and professional in all business interactions. 3. Build strong relationships based on trust and honesty. 4. Learn the German language or at least some basic phrases to facilitate communication and show respect for the local culture. You can assign this as an individual, group, or extra credit exercise. Students can submit a written report or deliver an oral presentation. You should discourage students from simply interviewing students who have gone to school abroad since their experiences will not fully reflect what it would be like to work or manage a project in a foreign country. A worthwhile option is to allow students to interview foreign business people who are working on projects in the United States. 2. Try as best you can to apply the Kluckhohn-Strodtbeck cross-cultural framework to the four countries discussed in this chapter: Mexico, France, Saudi Arabia, and China. Where do you think these countries lie on each of the cultural issues? This exercise is a good vehicle for generating a discussion of cross-cultural issues. Although we do not pretend to be experts in this area, below is our classification of the countries according to the Kluckhon-Strodtbeck framework. Cultural Issue China France Saudi Arabia Mexico Relationship to Nature ? Domination Subjugation ? Time Orientation Past Past Present Present Activity Orientation ? Controlling Being Being Nature of People ? Mixed Good Mixed Relationships Among People Group Hierarchical Group Group Students may question the Controlling orientation of the French and argue that Being is more appropriate. This is certainly consistent with the limited briefing in the text. However, closer examination of the international management literature indicates that French managers tend to treat problems as complex, intellectual exercises and are pre-occupied with the accuracy of information and how different parts of business interact to produce outcomes. This exercise can be used to explore reasons behind cultural variations and how different the American culture is compared to the rest of the world. 3. Place in order the following countries in terms of what you would think would be the least to most corrupt: United States, Denmark, Saudi Arabia, Russia, Australia, Hong Kong, Nepal, China, Kenya, Indonesia, Botswana, Greece, Chile. Use an Internet search engine to find the most recent International Corruptions Perceptions Index (CPI) released by the Berlin-based organization Transparency International. Check your predictions with the Index. How well did you do? What countries surprised you? Why? Below are selected ranks from the 2015 index , the latest available at publication time. A low score indicates less corruption. Rank Country 1 Denmark 2 Finland 3 Sweden 4 New Zealand 9 Canada 10 Germany 10 United Kingdom 13 Australia 16 United States 18 Japan 23 France 23 United Arab Emirates 32 Israel 48 Saudi Arabia 55 Kuwait 56 Cuba 61 Italy 76 India 83 China 83 Egypt 95 Mexico 112 Vietnam 119 Russia 167 North Korea 167 Somalia 4. Safety is a major concern when working on projects abroad. Select a country that you would consider dangerous to work in and look up the travel advisory provided for that country by the U.S. State Department (http://travel.state.gov/). How safe is it to work in that country? Let's consider Afghanistan as a country that could be considered dangerous to work in. Here's the current travel advisory provided by the U.S. State Department: According to the U.S. State Department's travel advisory for Afghanistan: " Do not travel to Afghanistan due to crime, terrorism, civil unrest, kidnapping, and armed conflict. " The advisory further states: • "Terrorist and insurgent groups continue planning and executing attacks in Afghanistan. These attacks occur with little or no warning, and they have targeted official Afghan and U.S. government convoys and facilities, foreign embassies, military installations, commercial entities, non-governmental organization offices, hospitals, places of worship, restaurants, hotels, airports, and educational institutions." • "The U.S. Embassy’s ability to provide routine and emergency services to U.S. citizens in Afghanistan is severely limited, particularly outside of Kabul." • "The U.S. government has limited ability to provide emergency services to U.S. citizens in Afghanistan due to the security conditions." Based on this travel advisory, it is extremely unsafe to work in Afghanistan due to the high risk of crime, terrorism, civil unrest, kidnapping, and armed conflict. The U.S. State Department advises against all travel to Afghanistan, and U.S. citizens already in the country are advised to depart immediately. Therefore, it is not safe to work in Afghanistan. Case 15.1 AMEX, Hungary Michael Thomas shouted, “Sasha, Tor-Tor, we’ve got to go! Our driver is waiting for us.” Thomas’s two daughters were fighting over who would get the last orange for lunch that day. Victoria (“Tor-Tor”) prevailed as she grabbed the orange and ran out the door to the Mercedes Benz waiting for them. The fighting continued in the back seat as they drove toward the city of Budapest, Hungary. Thomas finally turned around and grabbed the orange and proclaimed that he would have it for lunch. The back seat became deadly silent as they made their way to the American International School of Budapest. (Rest of case not shown due to length.) This case illustrates many of the issues a project manager has to deal with in managing a project in a different country. The case focuses on the day in the life of Michael Thomas who has been sent by AMEX to Hungary to set up business operations. Most students will unduly criticize Thomas and not appreciate the constraints he is operating under. Developing realistic expectations for international projects is a major objective of this case. 1. What are the issues confronting Thomas in this case? We usually lead a class discussion in which students identify the issues confronting Thomas. These issues include: Children appear to be having problems adapting to a new environment. Government regulations and bureaucracy are inhibiting progress on office renovation. Difficulty hiring competent and motivated staff. Hungarians appear to have different work habits and values than those Thomas is accustomed to. Potential threat of Ukrainian Mafia. High inflation, which will affect the cost and viability of the project. Thomas appears to have failed in his negotiations with Kodaly. Hungarian customs is delaying transportation of tanks. Thomas appears to be experiencing culture shock (headache). The project is behind schedule. 2. How well is Thomas dealing with these issues? Michael Thomas is facing several challenges while managing the project in Hungary. Let's evaluate how well he is dealing with these issues: 1. Cultural Awareness: Thomas is struggling with understanding and adapting to the cultural differences in Hungary, as seen in the interaction with his daughters over the orange. This indicates a lack of cultural awareness and sensitivity, which is essential when working in a different country. 2. Time Management: Thomas seems to be facing challenges with time management, as he is rushing to leave for work while dealing with his daughters' argument over breakfast. Being punctual and managing time efficiently is crucial, especially in a new work environment. 3. Communication: The interaction with his daughters also highlights communication challenges. Instead of effectively resolving the conflict, Thomas resorts to taking the orange for himself, leading to further tension. Effective communication skills are vital, especially when managing a project in a different cultural context. 4. Stress Management: Thomas appears to be under stress, as indicated by the hectic morning and the tense interaction with his daughters. Managing stress is essential for maintaining productivity and making sound decisions, especially in a challenging work environment. Overall, while Thomas is facing significant challenges in managing the project in Hungary, he is not dealing with these issues effectively. To improve, Thomas should focus on enhancing his cultural awareness, improving time management and communication skills, and implementing effective stress management strategies. Developing realistic expectations for international projects and understanding the constraints he is operating under are crucial for Thomas to succeed in his role. 3. What suggestions would you have for Thomas in managing this project? We think one of the first things Thomas needs to do is develop more realistic expectations about what is possible. Thomas’s frustration will escalate if he continues to compare progress with his original expectations. He needs to focus less on the situation and more on how his behavior is contributing to the problems so he can learn from his mistakes and improve his ability to work effectively in this foreign environment. In addition to developing more realistic expectations, Thomas needs to reshape the expectations top management at AMEX has for his project. He needs to contact the project sponsors and candidly inform them of the progress to date and begin to establish more realistic objectives for the project in terms of scope and schedule. Thomas needs to talk to other expatriates and learn how to work effectively in Hungary. In particular he needs to adjust his negotiating style and learn how to build business relations with Hungarians. If possible he should recruit a local to act as an intermediary who can help him interpret the Hungarian way of doing business and act on his behalf. Thomas needs to evaluate how he and his family are adapting to their new environment. He may need to devote more time to helping his family adjust to living in Budapest. He needs to relish small successes and focus more on the positives than dwelling on the negatives. Case 15.2 Phuket A In the previous edition this two-part case was combined as one case entitled Ghost Stories. The authors have found that it works better as a two part case in which the true reason for why Nils is not able to recruit workers is revealed after discussion in Part B which is distributed in class. This way students can speculate on the reasons before the answer is given. On December 26, 2004, an earthquake reaching 9.1 on the Richter scale triggered a series of devastating tsunamis off the coast of Indonesia. They spread throughout the Indian Ocean, killing large numbers of people and inundating coastal communities across South and Southeast Asia, including parts of Indonesia, Sri Lanka, India, and Thailand. The 2004 Asian tsunami was one of the deadliest catastrophes in modern history, with more than 220,000 lives lost. (Rest of case not shown due to length.) This case is based on conversations one of the authors had with a project manager in Thailand following the deadly 2004 tsunami. This is a short case that students can read in class to generate a discussion of a perplexing problem. Part A 1. Why do you think Nils is unable to recruit Thai workers for his project? Nils is unable to recruit Thai workers for his project following the 2004 tsunami because of a prevalent superstition in Thai culture. After the tsunami, many Thai workers were reluctant to return to work on construction projects near the coast because of a fear of ghosts. According to Thai folklore, spirits of those who died in tragic events such as the tsunami may linger in the area and haunt the living. As a result, Thai workers were hesitant to work on projects located near the coast, fearing encounters with these spirits. This superstition created a significant challenge for Nils in recruiting workers for his project, as many local workers were unwilling to work in the affected areas due to fear of encountering ghosts. This highlights the influence of cultural beliefs and superstitions on work behavior and decision-making, and the challenges they can pose in project management in different cultural contexts. Part B (Hand out Part B (below) before discussing this part.) Many American students are surprised by the answer and the case can generate a rich discussion of superstition and supernatural cross cultures. The point is that regardless of personal believes regarding ghosts this is the reality as the Thais see it, and it must be managed. 1. What options are available to Nils? Options available to Nils include: Increase wages to recruit workers Wait until mourning period has subsided and people are willing to work Investigate and see if there are some rituals that can be used exorcise the ghosts from the area Hire laborers from other countries and cultures who do not share the local beliefs. 2. What would you do and why? Some students will argue that there is a natural price point where locals would be willing to work despite their fears and this price point is likely to be lower than the cost of importing foreign laborers. Others will argue that patience is required because even if the resort was operational, demand would be so low do to local beliefs and the stigma of the tragedy in international community. Still, others will point to the Project Management X-Files Snapshot which suggests culturally bound beliefs in the supernatural should be consider a legitimate business concern and Nils will either have to exorcise the ghosts or import non-believing workers. In reality, after trying unsuccessfully to recruit local workers, project managers like Nils imported workers from such countries as the Philippines and Cambodia to help restore the vacation complexes. Phuket B At first Nils attributed the Thai reluctance to the shock caused by the devastation of the tsunami. Everyone he met seemed to know someone who had died or even worse had just disappeared. But he soon realized there was more going on than just shock. Nils was at a restaurant having a lunch with a Thai friend when an animated discussion broke out among some Thai patrons nearby. He asked his friend what was going on. The friend said someone was telling the story of a local taxi driver who had picked up three foreign tourists and was driving them to Kata Beach when he looked around and found his cab empty. Another told the story of a local family whose telephone rings constantly through the day and night. When answered, the voices of missing friends and relatives cry out for help. Nils sank in his chair when he began to realize that no one wanted to work for him because prospective workers believed that the region and his resort are haunted by ghosts. What options are available to Nils? Nils has several options to address the challenge of recruiting workers who are reluctant to work due to superstitions about ghosts: 1. Education and Communication: Nils can educate local workers about the realities of the situation and dispel myths and superstitions about ghosts. He can communicate with the community through meetings, workshops, or informational sessions to provide reassurance and factual information about the safety of the region and the resort. 2. Engage Local Leaders: Nils can enlist the support of local community leaders, such as village elders or religious figures, to help dispel superstitions and encourage workers to return to work. These leaders may have influence and credibility within the community and can help reassure workers about the safety of the area. 3. Offer Incentives: Nils can offer incentives to attract workers, such as higher wages, bonuses, or other benefits. Offering competitive compensation packages may help overcome workers' fears and incentivize them to return to work. 4. Provide Support: Nils can provide additional support and assistance to workers who are hesitant to return to work. This could include offering counseling services, providing transportation to and from work, or offering temporary accommodations for workers who are reluctant to return home. 5. Address Safety Concerns: Nils should also address any legitimate safety concerns that workers may have. This could include implementing safety measures at the resort, such as installing emergency alert systems or conducting regular safety drills. 6. Recruit Workers from Outside the Area: If local workers continue to be reluctant to return to work, Nils may need to recruit workers from outside the area who are not affected by the superstitions about ghosts. By implementing these options, Nils can address the challenge of recruiting workers and ensure the successful operation of his resort. What would you do and why? Given the situation Nils is facing, here are some steps he could take to address the challenge of recruiting workers who are reluctant to work due to superstitions about ghosts: 1. Education and Communication: Nils should organize meetings or workshops to educate local workers about the realities of the situation and dispel myths and superstitions about ghosts. He should communicate factual information about the safety of the region and the resort, emphasizing that there is no evidence to support the existence of ghosts. 2. Engage Local Leaders: Nils should enlist the support of local community leaders, such as village elders or religious figures, to help dispel superstitions and encourage workers to return to work. These leaders may have influence and credibility within the community and can help reassure workers about the safety of the area. 3. Offer Incentives: Nils could offer incentives to attract workers, such as higher wages, bonuses, or other benefits. Offering competitive compensation packages may help overcome workers' fears and incentivize them to return to work. 4. Provide Support: Nils should provide additional support and assistance to workers who are hesitant to return to work. This could include offering counseling services, providing transportation to and from work, or offering temporary accommodations for workers who are reluctant to return home. 5. Address Safety Concerns: Nils should address any legitimate safety concerns that workers may have. This could include implementing safety measures at the resort, such as installing emergency alert systems or conducting regular safety drills, to reassure workers about their safety. 6. Recruit Workers from Outside the Area: If local workers continue to be reluctant to return to work, Nils may need to recruit workers from outside the area who are not affected by the superstitions about ghosts. By implementing these steps, Nils can address the challenge of recruiting workers and ensure the successful operation of his resort. Solution Manual for Project Management: The Managerial Process Erik Larson, Clifford F. Gray 9781259666094, 9780078096594
