Cultural background

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Expatriates and locals cross-cultural
interactions in Indonesia.

• Hanna Karlsson
• Tomasz Odrobinski
• Helena Tadinen

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Plan

• Indonesian general issues
• Managing cultural differences
• Expatriates and locals cross-cultural
  interactions
• Time for questions and discussion
• Handout and Internet resources

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General information

• Localisation 17,508
• Climate humidity (69-95)
• People 200 millions 366 ethnics Javanese 45,
  Sudanese 14, Madurese 7.5,
• Religion the old believes and Islam (88)
• Languages
• Official Bahasa Indonesia (modified form of
  Malay), English, and Dutch, 300 dialects

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Location
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Political issues

• History Kingdom of Majapahit, Dutch
• Independence 1949
• Suharto (1966-1998),
• Abdurrahman Wahid (1998 - 2001)
• East Timor (1999)
• Megawati Sukarnoputri (2001 - ????)
• Economy
• Assuring political stability and diminish
  corruption
• independency demands Aceh and Moluccas.
• cruel inter ethnic and religion conflicts
• Bali bomb attack

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Economy Outlook

• Economy up and downs 1964-65, 70s,-1986
• Asian Crisis 1998
• low GDP growth 1 (1999) - 5 (2000) 3
  (2001)
• inflation - 14 (1999) - 11 (2000) 13
  (2001)
• high interest rate
• Challenges
• International Monetary Found - 400 millions US
  Dollars
• making central bank more independent
• acceleration of asset sale
• minimizing governments subsidies
• control over local authorities budget expenses

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FDI issues

• Indonesia offers
• large domestic market,
• rich natural resources
• Skilled, easy to train labour force
• high savings rate (highest in the world), good
  global integration
• Low FDI
• political situation,
• legal system,
• low development of Social and political
  institutions
• weak public and corporate governance

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FDI in Indonesia
Source Capital Investment Coordinating Board
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FDI will improve

• Capital Investment Coordinating Board (BKPM)
• New free economic zones
• New incentives (tax cut offs)
• New regulations
• centralized on-stop service centre for speeding
  up investment licenses procedures

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Cultural dimensions

• Individualism collectivism
• Power distance
• Uncertainty avoidance
• Masculinity femininity

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Indonesia vs Finland
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Viking management

• Decentralised decision-making
• Organisation structure is often ambiguous
• Perceived by others to be indecisive
• Goal formulation, long range objectives and
  performance
• valuation criteria are vague and implicit
• Informal channels of communication
• Coordinate by values not rules
• Case by case approach versus standard procedures
• Consensus oriented
• Avoid conflict
• Informal relationships between foreign
  subsidiaries and headquarters 

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Indonesian management

• Respect for hierarchy and elders
• Family oriented
• Group versus individual oriented
• Friendly and helpful, hospitable
• Tolerant
• Decisions based on compromise keep everyone
  happy
• Importance of religion (Islam)
• Five principles
• Bhinneka Tunggak Ika (Unity trough diversity)

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Cultural background of Indonesia

• family oriented
• respect for hierarchy and elders
• life style
• time concept
• friendly and hospitable
• importance of the religion
• gestures
• importance of the language

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Challenges when living and managing people

• lower the standards hygiene, work ethics
• staff instability pay, boyfriend, family
  influence
• being a bule
• hierarchy is a must
• constant control and double checking
• dont know the word no, use belum
• living environment tarffic jams, pollution, food
• corruption

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(cont.)

• being on alert all the time
• network of friends, neighbours
• man oriented country
• things dont work
• wild west of Asia
• the best kept secret in the world

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Summary

• Indonesia in general
• Challanges of every day live
• Expatriates and local interactions

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Now it is time for your questions

• Thank you for attention!!

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Questions

• After all that has happend would you still
  consider Indonesia as a place for doing business?
• If you notice that some of your stock is missing
  (has disappeared) what would you do?

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