Global Business Cultural Analysis In Turkey Commerce Essay

Global Business Cultural Analysis In dud Commerce EssayPeculiarities of running occupation and trans issue conferences ar directly related to the culture of the country. Globalization of the scrimping has undoubtedly become a commonly accepted phenomenon. Even small and medium straines, wanting or non, face problems of international business relationships be it the purchase of equipment, materials or other dish out and procurement activities, search for partners or investors, not to mention the direct competition with multinational companies in their own domestic market. Larger players of market, in connection with its essential saturation, argon forced to think about entering the international bena.All these factors realize the study of culture of business relationships and international communication increasingly pertinent for managing directors. Awargonness about the peculiarities of a particular culture, the ability to consider and use these peculiarities in practice help some companies quickly and at less personify to establish relations with partners, and others to deal more effectively with rivals. The knowledge of the features of international communication is also useful for managers working in unknown companies, since they help to bust adapt to a foreign environment, understand the requirements of top-management, permissible frames of conduct and, accordingly, to move faster through the ranks.Major dimensions of culture in washoutand their captivate on Turkish economy and business practicesWhen building business relationships, finding partners for business, developing private business in the territory of another country, it is always necessary to borrow into account the totality of the rules of business etiquette and specificities of traditions of each cultural environment. bomb has long been a secular state with atomic number 63an style of doing business, but it should be remembered that the influence of Islam, though not pronounc ed in recent epochs is reflected in some aspects of the Turkish business etiquette and bears a deep cultural meaning. dud combines European and Middle East traditions in the business culture, therefore common business etiquette here has some nuances which are useful to know for building successful and persistent business relationships. Lets consider these nuances.First, washout has a sufficiently well developed family-owned business with a clear hierarchy. Family traditions in Turkey are very important, twain in life and in business (Burnaz, 2009).Second, opposite spheres of life in Turkey are influenced by religion. If the partners are religious people, 1 should keep in mind that Friday is a holy day for Muslims when they visit temple to pray, so no important business meetings and negotiations should be appointed on this day. Ramazan is a month-long hallowed abstinence of all Muslims, during which one cannot eat, drink, smoke cigarettes from sunrise to sunset. This should b e kept this in mind when planning a business lunch or dinner in a restaurant. During Ramazan it is better to appoint business meetings with Turkish Muslims after sunset, however, if it is possible to avoid them, it is better to postpone all negotiations until after Ramazan. M both Turkey residents leave on vacation in July or August, so the middle of summer is not the best time for negotiations and business meetings, while from October to May is the virtually active and fruitful finale for Turkish business culture (Burnaz, 2009 OECD Economic Surveys Turkey, 2010).It should be remembered that as in any other country, courtesy and respect for etiquette in business in Turkey is especially important. Good ad hominem relationships based on trust and mutual respect play a significant purpose in building business relationships with Turkish partners, therefore, before proceeding to business negotiations, it is necessary to show them adequate to(p)ness and readiness for friendship and to emphasize the mutuality of benefits (Burnaz, 2009 Ararat, 2008, Gupta, 2009). motif in negotiating with the Turks should be clear and precise. It is very important in the process of business negotiations to clearly outline the advantages and profitability of a proposal for the Turkish side, although it is not the only thing a benefit may be expressed in for Turkish partners. Instead of profits it is recommended to focus often on such(prenominal) points of the transaction as increased authority and actor. Respect, recognition and other intangible benefits may also have a commanding impact on the return of business negotiations in Turkey (Gupta, 2009).Thus, understanding that Turkish culture is very dis convertible from European or American business culture is a large-minded step in doing business in Turkey and with the Turks. It takes patience and time to learn all the ins and outs, but the Turks also show patience towards foreigners and willing to make allowances for any mi stake or error in etiquette made by a foreigner.In general, Turkey is an attractive country to do business with the positive dynamics in the economy. Turkey managed to avoid large losses that might have occurred as a result of the global stinting crisis of 2008-2009 (Turkey passes the crisis test, 2009). Having analyzed the economic development of Turkey for the period from 2002 to the present day, it can be argued that the state of the economy has become particularly social, due to the below factors (OECD Economic Surveys Turkey, 2010 Turkey passes the crisis test, 2009 Turkey Business environment at a glance, 2011 Aydin, 2006) The currency reform in Turkey, 2002 reforms in social security and health care impose reform good for entrepreneurs TOK Innovations (Housing Administration Projects) gave impetus to the development of national construction companies State curb for small and medium-sized enterprises, which constitute 97% of the Turkish economy Increased economic evolutio n in Turkey, which is largely due to the automobile industry, real estate and textile industry Successful enthronisations in tourism Active development of the logistics sector in Europe New international communications and mod markets the some promising emerging markets for Turkey are China, South Korea, India, BRIIC group, as well as markets of Pakistan and Bangladesh regional and social development 40% of the EU budget is allocated to regional development and social infrastructure Funding at the expense of TOBB (the Union of Chambers and good Exchange of Turkey) Development of amplyer education there are already 95 public and 45 private universities in Turkey.Apart from that, the Government of the nation of Turkey considers foreign direct enthronisation as the driving force of economic development and prosperity of the country. Turkey has one of the to the highest degree liberal legitimate regimes for FDI among the member countries of the Organization for Economic Cooperati on and Development (OECD). Except for some sectors, businesses that are open to the private sector in Turkey are mostly open to foreign partners and investors (OECD Economic Surveys Turkey, 2010). Nevertheless, all investors, regardless of nationality, face a number of specific obstacles characteristic of developing Eastern countries excessive bureaucracy, slow acting referee system, of age(p) high school taxes, corporate governance weaknesses, sometimes un foreseeability of the decisions taken at local government level, as well as frequent changes in canon and regulatory framework (Gupta, 2009).However, foreign investment regulation, for the most part, is transparent. Turkey supports national regime, including the purchase of real estate by foreign detonator companies registered in consent with Turkish law, and in most sectors no investment audit is provided (only notification is required). The Turkish Government supports the principle of transparency with the associated nati on as a circumstance for the acquisition of real estate by foreigners, and imposes a limit of 2.5 hectare of property acquired by foreign individuals. Individuals cannot own more than 10% of the land in any of the areas of industrial development (Kalafatoglu, 2010 Keyman, 2005).The maximum share of foreign equity participation is limited to 25% in broadcasting and 49% in aviation and maritime transport. Establishment of companies offering financial services including banking and insurance, as well as oil-related companies, requires special permission from the Government of Turkey for both domestic and foreign investors. In practice, regulators do not restrict foreign ownership in the financial sector in 2005 and 2006 a series of acquisitions by foreign persons were approved, and several foreign financial companies has been operating in Turkey for a long time (Ulusoy, 2009).The privatization process in Turkey is truely going on. The Government of the Republic of Turkey privatizes the state economic enterprises through selling lots of securities, public offerings, or a combination of both. The total amount of transactions in the Turkish privatization design amounted to 8.1 billion dollars in 2006, 4.3 billion dollars in 2007, and 6.3 billion dollars in 2008. The state continues privatization process, despite the fact that the reduction of global financial flows, which began in 2008, may stand for certain obstacles (Ulusoy, 2009 OECD Economic Surveys Turkey, 2010).Bureaucratic delays used to be significant obstacles to both national and foreign companies. However, recent reforms have simplified the process of establishment of companies, trim down the requirements to obtain permits, set a single form of registration of companies and enabled individuals to register their businesses in the Union of Chambers and Commodities Exchange of Turkey.Cross-cultural analysis business cultures of the States and TurkeyGenerally, two polar opposite styles of management are distinguished, and consequently, business relation cultures American or Western and Oriental styles. They are fundamentally incompatible in structure of collection and exchange of information, separation and segregation of duties, degree of standardization, coordination and subordination.The American system is characterized by management based on science, individualism and personal responsibility, a clear division of labor, specialization, planning based on the analysis of large amounts of quantitative information. Oriental management system is based on collective responsibility, rotation system, long-term career planning, equation of employees to the company and its customs (Burnaz, 2009 Gupta, 2009).At the same time, in line with the Western style, there has recently distinguished a pan-European, also partly inherent to Turkey as an EU member, with a simultaneous focus on economic and social indicators, such as a guaranteed opportunity for staff development, involvement of empl oyees in decision-making process, the emphasis on favorable climate in the company (Burnaz, 2009 Gupta, 2009).However, despite the leanency to unify business methods and communication standards, we believe that the explicit differences in business culture will remain in the future.Despite the huge variety of business cultures, there are methods to predict certain aspects of behavior of representative of a certain culture. Ones of the most applicable methods are the classification of countries according to G. Hofstedes four variative characteristics reflecting basic differences of cultural values, and contextual rank of cultures, proposed by E. Hall (Cateora, 2000).According to these theories, the USA is a notable example of a country with a high index number of individualism (IDV=91), when a shed light on individual poorly integrates itself into the group, and strong individualistic mentality is observed with a focus on the importance of personal life and initiative. The Turkish society is instead a society where the mentality of community relations dominates, so it is based on morality, sense of duty, predominance of the interests of the collective over the individual ones, and loyalty (IDV=37) (Table 1). some other important cultural dimension is the parameter of world-beater (hierarchical) distance. Power distance index measures the tolerance of the society towards social inequality, i.e., unequal distribution of origin in the midst of superior and subordinate members of the social system. The degree of distancing shows the relation of employees to the power of managers. Turkey has a culture with a high index of power distance (PDI=66), and power in Turkey may even be inherited. Here there is a significant difference between the members of the society who are at different social levels and difference in the privileges, which are perceived by the members of the society for granted. In countries with a low power distance index, like USA (PDI=40), the abate pattern is observed (Table 1).The next quality largely influenced by culture is the control of the level of uncertainty, which shows the extent to which members of a cultural community are computer programmed to freedom of action in unstructured non-standard situations. In this aspect, the USA and Turkey also hold totally different positions. As a country with high uncertainty avoidance index, Turkey (UAI=85) is less resistant to stress, more concerned with security issues and following the rules, which leads to poor perception of change and slow adaptation to tender ideas. USA is characterized by culture with low UAI (UAI=46) associated with greater mobility, willingness to take risks, innovation, tendency to rely on knowledge, rather than absolute knowledge (Table 1).Moreover, the USA is rather a country described by Hofstede as the country with masculinity behavior (MAS=62), i.e. dominance, encouragement to competition, high demands, desire for career achievements and ent repreneurship, greed and passion for capital accumulation, drop of caring about others. In contrast, though attached now to the European community, Turkey still belongs to femininity pattern (MAS=45) and the prevailing values are humility and altruism, gender equality, emphasis on serving people, mutual aid (Table 1).Table 1. Indexing USA and Turkey depending on cultural values by Hofstede. boorishIDVRanking by IDV*PDIRanking by PDIUAIRanking by UAIMASRanking by MASUSA911403846436215Turkey37286618/198516/174532/33* assortment among 53 countries of the world, by 2000. (Cateora, 2000)In addition to the parameters identified by Hofstede, the predominant and characteristic of the culture type of communication is of great importance in the typology of business cultures. On this parameter, all nations can be ranked by the degree of cultural contextuality. Recent studies have revealed a high correlation between high/low-contextuality and the Hofstedes indices of individualism/collectivi sm, and hierarchical level of distancing (Cateora, 2000).Thus, low-context American culture shares relatively low hierarchical differences and high level of individualism. On the contrary, high-context Muslim culture is typically characterized by a significant difference between the hierarchical levels and low levels of individualism. Therefore, the majority of modern managers, employees of international companies, are more effective in countries with the low-context language, since they are relying on the reports, contracts and other acts documented in writing. But even in low-context cultures, communication is largely dependent on cultural differences (Cateora, 2000 Gupta, 2009).High-context cultures require a considerable period of time before starting the business part of the relationship, because future partners must get to know each other for joint business. For example, if one cannot find time and desire to drink coffee and talk about abstract topics, one cannot advance to th e business part of the conversation (Cateora, 2000 Gupta, 2009).Another indicator is the source of power and level of authority, which is a direct consequence of the level of the hierarchical distance, as it combines the effect of the power structure in business with the status and position of manager in the community, depending on the size of the company, publicity, type of property, and cultural values. In Turkey, the decisions are mainly made exclusively by the head of the company, who prefers to deal only with senior executives of other companies. Business here is not between companies or divisions, but between individuals. The latter also means that in case of leadership changes from one side or another, the achieved agreements may lose their power, if trust relationships arent re-established between new top executives of companies. Besides, the decentralized system, common for the U.S., enables managers at various levels to make decisions relevant to their functions, which is not common for Turkey (Ararat, 2008 Gupta, 2009).Thus, the obvious conclusion is that it is necessary for the authoritarian cultures as well as companies with a decentralized power structure to correctly determine the decision-makers, while working with companies in which decisions are taken by consensus, it is important to convince each member of the committee or group.Peculiarities of conducting business in TurkeyBusiness in Turkey is quite difficult to arrange. But the results of registration of the business in Turkey and certain investments can be easily recouped. Peculiarities of doing business in Turkey determine such things as sale and purchase, opening bank accounts, tax system, offshore, ready business, small business and profitability of big business.In general, 2011 will be very important for Turkey. In June, the general election will be held. The current government has been successful in many areas of the economy although some spartan problems still remain. Therefore, o pposition political parties should form new political-economic strategies with respect to the above areas. Turkey has to achieve significant economic growth, reduce unemployment, mark social justice, and resolve tax issues. If it is done succeeds, it will be able to join the BRIIC (Kalafatoglu, 2010 OECD Economic Surveys Turkey, 2010).The Government of Turkey since 2001 has been applying a comprehensive program designed to accelerate all the procedures related to investments and attract more direct foreign capital into the country. The national body, the Coordinating Council for the Improvement of the Investment Environment (YOIKK) provides methodological support in this issue. In addition, in 2004 the Investment Advisory Council for Turkey (IAC) was established, whose recommendations serve as a guide for YOIKK, and activities undertaken within the Councils recommendations are published in yearbook reports of the Treasury of Turkey on the activities of IAC (Keyman, 2005).The gove rnment continues to implement legislative reforms, some of which are aimed at attracting foreign investment to Turkey. The draft of National Legislative Network, a project of automation and integration completed the process of developing the technical infrastructure in 2008, designed to accelerate the execution of business cases by facilitating the hit of documents and transcripts of court proceedings and give the opportunity to file an application online. In addition, the government simplified the access of foreign investors to justice, including legal advice and Alternative Dispute Resolution, support by the U.S., EU and World Bank (Turkey Business environment at a glance, 2011 Kalafatoglu, 2010).Turkey made the tax system more convenient for investors as well. In 2006 the basic rate of income tax was rock-bottom from 30 to 20%. The government also cancelled the income tax for foreign investors who own bonds, notes and shares, preserving it for bank deposits and buy back transa ctions. In 2007 tax administration established a division designed to manage taxes collection from large corporations (Keyman, 2005). However, the Government of Turkey has not yet managed to implement further tax reforms, including reducing the tax on wages, which is one of the highest among OECD members. The Turkish Government also increased the VAT on leasing transactions from 1 to 18% in 2007. Special consumption tax on alcoholic beverages in 2008 reached 275.6% with the minimum requirements for special tax based on market prices of products (Ulusoy, 2008).Turkish laws touch the investment climate continues to develop. It guarantees freedom of ravish of profits, fees and royalties and repatriation of capital. This guarantee is reflected in the bilateral investment treaties between Turkey and the United States in 1986, and in some similar agreements, which regulate the unlimited and proper handling of all funds related to investment in a freely convertible currency in the self- moving market (Treaties and conformitys, Turkey-United States, 1986). Turkey is a member of the International Centre for Settlement of Investment Disputes (ICSID). Turkey also ratified the Convention Establishing the Multilateral Investment warrant Agency (MIGA) in 1987. Turkish law provides the confirmation of international arbitration execution of investment disputes between foreign investors and the state. Turkeys is also a member of the WTO Agreement on change Related Investment Measures (TRIMS) (Keyman, 2005 Ulusoy, 2008).Turkey investment stimuli system was significantly improved in 2006 to support manufacturing industry, energy sector, and export. General regime of investment incentives suggests tax benefits and, in some cases, the possibility of lending. Turkish Treasury also regulates some issues regarding interest rates on investment loans for small and medium enterprises, RD projects, environmental protection, as well as projects in 50 provinces, where the annual incom e per capita is below 1500 U.S. dollars. For such provinces, the law provides income tax incentives, social insurance benefits, free land and reduced electricity cost up to 20-50% (Ulusoy, 2009 OECD Economic Surveys Turkey, 2010).In RD sphere, Scientific and Technological Research Council of Turkey (TUBITAK) and Technology Development Foundation of Turkey (TTGV) deal with reimbursements for RD and capital borrowing. Projects that get such benefits include development concepts, technology research, technical feasibility evaluation, concept-to-design laboratory researches, samples study, test products production, experimental facilities construction, product testing, patent research and design problems solutions. In addition to these incentives, the Government of Turkey provides support for technological development zones, which involves the creation of infrastructure and production facilities, exemption from taxes, VAT, income taxes and revenues, and from customs duties for special I T-sector. Moreover, export stimulating program is focused on RD, market research, and participation in international exhibitions and fairs.In Turkey, no technical requirements for the beginning, implementation and expansion of investment projects are provided. There are also no restrictions to the acquisition by investors of goods from national sources and exporting specific percentage of products. Investors access to foreign currency does not affect exports. There are also no restrictions for domestic companies to own shares of foreign investors for the fact that the proportion of foreign shares will be gradually reduced or investor will graft its technology on certain terms. There are also no conditions established by the state in terms of the permission to invest, including the location in specialized geographic areas, specific percentage of national resources for the production of goods and services, national shares packages, import substitution, export requirements, employment of the population the investor technically located in, technology transfer and financing from national sources (Ulusoy, 2008 Ulusoy, 2009 OECD Economic Surveys Turkey, 2010).The Government of the Republic of Turkey does not force investors to disclose proprietary information or any other signifier of information different from the publicly available one during the process of obtaining permission from the supervisory authority. Companies with foreign capital are to send a report on their activities, submitted to the General Assembly of shareholders, the auditors report, and balance sheet in the Foreign Investment Department of the Treasury annually in May.Except for issues relating to openness to foreign investment and transparency of the system of regulation, Turkey provides all the rights, benefits, deductions and privileges available to national capital and companies, as well as foreign capital and companies on the basis of most favored nation regime (for selected countries). Fo r example, American and other foreign firms can participate in publicly funded programs and programs of subsidizing research and development on the basis of national treatment.The Government of the Republic of Turkey has adopted policies and laws that, for the most part, should promote free competition and transparency in business. However, foreign companies in some sectors complain that the regulations are not transparent and understandable from time to time. One should keep in mind that Turkey is an observer, but not a member of World Trade Organisations Commission on Government Procurement.However, Turkey is an actively developing country, which tries to keep pace on all the contemporary European and American innovations. One of the most perspective areas in Turkey is internet and mobile commerce. For instance, recent researches show that mobile marketing has acquired great popularity with the development of technology SMS since 2000 in Europe and different parts of Asia. Over th e past few years SMS-messages have become a major advertising channel in Turkey, and many experts even tend to view Turkey as an innovator in mobile marketing (Demirbag, 2008).The vivid example of this success is the experience of the Turkish branch of Pepsi, which in the persist 3 years has been one of the most active players using mobile marketing tools. To date, according to the data of Pepsi Turkey, the level of participation in promotional campaigns conducted by the department is the highest in the category. The company uses mobile technologies, because it considers them more effective than TV tool to provide an opportunity for interactive communication with Turkish consumers. One of the campaigns introduced by Pepsi offered consumers wallpapers and ringtones, including the famous song Da Da Da. Over the course of a promotional campaign, users downloaded more than 200,000 ringtones (Tsalikis, 2009). Turkish companies (like Finansbank, BP, FritoLay) proved that simplicity and p ossibility of immediate atonement are of great importance for the Turkish consumer, and the mobile channel can provide this effect (Demirbag, 2008).In general, the trust of Turkish consumers continues to rise since February 2010, reaching 85.8. This is the highest level over the past 14 months (OECD Economic Surveys Turkey, 2010). According to the report published by the Institute of Statistics of Turkey in 2010 jointly with the Central Bank of Turkey, the index of consumer confidence amounting to 85.8 points is the highest mark since February of 2009 when it amounted to 87.60% (Tsalikis, 2009). The index started to rise since November 2009, after reaching a record low value of 78.38 points. If the index exceeds 100, it means that consumers are optimistic, and if it equals to 100, it means that consumers are neither optimistic, nor pessimistic, but if the index is below 100, it indicates pessimistic consumers (Aydin, 2006). The report determines the growth of the index of consumer confidence through the increase of the purchasing power of consumers in the current and future period, the general state of the economy and employment opportunities in the coming quarter.ConclusionThe research has shown that Turkey is characterized by the specific business culture, experiencing the influence of European Union, USA, and its Asian partners. Belonging rather to eastern patterns of business culture, Turkey differs much form the United States in the major cultural indicators, such as indices of power distance, individualism, uncertainty avoidance, and type of business behavior (masculinity vs. femininity).However, in recent years, Turkey demonstrates high indicators of economy growth, openness to reforms, laws adjustments and democratic investment policy, which makes Turkey a favorable business partner. In addition, Turkish policy and legislation on labor, health and safety do not impede investment, although legal restrictions on firing workers may create obstacles to l abor-intensive activities in the formal economy. The specific tax policy sometimes hinders investment decisions, e.g. high taxation of beverages, similar to Coca-Cola, hinders investment in the sector. However, serious tax incentives for free trade zones provide incentives to invest in these zones. Similarly, incentives for investment in certain low-income provinces are designed to increase investments in these areas.Nowadays, international trust rating agencies insist that the investment level of the Turkish economy is still not high, but markets do not express much concern. Credit neglect swaps insuring Turkish securities against default for 5 years, are estimated at 1.84%. And while the Eurozone is struggling with budget deficits, Turkey states huge budget surplus due to the growth of tax revenues. Turkey is considered to be a country of investment grade in the market of credit default swaps after its dollar-denominated bonds started to exceed the bonds of developing countries in Europe largely due to accelerated economic growth.According to preliminary estimates of the Government, the economy of Turkey grew in first quarter by 12%, which allowed the Prime minister of religion of Turkey to claim that Turkeys credit rating wont be reduced in the coming 6-10 months. Generally, the country retains the trend towards improvement of economic performance, development and innovation, which opens new perspectives for foreign investment, collaboration and partnership.