[

2013Module Code: MBA4645

Module Name: Management Perspectives

Module Leader: Dr.Nathalie van Meurs

Assignment Title: Briefing report

Student Name: Kim Trang Vo (Vivian)

Student ID: M00437195

Word Count: 2,748

TABLE OF CONTENTS1. INTRODUCTION..............................................................................................................2

2. THAILAND BACKGROUND...........................................................................................2

2.1 Political.............................................................................................................................2

2.2 Economic..........................................................................................................................3

2.3 Financial...........................................................................................................................4

2.4 Social Climate..................................................................................................................5

3. BRITISH AND THAI BUSINESS CONTRAST...............................................................6

3.1 Thai business do’s and don’ts...........................................................................................7

3.2 British business do’s and don’ts.......................................................................................8

4. CULTURAL INTELLIGENCE & MANAGMENT CULTURE......................................9

4.1 Hofstede’s 5 dimensions...................................................................................................9

4.1.1 Power Distance..........................................................................................................9

4.1.2 Individualism vs. Collectivism................................................................................10

4.1.3 Femininity vs. Masculinity......................................................................................10

4.1.4 Uncertainty Avoidance............................................................................................11

4.1.5 Long-term vs Short-term Orientation......................................................................11

4.2 High vs. Low Context.....................................................................................................11

4.3 Direct and Indirect Communication...............................................................................11

4.4 Kilmann-Thomas model of dynamic conflict.................................................................12

5. RECOMMENDATIONS..................................................................................................12

6. REFERENCES.................................................................................................................14

7. APPENDICES..................................................................................................................17

APPENDIX 1: Indicators of ease to doing business ranking for Thailand by Doing Business................................................................................................................................17

APPENDIX 2: Individual Tax scheme in Thailand.............................................................18

APPENDIX 3: Corporate Tax scheme in Thailand..............................................................18

APPENDIX 4: Expectation of Thai employees to company’s assistance............................19

APPENDIX 5: Accepting outsiders attitude of Thai employees..........................................20

APPENDIX 6: Summary of respondents’ answers in Verluyten (1997) survey for the indirect criticism...................................................................................................................21

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1. INTRODUCTION

Kingdom of Thailand is located in South-eastern Asia with the population of around 67

millions in 2013 (The World Factbook 2013). The country’s neighbours are Burma,

Cambodia, Laos and Malaysia. Situated in Indochina area, which is heart of the mainland in

South-eastern Asia, Thailand can be considered to be the hub for trading to the developing

economic area - Greater Mekong Sub region (TCEB 2009). The foreign direct investment

(FDI) in Thailand has increased over the time to be around 159 billion dollars in first haft

2012. Thailand is said to be the hub of FDI in the area due partly to the 18 th global ranking

position on ease of doing business (Doing Business 2013) (APPENDIX 1).

The typical Thai culture and society is formed by its Thai language, Buddhist religion and the

monarchy. Thai culture then influences their politics, society and the way their residents

doing business. This report emphasises on influence of Thai culture in business. Moreover, it

also recognises and gives recommendations to overcome the pitfalls or challenges in cross

cultural management considering British and Thai’s different culture and perspectives.

Figure 1: Thailand’s map and key figures (Source: The World Factbook 2013 and BBC 2012)

2. THAILAND BACKGROUND

2.1 Political

Thailand governmental form is constitutional monarchy which resides the ability to make and

pass legislations in parliaments. The Prime Minister is the head of government who is elected

in a four year term by the House of Representatives. The country’s current Prime Minister is

YINGLUCK Shinawatra (The World Factbook 2013). Thai government policies is

formulated and executed by 20 cabinet ministries. The cabinet is made up by five main

parties included Pheu Thai, Chat Thai Pattana, Chat Pattana Phua Pandin, Palang Chon and

Mahachon (Royal Thai Government 2013).

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Thailand is current member of ASEAN (Association of Southeast Asian Nations), APEC

(Asia-Pacific Economic Cooperation), G-77 (Joint Declaration of the Seventy-Seven

Countries of the South), PATA (Pacific Asia Travel Association) and other associations (The

World Factbook 2013). Hence, the foreign trading is encouraged to and from Thailand due to

the creation of free trade areas, preferential tariff schemes and intra-regional services

liberalization (TCEB 2009 and The Group of 77 nd).

2.2 Economic

Thailand is one of fast growing economies in Asia and known as strong export and tourism

country. The country’s GDP is projected at $645.7 billion (2012) which grew by 5.5% from

2011 before gradually expected improving to 7.5% in 2013 (IMF 2012).

Table 1: Selected Asian’s real GDP, Consumer Prices, Current Account Balance and Unemployment

(Source: IMF 2012)

Thailand suffered the deficit of foreign trading in last few years due to the excess of imports

to exports. The country mostly exports the agricultural commodities, electronics appliances,

automobile products and parts as well as processed food to the main markets of United States,

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China and Japan. On the other hand, Thailand’s main import partners are Japan, China and

Malaysia, who mostly provides raw materials, consumer goods and fuels for Thailand (The

World Factbook 2013).

Figure 2: Foreign Trade Balance of Thailand from April 2010 to April 2013 (Source: BoT (2013), cited in Focus Economic (2013))

In general, it can be concluded that Thai economy is growing certainly and a promised

market for foreign trade. This stable market has extremely low unemployment rate of 0.6%

(The World Factbook 2013).

2.3 Financial

Thai currency is Thai Baht (THB) which is converted to be around 0.021 sterling pounds.

Over last two years, Thai Baht tended to appreciate against the sterling which benefits for the

British business trading to Thai due to higher competitive ability.

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Figure 3: Sterling exchange rates against Thai Baht (Source: OANDA 2013)

Inflation in Thailand is insignificantly volatile between 2-4% which reflectively moving at

the same direction as interest rate (averagely at 3%) from 2011 to 2013. Therefore, it

indicates a stable and healthy financial performance of the country in last two years.

Thailand applies the tax scheme based on four main categories of Corporate Income Tax,

Value Added Taxes (or Specific Business Taxes), Stamp duty and Personal Income Tax

(APPENDIX 2 & 3). The tax rates and incentives policies in Thailand can be considered to

be relatively favourable as it also considers avoiding double taxation (PwC 2012).

2.4 Social Climate

Thailand is classified to have young population structure as 45.5% of their population is in

the age range of 25-54. There is relatively balance in the gender of male and female in this

country. The common language is used in Thai society is Thai. The major ethnic of Thailand

is Thais which is broken down in various regional group such as Central Thai, Isan, Lanna

Thai and Southern Thai.

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Figure 4: Age and Gender structure of Thai population in 2013 (Source: The World Factbook 2013)

Buddhist (96% of population) is the most common religion in Thailand which highly respects

the monks. Moreover, there also small proportions of Thai are Muslim, Christian and others

(The World Factbook 2013).

Being the developing country, the country still faces the problem of poverty. The poverty rate

in Thailand has been improved over year and currently at 13.2% (World Bank 2013).

In conclusion, Thailand is a strong economic country which has developed strongly in term

of GDP, politics evolution and being the Middle-income country (MIC). However, the

country still has to struggle with various problems/challenges such as corruption, poverty and

climate change (annual heavy flood that significantly impacts on economic development)

(UNDP 2012).

3. BRITISH AND THAI BUSINESS CONTRAST

Diversity in management practices is not the new term due to globalisation. Multinational

management/leadership requires the recognition of culture difference and challenges. In this

part, the business etiquette/protocol in Thailand and Britain is identified to give initial culture

recognition. Hence, it is avoided the conflict in doing business between Thailand and Britain.

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3.1 Thai business do’s and don’ts

DO’S DON’TS

Inviting Thai counterparts for social

activities (eg. Having lunch) to

enhance the relationship and get to

know each other before doing

business

Asking personal questions such as

age, marital status, family and

background to build familiarity

Thai traditional “Wai” greeting to

business partners but not to children

and service staffs

Calling the counterparts with first

name, preceded by the title “Khun”

Exchanging the business card with

giving and receiving by right hand.

The cards should be given to the

highest senior person first.

Wearing formal suites for meeting

Taking off the shoes when invited to

colleges’ houses

Being patient and hiding emotions in

public or when business goes wrong

Showing respect to seniority

Planning the meetings at the begin

and end of working day due to the

difficulties of transportation to work

place

Criticising about the Thai

King/Queen as it is illegal to say

offensive comments about the royalty

Joking or criticising Buddhist religion

as Thais highly respects their religion

Touching Thais’ head as they

considered that top part is sacred in

their Buddhist religion

Opening the gifts from Thai

counterparts in their presence as it is

considered to be rude

Expressing strong emotions or

speaking loudly/noisily as it is

disrespectful

Communicating in complex/native

English language which can creates

misunderstanding/conflicts

Causing lost of ‘face’ such as

interrupting/cutting Thai

counterparts’ speaks

Creating highly competition working

environment

(Adapted from Communicaid 2009, Jirapornkul and Yolles 2010 and Verluyten 1997)

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3.2 British business do’s and don’ts

DO’S DON’TS

Making business appointments

several days in advance

Building good working relationships

with subordinates

Exchanging business cards shows

professionalism

Win-win approach applying in

negotiating and discussing with

British counterparts

Respect personal space with British

counterparts, thus it is advised to keep

an acceptable distance with them

It is polite and respectful to shake

hands at the first time meeting.

Allowing the one with higher rank to

enter the room first

Being on time for several minutes

earlier for the meetings/appointments

Communicating the objectives of the

meetings in advance

Bringing gifts such as

flowers/chocolate/wines when being

invited to colleges’ house

Asking personal questions such as

age, marital status, occupation and

salary

Sitting with folded arms during the

meetings as it represents boredom and

not interest for the meetings

(Adapted from Communicaid 2009)

The dos and don’ts analysis pointed out the main contrasts in British and Thai about personal

background learning to get acquainted each other. Thai considered it as a good way but

British sees it to be rude. Moreover, Thai consider more than just formal but also informal

relationship. In addition, the hierarchy in workplace requires Thai to respect to their

superiors, but British evaluate real boss-subordinates relationship.

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4. CULTURAL INTELLIGENCE & MANAGMENT CULTURE

For culture management, there is a requirement for cultural intelligence. Cultural intelligence

is identified to include the cultural strategic thinking. For thinking and solving the problem, it

is needed to understand how and why that particular people acting that way (Tan 2004).

Therefore, for cross-cultural management between Britain and Thailand, it is necessary to

have understanding of Thai culture which represents values, beliefs and drives Thai

employees acting in particular way. After that, an appropriate adaption can help limit the

conflicts between two different cultures in doing business.

4.1 Hofstede’s 5 dimensions

Hofstede (1993) mentioned five dimensions in evaluating the national culture which included

Power Distance, Individualism vs. Collectivism, Femininity vs. Masculinity, Uncertainty

Avoidance, and Long-term vs. Short-term Orientation. Based on that theory, there is a huge

gap in the scores for 5 Hofstede’s dimensions for Thailand and UK.

*PDI: Power Distance

*IDV: Individualism

*MAS: Masculinity

*UAI: Uncertainty Avoidance

*LTO: Long-term Orientation

Figure 5: Hofstede’s cultural dimensions’ scores for UK and Thailand (Source: The Hofstede Centre)

4.1.1 Power Distance

The dimension of Power Distance indicates the inequality level among the relationship

(Hofstede 1993). Thailand scores 64 which associates with hierarchical relationship between

the bosses and subordinates. It is clearly illustrated in the requirement for high respect

(krengjai) in Thai society from inferior to superior (such as elders, bosses, the King and the

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Queen). In Thai society, unequally in relationship is acceptable. The boss has the superior

power over their subordinates not only in the workplace but also in informal social life

(Verluyten 1997). Hence, acquiring power becomes the goal to be superior in Thai society

(Jirapornkul and Yolles 2010).

Unlike Thai, Britain scores very low in this dimension as there is a real relationship of boss

and subordinates in British culture.

4.1.2 Individualism vs. Collectivism

Thailand scores very low in Individualism which indicates an inclusion of features related to

collectivism. Therefore, it is believed that Thai people tend to respect and being loyal to the

groups they belong (Hofstede 1993). Hence, it is found that Thai employees are rather loyal

to the company they work for. They also expect to be assisted by the company (APPENDIX

4). However, there is a balance of collectivism and individualism approach for reward, as

Thai employees tend to prefer both individual and group-oriented reward systems. Moreover,

it is also agreed that the decisions should be made by a group rather than individuals

(Verluyten 1997). The collectivism approach in Thai culture also explains the ‘face-saving’

which protects the respect and confrontation avoidance in their belonging group.

Collectivism does not mean that Thai people desire to work in team. They feel more

comfortable working on their own (Danai Chaiyotha (2003, p. 14) cited in Jirapornkul and

Yolles (2010)). This is a contrast to British culture which highly evaluates team work.

4.1.3 Femininity vs. Masculinity

The 34 score for Thai in this dimension indicates the Femininity approach in their culture.

Therefore, Thai counterparts tend to care more about maintaining personal relationship,

harmony and quality of life rather than competition, achievement and success (Hofstede

1993). It is explained that this approach is an influence of Buddhism which encourage the

harmony. Therefore, in society and workplace, Thai people tend to avoid the confrontation

and disagreement and highly evaluate patience (Jirapornkul and Yolles 2010). However,

because of confrontation avoidance, Thai subordinates are also willing to work over-time or

even trade off their vacation for working (Verluyten 1997).

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4.1.4 Uncertainty Avoidance

Thai people prefer clear guidance and policies which shows high uncertainty avoidance.

Scoring 64 for this dimension, there is not absolute stability preference by Thai people.

Therefore, it is researched that it is taking into consideration of age and seniority for

promotion (Verluyten 1997). However, Thai people are also likely to accept the outsiders of

the company (APPENDIX 5).

4.1.5 Long-term vs Short-term Orientation

According to Hofstede (1993), this fifth dimension is strongly correlated to the above four

dimensions, which indicates the seeking for pragmatic future orientation rather than

conventional historical short-term view. In this approach, Thailand scores 56, which is quite

high compared to global scale and British score (25). It is said that Thai culture of long-term

orientation is influenced by the Confucianism (Verluyten 1997). Therefore, they emphasis on

building relationship with their counterparts/subordinates/business partners.

In conclusion, the Hofstede’s 5 dimensions analysis states the general understanding of Thai

national and organizational culture for a suggestion of doing business with Thai. However, it

still cannot clearly identify and describe the rich culture of Thailand. For example, Thai

culture is identified to be uncertainty avoidance which indicates an unwilling towards

significant change. However, from the survey’s findings of Verluyten (1997), Thai people are

less likely to afraid of the influence of Western culture to their traditional culture and willing

to adapt the modern culture.

4.2 High vs. Low Context

Thai business culture is identified to be very high context as it considered close relationship

over the time into business activities such as negotiation, meetings and cooperation.

Therefore, building a good personal relationship in doing business is highly evaluated in

Thailand. Moreover, respect is also another approach to build engagement and loyalty of

employees in negotiation context (State 1999).

4.3 Direct and Indirect Communication

Thailand obtained the implicit communication as a way to protect their ‘face’, thus criticism

and refusal cannot be expressed publicly and openly. This approach of Thailand is strongly

impacted by the Buddhism which highly evaluates the harmony. It is concluded from a

survey by Verluyten (1997), public criticism is avoided. Therefore, in working environment,

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feedbacks and criticisms between bosses and subordinated tend to be indirectly and privately.

For example, the criticisms are preferred to deliver through median people or by attitudes

(‘warning signs’) (APPENDIX 6). Moreover, because of ‘face-saving’ perspective, Thai

people also face difficulty to say a refusal or rejection to offers/invitation. It is contrastive to

British culture (Verluyten 1997).

4.4 Kilmann-Thomas model of dynamic conflict

Figure 6: Kilmann-Thomas model of dynamic conflict (Source: Kilmann and Thomas (1975) cited in Northouse (2011))

It is identified from the Hofstede’s 5 dimensions that Thai people tend to avoid confrontation

as part of their harmony approach. Therefore, the ‘Competing’ option from the Kilmann-

Thomas model is an inappropriate strategy for negotiating with Thai people. The other

strategic options can be fit to execute in negotiation with Thai people depending on the

situation. The consideration of strategic options depends on the level of seriousness, number

of people and level of management involved and outcome requirements.

5. RECOMMENDATIONS

Although there is recognition of differences between national and organisational culture, it is

also undeniable the influence of national culture into the way Thai residents doing business.

This analysis in both national and organizational level of culture has reached to some of

recommendations/notices for cultural management between Britain and Thailand. Moreover,

it is suggested to adapt or harmonise the differences of British and Thai culture.

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Respect is very important value in both Thai society and workplace. Therefore, it is suggested

that the managers should show their respect the Thai counterparts in both social and

workplace. The respect is one of element belongings to ‘face-saving’. Therefore, in meetings,

making decision, discussion and negotiation, managers should consider not ‘protect’ their

face, especially high seniority. For example, the manager should not interrupt or dominate the

conversation. Furthermore, keeping patience is highly appreciated in Thai working and social

environment, thus the managers should keep their positive attitude towards any

conflicts/problems/challenges no matter how serious situation is.

Moreover, Thai people are collectivism by highly evaluating harmony and confrontation

avoidance, thus, a working environment design is very important. The competition and highly

individual reward system is not suggested. Moreover, team working is not desired by Thai

people, thus training and slow process for adaption is needed for an effective cross-culture

working.

In addition, building relationship both formal and informal is crucial for getting acquainted

before doing business, having meetings, and negotiation with Thai counterparts. Thai people

considers on the familiarity, historic achievement, trust and respect in doing business. They

also are willing for social activities such as having lunch or team building. Therefore, the

managers should maintain and build relationships as well as create relationship encouraged

working environment.

Furthermore, although there is hierarchy in relationship, Thai people still evaluate the

decision making made by groups/teams. Therefore, creating opportunities for equal

involvement is favourable in decision making process.

Last but not least, ‘face-saving’ is again an essential element in Thai culture which

encourages indirect communication. Therefore, to adapt and reduce conflict, the manager

should consider giving criticism or feedback indirectly or privately to their

subordinates/counterparts. Moreover, it should be avoided to put Thai counterparts into

situation of making direct refusals/rejections.

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6. REFERENCES

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%20Business%20in%20Thailand.pdf. [Accessed 3 July 2013].

Communicaid. (2009). Doing Business in the UK | UK Social and Business Culture.

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%20Business%20in%20the%20UK.pdf. [Accessed 3 July 2013].

Doing Business. (2013). Doing business 2013: Smarter regulations for small and

medium-size enterprises. Economy profile: Thailand. [online]. The World Bank and

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2013].

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IMF.(2012). World economic outlook april 2012: Growth resuming , dangers remain.

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Jirapornkul, S. and Yolles, M. (2010). Assessing values and value change in Thai

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[online], 7 (3), 321-347. Available from: http://search.ebscohost.com/. [Accessed 2

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Kilmann, R.H. and Thomas, K.W. (1975). Interpersonal conflict-handling behavior as

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Northouse, P.G. (2011). Handling Conflict. Introduction to leadership: concepts and

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Thailand. [online]. (2013). World Bank. Available from:

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7. APPENDICES

APPENDIX 1: Indicators of ease to doing business ranking for Thailand by Doing Business

(Source: Doing Business 2013)

17

APPENDIX 2: Individual Tax scheme in Thailand

(Source: PwC 2012)

APPENDIX 3: Corporate Tax scheme in Thailand

(Source: PwC 2012)

18

APPENDIX 4: Expectation of Thai employees to company’s assistance

(Source: Verluyten 1997)

19

APPENDIX 5: Accepting outsiders attitude of Thai employees

(Source: Verluyten 1997)

20

APPENDIX 6: Summary of respondents’ answers in Verluyten (1997) survey for the indirect criticism

(Source: Verluyten 1997)

21