BUSINESS BLUNDERS

Blunder: A decision affecting the foreign operations of a firm that results in a

greater than necessary loss to the firm. The loss can be either monetary or
loss of reputation or image
Market blunder: A blunder that results from offering an inappropriate product
or service that has negative economic impact on the firm or from how the
product/service is offered. This occurs when a product or service offered or its
accompanying image does not meet societal needs or cultural norms.
Reasons firms blunder:
1. Deficiency in a decision makers attitudes, skills, and/or knowledge
2. Cultural responses (often unconscious and automatic)
History of blunders by U.S. companies:
Americans are seen throughout the world as being rude because, in the past,
Americans tended to act as if they were in the U.S. when dealing with other
cultures. Americans who are culturally uneducated believe that everyone else
is like them and they interact with others abroad as they would with Americans
at home.
U.S. corporate management was not adequately prepared for global business
realities in the past. This was generated by their inability to deal with cultural
diversity.
In order to be skillful in cross-cultural communication, managers must have
knowledge of each culture they are dealing with. They will never be totally
successful no matter how hard they try because this is not their native culture.
Ethics come into play a big part of cross-cultural communication. What is
considered unethical or illegal in the U.S. may not be considered the same with
other cultures.
Blunder examples:
Example 1
Americans tend to be legalistic and adversarial. They defend themselves with
legally binding contracts which is not only tolerated by Americans, but they
consider it an essential business practice. However, the Japanese do not follow
this practice. In Japan, they do business with people the Japanese know and
trust rarely using the law to handle conflicts between the two parties. One
American firm arrived in Japan to negotiate a joint venture with a contract in

their hands. In the first meeting, the Americans put the 50-page contract in
front of the twelve Japanese negotiators. The meeting took the entire
afternoon and none of the Japanese negotiators opened the contracts and they
only talked about general business conditions in both countries. After the
meeting, the Americans could not get the Japanese to the negotiating table
again and had to leave the country empty-handed. The Japanese saw having
the contract at the first meeting rude and decided not to do business with such
an inept firm.
Example 2
Another example is of an American firm trying to get an acceptable price for
their product from a Japanese buyer. The Americans presented a very detailed
presentation and offered what they felt was a reasonable price. After a few
moments of silence, the Americans thought the Japanese were going to reject
the offer so they lowered the price. There was more silence by the
Japanese. The Americans then said they would lower their price one last time
and that this was the lowest they could go. The Japanese accepted this offer
after a brief silence. The Japanese later said the first price was within an
acceptable range, but it was their custom to consider the proposal silently
before giving their decision. The Americans lost a lot of profit by jumping the
gun and believing the Japanese respond just like other Americans.
Example 3
Frederick W. Smith, who is the founder of Federal Express, had an aggressive,
take-charge, and confrontational interaction with others. He liked competition
and enjoyed seeing who would blink when standing neck and neck with his
adversaries. Smith tried to combine several independent European companies
into one company under the Fed Ex culture, but he ran into several
problems. Many executives quit and several customers took their business
elsewhere. Many of his colleagues took him aside and told him that his
confrontational style went against the tradition-steeped European business
culture and he was going to ruin the market for any other American
companies. He could not build his hub. The company admitted that they
believed doing business in Europe would be like doing business in the U.S.
Example 4
An American manager in Korea knew a little bit about the culture and spoke the
language fluently. He was assigned to Seoul to be in charge of his companys
office in Korea. The manager was uncomfortable with the deference his Korean
subordinates gave him since he was used to a democratic and egalitarian
leadership style. He asked his subordinate to treat him as an equal just as he
would with his subordinates in America. In Korea, deference in the office
setting was part of professionalism of office conduct. By removing the

obligatory deference, he in essence removed the required office

professionalism. The office became an environment of relaxed familiarity with
a lot of non-business conversations. Many deadlines were missed and the
offices work contained a tremendous amount of mistakes. The American
system can have its employees use a first name basis and maintain
professionalism, but this is not the case with the Korean culture. The manager
was never able to regain the same efficiency of the office.
Example 5
American makes mistakes with their products. One American company tried to
sell 29-inch tables in Japan when the average table height is 21 inches due to
fact that the Japanese sit on the floor at the table and do not use chairs.
Example 6
Parker Pens had a decentralized marketing department with ad agencies in
more than 40 countries developing ads for them. A new team of executives
were hired and wanted to centralize all their marketing decisions in the
companys headquarters in Janesville, Wisconsin. They wanted to standardize
the promotion, packaging, pricing, promotional materials, and
advertising. They believed the difference in the cultures were less important
than the similarities. They wanted to use one ad agency to develop one ad to
be used around the world. They did not want the ad too long so it would be
easier to translate. Subsidiaries complained that the pens may be similar, but
the markets were not. They wanted flexibility in the local markets. The
company centralized everything against these complaints. The same ad was
used in all countries. The ads tried to say something to everyone but ended up
saying nothing to no one. The companys campaign floundered. They were
developing a second campaign when the CEO was forced to resign and the rest
of the team either quit or were fired. The company then returned to a
decentralized marketing system.
Example 7
General Motors introduced the Nova in Latin America. Nova means, it doesnt
go in Spanish. The car had terrible sales. G.M. finally figured out the
problem, renamed the car Caribe, and the sales increased to the companys
expectations.
Example 8
McDonnell Douglas wanted to produce an aircraft brochure for its products to
be distributed in India. The artist selected photos from an article in National
Geographic. After the brochures were distributed, the company found out that

the turbans worn by the people in the brochures were Pakistani Moslem whom
the Indians do not get along with.
Example 9
U.S. firms have to abide by the Foreign Corrupt Practices Act of 1977. This
spells out acts that are not only unethical but also illegal. If states that firms
cannot give payments to foreign candidates, officials, or political parties who
are in decision making positions that the payments may induce a favorable
outcome for the firm. Grease money is used in several cultures to get business
dealings rolling. An example is of an American who was working in Africas
tourist industry when he concluded a business deal in East Africa. He was
asked very respectfully to give a significant amount of money and a radio to
the individual he was working with. The American stated that this was morally
wrong and that he did not pay bribes. He left the meeting never to
return. After he became more aware of the East African culture, he found out
that he had insulted the East African businessman. The money was to be used
to provide a feast in his honor and he would be introduced to everyone in the
community of importance. The radio was to be used for background music and
entertainment. It was to be the beginning of an ongoing profitable business
and social relationship where he would have been part of an inner circle of
business associates. He acted as if he was doing business in America and
offended his colleagues in the process.
Famous marketing blunders:
1. Scandinavian vacuum manufacturer Electrolux used the following in an
American campaign: "Nothing sucks like an Electrolux."
2. Coors put its slogan, "Turn It Loose," into Spanish where its translation
was read as "Suffer From Diarrhea."
3. Clairol introduced the "Mist Stick", a curling iron, into German only to
find out that "mist" is slang for manure. Not too many people had use for
the "manure stick."
4. When Gerber started selling baby food in Africa, they used the same
packaging as they did in the U.S., with the beautiful Caucasian baby on
the label. Later they learned that in Africa, companies routinely put
pictures on the label of what's inside, since most people can't read.
Yikes!
5. Colgate introduced a toothpaste in France called Cue, the name of a
notorious naughty magazine.
6. An American T-shirt maker in Miami printed shirts for the Spanish market
which promoted the Pope's visit. Instead of "I saw the Pope" (el papa),
the shirts read "I saw the potato" (la papa).
7. Pepsi's "Come alive with the Pepsi Generation" translated into "Pepsi
brings your ancestors back from the grave", in Chinese.

8. The Coca-Cola name in China was first read as "Ke-kou-ke-la", meaning

"Bite the wax tadpole" or "female horse stuffed with wax", depending on
the dialect. Coke then researched 40,000 characters to find a phonetic
equivalent "ko-kou-ko-le", translating into "happiness in the mouth."
9. When Parker Pen marketed a ball-point pen in Mexico, its ads were
supposed to have read, "It won't leak in your pocket and embarrass
you." Instead, the company thought that the word "embarazar" (to
impregnate) meant to embarrass, so the ad read: "It won't leak in your
pocket and make you pregnant."
10.Frank Perdue's chicken slogan, "It takes a strong man to make a tender
chicken" was translated into Spanish as "It takes an aroused man to
make a chicken affectionate."
Blunder video links:
1. http://www.youtube.com/watch?v=BF6ngYc7xJI Common Cultural
Blunders (2:14)
2. http://www.youtube.com/watch?v=9YWFf170GVI What are the common
cultural mistakes people make in international business? (1:54)

3. http://www.youtube.com/watch?v=SYbynThuONs Cultural
Misunderstandings Part 1 (11:26)